the impact of aid on growth revisited do donor motives matter abstract the typical identification strategy in aid effectiveness studies assumes that donor motives do not influence the impact of aid on growth we call this homogeneity assumption into question constructing a model in which donor motives matter and testing the assumption empirically

outsourcing imports and labour demand this paper examines the effects of purchased services and imported intermediate materials on the labour demand for different skills in german manufacturing sectors we derive and estimate a factor demand system based on the generalised box cox cost function nesting both the normalised quadratic and the translog functional form we find that the impacts of output and capital growth are more important in explaining the demand for heterogeneous labour than substitution effects between labour and non labour inputs similarly the increasing use of both imported materials and purchased services is a consequence of output growth rather than input substitution

where enterprises lead people follow links between migration and fdi in germany abstract standard neoclassical models of economic integration are based on the assumptions that capital and labor are substitutes and that the geography of factor market integration does not matter yet these two assumptions are violated if agglomeration forces among factors from specific source countries are at work agglomeration implies that factors behave as complements and that the country of origin matters this paper analyzes agglomeration between capital and labor empirically we use state level german data to answer the question whether and how migration and foreign direct investment fdi are linked stocks of inward fdi and of immigrants have similar determinants and the geography of factor market integration matters there are higher stocks of inward fdi in german states hosting a large foreign population from the same country of origin this agglomeration effect is confined to higher income source countries

does conditionality work a test for an innovative us aid scheme performance based aid has been proposed as an alternative to the failed traditional approach whereby donors make aid conditional on the reform promises of recipient countries however hardly any empirical evidence exists on whether ex post rewards are effective in inducing reforms we attempt to fill this gap by investigating whether the millennium challenge corporation mcc was successful in promoting better control of corruption we employ a difference in difference in differences ddd approach considering different ways of defining the treatment group as well as different time periods during which incentive effects could have materialized we find evidence of strong anticipation effects immediately after the announcement of the mcc while increasing uncertainty about the timing and amount of mcc aid appears to have weakened the incentive to fight corruption over time

the price responsiveness of the 1demand for labour by skill british mechanical engineering 1963 1978 it is commonplace in labour economics that employment changes in response to exogenous shifts in wages and aggregate demand depend among other factors on the degree of skill since the pioneering work of oi i962 and rosen i968 little work has been done in investigating this issue in the british context and this paper will attempt to remedy this deficiency we estimate a singular dynamic three skill labour demand system using time series data for british mechanical engineering we then calculate substitution wage and output elasticities for the demand for each kind of labour in such an analysis we must decide on two issues first the specification of technology second the modelling of dynamics in tackling the first issue we rely on the theory of duality samuelson i947 shephard i953 diewert i97i in choosing a model based on the cost function a cost function approach is advantageous for the following reasons first shephard s lemma allows us to move conveniently from any cost function to the cost minimising factor demands that underlie it second the cost function has factor prices as explanatory variables which may be regarded as exogenous at the industry level third the elasticities we seek to estimate are linear functions of the parameter estimates fourth the cost function is homogeneous of degree one in prices but this does not imply constant returns to scale see binswanger i974a the use of a cost function approach permits fewer constraints to be imposed on the production process in choosing the functional form we follow binswanger i974 a b berndt and wood i975 kesselman et al i977 and layard i983 in estimating the translog cost function which was first proposed by christensen et al i97i the generality of this functional form lies first in placing no apriori restrictions on the elasticities of substitution and second in that it may be regarded as a secondorder taylor series approximation to any arbitrary cost function near the equilibrium the factor demand system derived from the translog cost function is static and holds only in equilibrium however the existence of convex adjustments costs and of imperfections involved in obtaining information imply that there is some delay in adjusting employment to its desired level following exogenous wage and

corrupt governments do not receive more state to state aid governance and the delivery of foreign aid through non state actors abstract a core result of the aid allocation literature is that the quality of governance in recipient countries does not affect the amounts of foreign aid received donor countries may still give aid to poorly governed countries because of a dilemma they face those countries most in need typically also lack proper institutions this paper argues that donors try to resolve this dilemma by delivering aid through non state actors using aid shares as well as absolute amounts of aid allocated through state and non state channels and considering different dimensions of governance we provide evidence that bypassing governments via ngos and multilateral organizations is indeed a response to weak recipient state institutions the effect is stronger in aid sectors where donors can more easily switch between channels and weaker for higher levels of economic self interest among donors

aid and donor trust in recipient country systems abstract the 2005 paris declaration on aid effectiveness sets targets for increased use by donors of recipient country systems for managing aid the target is premised on a view that country systems are strengthened when donors trust recipients to manage aid funds but undermined when donors manage aid through their own separate parallel systems this study provides an analytical framework for understanding donors decisions to trust or bypass country systems empirical tests are conducted using data from three oecd dac surveys designed to monitor progress toward paris declaration goals tests show that use of recipient country systems is positively related to 1 the donor s reputational stake in the country s development as proxied by the donor s share of aid provided to the recipient 2 the trustworthiness or quality of those systems as measured by cross country corruption indicators and 3 donors risk tolerance as proxied by public support for aid provision in donor countries findings are robust to corrections for potential sample selection omitted variables or endogeneity bias

the minimum wage from a two sided perspective this paper sheds new light on the effects of the minimum wage on employment from a two sided theoretical perspective in which firms job offer and workers job acceptance decisions are disentangled minimum wages reduce job offer incentives and increase job acceptance incentives we show that sufficiently low minimum wages may do no harm to employment since their job offer disincentives are countervailed by their job acceptance incentives

the effect of the german and british environmental taxation reforms a simple assessment abstract this article implements a simple econometric approach to assess the effect of the environmental tax reforms introduced in germany and the uk despite the very simple econometric approach adopted in this paper in the case of the energy demand our results do not differ markedly from those obtained from complicated multi sectoral econometric models in the case of the labour demand our results differ from the estimates obtained from econometric models where the employment level is not directly influenced by the energy price on the other hand our results are more similar to those obtained from models where the level of employment is directly influenced by the energy price confirming the findings of bosquet 2000 environmental tax reform does it work a survey of the empirical evidence ecological economics 34 19 32 and oecd 2004 environment and employment an assessment working party on national environmental policy oecd paris we conclude that environmental tax reforms can deliver substantial reductions in energy consumption while having small effects on the level of employment effect which can be positive depending on the size of the reduction in the labour costs and the value of cross price elasticities

non neutral technical change capital white collar and blue collar labor some empirical results abstract the empirical analysis of recent quarterly data for west german industries indicates that technical change is biased in favor of white collar labor and equipment while it is biased against blue collar labor

facing the truth about separability nothing works without energy abstract separability is a pivotal theoretical and empirical concept in production theory while the standard definition of separability is primarily motivated by the desire to conceptualize production decisions as a sequential process the principal purpose of an appropriate concept of separability in empirical work is to justify the omission of variables for which data are either of poor quality or unavailable this paper demonstrates that this empirical concept needs to be more restrictive than the classical notion of separability is therefore we suggest a novel definition of separability based on cross price elasticities that has clear empirical content because there is ample empirical reason to even doubt the assumption that energy is separable from all other production factors in the relatively mild form of classical separability energy seems to be an indispensable production factor under separability aspects

interrelated factor demands from dynamic cost functions an application to the non energy business sector of the uk economy in this paper we propose a dynamic cost function which allows us consistently to derive a set of dynamic interrelated factor demand equations in the general error correction form introduced by anderson and blundell 1982 this paper expands results recently published in urga 1996 it shows that the derivation of an effective underlying cost function allows us to identify the full set of parameters of the underlying process this does not happen in the standard anderson blundell formulation we report an empirical exercise used to model the so called supply side of the london busines school large scale economic model where we estimate both the set of factor demands and the underlying dynamic cost function for the non energy business sector of the uk economy

why conditional aid does not work and what can be done about it abstract this paper studies a simple reform that introduces ex post incentives for the donor to reward good policies contrary to existing practices instead of committing aid to each recipient ex ante and making aid conditional on reform the donor centralizes the disbursement decision by committing aid to a group of countries the actual amount disbursed to each individual country would depend on its relative performance this explicit linkage of the allocation and disbursement decisions has two important advantages as compared to present practices first it raises the opportunity cost of disbursing aid ex post thereby giving the donor stronger incentives to reward good policies second competition among recipients allows the donor to make inferences about common shocks which otherwise conceal the recipient s choice of action this enables the donor to give aid more efficiently

the role of imports from the newly industrializing countries in u s production this paper examines the relationship among u s imports from the nics imports from developed countries capital and labor in the production of goods for final demand import demand and substitution elasticities are estimated for the period 1960 80 u s imports from the nics are found to be complements with both labor and imports from industrialized countries this indicates that the substitution effect resulting from a reduction in the price of imports from the nics would lead to a net increase in employment multilateral tariff cuts by the united states would increase the demand for nic goods despite a reduction in their preferential tariff margins

asymmetric substitutability theory and some applications economists usually describe goods as being either gross complements or gross substitutes yet what is less known is that one good may be a gross substitute for a second good while the second good is a gross complement to the first good this paper shows the existence of asymmetric gross substitutability and shows some potential examples and applications

services offshoring and its impact on productivity and employment evidence from germany 1995 2006 economists have recently recognised services offshoring as an important influence on domestic labour market outcomes services are of particular interest since their significance has grown in terms of both quantity and quality only one and a half decades ago most services were considered non tradable but the emergence and development of new information and communication technologies has made many services internationally tradable the liberalisation of international trade in services trade has further accelerated the volume of services trade our econometric estimations focus on services offshoring by german manufacturing sectors we use revised input output data from 1995 to 2006 we first estimate the impact of services offshoring on labour productivity we then measure the effects of services offshoring on labour demand the results show that services offshoring increased sectoral labour productivity but reduced german manufacturing employment the overall results suggest that labour demand decreased over 1995 2006 because labour reducing productivity and substitution effects dominated labour augmenting scale effects from services offshoring

what do nongovernmental organizations do nongovernmental organizations are one group of players who are active in the efforts of international development and increasing the welfare of poor people in poor countries nongovernmental organizations are largely staffed by altruistic employees and volunteers working towards ideological rather than financial ends their founders are often intense creative individuals who sometimes come up with a new product to deliver or a better way to deliver existing goods and services they are funded by donors many of them poor or anonymous yet these attributes should not be unfamiliar to economists development ngos like domestic nonprofits can be understood in the framework of not for profit contracting it is easy to conjure up a glowing vision of how the efforts of ngos could focus on problem solving without getting bogged down in corruption or bureaucracy but the strengths of the ngo model have some corresponding weaknesses in agenda setting decision making and resource allocation we highlight three factors in explaining the increased presence of ngos in the last few decades a trend towards more outsourcing of government services new ventures by would be not for profit entrepreneurs and the increasing professionalization of existing ngos

the own wage elasticity of labor demand a meta regression analysis firms labor demand responses to wage changes are of key interest in empirical research and policy analysis however despite extensive research estimates of labor demand elasticities remain subject to considerable heterogeneity in this paper we conduct a comprehensive meta regression analysis to re assess the empirical literature on labor demand elasticities building on 942 elasticity estimates from 105 different studies we identify sources of variation in the absolute value of this elasticity heterogeneity due to the theoretical and empirical specification of the labor demand model different datasets used or sectors and countries considered explains more than 80 of the variation in the estimates we further find substantial evidence for the presence of publication selection bias as estimates of the own wage elasticity of labor demand are upwardly inflated

how deep are the roots of economic development the empirical literature on economic growth and development has moved from the study of proximate determinants to the analysis of ever deeper more fundamental factors rooted in long term history a growing body of new empirical work focuses on the measurement and estimation of the effects of historical variables on contemporary income by explicitly taking into account the ancestral composition of current populations the evidence suggests that economic development is affected by traits that have been transmitted across generations over the very long run this article surveys this new literature and provides a framework to discuss different channels through which intergenerationally transmitted characteristics may impact economic development biologically via genetic or epigenetic transmission and culturally via behavioral or symbolic transmission an important issue is whether historically transmitted traits have affected development through their direct impact on productivity or have operated indirectly as barriers to the diffusion of productivityenhancing innovations across populations jel j11 o33 o47 z13

an examination of wage behaviour in macroeconomic models with long term contracts are long term contracts equivalent to a series of shorter term contracts except for the informational sets available this paper argues that the wage equations in many macroeconomic models with labor contracts imply a positive answer to the above question an empirical examination of canadian contract wage data rejects the above hypothesis the paper argues that real economic conditions at the time contracts are signed have a greater impact on wage settlements than do conditions that are expected to exist in the future this alternative hypothesis is generally supported by the data

aid policies and growth the authors of this paper use a new database on foreign aid to examine the relationships among foreign aid economic policies and growth of per capita gdp in panel growth regressions for 56 developing countries and 6 four year periods 1970 93 they find that the policies that have a great effect on growth are those related to fiscal surplus inflation and trade openness they construct an index for those three policies and have that index interact with foreign aid they have instruments for both aid and aid interacting with policies they find that aid has a positive impact on growth in developing countries with good fiscal monetary and trade policies in the presence of poor policies aid has no positive effect on growth this result is robust in a variety of specifications which include or exclude middle income countries include or exclude outliers and treat policies as exogenous or endogenous they examine the determinants of policy and find no evidence that aid has systematically affected policies either for good or for ill they estimate an aid allocation equation and show that any tendency for aid to reward good policies has been overwhelmed by donors pursuit of their own strategic interests in a counterfactual they reallocate aid reduce the role of donor interests and increasing the importance of policy such a reallocation would have a large positive effect on developing countries growth rates

the linear quadratic adjustment cost model and the demand for labour in this paper we demonstrate a new way of testing the linear quadratic adjustment cost lqac model under rational expectations we illustrate how the parameter restrictions arising from this model can be formally specified and we use these restrictions to extent the technique of campbell and shiller 1987 to a wider class of models based on present value relations potentially the demand for labour is an area in which the lqac model can find applicability in practice and subsequently we analyse sectoral labour demand in danish manufacturing we find however that for our data set the quadratic adjustment cost model under rational expectations can be rejected

aid allocation through various official and private channels need merit and self interest as motives of german donors summary the previous literature largely ignores the heterogeneity of aid channels used by each single donor country we estimate tobit models to assess the relative importance of recipient need merit and self interest of donors for various channels of official and private german aid across a large sample of recipient countries in 2005 07 our findings underscore the need for a disaggregated analysis of aid allocation aid channels differ significantly in the extent to which need and merit are taken into account yet the german case does not reveal unambiguously superior aid channels

the dynamic factor model revisited the identification problem remains abstract the lack of identification of short run effects in a system of regression equations consisting of a dynamic translog cost function and cost share equations derived from this cost function is shown

multinational firms acquisitions and job tasks we revisit the question how inward fdi and multinational ownership affect relative labor demand motivated by the recent literature that distinguish between skills and tasks we argue that the impact of multinational and foreign ownership on the demand for labor is better captured by focusing on job tasks rather than education we use swedish matched employer employee data and find that changes of local firms to both foreign and swedish multinationals increase the relative demand for non routine and interactive job tasks in the targeted local firms hence in a high income country both inward and outward fdi have a task upgrading impact on local firms the effect is primarily driven by wage effects leading to increased wage dispersion for workers with different non routine and interactive task intensity we also show that the effect is not the same as skill upgrading since dividing employees by educational attainment does not capture changes in the relative labor demand hence our results suggest a new aspect of the labor market consequences of fdi less

aid delivery through non governmental organisations does the aid channel matter for the targeting of swedish aid this paper analyses whether aid channelled through non governmental organisations ngos is less affected by selfish donor motivations and better targeted to needy recipient countries than aid distributed by state agencies we employ tobit and probit models and make use of an exceptionally detailed database that allows an assessment of the allocation of swedish aid channelled through ngos in comparison to the allocation of swedish official aid our analysis provides mixed results on the one hand ngos appear to be altruistic as far as available indicators on political and commercial motivations of aid can tell on the other hand needs based targeting of aid by ngos turns out to be surprisingly weak gdp per capita of recipient countries shapes the allocation of official aid but not that of aid channelled through ngos the headcount of absolute poverty has a significantly positive effect on aid allocation but its impact is not particularly strong when ngos are involved overall the swedish case supports the sceptical view that ngos are not necessarily superior donors compared to state aid agencies

how robust is the capital skill complementarity hypothesis this paper investigates the relation between substitution possibilities in manufacturing production between capital and two labor inputs blue collar and white collar workers griliches found in 1969 that unskilled labor was more easily substituted for by capital than skilled labor griliches called this capital skill complementarity the capital skill complementarity hypothesis has implications for the aggregation of labor inputs as well as for employment of labor categories and income distribution between factors this paper investigates the robustness of the capital skill complementarity hypothesis on swedish data by varying model assumptions concerning economies of scale and technological growth copyright 1992 by mit press

hands off my regime governments restrictions on foreign aid to non governmental organizations in poor and middle income countries many resource strapped developing country governments seek international aid but when that assistance is channeled through domestic civil society it can threaten their political control as a result in the last two decades 39 of the world s 153 low and middle income countries have adopted laws restricting the inflow of foreign aid to domestically operating nongovernmental organizations ngos governments recognize that such laws harm their international reputations for supporting democracy and may invite donor punishment in terms of aid reductions yet they perceive foreign aid to ngos as supporting political opponents and threatening their grip on power in the aftermath of competitive electoral victories governments often take new legal steps to limit these groups funding we test this argument on an original dataset of laws detailing the regulation of foreign aid inflows to domestically operating ngos in 153 low and middle income countries for the period 1993 2012 using an event history approach we find that foreign aid flows are associated with an increased risk of restrictive law adoption a log unit increase in foreign aid raises the probability of adoption by 6 7 this risk is exacerbated after the holding of competitive elections the interaction of foreign aid and competitive elections increases the probability of adoption by 11

rejecting capital skill complementarity at all costs any serious empirical study of factor substitutability has to allow the data to display complementarity as well as substitutability the standard approach reflecting this idea is a translog specification this is also the approach used by numerous studies analyzing the relative capital skill complementarity hypothesis formulated by griliches 1969 according to this hypothesis the degree of substitutability between skilled labor and capital is lower than that for unskilled labor and capital yet the results of empirical studies investigating this hypothesis are controversial this paper offers a straightforward explanation using a translog approach reduces the issue of actor substitutability or complementarity to a question of cost shares our review of translog studies mentioned in hamermesh s 1993 summary on the demand for heterogeneous labor demonstrates that this argument is empirically relevant all these studies can be reconciled with each other on the basis of the cost share argument

capital skill complementarity and inequality in sweden income inequality increased in sweden during the 1980s and 1990s as did the returns to higher education the main conclusion of this study is that increased income inequality between highand low skilled workers is demand driven and is due to the presence of capital skill complementarity in production increased investments in new more efficient capital equipment along with a slowdown in the growth rate of skilled labor have raised the ratio of effective capital inputs per skilled worker which in turn has increased the relative demand and market return for skilled labor through the capital skill complementarity mechanism

dynamic factor demands and the effects of energy price shocks a dynamic model is used to understand how sharp changes in energy prices affect investment behavior employment and energy use the authors discuss the theory behind their model selection model specifications estimation methods and data list parameter estimates and elasticities for the selected model and describe the simulations they conclude that 1 the data strongly reject the hypothesis of constant returns to scale within their specification of aggregate production 2 the data indicate adjustment costs on labor are small and 3 their results help reconcile some of the conflicting estimates of energy demand elasticities appearing in recent literature 23 references 3 figures 3 tables

25 years of aid allocation practice whither selectivity the 4p framework poverty population policy and proximity is introduced as a way of understanding a donor s aid allocation we use the two part model and examine the period 1982 2006 the results indicate that recent conclusions of increasing selectivity are misplaced for the seven major donors analyzed who together represent the majority of development aid indeed the effect of each of the commonly mentioned time trends selectivity the end of the cold war and the commencement of the global war on terror is much smaller than the role of donor heterogeneity which appears sizeable and entrenched

educational policy in a credit constrained economy with skill heterogeneity an overlapping generations model where agents choose whether to become educated when young is presented education enhances productivity but needs to be financed by borrowing because of the possibility of default lenders may ration credit we characterize the steady state equilibrium with and without credit constraints and show that credit constraints are associated with lower education and a lower real interest rate we then study the role of public policy in remedying the inefficiency which occurs with credit market imperfections and examine whether public education can improve on the constrained equilibrium

a dynamic heterogeneous labour demand model for german manufacturing this paper presents an application of the generalised error correction model gecm for heterogeneous factor demands based on the quadratic cost function using data for 26 west german manufacturing industries over the period 1976 1995 it turns out that less general specifications such as the partial adjustment and the static ar 1 model are rejected furthermore both shortrun and long run labour demands of different skill classes are inelastic unskilled labour is found to have a somewhat higher wage elasticity in absolute terms than medium skilled labour a small part of shift in demand away from unskilled labour can be explained by the substitutability relationship between intermediate materials and unskilled labour between 6 and 13 percent of the observed shift towards high skilled labour can be explained by capital accumulation

union wage settlements during a disinflation this paper examines the role of union wage contracts in the persistence of inflation and the implication of these contracts for the problem of disinflation in the united states a quantitative model of overlapping con tracts explicitly oriented toward the major union sector is developed the model takes account of expectations of future wage price and employment conditions as in more aggregated models that have been used in macroeconomic research in addition the distribution of workers according to contract length as well as deferred wage increases and escalator clauses are explicitly used in the model the main aim of the model is to determine the constraints which these contracts impose on disinflation paths the model indicates that the maximum speed of disinflation is extremely slow in the early phases if a rise in unemployment is to be avoided but increases considerably before the new lower rate of inflation is reached the disinflation path is considerably slower than that observed after hyperinflation periods however the existence of a path of inflation reduction raises questions about whether the institution of union wage con tracts is really the direct cause of costly disinflations or whether their influence works indirectly by raising credibility problems about a monetary disinflation this abstract was borrowed from another version of this item

the econometrics of panel data handbook of theory and applications preface 1 formulation and estimation of econometric models for panel data m nerlove p balestra part i linear models 2 introduction to linear models for panel data p balestra 3 fixed effect models and fixed coefficient models p balestra 4 error components models l matyas 5 random coefficients models cheng hsiao 6 linear dynamic models p sevestre a trognon 7 simultaneous equations j krishnakumar 8 panel data with measurement error e biorn 9 specification issues b h baltagi appendix matrix algebra for linear models part ii nonlinear models 10 introduction to nonlinear models c gourieroux 11 logit and probit models cheng hsiao 13 incomplete panels and selection bias m verbeek t nijman 14 pseudo panel data m verbeek 15 point processes j p florens d fougere part iii selected applications introduction to the applications z griliches 16 dynamic labour demand models g bresson f kramarz p sevestre 17 econometric models of company investment r blundell s bond c meghir 18 consumption dynamics and panel data a survey j m robin 19 estimation of labour supply functions using panel data a survey f laisney w pohlmeier m staat 20 individual labour market transitions d fougere t kamionka 21 modelling companies divident policy using account panel data j f malecot 22 software review p blanchard index

the anarchy of numbers aid development and cross country empirics the recent literature contains many stories of how foreign aid affects economic growth aid raises growth in countries with good policies or with difficult economic environments or outside the tropics or on average but with diminishing returns the diversity of the results suggests that many are fragile seven important aid growth papers are tested for robustness using 14 minimally arbitrary tests deriving mainly from differences among the studies themselves this approach investigates the importance of potentially arbitrary specification choices while minimizing the arbitrariness in testing choices all of the results appear fragile especially to sample expansion

testing restrictions in a flexible dynamic demand system an application to consumers expenditure in canada traditionally restrictions on systems of demand equations have been tested using static models whilst being estimated with time series data this paper develops a vector time series model of expenditure shares in the context of a singular dynamic demand system the model allows for non symmetric and non homogeneous short run behaviour the homogeneity and symmetry restrictions are only examined in the long run structure results based on canadian time series data are presented and reject the current practise of static modelling while restrictions suggested by economic theory are not rejected when imposed on the long run structure

dynamic translog and linear logit models a factor demand analysis of interfuel substitution in us industrial energy demand abstract we compare and contrast two popular dynamic flexible functional forms for cost functions the translog and the logit j bus econ stat 8 1990 347 353 using data on us industrial energy demand from 1960 to 1992 which has been analysed by previous studies energy econ 11 1989 89 94 appl econ 21 1989 931 945 j bus econ stat 13 1995 459 465 we show the crucial role played by different dynamic formulations of the translog in this analysis of factor demands with respect to rates of dynamic adjustment and substitution possibilities we conclude that the poor performance of the dynamic translog relative to the dynamic logit cannot be explained solely by dynamic model mis specification or the inclusion of price unresponsive non energy fuel use data our most robust empirical result is that coal and oil are substitutes

winners and losers a micro level analysis of international outsourcing and wages our paper investigates the link between international outsourcing and wages utilizing a large household panel and combining it with industry level information on industries outsourcing activities from input output tables this approach avoids prob lems such as aggregation bias potential endogeneity bias and poor skill definitions that commonly hamper industry level studies we find that outsourcing has had a marked impact on wages applying two alternative skill classifications we find evidence that a 1 percentage point increase in outsourcing reduced the wage for workers in the lowest skill categories by up to 1 5 while it increased wages for high skilled workers by up to 2 6 this result is robust to a number of different specifications jel classification f16 j31 gagnants et perdants une analyse micro economique de la sous traitance internationale et des salaires ce memoire etudie le lien entre la sous traitance internationale et les salaires a l aide de donnees d un grand panel de menages qu on combine avec des donnees au niveau des industries sur les activites de sous traitance de celles qui en font obtenues des tableaux interindustriels cette approche evite les problemes qui habituellement polluent les etudes au niveau de l industrie biais d agregation biais d endogeneite potentielle mauvaises definitions des habiletes on decouvre que la sous traitance a un effet sur les salaires a l aide de differentes formes de classification des habiletes il appert qu un point de pourcentage d augmentation dans la sous traitance reduit les salaires des travailleurs dans les categories d habilete les plus basses de 1 5 alors qu il accroit les salaires de travailleurs specialises de 2 6 ce resultat est robuste et avere meme quand on utilise diverses specifications

politics and the effectiveness of foreign aid abstract critics of foreign aid programs have long argued that poverty reflects government failure in this paper i test predictions for aid effectiveness based on an analytical framework that relates aid effectiveness to political regimes i find that aid does not significantly increase investment nor benefit the poor as measured by improvements in human development indicators but it does increase the size of government the impact of aid does not vary according to whether recipient governments are liberal democratic or highly repressive but liberal political regimes and democracies ceteris paribus have on average 30 lower infant mortality than the least free regimes this may be due to greater empowerment of the poor under liberal regimes even though the political elite continues to receive the benefits of aid programs an implication is that short term aid targeted to support new liberal regimes may be a more successful means of reducing poverty than current programs

public sector employment and the skill premium sweden versus the united states 1970 2012 swedish census data and tax records reveal an astonishing decline in the aggregate skill premium of 30 percent between 1970 and 1990 with only a modest recovery in the next couple of decades in contrast the us skill premium rose by around 24 percent over those four decades a theory that equalizes wages with marginal products can rationalize these disparate outcomes when we replace commonly used measures of total labor supplies by private sector employment the dramatic decline in the skill premium in sweden is the result of an expanding public sector that has disproportionately hired unskilled labor

presidential address institutions and culture how and why does distant political and economic history shape the functioning of current institutions this paper argues that individual values and convictions about the scope of application of norms of good conduct provide the missing link evidence from a variety of sources points to two main findings first individual values consistent with generalized as opposed to limited morality are widespread in societies that were ruled by non despotic political institutions in the distant past second well functioning institutions are often observed in countries or regions where individual values are consistent with generalized morality and under different identifying assumptions this suggests a causal effect from values to institutional outcomes the paper ends with a discussion of the implications for future research jel a10 d7 e00

the impact of foreign aid on migration revisited abstract while policymakers hope to stem migration flows by giving foreign aid existing empirical evidence points in the opposite direction by loosening budget constraints aid tends to encourage people to emigrate in this paper we revisit the aid migration link using a substantially extended and adjusted econometric approach based on a gravity model of international migration in contrast to the previous literature we obtain evidence of a negative relationship between the total aid a country receives and emigration rates this even holds for the poorer part of recipient countries which suggests that the budgetary constraint channel does not play a significant role in shaping migration decisions the most plausible explanation for these contrasting results is that unlike in previous studies we use migrant flows rather than migrant stocks as the dependent variable in substantive terms the limited importance of the budgetary constraint channel might reflect that positive welfare effects of foreign aid tend to manifest themselves in improved public services for the poor rather than higher incomes which is in line with the reorientation of foreign aid towards social sectors under the millennium development goals

the caring hand that cripples the east german labor market after reunification abstract the caring hand that cripples the east german labour market after reunification the east german labour market has hardly made any progress since german reunification despite massive migration flows and support from the west we argue that east germany is in trouble precisely because of the support it has received this paper explores the phenomenon of the caring hand that cripples arising from bargaining by proxy the adoption of the west german welfare system and the associated employment persistence even the steady decrease of labour cost normalized by productivity since the beginning of the 1990s did not help to kick start the east we suggest that labour force participants fell into traps concerning low skills ageing of the workforce labour saving capital and skills capital underutilization and unemployment arising from the decline of the tradeable sector jel classification e24 j3 and p2 keywords german unification labour market traps and labour markets dennis j snower kiel institute for the world economy dusternbrooker weg 120 24105 kiel germany tel 49 431 8814 235 fax 49 431 8814 501 email dennis snower ifw kiel de

do corrupt governments receive less foreign aid critics of foreign aid programs argue that these funds often support corrupt governments and inefficient bureaucracies supporters argue that foreign aid can be used to reward good governments this paper documents that there is no evidence that less corrupt governments receive more foreign aid on the contrary according to some measures of corruption more corrupt governments receive more aid also we could not find any evidence that an increase in foreign aid reduces corruption in summary the answer to the question posed in the title is no

how do banks adjust to changing input prices a dynamic analysis of u s commercial banks before and after the crisis abstract the 2000 2013 period was characterized by substantial regulatory monetary and technological change especially after the onset of the global financial crisis this study assesses the total impact of these policy shifts and technological changes on u s commercial banks short run and long run substitution elasticities an endogenous break test divides the sample into a pre crisis period and a post crisis period during the former period banks inputs tend to be inelastic substitutes after the onset of the crisis particularly the long run substitutability of most input factors decreases to even lower levels due to changes in both cost technology and economic conditions at the same time banks response to input price changes becomes more sluggish hence especially after the onset of the crisis banks have little flexibility regarding input factor usage and are thus sensitive to input price changes from a cost perspective

skills wages and employment in east and west germany fitzroy f and funke m 1998 skills wages and employment in east and west germany reg studies 32 459 467 disaggregated data from 28 two digit manufacturing industries in the east and west parts of unified germany are used to estimate employment for three skill categories of blue collar workers employment elasticities are uniformly higher for unskilled labour the results contradict union claims that wages had little relevance for east german job losses and confirm the capitalskill complementarity hypothesis fitzroy f et funke m 1998 competences salaires et emploi dans l est et l ouest de l allemagne reg studies 32 459 467 a partir des donnees decomposees provenant de vingt huit industries a deux chiffres situees dans l est et l ouest de l allemagne unifiee on fait une estimation de l emploi pour trois categories de competences des ouvriers les elasticites de l emploi s averent uniformement plus elevees pour les ouvriers non qualifies les resultats contredisent les declarations des

time series representations of economic variables and alternative models of the labour market accepting the hypothesis that the time series facts of the aggregate labour market may be summarized by the linear autoregressive and moving average representations of wages prices unemployment and interest rates implies that a useful theory ought to lead to predictions about these representations following this approach this paper first catalogues many of the time series facts about the aggregate labour market and then compares them against alternative models of the labour market based on the intertemporal substitution and staggered contract hypotheses