the private wage sector in cote d ivoire homogeneity or heterogeneity one dominant feature of economic development is change in the structure of the economy some sectors expand while others shrink in response to changes in output markets considerable adjustments must take place in factor markets as well development will therefore proceed more speedily when barriers in the factor markets are minimal whether or not barriers in the labor market exist macroeconomic discussions of labor markets usually assume uninhibited flows between sectors 13 similarly a large literature on earnings of wage workers has treated the wage sector as a homogeneous part of the labor market yet if the wage sector is heterogeneous model estimates have no empirical meaning and policy recommendations have no foundation

bequest receipt and family size effects i introduction the seminal economic models of intergenerational human capital investment demonstrate the potential importance of credit market failure in determining child achievement becker and barro 1988 becker and lewis 1973 becker and tomes 1986 willis 1973 1 without the ability to borrow against future child earnings additional children raise the cost of providing a given level of child quality alternatively the greater the level of child quality the higher the cost of having an additional child 2 the resulting negative relationship between family size and child outcomes is termed a quality quantity trade off early empirical studies found large negative family size effects consistent with significant credit market failure kessler 1991 includes a brief survey of this literature however kessler points out that this early literature often ignored the possible effects of birth order because birth order is inherently correlated with family size this omitted variable might account for observed family size effects if first or early born children are advantaged due to preferential parental investments or innate advantages see behrman and taubman 1986 for a discussion of biological psychological and economic reasons for such birth order effects studies that include both family size and birth order controls report conflicting results 3 using data from the national longitudinal survey of youth kessler 1991 finds that neither birth order nor family size affect the level or growth rate of wages he does find a family size effect in the hours worked by women though the direction of the effect depends on age using a sample from norway black devereux and salvanes 2005 find significant family size effects with ordinary least squares even with birth order controls however when family size is instrumented with twinning the effect becomes statistically indistinguishable from zero though the standard errors are large and the results are also consistent with very large family size effects in britain grawe 2008 finds sizable family size effects even after controlling for birth order of course the presence or absence of family size effects in the population as a whole is weak evidence for or against the importance of credit constraints both reason and theory suggest that some families will be free from such hurdles two existing studies have compared family size effects between groups that are more and less likely to be constrained the norwegian study of black devereux and salvanes 2005 divides the sample according to mother s education greater than or equal to 12 or 12 yr their estimates based on instrumental variables using twinning as the instrument do not clearly show greater family size effects among the presumably more constraint prone low mother s education group however the coefficients are imprecisely estimated and so the test has low power grawe 2008 examines the family size effect in britain dividing the sample by father s earnings those with fathers in the top 20 of the income distribution are presumably financially unconstrained yet strong family size effects are found in educational performance among children in these families these articles suggest that financial constraints do not explain family size effects in norway and britain but the experiences in these countries may say little about access to credit markets in the united states in particular both norway and britain provide free access to higher education within the past few years british universities have been allowed to charge as much as 3 000 pounds sterling for tuition but the individuals studied by grawe born in 1958 completed their educations long ago the present article explores the relevance of credit to family size effects in the united states dividing families based on bequest receipt of the children theory suggests that only those unconstrained by credit access would receive a financial bequest

international transfers the relative price of non traded goods and the current account this paper considers the role of the relative price of non traded goods and the current account in the adjustment of a small open economy to the receipt of an international transfer the paper shows that the economy s macroeconomic adjustment to the transfer depends upon the relative capital intensities of the traded and non traded sectors of the economy as well as on the duration of the transfer the paper provides a new interpretation of france s current account surplus in the 1870s that accompanied the payment of reparations to germany following the franco prussian war and of germany s trade deficit in the 1920s that accompanied reparations payments associated with the first world war

heterogeneity in informal salaried employment evidence from the egyptian labor market survey summary this paper contributes to the continuing debates on the mechanisms driving labor market informality in developing countries by proposing an innovative way to discriminate between segmented and competitive markets an empirical analysis is applied to egyptian paid employment in the highly dynamic context of 1998 2006 the study is based on recent nonparametric methods applied to estimate the model with essential heterogeneity the model is extended to decomposing the treatment effects into unobserved and observed components the results show triple heterogeneity of workers on the egyptian labor market offering support to both segmented and competitive views on informal labor

dual labor markets efficiency wages and search this article presents an equilibrium model of a dual labor market firms are assumed to be identical ex ante and dualism arises endogenously the dual labor market outcome is supported by efficiency wage and search considerations firms choose wage effort requirement packages optimally given optimal search and effort choice by workers and vice versa we prove existence and investigate the occurrence and nature of dual labor market equilibria

earnings schooling and economic reform earnings schooling and economic reform econometric evidence from hungary 1986 2004 nauro campos and dean jolliffe how does the relationship between earnings and schooling change with the introduction of comprehensive economic reform this article sheds light on this question using a unique data set and procedure to reduce sample selection bias the principal assumptions are that sample selection bias was minimal in 1986 and that the decision to participate in the wage market after 1986 is correlated with age gender and schooling demographics once corrected for sample selection on observables the increase in returns is smaller suggesting the existence of the positive correlation between education and the decision to participate in the wage sector that was discussed above 16 comparing the panels shows that sample selection bias is positive and quite large throughout the period of analysis an advantage of the wage and earnings survey design is that the sample was selected in a single stage and t

effects of family background on earnings and returns to schooling evidence from brazil we investigate whether omitted family background variables are responsible for high returns to schooling estimated in brazil returns to schooling fall by about one third when parental schooling is added to wage equations surprisingly the schooling of fathers in law has larger effects on wages than the schooling of fathers on the basis of a model of assortative mating we interpret this as evidence that parental characteristics represent unobservable worker attributes rather than nepotism in the labor market we conclude that the family background bias in returns to schooling is modest and need not imply returns to family connections

does marriage really make men more productive this paper presents new descriptive evidence regarding marital pay premiums earned by white males longitudinal data indicate that wages rise after marriage and that cross sectional marriage premiums appear to result from a steepening of the earnings profile data from a company personnelfile that includes information on job grades and supervisor performance ratings reveal large marital status pay differences within a narrow range of occupations managers and professionals and environments a single firm married workers tend to be located in higher paying job grades there are very small pay differentials within grades married men receive higher performance ratings than single men as a result they are much more likely to be promoted controlling for rated performance however eliminates the promotion differential sanders korenman is an assistant professor of economics and public affairs at princeton university and is a faculty associate of the office of population research at princeton university and a research affiliate of the national bureau of economic research nber david neumark is an assistant professor of economics at the university of pennsylvania and a research affiliate of the nber korenman wishes to acknowledge the hewlett foundation and the harvard university center for population studies for financial support the authors are grateful to james medofffor making available an extract from the company personnelfile questions regarding data availability should be directed to professor james

the quality of schooling comment a recent article in this review by jere behrman and nancy birdsall 1983 raises an important issue for makers of educational policy in developing countries behrmanbirdsall break ground both in specifying a model that treats schooling quantity and quality simultaneously and systematically and in developing practical methods for evaluating social rates of return to schooling quantity and quality in the absence of externalities their model is estimated using data from brazil a country with an impressive recent record in expanding primary schooling this comment has two objectives the first is to point out methodological errors made by behrman and birdsall in the derivation of the social rate of return to schooling quantity the second is to test the robustness of this corrected finding with a data set that differs from that used by behrman and birdsall the principal finding of the behrmanbirdsall analysis is that the estimated social rate of return to schooling quantity in brazil is much lower than that to schooling quality 6 8 vs 10 4 percent if this is generally the case in developing countries the possibility of a conflict between productivity and equity goals becomes an issue to be taken into account by educational policymakers for example with the conclusions reached by behrman birdsall if only one third of the students were to attend school and the resources saved by schooling only one third of the students could be used to increase both quality and quantity by 50 percent the estimates imply an overall income gain of 32 percent p 941 the analysis that follows demonstrates that correct procedure yields an estimated social rate of return to schooling quantity which is only slightly lower than that to schooling quality 9 8 vs 10 4 percent indicating no substantial inefficiency in the allocation of educational resources between schooling quantity and quality to test the robustness of this result a model of the behrmanbirdsall type is estimated using a 1979 set of micro data from one city in the brazilian northeast using theoretically and empirically preferred variable definitions very similar estimation results are obtained with respect to relative social rates of return to quantity and quality section i contains a correction of the errors made in deriving the social rate of return to schooling quantity section ii is empirical and contains a summary of potential sources of bias a description of the data set used to estimate a behrman birdsall type model and estimation results section iii contains a discussion of some remaining problems

wages relative prices and the choice between fixed and flexible exchange rates this paper reexamines the choice between fixed and flexible exchange rates to take into account wage indexation and flexible prices the difference in output variation in the two exchange rate regimes is shown to be dependent on wage behaviour in the domestic economy being proportional to one minus the degree of wage indexation foreign wage behaviour is also shown to be of key importance since high wage indexation abroad can insulate the domestic country from some foreign disturbances regardless of domestic behaviour while for other economic disturbances it is the relative degree of wage indexation which determines the desirability of flexible rates niveaux de salaires prix relatifs et le choix entre les regimes de taux de change fixes ouflucttuants ce memoire reouvre le dossier du choix entre regime de taux de change fixes et regime de taux de change fluctuants quand on tient compte de l indexation des salaires et de la flexibilite des prix il appert que l ecart entre les variations du niveau de production domestique entre les deux regimes depend du comportement des salaires dans l economie domestique il est proportionnel a 1 le degre d indexation des salaires le comportement des salaires dans le reste du monde est aussi important puisque un haut degre d indexation des salaires dans le reste du monde peut proteger l economie domestique de certaines perturbations economiques h l etranger quel que soit le comportement des salaires domestiques dans le cas d autres perturbations economiques c est le degre relatif d indexation des salaires h l interieur et h l exterieur qui devient le facteur determinant dans le choix d un regime de taux de change how much difference a flexible exchange rate makes to the economic performance of a country depends significantly on wage behaviour if wages are sufficiently sensitive to exchange rates output will exhibit much the same variability under flexible exchange rates as under fixed rates foreign wage behaviour is also of key importance since high wage flexibility abroad can insulate the domestic country from some foreign disturbances regardless of domestic wage behaviour while for other economic disturbances it is the relative degree of wage flexibility which determines the desirability of flexible rates this paper re examines the choice between fixed and flexible rates taking into account both domestic and foreign wage

structural adjustment and the construction sector abstract this paper adds a construction sector to a dynamic dependent economy model equipped with consumer tradeables and non tradeables sectors the model is used to study the response of the production structure relative prices and the trade balance to a favorable terms of trade shock under the benchmark assumptions of perfect intersectoral factor mobility a perfect international capital market and no adjustment costs for realistic relative capital intensities the model predicts a boom in the construction and consumer non tradeables sectors a contraction of the tradeables sector and no relative price changes the implications of relaxing those benchmark assumptions are discussed separately

the macroeconomic implications of a resource discovery in an open economy this paper analyses the macroeconomic impact on an economy of the discovery of significant quantities of a natural resource the resource will be termed oil and the analysis is intended to be suggestive of the effects on the u k economy of the discovery of north sea oil and of possible policy responses our motivation is what appears to be an inconsistency between the commonly expressed view that north sea oil has generated unemployment by causing the exchange rate to appreciate2 and the contention of proponents of the new classical macroeconomics that the oil discovery creates no special macroeconomic problems 3 in order to abstract from microeconomic questions we shall assume that oil is perfectly tradable and that there are no extraction costs 4 we also assume that the foreign currency oil price is exogenous and rises at the foreign interest rate the effect of these assumptions is that for the economy as a whole the oil discovery can be considered as a foreign exchange windfall of fixed magnitude and we define the term oil revenue in a permanent income sense as the infinite term foreign exchange annuity value of this windfall oil revenue as defined is independent of depletion policy it accrues whether or not depletion is occurring at any date since it includes capital gains on the oil stock and depends in no way on whether the oil is exported or used domestically it will be assumed throughout that the economy operates with a flexible exchange rate and that international capital mobility is perfect at the date of discovery the economy is assumed to be at zero inflation full employment with both current and capital accounts balanced we are primarily interested in the dynamics of adjustment to the oil discovery but comparative static analysis5 provides a convenient point of departure for this purpose only we suppose that depletion is managed so as actually to realise the oil revenue each year if all the oil revenue is saved then there are no effects on demand prices or

a note on fiscal policy under flexible exchange rates abstract the paper studies the effects of fiscal policy under flexible exchange rates the demand for real money balances in terms of the expenditure basket of goods is a function of income in terms of the same basket it turns out that fiscal expansion is expansionary neutral or contractionary in the money wage model depending on whether the income elasticity of the demand for money is smaller than equal to or greater than one the price of domestic goods rises is unchanged or declines in this model depending on whether the income elasticity is smaller than equal to or greater than one

does increasing women s schooling raise the schooling of the next generation the positive cross sectional relationship between the schooling of mothers and their children is substantially biased upward due to correlations between schooling and heritable ability as well as assortative mating an increase in the schooling of women would not have beneficial effects in terms of the schooling of children increased maternal schooling leads to reduced home time for mothers anticipating the consequences of investing in women s schooling requires attention to the role that schooling plays in the marriage market as well as to opportunities in the labor market for women

does sample selection bias affect the effect of family background on the returns to schooling evidence from korea this article examines the effect of family background on the returns to schooling in korea in doing so sample selection bias is controlled as the probability of being employed is affected by the schooling of family members the results of this study are different from previous studies which did not consider sample selection bias while the effect of family background on the returns to schooling was obvious in previous studies it is weakened with the control of sample selection bias this phenomenon is particularly strong for the wife moreover controlling sample selection bias increases the downward bias due to measurement error thus it is concluded from these findings that sample selection bias should be controlled to accurately estimate the effect of family background on the returns to schooling

family background and the estimated return to schooling earnings regressions for married and cohabiting swedish males in 1993 indicate that controlling for family background reduces the measured return to education by about 9 percent net of measurement error bias the swedish evidence is generally consistent with the hypothesis that family background effects are primarily a result of an efficient marital sorting

sample selectivity models for away from home expenditures on wine and beer the impact of household characteristics on away from home wine and beer weekly expenditures in the usa is examined results imply that higher income households without children and headed by an older white and higher educated individual spend more on wine away from home than do others on the other hand smaller midwestern and western households without children and headed by a younger and white individual spend more on beer away from home than do others

changes in the labor supply behavior of married women 1980 2000 using march current population survey data we investigate married women s labor supply from 1980 to 2000 we find a large rightward shift in their labor supply function for annual hours in the 1980s with little shift in the 1990s these shifts account for most of the slowdown in the growth of labor supply during this period a major development was the dramatic decrease in the responsiveness of married women s labor supply to their own and husbands wages their own wage elasticity fell by 50 56 while their cross wage elasticity fell by 38 47 in absolute value

trends in the gender earnings differential in urban china 1988 2004 this paper analyzes changes in the gender earnings gap in urban china over the period 1988 2004 using urban household survey data the mean female male earnings ratio declined from 86 3 to 76 2

productive government expenditures and long run growth the purpose of this paper is to review some of the recent developments in endogenous growth models specifically our focus is on the growth effects of productive government spending in dynamic general equilibrium models we use a simple overlapping generations model as our basic framework and illustrate the role of taxes and spending we then examine several related issues nonrivalry in publicly provided goods existence and uniqueness of competitive equilibrium endogenous public policy ways of financing public expenditures composition of publicly provided goods and services and private alternatives finally we review some empirical results related to output elasticity of public capital and educational expenditures

labour market segmentation a local labour market analysis using alternative approaches earlier studies have generally attempted to establish the presence or otherwise of labour market segmentation using a single technique using data drawn form the british social and economic life initiative sceli for six local labour markets this paper tests for segmentation using four different methods of analysis a simple career non career model cluster analysis and switching regressions the results in general suggest that explanatory power is not improved by analysing the labour market in different segments but this simple career model points to higher rewards for given characteristics in the career sector and the results of the switching regression model are consistent with duality in one of the six markets

returns to education a further international update and implications this paper updates evidence on the returns to investment in education by adding estimates for new countries and refining existing estimates to bring the total number of country cases to over 60 the new cross country evidence confirms and reinforces earlier patterns namely that returns are highest for primary education the general curricula the education of women and countries with the lowest per capita income the findings have important implications for directing future investment in education which for efficiency and equity purposes should concentrate on these priority areas

labor market integration in urban ethiopia 1994 2004 abstractan analysis of panel data on individuals in a random selection of urban households in ethiopia reveals large sustained and unexplained earnings gaps between public and private and formal and informal sectors over 1994 2004 at the same time we find first that the rate of mobility increased in the two pairs of sectors sample transitions rates grew across survey waves while state dependence in sector choice decreased second the correlation between sector choice and earnings gaps increased over the same period in particular the correlation between comparative earnings and selection into the informal sector was high throughout the survey decade and increased in magnitude over the second half of the period these results suggest that ethiopia s urban labor markets might be integrating

pension design with a large informal labor market evidence from chile this article investigates the fiscal and welfare trade offs involved in designing a pension system when workers can avoid contributing by working informally using a life cycle model of labor supply and saving decisions i structurally estimate preferences and earnings opportunities in the formal and informal sectors using data on chilean households i find limited support for formal jobs rationing instead mandatory pension contributions significantly encourage informality policy experiments show that chile could lower minimum pension spending by 23 while guaranteeing the same income to retirees if the minimum pension s implicit tax rate was increased to 60

formal measures of the informal sector wage gap in mexico el salvador and peru using comparable micro level data from three countries we ask what type of person works in the informal sector and whether informal workers earn lower wages than observationally equivalent workers in the formal sector the characteristics of informal workers are similar across countries surprisingly when we control for these personal characteristics we find a significant wage premium associated with formal employment in el salvador and peru but a premium associated with work in the informal sector in mexico a model of endogenous selection offers little help in explaining the differences in wage patterns the research casts doubt on the received wisdom that the informal sector always and everywhere is a poorly paid but easily entered refuge for those who have no other employment opportunities this abstract was borrowed from another version of this item

gender wage inequality during sri lanka s post reform growth a distributional analysis abstract this paper investigates gender wage inequality in sri lanka during 1992 2014 a period of robust economic growth following pro market reforms the gap in mean wages between men and women decreased steadily over this period unconditional quantile regression reveals the decline in gender wage inequality was driven by the upper half of the distribution and was due to improvements in women s observable human capital yet the pay structure became more unequal indicating widening gender gaps in the returns to labor market characteristics and in unobservable determinants of wages the gender gap in pay structure widened disproportionately in the lower half of the distribution coinciding with falling absolute and relative returns to women in manufacturing industries and production occupations facing greater international competition the study also demonstrates selection bias underestimates the gender wage gap and overestimates the gains in equality over time factors that hinder gender equality in the labor market are discussed along with policy implications

economic interpretations of intergenerational correlations science itself for example see galton s 1869 study of the eminence of relatives or his 1889 analysis of the heights of parents and children but extensive use of economic theory to interpret these correlations is much more recent using basic economic concepts such as supply demand investment incentives missing markets and so on theorists hope to explain how and why status is correlated across generations economic theory might provide a unified treatment of a variety of socioeconomic indicators such as earnings income occupation or wealth or it might predict how taxes subsidies and economic regulation affect intergenerational mobility and the operation of markets however while the subject matter earnings consumption wealth occupa tion is clearly interesting to economists it could nonetheless be the case that beyond basic questions of measurement economic theory has not improved our understanding of intergenerational mobility goldberger 1989 is quite explicit in this contention by emphasizing the distinction between genes and environment and by using statistical theory as its main analytical tool the paper by samuel bowles and herbert gintis in this issue implicitly concurs with goldberger we take this challenge very seriously what characterizes an economic approach to mobility while biologists and bowles and gintis distinguish endowments and investments by their source genetic versus environmental factors one focus of economic theorists is motiva

human capital accumulation and endogenous public expenditures in this paper we present an overlapping generations model where individuals accu mulate human capital through formal schooling we model the role of the public sector in schooling as one of collecting taxes from households and providing inputs to the learning technology public expenditures on schools are determined endogenously under plausible restrictions our model s predictions qualitatively match the observations on schooling pub lic expenditures on education and student teacher ratios jel classification el 3 e62 accumulation de capital humain et depenses publiques endogenes dans ce memoire les auteurs presentent un modele de generations qui se chevauchent ofu les individus accumulent du capital humain via l education formelle le r6le du secteur public dans l education est defini comme celui de collecteur d imp6ts aupres des menages et de fournisseur d intrants dans la technologie d apprentissage les depenses publiques en education sont determinees de maniere endogene a partir de restrictions plausibles les predictions du modele s arriment qualitativement aux observations sur le monde scolaire aux depenses publiques en educa tion et aux ratios 6leves enseignants

inequality and attainment in a dual labor market models of wage determination and sector attainment are estimated for a cohort of young men in a dual labor market neoclassical economic vs dual labor market views on market equilibrium are contrasted although schooling is rewarded similarly in the primary and secondary sectors other results support the dual labor market view that employment in the primary sector is rationed via a queuing mechanism

earnings schooling and economic reform econometric evidence from hungary 1986 2004 how does the relationship between earnings and schooling change with the introduction of comprehensive economic reform this article sheds light on this question using a unique data set and procedure to reduce sample selection bias the evidence is from consistently coded nonretrospective data for about 4 million hungarian wage earners returns to skill increased 75 percent from 1986 to 2004 that is during the period stretching from communism to full membership in the european union the winners were those with a college or university education and those employed in the services sector which here excludes those in public services the reform losers were those in construction and agriculture those with only a primary or vocational education who experienced a decline in returns to their education and younger workers who acquired most of their education after the main reforms were in place

informal employment in developing countries opportunity or last resort there is an ongoing debate among researchers and policy makers whether informal sector employment is a result of competitive market forces or labor market segmentation more recently it has been argued that none of the two theories sufficiently explains informal employment but that the informal sector shows a heterogenous structure for some workers the informal sector is an attractive employment opportunity whereas for others rationed out of the formal sector the informal sector is a strategy of last resort to test the empirical relevance of this hypothesis we formulate an econometric model which allows for several unobserved segments within the informal sector and apply it to the urban labor market in cote d ivoire

child care costs as a barrier to employment for single and married mothers because women typically serve as primary care providers for their children female labor force participation behavior is likely to be affected significantly by the costs associated with replacing maternal care with nonmaternal care while some evidence of this phenomenon exists in the economics literature discrepancies across studies make it difficult to provide conclusive evidence of the employment effects of these child care costs this paper uses an improved sipp survey design to present new evidence regarding the degree to which child care prices impede mothers employment behavior with additional evidence of the difference in these elasticities across marital status empirical technique and equation specification this permits linking this paper to the existing evidence drawing the conclusion that child care prices impede mothers employment behavior significantly with single mothers exhibiting less responsiveness in their labor force participation behavior to child care price changes than marri

anticipated budget deficits and the real exchange rate this paper explores the relationship between government budget deficits and the real exchange rate while the conventional view is that a deficit generates real exchange rate appreciation the experience of many small economies appears to contradict this belief in this model the impact of an announced future deficit depends on the elasticity of intertemporal substitution if it is high an announced deficit gives rise to immediate real exchange rate appreciation a deterioration in the trade balance and a fall in welfare of current generations when a low elasticity of intertemporal substitution exists however an announced deficit may generate a real depreciation with the opposite impact on the trade balance and welfare moreover in this case the announcement of a future deficit will increase the intertemporal volatility of the real exchange rate but leave its average value unaffected

segmented labour markets theory and evidence this paper examines the possibility of accepting the labour market segmentation approach as a valid alternative to the classical and neo classical analysis of labour markets it consists of three main parts the urst part contains a historical analysis of both the distant and recent origins of the labour market segmentation hypothesis part two outlines the central ideas of both segmentationalists and radical theorists who attempted to explain the fragmented nature of labour markets and the importance of institutional and social inuuences upon pay employment and mobility of individual workers between different labour market sectors the third part examines the case for labour market segmentation using four alternative techniques and discusses the issue of mobility among different labour market segments it is thereby concluded that the lack of agreement among the segmented labour market theorists on both theoretical and methodological issues has prevented them from developing a consistent and convincing argument based on veriuable empirical evidence to validate their thesis

testing spanish labour market segmentation an unknown regime approach this paper studies the existence of two differentiated segments primary and secondary in the spanish labour market for this a methodology switching regression model with unknown regimes is used which on the one hand does not demand a priori demarcation of segments and on the other enables the allocation of workers to the segments to be treated as a factor endogenous to the model itself and closely connected with the wage setting mechanisms operating in the segments the empirical results show that the assignment to segments is not random and that there are substantial differences in the wage determination process between the two sectors furthermore the model estimated has allowed analysis of the ex post composition of the segments and corroboration to a large extent of the predictions of the dual labour market theory

family ties and labor markets in the united states and brazil we use comparable surveys from brazil and the united states to examine vertical and horizontal connections between families motivated by a model of assortative mating and intergenerational transmission of schooling and earnings we include the schooling of relatives in male wage equations we find that the effect offather in law s schooling is larger than the effect offather s schooling in brazil while the opposite is observed in the united states we interpret these effects as indicators of unobservable worker characteristics with differences in assortative mating and female labor market activity explaining the differences in the apparent effect of fathers and fathers in law in the two countries

changes in the structure of earnings during the polish transition abstract we document changes in the structure of earnings during the economic transition in poland we find that inequality in labor earnings increased substantially from 1988 to 1996 a common view is that the reallocation of workers from a public sector with a compressed wage distribution to a private sector with much higher wage inequality accounts for the bulk of increased earnings inequality during transition see e g the models of aghion and commander 1999 aghion philippe commander simon 1999 on the dynamics of inequality in the transition economics of transition 7 275 2898 and commander and tolstopiatenko 1998 commander simon tolstopiatenko andrei 1998 the role of unemployment and restructuring in the transition in commander simon ed enterprise restructuring and unemployment in models of transition the world bank washington pp 169 192 however our decomposition of the sources of the increase in inequality suggests that this compositional effect accounts for only 39 of the increase fully 52 of the increase is due to the increase in the variance of wages within sectors that is earnings inequality within both the private and public sectors grew substantially and by similar amounts this is consistent with prior work suggesting that even state owned enterprises in poland moved towards competitive wage setting as they restructured see e g pinto et al 1993 pinto brian belka marek krajewski stefan 1993 transforming state enterprises in poland evidence on adjustment by manufacturing firms brookings papers on economic activity 213 70 commander and dhar 1998 commander simon dhar sumana 1998 enterprises in the polish transition in simon commander ed enterprise restructuring and unemployment in models of transition the world bank washington pp 109 142 a substantial part of the increase in earnings inequality was between group due largely to increased education premiums however changes in inequality within education experience gender groups account for about 60 percent of the increase in overall earnings inequality the increases in within group inequality were very different across skill groups with much larger increases for highly educated workers these patterns hold in both the private and public sectors although increases in education premiums were somewhat greater in the private sector

sequential migration theory and evidence from peru abstract the standard human capital model of labor migration has been successful in explaining several empirical regularities of the migration process however there are a number of empirical facts that have not yet been explained or empirically tested among them that migrants usually perform more than one move in their lifetime return migration accounts for a very important share of total migration rates and there is a high positive correlation between in and out migration rates in the more advantageous regions this paper presents both a simple model explaining these facts and an empirical analysis using data from peru

informal employment in developing economies multiple heterogeneity abstractthis paper contributes to the literature on the nature of informal employment in developing economies drawing on the model with essential heterogeneity it offers a list of scenarios describing the behavioural patterns which informal workers follow the list nests not only classical patterns of a rationed formal sector versus an integrated labour market but also different patterns of rationing using non parametric techniques and data from a few african economies with different levels of development the paper proposes empirical case studies fitting various informality schemes developing economies show disparate patterns of allocation of workers and various patterns of rationing

kinship ties social networks and segmented labor markets evidence from the construction sector in egypt abstract this paper tests for rationing of entry into craft occupations in the construction labor market in egypt and investigates whether entry is rationed according to regional origin and access to kinship and other social networks i use a modified version of roy s model of occupational choice which allows for the existence of costs of entry into craft occupations data from a 1988 survey of construction workers are used to estimate the model and test for rationing the results confirm the existence of rationing according to a worker s regional background but are inconclusive with respect to kinship ties and social networks

can an oil discovery lead to a recession a comment on eastwood and venables in a recent paper in this journal eastwood and venables ev present an analysis of the macroeconomic consequence of an oil discovery in an open economy model which assumes perfect international capital mobility rational exchange rate expectations and sluggish adjustment of domestic goods prices in this note the authors attempt to reconcile this apparent contradiction in the literature in particular the authors show that ev s results hinge crucially on their failure to allow for a direct impact of higher oil wealth on money demand even when all the oil revenue accrues to the government this should raise private sector wealth through the anticipated reduction in future tax liabilities in any case the authors find it difficult to conceive a situation in which an oil discovery will raise spending but leave money demand permanently unaffected the purpose of this note is to show the important implications of this observation for the effects of an oil discovery when appropriate monetary accommodation does not take place

caste discrimination and transaction costs in the labor market evidence from rural north india abstract this paper is an empirical attempt to quantify caste based discrimination in the labor market using household data taken from rural north india in the regression analysis transaction costs associated with entry into the labor market and reservation wages are estimated simultaneously along with market wages the estimation results provide evidence of the existence of transaction costs in the labor market and discrimination against backward classes with regard to access to regular employment in line with previous studies the results suggest that the achievements of india s reservation policy so far have at best been limited in addition a comparison between the estimates from the model employed in this paper and conventional reduced form approaches shows that discrimination in labor market entry is likely to be underestimated in the conventional reduced form approaches

human capital and earnings distribution in a developing country the case of prerevolutionary nicaragua this article examines how different patterns of human capital investments affect household earning and its major components in rural and urban areas of developing countries 1865 women aged 15 45 in the following 3 areas of prerevolutionary nicaragua supply data the central metropolis other urban areas and rural areas other urban area households have the highest average total income central metropolis households have the next highest and rural areas have the lowest urbanization is positively associated with both mean level of total earnings and with total income the authors examine 5 human capital variables womens schooling mens schooling womens health mens health and average household nutrition another variable cumulative work experience became apparent during modeling for women schooling increases labor force participation probability in urban but not rural areas nutrition has a positive impact in all 3 regions and past work experience has a significant impact health status has no effect standard human capital variables do not differ significantly between the central metropolis and other areas but sharply contrast between urban and rural areas for men there is less potential for increasing labor force participation through human capital investment although past work experience schooling and nutrition show significant effects the authors test 10 simulations of hypothetical changes in human capital distributions which involve increasing education improving nutritional status and improving health 4 conclusions are drawn 1 since changes from human capital variables on regional earnings distributions cannot be discerned from individual relations simulation is a useful tool for investigation 2 estimates of the gains toward distributional goals are needed compared to other investments 3 directing policies toward the target group is more cost effective than general measures and 4 policies should be targeted for households low in the overall distribution not just the poorest households

wage effects of the move toward free markets in east germany this analysis of data from the german socio economic panel soep for the years 1989 91 illuminates important changes in the structure of wages that were occurring in the former east germany during its transition toward a capitalist economy and changes that are probably occurring in other countries in eastern europe as well under the new capitalist wage regime workers realized significant returns to schooling gained under socialism but no significant returns to work experience because work experience is the largest element in the human capital of older workers their wages fell under the new system and the results suggest that their wages will continue to fall relative to those of younger workers generous transfer payments from western germany may prevent an absolute decline in living standards of these workers older workers in other eastern countries however will have no such social assistance and their living standards will probably fall

literacy sharing assortative mating or what labour market advantages and proximate illiteracy revisited abstract this paper explores the relationship between household literacy and the labour market outcomes of illiterate household members which basu narayan and ravallion 2002 report using household income and expenditure data from bangladesh bnr attribute a considerable wage premium for proximate illiterate women in off farm employment to labour productivity gains from intra household literacy sharing this wage premium also suggests that women may be more efficient recipients of literacy externalities than men we propose that any such relationship might not be due to higher labour productivity but may have other explanations such as systematically different and unobserved attributes of illiterate females married into literate households we also pay attention to the negative selection of illiterate females into non farm wage employment which contrary to received wisdom suggests that household literacy may not be unambiguously progressive for females we propose that the widely reported finding that

do cognitive test scores explain higher u s wage inequality using microdata from the 1994 1998 international adult literacy survey for nine countries we examine the role of cognitive skills in explaining higher wage inequality in the united states we find that while the greater dispersion of cognitive test scores in the united states plays a part in explaining higher u s wage inequality higher labor market prices i e higher returns to measured human capital and cognitive performance and greater residual inequality still play important roles and are on average quantitatively considerably more important than differences in the distribution of test scores in explaining higher u s wage inequality

are there dual labor markets in chile empirical evidence abstract in this paper we use a switching regression method to test the hypothesis that segmentation in the chilean labor market exists the results support the labor segmentation hypothesis and consequently they contradict those of corbo and stelcner 1983 the explanation for this is that we do not make any a priori definition of the population as corbo and stelcner do in fact our results show that any a priori definition of the sample will lead to rejecting the segmentation hypothesis

demand side and supply side explanations for barriers to labor market mobility in developing countries the case of guatemala the hypothesis of labor market segmentation is based on the existence of barriers to mobility between jobs because of these barriers wages of workers with similar characteristics are different from wages that would result from competition though the labor market segmentation hypothesis concerns mobility and access there have been few direct tests of the existence of restricted mobility in the labor market rather tests of labor market segmentation have focused on the presumed effects of restricted mobility in particular the presence of different reward structures across sectors is viewed as support for the segmentation hypothesis as a result much of the literature has concentrated on the appropriate comparison of the wages of workers by including controls for observable and unobservable characteristics

globalization and the gender wage gap there are several theoretical reasons why globalization will have a narrowing as well as widening effect on the gender wage gap but little is known about the actual impact except for a number of country studies the author provides a cross country study of the impact of globalization on the occupational gender wage gap based on the rarely used but most far ranging survey of wages around the world the international labour organization s october inquiry this annual survey was started in 1924 and contains a wealth of information on wages and the gender wage gap for the period 1983 99 there is information on the gender wage gap in 161 narrowly defined occupations in more than 80 countries around the world the author finds the following i the occupational gender wage gap appears to be narrowing with increases in gdp per capita ii there is a significantly narrowing impact of trade and foreign direct investment fdi net inflows on the occupational gender wage gap for low skill occupations both in poorer and richer countries and for high skill occupations in richer countries iii there is no evidence of a narrowing impact of trade but there is evidence of a widening impact of fdi net inflows on the high skill occupational gender wage gap in poorer countries iv wage setting institutions have a strong impact on the occupational gender wage gap in richer countries

capital accumulation income distribution and endogenous fertility in an overlapping generations general equilibrium model abstract this paper studies the intertemporal relationships among population growth income distribution inter generational social mobility skill composition of the labor force and household income in an overlapping generations general equilibrium model that aggregates household decisions regarding fertility savings and investment in human capital of children it shows that as a consequence of endogenous fertility the equilibrium path attains steady state from the second generation income tax transfer child taxation and social security taxation policies that can be devised to affect these variables are also analyzed the model provides a structural explanation for the inverse household income child quantity and negative child quality quantity relationships that are observed in developing countries it also shows that group interests may hinder the emergence of perfect capital markets with private initiatives

a test of dual labor market theory despite substantial differences in their views of the appropriate policy response to the existence of poverty neither the proponents of dual market theory nor its critics have proposed potentially conclusive tests of the dual market hypothesis this paper presents a test of the two central propositions of dual market theory 1 the existence of two distinct labor markets with different wage setting mechanisms and 2 the existence of barriers to mobility between the labor markets we find considerable support for both hypothesis estimation of a switching model of wage determination with unknown regimes yields two distinct wage equations the one which most workers are associated with closely resembles the standard human capital regression with significant returns to education and experience the other equation is flat with no returns to human capital these two equations resemble the predictions of dual market theory for the primary and secondary markets respectively further we present evidence that at least some non white workers are involuntarily confined to the secondary market this crowding of minority workers into the low wage labor market accounts for a substantial portion of white non white wage differences we interpret these results as providing empirical support for the dual market hypothesis and for recent theoretical work on efficiency wagemodels in addition combining the efficiency wage argument with the observation that much of the white non white wage difference is explained by the exclusion of non whites from the primary sector suggests an explanation for the persistance of wage differences this abstract was borrowed from another version of this item

women in transition changes in gender wage differentials in eastern europe and the former soviet union under state socialism women fared relatively well in the labor market female male wage differentials were similar to those in the west and female labor force participation rates were among the h

the formal sector wage premium and firm size abstract we show theoretically that when larger firms pay higher wages and are more likely to be caught defaulting on labor taxes then large high wage firms will be in the formal and small low wage firms will be in the informal sector the formal sector wage premium is thus just a firm size wage differential using data from ecuador we illustrate that firm size is indeed the key variable determining whether a formal sector premium exists

economic reforms and gender inequality in urban china abstractthis study jointly examines the gender earnings gap and employment rate in urban china using a longitudinal data set that covers the period of 1989 2004 consistent with previous studies we find that gender earnings gap increased by 5 percentage points between 1989 and 1997 since then its changes have become much more moderate actually after controlling for observed characteristics the size of the earnings gap in 2004 is almost the same as it was in 1997 the widening earnings gap in the 1989 1997 period was accompanied by a rising employment gap between men and women particularly among those aged 45 and older the stability in the gender earnings gap in the later years co occurred with a decline in the employment of less educated women

gender segregation and wage gap an east west comparison this paper discusses the implication of recent results on the structure of gender wage gaps in transition economies for the literature on gender segregation differences in employment rates of low wage women driven by initial transition policies may be responsible for different wage penalties to predominantly female occupations new evidence presented here also suggests that the introduction of western type anti discrimination policies has had little immediate effect on the structure of female male wage differences jel j3 j7 p3

increasing returns human capital and the kuznets curve abstract we present a simple model of human capital accumulation which generates the kuznets curve as an equilibrium outcome the central ingredient that helps generate the kuznets curve in the model is what we call short run increasing returns to scale in the learning technology the learning technology exhibits increasing returns to scale but only in the short run since one of the factors of production time is bounded above by the endowment we show that short run increasing returns to scale is necessary to obtain the kuznets curve but not sufficient

marriage markets and assortative mating with household public goods theoretical results and empirical implications this paper analyzes marriage market equilibria when the gains from marriage result from joint consumption of household public goods assuming transferable utility within marriage the paper proves that marriage markets will be characterized by positive assortative mating on wealth when spouses differ only in endowments and the gains to marriage result only from public goods when spouses differ in wages and household public goods are produced at home the results imply offsetting effects with public good economies creating an incentive for positive assortative mating on wages and gains from specialization creating an incentive for negative assortative mating on wages the results help explain the persistent lack of empirical support for becker s prediction of negative assortative mating on wages and have implications for empirical analysis of all joint living arrangement decisions

taxation wage controls and the informal sector abstract in this paper we study the effects of taxation and wage controls in a developing economy with an informal sector for that purpose we build a model with firm heterogeneity in which a formal and an informal sector endogenously emerge in some productive branches of the economy based on the assumption that the marginal cost of tax and regulation evasion increases with the size of the firm our model offers an explanation for the observed discontinuity in the distribution of firms size the missing middle three forms of dualism scale wage and evasion consistent with market segmentation are obtained the model accounts for the presence of waiting unemployment that seems particularly pervasive in urban regions a computable general equilibrium cge model for cameroon is built incorporating these features various reforms of the tax and regulation system are simulated and their effects on the extent of the informal sector are analyzed

is there an informal employment wage penalty evidence from south africa abstract we estimate the wage penalty associated with working in the south african informal sector to this end we use a rich data set on non self employed males that allows one to accurately distinguish workers employed in the informal sector from those employed in the formal sector and link individuals over time implementing various econometric approaches we find that there is a gross wage penalty of a little over 18 for working in the informal sector however once we reduce our sample to a group for which we can reasonably calculate earnings net of taxes and control for time invariant unobservables the wage penalty disappears

an investigation of the labor market earnings of panamanian males evaluating sources of inequality this paper presents empirical evidence on the determinants of labor market earnings and inequality for males in panama using newly available microdata we estimate earnings equations based on the measurement framework of mincer 1974 and compare them with those for other countries at various stages of economic development we present evidence on two aspects of inequality in less developed economies labor market segmentation and social stratification we present tests of the segmentation hypothesis including several of the dual labor market hypotheses and discuss their inherent ambiguity we also present evidence on the importance of family background for earnings determination and educational attainment

the reemergence of segmented labor market theory according to dual labor market theory the labor market can be usefully described as consisting of two sectors a high wage primary sector with good working conditions stable employment and substantial returns to human capital variables such as education and experience and a low wage secondary sector with the opposite characteristics moreover primary jobs are rationed that is not all workers who are qualified for primary sector jobs and desire one can obtain one finally the sector of the labor market in which an individual is employed directly influences his or her tastes behavior patterns and cognitive abilities thus the dual labor market model or more generally segmented labor market models is simultaneously a description of the income distribution a claim about the absence of market clearing and a radical departure from the standard neoclassical assumption of fully rational actors and exogenously determined preferences while this last element is potentially the most interesting even its proponents fail to give it the attention it deserves and related work has not been incorporated into the segmented labor market model in this paper we therefore concentrate on the first two elements of the model segmented labor market theory was sufficiently popular in the late 1960 s and early 1970 s to be taken seriously by prominent mainstream labor economists however two influential and largely negative reviews glenn cain 1976 michael wachter 1974 portrayed the segmented labor market hypothesis as largely atheoretical and based at best on questionable statistical analysis it seems fair to say that even sympathetic mainstream critics felt that key insights from the segmented labor model could be incorporated into neoclassical analysis and that the remaining elements of the model did not form a sufficiently coherent theory to pose a challenge to the neoclassical model whatever the merits of this perception it is clear that advocates of the segmented labor market approach did not develop a formal theory which conformed to the standards of mainstream economists with some notable exceptions michael piore 1975 david gordon 1972 the work was atheoretical moreover the empirical methods used tended to fall outside the norm for example interviews observational studies and historical and institutional analysis advocates of the segmented labor market perspective mostly radical political economists chose instead to develop their own research program outside the mainstream the reemergence of segmented labor market theory is linked with the reversal of these two tendencies the theory has been pursued by economists using modern tools of imperfect information theory and state of the art econometrics as a result the approach has again attracted the attention of the mainstream even a few years ago it would have been a clairvoyant observer who predicted that lawrence summers would be working on a theoretical model of labor market duality with jeremy bulow 1986 that robert solow would count among his recent work a dual market model with ian mcdonald 1985 and that james heckman would publish an article in which he undertook an empirical test of a dual market model failed to reject the model and then devoted much of the rest of the article to attacking his and other tests of the dual labor market view see his article with v joseph hotz 1986 since the theoretical developments are largely associated with efficiency wage and departments of economics university of california berkeley ca 94720 and nber and boston university 270 bay state road boston ma 02215 and nber respectively this study was supported in part by nsf grant no ses 8606139 lang acknowledges support from a sloan faculty research fellowship dickens acknowledges support from the institute of industrial relations at berkeley

geography of savings in the german occupational pension system burger c geography of savings in the german occupational pension system regional studies the german pension reform of 2001 significantly decreased the level of public pensions for future generations and created instead voluntary supplementary plans this paper analyses the regional structure of savings amounts in the case of occupational pensions using a unique commercial dataset containing the records of 286 000 employees joining between the years 2002 and 2009 the analysis applies different location definitions in explaining financial behaviour the differences in the relationship between metropolitan and non metropolitan east and west and north and south are explained with the geographical nature of decision contexts implications are drawn on human behaviour and geography

intergenerational income mobility among daughters new evidence on daughters intergenerational mobility in a framework that encompasses women not in the labor force using broader measures of economic status than just the women s own earnings is presented and the role of husbands earnings is highlighted a parallel analysis of sons mobility is performed intergenerational transmission of income status may be weaker for daughters than for sons but is still quite substantial assortative mating is an important element in the intergenerational transmission process

the performance of industrial sector voluntary climate programs climate wise and 1605 b abstract corporate voluntary climate programs have had limited evaluation the self selection of participants an essential element of such initiatives poses challenges to researchers because the decision to participate may not be random and may be correlated with outcomes this study aims to gage the environmental effectiveness of the industrial sector elements of two early voluntary climate change programs with established track records the u s environmental protection agency s climate wise and the u s department of energy s voluntary reporting of greenhouse gases program 1605 b particular attention is paid to the participation decision and how various assumptions affect estimates of program outcomes using propensity score matching methods applied to plant level census data overall the effects are modest reductions in fuel and electricity expenditures are no more than 10 percent and probably less than 5 percent virtually no evidence suggests either program has a statistically significant effect on fuel costs some evidence indicates that participation in climate wise led to a 3 5 percent increase in electricity costs that vanished after two years stronger evidence suggests that participation in 1605 b led to a 4 8 percent decrease in electricity costs that persisted for at least three years these results suggest that while voluntary programs can play some role in addressing climate change they are unlikely to bring about the kinds of steep reductions called for in the current debate

fiscal policy and the real exchange rate abstract this paper reconsiders some conventional notions about fiscal policy under flexible exchange rates using an extended version of the dornbusch overshooting model the extension allows for a long run link between output and the real exchange rate unanticipated permanent fiscal policy affects both current and long run output while the long run effect is always in the expected direction it is possible that the current effect is perverse both fiscal and monetary policy must cause either nominal exchange rate overshooting or perverse domestic interest rate effects the results suggest that real shocks are a potential source of high exchange rate variability

intergenerational mobility and marital sorting we use data from the german socio economic panel and the british household panel survey to estimate the extent of intergenerational economic mobility in a framework that highlights the role played by assortative mating we find that assortative mating plays an important role on average about 40 50 of the covariance between parents and own permanent family income can be attributed to the person to whom one is married this effect is driven by strong spouse correlations in human capital which are larger in germany than britain 2006 the authors journal compilation royal economic society 2006

the intergenerational transmission of education and equality of educational opportunity in east and west germany socialist societies often emphasized the abolition of traditional social classes to achieve this objective educational opportunities were at times actively managed and allocated to children of less educated parents what happened to these patterns after the demise of socialist rule in eastern europe we study the development of educational mobility after the fall of the iron curtain in east germany and compare the relevance of parental educational background for secondary schooling in east and west germany based on the data from the german mikrozensus we find that educational mobility is lower in east than in west germany and that it has been falling in east germany after unification while the educational advantage of girls declined over time having many siblings presents a more substantial disadvantage in east than in west germany

marital matching and earnings evidence from the unmarried population in sweden social scientists have devoted substantial research to economic basis for matching of men and women in marriage a common feature of existing studies is their reliance on samples of married couples the principal shortcoming of spouse data is that spouses earnings correlations are contaminated by the partners behaviors and other events that occur after marriage and affect their earnings this study addresses that problem by exploiting a longitudinal data file from the swedish population by selecting a sample of married couples in a given year we retreat through the file to years before the marriage using data from the spouses single years we apply the correlation methodology to their earnings evidence from the model supports positive assortative mating

gender segmentation at work in china s privatized rural industry some evidence from shandong and jiangsu abstract in this paper we argue that labor segmentation exists along gender lines in the newly privatized township and village enterprises in rural china the results based upon surveys of workers enterprise managers and local officials indicate that women are segregated into production type jobs in certain industries have less control over their work do not receive a return to experience and are adversely affected by wage discrimination there is a clear gender bias in favor of men in share holding a new and important form of workplace benefit that confers wealth and affects control within the workplace and thus privatization has contributed to gender segmentation the results support the general argument that the process of economic transition is not gender neutral

the transition in east germany when is a ten point fall in the gender wage gap bad news the gender wage gap in east germany has narrowed by 10 percentage points in transition but women have experienced much more severe employment difficulties than men using the german socio economic panel for 1990 94 i show that on balance women have lost relative to men almost half the relative wage gain is due to exits from employment of the low skilled who are disproportionately women the female employment decline is not primarily voluntary more than half the gender gap in the hazard rate from employment reflects a general fall in demand for low skilled workers reduced child care plays no role

what determines success examining the human financial and social capital of jamaican microentrepreneurs abstract this research examines the performance of 215 informal microenterprises in jamaica studying the influence of human capital social capital and financial capital of the owners on their business profitability understanding the importance of particular relationships that result in successful micro businesses is important for a number of reasons first among many developing countries the growth of microenterprise provides the most visibly vibrant and growing economic activity although considerable effort and resources are being directed toward microenterprise promotion schemes empirical research on the subject is quite limited second economies in developing countries mirror many of the social and institutional problems existent in urban economically disadvantaged areas of the united states and other developed countries for these areas microenterprise may be an essential component of urban renewal and community development this study helps in identifying important characteristics of social and individual attributes that may be relevant to those attempting to strengthen this subsector finally this study seeks to provide insight into a dimension of microbusiness research for which there are limited data specifically the role that social capital plays among practicing entrepreneurs and owners this research found that different structural environments even within a singular and small economy may considerably alter the rates of return to human social and financial capital as a result the analysis of enterprises includes segmentation according to both the usage or not of employees and the sophistication of the technologies used several factors were determined to enhance the profitability of the businesses in all categories vocational training for example demonstrated consistently strong and positive effects mother s high occupational status a proxy for socioeconomic status and years of experience in the business were also consistently positive and strongly associated with increasing profits although additional starting capital played an important role for both the businesses with and without employees increasing amounts failed to differentiate the success of those firms that were already operating in the higher technological tier obtaining a small business loan acted in a similar manner enhancing the profitability of all firms except those segmented into a high technological tier one interpretation of this finding is that the role of technological choice is extremely important and appears to dwarf that of varying amounts of starting capital social capital as operationalized by frequent church attendance and marital status of the owner was found generally to increase the profitability of the business the data demonstrate that social networks play an important role in the success of these businesses and that conditions in the highest tier utilize social capital in a somewhat unique manner

child care costs and family labor supply this paper presents a theoretical and empirical analysis of the effects of child care costs on family labor supply and the demand for market child care the model is a framework for cross section estimation of the effects of child care costs on labor supply and child care use it applies to households having young children requiring continuous care and in which both the mother and 1 other potential child care provider are present the 3 potential sources of child care are the mother the potential informal provider and the market using data from the 1980 baseline household survey of the employment opportunity pilot projects this empirical analysis uses a subsample of 6170 households in which there is a married woman under age 45 with her spouse present at the time of the survey at least 1 child under age 14 and nonmissing data on key variables results show that 1 higher market child care costs discourage women from working even when an informal source of care is available indicating that such informal care is an imperfect substitute for market care 2 a higher wage rate for the mother encourages her to work thus a higher wage rate increases the probability of using market child care 3 the number of children requiring care has a negative impact on the probability of the women working with the largest impact caused by younger children 4 nonwage income has a negative impact on the probability of the woman working and 5 black women are more likely to work than whites and are statistically more likely than whites to use market child care if they do work this family labor supply model predicts that the cost of market child care will affect household decisions on labor supply and child care use estimates of a qualitative choice model provide strong confirmation that child care costs affect such decisions the responsiveness of the labor supply of mothers to child care costs demonstrated in this study indicate that such subsidies do have their intended effect of encouraging labor supply the fact that a large proportion of current child care subsidies benefit primarily middle and upper income families via the income tax credit suggests that the labor supply effets of such subsidies may in practice be stronger for less needy families than for low income families employer subsidized child care may become an increasingly popular tool for attracting mothers into the labor force

the quality of schooling quantity alone is misleading although much research discusses the quantity of schooling as an effective impact on productivity and earnings most such research leaves out the idea of the quality of schooling which may cause biases in the estimated returns to schooling this paper consequently attempts to extend the standard mincerian approach to incorporate school quality as well as quantity it demonstrates how exclusion of quality in the standard procedure may cause biases in the estimated returns to years of schooling probably in the upward direction the paper explores the implications of this extension of the standard model for the case of young brazilian males it shows that the estimate of the private return to years of schooling using the preferred quality inclusive specification is only one half the estimate using the standard procedure indicating substantial upward bias in the standard estimates it further outlines a method for estimating a social return to quality and finds that it exceeds substantially the social return to quantity the paper then shows why this in turn suggests there may be an equity productivity trade off in schooling investments

swimming upstream trends in the gender wage differential in the 1980s using michigan panel study of income dynamics data for 1979 and 1988 we analyze how a falling gender wage gap occurred despite changes in wage structure unfavorable to low wage workers the decrease is traced to gender specific factors which more than counterbalanced changes in measured and unmeasured prices working against women supply shifts net of demand were unfavorable for women generally and hurt high skilled more than middle and low skilled women by analyzing wages we find support for the notion of a gender twist in supply and demand having its largest negative effect on high skilled women