lessons from the tequila crisis abstract this paper draws several important lessons from the tequila crisis of 1994 and 1995 the overriding lesson is that the dynamics of financial crises in emerging market countries differ from those in industrialized countries because institutional features of their debt markets differ several policy lessons for emerging market countries also emerge from the analysis 1 pegged exchange rate regimes are extremely dangerous 2 strong prudential supervision of the banking system is critical for prevention of financial crises 3 financial liberalization must be managed extremely carefully and 4 different policies are needed to promote recovery in emerging market countries than those that are applicable to industrialized countries

are ghettos good or bad spatial separation of racial and ethnic groups may theoretically have positive or negative effects on the economic performance of those groups we examine the effects of segregation on outcomes for blacks in schooling employment and single parenthood we find that blacks in more segregated areas have significantly worse outcomes than blacks in less segregated areas we control for the endogeneity of location choice using instruments based on political factors topographical features and residence before adulthood a one standard deviation decrease in segregation would eliminate one third of the black white differences in most of our outcomes

black residential centralization and the spatial mismatch hypothesis abstract black residential centralization is found to be an important determinant of black employment status when estimated across metropolitan areas mas to avoid neighborhood selection the effects are greatest in large mas for the young and elderly and for individuals with less than a college education instrumental variable iv estimates support ordinary least squares ols results black residential centralization can account for 48 62 of the black white employment differential among 18 30 year olds living in large mas when estimated together black residential centralization job centralization and segregation all have large effects but the effects of black centralization and job centralization are considerably larger

dual labor markets urban unemployment and multicentric cities a two sector model of urban employment is developed which focuses on the formation of a secondary sector in response to a primary sector demand shock the optimal location of this single firm sector is shown to give rise to a multicentric urban spatial structure conditions are then established under which the new labor market equilibrium involves both a decrease in unemployment and an increase in net income for those unemployed these results are extended to a case where all unemployment benefits are financed by local taxation of firms here it is shown that profit incentives may exist for the primary sector to subsidize entry of the secondary sector c 1997 academic press

evidence on discrimination in mortgage lending much of the controversy about whether mortgage lenders discriminate against minorities can be explained in terms of the confusion about how to define discrimination based on the legal definition careful studies of loan denial rates such as that done by the federal reserve bank of boston represent an appropriate method for testing for discrimination by lenders based on that study it is quite clear that lenders discriminate the fact that minorities have higher default rates on average than whites is irrelevant to the interpretation of the race coefficient in such models nonetheless more research on and discussion about the relationship between the race of the applicant and delinquencies defaults and losses would be desirable

nonparametric tests of market structure an application to the cigarette industry the revealed preference approach is used to construct a nonparametric test of the monopoly model and some simple generalizations of it and the test is applied to data for the cigarette industry it exploits the maintained hypothesis that variations in the excise tax charged on a package of cigarettes allow us to assess seller reactions to common exogenous variations in marginal cost results indicate that the monopoly hypothesis and other simple models that do not embody at least a moderate amount of competition serve as poor predictors of the effects of excise tax changes on cigarette prices sales and revenues copyright 1987 by blackwell publishing ltd

on the endogeneous formation of secondary employment centers in a city a new approach is proposed to explain the formation of secondary employment centers in a monocentric city specifically a large firm considers locating a new plant in a city where none of the existing businesses has a significative share of the labor force so that its location can be viewed as a secondary employment center the choice of this location results from the interplay between the process of competition on both the labor and land markets and the technological externalities generated by the proximity of the city center where other firms are located

job search and unemployment duration implications for the spatial mismatch hypothesis abstract this paper analyzes the relationship between unemployment duration and the spatial distribution of employment it builds on the spatial mismatch literature by analyzing the role of access in a job search framework a unique measure of access is created using municipal level employment growth and a matrix of commuting times for the pittsburgh metropolitan area individuals with more access to employment are found to have shorter unemployment spells the effect of access on unemployment duration is found to be sensitive to the specification of access

intrametropolitan variation in wage rates the case of atlanta fast food restaurant workers this paper utilizes a unique data base to provide some rare evidence on wage variation within a metropolitan area positively sloped wage gradients are found for both black and white employees of fast food restaurants in atlanta georgia blacks are found to work on that portion of the gradient where wage rates are lowest evidence on discrimination suggests that consumer prejudice affects the wages paid to black workers as distance from the central business district center increases the positive wage gradient effect is found to strongly dominate the negative effect on wages from greater consumer discrimination copyright 1994 by mit press

customer discrimination and employment outcomes for minority workers this paper investigates the effects of customer discrimination on the employment and earnings of minorities particularly blacks data are used from a new survey of employers in four large metropolitan areas in the united states our results show that the racial composition of an establishment s customers has sizable effects on the race of who gets hired particularly in jobs that involve direct contact with customers and in sales or service occupations race of customers also affects wages with employees in establishments that have mostly black customers earning less than those in establishments with mostly white customers

moving to opportunity in boston early results of a randomized mobility experiment this paper examines the short run impacts of a change in residential neighborhood on the well being of low income families using evidence from a program in which eligibility for a housing voucher was determined by random lottery we examine the experiences of households at the boston site of moving to opportunity mto a demonstration program in five cities families in high poverty public housing projects applied to mto and were assigned by lottery to one of three groups experimental offered mobility counseling and a section 8 subsidy valid only in a census tract with a poverty rate of less than 10 percent section 8 comparison offered a geographically unrestricted section 8 subsidy or control offered no new assistance but continued to be eligible for public housing our quantitative analyses of program impacts uses data on 540 families from a baseline survey at program enrollment a follow up survey administered l to 3 5 years after random assignment and state administrative data on earnings and welfare receipt 48 percent of the experimental group and 62 percent of the section 8 comparison group moved through the mto program one to three years after program entry families in both treatment groups were more likely to be residing in neighborhoods with low poverty rates and high education levels than were families in the control group however while members of the experimental group were much more likely to be residing in suburban communities than were those in the section 8 group the lower program take up rate among the experimental group resulted in more families remaining in the most distressed communities households in both treatment groups experienced improvements in multiple measures of well being relative to the control group including increased safety improved health among household heads and fewer behavior problems among boys experimental group children were also less likely to be a victim of a personal crime to be injured or to experience an asthma attack there are no significant impacts of either mto treatment on the employment earnings or welfare receipt of household heads in the first three years after random assignment

can black workers escape spatial mismatch employment shifts population shifts and black unemployment in american cities abstract this paper uses a spatial mismatch index that measures the extent to which residential and employment locations differ across a metropolitan area to determine whether the spatial separation of black residential locations and employment locations impacted black labor market outcomes from 1980 to 1990 it is found that between 1980 and 1990 unemployment rates for black workers were negatively affected by a growing divergence between black residential locations and metropolitan employment locations metropolitan employment shifts increased black unemployment rates by 0 63 to 4 32 percentage points while black population shifts did not fully offset the impact of employment shifts

tax policy and urban development evidence from the indiana enterprise zone program abstract this paper analyzes the effect of the indiana enterprise zone ez program on local employment and investment using a panel of local taxing jurisdictions as in other ez programs indiana s incentives favor capital relative to labor but the target of the capital incentive is unusual the stock of inventories using various estimation methods i estimate that zone designation initially reduces the value of depreciable personal property by about 13 percent but also reduces unemployment claims in the zone and surrounding community by 19 percent the value of inventories in indiana zones is 8 percent higher than it would be without the program

are emily and greg more employable than lakisha and jamal a field experiment on labor market discrimination we study race in the labor market by sending fictitious resumes to help wanted ads in boston and chicago newspapers to manipulate perceived race resumes are randomly assigned african american or white sounding names white names receive 50 percent more callbacks for interviews callbacks are also more responsive to resume quality for white names than for african american ones the racial gap is uniform across occupation industry and employer size we also find little evidence that employers are inferring social class from the names differential treatment by race still appears to still be prominent in the u s labor market jel j71 j64

does city structure affect job search and welfare we develop a model in which workers search efficiency is negatively affected by access to jobs workers location in a city is endogenous and reflects a trade off between commuting costs and the surplus associated with search different configurations emerge in equilibrium notably the unemployed workers may reside far away segregated city or close to jobs integrated city we prove that there exists a unique and stable market equilibrium in which both land and labor markets are solved for simultaneously we find that despite inefficient search in the segregated city equilibrium the welfare difference between the two equilibria is not so large due to differences in commuting costs we also show how a social planner can manipulate wages by subsidizing taxing the transport costs and can accordingly restore the efficiency

car ownership employment and earnings abstract we assess whether the positive relationship between car ownership and employment outcomes reflects a causal effect of auto ownership we match state level data on car insurance premiums and gas taxes to a microdata sample containing information on car ownership and employment outcomes in ols regressions that control for observable covariates we find large differences in employment rates weekly hours worked and hourly earnings between those with and without cars instrumenting for car ownership with insurance and gas taxes yields estimates of the employment and hours effects that are quite close to the ols estimates concerning wages instrumenting eliminates the positive impact of auto ownership

spatial mismatch and costly suburban commutes can commuting subsidies help proponents of the spatial mismatch hypothesis argue that job decentralisation harms low income residents of central cities because of barriers that limit their access to suburban labour markets such barriers can take the form of housing discrimination exclusionary zoning or long and difficult commutes this paper uses an urban equilibrium model of spatial mismatch to analyse the impact of commuting subsidies on the welfare of low income central city households with restricted mobility specifically it seeks to determine how effective such subsidies are at reducing the welfare impact of spatial mismatch while subsidised outward commuting is found to raise the welfare of the low income households the welfare gains are only a small portion of the welfare loss due to spatial mismatch

racial discrimination and redlining in cities we propose a model where employers have two types of prejudices racial and spatial discriminations because of the rst one black workers have less chance than white workers to nd a job because of the second one workers living closer to the city center have less chances than suburban workers to nd a job in this context we show that depending on the importance of access costs to employment centers two urban equilibria may emerge in equilibrium 1 the access cost for blacks is quite large black and white workers are totally separated while in equilibrium 2 the access cost for blacks is relatively small workers are separated by their employment status the unemployed versus the employed we then study the labor market equilibrium and its interactions with the land market we show in particular that both race and space matter to explain high unemployment rates among blacks

when jobs move do black and latino men lose the effect of growth in job decentralisation on young men s jobless incidence and duration the spatial mismatch hypothesis suggests that the movement of jobs from central cities to suburbs negatively affects blacks employment both absolutely and relative to whites in this paper data a

job contact networks abstract many workers hear about or obtain their jobs through friends and relatives the aim of this paper is twofold first we relate both individual and aggregate labor market outcomes to the network structure of personal contacts second we study strategic network formation to this purpose we develop a model specifying at the individual level both the decision to form contacts with other agents and the process by which information about jobs is obtained and transmitted we show that equilibrium networks always exist and that only moderate levels of network asymmetry can be sustained at equilibrium also we establish a general non monotonicity result on information flow and unemployment with respect to network size in symmetric networks

the spatial distribution of black employment between the central city and the suburbs i introduction smock 1968 kain 1968 and leonard 1987 have shown that the share of jobs held by blacks is smaller in the suburbs in comparison to the central city little is known concerning the factors accounting for this skewness in the spatial distribution of black employment because of the absence of suitable data a number of possible factors can be suggested first there may be no incentive to commute to the suburbs if wages are no higher or jobs no more available than within the central city that is the alleged spatial mismatch that has presumably created a surplus of less educated workers living in the central city and a shortage of these workers living in the suburbs may in fact not exist second the distances to jobs in the suburbs may make commuting to these jobs prohibitively costly and may limit the information readily available to urban blacks on suburban job opportunities third becker type consumer and or employer discrimination may cause employers to prefer hiring blacks in the central city or prefer hiring whites in suburban areas or both finally in comparison to central city jobs fewer suburban jobs are within walking distance of a public transit stop and many central city blacks do not own automobiles 1 from a policy perspective it is crucial to determine the relative importance of the above explanations for black employment segregation for example based upon a belief in the spatial mismatch hypothesis kasarda 1989 orfield 1985 hughes 1989 skinner 1989 and wilson 1992 have recommended that improved public transportation be provided to reverse commuters however on its own this strategy may not be particularly effective if blacks encounter greater hiring discrimination outside the central city and or know little about suburban jobs to shed some light on the spatial distribution of black employment between the central city and the suburbs this paper 1 provides some evidence on whether the central city labor market is tighter or looser than the suburban labor market for less educated workers 2 develops and estimates a model which explains the racial composition of firms workforces and 3 uses the parameter estimates from this model to investigate the relative importance of the aforementioned factors as explanations for black employment segregation the data come from a survey which we conducted of the managers of 102 fast food hamburger restaurants in the atlanta georgia metropolitan area the results yield three conclusions first expected wages the probability of employment times the wage rate are higher in the suburbs than within the central city which lends support to the spatial mismatch hypothesis and reinforces the need to understand the spatial distribution of black employment second the manager s race the percentage of the restaurant s customers who are white distance from the central business district and the proximity of the restaurant to mass transit are all found to have an important influence on the racial composition of the restaurant s crew third all of these variables are found to play an important role in explaining the difference in black employment share between central city and suburban restaurants of particular interest is that approximately 36 percent of this difference can be attributed to the fact that suburban restaurants are less frequently served by public transit the next section reviews the literature on the spatial mismatch hypothesis and relates this hypothesis to black employment segregation section iii describes the data evidence is presented on the quality and availability of suburban in comparison to central city jobs in section iv a model of the racial mix of the restaurant s crew is developed in section v the results from estimating this model are discussed in section vi policy implications and suggestions for future research conclude the paper ii the spatial mismatch hypothesis and black employment segregation the last half of the 1980s witnessed a revival of interest in the old idea that the suburbanization of jobs and involuntary housing market segregation have acted together to create a surplus of workers relative to the number of available jobs in inner city neighborhoods where blacks are concentrated

redlining in boston do mortgage lenders discriminate against neighborhoods historically lenders have been accused of redlining minority neighborhoods as well as refusing to lend to minority applicants considerable bank regulation is designed to prevent both actions however the strong correlation between race and neighborhood makes it difficult to distinguish the impact of geographic discrimination from the effects of racial discrimination previous studies have failed to untangle these two influences in part because of severe omitted variable bias the data set in this paper allows the distinct effects of race and geography to be identified and it shows that the evidence for redlining is weak

spatial mismatch transport mode and search decisions in england abstract we develop a theoretical model in which whites mainly use private vehicles to commute whereas nonwhites use public transportation we show that for both whites and nonwhites higher time distance to jobs leads to lower search effort because of different transport modes we also show that at exactly the same time distance to jobs white unemployed workers search more intensively than nonwhites because it is less costly for them to gather information about jobs we then test this model using english sub regional data we find that for each race indeed living in areas where distance to jobs is higher yields the unemployed to search less than in areas with better job access we also find that having access to a car increases search intensity for both whites and nonwhites finally closing the racial gap in car access and distance to jobs would considerably narrow the difference in search intensities between whites and nonwhites

how common is housing discrimination improving on traditional measures abstract fair housing audits are an important tool for measuring the incidence of racial and ethnic discrimination in housing markets traditional measures of incidence calculate the proportion of cases in which the white auditor is favored gross adverse treatment or the difference between the proportion of white favored and minority favored audits net adverse treatment the gross measure may overstate discrimination because treatment differences sometimes arise from differences in circumstances across auditor visits on the other hand the net measure understates discrimination because audits in which the minority auditor is favored for systematic reasons are incorrectly subtracted this paper presents a model of agent behavior that more fully accounts for the audit design and employs the estimated parameters to calculate bounds on the incidence of discrimination this approach leads to a lower bound for the incidence of discrimination that is often substantially higher than the simple net measure and to an upper bound that is close to and sometimes above the simple gross measure

spatial mismatch in search equilibrium we construct a search equilibrium model for a city with central and suburban labor markets that is consistent with the set of empirical regularities commonly associated with the spatial mismatch hypothesis a higher rate of unemployment for central city residents than suburban residents a higher job vacancy rate for suburban firms and reverse commuting and higher suburban wages the effectiveness and welfare implications of public policy programs that might be used to remedy the underlying mismatch are examined

the spatial mismatch hypothesis what has the evidence shown this paper reviews 20 years worth of empirical evidence on the spatial mismatch hypothesis after briefly surveying the relevant models from urban and labour economics and recent trends in employment and population suburbanisation the empirical evidence on spatial effects is examined this literature includes evidence on the effects of residential segregation residential suburbanisation and employment suburbanisation and direct measures of access such as travel times the most recent evidence suggests that spatial mismatch is relevant for explaining black white employment differences though the magnitudes of these effects remain unclear

on the optimal structure of government subsidies for enterprise zones and other locational development programs abstract government locational development programs often reward businesses for decisions they would have made or that are going to be quickly reversed this paper presents a model to determine the amount and structure of government locational subsidies that minimize this problem we model the firm s decision to switch locations as an option whose value depends on stochastic operating costs the costs to switch locations and subsidies offered by the government the government maximizes the expected benefit from the operation of the firm within its preferred location by choosing a subsidy package that explicitly and endogenously recognizes the firm s switching option

consumer discrimination and self employment self employment rates and incomes differ significantly by race we show that these differentials arise in markets with consumer discrimination and incomplete information about the price of the good and the race of the seller equilibrium income distributions have two properties mean black incomes are lower than mean white incomes and the returns to ability are lower for black than for white sellers able blacks therefore are less likely to self select into the self employment sector than able whites using the 1980 census data we find that observed racial differences in the self employment income distributions are consistent with the theoretical predictions

the mechanisms of spatial mismatch the spatial mismatch hypothesis smh argues that low skilled minorities residing in us inner cities experience poor labour market outcomes because they are disconnected from suburban job opportunities this assumption gave rise to an abundant empirical literature which is rather supportive of the smh surprisingly it is only recently that theoretical models have emerged which probably explains why the mechanisms of spatial mismatch have long remained unclear and not properly tested this article presents relevant facts reviews the theoretical models of spatial mismatch confronts their predictions with available empirical results and indicates which mechanisms deserve further empirical tests

space and unemployment the labor market effects of spatial mismatch the aim of this article is to analyze the effects of housing discrimination on the wages and unemployment rates of black workers the unemployment effect is first analyzed using a simple minimum wage model an efficiency wage model is then adopted in order to endogenize both unemployment and wages under both models suburban housing discrimination leads to a higher unemployment rate for blacks in the central city than in the suburbs under the efficiency wage model black wages are also lower in the center the analysis thus generates a link between unemployment and a seemingly unrelated phenomenon racial discrimination in the housing market

job proximity and the urban employment problem do suitable nearby jobs improve neighbourhood employment rates due to a scarcity of small area jobs data much of the spatial mismatch literature has not directly addressed the impact of nearby jobs on neighbourhood employment rates such analysis is particula

pareto improving immigration in an economy with equilibrium unemployment economists from around the industrialized world demonstrate the strength of both theories about the rise of economic inequality that is it the mechanical consequence of changes in such economic fundamentals as technology and demographic parameters and that it is the contingent consequence country specific and time specific changes in institutions they find that though institutions always play a crucial role in shaping inequality and sometimes preventing it still it creeps in

city structure job search and labour discrimination theory and policy implications we consider a search matching model in which black workers are discriminated against and the job arrival rates of all workers depend on social networks as well as distance to jobs location choices are driven by the racial preferences of households both blacks and whites consciously choosing to trade off proximity to neighbors of similar racial backgrounds for proximity to jobs because of coordination failures in the location choices multiple urban equilibria emerge there is a spatial mismatch equilibrium in which blacks reside far away from jobs and experience high unemployment rates and a spatial match equilibrium in which blacks are closer to jobs and experience lower unemployment rates under some reasonable condition we demonstrate that all workers are better off in the spatial match equilibrium we then consider two policies affirmative action and employment subsidies to the firms which hire black workers we show that the optimal policy requires imposing larger quotas or subsidies in cities in which black workers reside far away from jobs than in cities in which they live closer to jobs

can commutes be used to test the spatial mismatch hypothesis this paper uses a simple spatial model of urban employment to demonstrate that the relationship between spatial mismatch and commuting times is indeterminate if employment probabilities decline as

measuring racial discrimination with fair housing audits caught in the act a survey technique called a fair housing audit provides a direct measure of racial discrimination in housing this paper examines the econometric issues raised by audit data measures the discrimination uncovered by a 1981 boston study and tests hypotheses about the causes of discrimination the estimated level of discrimination is high black housing seekers are told about 30 percent fewer available housing units than are whites the hypothesis tests indicate that the primary cause of this discrimination is that housing agents illegally promote their economic interests by catering to the racial prejudice of their current or potential white customers

causality in the suburbanization of population and employment abstract using the slope of the density function as a measure of centralization we find that suburbanization of the residential population is enhanced by rising income and suburbanization of employment in the transportation communication and public utilities and service sectors and by the failure of manufacturing to decentralize suburbanization of population is only a positive force in promoting decentralization of the service and retail sectors however there are a number of interesting interactions between decentralization of some industrial sectors and suburbanization of other sectors overall our results differ significantly from those of previous studies which failed to disaggregate employment by industry and which aggregated change over decennial rather than annual time intervals