managerial entrenchment and firm value a dynamic perspective we examine the impact of managerial entrenchment on firm value using a dynamic model with firm fixed effects to estimate the model we employ the long difference technique which is shown by our simulation to deliver the least biased estimates based on a large sample of u s companies we document a significantly negative and causal effect of managerial entrenchment on firm value after taking into account omitted variables reverse causality and highly persistent endogenous variables additional analysis suggests that the causality running from managerial entrenchment to firm value is more pronounced than that for reverse causality

how much do rights matter summary do better political rights yield more economic development by addressing the econometric challenges plaguing this question we find support for a positive impact of rights on development for a significant grouping of countries the association is nonlinear the positive impact of rights is particularly strong at low rights levels it is either absent or negative in an intermediate rights range and returns to a moderate positive impact at high levels of rights there is also evidence to suggest that transitions from autocratic political dispensations are associated with significant negative output shocks

how large are search frictions textabstractthis paper presents strong evidence for the concavity of wages in job and worker characteristics by adding second order terms to a mincerian earnings function for 6 oecd countries under a standard normality assumption this concavity cannot be attributed to unobserved components in those characteristics an assignment model with search frictions provides a parsimonious explanation for our findings this model yields two restrictions on the coefficients which fit the data very well the impact of search frictions on wages is large our results relate to the literature on industry wage differentials on structural identification in hedonic models and on wage posting versus nash bargaining in search models

inward versus outward growth orientation in the presence of country risk the purpose of this paper is to model the role of trade dependency in determining the access of a developing economy to the international credit market and its desirable growth strategy with full integration of capital markets the choice with respect to the inwardness of a technology is irrelevant investment will be channeled to the more productive sectors independently of their trade inwardness with limited capital market integration a given investment will generate two effects the first is the standard direct productivity effect that is associated with the change in future output the second is the trade dependency externality generated by the change in future bargaining outcomes due to the change in the trade dependency of the nation with partial integration investment that increases trade dependency is desirable if the credit markets are disjoint due to partial defaults higher trade dependency is disadvantageous thus higher trade dependency generates a positive externality with partial integration of capital markets and a negative externality with disjoint credit markets we show that credit market integration is determined by the size of the indebtedness relative to the trade dependency as reflected by the repayment burden that is supported by the bargaining outcome the repayment bargaining outcome is determined by the sectoral composition of the economy and by the effective size of the developing and the developed economies this abstract was borrowed from another version of this item

collective action clauses how do they affect sovereign bond yields abstract we study the effects of the adoption of collective action clauses cacs on government bond yields by exploiting secondary market data on sovereign bonds quoted in international markets from march 2007 to april 2011 cacs are assessed security by security using a panel data approach we find a u shaped effect of cacs on yields according to the credit rating of the issuer while the impact is negligible for the highest ratings a significant yield discount emerges for mid range ratings which is smaller for bad ratings and possibly insignificant for the worst ratings this relationship appears fairly robust across a number of checks this evidence may reflect the fact that cacs are valuable because they help with orderly restructuring unless the perceived probability of default is too small nevertheless at low ratings this effect can be weakened by an increasing risk of moral hazard

tax reform and automatic stabilization an income tax provides implicit insurance by dampening the variability of disposable income and consumption using an empirical framework derived from the consumption insurance literature and data from the panel study of income dynamics we examine the effect of federal income tax reforms of the 1980 s on automatic stabilization of consumption overall erta and tra86 reduced consumption stability by about 50 percent recently increased eitc generosity restored or enhanced consumption insurance the welfare cost of moving to the post tra86 system is sizable for relatively risk averse households facing large income risk but is much more modest for the typical household jel h21

the effect of female education on fertility and infant health evidence from school entry policies using exact date of birth this paper uses age at school entry policies to identify the effect of female education on fertility and infant health we focus on sharp contrasts in schooling fertility and infant health between women born just before and after the school entry date school entry policies affect female education and the quality of a woman s mate and have generally small but possibly heterogeneous effects on fertility and infant health we argue that school entry policies manipulate primarily the education of young women at risk of dropping out of school

child labor and the labor supply of other household members evidence from 1920 america this paper analyses the effect of child labor on household labor supply using 1920 us census micro data the aim of the analysis is to understand who in the household benefits from child labor in order to identify a source of exogenous variation in child labor i use state specific child labor laws i find that a rise in the proportion of working children by household is associated with no variation in parents labor supply i also find a strong negative externality among children as the proportion of working children by household rises everything else equal the probability that each child works falls while the probability that he attends school rises this suggests that parents redistribute entirely the returns from child labor to the children in the household consistent with a model of household labor supply with fully altruistic parents

earnings functions when wages and prices vary by location economists generally assume implicitly that the return to schooling is invariant across local labor markets we demonstrate that this outcome pertains if and only if preferences are homothetic a special case that seems unlikely our theory predicts that returns to education will instead be relatively low in expensive high amenity locations our analysis of u s data provides support for this contention returns to college are especially low in such cities as san francisco and seattle our findings call into question standard empirical exercises in labor economics that treat the returns to education as a single parameter

evaluation of the subjective probabilities of survival in the health and retirement study in the health and retirement study respondents were asked about the chances they would live to 75 or to 85 we analyze these responses to determine if they behave like probabilities of survival if their averages are close to average probabilities in the population and if they have correlations with other variables that are similar to correlations with actual mortality outcomes we find that generally they do behave like probabilities and that they do aggregate to population probabilities most remarkable however is that they covary with other variables in the same way actual outcomes vary with the variables for example respondents with higher socioeconomic status give higher probabilities of survival whereas respondents who smoke give lower probabilities we conclude that these measures of subjective probabilities have great potential use in models of intertemporal decision making under uncertainty

monotone instrumental variables with an application to the returns to schooling for fifty years econometric analyses of treatment response have made extensive use of instrumental variable iv assumptions holding that mean response is constant across specified subpopulations of a population of interest 2 yet the credibility of mean independence conditions and other iv assumptions has often been a matter of considerable disagreement with much debate about whether some covariate is or is not a valid instrument in an application of interest there is therefore good reason to consider weaker but more credible assumptions to this end we introduce monotone instlumental variable miv assumptions holding that mean response varies weakly monotonically across specified subpopulations we study the identifying power of these miv assumptions and give an empirical application the findings reported here add to the literature developing nonparametric bounds on treatment effects 3 this paper uses the same formal setup as manski 1997 there is a probability space j x2 p of individuals each member j of population j has observable covariates xi e x and a response function yj t y mapping the mutually exclusive and exhaustive treatments t e t into outcomes yj t e y person j has a realized treatment zj e t and a realized outcome y 1 y zi both of which are observable the latent outcomes yj t

growth effects of government expenditure and taxation in rich countries a reply folster and henrekson european economic review 45 2001 1501 1520 argue that the more the econometric problems that are addressed the more robust the relationship between government size and economic growth appears but in failing to control for simultaneity and in ignoring issues of sample selection bias the regressions reported by folster henrekson are flawed using theoretically valid instruments we find that the estimated partial correlation between size of the public sector and economic growth is statistically insignificant and highly unstable across specifications moreover since instruments are weak all hypothesis tests are unreliable we conclude that cross country growth regressions are unlikely to come up with a reliable answer to the question of the growth effects of government spending and taxation

an econometric analysis of reservation wages this paper describes an analysis of survey data on unemployed people who reported their asking wage and the wage they expected to earn we show that if agents behavior is described by the standard optimal job search model one can use these data to deduce structural parameters rather than estimate them and we report our deductions from two surveys 1 of british unemployed people

split sample instrumental variables estimates of the return to schooling this article reevaluates recent instrumental variables iv estimates of the returns to schooling in light of the fact that two stage least squares is biased in the same direction as ordinary least squares ols even in very large samples we propose a split sample instrumental variables ssiv estimator that is not biased toward ols ssiv uses one half of a sample to estimate parameters of the first stage equation estimated first stage parameters are then used to construct fitted values and second stage parameter estimates in the other half sample ssiv is biased toward 0 but this bias can be corrected the splt sample estimators confirm and reinforce some previous findings on the returns to schooling but fail to confirm others

does education improve citizenship evidence from the united states and the united kingdom abstract many studies document an association between schooling and civic participation but none credibly investigate causal links we explore the effect of extra schooling induced through compulsory schooling laws on the likelihood of becoming politically involved in the united states and the united kingdom we find that educational attainment is related to several measures of political interest and involvement in both countries we find a strong and robust relationship between education and voting for the united states but not for the united kingdom our us results approach the uk findings when conditioning on registration possibly indicating that registration rules present a barrier to participation

education s role in china s structural transformation abstract we explore education s role in improving the allocation of labor between china s agricultural and nonagricultural sectors and measure the portion of china s recent growth attributable to this channel using detailed micro level data and an empirical model that allows for the endogenous selection of education and sector of employment we estimate the relationship between an individual s educational attainment sector and income we find that about 11 of aggregate growth in output per worker from 1978 to 2004 is accounted for by increased education with 9 coming through the labor reallocation channel and 2 attributable to increased within sector human capital

why are stabilizations delayed when a stabilization has significant distributional implications e g tax increases to eliminate a large budget deficit socioeconomic groups may attempt to shift the burden of stabilization onto other groups the process leading to stabilization becomes a war of attrition each group attempting to wait the others out and stabilization occurring only when one group concedes and bears a disproportionate share of the burden the authors solve for the expected time of stabilization in a model of rational delay and relate it to several political and economic variables they motivate this approach and its results by comparison to historical and current episodes copyright 1991 by american economic association

job insecurity and wages this paper examines whether subjective expectations of unemployment are reliable indicators of the probability of becoming unemployed and investigates their association with wage growth we find that workers fears of unemployment are increased by their previous unemployment experience and by the unemployment experiences of a close friend and are associated with other objective indicators of insecure jobs we then show that unemployment fear predicts future unemployment above and beyond observed objective variables high fears of unemployment are found to be associated with significantly lower levels of wage growth for men but to have no significant link with wage growth for women

schooling and citizenship in a young democracy evidence from postwar germany this paper examines whether schooling has a causal impact on individuals political interest voting turnout democratic values political involvement and political membership using two national representative samples between 1949 and 1969 the number of compulsory years of schooling was increased from eight to nine years in the federal republic of germany gradually over time and across federal states these legislative changes allow one to investigate the causal impact of years of schooling on citizenship in a young democracy years of schooling are found to be positively correlated with a broad range of citizenship outcomes however when exogenous increase in schooling through legislative changes is used there is little evidence of a causal efiect several potential explanations are examined 1 poor or apolitical teaching practices in the post war period 2 shortages of qualifled teachers and adequate teaching material 3 extra curricular civic education and 4 whether civic knowledge might have been acquired prior to the increase in schooling the estimates reject the flrst three explanations whereas ample historical evidence is in favour of the hypothesis that the fundamentals of democracy were learned already earlier in school

externalities incentives and failure to achieve national objectives in decentralized economies abstract this paper studies why decentralized economies often fail to achieve national objectives we assume that the central government allocates its tax revenues among a large number of decision makers provincial authorities or ministers decision makers are facing a soft budget constraint because of limited monitoring by the central authorities spending in excess to allocations fuels inflation cooperation to limit aggregate spending occurs when no decision maker can benefit by opportunistic behavior adverse macroeconomic shocks are shown to reduce the likelihood that decentralized decision makers will cooperate in order to achieve national objectives debt relief can induce higher investment because it can promote a shift from opportunistic behavior to cooperation

teachers pay for performance in the long run the dynamic pattern of treatment effects on students educational and labour market outcomes in adulthood this paper examines the dynamic effects of a teachers pay for performance experiment on long term outcomes at adulthood the program led to a gradual increase in university education of the treated high school students reaching an increase of 0 25 years of schooling by age 28 30 the effects on employment and earnings were initially negative coinciding with a higher rate of enrollment in university but became positive and significant with time these gains are largely mediated by the positive effect of the program on several high school outcomes including quantitative and qualitative gains in the high stakes matriculation exams

the world trade network and the environment this papers analyses the role of the world trade network on the environment we rely on methods developed for social network analysis to identify the most important countries in connecting trade between all the other countries in the world trade network we then estimate how the network or indirect effects from trade affect the environmental quality of a country as the trade networks are endogenously determined by trade and environmental conditions we use as instrumental variables the growth in the population of trade partners and the growth in the population of trade partners partners to exploit exogenous variation in the world trade network once we simultaneously estimate the environmental trade income and network equations using a three stage least square procedure we find that network effects harm the environmental quality of developed countries but improve the environment of developing countries

seigniorage and political instability the importance of seigniorage relative to other sources of government revenue differs markedly across countries this paper tries to explain this regularity by studying a political model of tax reform the model implies that countries with a more unstable and polarized political system will have more inefficient tax structures and thus will rely more heavily on seigniorage this prediction of the model is tested on cross sectional data for seventy countries the authors find that after controlling for other variables political instability is positively associated with seigniorage copyright 1992 by american economic association

the effects of compulsory schooling on growth income distribution and welfare abstract in this paper we consider an olg model with productive capital and human capital affecting the quality of labor in each generation parents invest in their children s education but disregard its external effect on the aggregate production function government intervention in providing compulsory schooling increases economic growth along the equilibrium path while the intragenerational income distribution becomes more equal also in the long run the majority of individuals in each generation are better off due to compulsory schooling

education human capital and growth a personal perspective this article reviews the literature on the relationship of economic growth to the education levels of the labor force the emphasis is on yoram ben porath s contribution to some of the issues in this field the endogeneity of schooling the role of the public sector as an absorber of educated labor and the importance of personal human capital created by investments in reputation and personal relationships the f connection

public schooling college subsidies and growth abstract how does the mix of public education expenditures across primary and secondary k 12 education and post secondary college education influence economic growth to address this i build an overlapping generations endogenous growth model human capital is accumulated through compulsory k 12 education and through optional college education government uses tax revenue to provide quality in k 12 schooling and to subsidize college tuition when total expenditures are small all funds should provide k 12 quality when expenditures are above a critical value a positive share should subsidize tuition the share should increase with total expenditures and with the degree of complementarity of human capital accumulated through the two types of education also increased education spending is more likely to increase growth when a larger share subsidizes tuition

grand corruption instead of commitment reconsidering time inconsistency of monetary policy abstract this paper suggests that inflation may be affected differently by grand corruption compared to its positive nexus with petty corruption in an extended barro and gordon 1983a model grand corruption may serve as a quasi commitment device a cheating expropriating government may actually deter a monetary authority from cheating reneging furthermore rogoff s 1985 conservative central banker has an unambiguously beneficial effect she reduces the inflationary bias even more while also rendering fiscal policy more effective the model nests the standard fiscal monetary interaction logic with and without expropriation as well as the diametrical symbiosis result obtained by dixit and lambertini 2003a

lessons from the bell curve this paper examines the argument presented in the bell curve a central argument is that one factor g accounts for correlation across test scores and performance in society another central argument is that g cannot be manipulated these arguments are combined to claim that social policies designed to improve social performance cannot be effective a reanalysis of the evidence contradicts this story the factors that explain wages receive different weights than the factors that explain test scores more than g is required to explain either other factors besides g contribute to social performance and they can be manipulated

pseudo panel data models with cohort interactive effects when genuine panel data samples are not available repeated cross sectional surveys can be used to form so called pseudo panels in this article we investigate the properties of linear pseudo panel data estimators with fixed number of cohorts and time observations we extend standard linear pseudo panel data setup to models with factor residuals by adapting the quasi differencing approach developed for genuine panels in a monte carlo study we find that the proposed procedure has good finite sample properties in situations with endogeneity cohort interactive effects and near nonidentification finally as an illustration the proposed method is applied to data from ecuador to study labor supply elasticity supplementary materials for this article are available online

the effects of financial education in the workplace evidence from a survey of households abstract we use a novel household survey to investigate the effects of employer based financial education on personal saving we explore cross sectional relations between the availability of employer based financial education and various measures of asset accumulation and we interpret these patterns in light of various potentially confounding factors our findings favor the hypothesis that employer based financial education stimulates saving both in general and for retirement

on the validity of econometric techniques with weak instruments inference on returns to education using compulsory school attendance laws we evaluate angrist and krueger 1991 and bound jaeger and baker 1995 by constructing reliable confidence regions around the 2sls and liml estimators for returns to schooling regardless of the quality of the instruments the results indicate that the returns to schooling were between 8 and 25 percent in 1970 and between 4 and 14 percent in 1980 although the estimates are less accurate than previously thought most specifications by angrist and krueger 1991 are informative for returns to schooling in particular concern about the reliability of the model with 178 instruments is unfounded despite the low first stage f statistic finally we briefly discuss bias adjustment of estimators and pretesting procedures as solutions to the weak instrument problem

long lasting effects of socialist education abstract political regimes influence the content of education and criteria used to select and evaluate students we study the impact of a socialist education on the likelihood of obtaining a college degree and on several labor market outcomes by exploiting the reorganization of the school system in east germany after reunification our identification strategy uses cutoff birth dates for school enrollment that lead to variation in the length of exposure to the socialist education system within the same birth cohort an additional year of socialist education decreases the probability of obtaining a college degree and affects longer term labor market outcomes for men

does compulsory school attendance affect schooling and earnings we establish that season of birth is related to educational attainment because of school start age policy and compulsory school attendance laws individuals born in the beginning of the year start school at an older age and can therefore drop out after completing less schooling than individuals born near the end of the year roughly 25 percent of potential dropouts remain in school because of compulsory schooling laws we estimate the impact of compulsory schooling on earnings by using quarter of birth as an instrument for education the instrumental variables estimate of the return to education is close to the ordinary least squares estimate suggesting that there is little bias in conventional estimates every developed country in the world has a compulsory schooling requirement yet little is known about the effect these laws have on educational attainment and earnings 1 this paper exploits an unusual natural experiment to estimate the impact of compulsory schooling laws in the united states the experiment stems from the fact that children born in different months of the year start school at different ages while compulsory schooling laws generally require students to remain in school until their sixteenth or seventeenth birthday in effect the interaction of school entry requirements and compulsory schooling laws compel students born

earnings expectations revisions and realizations during the spring and the fall of 1993 respondents to a national household survey were asked to report expectations of spring 1994 weekly earnings elicited in the form of subjective probabilities these data are potentially much more informative than are typical reports of economic expectations subjective probability distributions of future weekly earnings are estimated for each respondent based on his or her reports of a series of subjective probabilities this paper analyzes the cross sectional variation in expectations revisions of expectations between the spring and the fall of 1993 and the relationship between 1993 expectations and the distribution of spring 1994 earnings realizations generally positive findings on the validity of the data bode well for the prospects of eliciting expectations in future surveys

investment and monetary policy in the euro area abstract this paper analyses the effects of a change in monetary policy on firms investment in germany france italy and spain using a data set which provides aggregated balance sheet and profit and loss account data for 17 different industries and three different size classes the main findings are twofold first in each of the four countries a change in the user cost of capital which in turn is affected by interest rates has both statistically and economically significant effects on investment second while the average interest rate on debt is generally higher for small firms than for large firms there is little evidence that the effects of monetary policy on small firms are larger

does school quality matter returns to education and the characteristics of public schools in the united states this paper estimates the effects of school quality measured by the pupil teacher ratio average term length and relative teacher pay on the rate of return to education for men born between 1920 and 1949 using earnings data from the 1980 census we find that men who were educated in states with higher quality schools have a higher return to additional years of schooling rates of return are also higher for individuals from states with better educated teachers and with a higher fraction of female teachers holding constant school quality measures however we find no evidence that parental income or education affects average state level rates of return

minimum wages and teenagers enrollment employment outcomes a multinominal logit model this paper tests the hypothesis that the effect of minimum wage legislation on teenagers education decisions is asymmetrical across family income classes with the legislation inducing children from low income families to reduce their levels of schooling and children from higher income families to increase their educational attainment we use data from the national longitudinal surveys nls and exploit the fact that although the minimum wage is fixed at a point in time its value relative to adult wages varies across areas multinomial logit models of teenagers enrollment employment outcomes are estimated the hypothesis appears to be confirmed for white teens however the evidence for nonwhites is more ambiguous

intertemporal substitution in labor supply evidence from micro data the sensitivity of the supply of labor to intertemporal variation in the wage is an important issue in macroeconomics the analysis of social security and pensions and the study of life cycle patterns of work this paper explores two approaches to the measurement of intertemporal substitution that have appeared in the literature the first approach is to use consumption to control for wealth and unobserved expectations about future wages in the labor supply equation the second approach is to estimate a first difference equation for hours in which labor supply from the previous period serves as a control for wealth and wage expectations the results indicate that intertemporal substitution elasticity for married men is positive but small

the compelling effects of compulsory schooling evidence from canada abstract compulsory school laws have existed for more than a hundred years and policies to mandate further education continue to be discussed the implications of these laws however are not well understood historical changes to compulsory schooling in canada permit an examination of their effects on would be dropouts under very different circumstances than those during changes in other countries mandating education substantially increased adult income and substantially decreased the likelihood of being below the low income cut off unemployed and in a manual occupation these findings suggest significant gains from this legislation which seem unlikely offset by the costs incurred while having to remain in school jel classification i20 i28

modelling the dynamics of market shares in a pooled data setting econometric and empirical issues the objective of this article is twofold first it is to study the applicability of the widely used autoregressive distributed lag model ardl in a pooled data setting second it is to analyse chile s market shares in the eu during the period 1988 to 2002 pointing to application problems that might jeopardize the model and searching for estimation methods that deal with the problem of inter temporal and cross sectional correlation of the disturbances to estimate the coefficients of the ardl model feasible generalized least squares fgls is utilized within the three stage least squares 3sls and the nonstandard generalized method of moments gmm frameworks a computation of errors is added to highlight the susceptibility of the model to problems related to the underlying model assumptions

price stickiness and the contractionary effect of technology shocks abstract we derive a measure of technological change from a dynamic cost minimization model that controls for imperfect competition increasing returns and unobserved factor utilization we estimate this measure using highly detailed panel data of a representative sample of italian manufacturing firms for the period 1984 1997 our key finding is that technological improvements result in a contraction of labor input on impact in principle this result can be reconciled with the transmission mechanism of flexible price models by resorting to reorganization and reallocation effects on the other hand however it is consistent with the predictions of a sticky price model using survey information on the frequency of price revisions we corroborate the latter interpretation by showing that the contractionary effect of technology shocks is much stronger for firms with stickier prices

returns to education evidence from u k twins we use a new sample of uk female identical twins to estimate private economic returns to education we report findings in three areas first we use identical twins to control for family effects and genetic ability bias and the education reported by the other twin to control for schooling measurement error our estimates suggest a return to schooling for uk females of about 7 7 second we investigate within twin pair ability differences by examining within twin pair and between family correlations of education with observable correlates of ability including birthweight ability tests and reading scores our findings suggest lower ability bias in within twin pair regressions than pooled regressions third using data on twins smoking we show smoking reflects family background and using it as an instrument exacerbates ability bias this abstract was borrowed from another version of this item

using unemployment rates as instruments to estimate returns to schooling i use state unemployment rates during a person s teenage years to estimate the returns to schooling a higher unemployment rate reduces the opportunity costs of attending school using the same 1980 census data set that angrist and krueger 1991 use i also estimate returns to schooling with a modified version of their quarter of birth instrument the estimates from the two stage least squares 2sls model using the unemployment rate and the model using the quarter of birth instruments are almost identical in addition these 2sls estimates are larger than the ordinary least squares ols estimates supporting this counterintuitive yet prevalent result in the literature

estimation of limited dependent variable models with dummy endogenous regressors applied economists have long struggled with the question of how to accommodate binary endogenous regressors in models with binary and nonnegative outcomes i argue here that much of the difculty with limited dependent variables comes from a focus on structural parameters such as index coefcients instead of causal effects once the object of estimation is taken to be the causal effect of treatment several simple strategies are available these include conventional two stage least squares multiplicative models for conditional means linear approximation of nonlinear causal models models for distribution effects and quantile regression with an endogenous binary regressor the estimation strategies discussed in the article are illustrated by using multiple births to estimate the effect of childbearing on employment status and hours of work

identification weak instruments and statistical inference in econometrics we discuss statistical inference problems associated with identification and testability in econometrics we consider inference in non parametric models and weakly identified structural models weak instruments we point out that many ill defined statistical problems such as non testable hypotheses occur in these areas and are typically associated with asymptotic approximations in non parametric models such problems include testing moments and inference under heteroscedasticity or serial dependence of unknown form for weakly identified structural models difficulties are typically associated with improper pivots and we review recent developments aimed at proposing more reliable procedures including alternative proposed statistics bounds projection split sampling conditioning monte carlo tests jel classification c1 c12 c14 c15 c3 c5 identification instruments faibles et inference statistique en econometrie nous analysons les problemes d inference associes a l identification et a la testabilite en econometrie nous considerons l inference dans les modeles non parametriques et les modeles structurels faiblement identifies instruments faibles nous remarquons que beaucoup de problemes mal poses tels que des hypotheses non testables apparaissent dans ces domaines et que ceux ci sont typiquement associes a l emploi d approximations asymptotiques dans les modeles non parametriques de tels problemes incluent les tests sur les moments et l inference sous heteroscedasticite ou dependance serielle de forme non specifiee dans les modeles structurels faiblement identifies ces difficultes sont habituellement associees a l emploi de fonctions pivotales impropres et nous presentons un survol des methodes recentes ayant pour objectif d obtenir des procedures plus fiables ce qui comprend les differentes statistiques proposees l emploi de bornes la subdivision d echantillon les techniques de projection le conditionnement et les tests de monte carlo

the craft of labormetrics using a wide array of examples from the literature and from original estimates the author examines the pitfalls that make good empirical research in labor economics at least as much craft as statistical technique among the subjects discussed are the appropriateness and cleanliness of data problems of extreme observations the validity of attempts to produce exogeneity using instrumental variables natural experiments and structural models and the treatment of selectivity and unobservable individual effects the author stresses the importance of testing empirical results to ensure that they make sense and of presenting them clearly and economically

what is the impact of international remittances on poverty and inequality in latin america workers remittances have become a major source of income for developing countries however little is still known about their impact on poverty and inequality using a large cross country panel dataset the authors find that remittances in latin american and caribbean lac countries have increased growth and reduced inequality and poverty these results are robust to the use of different instruments that attempt to correct for the potential endogeneity of remittances household survey based estimates for 10 lac countries confirm that remittances have negative albeit relatively small inequality and poverty reducing effects even after imputations for the potential home earnings of migrants

poverty and the political economy of public education spending evidence from brazil a large body of literature has emphasized the elite capture of democratic institutions as the explanation for the low levels of spending on public education in many low income democracies this paper provides an alternative to that longstanding hypothesis motivated by new cross country facts and evidence from brazilian municipalities we hypothesize that many democratic developing countries might invest less in public education spending because poor decisive voters prefer the government to allocate resources elsewhere one possible explanation is that low income voters could instead favor redistributive programs that increase their incomes in the short run such as cash transfers to test for this possibility we design and implement an experimental survey and an incentivized choice experiment in brazil the findings from both interventions support our hypothesis

schooling and monetary rewards in greece an over education false alarm the paper uses data from the 1993 94 household survey to investigate a number of issues stemming from the current educational policy debate in greece private and social returns to investment in education are estimated and a test of the screening hypothesis is conducted no evidence was found that higher education is being used as a screening device and the returns to investment in education have been maintained to just below their level in the 1960s the central finding of the paper is that the fear of further expansion of the university system is highly exaggerated and that the economy could absorb even larger amounts of highly educated manpower of course such expansion could not take place unless there is an end of the state monopoly on the financing and provision of tertiary education

bootstrap based bias correction for dynamic panels abstract the within or least squares dummy variable estimator is inconsistent for homogeneous dynamic panel models with fixed time dimension t we present a bias correction for this estimator based on an iterative bootstrap procedure monte carlo simulations show that for panels with small to moderate t this procedure provides a good alternative for existing dynamic panel data estimators

the effect of income taxation on consumption and labor supply we estimate the incentive effects of income taxation in a life cycle model of consumption and labor supply without intratemporal strong separability we find that consumption and hours worked are direct complements in utility both increase with a compensated increase in the net wage the compensated net wage elasticity is about 0 3 nearly double estimates for u s men from a linear labor supply specification estimated intertemporal elasticities indicate significant intertemporal smoothing of utility the estimated marginal welfare cost of government revenue is 6 20 which is about half the estimated welfare cost when additivity between consumption and leisure is incorrectly imposed

liberalization and rent seeking in china s labor market communist party membership can generate labor market benefits in at least two ways first the party may hand out direct benefits to favored groups in the form of higher earnings alternatively the party may function in much the same way as education in western countries screening workers for talent and motivation we find very little evidence of earnings premiums to party membership or to cadre status prior to chinese market liberalization with liberalization comes less emphasis on being red and a greater capacity to earn wages that reflect ability both observed through schooling and identified by the party we find that party premiums are inversely related to education modest premiums to cadre status appear in 1995

changes in compulsory schooling education and the distribution of wages in europe using data from 12 european countries and the variation across countries and over time in the changes of minimum school leaving age we study the effects of the quantity of education on the distribution of earnings we find that compulsory school reforms significantly affect educational attainment especially among individuals belonging to the lowest quantiles of the distribution of ability there is also evidence that additional education reduces conditional wage inequality and that education and ability are substitutes in the earnings function

efficient estimation with panel data when instruments are predetermined an empirical comparison of moment condition estimators i examine the empirical performance of instrumental variables estimators with predetermined instruments in an application to life cycle labor supply under uncertainty the estimators studied are two stage least squares generalized method of moments gmm forward filter independently weighted gmm and split sample instrumental variables i compare the bias efficiency trade off for the estimators using bootstrap algorithms suggested by freedman and by brown and newey results indicate that the downward bias in gmm is quite severe as the number of moment conditions expands outweighing the gains in efficiency the forward filter estimator however has lower bias and is more efficient than two stage least squares

estimating the effect of financial aid offers on college enrollment a regression discontinuity approach an important problem faced by colleges and universities that of evaluating the effect of their financial aid offers on student enrollment decisions is complicated by the likely endogeneity of the aid offer variable in a student enrollment equation this article shows how discontinuities in an east coast college s aid assignment rule can be exploited to obtain credible estimates of the aid effect without having to rely on arbitrary exclusion restrictions and functional form assumptions semiparametric estimates based on a regression discontinuity rd approach affirm the importance of financial aid as an effective instrument in competing with other colleges for students

the competitive externalities and the optimal seignorage this study analyzes the inflation tax in an economy with several competing decisionmakers who can effectively print more money via the central bank the author derives the sequential rational expectation equilibrium and shows that the presence of competing decisionmakers increases the inflation rate and may put the economy on the wrong side of the inflation tax laffer curve the analysis is interpreted for a country consisting of several states or provinces where the centralized government system is weak similar results apply to the case of competing ministers in an economy where the central bank is weak copyright 1992 by ohio state university press

human capital vs signalling explanations of wages increases wages by directly increasing the worker s productivity this learning explanation is usually associated with human capital theory however it seems unlikely that learning explains all the wage differences associated with schooling and work history better educated workers are not a random sample of workers they have lower propensities to quit or to be absent are less likely to smoke drink or use illicit drugs and are generally healthier it is unlikely that employers make full use of differences in propensities to quit or to be absent or sick when hiring workers these characteristics are often not directly observed and the americans with disabilities act precludes firms from using either poor health or the likelihood of future sickness as a hiring criterion unless it is directly related to job performance however if low levels of education are associated with these unfavorable employee characteristics and employers are allowed to take education into account when hiring workers we would expect employers to favor better educated workers as a means of reducing their costs of sickness and job turnover in turn students will take these hiring criteria into account when deciding how long to stay in school students will choose a length of schooling to signal their ability to employers and employers will demand a minimum level of schooling

measuring the effects of welfare time limits this paper develops a simple regression model that incorporates the behavioral dynamics of time limits and is estimable by panel data techniques by relating this model to reduced form analysis i clarify an implicit assumption that underlies a popular difference in differences did specification which understates the overall effects of time limits i also find that a considerable amount of dynamics is due to individuals reducing welfare use as their stock of remaining welfare eligibility depletes this generates more plausible predictions related to counterfactuals cumulative welfare use patterns and mechanical termination of benefits

educational reform ability and family background in this paper we evaluate the impact of a major school reform that took place in the 1950s in sweden on educational attainment and earnings the reform which has many common elements with reforms in other european countries including the uk consisted of increasing compulsor schooling imposing a national curriculum and abolishing selection by ability into academic and non academic streams at the age of 12 comprehensive school reform our data combines survey data with administrative sources we find that the reform increased both the educational attainment and the earnings of children whose fathers had just compulsory education however the earnings of those with educated parents declined possibly because of a dilution of quality at the top end of the education levels the overall effect of the reform was however positive

the dynamics of local employment in france we study the impact of local economic structure on employment dynamics local employment is decomposed into the product of the average plant size and the number of plants in the area and industry we estimate the dynamics of both components simultaneously using french yearly data on 36 industries and 341 areas between 1984 and 1993 the careful specification of short run dynamics and the control for fixed effects and endogeneity are shown to be critical in the empirical model first static externalities are prevalent compared to dynamic ones moreover whereas area and industry effects explain most of the spatial variation of plant size the local number of plants is mainly driven by the current local economic structure policies targeted towards plant creation should thus be more efficient for instance large areas endowed with a small number of even size industries have both more and larger plants a large number of plants heterogeneous in size also increases the average plant size but the number of plants is higher when plants have similar size

spatial dynamics and heterogeneity in the cyclicality of real wages neither the issue of how local and aggregate labor markets interact over time nor the issue of how heterogeneity by education race and other factors interacts with these spatial dynamics has prev

happy birthday you re insured gender differences in work ethics this study investigates the potential existence of cheating within the sickness insurance program results indicate that young male workers have strong preferences for leisure linked to birthday celebrations other workers appear to consider the costs of reporting in sick around birthdays as relatively large

school entry policies and skill accumulation across directly and indirectly affected individuals during the past half century there has been a trend toward increasing the minimum age a child must reach before entering school in the united states states have accomplished this by moving the school entry cutoff date earlier in the school year the evidence presented in this paper shows that these law changes increased human capital accumulation and hence adult wages backing up the cutoff by one month increases average male hourly earnings by approximately 0 6 percent the evidence also suggests that the majority of the cohort benefits from backing up the cutoff not just those who must delay entry

priceless the nonpecuniary benefits of schooling copyright 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 by the american economic association permission to make digital or hard copies of part or all of american economic association publications for personal or classroom use is granted without fee provided that copies are not distributed for profit or direct commercial advantage and that copies show this notice on the first page or initial screen of a display along with the full citation including the name of the author copyrights for components of this work owned by others than aea must be honored abstracting with credit is permitted the author has the right to republish post on servers redistribute to lists and use any component of this work in other works for others to do so requires prior specific permission and or a fee permissions may be requested from the american economic association administrative office by going to the contact us form and choosing copyright permissions request from the menu copyright 2016 aea

why did the ssi disabled program grow so much disentangling the effect of medicaid the number of participants in the ssi program grew by 1 1 million from 1987 to 1993 this paper examines the role of medicaid on the ssi participation decision i use the rapid growth in average medicaid expenditure as a proxy for its value ols estimates of medicaid s effect may be biased because of omitted variables bias and measurement error i therefore apply two stage least squares to estimate medicaid s effect using average medicaid expenditure for blind ssi recipients as an instrument these estimates show that rising medicaid expenditure significantly increased ssi participation among adults with low permanent incomes explaining 20 of the growth

what drives private saving around the world the authors investigate the policy and non policy factors behind saving disparities using a large panel data set and an encompassing approach including several relevant determinants of private saving they extend the literature in several dimensions by 1 using the largest data set on aggregate saving assembled to date 2 using panel instrumental variable techniques to correct for endogeneity and heterogeneity 3 performing robustness checks on changes in estimation procedures data samples and model specification their main empirical findings a private saving rates show considerable inertia are highly serially correlated even after controlling for other relevant factors b private sector rates rise with the level and growth rate of real per capita income so policies that spur development are in indirect but effective way to raise private saving rates c predictions of the life cycle hypothesis are supported in that dependency ratios generally have a negative effect on private saving rates d the precautionary motive for saving is supported by the finding that inflation conventionally taken as a summary measure of macroeconomic volatility has a positive impact on private saving holding other facts constant e fiscal policy is a moderately effective tool for raising national saving f the direct effect of financial liberalization are largely detrimental to private saving rates greater availability of credit reduces the private saving rate financial depth and higher real interest rates do not increase saving

on persistent poverty in a rich country we examine differences in income within the united states and the regions of persistent poverty that have arisen using a newly assembled county level data set linking 19th century census data with contemporary data we identify the roles of current differences in aggregate production technologies and factor endowments together with contributions of historical institutions culture geography and human capital we allow for possible cross county factor mobility via a correlated random effects gmm estimator and find evidence of significant regional differences in production technologies our decompositions of the poor nonpoor income gap suggest that at least three fourths of the gap is explained by differences in productive factors persistently poor counties are different and poorer primarily because they have lower levels of factors of production not because they use the factors they have less efficiently together historical and contemporary human capital explain over half of the overall income gap between persistently poor and nonpoor counties

returns to investment in education a global update the author updates compilations of rate of return estimates to investment in education published since 1985 and discusses methodological issues surrounding those estimates some key patterns among the three main levels of education primary education continues to exhibit the highest social profitability in all world regions private returns are considerably higher than social returns because of the public subsidization of education the degree of public subsidy increases with the level of education which is regressive social and private returns at all levels generally decline by the level of a country s per capita income overall the returns to female education are higher than those to male education but at individual levels of education the pattern is more mixed the returns to the academic secondary school track are higher than the vocational track since unit cost of vocational education is much higher and the returns for those who work in the private competitive sector of the economy are higher than in the public noncompetitive sector and the returns in the self employment unregulated sector of the economy are higher than in the dependent employment sector controversies in the literature are discussed in the light of the new evidence the undisputable and universal positive correlation between education and earnings can be interpreted in many ways the causation issue on whether education really affects earnings can be answered only with experimental data generated by randomly exposing different people to various amounts of education given the fact that moral and pragmatic considerations prevent the generation of such pure data researchers have to make do with indirect inferences or natural experiments some have been attempted the author looks at the research on overeducation or surplus schooling the conclusions reinforce earlier patterns they confirm that primary education continues to be the number one investment priority in developing countries they also show that educating females is marginally more profitable than educating males that the academic secondary school curriculum is a better investment than the technical vocational tract and that the returns to education obey the same rules as investment in conventional capital that is they decline as investment is expanded