can falling supply explain the rising return to college for younger men a cohort based analysis although the college high school wage gap for younger u s men has doubled over the past 30 years the gap for older men has remained nearly constant in the united kingdom and canada the college high school wage gap also increased for younger relative to older men using a model with imperfect substitution between similarly educated workers in different age groups we argue that these shifts reflect changes in the relative supply of highly educated workers across age groups the driving force behind these changes is the slowdown in the rate of growth of educational attainment that began with cohorts born in the early 1950s in all three countries

the response of co2 emissions to the business cycle new evidence for the u s abstract this paper investigates the response of co 2 emissions to the business cycle for the u s on a monthly basis between 1973 and 2015 using a rolling regression approach we find that the emissions elasticity with respect to gdp is not constant over time irrespective which filtering method such as the hodrick prescott the baxter king the christiano fitzgerald or the butterworth filter has been employed in order to check whether or not emissions react differently during normal and recession times next we employ a markov switching approach we find first that emissions are significantly more elastic during recessions than in normal times second depending on the filtering method we also obtain parameter estimates of the emissions elasticity above one in recession times and below one in normal times the results are also robust against including monetary policy also in times of the zero lower bound thus environmental policy instruments not turning out to be sub optimal should account for this asymmetric response of emissions due to changes in gdp

wage curve analyses of establishment data from western germany using the iab establishment panel which is representative for western germany the authors find that establishment level wages reacted to variations in the regional unemployment rate the elasticity of wages with respect to unemployment they estimate was about 0 1 this responsiveness of the wage to regional variation is close to estimates found by other researchers using individual rather than establishment data for other countries and contradicts the view that germany s labor market largely due to the nature of collective bargaining in that country is relatively inflexible possible explanations for this finding are that the negotiated wage is treated like a minimum wage with firms deviating from it in order to increase work effort bargaining between firms and individual workers or between firms and works councils produces wage differences or collective agreements do not restrict firms to the extent that is often assumed

tricks with hicks the easi demand system we invent implicit marshallian demands which combine desirable features of hicksian and marshallian demands we propose and estimate the exact affine stone index easi implicit marshallian demand system like the almost ideal demand aid system easi budget shares are linear in parameters given real expenditures however unlike the aid easi demands can have any rank and its engel curves can have any shape over real expenditures easi error terms equal random utility parameters to account for unobserved preference heterogeneity easi demand functions can be estimated using gmm or three stage least squares and like aid an approximate easi model can be estimated by linear regression

the effect of land use regulation on housing and land prices abstract this paper investigates the effects of land use regulation restrictiveness on house and vacant land prices in contrast to prior studies the index of restrictiveness is treated as an endogenous variable and estimated effects are allowed to vary by market setting using data on more than 100 florida cities greater regulation restrictiveness is found to increase house price and decrease land price evidence is also provided showing that more restrictiveness increases the size of newly constructed homes

forecasting macro variables with a qual var business cycle turning point index one criticism of vector autoregression var forecasting is that macroeconomic variables tend not to behave as linear functions of their own past around business cycle turning points a large amount of literature therefore focuses on nonlinear forecasting models such as markov switching models which only indirectly capture the relation with turning points this article investigates a direct approach to using information on turning points from the national bureau of economic research nber chronology to model and forecast macroeconomic data our qual var model includes a truncated normal latent business cycle index that is negative during nber recessions and positive during expansions we motivate our forecasting exercise by demonstrating that if starting from a linear specification a truncated normal variable is an omitted variable then forecasts of the remaining variables will become nonlinear functions of their own past we apply the qual var model to recursive out of sample forecasting and find th

the effects of petroleum product price regulation on macroeconomic stability in china abstract china has undertaken measures to regulate the prices of petroleum products since 1998 in order to deal with the world oil price shocks on its macro economy however the effects of price regulation are yet unknown especially when the world oil price fluctuates in different regimes the study first analyses the mechanisms of petroleum product price ppp regulation in the case of gasoline and the crude oil gasoline price fluctuation transmission followed by the identification of regimes and their time intervals using regime switching vector autoregressive model and then estimates the effects of gasoline price regulation in reducing macroeconomic volatility it is found that the world crude oil fluctuates in different regimes the mild fluctuation regime and the violent fluctuation regime the ppp regulation can reduce oil price volatility and then macroeconomic volatility but it is more effective in the mild fluctuation regime the findings present a deeper understanding of the stabilization effect of ppp regulation on the macroeconomy provide an evidence for sustaining china s ppp regulation for the purpose of macroeconomic stability and offer policymakers new information for petroleum product pricing reforms

the economic implications of housing supply in this essay we review the basic economics of housing supply and the functioning of us housing markets to better understand the distribution of home prices household wealth and the spatial distribution of people across markets we employ a cost based approach to gauge whether a housing market is delivering appropriately priced units specifically we investigate whether market prices roughly equal the costs of producing the housing unit if so the market is well functioning in the sense that it efficiently delivers housing units at their production cost the gap between price and production cost can be understood as a regulatory tax the available evidence suggests but does not definitively prove that the implicit tax on development created by housing regulations is higher in many areas than any reasonable negative externalities associated with new construction we discuss two main effects of developments in housing prices on patterns of household wealth and on the incentives for relocation to high wage high productivity areas finally we turn to policy implications

mixed frequency var models with markov switching dynamics this paper extends the markov switching vector autoregressive models to accommodate both the typical lack of synchronicity that characterizes the real time daily flow of macroeconomic information and economic indicators sampled at different frequencies the results of the empirical application suggest that the model is able to capture the features of the nber business cycle chronology very accurately

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

endogenous gentrification and housing price dynamics in this paper we begin by documenting substantial variation in house price growth across neighborhoods within a city during citywide housing price booms we then present a model which links house price movements across neighborhoods within a city and the gentrification of those neighborhoods in response to a citywide housing demand shock a key ingredient in our model is a positive neighborhood externality individuals like to live next to richer neighbors this generates an equilibrium where households segregate based upon their income in response to a citywide demand shock higher income residents will choose to expand their housing by migrating into the poorer neighborhoods that directly abut the initial richer neighborhoods the in migration of the richer residents into these border neighborhoods will bid up prices in those neighborhoods causing the original poorer residents to migrate out we refer to this process as endogenous gentrification using a variety of data sets and using bartik variation across cities to identify city level housing demand shocks we find strong empirical support for the model s predictions

extracting nonlinear signals from several economic indicators summary we develop a twofold analysis of how the information provided by several economic indicators can be used in markov switching dynamic factor models to identify the business cycle turning points first we compare the performance of a fully nonlinear multivariate specification one step approach with the shortcut of using a linear factor model to obtain a coincident indicator which is then used to compute the markov switching probabilities two step approach second we examine the role of increasing the number of indicators our results suggest that one step is generally preferred to two steps especially in the vicinity of turning points although its gains diminish as the quality of the indicators increases additionally we also obtain decreasing returns of adding more indicators with similar signal to noise ratios using the four constituent series of the stock watson coincident index we illustrate these results for us data copyright 2014 john wiley sons ltd

what do the leading indicators lead the authors find that the composite leading index cli is useful for forecasting gross national product gnp both in sample and in an out of sample real time exercise they propose a nonlinear specification in which cyclical shifts of the cli precede those in gnp however the authors find that better forecasts are provided by a simple linear relation between current gnp growth and the growth rate of the cli during the previous quarter along with an error correction term corresponding to the previous quarter s logarithmic difference between the level of the cli and the level of gnp copyright 1996 by university of chicago press

a bayesian approach to model changes in volatility in the mexican stock exchange index we model the changes in volatility in the mexican stock exchange index using a bayesian approach we study the time series with a wide set of models characterized by a markov switching heterogeneit

staunching emigration from east germany age and the determinants of migration following the unification of germany in 1990 eastern wages and unemployment both rose rapidly i demonstrate that rising wages reduced eastern emigration greatly while rising unemployment had little effect this reflects the behavior of the young who are very sensitive to source region wages and relatively insensitive to source unemployment i show that most of the effect of source unemployment comes from the contemporaneous effect on those laid off who are more likely to be older i find that compared to stayers young emigrants are much more skilled older emigrants are slightly more skilled and commuters are not more skilled as measured by education and pre move wages my conclusions are based on a comparison of results from aggregate inter state migration data and individual data from the eastern sample of the german socio economic panel for 1990 2000 jel j61 p23

agglomeration spillovers and wage and housing cost gradients across the urban hierarchy abstract the tyranny of distance in terms of its effect on median earnings and housing costs is examined for rural and urban u s counties first we develop a series of distance metrics for an area s remoteness from multiple tiers of the urban hierarchy second we consider geographical access of buyers and sellers through market potential measures typical of those used in empirical studies of the new economic geography we estimate penalties of about 5 to 9 for median earnings and 12 to 17 for housing costs for area remoteness from the combined tiers of the urban hierarchy differences in market potential also influence factor prices but these effects generally are smaller than those produced by urban hierarchy distances thus it appears that empirical tests of new economic geography models need to consider sources of agglomeration spillovers beyond aggregate market potential

measuring business cycles a modern perspective in the first half of this century special attention was given to two features of the business cycle 1 the comovement of many individual economic series and 2 the different behavior of the economy during expansions and contractions both of these attributes were ignored in many subsequent business cycle models which were often linear representations of a single macroeconomic aggregate however recent theoretical and empirical research has revived interest in each attribute separately notably dynamic factor models have been used to obtain a single common factor from a set of macroeconomic variables and nonlinear models have been used to describe the regime switching nature of aggregate output we survey these two strands of research and then provide some suggestive empirical analysis in an effort to unite the two literatures and to assess their usefulness in a statistical characterization of business cycle dynamics

the costs of agglomeration house and land prices in french cities we develop a new methodology to estimate the elasticity of urban costs with respect to city population using french house and land price data after handling a number of estimation concerns we find that the elasticity of urban costs increases with city population with an estimate of about 0 03 for an urban area with 100 000 inhabitants to 0 08 for an urban area of the size of paris our approach also yields a number of intermediate outputs of independent interest such as the share of housing in expenditure the elasticity of unit house and land prices with respect to city population and within city distance gradients for house and land prices

viewpoint boosting recessions this paper explores the effectiveness of boosting often regarded as the state of the art classification tool in giving warning signals of recessions 3 6 and 12 months ahead boosting is used to screen as many as 1 500 potentially relevant predictors consisting of 132 real and financial time series and their lags estimation over the full sample 1961 1 2011 12 finds that there are fewer than 10 important predictors and the identity of these variables changes with the forecast horizon there is a distinct difference in the size and composition of the relevant predictor set before and after mid 1980 rolling window estimation reveals that the importance of the term and default spreads are recession specific the aaa spread is the most robust predictor of recessions three and 6 months ahead while the risky bond and 5 year spreads are important for 12 months ahead predictions certain employment variables have predictive power for the two most recent recessions when the interest rate spreads were uninformative warning signals for the post 1990 recessions have been sporadic and easy to miss the results underscore the challenge that changing characteristics of business cycles pose for predicting recessions prevoir les recessions ce texte explore l efficacite de la methode dite du boosting qu on considere souvent comme un instrument de classification qui est a la fine pointe de l art de prevoir les recessions 3 6 et 12 mois a l avance cette methode est utilisee pour passer au crible quelques 1500 predicteurs potentiellement pertinents construits a partir de 132 series chronologiques de variables reelles et financieres plus ou moins decalees des estimations de l echantillon complet pour la periode du debut de 1961 a la fin de 2011 revelent qu aussi peu que dix predicteurs sont importants et que l identite de ces variables change selon l horizon de prevision considere il y a aussi une difference marquee dans la taille et la composition de cet ensemble de predicteurs avant et apres le milieu des annees 1980 il appert que l importance des ecarts de credit ecarts des taux d interet et des risques de defaut de paiement est specifique a la recession particuliere l ecart aaa est le predicteur le plus robuste des recessions dans trois et six mois alors que la debenture risquee et l ecart des taux d interet pour la fenetre de 5 ans sont les predicteurs importants pour un horizon temporel de 12 mois certaines variables reliees a l emploi ont eu un certain pouvoir de prediction pour les deux dernieres recessions quand les ecarts de taux d interet n ont pas ete eclairants les signaux des clignotants pour les recessions d apres 1990 ont ete sporadiques et faciles a manquer les resultats soulignent le defi que posent a ceux qui font des previsions de recessions les caracteristiques changeantes des cycles economiques

nonlinear forecasting analysis using diffusion indexes an application to japan this paper extends the diffusion index di forecast approach of stock and watson 1998 2002 to the case of possibly nonlinear dynamic factor models when the number of series is large a two step procedure based onthe method of principal components is useful since it allows wide variety of nonlinearity in the factors the factors extracted from a large japanese data suggest some evidence of nonlinear structure furthermore both the linear and nonlinear di forecasts in japan outperform traditional time series forecasts while the linear di forecast in most cases performs as well as the nonlinear di forecast

model averaging in markov switching models predicting national recessions with regional data this paper introduces new weighting schemes for model averaging when one is interested in combining discrete forecasts from competing markov switching models in the empirical application we forecast u s business cycle turning points with state level employment data we find that forecasts obtained with our best combination scheme provide timely updates of u s recessions in that they outperform a notoriously difficult benchmark to beat the anxious index from the survey of professional forecasters for short term forecasts

business cycle turning points a new coincident index and tests of duration dependence based on a dynamic factor model with regime switching the synthesis of the dynamic factor model of stock and watson 1989 and the regime switching model of hamilton 1989 proposed by diebold and rudebusch 1996 potentially encompasses both features of the business cycle identified by burns and mitchell 1946 1 comovement among economic variables through the cycle and 2 nonlinearity in its evolution however maximum likelihood estimation has required approximation recent advances in multimove gibbs sampling methodology open the way to approximation free inference in such non gaussian nonlinear models this paper estimates the model for u s data and attempts to address three questions are both features of the business cycle empirically relevant might the implied new index of coincident indicators be a useful one in practice do the resulting estimates of regime switches show evidence of duration dependence the answers to all three would appear to be yes

a new coincident index of business cycles based on monthly and quarterly series maximum likelihood factor analysis of time series is possible even when some series are quarterly and others are monthly treating quarterly series as monthly series with missing observations and replacing them with artificial observations independent of the model parameters one can apply the kalman filter to a state space representation of a factor model and evaluate the likelihood function an application to quarterly real gdp and monthly coincident business cycle indicators gives a new coincident index of business cycles the new index is essentially the smoothed estimate of latent monthly real gdp and should improve upon the stock watson index

should the personal computer be considered a technological revolution evidence from u s metropolitan areas the introduction and diffusion of personal computers are widely viewed as a technological revolution using u s metropolitan area level panel data this paper asks whether links between pc adoption educational attainment and the return to skill conform to a model of technological revolutions in which the speed and extent of adoption are endogenous the model implies that cities will adjust differently to the arrival of a more skill intensive means of production with the returns to skill increasing most where skill is abundant and its return is low we show that the cross city data fit many of the predictions of the model during the period 1980 2000 the pc diffusion era

forecasting regional employment with the entrop method the paper provides an outline of a method useful for forecasting problems the approach is based on a combination of top down and bottom up techniques it is applied to project employment in all 327 western german districts for a time span of two years the most important step in the preparation of the forecast uses the entrop method which is an entropy optimizing procedure a generalization of common ras techniques newly developed for the estimation of matrices from heterogeneous information in a defined sense the estimated matrix is the most probable one the method chosen is very flexible and uses any available information extensively therefore the estimates are reliable as is shown in an ex post forecast there is a double purpose for the forecast of employment first it helps to gain insights in the causal processes generating regional developments and spatial disparities on labour markets second it is useful for regional labour market policies e g the budgetary planning of the federal em

learning by working in big cities individual earnings are higher in bigger cities we consider three reasons spatial sorting of initially more productive workers static advantages from workers current location and learning by working in bigger cities using rich administrative data for spain we find that workers in bigger cities do not have higher initial ability as reflected in fixed effects instead they obtain an immediate static premium and accumulate more valuable experience the additional value of experi ence in bigger cities persists after leaving and is stronger for those with higher initial ability this explains both the higher mean and greater dispersion of earnings in bigger cities

tipping and the dynamics of segregation schelling dynamic models of segregation journal of mathematical sociology 1 1971 143 186 showed that extreme segregation can arise from social interactions in white preferences once the minority share in a neighborhood exceeds a tipping point all the whites leave we use regression discontinuity methods and census tract data from 1970 through 2000 to test for discontinuities in the dynamics of neighborhood racial composition we find strong evidence that white population flows exhibit tipping like behavior in most cities with a distribution of tipping points ranging from 5 to 20 minority share tipping is prevalent both in the suburbs and near existing minority enclaves in contrast to white population flows there is little evidence of nonlinearities in rents or housing prices around the tipping point tipping points are higher in cities where whites have more tolerant racial attitudes

tarnishing the golden and empire states land use restrictions and the u s economic slowdown abstract this paper studies the impact of state level land use restrictions on u s economic activity focusing on how these restrictions have depressed macroeconomic activity since 2000 we use a variety of state level data sources together with a general equilibrium spatial model of the united states to systematically construct a panel dataset of state level land use restrictions between 1950 and 2014 we show that these restrictions have generally tightened over time particularly in california and new york we use the model to analyze how these restrictions affect economic activity and the allocation of workers and capital across states counterfactual experiments show that deregulating existing urban land from 2014 regulation levels back to 1980 levels would have increased us gdp and productivity roughly to their current trend levels california new york and the mid atlantic region expand the most in these counterfactuals drawing population out of the south and the rustbelt general equilibrium effects particularly the reallocation of capital across states account for much of these gains

human capital graduate migration and innovation in british regions with the aid of a geographical information system our paper constructs a three stage least squares simultaneous equation model to investigate the interrelationships between the interregional flows of human capital and the innovation dynamism of a region in order to do this we model the interregional migration behaviour of high quality british university graduates from university into first employment and we relate these human capital flows to both the labour market characteristics and the knowledge characteristics of the employment regions this is done for all industries and separately for just high technology industries our results indicate that for england and wales there is a two way causality between the interregional human capital employment migration flows of recent university graduates and the innovation performance of regions however the results for great britain as a whole depend on whether london is included and scotland is excluded we find little or no support for the argument that the presence of local universities or small firms promotes regional innovation

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

forecasting us recessions with macro factors dynamic factors estimated from panels of macroeconomic indicators are used to predict future recessions using probit models three factors are considered a bond and exchange rates factor a stock market factor and a real activity factor three results emerge first models that use only financial indicators exhibit a large deterioration in fit after 2005 second models that use factors yield better fit than models that use indicators directly out of sample forecasting exercises confirm these results for 3 6 and 12 month horizons using both ex post revised data and real time data third results show evidence that data revisions affect factors less than individual indicators

firm sorting and agglomeration to account for the uneven distribution of economic activity in space i propose a theory of the location choices of heterogeneous firms in a variety of sectors across cities in equilibrium the distribution of city sizes and the sorting patterns of firms are uniquely determined and affect aggregate tfp and welfare i estimate the model using french firm level data and find that nearly half of the productivity advantage of large cities is due to firm sorting the rest coming from agglomeration economies i quantify the general equilibrium effects of place based policies policies that subsidize smaller cities have negative aggregate effects

power couples changes in the locational choice of the college educated 1940 1990 college educated couples are increasingly located in large metropolitan areas these areas were home to 32 percent of all college educated couples in 1940 39 percent in 1970 and 50 percent in 1990 we investigate whether this trend can be explained by increasing urbanization of the college educated or the growth of dual career households and the resulting severity of the colocation problem we argue that the latter explanation is the primary one smaller cities may therefore experience reduced inflows of human capital relative to the past and thus become poorer

the dynamic relationship between permanent and transitory components of u s business cycles this paper investigates the dynamic relationship between permanent and transitory components of post war u s business cycles we specify a time series model for real gnp and consumption in which the two share a common stochastic trend and transitory component and markov regime switching is used to model business cycle phases in these components the timing of switches between business cycle phases is allowed to differ across the permanent and transitory components we find strong evidence of a lead lag relationship between the switches in the two components specifically switches in the permanent component leads switches in the transitory component when entering recessions

the dynamics of capital flow episodes nous proposons une methodologie nouvelle pour reperer les episodes de flux importants de capitaux cette methode repose sur un modele de markov a changement de regime le grand avantage de ce type de modeles sur les approches retenues dans la litterature est qu il permet de classifier les mouvements de capitaux en differents regimes sans qu il soit necessaire de formuler des hypotheses specifiques au contexte ou a l echantillon choisi

amenities and regional differences in returns to worker characteristics average wages in regions in the united states vary considerably in trying to explain these differences in the average wage across regions a number of studies have found that differences in the returns to characteristics of workers such as years of schooling are as important as differences in the skill composition of the labor force 4 6 10 141 these differences in returns are generally interpreted as reflecting regional differences in demand for worker characteristics coupled with barriers to factor mobility this interpretation is based on the argument that the presence of at least one perfectly mobile factor with perfect information will cause spatial convergence in characteristic prices as that particular factor exploits any spatial price differential 4 p 2161 this paper suggests an alternative to this demand based explanation for regional differences in the structure of wages one based on regional differences in the supply of worker characteristics this explanation does not rely on impediments to the movement of workers or firms and is consistent with an equilibrium view of wages in which regional wage differentials are viewed as compensation for local amenities the theoretical model presented in the following section assumes capital and labor are perfectly mobile with perfect information implying that in equilibrium the utility of workers with similar characteristics is the same in all locations this convergence of utility however does not necessarily imply convergence of characteristic prices equilibrium differences in the returns to a specific worker characteristic can exist if worker characteristics affect an individual s valuation of an area s amenities relative to the individual s demand for land

why has regional income convergence in the u s declined the past thirty years have seen a dramatic decrease in the rate of income convergence across states and in population flows to wealthy places these changes coincide with 1 an increase in housing prices in productive areas 2 a divergence in the skill specific real returns to living in productive places 3 a redirection of low skilled migration and 4 diminished human capital convergence due to migration we develop a model where falling housing supply elasticity and endogenous labor mobility generates these patterns using a new panel measure of housing supply regulations we demonstrate the importance of this channel income convergence continues in less regulated places while it has stopped in more regulated places

the determinants and welfare implications of us workers diverging location choices by skill 1980 2000 abstract from 1980 to 2000 the rise in the us college high school graduate wage gap coincided with increased geographic sorting as college graduates concentrated in high wage high rent cities this paper estimates a structural spatial equilibrium model to determine causes and welfare consequences of this increased skill sorting while local labor demand changes fundamentally caused the increased skill sorting it was further fueled by endogenous increases in amenities within higher skill cities changes in cities wages rents and endogenous amenities increased inequality between high school and college graduates by more than suggested by the increase in the college wage gap alone jel d31 i26 j24 j31 j61 r23

wages rents and amenities differences among workers and regions what explains persistent regional earnings differences this paper argues that regional differences in amenities can account for the wage differences in contrast cost of living variations do not account for wage differences but actually exacerbate them this conclusion results from a model in which variations in rents and wages are equalizing differences for amenity differences empirical results are consistent with the model

housing urban growth and inequalities the limits to deregulation and upzoning in reducing economic and spatial inequality urban economics and branches of mainstream economics what we call the housing as opportunity school of thought have been arguing that shortages of affordable housing in dense agglomerations r

identifying human capital externalities theory with applications the identification of aggregate human capital externalities is still not fully understood the existing mincerian approach confounds positive externalities with wage changes due to a downward sloping demand curve for human capital as a result the mincerian approach yields positive externalities even when wages equal marginal social products we propose an approach that identifies human capital externalities whether or not aggregate demand for human capital slopes downward another advantage of our approach is that it does not require estimates of the individual return to human capital applications to u s cities and states between 1970 and 1990 yield no evidence of significant average schooling externalities copyright 2006 wiley blackwell

an econometric characterization of business cycle dynamics with factor structure and regime switching a dynamic factor model with regime switching is proposed as an empirical characterization of business cycles the approach integrates the idea of comovements among macroeconomic variables and asymmetries of business cycle expansions and contractions the first is captured with an unobservable dynamic factor and the second by allowing the factor to switch regimes the model is estimated by maximizing its likelihood function and the empirical results indicate that the combination of these two features leads to a successful representation of the data relative to extant literature this holds for within and out of sample and for both revised and real time data copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

is specialization good for regional economic development kemeny t and storper m is specialization good for regional economic development regional studies debates about urban growth and change often centre on specialization however arguments linking specialization to metropolitan economic development contain diverse and sometimes conflicting claims is it better to be highly specialized or diversified does specialization refer to the absolute or relative scale of an activity in a region does specialization have static or evolutionary effects this paper investigates these questions in theoretical and empirical terms by analysing local agglomerations over time it is found that growing absolute specialization is positively linked to wages while changes in relative concentration are not significantly associated with wage dynamics

the german wage curve evidence from the iab employment sample abstract this paper examines the german wage curve using the institut fur arbeitsmarkt und berufsforschung iab employment sample over the period 1981 1990 a random sample of 6590 employees covering 142 labor market regions over a ten year period is considered the total number of observations is 40 852 taking into account the endogeneity of unemployment as well as controlling for region and time effects this paper finds support for the wage curve in germany the overall unemployment elasticity estimate is 0 07 and is higher for younger workers than older workers the wages of less qualified workers are more responsive to local unemployment rates than the wages of more qualified workers also the wages of men are slightly more responsive to local unemployment rates than the wages of women ignoring endogeneity of the local unemployment rate yields results in favor of the wage curve only for younger and less qualified workers accounting for endogeneity of the unemployment rate yields evidence in favor of the wage curve across all types of workers

land use worker heterogeneity and welfare benefits of public goods we show that investments in public goods change the optimal land use in their vicinity leading to additional welfare benefits this occurs through two sorting mechanisms first availability of public goods leads to higher population densities second population groups sort according to their preferences for public goods we develop a structural spatial general equilibrium model that accounts for these effects the model is estimated using data on transport infrastructure commuting behaviour land use and land rents for some 3000 zip codes in the netherlands and for three levels of education welfare benefits of investments in public transport infrastructure are shown to differ sharply by workers educational attainment welfare gains from changes in land use account for up to 30 of the total benefits of a transport investment

spatial changes in labour market inequality abstract we study spatial changes in labour market inequality for us states and msas using census and american community survey data between 1980 and 2010 we report evidence of significant spatial variations in education employment shares and in the college wage premium for us states and msas and show that the pattern of shifts through time has resulted in increased spatial inequality because relative supply of college versus high school educated workers has risen faster at the spatial level in places with higher initial supply levels we also report a strong persistence and increased inequality of spatial relative demand bigger relative demand increases are observed in more technologically advanced states that have experienced faster increases in r d and computer usage and in states where union decline has been fastest finally we show the increased concentration of more educated workers into particular spatial locations and rising spatial wage inequality are important features of labour market polarization as they have resulted in faster employment growth in high skill occupations but also in a higher demand for low wage workers in low skill occupations overall our spatial analysis complements research findings from labour economics on wage inequality trends and from urban economics on agglomeration effects connected to education and technology

conventional monetary policy transmission during financial crises an empirical analysis summary this paper studies the effects of a conventional monetary policy shock in the usa during times of high financial stress the analysis is carried out by introducing a smooth transition factor model where the transition between states normal and high financial stress depends on a financial conditions index employing a quarterly dataset over the period 1970 q1 to 2008 q4 containing 108 us macroeconomic and financial time series i find that a monetary policy shock during periods of high financial stress has stronger and more persistent effects on macroeconomic variables such as output consumption and investment than it has during normal times differences in effects among the regimes seem to originate from nonlinearities in both components of the credit channel i e the balance sheet channel and the bank lending channel copyright 2016 john wiley sons ltd

new index of coincident indicators a multivariate markov switching factor model approach abstract this paper extends the univariate markov switching unobserved component model to the multivariate markov switching factor model of coincident economic indicators an approximate ml method is developed to estimate the model the extracted markov switching factor may be interpreted as the coincident index and is comparable to the stock watson index which differs only by the markov switching component using four constituent series of the doc coincident index for the period january 1960 to june 1992 the proposed model generates recessionary and expansionary periods which are remarkably consistent with the nber chronology of the business cycles from the noisy monthly data this paper also finds that duration dependence does matter

forecasting the probability of us recessions a probit and dynamic factor modelling approach quantifying the probability of u s recessions has become increasingly important since august 2007 in a data rich environment this paper is the first to apply a probit model to common factors extracted from a large set of explanatory variables to model and forecast recession probability the results show the advantages of the proposed approach over many existing models simulated real time analysis captures all recessions since 1980 the proposed model also detects a significant jump in the next six month recession probability based on data up to november 2007 one year before the formal declaration of the recent recession by the nber quantifier la probabilite des recessions americaines est devenu de plus en plus important depuis aout 2007 dans un environnement ou l information foisonne ce texte est le premier a appliquer la technique probit a des facteurs communs extraits d un vaste ensemble de variables explicatives pour modeliser et predire la probabilite de recession les resultats montrent les avantages de l approche utilisee sur plusieurs des modeles en vogue une analyse de simulation en temps reel saisit toutes les recessions depuis 1980 le modele propose detecte aussi un saut significatif dans la probabilite de recession dans les prochains six mois a partir des donnees disponibles jusqu a novembre 2007 un an avant que le nber n annonce formellement le commencement de la recente recession

immigration and inequality immigration is often viewed as a proximate cause of the rising wage gap between highand low skilled workers nevertheless there is controversy over the appropriate theoretical and empirical framework for measuring the presumed effect and over the precise magnitudes involved this paper offers an overview and synthesis of existing knowledge on the relationship between immigration and inequality focusing on evidence from cross city comparisons in the u s while some researchers have claimed that a cross city research design is inherently flawed i argue that the evidence from cross city comparisons is remarkably consistent with recent findings based on aggregate time series data in particular cross city and aggregate time series comparisons provide support for three key conclusions 1 workers with below high school education are perfect substitutes for those with a high school education 2 high school equivalent and college equivalent workers are imperfect substitutes with an elasticity of substitution on the order of 2 3 within education groups immigrants and natives are imperfect substitutes together these results imply that the average impacts of recent immigrant inflows on the relative wages of u s natives are small the effects on overall wage inequality including natives and immigrants are larger reflecting the concentration of immigrants in the tails of the skill distribution and higher residual inequality among immigrants than natives even so immigration accounts for a small share 5 of the increase in u s wage inequality between 1980 and 2000

financial stress regimes and the macroeconomy some financial stress events lead to macroeconomic downturns while others appear to be isolated to financial markets we identify financial stress regimes using a model that explicitly links financial variables to macro economic outcomes the stress regimes are identified using an unbalanced panel of financial variables with an embedded method for variable selection our identified stress regimes are associated with corporate credit tightening and with nber recessions an exogenous deterioration in our financial conditions index has strong negative effects in economic activity and negative amplification effects on inflation in the stress regime these results are obtained with a novel factor augmented vector autoregressive model with smooth transition regimes fastvar

the interjurisdictional effects of growth controls on housing prices institute of university of i 39 business and california at i economic research berkeley fisher center for real estate and urban economics working paper series working paper no 84 83 the interjurisdictional effects of growth controls on housing prices l by these papers are preliminary in nature their purpose is to stimulate discussion and lawrence katz comment therefore they kenneth t rosen are not to be cited or quoted in any publication without the ex press permission of the author walter a haas school of business