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

social changes in impressionable years and adult political attitudes evidence from jewish expulsions in nazi germany this study provides evidence that individuals who grew up during the 1930 s jewish expulsions are less likely to show interest and participate in politics the estimates imply that at the mean individuals in their impressionable ages at the time of the expulsions are about 13 less likely to be interested in politics and 26 less likely to participate in politics these results are not found for individuals who were older at the time of the expulsions nor for those growing up during world war wwii results are robust to fixed region and birth year characteristics various definitions of impressionable ages and composition bias induced by differential migration and mortality rates across regions and cohorts the estimates are also not driven by other regional differences in 1930 s political participation party support catholic share exposure and destruction during wwii urbanization and other regional characteristics we provide evidence that the adverse effects on political attitudes we find are explained by a model of political participation emphasizing the role of civic skills and socioeconomic status acquired at younger ages exposure to the expulsions when young is associated with lower adult volunteerism trust church attendance and socioeconomic status

the estimation of wage gains and welfare gains in self selection models the authors modify the basic self sele ction model for the effects ofeducation training unions and other activities on wages by including heterogeneity of rewards to the activity i e diffe rences across individuals in the rate of return to the activity the authors sho w that such heterogeneity creates a new form of selectionbias they provide tes ts for its presence and draw out its implications for the wage and welfare gains to the activity an empirical application provides strong support for such hete rogeneityin one particular training program copyright 1987 by mit press

the effect of cohort size on earnings growth a reexamination of the evidence this study reexamines the effect of cohort size on earnings growth finis welch finds that individuals in larger cohorts experience depressed earnings conditions on entry into the labor market but that their earnings grow at faster rates than in smaller cohorts thus a large portion of the cohort size effect on earnings dissipates after a few years however using data almost identical to those of welch but estimating less restrictive models it is found here that cohort size not only depresses earnings at entry but also seems to slow down early career earnings growth the evidence suggests that earnings ini larger cohorts do not approach normal levels after at brief period in the labor force rather the negative cohort size effect on earnings appears to worsen with experience

children of war the long run effects of large scale physical destruction and warfare on children this paper provides causal evidence on the long term consequences of large scale physical destruction on educational attainment health status and labor market outcomes of children i exploit the plausibly exogenous region by cohort variation in the intensity of world war two wwii destruction as a unique quasi experiment i find that exposure to destruction had long lasting detrimental effects on the human capital formation health and labor market outcomes of germans who were at school age during wwii an important channel for the effect of destruction on educational attainment is the destruction of schools whereas malnutrition is partly behind the estimated impact on health

the choice of exchange rate regimes in developing countries a multinomial panel analysis abstract this paper analyses the choices of exchange rate regimes in developing countries since 1980 static and dynamic random effects multinomial panel models are estimated using simulation based techniques explanatory variables include oca fundamentals stabilization considerations currency crises factors and political and institutional features the results reveal strong state dependence in regime choices we also find evidence for non monotonic relationship between regime determinants and the degree of regime flexibility

returns to apprenticeship training in austria evidence from failed firms in the german speaking countries little is known about the payoffs to apprenticeship training for the participants ols estimates suggest that the returns are similar to those of other types of schooling however there is considerable heterogeneity in the quality of apprenticeships offered and institutional descriptions suggest that there might be an important element of selection in who obtains an apprenticeship and what type in order to overcome the resulting ability bias we estimate returns to apprenticeship training for apprentices in small austrian firms which cease to operate when a firm fails current apprentices cannot complete their training in this firm since apprentices will be at different stages in their apprenticeship at that time the failure of a firm will manipulate the length of the apprenticeship period completed for some apprentices the time to firm failure can therefore serve as an instrument for the length of the apprenticeship completed both at the original firm and at other firms we find instrumental variables returns which are similar or larger than the ols returns in our sample indicating relatively little selection

human capital and regional wage gaps lopez bazo e and motellon e human capital and regional wage gaps regional studies this paper uses micro level data to analyse the effect of human capital on regional wage differentials the results for the set of spanish regions confirm that they differ in the endowment of human capital but also that the return that individuals obtain from it varies sharply across regions regional heterogeneity in returns is especially intense in the case of education particularly when considering its effect on the employability of individuals these differences in endowment and especially in returns to human capital account for a significant proportion of regional wage gaps lopez bazo e and motellon e lopez bazo e et motellon e le capital humain et les ecarts des salaires regionaux regional studies cet article emploie des m

a war is forever the long run effects of early exposure to world war ii on trust abstract this paper examines the long term effect of conflict on trust by using changes in places and timing of combats during world war ii we focus on the pre school period an important life stage for the formation of trust and an age where war exposure may persist throughout life we find robust evidence that individuals exposed to combats in the first six years of life display lower trust and social engagement well into adulthood in light of the well known relationship between trust and collective action our results lend credence to the theory that violent conflict inhibits well functioning government in long run

democratizing access to higher education in russia the consequences of the unified state exam reform this is the first paper that evaluates the effects of a reform requiring russian universities to make admission decisions based on the results of a national high school exam we show the reform led to a threefold increase in geographic mobility rates among high school graduates from small cities and towns to start college this is robust to different techniques samples and specifications the reform was also accompanied by increases in students expectations to attend university parental transfers and educational expenditures there is no evidence the reform affected parental labor supply divorce and employment outcomes of graduates who did not move

banking crises and exchange rate regimes is there a link the authors investigate the links between banking crises and exchange rate regimes using a comprehensive data set that includes developed and developing countries over the last two decades in particular they examine whether the choice of exchange rate regime affects the likelihood cost and duration of banking crises empirical results indicate that adopting a fixed exchange rate diminishes the likelihood of a banking crisis in developing countries but once a banking crisis occurs its real costs in terms of forgone output growth are higher for countries with more stringent exchange rate requirements the duration of crises seems not to be affected by exchange rate policy instead it is influenced mainly by the size of the credit boom before the crisis

the choice of an exchange rate system and macroeconomic stability the recent theoretical literature regarding the choice of an exchange rate system has focused on how the choice of an exchange rate regime will affect the stability of the economy while the methodology and emphasis of the various theoretical arguments differ the common thread that runs through all is the notion that the appropriate exchange rate system will differ with the nature of the disturbance to the economy the substantive differences existing among the various studies are to a certain extent due to different criteria used for exchange system choice it is not surprising that one s beliefs with regard to the effect of exogenous shocks on exchange system choice will be sensitive to the objective function used for instance fischer 1977 and frenkel and aizenman 1982 focus on the minimization of real consumption shocks and derive the result that the greater the domestic money shocks the more likely is a float alternatively flood 1979 and aizenman 1983 with an objective of minimizing domestic price shocks conclude that the greater the domestic money shocks the more preferred is a fixed exchange rate while the evidence presented below will indicate which approach is more consistent with actual country practice we should first consider the rationale behind the criteria considered fischer appeals to basic micro theory when he says that concavity of utility functions expressed as a function of consumption justifies concern with the stability of consumption but it is not obvious that price stability is of itself undesirable

exploring different views of exchange rate regime choice the empirical distinction between de facto and de jure exchange rate regimes raises a number of interesting questions which factors may induce a de facto peg why do countries enforce a peg but do not announce it why do countries break their promises we show that a stable socio political environment and an efficient political decision making process are a necessary prerequisite for choosing a peg and sticking to it challenging the view that sees the exchange rate as a commitment device policymakers seem rather concerned with regime sustainability in the face of adverse economic and socio political fundamentals

unemployment in britain male unemployment in britain has risen from around 2 per cent in the 1950s to around 17 per cent in 1985 see figure 1 the figures are for male unemployment because there is no consistent series for women 1 even more remarkably unemployment has fallen in only three years out of the last twenty 1973 1978 and 1979 to account for this we need a model that explains both changes in the natural or non accelerating inflation rate of unemployment nairu and deviations from it we use a three equation supply side model centred on the labour market this has two main features the first concerns the determination of employment in the short run the labour demand function that we use cuts through the fruitless debate now raging especially in europe as to whether current unemployment is classical or keynesian according to the classical view employment is too high because real wages are too high according to the keynesian view real wages are not binding and unemployment is high because the product market does not clear with prices too high relative to nominal demand the whole debate is set in the framework of perfect competition yet in perfect competition prices are set by impersonal forces and it is not clear what could possibly stop prices clearing the market it is much more reasonable to think of prices as being set by imperfectly competitive firms existing prices being the best they can think of given the demand they face in this context firms demand for labour will depend on both the real product wage and the level of real aggregate demand this is the demand function we estimate and it conforms both to common sense and to the data however this does not imply that employment can be made to grow without limit by pumping up real demand for in the medium term when price surprises are eliminated our model determines three variables employment real wages and real demand on the basis of three equations an employment equation a price equation and a wage equation thus in the medium term there is a natural level of employment and corresponding to this a natural level of real aggregate demand the second key feature of our model concerns the medium term determination of unemployment in the medium term the planned mark up of wages over prices in wage settlements must be consistent with the mark up of prices over wage costs in employers pricing behaviour for if wage setters try to set real product wages higher than is consistent with employers pricing behaviour this generates ever increasing inflation thus the key to understanding unemployment in the medium term is the behaviour of wage setters if events occur that push them towards too high real wages then unemployment has to rise to offset these influences we shall call these influences wage pressure variables or push factors and they are clearly crucial in understanding unemployment the variables here include the social security system employment protection

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

pegging emerging currencies in the face of dollar swings the aim of this article is to study ruptures of exchange rate pegs by focusing on the fluctuations of the anchor currency we test for the hypothesis that currencies linked to the usd are more likely to loosen their peg when the usd is appreciating while sticking to it otherwise to this end we estimate smooth transition regression models for a sample of 28 emerging currencies over the 1994 2011 period our findings show that while the real effective exchange rates of most of these countries tend to co move with that of the usd in times of depreciation this relationship is frequently reversed when the us currency appreciates over a certain threshold

determining global currency bloc equilibria an empirical strategy based on estimates of anchor currency choice the study presents an empirical strategy for determining global currency bloc equilibria the procedure includes first a nested logit estimation of the combined determinants of currency regime and anchor currency choice second a test for a welfare maximizing regime decision in which estimates of the relative welfare of alternative regimes are inferred from the results of the first step estimation and third taking the path dependency of regime choice into account a currency bloc equilibrium is derived in equilibrium the dollar bloc is somewhat smaller and the euro bloc larger than at present counterfactual exercises assess among others the potential for a renminbi bloc

civil conflict and human capital accumulation the long term effects of political violence in peru this paper provides empirical evidence of the persistent effect of exposure to political violence on human capital accumulation i exploit the variation in conflict location and birth cohorts to identify the long and short term effects of the civil war on educational attainment conditional on being exposed to violence the average person accumulates 0 31 less years of education as an adult in the short term the effects are stronger than in the long run these results hold when comparing children within the same household further exposure to violence during early childhood leads to permanent losses i also explore the potential causal mechanisms

employment in the british coal industry a test of the labour demand model the authors test the conventional model of labor demand against the alternative that bargaining takes place over both wages and employme nt for a time series cross section data set covering the british coal industry they note the difficulty of identifying the contract curve under the alternative hypothesis and suggest the use of variables affecting the union and management status quo points as instruments for the endogenous wage they find that outside variables such as benefits and manufacturing wages are important in determining the level of employment thus rejecting the labor demand model copyright 1988 by royal economic society

the long run educational cost of world war ii an important component of the long run cost of a war is the loss of human capital suffered by school age children who receive less education austrian and german individuals who were 10 years old during the conflict or were more directly involved through their parents received less education than comparable individuals from nonwar countries such as switzerland and sweden we also show that these individuals experienced a sizable earnings loss some 40 years after the war which can be attributed to the educational loss caused by the conflict the implied consequences in terms of gross domestic product loss are calculated

tests of alternative wage employment bargaining models with an application to the uk aggregate labour market abstract in this paper we propose a test that discriminates among alternative models of bargaining for wages and employment the test rests on a theoretical framework which encompasses both the labour demand and the efficient bargain models of wage and employment determination it is based on testing the cross equation restrictions implied for the coefficients of union power variables in reduced form wage and employment equations the test is illustrated for the layard and nickell model of the aggregate uk labour market for which it is found that one can reject both the labour demand model and the hypothesis that wage employment bargains are efficient in favour of a generalised model of inefficient bargaining for wages and employment

child health and conflict in cote d ivoire we examine the impact of the 2002 07 civil conflict in cote d ivoire on children s health status measured by height for age we use pre and post war survey data coupled with information on the location of violent incidents to capture exposure to the conflict of children born during 1997 2007 our results indicate that children from regions more affected by the conflict suffered significant health setbacks compared with children from less affected regions further household level victimization such as war related economic stress health stress and displacement has a large and negative effect on child health in conflict affected regions

the long term educational cost of war evidence from landmine contamination in cambodia abstract the economic impact of war may be visible in the long run and particularly through its impact on human capital this paper uses unique district level data on landmine contamination intensity in cambodia combined with survey data on individuals to evaluate the long run impact of cambodia s 30 years of war 1970 1998 on education levels and earnings these effects are identified using difference in differences dd and instrumental variables iv estimators in the dd framework i exploit two sources of variation in an individual s exposure to the conflict age in 1970 and landmine contamination intensity in the district of residence the iv specification uses the distance to the thai border as an exogenous source of variation in landmine contamination intensity the most conservative result indicates that individuals who were too young to have attended school before the start of the war received on average 0 5 less years of education and immediately after the war there was no visible effect on e

evaluating the labor market effects of compulsory military service we identify the causal effect of compulsory military service on conscripts subsequent labormarket outcomes by exploiting the regression discontinuity design of the military draft in germany during the 1950s unbiased estimates of the effect of military service on lifetime earnings wages and employment are obtained by comparing men born before july 1 1937 the white cohort who were exempted from compulsory military service to men who were born on or shortly after this threshold date and hence faced a positive probability of being drafted we find that the putative earnings advantage and wage premium of those who served in the armed forces vanish when selection effects are taken into account

exchange rate regimes and inflation only hard pegs make a difference abstract using data from a large sample of developing countries from 1985 to 2001 we confirm that hard pegs currency boards or a shared currency reduce inflation and money growth there is no evidence that soft pegs confer any monetary discipline after other factors are controlled for inflation triggers regime switches under hard pegs monetary growth is unaffected by fiscal deficits or by inflation shocks under soft pegs as under floats increased fiscal deficits and positive inflation shocks are associated with higher monetary growth the apparently slower per capita output growth under hard pegs is explained by their geographical distribution jel classification f41

employment adjustment in uk manufacturing this analysis differs from previous studies of labor demand in its explicit inclusion of the costs to the firm of adju sting its workforce these costs include institutional factors such a s employment protection legislation and unions and market factors su ch as the degree of slack in the labor market two questions are addr essed what is the quantitative impact of these forces and does their inclusion improve the fit of a labor demand function the results sh owed these factors to have a strong influence on the rate of hiring f iring and to improve significantly on conventional labor demand funct ions copyright 1988 by royal economic society

was weber wrong a human capital theory of protestant economic history max weber attributed the higher economic prosperity of protestant regions to a protestant work ethic we provide an alternative theory protestant economies prospered because instruction in reading the bible generated the human capital crucial to economic prosperity we test the theory using county level data from late nineteenth century prussia exploiting the initial concentric dispersion of the reformation to use distance to wittenberg as an instrument for protestantism we find that protestantism indeed led to higher economic prosperity but also to better education our results are consistent with protestants higher literacy accounting for most of the gap in economic prosperity

the economic determinants of the choice of an exchange rate regime a probit analysis abstract probit models were used to analyze the choice of exchange rate regimes by developing countries in the period 1977 1995 the results show the preeminence of criteria postulated in the theory of optimum currency areas i e individual structural characteristics

national culture and the choice of exchange rate regime abstract based on the social analysis framework of williamson we argue that national culture especially the individualism collectivism dimension located in the social embeddedness level can guide behaviors and decisions in a country including the choice of exchange rate regime we argue that individualistic societies are more likely to choose floating regimes because their economic agents are independent overconfident and have higher levels of risk tolerance individualistic societies are also associated with better financial development fewer capital controls and more democratic institutions which are all tied to a higher probability of choosing a floating exchange rate regime we use data on 78 countries over the 1976 2014 period and we control for common determinants of exchange rate regimes we find that individualistic countries have a significantly higher probability of implementing a floating regime than a fixed regime our evidence is robust to using an instrumental variables approach an alternative estimation technique an alternative regime classification alternative proxies for culture a subsample analysis and additional controls we also find that other cultural dimensions uncertainty avoidance power distance and masculinity can influence the choice of exchange rate regime but their effect is weaker than that of individualism

zero returns to compulsory schooling in germany evidence and interpretation abstract we estimate the impact of compulsory schooling on earnings using changes in compulsory schooling laws in west germany after world war ii most estimates in the literature indicate returns in the range of 10 to 15 while our research design is very similar to studies for various other countries we find a zero return we find no evidence that this is due to labor market institutions or the apprenticeship training system in germany the result might be due to the fact that the basic skills most relevant for the labor market are learned earlier in germany than in other countries

currency boards more than a quick fix currency boards more than a quick fix once a popular colonial monetary arrangement currency boards fell into disuse as countries gained political independence but recently currency boards have made a remarkable come back this essay takes a critical look at their performance are currency boards really a panacea for achieving low inflation and high growth or do they merely provide a quick fix allowing authorities to neglect fundamental reforms and thus fail to yield lasting benefits we have three major findings first the historical track record of currency boards is sterling with few instances of speculative attacks and virtually no involuntary exits countries that did exit from currency boards did so mainly for political rather than economic reasons and such exits were usually uneventful second modern currency boards have often been instituted to gain credibility following a period of high or hyperinflation and in this regard have been remarkably successful countries with currency boards experienced lower inflation and higher if more volatile gdp growth compared to both floating regimes and simple pegs the inflation difference reflects both a lower growth rate of money supply a discipline effect and a faster growth of money demand a credibility effect the gdp growth effect is significant but may simply reflect a rebound from depressed levels third case studies reveal the successful introduction of a currency board to be far from trivial requiring lengthy legal and institutional changes as well as a broad economic and social consensus for the implied commitment moreover there are thorny issues as yet untested regarding possible exits from a currency board thus currency boards do not provide easy solutions but if introduced in the right circumstances with some built in flexibility they can be an important tool for gaining credibility and achieving macroeconomic stabilization atish r ghosh anne marie and holger c wolf

determinants of exchange rate practices some empirical evidence from thailand although thailand has achieved a spectacular average annual growth rate of 8 in the past two decades due largely to the opening of the economy to international trade there is not yet a consensus on the exchange rate regime that is most suited to the restoration of sustained growth in thailand this study empirically investigates the predictors of exchange rate regimes in thailand using quarterly data spanning the period 1990 1 and 2002 3 results indicate that the government is likely to choose a pegged exchange rate regime in periods of monetary shocks and unsustainable public finance whereas an open economy with a degree of economic development and foreign reserves will encourage the government to opt for a flexible exchange regime in thailand

education and civil conflict in nepal between 1996 and 2006 nepal experienced violent civil conflict as a consequence of a maoist insurgency which many argue also brought about an increase in female empowerment this paper exploits variations in exposure to conflict by birth cohort survey date and district to estimate the impact of the insurgency on education outcomes overall conflict intensity measured by conflict casualties is associated with an increase in female educational attainment whereas abductions by maoists which often targeted school children have the reverse effect male schooling tended to increase more rapidly in areas where the fighting was more intense but the estimates are smaller in magnitude and more sensitive to specification than estimates for females similar results are obtained across different specifications and robustness checks indicate that these findings are not due to selective migration

education earnings and the canadian g i bill canadian second world war veterans benefited from an extensive educational pro gram similar to the u s g i bill because of differences in military enlistment rates how ever a much lower fraction of quebec men were eligible for these benefits than men from other provinces building on this fact we analyse inter cohort patterns of education and earnings for english speaking men from ontario using french speaking men from quebec as a control group we find that the instrumental variables estimates of the return to school ing are typically as big or bigger than the corresponding ols estimates jel classification j24 i21

effect of secondary school fees on educational attainment in this study the heterogeneity of the fee abolition process in west german secondary schools is used to identify the effect of school fees on educational attainment and to obtain an estimate of the price elasticity of upper secondary education the analysis is based on representative individual level data from three annual surveys of the german mikrozensus while coefficients cannot be estimated precisely the results suggest that on average upper secondary school attainment increased by at least 8 percent in response to the fee abolition the educational attainment of females appears to be more price sensitive than that of males