marshall s scale economies using panel data this paper estimates plant level production functions for machinery and high tech industries that allow for scale externalities from other plants in the same industry locally and from the scale or diversity of local economic activity outside the own industry the paper finds that the count of other own industry plants representing a count of local information spillover sources has strong productivity effects in high tech but not machinery industries single plant firms both benefit more from and generate greater external benefits than corporate plants given their greater reliance on external environments on dynamic externalities high tech single plant firms benefit also from the scale of past own industry activity i find little evidence of economies from the diversity or scale of local economic activity outside the own industry

commutes neighborhood effects and earnings an analysis of racial discrimination and compensating differentials abstract recent tester studies indicate that minority workers face restricted residential and employment opportunities because of racial discrimination in housing and labor markets these restrictions may create a spatial mismatch between where urban minorities reside and where metropolitan area jobs are located resulting in reduced proximity of minority workers to jobs prior studies of racial discrimination and urban spatial mismatch however have paid little attention to the possibility that differences in employment commutes may be partially offset by compensating variations in neighborhood amenities quality adjusted house prices and earnings such effects could help to mitigate the impact of discrimination on minority workers using a unique subset of the 1985 and 1989 american housing surveys we estimate a fixed effects commute time model that controls for quality adjusted house prices neighborhood amenities and earnings results indicate that although blacks have longer commutes than comparably skilled white and asian workers roughly one third of the estimated difference is offset by neighborhood amenity and housing price differentials however even after controlling for neighborhood fixed effects and earnings educated black workers have significantly longer commutes than comparably skilled asian and white workers additional findings indicate that regardless of race household mobility is an important mechanism through which the market attains a spatial equilibrium providing further support for arguments that restricted proximity to residential opportunities and jobs reduces the economic welfare of minority households

assessing the equalizing force of mobility using short panels france 1990 2000 in this paper we document whether and how much the equalizing force of earnings mobility has changed in france in the 1990 s for this purpose we use a representative three year panel the french labour force survey we develop a model of earnings dynamics that combines a flexible specification of marginal earnings distributions to fit the large cross sectional dimension of the data with a tight parametric representation of the dynamics adapted to the short time series dimension log earnings are modelled as the sum of a deterministic component an individual fixed effect and a transitory component which is assumed first order markov the transition probability of the transitory component is modelled as a one parameter plackett copula we estimate this model using a sequential expectation maximization algorithm we exploit the estimated model to study employment earnings inequality in france over the 1990 2002 period we show that in phase with business cycle fluctuations a recession in 1993 and two peaks in 1990 and 2000 earnings mobility decreases when cross section inequality and unemployment risk increase we simulate individual earnings trajectories and compute present values of lifetime earnings for various horizons inequality presents a hump shaped evolution over the period with a 9 increase between 1990 and 1995 and a decrease afterwards accounting for unemployment yields an increase of 11 moreover this increase is persistent as it translates into a 12 increase in the variance of log present values the ratio of inequality in present values to inequality in one year earnings a natural measure of immobility or of the persistence of inequality remains remarkably constant over the business cycle

wage mobility in the united states this paper examines the mobility of individuals through the wage and earnings distributions using 1979 1991 data from the national longitudinal survey of youth lifetime wages will be more equally distributed than wages from any single year if individuals change position in the wage distribution over time the results suggest that mobility is predominantly within group mobility reducing wage inequality by 12 26 over a four year horizon a detailed examination of within group mobility using year to year estimates of transition probabilities among quintiles of the distribution reveals similar general patterns across all skill groups mobility declined significantly over the years especially at the lower end of the wage and earnings distributions

valuing english primary schools this paper provides the first empirical evidence for the uk on the effect of primary school performance on property prices we find that on average a one percentage point increase in the neighbourhood proportion of children reaching the government specified target grade pushes up neighbourhood property prices by 0 67 at 2000 property prices we calculate the social valuation of a sustained 1 improvement in primary school performance to be up to 90 per child per year our instrumental variable and semi parametric approach avoids the problems of school quality endogeneity and omitted neighbourhood variables that occur in typical property value models

positive feedback in skill aggregation across chinese cities this paper examines whether human capital levels diverged across chinese cities between 1990 and 2010 by employing a series of instruments for the initial human capital share consistent positive

race specific urban wage premia and the black white wage gap abstract we establish a novel empirical fact about the black white wage gap looking both across and within metropolitan areas increasing city size or employment density is associated with a larger black white wage gap the estimated effects represent between 9 and 18 of recent estimates of the black white wage gap using a variety of techniques we demonstrate that our within city relationship is unlikely to be driven by racial differences in unobserved ability finally we present evidence suggestive of a role for race specific networks in explaining these differences in the black white wage gap

ethnicity neighborhoods and human capital externalities the socioeconomic performance of today s workers depends not only on parental skills but also on the average skills of the ethnic group in the parents generation or ethnic capital this paper investigates the link between the ethnic externality and ethnic neighborhoods the evidence indicates that residential segregation and the external effect of ethnicity are linked partly because ethnic capital summarizes the socioeconomic background of the neighborhood where the children were raised ethnicity has an external effect even among persons who grow up in the same neighborhood when children are exposed frequently to persons who share the same ethnic background copyright 1995 by american economic association

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

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

racial disparities in job finding and offered wages abstractthe extent to which discrimination can explain racial wage gaps is one of the most divisive issues in the social sciences using a newly available data set this paper develops a simple empirical test that under plausible but not innocuous conditions provides a lower bound on the extent of discrimination in the labor market taken at face value our estimates imply that differential treatment accounts for at least one third of the black white wage gap we argue that the patterns in our data are most naturally rationalized through a search matching model in which employers statistically discriminate on the basis of race when hiring unemployed workers but learn about their marginal product over time

earnings instability and earnings inequality of males in the united states 1967 1991 although much research has focused on recent increases in annual earnings inequality in the united states the increases could have come from either of two sources the distribution of lifetime earnings could have become more unequal or the receipt of lifetime earnings could have become more unstable based on an analysis of the 1968 92 panel study of income dynamics we find that lifetime earnings inequality increased during the early 1980s and that earnings instability increased during the 1970s we also examine how these trends are related to changes in the distribution of wages and hours and the returns to education

geography industrial organization and agglomeration this paper makes two contributions to the empirical literature on agglomeration economies first the paper uses a unique and rich database in conjunction with mapping software to measure the geographic extent of agglomerative externalities previous papers have been forced to assume that agglomeration economies are club goods that operate at a metropolitan scale second the paper tests for the existence of organizational agglomeration economies of the kind studied qualitatively by saxenian 1994 this is a potentially important source of increasing returns that previous empirical work has not considered results indicate that localization economies attenuate rapidly and that industrial organization affects the benefits of agglomeration

ethnic unemployment rates and frictional markets the unemployment rate in france is roughly 6 percentage points higher for african immigrants than for natives in the us the unemployment rate is approximately 9 percentage points higher for blacks than for whites commute time data indicates that minorities face longer commute times to work potentially reflecting more difficult access to jobs in this paper we investigate the impact of spatial mismatch on the unemployment rate of ethnic groups using the matching model proposed by rupert and wasmer 2012 we find that spatial factors explain 1 1 5 percentage points of the unemployment rate gap in both france and the us amounting to 17 25 of the relative gap in france and about 10 17 5 in the us among these factors differences in commuting distance play the most important role in france though longer commuting distances may be mitigated by higher mobility in the housing market for african workers overall we still conclude that labor market factors remain the main explanation for the higher unemployment rate of africans

quantile selection models with an application to understanding changes in wage inequality we propose a method to correct for sample selection in quantile regression models selection is modeled via the cumulative distribution function or copula of the percentile error in the outcome equation and the error in the participation decision copula parameters are estimated by minimizing a method of moments criterion given these parameter estimates the percentile levels of the outcome are readjusted to correct for selection and quantile parameters are estimated by minimizing a rotated check function we apply the method to correct wage percentiles for selection into employment using data for the uk for the period 1978 2000 we also extend the method to account for the presence of equilibrium effects when performing counterfactual exercises

residential segregation and the economic status of black workers new evidence for an old debate abstract scholars have long debated whether ghetto residence lowers the earnings of blacks most empirical studies on this question have been flawed because they have not considered the simultaneous effects of choices of work and residence locations and the effects of intrametropolitan variation in rents and wages this paper estimates a revealed preference model of intraurban location with data from the 1980 public use microdata sample for cleveland detroit and philadelphia to test whether black male household heads who are employed full time year round are less likely than whites to live and work at their best locations we measure the wages rents and commuting costs associated with each possible job residence location combination in these cities for each person given their job qualifications and their housing needs a revealed preference approach is used to evaluate the economic welfare of individuals at each possible location and then compare the actual distribution of work and residence locations by race with the welfare maximizing distribution the divergence in these distributions by race measures the economic effects for employed black male household heads of residential segregation in ghettos we find that the economic status of blacks can be improved significantly by changing their intrametropolitan job locations surprisingly this conclusion holds regardless of whether or not blacks keep their current residential locations while changes in residential locations can improve the economic status of blacks relative to whites by decreasing commuting and or the cost of housing such residential changes do not significantly alter the physical accessibility of better paying jobs

communication externalities in cities to identify communication externalities in french cities we exploit a unique survey recording workplace communication of individual workers our hypothesis is that in larger and or more educated cities workers should communicate more in turn more communication should have a positive effect on wages by estimating both an earnings and a communication equation we find evidence of communication externalities in larger and more educated cities workers communicate more and in turn this has a positive effect on their wages depending on the estimates we find that 13 to 22 of the effects of a more educated and larger city on wages percolate through this channel

start up complexity and the thickness of regional input markets start ups in different industry groups are classified according to their average complexity we find that thick regional input markets are conducive to start up activity in general and complex start ups in particular but that some inputs are more important than others

comparing income mobility in germany and the united states using generalized entropy mobility measures based on a derivation of the asymptotic sampling distribution of the generalized entropy mobility measures this paper provides a statistically rigorous analysis of income mobility in germany and the united states using the panel data set psid soep equivalent data file several alternative measures of income aggregation inequality measures and groupings are considered to establish robustness we find that to a high degree of statistical confidence post government income mobility is much higher in germany possible reasons for these findings are revealed through disaggregation of the samples by population subgroups

competition over high income workers job growth and access to labour in atlanta access to a large labour pool labour pooling leads to local economic concentrations through agglomeration economies however these concentrations may be self limiting by reducing labour availability through competition over high skill workers this paper examines whether labour pooling and labour availability of workers with different incomes account for local job growth in the atlanta metropolitan area between 2000 and 2006 workers income is employed to account for the human capital of workers including education and skills it is found that the availability of high income workers is the only positive significant factor for job growth and the spatial size of the effect is larger than the traffic analysis zone neighbourhood scale in contrast no labour pooling indicators show a positive association with job growth the finding casts doubt on labour pooling effects at the intraregional level and suggests avenues for further research on local area agglomeration economies

productivity gains from geographic concentration of human capital evidence from the cities abstract based on recent theoretical developments the argument is made that the average level of human capital is a local public good cities with higher average levels of human capital should therefore have higher wages and higher land rents after conditioning on the characteristics of individual workers and dwellings this prediction is supported by data for standard metropolitan statistical areas smsas in the united states where the smsa average levels of formal education and work experience are used as proxies for the average level of human capital the alternative explanations of omitted smsa variables and self selection are evaluated an estimate of the effect of an additional year of average education on total factor productivity is computed

wage premia in employment clusters how important is worker heterogeneity this article tests whether the correlation between wages and concentration of employment can be explained by unobserved worker productivity residential location is used as a proxy for unobserved productivity and average commute time to workplace is used to test whether location based productivity differences are compensated away by longer commutes analyses using confidential data from the 2000 decennial census find that estimates of agglomeration wage premia within metropolitan areas are robust to comparisons within residential location and that estimates do not persist after controlling for commuting costs suggesting that the productivity differences across locations are due to location not individual unobservables

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

neighborhood crime and young males job opportunity abstract a puzzling aspect of america s crime problem is the concentration of crime in poor inner city neighborhoods the economic model of crime suggests that this concentration may be caused by a dearth of legitimate earnings opportunities for young males living in these neighborhoods while studies on spatial mismatch in the low skilled labor market have documented the relatively poor job opportunity possessed by youth in these neighborhoods there exists no evidence on the role job opportunity plays in explaining the dramatic spatial variation in crime within urban areas using a unique panel of neighborhood crime and employment data for atlanta i estimate models that control for time and fixed effects as well as the possible endogeneity of job opportunity the results suggest that young males job opportunity plays a key role in resolving the enigma surrounding the high variation in crime across urban neighborhoods

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

urban wages and labor market agglomeration abstract using the 5 public use micro sample of the 1990 u s census we find that observationally equivalent workers in the manufacturing sector earn higher wages when they are in urban labor markets that have a larger share of national or metropolitan employment in their same occupation and industry groups quantitatively the effect is large with an elasticity measured at the means of between 1 2 and 3 6 for these effects we interpret the willingness of firms to pay more for equivalent workers in dense markets as evidence of an agglomeration economy in urban labor

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

trends in the transitory variance of earnings in the united states we decompose the rise in cross sectional variance of male annual earnings in the united states from 1969 to 1996 into permanent and transitory components we find that the variance of permanent earnings began rising in the the late 1970s and has continued to rise in the 1980s the variance of transitory earnings also rose in the 1980s but declined in the 1990s there are lags in the earnings process which require a structural model to pinpoint the exact calendar times at which the changes in trends occurred

perspectives on the rise and fall of american growth abstract this paper summarizes the book and assesses the reviews contained in the four contributed papers gregory clark provides convincing arguments that extend the book s forecast that future technological change will be slower nicholas crafts shows declining mortality and shorter work hours greatly increase welfare augmented tfp growth during 1929 50 benjamin friedman points out that optimism about future technological change casts doubt on future employment growth while technological pessimism implies employment optimism daron acemoglu and co authors emphasize the institutional environment that influences the timing and magnitude of innovation

peers at work we study peer effects in the workplace specifically we investigate whether how and why the productivity of a worker depends on the productivity of coworkers in the same team using high frequency data on worker productivity from a large supermarket chain we find strong evidence of positive productiv ity spillovers from the introduction of highly productive personnel into a shift worker effort is positively related to the productivity of workers who see him but not workers who do not see him additionally workers respond more to the presence of coworkers with whom they frequently interact we conclude that social pressure can partially internalize free riding externalities that are built into many workplaces jel j24 l81 m54

a theory of urban growth in an economy experiencing endogenous economic growth and exogenous population growth we explore two main themes how urbanization affects efficiency of the growth process and how growth affects patterns of urbanization localized information spillovers promote agglomeration and human capital accumulation fosters endogenous growth individual city sizes grow with local human capital accumulation and knowledge spillovers and city numbers generally increase which we demonstrate is consistent with empirical evidence we analyze whether local governments can successfully internalize local dynamic externalities in addition we explore how growth involves real income differences across city types and how urbanization can foster income inequality most nonagricultural production in developed countries occurs in metropolitan areas the underlying reasons why economic activity agglomerates into cities localized information and knowledge spillover also make cities the engines of economic growth in an we gratefully acknowledge support of the national science foundation grants sbr 9422440 and sbr9730142 for this research the work has benefited from conversations with harl ryder on the dynamics of the model and from comments by gilles duranton and participants in seminars at brown colorado and texas austin and a presentation at an isit seminar sponsored by the centre for economic policy research and the national bureau of economic research

commutes quits and moves abstract this paper analyzes the effects of commuting distance on quit and move propensities in metropolitan areas with conventional wage and housing price gradients most workers ordinarily move in order to lengthen commutes and quit in order to shorten them however quits and moves by workers whose residential choices are constrained by segregation should be relatively insensitive to commutes descriptive statistics and simultaneous probit estimates of move and quit propensities for white and black employees of a single firm confirm these predictions they demonstrate that long commutes encourage white quits and discourage white moves commute increases of one standard deviation would increase white quit propensities and reduce white move propensities by approximately 10 in contrast commutes by black employees have no significant effects on their quit and move propensities

labor earnings mobility and inequality in the united states and germany during the growth years of the 1980s recent years have witnessed increased interest in issues of inequality and mobility in the labor market using data from the panel study of income dynamics and the german socio economic panel we compare the labor earnings mobility of prime age men and women in the united states and germany during the growth years despite major differences in labor market institutions we find very similar patterns in the two countries our formal models of labor earnings dynamics suggest a great deal of persistence in both countries in the united states this may derive from permanent individual specific differences among men while in germany random shocks are found to persist longer for men women in germany and the united states have similar earnings dynamics copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

effort wages and the international division of labor this paper embeds variable effort into a traditional two sector heckscher ohlin model of international competition effort enters a production function as total factor productivity and on the assumption that effort does not affect capital depreciation the capital cost savings from high effort operations are passed on to workers the labor market thus offers a set of contracts with higher wages compensating for higher effort this has implications for growth openness minimum wages collective bargaining public support of education efficiency of state enterprises the distribution of wealth childbearing and much more

is the ladder sticky measuring semi parametrically state dependence in earnings mobility employing the u s data for the 1990 s we disentangle state dependence from unobserved heterogeneity in earnings mobility the fixed effects dynamic multinomial logit utilized to model earnings quintiles dynamics fits the data very well much more so than the autocorrelated dynamic ordered probit unordered models should thus be preferred to study earnings mobility state dependence is found to be significant it has a protective anti fall effect at the top of the distribution and a detrimental anti rise effect at the bottom consequently the difficulty of climbing the ladder is not exclusively a question of individual characteristics public policies could thus be implemented to improve information about individuals ability and job offers and to design more efficient wage setting institutions

spatial mismatch in the labor market and racial differences in neighborhood crime abstract results from estimating fixed effects models of neighborhood crime show that an important cause of higher crime in black neighborhoods is the poor job accessibility of black youth a key result is that access explains 21 of the difference in property crime between black and white neighborhoods

the impact of school racial compositions on neighborhood racial compositions evidence from school redistricting i use data surrounding public school redistricting to study how school racial compositions affect neighborhood racial compositions this redistricting followed from the end of court ordered busing for racial desegregation significantly changing the racial composition of the assigned school for many neighborhoods over a 5 year period the impact of an increase in the percent black of the assigned elementary school on the percent black of the neighborhood was positive the effects increased over time consistent with a simple model of short run neighborhood racial dynamics these results have implications for potential effects of school racial desegregation policy changes on neighborhood racial compositions jel h75 i28 r23

job information networks neighborhood effects and inequality this paper explores the theoretical and empirical literature to examine the use by different social groups of informal sources of information provided by friends relatives and acquaintances during job search and its consequences for the job market it also addresses the role of network structure and size the resource endowments of contacts and nature of the links between contacts to explain differences in the effects of job information networks in doing so the paper also turns to the sociology literature on job information networks and provides an economic perspective on such sociological concepts as strong versus weak ties inbreeding distance from structural holes etc the paper distinguishes between models of exogenous job information networks that is where individuals obtain job related information through a given social structure and endogenous job information networks which are social networks that result from individuals uncoordinated actions the paper pays special attention to such issues as physical and social proximity and sharing of information and discusses them in the context of the recent social interactions and neighborhood effects literature finally the paper outlines a model that integrates job information networks where interactions occur in business cycle frequencies with the dynamics of human capital formation which include the joint effects of parental community and neighborhood human capital and are set in life cycle frequencies for the purpose of organizing suggestions for future research and examining earned income inequality

a cross national comparison of permanent inequality in the united states and germany traditional cross sectional measures find greater inequality in the united states than in industrialized western european countries but are unable to distinguish transitory from permanent inequality with longitudinal data we measure cross sectional inequality during the 1980s using the shorrocks measure of income stability to find the degree to which single period measures exaggerate permanent inequality surprisingly given the smaller social welfare system and the less restrictive labor markets in the united states we find that both single period inequality and the share of that inequality that persists over time are greater in the united states than in germany

relative wage movements and the distribution of consumption we analyze how relative wage movements among birth cohorts and education groups affected the distribution of household consumption and economic welfare our empirical work draws on the best available cross sectional data sets to construct synthetic panel data on u s consumption labor supply and wages during the 1980s we find that low frequency movements in the cohort education structure of pretax hourly wages among men drove large changes in the distribution of household consumption the results constitute a spectacular failure of between group consumption insurance a failure not explained by existing theories of informationally constrained optimal consumption behavior a welfare analysis indicates that the cost of between group consumption variability is larger than the cost of aggregate consumption variability by two orders of magnitude

concentration of human capital externalities and the wage gap in us metro areas the effects of the concentration of human capital on wages and productivity have been widely studied but despite their heterogeneity little attention has been paid to its effects on the wage gap

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

education and labor market discrimination using a model of statistical discrimination and educational sorting we explain why blacks get more education than whites of similar cognitive ability and we explore how the armed forces qualification test afqt wages and education are related the model suggests that one should control for both afqt and education when compar ing the earnings of blacks and whites in which case a substantial black white wage differential emerges we reject the hypothesis that differences in school quality between blacks and whites explain the wage and education differentials our findings support the view that some of the black white wage differential reflects the operation of the

rising inequality changes in the distribution of income and consumption in the 1980s this paper examines changes in the distribution of income and consumption in the united states during the 1980s using data from the current population survey income and consumer expenditure survey consumption we reach three primary conclusions first changes in the distribution of consumption parallel changes in the distribution of income the lowest quintile of the consumption distribution received 0 9 percentage points less of total consumption in 1988 than in 1980 the corresponding decline for income was 0 6 percentage points second broad conclusions concerning recent changes in the consumption distribution are not very sensitive to the exact choice of a measure of family needs under a wide variety of alternative household equivalence scales there is a widening in the consumption distribution in the 1980s third the usc of consumption measures of well being in place of measures based on current money income docs change conclusions concerning the extent of poverty in the united stales using the official federal poverty thresholds we find that the overall consumption poverty rate was three percentage points below the income poverty rate in 1988 comparisons of the poverty rates of the elderly and the non elderly are substantially affected by the choice of poverty measure the consumption poverty rare for the elderly was only 60 percent of the rate for adults and one third of the rate for children in 1988 this abstract was borrowed from another version of this item

selection on observed and unobserved variables assessing the effectiveness of catholic schools in this paper we measure the effect of catholic high school attendance on educational attainment and test scores because we do not have a good instrumental variable for catholic school attendance we develop new estimation methods based on the idea that the amount of selection on the observed explanatory variables in a model provides a guide to the amount of selection on the unobservables we also propose an informal way to assess selectivity bias based on measuring the ratio of selection on unobservables to selection on observables that would be required if one is to attribute the entire effect of catholic school attendance to selection bias we use our methods to estimate the effect of attending a catholic high school on a variety of outcomes our main conclusion is that catholic high schools substantially increase the probability of graduating from high school and more tentatively attending college we find little evidence of an effect on test scores

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

spatial wage disparities sorting matters spatial wage disparities can result from spatial differences in the skill composition of the workforce in non human endowments and in local interactions to distinguish between these explanations we estimate a model of wage determination across local labour markets using a very large panel of french workers we control for worker characteristics worker fixed effects industry fixed effects and the characteristics of the local labour market our findings suggest that individual skills account for a large fraction of existing spatial wage disparities with strong evidence of spatial sorting by skills interaction effects are mostly driven by the local density of employment not controlling for worker heterogeneity leads to very biased estimates of interaction effects endowments only appear to play a small role

why do minority men earn less a study of wage differentials among the highly educated en in several minority groups in the united states have wages that are substantially lower than those of the benchmark majority group non hispanic white men several generations of labor economists have sought to understand the forces that drive these disparities this research program is potentially important for the purpose of determining whether minority wage gaps are likely to be narrowed more effectively by increasing enforcement of antidiscrimination laws or by implementing policies that reduce inequity in educational opportunity existing work shows large racial and ethnic differences in premarket factors especially formal schooling and suggests that these differences play a key role in shaping wage differences one example is trejo 1997 who finds that third and higher generation mexican american men earn 21 less than non hispanic white men approximately three quarters of the earnings gap is found to be attributable to the mexican americans relative youth and to differences in english language proficiency and years of schooling a second example is neal and johnson 1996 who find that black men earn 24 less than do non hispanic white men differences in schooling account for only about one fifth of this gap when the authors condition on performance on a basic verbal and math skills test the armed forces qualification test afqt though the differential between wages of blacks and whites declines to approximately onethird of its unadjusted level 1 trejo s 1997 study is a nice example of the traditional approach to studying race ethnicity wage gaps traditional in the sense that the explanatory variables in the study are conventional objective measures of human capital such as years of schooling and language ability neal and john

winter is coming robert gordon and the future of economic growth this comment assesses the claim of the rise and fall of american growth that for coming decades growth in us tfp will continue the disappointing pace of the last decade while predicting future technological advance is difficult there are indications that gordon may actually be too optimistic on future tfp growth the share of output from manufacturing which still generates the majority of r d expenditures and has historically more rapid tfp growth will continue to fall there are substantial obstacles to rapid tfp advance in much of the rest of the economy construction transport health care and other services

twenty years of rising inequality in u s lifetime labour income values in this paper we study the evolution of lifetime labour income inequality by constructing present value life cycle measures that incorporate both earnings and employment risk we find that even though lifetime income inequality is 40 less than earnings inequality the total increase in lifetime income inequality over the past 20 years is the same as earnings inequality while the total increase is the same the pathways there differ with earnings inequality experiencing a steady increase and lifetime income inequality increasing in spurts particularly in the latter half of the 1990s finally we find the changes in lifetime income inequality are primarily driven by changes in earnings mobility and changes in the earnings distribution itself changes in employment risk and the composition of the sample such as the shift toward attaining more education and the ageing population do not play a large role 2004 the review of economics studies limited

the attenuation of human capital spillovers abstract this paper uses 2000 census data to estimate the relationship of agglomeration and proximity to human capital to wages the paper takes a geographic approach and focuses on the attenuation of agglomeration and human capital effects differencing and instrumental variable methods are employed to address endogeneity in the wage agglomeration relationship and also to deal with measurement error in our agglomeration and human capital variables three key results are obtained first the spatial concentration of employment within five miles is positively related to wage second the benefits of spatial concentration are driven by proximity to college educated workers an instance of human capital spillovers third these effects attenuate sharply with distance

local human capital and productivity an analysis for the spanish regions sanroma e and ramos r 2007 local human capital and productivity an analysis for the spanish regions regional studies 41 349 359 this paper examines the relationship between the stock of human capital and productivity in the spanish regions nuts iii and assesses whether the transmission channel involves external economies the empirical evidence points to a positive relationship between the two variables although it cannot be explained in terms of the impact of exogenous local human capital external economies but rather in terms of other demand factors sanroma e et ramos r 2007 le capital humain et la productivite locales une analyse des regions d espagne regional studies 41 349 359 cet article cherche a examiner le rapport entre le stock de capital humain et la productivite dans les regions d espagne nuts iii et a evaluer si oui ou non la chaine de transmission implique des economies externes les preuves empiriques indiquent un rapport etroit entre les deux variables bien que l

social housing neighborhood quality and student performance children who grow up in deprived neighborhoods underperform at school and later in life but whether there is a causal link remains contested this study estimates the short term effect of very deprived neighborhoods characterized by a high density of social housing on the educational attainment of fourteen years old students in england to identify the causal impact this study exploits the timing of moving into these neighborhoods i argue that the timing can be taken as exogenous because of long waiting lists for social housing in high demand areas using this approach i find no evidence for negative short term effects on teenage test scores

consumption inequality and income uncertainty this paper places the debate over using consumption or income in studies of inequality growth in a formal intertemporal setting it highlights the importance of permanent and transitory income uncertainty in the evaluation of growth in consumption inequality we derive conditions under which the growth of variances and covariances of income and consumption can be used to separately identify the growth in the variance of permanent and transitory income shocks household data from britain for the period 1968 1992 are used to show a strong growth in transitory inequality toward the end of this period while younger cohorts are shown to face significantly higher levels of permanent inequality

chinese industrial reform accomplishments prospects and implications why has china grown so fast when conditions thought to be necessary for growth were absent nowhere is this dissonance greater than in china s industrial sector which has recorded big gains in output employment and exports in the absence of privatization effective bankruptcy legislation and other policy innovations widely seen as prerequisites for successful reform this essay reviews the accomplishments of chinese industry since the start of reform in 1978 focusing on the internal dynamics of the development process considers the future of partial reform and discusses the implications of china s industrial reform experience

semiparametric estimation of regression models for panel data linear models with error components are widely used to analyse panel data some applications of these models require knowledge of the probability densities of the error components existing methods handle this requirement by assuming that the densities belong to known parametric families of distributions typically the normal distribution this paper shows how to carry out nonparametric estimation of the densities of the error components thereby avoiding the assumption that the densities belong to known parametric families the nonparametric estimators are applied to an earnings model using data from the current population survey the model s transitory error component is not normally distributed use of the nonparametric density estimators yields estimates of the probability that individuals with low earnings will become high earners in the future that are much lower than the estimates obtained under the assumption of normally distributed error components

two tales on human capital and knowledge spillovers the case of the us and brazil this article uses a quasi mincerian approach to verify whether the concentration of college educated individuals employed in the business support services sector and in the own sector contributes to increased productivity in other sectors of the economy we estimate the returns to education using data from the 2008 us current population survey march supplement and from the 2008 brazilian household survey this article finds evidence of a positive and significant human capital sectorial spillover effect which is consistent with acemoglu s 1996 conjecture the sectorial concentration of highly educated workers contributes to increase wages for all workers this study also finds evidence of increasing returns to education in brazil and diminishing returns to education in the united states this finding may be explained by differences in supply of skilled workers in both economies in addition the short supply of highly skilled workers in brazil likely explains the importance of the spillover effect fro

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

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

smart cafe cities testing human capital externalities in the boston metropolitan area abstract existing studies have explored only one or in some cases two mechanisms by which human capital externalities percolate at the macrogeographic levels this study however uses the 1990 massachusetts census data to test four mechanisms at the microgeographic levels in the boston metropolitan area labor market we propose that individual workers can learn from their occupational and industrial peers in the same local labor market through four channels depth of human capital stock marshallian labor market externalities jacobs labor market externalities and thickness of the local labor market we find that all types of human capital externalities are significant across census blocks different types of externalities attenuate at different speeds over distances for example the effect of human capital depth decays rapidly beyond three miles away from block centroids we conclude that knowledge spillovers are very localized within a microgeographic scope in cities that we call smart cafe cities

cluster sample methods in applied econometrics inference methods that recognize the clustering of individual observations have been available for more than 25 years brent moulton 1990 caught the attention of economists when he demonstrated the serious biases that can result in estimating the effects of aggregate explanatory variables on individual specific response variables the source of the downward bias in the usual ordinary least squares ols standard errors is the presence of an unobserved state level effect in the error term more recently john pepper 2002 showed how accounting for multi level clustering can have dramatic effects on t statistics while adjusting for clustering is much more common than it was 10 years ago inference methods robust to cluster correlation are not used routinely across all relevant settings in this paper i provide an overview of applications of cluster sample methods both to cluster samples and to panel data sets

earnings dynamics and inequality among canadian men 1976 1992 evidence from longitudinal income tax records using an extraordinary database drawn from longitudinal income tax records we decompose canada s growth in earnings inequality into its persistent and transitory components we find that the growth in earnings inequality reflects both an increase in long run inequality and an increase in earnings instability the canadian data strongly reject several restrictions commonly imposed in the u s literature and they also suggest that imposing these evidently false restrictions may lead to distorted inferences about earnings dynamics and inequality trends

intra urban wage variation employment location and commuting times abstract theory predicts that within a metropolitan area employers located where there is difficult commuting will have to compensate their workers with appropriately higher wages this should hold whether one is comparing central city work locations with those at the fringe or simply differences between suburban edge cities in the longer run if employers are concerned primarily with labor costs firm mobility should equalize wages or else agglomeration economies must exist to sustain the differences using microdata from the 1990 census for 2 large metropolitan areas in the u s wage equations are estimated for urban workers allowing for different wage levels depending on zone of employment the results show that observationally equivalent workers have wages that vary substantially across employment zones within a metro area and that this variation is strongly and significantly correlated with the average commute time of the workers employed in that zone these results hold across several different econometric specifications wages and average travel times also are found to be highly correlated with the aggregate number of workers in each zone but are not affected by zone employment specialization thus there is inconclusive evidence as to whether wage commuting cost differences result from equilibrium agglomeration effects or from a disequilibrium distribution of employment

the empirical content of the job search model labor mobility and wage distributions in europe and the us abstract job search models of the labor market hypothesize a very tight correspondence between the determinants of labor turnover and individual wage dynamics on one hand and the determinants of wage dispersion on the other this paper offers a systematic examination of whether this correspondence is present in the data by estimating a rudimentary partial equilibrium job search model on a three year panel of individual worker data covering 10 european countries and the u s we find that our basic job search model fits the data surprisingly well this also allows us to point at a number of interesting empirical regularities about wage distributions our results suggest that cross sectional data on individual wages contain the basic information needed to obtain a reliable measure of the magnitude of labor market frictions as measured by a parameter of the canonical job search model finally we use our results in a cross country comparison of the intensity and nature of job to job turnover we arrange countries into two different groups according to their turnover intensity we further show that the nature of job to job turnover is very different between those two groups turnover is predominantly voluntary in low turnover countries whereas it is to a large extent involuntary in high turnover countries

an international comparison of lifetime inequality how continental europe resembles north america we compare earnings inequality and mobility across the united states canada france germany and the united kingdom during the late 1990s a flexible model of earnings dynamics that isolates positional mobility within a stable earnings distribution is estimated earnings trajectories are then simulated and lifetime annuity value distributions are constructed earnings mobility and employment risk are found to be positively correlated with base year inequality taken together they produce more equalization in countries with high cross section inequality such that the countries in our sample have more similar lifetime inequality levels than cross section measures suggest

modelling income processes with lots of heterogeneity all empirical models of earnings processes in the literature assume a good deal of homogeneity in contrast to this we model earnings processes allowing for lots of heterogeneity between agents we also introduce an extension to the linear arma model that allows that the initial convergence

an empirical equilibrium search model of the labor market in structural empirical models of labor market search the distribution of wage offers is usually assumed to be exogenous however because in setting their wages profit maximizing firms should consider the reservation wages of job seekers the wage offer distribution is essentially endogenous we investigate whether a proposed equilibrium search model in which the wage offer distribution is endogenous is able to describe observed labor market histories we find that the distributions of job and unemployment spells are consistent with the data and that the qualitative predictions of the model for the wages set by employers are confirmed by wage regressions the model is estimated using panel data on unemployed and employed individuals we distinguish between separate segments of the labor market and we show that productivity heterogeneity is important to obtain an acceptable fit to the data the results are used to estimate the degree of monopsony power of firms further the effects of changes in the mandatory minimum wage are examined

nonlinear household earnings dynamics self insurance and welfare earnings dynamics are much richer than typically assumed in macro models with heterogeneous agents this holds for individual pre tax and household post tax earnings and across administrative social security administration and survey panel study of income dynamics data we study the implications of two processes for household post tax earnings in a standard life cycle model a canonical earnings process that includes a persistent and a transitory shock and a rich earnings dynamics process that allows for age dependence of moments non normality and nonlinearity in previous earnings and age allowing for richer earnings dynamics implies a substantially better fit of the evolution of cross sectional consumption inequality over the life cycle and of the individual level degree of consumption insurance against persistent earnings shocks richer earnings dynamics also imply lower welfare costs of earnings risk but as the canonical earnings process do not generate enough concentration at the upper tail of the wealth distribution

racial differences in residential and job mobility evidence concerning the spatial mismatch hypothesis abstract the spatial mismatch hypothesis asserts that job decentralization adversely impacts the labor market outcomes of african americans this paper tests whether race and job access have an independent effect on the probability of a joint residential move and job change no evidence is found to indicate that race directly influences the joint probability the paper finds however that poor job access has an independent negative effect on the probability of a joint residential move and job change because african american residences are heavily concentrated in american central cities these results suggest that african american workers may not be able to fully adjust as new jobs are created in the suburbs

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

urban diversity and economic growth at the risk of some simplification it is possible to identify four periods of intense study of cities by economists each of these has led to an increased understanding of the economics of urban areas and the unique role played by cities in the modem economy the first of these periods occurred in the decade after world war i only about ten years after the truck revolutionized the transport of goods within urban areas this period included the first systematic empirical analysis of the forces affecting the location of firms and households within cities robert murray haig 1926 and a number of other microeconomists at columbia analyzed the spatial pattems of manufacturing activity in lower manhattan and in the rest of new york city haig jmd his colleagues devoted considerable attention to where things belong in an urban area p 402 providing the first systematic economic analysis of urban spatial structure for example they analyzed the garment industry concluding that it was destined by nature to disperse north of 14th street and predicting that it would follow the estabhshed spatial pattem of the cooperage barrelmaking industry standardization in size and quality of barrels had meant that identical barrels could be made throughout the new york metropolitan area even in new jersey and the introduction of the truck meant that they could be transported cheaply throughout the region and exported the second of these periods though not in chronological order began in the mid 1960s it formalized many of the insights about location incentives within urban areas which had been uncovered a half century before mixed them with the logic of heinrich von thunen s 1826 ancient theories about agricultural crops and land values and applied them to the hotisehold sector the works of william alonso 1964

congestion tolling with agglomeration externalities abstract consider an urban economy with two types of externalities negative traffic congestion externalities and positive agglomeration externalities deriving from non market interaction suppose that urban travel can be tolled that non market interaction cannot be subsidized and that non market interaction is stimulated by a reduction in travel costs then the optimal toll is below the congestion externality cost this paper explores this line of reasoning

labour market structure and inequality a comparison of italy and the u s markets with rigid labour regulations and centralized wage setting are often thought to be inefficient but egalitarian using a model of off and on the job search and event history individual level data for italy and the u s we show that while the cross sectional wage distributions of young italian males are much more compressed than are the comparable distributions for young white u s males the estimated search model implies that the distribution of lifetime welfare is no more disperse in the u s than it is in italy our model implies that the high frequency of movements between labour market states leads to both a relatively equitable distribution of long run welfare in the u s and a high level of cross sectional inequality

wage differentials employer size and unemployment the unique equilibrium solution to a game in which a continuum of individual employers choose permanent wage offers and a continuum of workers search by sequentially sampling from the set of offers is characterized wage dispersion is a robust outcome provided that workers search while employed as well as when unemployed the unique nondegenerate equilibrium distribution of wage offers is constructed for three cases 1 identical workers and employers 2 identical employers and an atomless distribution of worker supply prices and 3 identical workers and an atomless distribution of job productivities copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

income variance dynamics and heterogeneity recent theoretical work has shown the importance of measuring microeconomic uncertainty for models of both general and partial equilibrium under imperfect insurance in this paper the assumption of i i d income innovations used in previous empirical studies is removed and the focus of the analysis is placed on models for the conditional variance of income shocks which is related to the measure of risk emphasized by the theory we first discriminate amongst various models of earnings determination that separate income shocks into idiosyncratic transitory and permanent components we allow for education and time specific differences in the stochastic process for earnings and for measurement error the conditional variance of the income shocks is modelled as a parsimonious arch process with both observable and unobserved heterogeneity the empirical analysis is conducted on data drawn from the 1967 1992 panel study of income dynamics we find strong evidence of sizeable arch effects as well as evidence of unobserved heterogeneity in the variances

coupling couples with copulas analysis of assortative matching on risk attitude we investigate patterns of assortative matching on risk attitude using self reported ordinal data on risk attitudes for males and females within married couples from the german socio economic panel over the period 2004 2012 we apply a novel copula based bivariate panel ordinal model estimation is in two steps first a copula based markov model is used to relate the marginal distribution of the response in different time periods separately for males and females second another copula is used to couple the males and females conditional on the past distributions we find positive dependence both in the middle of the distribution and in the joint tails and we interpret this as positive assortative matching pam hence we reject standard assortative matching theories based on risk sharing assumptions and favor models based on alternative assumptions such as the ability of agents to control income risk we also find evidence of assimilation that is pam appearing to increase with years of marriage jel c33 c51 d81