estimating the impact of currency unions on trade solving the glick and rose puzzle does leaving a currency union reduce international trade this paper uses a historical approach to re examine the puzzling large apparent impact of currency unions on trade i find that the early time series estimates were driven by the gradual decaying of colonial trade ties and other major geopolitical factors including warfare communist takeovers and ethnic cleansing episodes my methodology which carries lessons for other uses of gravity equations in policy analysis yields point estimates of currency unions on trade that are not statistically distinct from zero

labor market discrimination in a poor urban economy labor market discrimination by sex and by race in a poor urban economy is analyzed using a survey of manufacturing employees in tanzania there are large differences in mean wages by both sex and race using techniques previously applied to developed countries it is found that whereas the sex difference in mean wages can be explained mainly in terms of sex differences in personal characteristics the race difference is mainly the result of wage and job discrimination an attempt is made to explain the results which run counter to common presuppositions about discrimination

to float or to fix evidence on the impact of exchange rate regimes on growth we study the relationship between exchange rate regimes and economic growth for a sample of 183 countries over the post bretton woods period using a new de facto classification of regimes based on the actual behavior of the relevant macroeconomic variables in contrast with previous studies we find that for developing countries less flexible exchange rate regimes are associated with slower growth as well as with greater output volatility for industrial countries regimes do not appear to have any significant impact on growth the results are robust to endogeneity corrections and a number of alternative specifications borrowed from the growth literature

bilateral trade and the eurozone evidence from new member countries the question of whether and how much currency unions increase bilateral trade among their members has garnered much attention since rose s seminal article the answer is as pertinent now as ever for both the eurozone s existing and future members as the financial crisis shook the very foundations of the european monetary union emu and brought its shortcomings into the spotlight this paper analyses the issue using the gravity equation with country pair and time fixed effects for a sample of the four new members of the emu slovakia slovenia malta and cyprus which has to the author s knowledge not been studied thus far due to their recent joining and controls drawn from the european union this paper finds a positive relationship between joining the emu and trade with emu partners but not with non emu partners

formal schooling and workforce participation in a rapidly developing economy evidence from compulsory junior high school in taiwan abstract using 18 consecutive household surveys this study explores the impact of taiwan s extension of tuition free education from 6 to 9 years upon schooling and labor market outcomes participation sector class of activity and work income i estimate upward shifts relative to preexisting trends of more than 0 4 years of education for males and 0 25 years for females in the first six cohorts affected by compulsory junior high schooling utilizing inter cohort variation within an instrumental variables iv strategy i find larger effects of schooling on females workforce participation and total earnings even controlling for selection

risk adjustment and prevention widespread integration of market based incentives into healthcare systems calls for and has elicited increasing adoption of risk adjustment by deterring selection risk adjustment helps to assure fair and efficient payments among health insurers or capitated provider groups however since conventional risk adjustment allocates funds among regions or insurers according to current population health status it does not reward indeed it penalizes preventive efforts that improve population health this prevention penalty of risk adjustment represents a hidden cost of unclear magnitude undermining provider incentives for health promotion we develop a theoretical model of selection and prevention demonstrating this problem with conventional risk adjustment and suggesting a simple alternative risk adjustment should be linked to pay for performance for prevention l integration generalisee d incitatifs mercantiles dans les systemes de soins de sante appelle et a engendre l adoption croissante d ajustements au risque en decourageant la selection l ajustement au risque aide a assurer des paiements justes et equitables entre les assureurs ou les groupes de fournisseurs finances par capitation cependant comme les ajustements conventionnels au risque allouent des fonds entre les regions ou les assureurs selon le statut sanitaire present de la population ils ne recompensent pas et meme penalisent les efforts de prevention qui ameliorent la sante des populations cette penalisation de la prevention dans les ajustements au risque represente un cout cache d une magnitude mal etablie qui mine l incitation des fournisseurs a s occuper de promotion de la sante on developpe un modele theorique de selection et de prevention mettant en lumiere ce probleme dans l utilisation de l ajustement au risque conventionnel et on suggere une solution de rechange ou l ajustement au risque est reliea une remuneration a la performance pour la prevention

gender wage differentials and discrimination in the new south africa research into discrimination within south africa sa has focused on racial issues with gender issues being largely ignored this study aims to estimate gender wage differentials and through decomposition analysis understand the different problems faced by white black coloured and indian asian in 1995 it is found that white and asian females suffer greater gender discrimination than their black and coloured counterparts which could be a signal to future problems black and coloured females may encounter the largest gender wage differential is faced by white females whilst the lowest is encountered by coloured and black females a possible explanation for this finding is the low subsistence wages that the black and coloured population groups command relative to other population groups

caste and tribe inequality evidence from india 1983 1999 abstract despite policies targeting scheduled castes sc and scheduled tribes st there remain large disparities of living standards between sc st and non sc st households in india the sc st households may be poorer because they possess lower human and physical capital but they may also earn lower returns to these assets this study finds that 30 50 of the welfare disparities are attributable to different returns such structural differences between the sc and the non sc st are partly because the sc earn lower returns to schooling a large part of the structural disparities between the st and the non sc st comes from the fact that the areas where the st live are different from those where the non sc st live in addition the st tend to earn lower returns even with controls for geographical conditions

disadvantage and discrimination in self employment caste gaps in earnings in indian small businesses using the 2004 2005 india human development survey data we estimate and decompose the earnings of household businesses owned by historically marginalized social groups known as scheduled castes and tribes scsts and non scsts across the earnings distribution we find clear differences in characteristics between the two types of businesses with the former faring significantly worse the mean decomposition reveals that as much as 55 of the caste earnings gap could be attributed to the unexplained component quantile regressions suggest that gaps are higher at lower deciles providing some evidence of a sticky floor finally quantile decompositions reveal that the unexplained component is greater at the lower and middle deciles than higher suggesting that scst owned businesses at the lower and middle end of the conditional earnings distribution face greater discrimination

market structure and prices the responses of hospitals in the uk national health service to competition abstract the internal market reforms to the uk national health service nhs are a model adopted in many health care systems they introduce competition in supply little is known about the impact of these reforms this paper examines the pricing responses of nhs suppliers to competition the incentives of the reformed system are analysed these indicate that prices should differ between buyers and markets these hypotheses are tested using data on spot market transactions between hospitals and health care buyers the results indicate considerable price variability but offer broad support for the hypotheses

financial integration gdp correlation and the endogeneity of optimum currency areas the paper analyses the relationship between trade financial integration and business cycle synchronization in the euro area the introduction of the euro has had a noticeable impact on european financial markets evidence that capital market integration exerts a positive effect on output correlation has two major implications first it corroborates the hypothesis of the endogeneity of optimum currency areas whereby after joining a monetary union countries better meet standard oca criteria second it provides european policy makers with yet another reason to pursue financial integration in the euro area and in prospective members as well

games of monetary and fiscal interactions in the emu abstract this paper constructs various models of the emu and ecb when member countries have different objectives voting in pursuit of national interest can yield moderate and stable inflation the metaphor of walsh type contracts implements a monetary policy rule that averages the member countries most preferred rules in a repeated relationship where a country suffering a large adverse shock can use political bargaining to subvert the ecb s commitment the optimal rule should incorporate some flexibility to forestall that finally freedom of national fiscal policies undermines the ecb s monetary commitment this may justify fiscal constraints like the stability and growth pact

the decline of discrimination against colored people in south africa 1970 to 1980 abstract the paper analyses the gap in earnings between white and colored people in south africa in 1970 and 1980 the gap is decomposed into its explained and discrimination components and from a model of occupational attainment into wage and job discrimination job discrimination decreased between 1970 and 1980 colored people in younger experience cohorts experienced a significant decline in discrimination between 1970 and 1980 most of which was due to a decline in job descrimination discrimination against those in older experience cohorts appears not to have declined

do doctors respond to financial incentives uk family doctors and the gp fundholder scheme abstract the 1991 reforms to the uk nhs created a group of buyers of hospital care from amongst primary care physicians the implementation of the reforms was such that these buyers had incentives to increase their use of hospital services prior to entering the scheme in order to inflate their budgets it has been argued that non financial motives would limit such behaviour the paper shows that these health care providers did respond to the financial incentives offered by the scheme increasing hospital based activity prior to entry and so inflating their budgets upwards for the duration of the fundholding scheme

endogenous oca analysis and the early euro experience some have argued that the endogenous responses to the formation of a currency area are so strong that one need not worry about optimum currency area conditions ex ante we argue that this is much too strong a conclusion we draw on a number of recent studies to evaluate the endogeneity experiences of the eurozone in three major areas trade flows business cycle synchronisation and structural reforms to improve labour and product market flexibility simple before and after comparisons are insufficient for analysis of endogeneity the experiences of non euro western european economies suggest that broader trends also had considerable influence on trade and business cycle patterns while trade rose substantially within the eurozone it also rose with and among other european economies we argue that political economy considerations tend to dampen the magnitude of endogeneity efforts on structural reforms and that meeting conditions for entry may be a more powerful mechanism in this than are subsequent endogenous responses we also discuss a number of areas for further research

workers of the world unite franchise extensions and the threat of revolution in europe 1820 1938 abstract we test the hypothesis that the extension of the voting franchise in europe was related to the threat of revolution we contend that international diffusion of regime contention and information about revolutionary events happening in neighboring countries generate the necessary variation in the perceived threat of revolution using two samples of european countries covering the period from 1820 to 1938 we find robust evidence which is consistent with the threat of revolution hypothesis we also find some evidence that war triggered suffrage reform

trade creation and diversion revisited accounting for model uncertainty and natural trading partner effects summary the effect of preferential trade agreements ptas on trade flows is subject to model uncertainty stemming from the diverse and even contradictory effects suggested by the theoretical pta literature the existing empirical literature has produced remarkably disparate results and the wide variety of empirical approaches reflects the uncertainty about the correct set of explanatory variables that ought to be included in the analysis to account for the model uncertainty that surrounds the validity of the competing pta theories we introduce bayesian model averaging bma to the pta literature statistical theory shows that bma successfully incorporates model uncertainty in linear regression analysis by minimizing the mean squared error and by generating predictive distributions with optimal predictive performance once model uncertainty is addressed as part of the empirical strategy we find strong evidence of trade creation trade diversion and open bloc effects our results are robust to a range of alternative empirical specifications proposed by the recent pta literature copyright 2010 john wiley sons ltd

one money one market the effect of common currencies on trade currency unions their dramatic effect on international trade a gravity model is used to assess the separate effects of exchange rate volatility and currency unions on international trade the panel data bilateral observations for five years during 1970 90 covering 186 countries includes 300 observations in which both countries use the same currency i find a large positive effect of a currency union on international trade and a small negative effect of exchange rate volatility even after controlling for a host of features including the endogenous nature of the exchange rate regime these effects statistically significant imply that two countries sharing the same currency trade three times as much as they would with different currencies currency unions like the european emu may thus lead to a large increase in international trade with all that that entails andrew rose

caste discrimination in the indian urban labour market abstract this the pioneering quantitative analysis of caste in the indian urban labour market examines the age old problem of caste in the light of discrimination theory and government policy using a survey of workers in delhi the gross wage difference between scheduled untouchable and non scheduled caste is decomposed into its explained and discrimination components and from a model of occupation choice into wage and job discrimination discrimination is found to exist and to operate at least in part through the traditional mechanism viz assignment to jobs with the scheduled castes entering poorly paid dead end jobs it is assisted by methods of recruitment based on contacts prevalent in the manual occupation which also cause past discrimination to carry over to the present its practice serves the economic interests of those who exercise a taste for discrimination

rationing by waiting lists an empirical investigation abstract many social systems rely on a waiting list rather than price as a rationing device we present a model of the waiting list for elective surgery in the british national health service waiting time is allowed to influence both supply of and demand for surgery the resulting models of supply and demand are estimated empirically using over 4000 observations the results indicate low elasticity of demand with respect to waiting time suggesting that increased resources may reduce waiting times without greatly stimulating utilization the policy implications are important for the british national government when choosing the level of public expenditure to be devoted to health care

the human capital approach to black white earnings inequality some unsettled questions the persistence of earnings differences between blacks and whites in the united states has been a topic that has received a substantial amount of attention in both theoretical and empirical research in economics the differential in earnings typically is tied to racial differences in human capital accumulation this paper advances a systematic critique of the human capital approach to black white inequality inadequacies are identified in human capital theory as a general theory of inequality as well as a specific theory of racial inequality the critique suggests that a serious analysis of the black white earnings gap will require an entirely new approach to the study of racial income inequality

long run growth and volatility which source really matters the aim of the article is to analyse the relationship between long run growth and business cycle volatility in particular the main purpose of this article is to identify which source of volatility is most detrimental to growth using cross country data from 1970 to 2000 and several indicators of volatility such as inflation exchange rate government expenditure output and investment volatility this article shows that although all these measures of volatility are remarkably harmful for growth business cycle investment volatility is the main source that hampers long run growth this relation is robust to different measures of business cycle and to different sub samples of countries

do doctors charge high income patients more abstract when doctors are unconstrained in setting fees they charge higher fees to high income patients for a standard gp consultation the average fee gap is 25 of a minimum price competition closes this gap but not local area income

a multinomial logit nondiscriminatory approach to estimating racial wage and occupational discrimination this paper combines a technique to measure nondiscriminatory wage structures with a multinomial logit model to estimate both occupational racial discrimination and within occupation racial wage underpayment and overpayment using a recent south african october household survey it is found that racial discrimination against blacks and in favour of whites still persists in the south african labour market implying the persistence of white employer nepotism and or white employee discrimination

european product market integration after the euro using a detailed data set of prices of consumer goods in european cities from 1990 to spring 2003 we investigate the question of whether the introduction of the euro in january 1999 increased integration of consumer markets as reflected by consumer prices in fact we find no tendency for prices to converge after january 1999 this finding holds even when we control for a number of factors that might affect price dispersion on the other hand we find that there has been a significant reduction in price dispersion throughout the decade of the 1990s suggesting that efforts to reduce economic barriers initiated early in the decade may have in fact had the effect of significantly increasing the integration of consumer markets charles engel and john h rogers

distance language religion and the law of one price evidence from canada and nigeria we examine the impact of physical distance language and religion on law of one price lop deviations across interwar canadian and modern nigerian cities the data comprise monthly average retail prices for narrowly defined goods collected by national statistical agencies we find that differences in the fraction of the city population sharing a common language and religion have a significant impact on lop deviations the impact of language differences is consistent with a recently developed theory in which both trade costs and differences in signal noise ratios contribute to lop deviations

exchange rate regimes and international trade evidence from the classical gold standard era in this paper we show that the spread of the classical gold standard in the late nineteenth century increased international trade flows this positive effect was compounded whenever a group of countries formed a monetary union applying the gravity model of trade to more than 1 100 country pairs during the 1870 1910 period we find that two countries on gold would trade 60 percent more with each other than with countries on a different monetary standard moreover a monetary union would more than double bilateral trade flows our findings are relevant for current discussions on alternative monetary arrangements for the twenty first century

caste discrimination and transaction costs in the labor market evidence from rural north india abstract this paper is an empirical attempt to quantify caste based discrimination in the labor market using household data taken from rural north india in the regression analysis transaction costs associated with entry into the labor market and reservation wages are estimated simultaneously along with market wages the estimation results provide evidence of the existence of transaction costs in the labor market and discrimination against backward classes with regard to access to regular employment in line with previous studies the results suggest that the achievements of india s reservation policy so far have at best been limited in addition a comparison between the estimates from the model employed in this paper and conventional reduced form approaches shows that discrimination in labor market entry is likely to be underestimated in the conventional reduced form approaches

bad karma or discrimination male female wage gaps among salaried workers in india summary we use nationally representative data from the employment unemployment surveys in 1999 2000 and 2009 10 to explore gender wage gaps among regular wage salaried rws workers in india both at the mean as well as along the entire wage distribution to see what happens where the gender log wage gap at the mean is 55 in 1999 2000 and 49 in 2009 10 but this change is not statistically significant the blinder oaxaca and the machado mata melly decompositions indicate that in both years the bulk of the gender wage gap is unexplained i e possibly discriminatory they also reveal that over the decade while the wage earning characteristics of women improved relative to men the discriminatory component of the gender wage gap also increased in fact in 2009 10 if women were paid like men they would have earned more than men on account of their characteristics in both years we see the existence of the sticky floor in that gender wage gaps are higher among low wage earners and lower for high wage earners over the ten year period we find that the sticky floor became stickier for rws women machado mata melly decompositions reveal that in both years women at the lower end of the wage distribution face higher discriminatory gaps compared to women at the upper end

vocational training programs and youth labor market outcomes evidence from nepal abstract lack of skills is arguably one of the most important determinants of high levels of unemployment and poverty in response policymakers often initiate vocational training programs in effort to enhance skill formation among the youth using a regression discontinuity design we examine a large youth training intervention in nepal we find twelve months after the start of the training program that the intervention generated an increase in non farm employment of 10 percentage points itt estimates and up to 31 percentage points for program compliers late estimates we also detect sizeable gains in monthly earnings women who start self employment activities inside their homes largely drive these impacts we argue that low baseline educational levels and non farm employment levels and nepal s social and cultural norms towards women drive our large program impacts our results suggest that the program enables otherwise underemployed women to earn an income while staying at home close to household errands and in line with the socio cultural norms that prevent them from taking up employment outside the house

literacy sharing assortative mating or what labour market advantages and proximate illiteracy revisited abstract this paper explores the relationship between household literacy and the labour market outcomes of illiterate household members which basu narayan and ravallion 2002 report using household income and expenditure data from bangladesh bnr attribute a considerable wage premium for proximate illiterate women in off farm employment to labour productivity gains from intra household literacy sharing this wage premium also suggests that women may be more efficient recipients of literacy externalities than men we propose that any such relationship might not be due to higher labour productivity but may have other explanations such as systematically different and unobserved attributes of illiterate females married into literate households we also pay attention to the negative selection of illiterate females into non farm wage employment which contrary to received wisdom suggests that household literacy may not be unambiguously progressive for females we propose that the widely reported finding that

earnings and caste an evaluation of caste wage differentials in the nepalese labour market abstractthis paper examines the sources of wage differentials among castes in nepal a country which had until 1963 an age old caste based social division of labour we use an extended oaxaca decomposition model with occupation and firm size augmenting the conventionally used measures of human capital endowments our results indicate that caste wage differentials in nepal are large and that human capital endowments and lack of access to better paying occupations and larger firms have a significant impact furthermore we find mixed evidence that the government policy of affirmative action has narrowed down the caste wage differential

the nonlinear impact of currency unions on bilateral trade abstract most gravity model specifications assume that a currency union varies the level of bilateral trade between members by a constant proportion we demonstrate that a common currency also alters the slope of the relationship between bilateral trade and member country gdps

does the labour market explain lower female schooling in india labour market discrimination against women and parental discrimination against daughters are two of the most commonly cited explanations of the gender gap in education in developing countries this study empirically tests the labour market explanation for india using recent household survey data the results reveal substantial omitted family background bias in the estimates of rates of return to education the findings suggest that as well as overall labour market discrimination girls face poorer economic incentives to invest in schooling than boys because they reap lower labour market returns to education than boys

currency unions and trade how large is the treatment effect currency unions and trade what can the data say the impact of a common currency on trade can be grossly mismeasured if countries that belong to currency unions are systematically different from those that do not and if the relationship between trade and its observable determinants is complex i argue that such complications are plausible and likely to distort the empirical results of a recent economic policy paper by andrew rose issue 30 2000 pp 7 45 using techniques designed to be robust in this situation i find that the effects of common currency on international trade are considerably less dramatic and much less precisely estimated torsten persson i have always maintained that the measured effect of a single currency on trade appears implausibly large but i am not convinced by torsten persson s diagnosis and proposed solution i apply a variety of estimation techniques to a new larger data set where many more instances of currency union creation and abandonment make it possible to rely on time series as well as cross sectional evidence the results are similar to my earlier ones the effect of a single currency on trade is large andrew rose

trade costs 1870 2000 what has driven trade booms and trade busts in the past century and a half was it changes in global output or in the costs of international trade to address this question we derive a micro founded measure of aggregate bilateral trade costs based on a standard model of trade in differentiated goods these trade costs gauge the difference between observed bilateral trade and frictionless trade in terms of an implied markup on retail prices of foreign goods thus we are able to estimate the combined magnitude of tariffs transportation costs and all other macroeconomic frictions that impede interna tional trade but that are inherently difficult to observe we use this measure to examine the growth of global trade between 1870 and 1913 its retreat from 1921 to 1939 and its subsequent rise from 1950 to 2000 we find that trade cost declines explain roughly 55 percent of the pre world war i trade boom and 33 percent of the post world war ii trade boom while a precipi tous rise in trade costs explains the entire inter

jobs off the farm wealth human capital and social group in rural eastern india abstractthis study examines the effects of wealth human capital and social group on the occupational choice and income of farm households to gain an understanding of the mechanism underlying the

livestock and land share contracts in a hindu society this article examines factors related to a livestock rental market in western nepal and assesses whether this market is associated with caste differentiation and land rental market participation theoretical models for asset rich i e high caste households rich in land and livestock and asset poor i e low caste families households are presented to provide logical explanations for the existence of a livestock rental market and the synergy between livestock and land rental markets participation a combination of double hurdle models and bivariate ordered probit models were used to test the implications of the models consistent with the theoretical models land and livestock rich high caste households were more likely to rent out land and or livestock whereas land and livestock poor and credit constrained low caste households were more likely to rent livestock and land from others participation in the two markets was positively correlated indicating a synergistic relationship that may be due to production and transaction costs reducing benefits policies that can enhance the allocative efficiency of livestock and land rental markets can improve equity as well as efficiency of land use in nepal provision of livestock credit to land poor low caste households is also crucially dependent on their access to more long term contracts for land jel classifications q12 q15 q18

the myth of decoupling the decoupling hypothesis is the idea that business cycles in emerging market economies have become more independent from business cycles in advanced economies in recent years decoupling essentially amounts to a structural break in the degree of business cycle interdependence between the two groups of economies and it can be tested as such we develop an innovative measure of business cycle interdependence based on the euclidean distance available at the annual frequency which allows for a proper test for a structural break in a graphical setup we also make use of a standard econometric test both approaches point to the same conclusion there has been no decoupling in recent years if anything the degree of business cycle interdependence has become stronger

disaggregated trade and disaggregated currency unions a ranking of common currency effects andrew rose has long argued that a common currency has a large effect on increasing trade recently rose has called into question the reliability of this conclusion as new techniques have emerged for estimating gravity equations this article uses the sector specific gravity model developed by anderson and yotov 2010a to investigate if disaggregated trade can provide a reliable estimate of a common currency s effect disaggregating trade alone is insufficient to obtain a reliable estimate of a currency union regardless of econometric technique when the effect of a common currency on trade is uniform across all unions disaggregating the universe of currency unions with individual effects provides a reliable ranking of currency unions independent of estimation method by the effect that each union s currency has on increasing trade these rankings differ across sectors

career concerns monetary incentives and job design we study optimal incentive contracts when commitments are limited and agents have multiple tasks and career concerns the agent s career concerns are determined by the outside market we show that the principal might want to give the strongest explicit incentives to agents far from retirement to account for the fact that career concerns might induce behavior in conflict with the principal s preferences furthermore we show that maximized welfare might be decreasing in the strength of career concerns that optimal incentives can be positively correlated with various measures of uncertainty and that career incentives have strong implications for optimal job design

out in the cold iceland s trade performance outside the european union and european monetary union although entering currency and customs unions involve both costs and benefits an increasing body of research is finding that the benefits in terms of international trade creation are remarkably large focusing simply on the european monetary union emu rather than the broad range of currency unions studied by other authors we find that the trade impact of emu is smaller but still substantial our findings suggest that the iceland s trade could increase by about 60 and that the trade to gdp ratio could rise by 12 percentage points should iceland join the european union and emu copyright 2006 oxford university press