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

south south migration the impact of nicaraguan immigrants on earnings inequality and poverty in costa rica summary more than half of those who emigrate from developing countries move to other developing countries yet there have been few studies of the impact of this south south migration in this paper we examine the impact of migration from one developing country nicaragua on the labor market in another developing country costa rica we find little evidence to support the hypothesis that nicaraguan migration to costa rica was an important factor contributing to falling earnings increased inequality or stagnating poverty in costa rica

temporary foreign workers and firms theory and canadian evidence abstract temporary foreign worker tfw programs have grown considerably in size when uncapped we develop a simple efficiency wage model to explain this phenomenon and examine the empirical evidence for it we also use the model to evaluate the implications of tfw programs for domestic workers in our framework firms that have been unable to find domestic workers may hire tfws at the wage previously advertised to domestic workers due to the lower outside option for tfws than domestic workers tfws will exert more effort for the same wage firms would thus prefer to hire otherwise identical tfws rather than domestic workers our model identifies an unintended consequence of a tfw program since the repercussions of a failed domestic job search are less severe if a tfw may be hired instead firms have an incentive to lower their wage offers made to domestic workers using canadian data we find that relative to domestic workers tfws work longer hours have lower rates of absenteeism and are less likely to be laid off consistent with higher effort in our model moreover for tfws from home countries with a relatively high outside option effort is lower than for tfws from other countries resume travailleurs etrangers temporaires et entreprises theorie et exemple canadien en l absence de plafonnement les programmes de travailleurs etrangers temporaires ptet se sont considerablement developpes afin d expliquer ce phenomene et d en examiner les preuves empiriques nous avons developpe un modele simple de salaire d efficience nous avons egalement utilise ce modele pour evaluer l incidence des ptet sur les travailleurs domestiques dans notre cadre d etude les entreprises peinant a trouver une main d uvre locale peuvent embaucher des travailleurs etrangers temporaires au salaire prealablement propose aux travailleurs domestiques compte tenu d options exterieures plus faibles les travailleurs etrangers temporaires deploieront davantage d efforts pour le meme salaire les entreprises prefereront donc embaucher des travailleurs etrangers par ailleurs identiques plutot que des travailleurs domestiques notre modele identifie une consequence inattendue aux ptet etant donne que les consequences d une recherche d employes domestiques infructueuse sont attenuees par l embauche de travailleurs etrangers temporaires les entreprises sont incitees a diminuer les offres salariales proposees aux travailleurs locaux en exploitant les donnees propres au canada nous avons decouvert que les travailleurs etrangers temporaires travaillaient plus d heures avaient des taux d absenteisme inferieurs et etaient moins susceptibles de se faire congedier que les travailleurs domestiques conformement au concept d effort accru developpe dans notre modele en outre pour les travailleurs etrangers temporaires originaires de pays a options exterieures relativement elevees l effort sera moindre que pour ceux provenant d autres pays

emigration and rising wages in myanmar evidence from mon state whether and how immigration affects labour markets is a hotly debated and widely studied topic by contrast the converse question of how emigration impacts labour markets in the source economy has

bank risk taking securitization supervision and low interest rates evidence from the euro area and the u s lending standards using a unique dataset of the euro area and the u s bank lending standards we find that low monetary policy short term interest rates soften standards for household and corporate loans this softening especially for mortgages is amplified by securitization activity weak supervision for bank capital and low monetary policy rates for an extended period conversely low long term interest rates do not soften lending standards finally countries with softer lending standards before the crisis related to negative taylor rule residuals experienced a worse economic performance afterward these results help shed light on the origins of the crisis and have important policy implications the author 2011 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

emigration and wages in source countries evidence from mexico abstract this paper examines empirically the effect of mexican emigration to the united states on wages in mexico using data from the mexican and us censuses from 1970 to 2000 the main result in the paper is that emigration has a strong and positive effect on mexican wages there is also evidence for increasing wage inequality in mexico due to emigration simple welfare calculations based on a labor demand supply framework suggest that the aggregate welfare loss to mexico due to emigration is small however there is a significant distributional impact between labor and other factors

collective moral hazard maturity mismatch and systemic bailouts the paper elicits a mechanism by which private leverage choices exhibit strategic complementarities through the reaction of monetary policy when everyone engages in maturity transformation authorities haver little choice but facilitating refinancing in turn refusing to adopt a risky balance sheet lowers the return on equity the key ingredient is that monetary policy is non targeted the ex post benefits from a monetary bailout accrue in proportion to the number amount of leverage while the distortion costs are to a large extent fixed this insight has important consequences first banks choose to correlate their risk exposures second private borrowers may deliberately choose to increase their interest rate sensitivity following bad news about future needs for liquidity third optimal monetary policy is time inconsistent fourth macro prudential supervision is called for we characterize the optimal regulation which takes the form of a minimum liquidity requirement coupled with monitoring of the quality of liquid assets we establish the robustness of our insights when the set of

money liquidity and monetary policy in a market based financial system banking and capital market developments are inseparable and funding conditions are closely tied to fluctuations in the leverage of market based financial intermediaries offering a window on liquidity the balance sheet growth of broker dealers provides a sense of the availability of credit contractions of broker dealer balance sheets have tended to precede declines in real economic growth even before the current turmoil for this reason balance sheet quantities of market based financial intermediaries are important macroeconomic state variables for the conduct of monetary policy

the effect of emigration from poland on polish wages in this paper we analyse the effect of emigration from poland on polish wages focusing on the 1998 2007 period for poland we use a unique dataset that contains information about household members who are currently living abroad which allows us to develop region specific emigration rates and to estimate the effect of emigration on wages using within region variation our findings show that emigration led to a slight increase in wages for high and medium skilled workers which are the two groups with the largest relative outmigration rates workers at the low end of the skill distribution might have experienced wage decreases

cross country variation in the impact of international migration canada mexico and the united states using data drawn from the canadian mexican and u s censuses we find a numerically comparable and statistically significant inverse relation between immigrant induced shifts in labor supply and wages in each of the three countries a 10 labor supply shift is associated with a 3 4 opposite signed change in wages despite the similarity in the wage response theimpactofmigrationonthewagestructuredifferssignificantlyacrosscountries international migration narrowed wage inequality in canada increased it in the united states and reduced the relative wage of workers at the bottom of the skill distribution in mexico jel j31 j61

technological change occupational tasks and declining immigrant outcomes implications for earnings and income inequality in canada the earnings and occupational task requirements of immigrants to canada are analyzed the growing education levels of immigrants in the 1990s have not led to a large improvement in earnings as one might expect if growing computerization and the resulting technological change was leading to a rising return to non routine cognitive skills and a greater wage return to university education controlling for education we find a pronounced cross arrival cohort decline in earnings that coincided with cross cohort declines in cognitive occupational task requirements and cross cohort increases in manual occupational task requirements the immigrant earnings outcomes had only a small effect on overall canadian earnings inequality resume changement technique t ches occupationnelles et resultats declinants pour les immigrants implications pour l inegalite des gains et des revenus au canada les auteurs analysent les gains et les prerequis des t ches occupationnelles des immigrants les niveaux d education croissants des immigrants dans les annees 1990 n ont pas entraine une grande amelioration dans les gains comme on aurait pu s y attendre si l informatisation accrue et les changements techniques qui s ensuivent ont entraine un rendement croissant sur des habiletes cognitives non routinieres et un rendement salarial plus grand sur l education universitaire normalisant pour le niveau d education on decouvre un declin entre cohortes dans les gains qui coincide avec un declin dans ce que reclament les t ches en termes d habiletes cognitives et un accroissement de ce que reclament les occupations manuelles l effet de ces changements sur les gains des immigrants n a eu qu un faible impact sur l inegalite des gains au canada

monetary policy bank leverage and financial stability abstract this paper shows that with limited liability banks lever up excessively to finance new loans lower monetary policy rates can worsen or reduce these incentives depending on the size of the shock when equity financing is ruled out when this constrained is relaxed but the bank faces costly dividend adjustment lower monetary policy rates always worsen risk taking incentives and the effect is persistent the reason is that costly dividend adjustment lowers the opportunity cost of lending in this model capital requirements are closer to the source of the distortion and thus work better than loan to value caps in reducing excessive risk taking

an introduction to the economics of immigration in oecd countries the share of the foreign born in oecd countries is increasing and this article summarizes economics research on the effects of immigration in those nations four broad topics are addressed labor market issues fiscal questions the political economy of immigration and productivity international trade extreme concerns about deleterious labour market and fiscal impacts following from new immigrants are not found to be warranted however it is also clear that government policies and practices regarding the selection and integration of new migrants affect labour market fiscal and social cultural outcomes policies that are well informed well crafted and well executed beneficially improve population welfare

immigrants minorities and labor market competition this paper investigates the extent of labor market competition among immigrants minorities and the native population an analysis of 1980 u s census data reveals that immigrants tend to be substitutes for some labor market groups and complements for others the effects of shifts in immigrant supply on the earnings of native born men are however very small on the other hand increases in the supply of immigrants do have a sizable impact on the earnings of immigrants themselves an increase of 10 percent in the supply of immigrants for example reduces the immigrant wage by about 10 percent

leaning against the wind and the timing of monetary policy abstract if monetary policy is to aim also at financial stability how would it change to analyze this question this paper develops a general form framework financial stability objectives are shown to make monetary policy more aggressive in reaction to negative shocks cuts are deeper but shorter lived than otherwise by keeping cuts brief monetary policy tightens as soon as bank risk appetite heats up within this shorter time span cuts must then be deeper than otherwise to also achieve standard objectives finally we analyze how robust this result is to the presence of a bank regulatory tool and provide a parameterized example

dynamics of public infrastructure industrial productivity and profitability a restricted equilibrium framework is utilized to estimate the contribution of public investment in infrastructure to private sector profitability a restricted cost function in translog form which treats labor and materials as variable inputs and private capital and public sector capital stock in transportation communications and electricity as quasi fixed inputs is specified a system of non linear equations comprising variable cost function and derived input demand equations is estimated using data from 1970 to 1987 for twenty six mexican three digit manufacturing industries the divergence of private and public capital stocks from their static equilibrium levels is estimated the net rate of return to fixed factors is also calculated estimates of allocative efficiency are derived the study further provides estimates of short run and long run scale economies output elasticity of factors measures of productivity growth and technical change economic significance and policy implications of the findings are also presented copyright 1992 by mit press

the impact of immigration why do studies reach such different results we classify the empirical literature on the wage impact of immigration into three groups where studies in the first two groups estimate different relative effects and studies in the third group estimate the total effect of immigration on wages we interpret the estimates obtained from the different approaches through the lens of the canonical model to demonstrate that they are not comparable we then relax two key assumptions in this literature allowing for inelastic and heterogeneous labor supply elasticities of natives and the downgrading of immigrants downgrading occurs when the position of immigrants in the labor market is systematically lower than the position of natives with the same observed education and experience levels downgrading means that immigrants receive lower returns to the same measured skills than natives when these skills are acquired in their country of origin we show that heterogeneous labor supply elasticities if ignored may complicate the interpretation of wage estimates and particularly the interpretation of relative wage effects moreover downgrading may lead to biased estimates in those approaches that estimate relative effects of immigration but not in approaches that estimate total effects we conclude that empirical models that estimate total effects not only answer important policy questions but are also more robust to alternative assumptions than models that estimate relative effects

interest rates and bank risk taking abstract a recent line of research views the low interest rate environment of the early to mid 2000s as an element that triggered increased risk taking appetite of banks in search for yield this paper uses approximately 18000 annual observations on euro area banks over the period 2001 2008 and presents strong empirical evidence that low interest rates indeed increase bank risk taking substantially this result is robust across a number of different specifications that account inter alia for the potential endogeneity of interest rates and or the dynamics of bank risk notably among the banks of the large euro area countries this effect is less pronounced for french institutions which held on average a relatively low level of risk assets finally the distributional effects of interest rates on bank risk taking due to individual bank characteristics reveal that the impact of interest rates on risk assets is diminished for banks with higher equity capital and is amplified for banks with higher off balance sheet items

native internal migration and the labor market impact of immigration this paper presents a theoretical and empirical study of how immigration influences the joint determination of the wage structure and internal migration behavior for native born workers in local labor markets using data from the 1960 2000 decennial censuses the study shows that immigration is associated with lower in migration rates higher out migration rates and a decline in the growth rate of the native workforce the native migration response attenuates the measured impact of immigration on wages in a local labor market by 40 to 60 per cent depending on whether the labor market is defined at the state or metropolitan area level

irreversible environmental investments with uncertain benefit levels abstract the principal property of irreversibilities is that they generate incentives for policies that are smaller in scale than a myopic policy the circumstances in which this irreversibility effect occurs are first considered for a model with unit benefit uncertainty and time invariant cost functions with changes in cost relationships over time such as fixed costs for augmenting investment it may be desirable to adopt policies with scales that are larger than smaller than or the same as the scale of a myopic policy with rising unit benefits over time one adopts a policy scale larger than or the same as that in the myopic case and with declining unit benefits the opposite result holds irreversibilities will however lead to underinvestments in comparison with incompletely reversible investments with similar adjustment costs for increasing policy investments

monetary and macroprudential policy coordination among multiple equilibria abstract the notion of a tradeoff between output and financial stabilization is based on monetary macroprudential models with unique equilibria using a game theory setup this paper shows that multiple equilibria lead to qualitatively different results monetary and macroprudential authorities have tools that impose externalities on each other s objectives one of the tools macroprudential is coarse while the other monetary policy is unconstrained we find that this asymmetry always leads to multiple equilibria and show that under economically relevant conditions the authorities prefer different equilibria giving the unconstrained authority a weight on helping the constrained authority leaning against the wind now has unexpected effects the relation between this weight and the difficulty of coordinating is hump shaped and therefore a small degree of leaning worsens outcomes on both authorities objectives

bank capital requirements business cycle fluctuations and the basel accords a synthesis abstract in order to survey the mechanisms through which the introduction of basel ii bank capital requirements is likely to accentuate the procyclical tendencies of banking this paper brings together the theoretical literature on the bank capital channel of propagation of exogenous shocks and the literature on the regulatory framework of capital requirements under the basel accords we conclude that the theoretical models that revisit the bank capital channel under the new accord generally support the basel ii procyclicality hypothesis and that the magnitude of the procyclical effects essentially depends on i the composition of banks asset portfolios ii the approach adopted by banks to compute their minimum capital requirements iii the nature of the rating system used by banks iv the view adopted concerning how credit risk evolves through time v the capital buffers over the regulatory minimum held by the banking institutions vi the improvements in credit risk management and vii the supervisor and market intervention under basel ii the recent events and instability in financial markets all over the world have led the procyclicality issue to enter the agendas of several political international fora and some measures to mitigate procyclicality are being put forward the bank capital channel literature should now play an important role in evaluating their effectiveness

capital and labour mobility and their impacts on mexico s regional labour markets abstract this paper studies the effects of capital and labor mobility on real wages across mexican states for the period 1997 2006 employing dynamic panel data methods we find 1 strong positive effects on real wages from foreign direct investment fdi and from migration 2 domestic and foreign migration provide similar wage effects and 3 alternative partitions indicate that real wages are more sensitive to fdi related fluctuations across states with relatively lower wages and migration levels overall these results provide support that real wages respond positively to fluctuations in capital flows and labour movements as predicted from the theory

credit booms and lending standards evidence from the subprime mortgage market this paper links the u s subprime mortgage crisis to demand side factors that contributed to the rapid expansion of the u s mortgage market we show that denial rates were relatively lower in areas that experienced faster credit demand growth and that lenders in these high growth areas attached less weight to applicants loan to income ratios the results are robust to controlling for supply side factors including house price appreciation mortgage securitization and other economic fundamentals and to several robustness tests controlling for endogeneity the results are consistent with the notion that a relaxation of lending standards triggered by an increased demand for loans contributed to the boom and the ensuing crisis together with other supply side explanations these findings shed new light on the relationship between credit booms and financial instability

the effect of skilled emigration on real exchange rates through the wage channel abstract building on an analytical model we provide cross country empirical evidence that net skilled emigration appreciates bilateral real exchange rates through the wage channel in source countries chains of causality in the presence of the law of one price run through the spending effect and the resource allocation effect analogous to the remittance based dutch disease effect a pricing to market model allows pass through for both traded and nontraded prices when the law of one price is violated the skilled emigration elasticity of real exchange rate is estimated to be in the range of between 0 6 and 0 8 with internal prices playing a dominant role alternative model specifications show robust outcomes

immigration and wages evidence from construction to identify relative wage impacts of immigration we make use of certification and licensing requirements in the norwegian construction sector that give rise to exogenous variation in immigrant employment shares across trades individual panel data reveal substantially lower wage growth for workers in trades with rising immigrant employment than for other workers selective attrition from the sector masks the causal wage impact unless accounted for by individual fixed effects for low and semi skilled workers effects of new immigration are comparable for natives and older immigrant cohorts consistent with perfect substitutability between native and immigrant labor within trade finally we present evidence that immigration reduces price inflation as price increases over the sample period were significantly lower in activities with growth in the immigrant share than in activities with no or small change in immigrant employment

migration and imperfect labor markets theory and cross country evidence from denmark germany and the uk we investigate the labor market effects of immigration in denmark germany and the uk three countries which are characterized by considerable differences in labor market institutions and welfare states institutions such as collective bargaining minimum wages employment protection and unemployment benefits affect the way in which wages respond to labor supply shocks and hence the labor market effects of immigration we employ a wage setting approach which assumes that wages decline with the unemployment rate albeit imperfectly we find that the wage and employment effects of immigration depend on wage flexibility and the composition of the labor supply shock in germany immigration involves only moderate wage but large unemployment effects since immigrants are concentrated in labor market segments with low wage flexibility the reverse is true for the uk and denmark

monetary policy and risk taking abstract we assess the effects of monetary policy on bank risk to verify the existence of a risk taking channel monetary expansions inducing banks to assume more risk we first present var evidence confirming that this channel exists and is particularly significant on the bank funding side then to rationalize this evidence we build a macroeconomic model where banks subject to runs endogenously choose their funding structure deposits vs capital and risk level a monetary expansion increases bank leverage and risk in turn higher bank risk in steady state increases asset price volatility and reduces equilibrium output

collateralized borrowing and risk taking at low interest rates abstract empirical evidence suggests financial intermediaries increase risky investments when interest rates are low we develop a model consistent with this observation and ask whether the risks undertaken exceed the social optimum interest rate policy affects risk taking in the model through two opposing channels first low policy rates make riskier assets more attractive than safe bonds second low policy rates reduce the amount of safe bonds available for collateralized borrowing in interbank markets the calibrated model features excessive risk taking at the optimal policy however at low policy rates collateral constraints tighten and risk taking does not exceed the social optimum

the impact of immigration on the labor market the literature on the impact of immigration on the labor market is highly controversial the aim of this paper is to review the existing literature and draw some general conclusions on how wages and employment respond to immigration economic studies indicate that the impact of immigration on the average wage and employment of native workers is null or slightly positive however because adjustments take time the immediate labor market effects of unexpected as opposed to expected migration episodes can be detrimental immigration also can have distributional consequences in particular the skill composition of immigrants matters in determining their impact on native labor market outcomes an inflow of immigrants will tend to reduce the wages of competing native workers with skills similar to those of the migrants and increase those of complementary workers with skills that complement those of immigrants by affecting the skill composition of the workforce immigration can create winners and losers among native workers via changes in the wage structure

capital regulation and monetary policy with fragile banks optimizing banks subject to runs are introduced in a macro model to study the transmission of monetary policy and its interplay with bank capital regulation when banks are risky a monetary expansion and a positive productivity shock increase bank leverage and risk risk based capital requirements amplify the cycle and are welfare detrimental within a class of simple policy rules the best combination includes mildly anticyclical capital ratios as in basel iii and a response of monetary policy to asset prices or bank leverage

the labour market impact of immigration in the first part of this paper we present a stylized model of the labour market impact of immigra tion we then discuss mechanisms through which an economy can adjust to immigration changes in factor prices output mix and production technology in the second part we explain the problems of empirically estimating how immigration affects labour market outcomes of the resident population and review some strategies to address these we then summarize some recent empirical studies for the uk and other countries we conclude with an outlook on what we believe are important avenues for future research

the great mexican emigration abstract in this paper we examine net emigration from mexico over the period 1960 to 2000 the data are consistent with labor supply shocks having made a substantial contribution to mexican emigration accounting for two fifths of mexican labor flows to the united states over the last two decades of the twentieth century net emigration rates by mexican state birth year cohort display a strong positive correlation with the initial size of the mexican cohort relative to the corresponding u s cohort in states with long histories of emigration the effects of cohort size on emigration are relatively strong consistent with the existence of preexisting networks

international migration self selection and the distribution of wages evidence from mexico and the united states we use the 1990 and 2000 mexican and u s population censuses to test borjas s negative selection hypothesis that the less skilled are those most likely to migrate from countries with high skill premia earnings inequality to countries with low skill premia earnings inequality we find that mexican immigrants in the united states are more educated than nonmigrants in mexico and were mexican immigrants to be paid according to current skill prices in mexico they would be concentrated in the middle of mexico s wage distribution these results are inconsistent with the negative selection hypothesis and instead suggest that there is intermediate selection of immigrants from mexico