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

the microfinance promise in the past decade microfinance programs have demonstrated that it is possible to lend to low income households while maintaining high repayment rates even without requiring collateral the programs promise a revolution in approaches to alleviating poverty and spreading financial services and millions of poor households are served globally a growing body of economic theory demonstrates how new contractual forms offer a key to microfinance success particularly the use of group lending contracts with joint liability for the most part however high repayment rates have not translated into profits and studies of impacts on poverty yield a mixed picture in describing emerging tensions the paper highlights the diversity of innovative mechanisms beyond group lending contracts the measurement of financial sustainability the estimation of economic and social impacts the costs and benefits of subsidization and the potential to reduce poverty through savings programs rather than just credit the promise of microfinance has pushed far ahead of the evidence and an agenda is put forward for addressing critical empirical gaps and sharpening the terms of policy discussion

the supply and demand side impacts of credit market information abstract we utilize a unique pair of experiments to isolate the ways in which reductions in asymmetric information alter credit market outcomes a guatemalan microfinance lender gradually started using a credit bureau across its branches without letting borrowers know about it one year later we ran a large randomized credit information course that described the existence and workings of the bureau to the clients of this lender this pairing of natural and randomized experiments allows us to separately identify how new information enters on the supply and the demand sides of the market our results indicate that the credit bureau generated large efficiency gains for the lender and that these gains were augmented when borrowers understood the rules of the game the credit bureau rewarded good borrowers but penalized weaker ones increasing economic differentiation

group lending repayment incentives and social collateral abstract in this paper we investigate the impact on repayment rates of lending to groups which are made jointly liable for repayment this type of scheme especially in the guise of the grameen bank in bangladesh has received increasing attention we set up and analyze the repayment game which group lending gives rise to our analysis suggests that such schemes have both positive and negative effects on repayment rates the positive effect is that successful group members may have an incentive to repay the loans of group members whose projects have yielded insufficient return to make repayment worthwhile the negative effect arises when the whole group defaults even when some members would have repaid under individual lending we also show how group lending may harness social collateral which serves to mitigate its negative effect

experience tenure and wage growth of young black and white men this paper studies the source of differences in wage growth between young black and white workers focusing on terminal high school graduates from the national longitudinal survey of youth we estimate the returns to on the job tenure and general labor market experience using ordinary least squares altonji and shakotko and topel estimators results from all three estimators indicate that returns to general experience for black workers trail those for white workers but that black workers earn equal if not higher returns to tenure than do white workers

peer pressure and partnerships partnerships and profit sharing are often claimed to motivate workers by giving them a share of the pie but in organizations of any significant size the free rider effects would seem to choke off

a joint dynamic model of fertility and work of married women this article estimates a dynamic model of fertility and labor supply of married women drawn from the national longitudinal survey of young women 1968 91 it distinguishes part time and full time employment sectors which differ by pecuniary and nonpecuniary returns and transferability of human capital the model with unobserved heterogeneity in earning ability and preferences for children fits the data and produces reasonable forecasts of labor force participation in decisions the estimates unpack important features of the persistence in labor market decisions intertemporal substitution of leisure over the life cycle and the effect of work interruptions due to childbirth on lifetime utility

rural financial markets in low income countries recent controversies and lessons abstract recently some researchers have criticized traditional agricultural credit policies in low income countries this article identifies the major points of controversy between traditional views and these new views and also summarizes the primary lessons learned from these controversies savings mobilization more flexible interest rate policies less loan targeting and greater emphasis on improving the quality of financial services in rural areas are new views that are emphasized

job search and asset accumulation under borrowing constraints this article examines the relationship between wealth accumulation and job search dynamics it proposes a model in which risk averse individuals search for jobs save and borrow to smooth their consumption one motivation for accumulating wealth is to finance voluntary quits in order to search for better jobs using data on men from the national longitudinal survey 1979 cohort i estimate the individual s dynamic decision problem the results show that borrowing constraints are tight and reinforce the influence of wealth on job acceptance decisions namely that more initial wealth and access to larger amounts of credit increase wages and unemployment duration

the return to schooling in structural dynamic models a survey this papers contains a survey of the recent literature devoted to the returns to schooling within a dynamic structural framework i present a historical perspective on the evolution of the literature from early static models set in a selectivity framework willis and rosen 1979 to the recent literature stimulated by keane and wolpin 1997 and which uses stochastic dynamic programming techniques after reviewing the literature thoroughly i compare the structural approach with the iv experimental approach i present their commonalities and i also discuss their fundamental di8erences to get an order of magnitude most structural estimates reported for the us range between 4 and 7 per year on the other hand iv estimates between 10 and 15 per year are often reported the discrepancy prevails even when comparable if not identical data sets are used the discussion is focussed on understanding this divergence the distinction between static and dynamic model specifications is a recurrent theme in the analysis i argue that the distinction between the iv approach and the structural approach may be coined in terms of a trade o8 between behavioral and statistical assumptions for this reason and unless one has very specific knowledge of the true data generating process it is neither possible nor sensible to claim which approach to estimation is more flexible more precisely i show that structural and iv approaches differ mainly at the level of i the compatibility of the underlying models with truly dynamic behavior ii the role of heterogeneity in ability and tastes iii the consideration of post schooling opportunities and iv the specification and interpretation of the mincer wage equation

does wealth explain black white differences in early employment careers in this article i inquire about the effects initial wealth has on black white differences in early employment careers i set up a dynamic model in which individuals simultaneously search for a job and accumulate wealth and fit it to data from the national longitudinal survey 1979 cohort regime changes and decompositions of racial differences reveal that differences in the labor market environment and in preferences account fully for racial gaps in wealth and in wages persisting several years after high school graduation differences in initial wealth partially explain differences in early employment careers

credit markets in northern nigeria credit as insurance in a rural economy this article addresses the issues of imcomplete markets and imperfect information in the context of credit markets in rural northern nigeria in much recent theoretical literature the problems of moral hazard and adverse selection are assumed to be decisive for the organization of agrarian institutions in contrast it is found that in the four villages surveyed credit transactions take advantage of the free flow of information within rural communities information asymmetries between borrower and lender are unimportant and their institutional consequences the use of collateral and interlinked contracts are absent credit transactions play a direct role in pooling risk between households through the use of contracts in which the repayment owed by the borrower depends on the realization of random production shocks by both the borrower and the lender

unemployment insurance and male unemployment duration in canada a model of unemployment duration is estimated with weekly micro data on canadian men entitlement provisions in the unemployment insurance program and demand conditions are found to have a significant effect on the probability of leaving unemployment the probability of a worker leaving unemployment declines with the duration of unemployment holding unemployment insurance entitlement constant when entitlement is allowed to vary the probability of leaving first falls and then generally rises with unemployment duration these results are robust with respect to allowing for person specific unobserved heterogeneity and alternative specifications of duration dependence

does it pay for women to volunteer this article estimates the economic and noneconomic returns to volunteering for prime aged women estimates of a dcdp model indicate that an extra year of volunteer experience increases wage offers by 8 5 in future part time work and by 2 6 in future full time work on average working for free increases lifetime earnings by 16 7 the economic returns to volunteering are more important than the noneconomic returns in increasing lifetime utility the model also reveals an adverse selection mechanism into volunteering that helps explain why reduced form regressions of the returns to working for free will likely be downward biased

hedonic wages and labor market search this article investigates the consequences of labor market search for the theory of hedonic wages we find that the introduction of search has surprising consequences for the theory of hedonic wages in particular we demonstrate that the equilibrium distribution of wage and nonwage amenity bundles generally bears little resemblance to workers underlying preferences a consequence of this analysis is that estimates of workers marginal willingness to pay derived from the conventional hedonic wage methodology are biased in addition we demonstrate that search generates differences between firm level and employee level data that can cause substantial deviations in the estimates of hedonic wage equations

repayment and exclusion in a microfinance experiment microfinance groups often engage in a variety of collective activities not directly related to credit we design a three stage repayment game to examine how the existence of these ancillary activities affect repayment behavior and group attrition in the first stage the group borrows under joint liability each member undertakes a risky project and decides whether or not to contribute to loan repayment in the second stage contributing members can vote to expel others from the group those remaining engage in a public goods game in the last stage the public good game represents the non credit collective activity that members can be involved in we identify repayment equilibria with and without exclusion and show that exclusionary equilibria are most likely when loans are large and there is significant within group heterogeneity in the gains from the public good results from a laboratory experiment that embodies the main features of the repayment game are consistent with the theoretical predictions individual decisions to contribute to loan repayment depend on gains from the public good and groups with the largest debt burdens have the highest rates of default and attrition

does the public employment service affect search effort and outcomes in this paper we examine the disincentive effects of the public employment service on the search effort of unemployed workers and on their exit rate from unemployment for that purpose we specify a structural search model with fixed and variable costs of search in which unemployed workers select their optimal search intensity given the exogenous arrival rate of job contacts coming from the public employment agency because the theoretical effect of an increase in this exogenous job contact arrival rate on the structural exit rate from unemployment is ambiguous we estimate this model using individual unemployment duration data our results show that the exit rate from unemployment increases with the arrival rate of job contacts obtained by the public employment service especially for low educated and low skilled workers they also show that the search effort is more costly for low educated women and low skilled adult unemployed workers this last result suggests that a public employment agency that matches searchers and employers is beneficial in the sense that it saves searchers in terms of search costs they would otherwise bear

moral hazard and nonmarket institutions dysfunctional crowding out or peer monitoring the authors examine a situation in which insurance is characterized by moral hazard when market insurance is provided supplementary mutual assistance between family and friends unobservable to market insurers will occur when nonmarket insurers have no better information than market insurers the mutual assistance not only crowds out market insurance but is also harmful and therefore dysfunctional alternatively when nonmarket insurers can observe each other s effort perfectly mutual assistance is beneficial these results point to the potential importance of peer monitoring mechanisms in mitigating moral hazard copyright 1991 by american economic association

the determinants of black white differences in early employment careers search layoffs quits and endogenous wage growth this paper studies the transition from school to full time employment and subsequent labor mobility during the first five postschooling years for several recent cohorts of black and white male terminal high school graduates using unique data from the 1979 youth cohort of the national longitudinal surveys of labor market experience a constrained optimization model of labor force dynamics is implemented empirically integrating features of models previously described in the literature the estimates of the model provide quantitative evidence on underlying structural differences in labor market constraints faced by blacks and whites for example while blacks have overall a substantially smaller wage return to work experience and face a less disperse wage offer distribution blacks face a higher probability of receiving job offers

the role of labor and marriage markets preference heterogeneity and the welfare system in the life cycle decisions of black hispanic and white women using data from the nlsy79 we structurally estimate a dynamic model of the life cycle decisions of young women the women make sequential joint decisions about school attendance work marriage fertility and welfare participation we use the model to perform counterfactual simulations designed to shed light on three questions 1 how much of observed minority majority differences in behavior can be attributed to differences in labor market opportunities marriage market opportunities and preference heterogeneity 2 how does the welfare system interact with these factors to augment those differences 3 how can new cohorts that grow up under the new welfare system temporary aid for needy families be expected to behave compared to older cohorts

estimating a structural search model the transition from school to work this paper presents a finite horizon search model that is econometrically implemented using all of the restrictions impli ed by the theory following a sample of male high school graduates fr om the youth cohort of the national longitudinal surveys from graduat ion to employment search parameters are estimated reservation wages and offer probabilities are estimated to be quite low simulations a re performed of the impact of changing the parameters on the expected duration of unemployment copyright 1987 by the econometric society

job matching and occupational choice this paper presents a model of job matching the generalizes the existing literature by allowing for different jobs types or occupations such differences affect the value of job specific experience inducing a career profile where certain types are sampled before others more specifically the analysis shows that it is optimal for the young and inexperienced to gravitate toward jobs exhibiting a certain kind of risk then after deriving the equilibrium job turnover rate for an economy in which people do not switch occupations panel data are used to estimate its underlying parameters the hypothesis that people do not switch occupations is rejected against the alternative that they do thus providing empirical support for the theoretical extension undertaken here

a dynamic analysis of educational attainment occupational choices and job search this article examines career choices using a dynamic structural model that nests a job search model within a human capital model of occupational and educational choices wage growth occurs in the model because workers move between firms and occupations as they search for suitable job matches and because workers endogenously accumulate firm and occupation specific human capital simulations performed using the estimated model reveal that both self selection in occupational choices and mobility between firms account for a much larger share of total earnings and utility than the combined effects of firm and occupation specific human capital

the economic consequences of unwed motherhood using twin births as a natural experiment social scientists have long concluded that premarital childbearing exacerbates problems of both poverty and family instability out of wedlock and adolescent childbearing may reduce a mothers educational attainment lower the probability of her eventual marriage increase her probability of welfare recipiency and decrease family income the authors use an exogenous fertility event the birth of twins to estimate the economic effects of unplanned births the approach compares the economic outcomes of women experiencing premarital twin first births to those experiencing premarital single first births in the attempt to identify the consequences of an unplanned birth upon womens future fertility and marital decisions education labor force participation labor earnings welfare receipt and poverty status 1970 and 1980 us census micro data are used to identify twin births to unmarried women analysis found large short term effects of unplanned births on labor force participation poverty and welfare recipiency among unwed mothers but not among married mothers furthermore most adverse economic effects of unplanned motherhood dissipate over time for whites but larger and more persistent negative effects weigh upon black unwed mothers

search and nonwage job characteristics this paper quantifies the importance of nonwage job characteristics to workers by estimating a structural on the job search model the model generalizes the standard search framework by allowing workers to search for jobs based on both wages and job specific nonwage utility flows within the structure of the search model data on accepted wages and wage changes at job transitions identify the importance of nonwage utility through revealed preference the estimates reveal that utility from nonwage job characteristics plays an important role in determining job mobility the value of jobs to workers and the gains from job search

estimating the effect of racial discrimination on first job wage offers in this paper we develop and implement a method for bounding the extent to which labor market discrimination can account for racial wage differentials the method is based on a two sided search matching model that formally accounts for unobserved heterogeneity and unobserved offered wages we find that racial differences in offered wages are proportionately twice three times as large as racial differences in accepted wages for high school dropouts high school graduates the results indicate that discrimination could account for the entire racial wage offer differential for high school dropouts and for high school graduates i e the bound on the extent of discrimination is not informative

job and wage mobility with minimum wages and imperfect compliance we propose a job search model with minimum wage regulations and imperfect compliance to explain the doubling of the mean and variance of hourly earnings of white males during the first 18 years of labor market experience the model encompasses job mobility and on the job wage growth as sources of wage dynamics and is estimated by simulated generalized method of moments using data from the national longitudinal survey of youths 1979 our estimates provide a good fit for the observed levels and trends of the main job and wage mobility data and for the increase in the mean and variance of wages over the life cycle as well as for the fall in the fraction of workers paid below the minimum wage job mobility explains 40 50 of the observed wage growth increases in the minimum wage and or compliance deliver small effects on the wage distribution and the nonemployment rate

unemployment insurance eligibility and the scholl to work transition in canada and the united states to study how the design of unemployment insurance ui affects people leaving school to find jobs a model of job search in the presence of ui is developed and estimated for the united states and canada the level of ui benefits depends on previous earnings which creates opposing incentives for unemployed people not receiving benefits which of these opposing incentives dominates the other is found to differ across demographic groups within each country changes in ui policy therefore can have very different effects on different individuals the major differences found in the transition from school to work in canada and the united states are a lower rate of job offer arrivals and a lower rate of offer rejections in canada within each country offer arrival rates differ across individuals much more than offer rejection rates

microfinance spillovers a model of competition in informal credit markets with an application to indian villages despite widespread interest in the development of microfinance spillover effects on the non using population and redistributive issues remain largely unexplored i study a competition game between microfinance institutions mfis offering joint liability loans and moneylenders offering individual loans in presence of adverse selection i show that one unintended consequence of the entry of a microfinance sector in local credit markets can be to trigger an increase in the equilibrium informal interest rate because mfis tend to attract a disproportionately safe share of the borrower pool away from incumbent moneylenders the existence of such composition externality depends crucially on the size of the microfinance sector and the risk composition of the borrower pool the model predicts a non linearly increasing relationship between informal interest rates and mfis capacity in relatively safe credit markets and no relationship in risky villages i show evidence supporting these predictions using a first hand panel database that records all credit transactions over 8 years for a sample of about 1000 households living in indian villages with extensive space and time variation in the size of their microfinance sector

social connections and group banking lending to the poor is expensive due to high screening monitoring and enforcement costs group lending advocates believe lenders overcome this by harnessing social connections using data from finca peru i exploit a quasi random group formation process to find evidence of peers successfully monitoring and enforcing joint liability loans individuals with stronger social connections to their fellow group members i e either living closer or being of a similar culture have higher repayment and higher savings furthermore i observe direct evidence that relationships deteriorate after default and that through successful monitoring individuals know who to punish and who not to punish after default

an estimable dynamic stochastic model of fertility and child mortality this paper develops a finite horizon dynamic stochastic model of discrete choice with respect to life cycle fertility within an environment where infant survival is uncertain the model yields implications for the number timing and spacing of children a tractable estimation method is developed for the linear constraint quadratic utility case that is intimately tied to the dynamic optimization problem and the method is applied to malaysian household data estimation is based on integrating the numerical solution of the dynamic programming model of behavior with a maximum likelihood procedure

the role of social capital in financial development to identify the effect of social capital on financial development we exploit social capital differences within italy in high social capital areas households are more likely to use checks invest less in cash and more in stock have higher access to institutional credit and make less use of informal credit the effect of social capital is stronger where legal enforcement is weaker and among less educated people these results are not driven by omitted environmental variables since we show that the behavior of movers is still affected by the level of social capital of the province where they were born

the racial wage gap the importance of labor force attachment differences across black mexican and white men labor market attachment differs significantly across young black mexican and white men although it has long been agreed that potential experience is a poor proxy for actual experience for women many view it as an acceptable approximation for men using the nlsy this paper documents the substantial difference between potential and actual experience for both black and mexican men we show that the fraction of the black white and mexican white wage gaps that are explained by differences in potential experience are quite different from the fraction of the racial wage gaps that are explained by actual real experience differences

deal structuring in philanthropic venture capital investments financing instrument valuation and covenants philanthropic venture capital phvc is a financing option available for social enterprises that like traditional venture capital provides capital and value added services to portfolio organizations differently from venture capital phvc has an ethical dimension as it aims at maximizing the social return on the investment this article examines the deal structuring phase of phvc investments in terms of instrument used from equity to grant valuation and covenants included in the contractual agreement by content analyzing a set of semi structured interviews and thereafter surveying the entire population of phvc funds that are active in europe and in the united states findings indicate that the non distribution constraint holding for non profit social enterprises is an effective tool to align the interests of both investor and investee this makes the investor behaving as a steward rather than as a principal conversely while backing non profit social ventures philanthropic venture capitalists structure their deal similarly as traditional venture capital as the absence of the non distribution constraint makes such investments subject to moral hazard risk both in terms of perks and stealing and social impact focus

unemployment insurance and the business cycle an equilibrium model is developed to study the interaction of the business cycle unemployment insurance and the labor market for young men in canada the model combines optimal job oer layo and recall decisions within a numerically solved and restricted bayesian nash equilibrium we consider the long run implications of changes made to unemployment insurance in canada during the 1990s the changes lead to equilibrium increases in average rates of unemployment layos and recalls eliminating ui lowers the equilibrium unemployment

on the design of a credit agreement with peer monitoring this paper analyses the optimal design of collective credit agreements with joint responsibility first we demonstrate that these agreements can potentially induce peer monitoring reduce the incidence of strategic default and enhance the lender s ability to elicit debt repayments the resulting benefits in terms of extended credit should however be weighted against the higher monitoring effort that such agreements impose upon participant borrowers second we show that the relative benefits from peer monitoring are maximized when risks are positively correlated across borrowers and also when the size of the group is neither too small due to a joint responsibility cost sharing and commitment effects nor too large due to a free riding effect third we compare among different monitoring structures

effects of permanent and transitory tax changes in a life cycle labor supply model with human capital i examine effects of labor income taxation in life cycle models with human capital accumulation in this case the opportunity cost of time equals the wage plus returns to work experience this has several interesting consequences first the data appear consistent with larger labor supply elasticities than prior work suggests second contrary to conventional wisdom permanent tax changes can have larger effects on current labor supply than temporary changes third human capital dampens responses of young workers to transitory tax changes fourth labor supply elasticities increase with age fifth human capital amplifies the effect of permanent tax changes in the long run

job search by employed and unemployed youth analysis of data from the new youth cohort of the national longitudinal survey yields evidence that young unemployed job seekers chose higher levels of search effort as measured by number of methods used and time spent per method and lower reservation wages relative to offered wages than did comparable employed job seekers in 1981 these differences in search choices at least partly explain differences in search outcomes between the two groups unemployed searchers apparently were more likely than employed searchers to gain new employment and the wages they obtained were slightly lower the author argues that the greater search effort by unemployed job seekers is due to the higher costs of search they bear because of foregone earnings

the economics of rotating savings and credit associations supported by the center for energy policy studies m i t and the japanese corporate associates program at the kennedy school of government

measuring human capital and its effects on wage growth ever since mincer years of labour market experience were used to approximate individual s general human capital while years of seniority were used to approximate job specific human capital this specification is restrictive because it assumes that starting wages at a new job depend only on job market experience in this paper i investigate the effects of human capital on wage growth by using a more flexible specification of the wage equation which allows for a rich set of information on past employment spells to affect the starting wages in addition i endogenize the labour mobility decision in order to illuminate the effects of human capital accumulation patterns on wage growth i compare counterfactual career paths for representative individuals copyright 2010 blackwell publishing ltd

motherhood and female labor supply in the developing world evidence from infertility shocks abstract we introduce a new instrument for family size infertility to investigate the causal relationship between children and female labor force participation infertility mimics an experiment where nature assigns an upper bound for family size independent of a woman s background this new instrument allows us to investigate the differential labor supply without restrictions on initial family size using the demographic and health surveys from 26 developing countries we show that ols estimates are biased upward we find that the presence of children affects neither the likelihood of work nor its intensity but impacts the type of work a woman pursues

here today gone tomorrow can dynamic incentives make microfinance more flexible this paper presents a model of microfinance lending to individuals that uses dynamic incentives in the form of access to additional loans to discourage borrowers from strategic default or the unwillingness to repay a loan once a positive outcome is realized we propose an improvement on contracts currently used by microfinance institutions mfis by endogenizing the default penalty while constraining the mfi to maintain sustainable lending operations furthermore accounting for the risks that the poor face by including a negative economic shock we show that under certain circumstances the punishment for default need not be a lifetime without loans

children and their parents a review of fertility and causality childbearing decisions are not made in isolation they are taken in concert with decisions regarding work marriage health investments and stocks as well as many other observable and non observable considerations drawing causal inferences regarding the effect of additional children on family outcomes is complicated by these endogenous factors this paper lays out the issues involved in estimating the effect of additional child births on family outcomes and the assumptions underlying the range of estimators and methodologies proposed in the economic literature the common pitfalls of these estimators are discussed as well as their potential to bias our interpretation of the effect additional births have on children and parents both in the existing literature and in future work in the face of changing patterns of childbearing and child rearing

the specification and estimation of dynamic stochastic discrete choice models a survey our main goal is to quantify the returns to a career in the united states congress we specify a dynamic model of career decisions of a member of congress and estimate this model using a newly collected dataset given estimates of the structural model we

the contributions of search and human capital to earnings growth over the life cycle abstract this paper presents and estimates a unified model where both human capital investment and job search are endogenized this unification enables us to quantify the relative contributions of each mechanism to life cycle earnings growth while investigating potential interactions between human capital investment and job search within the unified framework the expectation of rising rental rates of human capital through job search gives workers more incentive to invest in human capital in addition unemployed workers reduce their reservation rental rates and increase their search effort to leave unemployment quickly to take advantage of human capital accumulation on the job the results show both forces are important for earnings growth and the interactions are substantial human capital accumulation accounts for 50 of total earnings growth job search accounts for 20 and the remaining 30 is due to the interactions of the two

micro credit in chiapas mexico poverty reduction through group lending micro credit mc programs lend money to poor borrowers using innovative mechanisms such as group lending under joint liability while successfully accounting for the presence of asymmetric information in underdeveloped financial markets mc programs have achieved what the conventional financial institutions and the government have not been able to lend to the poor impressive loan recuperation and a positive impact in poverty reduction this article analyzes the performance of alsol an mc program in chiapas mexico for 2151 participants in urban and rural areas for the time period between july 2000 and july 2001 while loan recuperation is high 95 administrative costs also remain high socially responsible lenders and donors play a key role in providing continuous funding to mc programs and assisting in reducing the level of poverty

job mobility and the market for lawyers this paper studies the life cycle career choices of law school graduates using unique data from the university of michigan law school the model assumes that these graduates act according to the optimal solution of a dynamic optimization problem in which they sequentially choose among five employment sectors the employment sectors are differentiated by pecuniary and nonpecuniary returns promotion and dismissal probabilities and the extent of transferability of human capital the estimation of the model reveals a self selection mechanism based on unobserved heterogeneity in abilities and expected future returns which plays a critical role in reproducing the sector specific nonmonotonic separation hazards observed in the data the underlying self selection mechanism also has implications for policy interventions in the market for lawyers such as loan forgiveness programs

peer monitoring and credit markets a major problem for institutional lenders is ensuring that borrowers exercise prudence in the use of the funds so that the likelihood of repayment is enhanced one partial solution is peer monitoring having neighbors who are in a good position to monitor the borrower be required to pay a penalty if the borrower goes bankrupt peer monitoring is largely responsible for the successful financial performance of the grameen bank of bangladesh and of similar group lending programs elsewhere but peer monitoring has a cost it transfers risk from the bank which is in a better position to bear risk to the cosigner in a simple model of peer monitoring in a competitive credit market this article demonstrates that the transfer of risk leads to an improvement in borrowers welfare

modeling earnings dynamics in this paper we use indirect inference to estimate a joint model of earnings employment job changes wage rates and work hours over a career we use the model to address a number of important questions in labor economics including the source of the experience profile of wages the response of job changes to outside wage offers and the effects of seniority on job changes we also study the dynamic response of wage rates hours and earnings to various shocks and measure the relative contributions of the shocks to the variance of earnings in a given year and over a lifetime we find that human capital accounts for most of the growth of earnings over a career although job seniority and job mobility also play significant roles unemployment shocks have a large impact on earnings in the short run as well as a substantial long term effect that operates through the wage rate shocks associated with job changes and unemployment make a large contribution to the variance of career earnings and operate mostly through the job specific error components of wages and hours

job selection and wages over the business cycle we consider a model with on the job search where current wages depend only on current aggregate labor market conditions and idiosyncratic match specic productivities we show theoretically that the model replicates the ndings in bils 1985 and beaudry and dinardo 1991 on the history dependence in wages we develop a method to measure match qualities in the data and show empirically that various variables summarizing past aggregate labor market conditions have explanatory power for current wages only because they are correlated with match qualities they lose any predictive power once match qualities are accounted for

group lending under asymmetric information abstract this paper examines joint liability loan contracts as part of a screening mechanism adopted by lenders using group lending schemes a model and one period game are introduced in order to analyze the type of optimal loan contracts that emerge when lenders have less information than borrowers it is shown that under imperfect information lenders may be able to utilize joint liability contracts as a means of screening agent types by inducing endogenous group formation and self selection among the borrowers

the effect of job tenure on wage offers a wage offer can be either acceptable or unacceptable to a worker but in cross sectional and panel data only acceptable wage offers are observed an ols wage equation will not reveal how job tenure affects wage offers but rather will reveal how tenure affects acceptable wage offers by jointly modeling the firm s determination of the wage offer and the worker s decision to accept or reject the offer we are able to estimate the effect of job tenure on wage offers consistently in contrast to the usual ols results we find that job tenure has no statistically significant effect on wage offers

children and their parents labor supply evidence from exogenous variation in family size although theoretical models of labor supply and the family are well developed there are few credible estimates of key empirical relationships in the work family nexus this study uses a new instrumental variable the sex composition of the first two births in families with at least two children to estimate the effect of additional children on parents labor supply in the united states instrumental variables estimates using the sex mix are substantial but smaller than the corresponding ordinary least squares ols estimates moreover unlike the ols estimates the female labor supply effects estimated using sex mix instruments appear to be absent among more educated women and women with high wage husbands we also find that married women who have a third child reduce their labor supply by as much as women in the full sample while there is no relationship between wives child bearing and husbands labor supply excerpt

modeling employment dynamics with state dependence and unobserved heterogeneity this study extends existing work on the dynamics of labor force participation by distinguishing between full time and part time employment and by allowing unobserved heterogeneity in the effects of previous employment outcomes children and education on labor supply behavior in addition unobserved heterogeneity may feature autocorrelation and correlated random effects the results reveal significant variation in the effects of children and education on labor supply behavior moreover the omission of random coefficients and autocorrelation biases estimates of state dependencies on average temporary shocks that increase the rate of part time employment lead subsequently to lower rates of nonemployment than do shocks that temporarily increase the rate of full time work the article has additional online supplementary material

patents as options some estimates of the value of holding european patent stocks in many countries holders of patents must pay an annual renewal fee in order to keep their patents in force this paper uses data on the proportion of patents renewed and the renewal fees faced by post world war ii cohorts of patents in france the united kingdom and germany in conjunction with a model of patent holders renewal decisions to estimate the returns earned from holding patents in these countries since patents are often applied for at a nearly stage in the innovation process the model allows agents to be uncertain about the sequence of returns that will be earned if the patent is kept inforce formally then the paper presents and solves a discrete choice optimal stochastic control model derives the implications of the model on aggregate behaviour and then estimates the parameters of the model from aggregate data the estimates enable a detailed description of the evolution of the distribution of returns earned from holding patents over their life spans and calculations of both the annual returns earned from holding the patents still in force or the patent stocks in the alternative countries and the distribution of the discounted value of returns earned from holding the patents in a cohort this abstract was borrowed from another version of this item

an equilibrium model of health insurance provision and wage determination we investigate the effect of employer provided health insurance on job mobility rates and economic welfare using a search matching and bargaining framework in our model health insurance coverage decisions are made in a cooperative manner that recognizes the productivity effects of health insurance as well as its nonpecuniary value to the employee the resulting equilibrium is one in which not all employment matches are covered by health insurance wages at jobs providing health insurance are larger in a stochastic sense than those at jobs without health insurance and workers at jobs with health insurance are less likely to leave those jobs even after conditioning on the wage rate we estimate the model using the 1996 panel of the survey of income and program participation and find that the employer provided health insurance system does not lead to any serious inefficiencies in mobility decisions

the long term effects of youth unemployment using nlsy data we examine the long term effects of youth unemployment on later labor market outcomes involuntary unemployment may yield suboptimal investments in human capital in the short run a theoretical model of dynamic human capital investment predicts a rational catch up response using semiparametric techniques to control for the endogeneity of prior behavior our estimates provide strong evidence of this response we also find evidence of persistence in unemployment combining our semiparametric estimates with a dynamic approximation to the lifecycle we find that unemployment experienced as long ago as ten years continues to affect earnings adversely despite the catch up response

duration to first job and the return to schooling estimates from a search matching model this paper investigates the properties of the joint distribution of the duration to the first post schooling full time job and of the accepted wage for that job within a search matchingbargaining theoretic model the model provides an interpretation of the observations on duration to first job and accepted wages that differentiates between behavioural influences and market fundamentals in determining the accepted wage schooling relationship the return to schooling is appropriately measured by differences in the wage offer distribution which depends only on market fundamentals we use data from the 1979 youth cohort of the national longitudinal surveys of labor market experience to follow several school leaving cohorts of young males a model which allows for five types of heterogeneous workers within schooling race groups fits the duration and wage data well for all such groups offer probabilities for all groups are estimated to be close to one mean offered wages are about 1000 less than mean accepted wages and the internal annual rate of return for attending college relative to graduating from high school is 32 for blacks and 17 for whites this paper investigates the properties of the joint distribution of the duration to the first post schooling full time job and of the accepted wage for that job within a search matching bargaining model it is a well established empirical regularity that hazard rates are decreasing with the duration of search unemployment it is also true for the data we use that the sample mean of the accepted wage associated with the first job is not increasing with duration these findings hold for both black and white male youth at all levels of schooling conditional on schooling however the time between leaving school and working at the first full time job is longer for blacks and their accepted mean wage is lower conditional on race the time between leaving school and working at the first full time job is shorter for those with higher levels of schooling and their accepted mean wage is higher interestingly blacks display a similar pattern of duration and accepted wages to whites who are one level of schooling below e g black high school graduates and white high school dropouts

identification of search models using record statistics this paper shows how record value theory a branch of statistics that deals with the timing and magnitude of extreme values in sequences of random variables can be used to recover features of the wage offer distribution in conventional search models using national longitudinal survey of youth nlsy wage data i show that the data are not compatible with specifications for the offer distribution characterized by extreme negative skewness in addition i show that my approach can be used to construct a bound on the returns to job seniority my results suggest that job seniority plays only a minor role in the wage growth of the workers surveyed in the nlsy copyright 2008 wiley blackwell

the life cycle of a microfinance institution the irish loan funds abstract ireland s loan funds were a long lived self sustaining large scale microfinance organization that made millions of loans without collateral to the poor during the first 100 years of their life cycle a period of growth ending in the 1840s they adapted constantly and obtained improvements to their legal structure because they were complementary to the banking system and seen as effective in relieving poverty in their 2nd century they became ossified in part because of competition with commercial banks the loan funds provide an example of sustainable microfinance under harsh economic conditions and illustrate how organizations change incrementally and when successful alter their institutional framework

rural credit markets and institutions in developing countries lessons for policy analysis from practice and modern theory this article presents evidence of the failure of government intervention in rural credit markets of ldcs in the past three decades it then shows how lessons for policy analysis can be drawn from modern theory particularly those theories focussing on credit rationing in competitive markets and interlinking of credit contracts with labor and land contracts the article outlines the policy implications of these theories and finds them insufficient to account for the empirical evidence it contends that a more systematic and rigorous analysis of institutions and institutional environments is essential for understanding and implementing effective policy reforms of rural credit markets it presents suggestions for undertaking such an analysis

detailed estimation of worklife expectancy for the measurement of human capital accounting for marriage and children abstract measuring an individual s human capital at a point in time as the present actuarial value of expected net lifetime earnings has a lengthy history calculating such measures requires accurate estimates of worklife expectancy here worklife estimates for men and women in the usa categorized by educational attainment race marital status parental status and current labour force status are presented race has a much larger impact on the worklife expectancy of men than women education is associated with larger worklife differentials for women the association between marriage and worklife expectancy is significant but of opposite sign for men and women married women men have a lower higher worklife expectancy than single women men parenthood is associated with a reduction in the worklife expectancy of women the association is smaller and varies from positive for some education marital status groups to negative for others for men

why do mexican americans earn low wages using current population survey data from november 1979 and 1989 i find that mexican americans earn low wages primarily because they possess less human capital than other workers not because they

estimating average and local average treatment effects of education when compulsory schooling laws really matter the change to the minimum school leaving age in the united kingdom from 14 to 15 had a powerful and immediate effect that redirected almost half the population of 14 year olds in the mid twentieth century to stay in school for one more year the magnitude of this impact provides a rare opportunity to a estimate local average treatment effects late of high school that come close to population average treatment effects ate and b estimate returns to education using a regression discontinuity design instead of previous estimates that rely on difference in differences methodology or relatively weak instruments comparing late estimates for the united states and canada where very few students were affected by compulsory school laws to the united kingdom estimates provides a test as to whether instrumental variables iv returns to schooling often exceed ordinary least squares ols because gains are high only for small and peculiar groups among the more general population i find instead that the benefits from compulsory schooling are very large whether these laws have an impact on a majority or minority of those exposed

when is the local average treatment close to the average evidence from fertility and labor supply the local average treatment effect late may differ from the average treatment effect ate when those influenced by the instrument are not representative of the overall population heterogeneity in treatment effects may imply that parameter estimates from 2sls are uninformative regarding the average treatment effect motivating a search for instruments that affect a larger share of the population in this paper i present and estimate a model of home production with heterogeneous costs and benefits to fertility the results indicate that a sex preference instrument in taiwan produces iv estimates closer to the estimated ate than in the united states where sex preference is weaker

experience tenure and the perceptions of employers this paper examines how group based assessments concerning employee ability impact employee compensation the employer learns about worker ability through bayesian updating creating an additional channel for wage growth that is not available to those workers with only general labor market experience consistent with the model s predictions results from national longitudinal survey of youth nlsy indicate that black workers fare much better relative to white workers in returns to tenure than in returns to experience finally parameter estimates in the structural model suggest that employers initially undervalue black males but that their wages rise with learning by employers over time on average black males earn lower wages than white males just as average wages differ across many groups this paper examines one explanation for this wage gap the possibility that employers underestimate the ability of workers in one or more groups in particular this paper proposes a model that provides explicit predictions about the affect of employer s perceptions on workers returns to general experience and tenure on the job we then examine the wage growth of young males to see whether patterns are consistent with the model economic theory provides many other explanations for differences in wages across groups

natural natural experiments in economics the recent literature exploiting natural events as natural experiment instruments is reviewed to assess to what extent it has advanced empirical knowledge a weakness of the studies that adopt this approach is that the necessary set of behavioral market and technological assumptions made by the authors in justifying their interpretations of the estimates is often absent the methodology and findings from twenty studies are summarized and simple economic models are used to elucidate the implicit assumptions made by the authors and to demonstrate the sensitivity of the interpretations of the findings to the relaxation of some of these assumptions

does a foot in the door matter white nonwhite differences in the wage return to tenure and prior workplace experience author affiliation arthur h goldsmith department of economics washington and lee university lexington va 24450 usa goldsmitha wlu edu corresponding authordarrick hamilton milano the new school of management and urban policy 72 fifth avenue new york ny 10011 usa hamiltod newschool eduwilliam darity jr department of economics university of north carolina at chapel hill chapel hill nc 27514 usa darity unc edu this work is supported by grant 0213838 from the national science foundation acknowledgment we are grateful for suggestions provided by barry hirsch and seminar participants at bond university gold coast australia in addition we are grateful for comments from julie hotchkiss co editor for this journal and two anonymous referees this paper was presented at the 2004 southern economic association meetings 1 overviewthere is an extensive literature documenting the lower wages of black and latino workers relative to white workers in the united states the explanations for these racial and ethnic wage disparities have ranged from differential accumulation of human capital to labor market discrimination 1 farmer and terrell 1996 and more recently lewis and terrell 2001 extend this literature by advancing a hypothesis which we summarize as the theory of ability misperception this hypothesis explains how group membership may differentially influence the gains associated with workplace experience and hence the relative wages of black and latino workers over the course of their working lifecycle their basic idea is twofold first employers believe nonwhite employees acquired fewer skills on prior jobs than white workers thus employers will reward additional experience with prior employers to a greater extent for white workers than for nonwhite workers we refer to this hypothesis as proposition 1 this first proposition falls under the umbrella of statistical discrimination which explains wage inequality as a result of employers offering nonwhite workers lower wages as a result of employer reliance on their perception that the distribution of skills for nonwhite workers is worse than that of white workers second as employers directly observe nonwhite workers on the job they come to realize that their perceptions concerning the distribution of skills for nonwhite workers were incorrect and consequently they have underrated the ability of nonwhite employees this learning leads employers to update their assessment of the relative productivity of nonwhite workers therefore racial ethnic differences in the return to additional tenure or seniority with the current employer will be smaller than the racial ethnic difference in the return to prior experience when proposition 1 holds this prediction constitutes proposition 2 of the theory of ability misperception in addition we introduce a third proposition or a strong form of proposition 2 which suggests that the returns to additional tenure for nonwhite employees will actually exceed that of white employees thus proposition 2 requires that the difference in returns to additional tenure with the current employer between nonwhite and white workers be smaller than the difference in returns to prior experience while proposition 3 requires that nonwhite workers actually receive a higher return for tenure the purpose of this paper is to advance the existing empirical literature aimed at evaluating the validity of the propositions central to the theory of ability misperception using data drawn from the multi city study of urban inequality mcsui if farmer and terrell 1996 and lewis and terrell 2001 are correct that employers underestimate the skills of nonwhite workers before directly observing them at the worksite then many capable nonwhite applicants will be denied work and if employed will suffer undue economic losses