smoking drinking and income in an effort to increase understanding of the alcohol income puzzle the finding that drinking appears to lead to higher income this paper presents maximum simulated likelihood estimates of a system of limited dependent variables governing smoking and drinking patterns and income with all else held constant moderate drinking is associated with 10 percent higher income and heavy drinking associated with 12 percent higher income than drinking abstention smoking is associated with larger effects on income than drinking single equation estimates suggest smokers earn 8 percent less than nonsmokers and the smoking penalty rises to 24 percent after correcting for endogeneity

the value of hiring through employee referrals using personnel data from nine large firms in three industries call centers trucking and high tech we empirically assess the benefit to firms of hiring through employee referrals compared to nonreferred applicants referred applicants are more likely to be hired and more likely to accept offers even though referrals and nonreferrals have similar skill characteristics referred workers tend to have similar productivity compared to nonreferred workers on most measures but referred workers have lower accident rates in trucking and produce more patents in high tech referred workers are substantially less likely to quit and earn slightly higher wages than nonreferred workers in call centers and trucking the two industries for which we can calculate worker level profits referred workers yield substantially higher profits per worker than nonreferred workers these profit differences are driven by lower turnover and lower recruiting costs for referrals jel codes j24 m51 j30 j63

trade migration and integration evidence and policy implications this paper takes as its point of departure the unique position recently adopted by swedish policymakers emphasizing migration as a tool to increase trade we attempt to empirically scrutinize this

information inequality and mass polarization ideology in advanced democracies growing polarization in the american congress is closely related to rising income inequality yet there has been no corresponding polarization of the u s electorate and across advanced democracies mass polarization is negatively related to income inequality to explain this puzzle we propose a comparative political economy model of mass polarization in which the same institutional factors that generate income inequality also undermine political information we explain why more voters then place themselves in the ideological center hence generating a negative correlation between mass polarization and inequality we confirm these conjectures on individual level data for 20 democracies and we then show that democracies cluster into two types one with high inequality low mass polarization and polarized and right shifted elites e g the united states and the other with low inequality and high mass polarization with left shifted elites e g sweden this division reflects long standing difference

using employer hiring behavior to test the educational signaling hypothesis this paper presents a test of the educational signaling hypothesis if employers use education as a signal in the hiring process they will rely more on education when less is otherwise known about applicants we nd that employers are more likely to lower educational standards when an informal more informative recruitment channel is used so we conclude that education is used as a signal in the hiring process

the export effect of immigration into the usa much has been written on the connection between migration and international trade human history provides important examples of migrations leading to increased trade activity with perhaps the most well known example of the overseas chinese this study investigates the trade related importance of chinese and other immigrants into the usa previous studies may have underestimated or overestimated the relationship between trade and migration with nations treated as featureless plains rather than as varied landscapes this study contends that an understanding of the immigration trade relationship can be improved upon by examining the specific pattern and destination of immigration into specific us states using state level export data to 28 immigrant source countries in 1993 a strong immigration trade link is found reinforcing conclusions made by previous research using country level data the compelling connection between immigration and trade found in this study and others suggests that future change

immigrant trade links transplanted home bias and network effects macro level data for the us and 73 trading partners spanning the years 1980 to 2001 is used with a gravity specification to investigate the influence of immigration on bilateral trade prior research has identified immigrant stocks as a significant determinant of trade however this study indicates that the us immigrant trade link is driven by immigration from relatively low income countries a 10 increase in the immigrant stock is found to generate respectively 4 7 and 1 5 increases in domestic imports from and exports to the typical low income home country the observed link is decomposed into two hypothesized channels network effects and transplanted home bias considerable variation in per immigrant trade effects is found across home countries imports from the typical low income home country are estimated to increase by up to 2057 due to transplanted home bias and by as much as 2967 as a result of network effects while exports rise by up to 910 as a result of networks

immigrant specificity and the relationship between trade and immigration theory and evidence studies routinely document that immigrant employment concentrates in non traded goods sectors and that many immigrants have low inter sectoral mobility we consider these observed characteristics of immigrant employment with regard to the question of how immigration affects a nation s pattern of production and trade we model an economy producing three goods one is non traded domestic labor and capital are domestically mobile but internationally immobile allowing that some new immigrants will become specific to the non traded goods sector the model indicates that the effects of immigration on output and trade depend importantly on the sectoral pattern of employment of both new and existing immigrants empirical investigation in a panel data set of oecd countries supports the model s prediction that immigration raises the output of non traded goods consistent with the model we also find that immigration and trade are complements given its empirical support the model s implications for immigration policy are then discussed

informal work networks we present a model of time allocation between formal and informal labour supply where workers learn of informal job opportunities from their peers in addition to formal income taxation and enforcement individuals labour supply decisions depend on the number of their peers with informal jobs and the strength of social ties workers allocate more time to informal activities when tax enforcement is lax and job information transmission is good more connected social networks e g wheel complete feature lower average income but higher average utility than poorly connected social networks e g star empty average income may be non monotonic in tax enforcement on presente un modele d allocation du temps entre l offre de travail formel et informel dans le cas ou les travailleurs apprennent l existence de possibilites de travail informel de leurs pairs en plus de dependre de l imposition des revenus formels et de la rigueur de ce processus les decisions des individus dans leur offre de travail dependent du nombre des pairs qui ont du travail informel et de la force des liens sociaux les travailleurs allouent plus de temps aux activites informelles quand l application de la loi fiscale est rel chee et que la transmission de l information a propos du travail informel est bonne des reseaux sociaux mieux connectes e g roue complet se traduisent par un revenu moyen plus bas mais par une utilite moyenne plus elevee que des reseaux sociaux plus pauvrement connectes e g etoile vide le revenu moyen peut avoir un lien non monotone a la nature de l application de la loi fiscale

revisiting the trade migration nexus evidence from new oecd data international migrants contribute to bilateral trade creation if their presence reduces information costs or entails additional demand for goods from their source countries using new data on stocks of foreign born individuals by skill class we try to separately quantify those two channels we assume that improved information affects host countries imports and exports symmetrically while the preference channel matters for imports only on average for differentiated goods both channels contribute evenly toward the total trade creating effect of migration in line with expectations the relative importance of the trade cost channel is largest for homogeneous goods and for high skilled migrants

are cadre offspring in the fast lane evidence from the labour market for college graduates in china this paper studies the impact of having a cadre parent on the labour market performance and channels of the intergenerational transference using a recent data set we find that college graduates w

the macrodynamics of sorting between workers and firms we develop an equilibrium model of on the job search with ex ante heterogeneous workers and firms aggregate uncertainty and vacancy creation the model produces rich dynamics in which the distributions of unemployed workers vacancies and worker firm matches evolve stochastically over time we prove that the surplus function which fully characterises the match value and the mobility decision of workers does not depend on these distributions we estimate the model on us labour market data from 1951 2007 and predict the fit for 2008 12 we use the model to measure the cyclicality of mismatch between workers and jobs

do foreign workers reduce trade barriers microeconomic evidence this paper provides evidence that foreign workers reduce firms trade costs and thus increase the probability that firms export this informs both the literature on trade costs and the microeconomic literature on firms export behaviour we identify the nationality of each worker in a large sample of german establishments and relate this to the exporting behaviour of these establishments we allow for the possible endogeneity of an establishment s workforce by instrumenting the share of foreign workers with the regional distribution of foreign workers in the wider labour market we find a significant effect of worker nationality on exporting which is not driven by the industrial occupational or locational concentration of migrants the effect is much stronger for senior occupations who are more likely to have a role in exporting decisions by the establishment the relationship is also stronger when we consider exports to particular regions and workers from these regions consistent with a gravity model in which trade flows from country i to j are a function of migrants from j in i

migration and trade theoretical and empirical research in economics suggests that bilateral migration triggers bilateral trade through a number of channels this paper assesses the functional form of the impact of migration on trade flows in a quasi experimental setting we provide evidence that the relationship is not log linear in particular at small levels of immigration stocks the elasticity of trade to migration is quite high and it declines to zero at about 4 000 immigrants if immigration stocks exceed such a level the evidence suggests that trade will not increase anymore this suggests that for cross country network and other effects flowing from immigration to materialise at a significant level for trade a high enough level of immigrant stocks is necessary but there appears to be satiation as immigrant numbers increase

immigration and trade creation econometric evidence from canada immigrants may expand trade with their country of origin owing to superior knowledge of or preferential access to market opportunities the authors test this proposition using canadian trade data with 136 partners from 1980 to 1992 in an augmented gravity equation they find that a 10 percent increase in immigrants is associated with a 1 percent increase in canadian exports to the immigrant s home country and a 3 percent increase in imports they also find that among the primary categories of immigrants independents have the greater influence on trade immigration via the entrepreneur class appears to have less impact on trade than all other classes except refugees

who gets the job referral evidence from a social networks experiment we use recruitment into a laboratory experiment in kolkata india to analyze how job networks select individuals for employment opportunities we present evidence that individuals face a tradeoff between choosing the most qualified individual for the job and the individual who is ideal from the perspective of their social network the experiment allows randomly selected subjects to refer members of their social networks to subsequent rounds of the experiment and varies the incentive schemes offered to these participants we find that when faced with performance pay individuals are more likely to refer co workers and less likely to refer family members high ability participants who are offered performance pay recruit referrals who perform significantly better on a cognitive ability task and also prove to be more reliable as evidenced by their choices in the trust game and performance on an effort task

the cyclicality of the opportunity cost of employment the flow opportunity cost of moving from unemployment to employment consists of forgone public benefits and the forgone consumption value of nonworking time we construct a time series of the opportunity cost of employment using detailed microdata and administrative or national accounts data to estimate benefits levels eligibility take up consumption by labor force status hours taxes and preference parameters the opportunity cost is procyclical and volatile over the business cycle the estimated cyclicality implies far less unemployment volatility in leading models of the labor market than that observed in the data irrespective of the level of the opportunity cost

pride and prejudice using ethnic sounding names and inter ethnic marriages to identify labour market discrimination labour markets discriminate against workers with particular ethnic sounding names we use non random sorting into interethnic marriage and salient differences between sephardic and ashkenazi surnames to evaluate the causal impact of sephardic affiliation on wages using the 1995 israeli census we estimate the effect of a sephardic sounding surname on wages we first compare the wages of israeli jewish males born to sephardic fathers and ashkenazi mothers sa who are more likely to carry a sephardic surname with the wages of israeli jewish males born to ashkenazi fathers and sephardic mothers as we find that israeli labor markets discriminate based on perceived ethnicity sa workers earn significantly less than their as counterparts we then exploit the custom of women to adopt their husbands surnames to disentangle actual ethnicity from the ethnicity perceived by the market consistent with ethnic discrimination based on surnames we find that it is father in law s ethnicity rather than father s ethnicity that shapes female wage rates finally we find that labor markets discriminate based on surname only when those names provide additional information about ethnicity when ethnicity can be discerned from skin tone surnames do not provide additional explanatory power with respect to wages

out of sight not out of mind education networks and international trade summary university students typically develop between them long lasting ties of friendship and trust as well as an attachment to their university if they are foreign students they also form a bond to their country of study this paper investigates the impact of university ties on the uk s trade with 167 countries during 1999 2009 i find robust evidence that education network ties boost the uk s bilateral trade flows specifically the impact of networks is stronger on trade between the united kingdom and countries with dissimilar institutions and culture and particularly with post communist economies results are robust to different econometric specifications and regressors

transitions in the german labor market structure and crisis abstract since the so called hartz iv reforms around 2005 and during the global crisis of 2008 2009 the german labor market featured mainly declining unemployment rates we develop a search and matching model with heterogeneous skills to explore the role of structural and cyclical policies for this performance calibrating unemployment benefits to approximate legislation before and after the reforms we find a large reduction in unemployment and its duration with the transition concluding after about three years during the crisis the extended use of short time labor subsidies that prevent jobs from being destroyed is likely to have prevented strong increases in unemployment

public sector wage policy and labor market equilibrium a structural model we develop and estimate a structural model that incorporates a sizable public sector in a labor market with search frictions the wage distribution and the employment rate in the public sector are taken as exogenous policy parameters overall wage distribution and employment rate are determined within the model taking into account the private sector s endogenous response to public sector employment policies job turnover is sector specific and transitions between sectors depend on the worker s decision to accept alternative employment in the same or different sector by comparing the value of employment in the current and prospective jobs the model is estimated on british data by a method of moments we use the model to simulate the impact of various counterfactual public sector wage and employment policies

the impact of ethnic diversity on microenterprise start ups until recently factors determining the decisions made by microfinance institutions mfis to extend loans to business start ups had not been explored recent evidence shows that mfi performance wi

the impact of alcohol consumption on occupational attainment in england in this study we provide evidence on the effect of alcohol consumption on occupational attainment in england to do this we use samples of employees from the health survey for england between 1992 and 1996 we find that owing to the endogenous nature of alcohol consumption ols estimates may provide a biased picture of the impact of alcohol consumption on occupational attainment using various sets of instrumental variables we find positive and significant returns to moderate levels of drinking for male and female employees which drop off rapidly as consumption increases

from sick man of europe to economic superstar germany s resurgent economy in the late 1990s and into the early 2000s germany was often called the sick man of europe indeed germany s economic growth averaged only about 1 2 percent per year from 1998 to 2005 including a recession in 2003 and unemployment rates rose from 9 2 percent in 1998 to 11 1 percent in 2005 today after the great recession germany is described as an economic superstar in contrast to most of its european neighbors and the united states germany experienced almost no increase in unemployment during the great recession despite a sharp decline in gdp in 2008 and 2009 germany s exports reached an all time record of 1 738 trillion in 2011 which is roughly equal to half of germany s gdp or 7 7 percent of world exports even the euro crisis seems not to have been able to stop germany s strengthening economy and employment how did germany with the fourth largest gdp in the world transform itself from the sick man of europe to an economic superstar in less than a decade we present evidence that the specific governance structure of the german labor market institutions allowed them to react flexibly in a time of extraordinary economic circumstances and that this distinctive characteristic of its labor market institutions has been the main reason for germany s economic success over the last decade

education choices in mexico using a structural model and a randomized experiment to evaluate progresa in this paper we evaluate the effect of a large welfare program in rural mexico for such a purpose we use an evaluation sample that includes a number of villages where the program was not implemented for evaluation purposes we estimate a structural model of education choices and argue that without such a framework it is impossible to evaluate the effect of the program and especially possible changes to its structure we also argue that the randomized component of the data allows us to identify a more flexible model that is better suited to evaluate the program we find that the program has a positive effect on the enrollment of children especially after primary school we also find that an approximately revenue neutral change in the program that would increase the grant for secondary school children while eliminating for the primary school children would have a substantially larger effect on enrollment of the latter while having minor effects on the former

the signaling role of promotions further theory and empirical evidence an extensive theoretical literature investigates the role of promotions as a signal of worker ability we extend the theory by focusing on how the signaling role of promotion varies with education and then investigate the resulting predictions using a longitudinal data set that contains detailed information concerning the internal labor market history of a medium sized firm in the financial services industry our results support signaling being important for understanding the differences between promotion practices concerning bachelor s and master s degree holders while the evidence concerning the importance of signaling for high school graduates and phds is mixed

a structural model of multiple welfare program participation and labor supply work on estimating the labor supply effects of high marginal tax rates in welfare programs has been hindered by the difficulty of estimating the effects of participation in multiple welfare programs simultaneously the authors solve this problem by applying methods of simulation estimation to a model of labor supply and multiple program participation the results show asymmetric wage and tax rate effects with fairly large wage elasticities of labor supply but very inelastic responses to moderate changes in cumulative marginal tax rates implying that high welfare tax rates do not necessarily induce major reductions in work effort copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

do drinkers earn less theoretical work by becker and others on human capital led initially to empirical research on the determinates of earnings interest in human capital has now spread to other areas especially health this movement is in conjunction with societal concerns regarding the role of diet and environmental factors on human well being and performance following becker 1 and grossman 9 economists expect to find a significant relationship between health and earnings health aspects of human capital have been extensively explored since the early work of grossman 9 10 good health is both beyond the control of the individual exogenous as a result of genetic factors and random events and controllable endogenous through the regulation of activities such as smoking drinking eating exercise and other informed choices this study examines the relation between earnings and drinking curiously little rigorous empirical work has been done on the relation between earnings and drinking irving fisher s claim to the contrary 1 there is little evidence that prohibition led to substantial if any productivity increases although it is established that excessive drinking leads to poor health the empirical evidence regarding earnings and drinking is mixed and inconclusive according to the u s government abusive drinkers earn less in their biennial reports to congress the national institute on alcohol abuse and alcoholism niaaa estimates the economic cost to society of alcohol abuse approximately half of this cost arises from the estimated loss in earnings productivity due to abusive drinking 2 their approach consists of estimating a wage equation which includes human capital variables as well as a dichotomous abusive drinking variable and quantity of alcohol consumed 3 berger and leigh 3 used a sample selection model to test whether drinkers earned more or less than nondrinkers they divided their sample from the 1972 73 quality of employment survey into two categories drinkers and nondrinkers using a sample selection correction estimator hedonic wage regressions for each category and by sex were estimated they found that drinkers moderate and abusive combined earned more than nondrinkers comparisons were then made between wages from each regression with demographic and human capital variables set at

the labor market integration of refugees in the united states do entrepreneurs in the network help we investigate whether entrepreneurs in the network of refugees from the same country of origin help refugees enter the labor market by hiring them we analyze the universe of refugee cases without u s ties who were resettled in the united states between 2005 and 2010 we address threats to identification due to refugees sorting into specific labor markets and to strategic placement by resettlement agencies we find that the probability that refugees are employed 90 days after arrival is positively affected by the number of business owners in their network but negatively affected by the number of those who are employees this suggests that network members who are entrepreneurs hire refugees while network members working as employees compete with them which is consistent with refugees complementing the former and substituting for the latter

is there a wage bonus from drinking unobserved heterogeneity examined while the result that drinkers earn more than abstainers has been remarkably persistent only one paper in the literature on drinking and earnings has been written where individual fixed effects are included this study improves the current literature by utilizing a much longer panel and focuses on the low end of drinking while controlling for unobserved heterogeneity with the inclusion of individual specific effects it is found that while ols specifications yield a positive significant coefficient on current drinking even when a rich set of covariates is controlled for including individual fixed effects renders the coefficient statistically insignificant

labor market reforms an evaluation of the hartz policies in germany abstract how do workers and firms respond to comprehensive labor market reforms we use detailed micro data to analyze the german hartz reforms through the lens of a structural model of the labor market these reforms aimed at reducing unemployment by increasing working hour flexibility job matching and work incentives in our setting reforms directly affect the model parameters which are estimated using matched data on 430 000 workers in 340 000 firms contrary to previous findings our analysis shows that although the reforms shortened the typical duration of unemployment they did not reduce unemployment as a whole and led to a decline in wages low skilled workers suffered the most in terms of employment and wage losses furthermore we decompose the contribution of each reform wave to employment and wage changes finding that the reduction in generosity of unemployment benefits was the principle driver in reducing wages

immigrant links to the home country empirical implications for u s bilateral trade flows immigrants ties to their home countries can play a key role in fostering bilateral trade linkages immigrant ties include knowledge of home country markets language preferences and business contacts that have the potential to decrease trading transaction costs empirical results for the united states suggest that immigrant links have historically been important in increasing bilateral trade flows with immigrants home countries copyright 1994 by mit press

the employment effect of reforming a public employment agency by how much does an increase in operating effectiveness of a public employment agency pea and a reduction of unemployment benefits reduce unemployment using a recent labour market reform in germany as background we find that an enhanced effectiveness of the pea explains about 20 of the observed post reform unemployment decline the role of unemployment benefit reduction explains just about 5 of the observed decline due to disincentive effects resulting from the reform the reform of the pea could have had an even higher impact on unemployment reduction if there had been less focus on long term unemployed workers

the drinkers bonus in the military officers versus enlisted personnel applied economics published the first article reporting the findings of drinkers earning more than nondrinkers in 1988 the positive correlation between drinking and higher wages has existed in the economics literature on alcohol consumption for almost two decades however a clear explanation for this finding is only beginning to emerge i use data on male military personnel from the 1985 worldwide survey of alcohol and nonmedical drug use among military personnel to explore a theory of social capital specifically one way individuals can invest in social capital is through drinking in certain settings abstainers miss out on opportunities to increase their social capital stock because they forego social interaction that could result in promotion some evidence comes from exploring the wage bonus for officers versus enlisted i find the effect of different drinking levels on wages varies with station in the military officers who drink between two and 38 drinks per week earn between 2 and 8 more than o

trade diaspora and migration to new zealand this paper examines the hypotheses that a greater stock of migrants in new zealand from a particular country leads to more trade between that country and new zealand and a greater stock of new zealanders living overseas in a particular country leads to more trade between that country and new zealand it also examines the relationships between migration diaspora and tourism exports the literature suggests that migrants can stimulate trade by lowering transaction costs and by bringing with them preferences for goods produced in their home country our approach is to apply panel data techniques within the framework of a standard gravity model of trade to a dataset consisting of information on 233 countries in each of the 26 years between 1981 and 2006 we estimate a random effects panel sample selection model using correlated random effects our results indicate that migration does indeed stimulate trade in our benchmark specification merchandise exports from and imports to new zealand both have a statistically significant relationship with numbers of migrants in new zealand imports also have a statistically significant relationship with numbers of new zealanders overseas our results also suggest that migration stimulates imports more than exports

an economic approach to social capital a standard optimal investment model can be used to analyse an individual s decision to accumulate social capital we analyse six facts that support the predictions of this individual based approach 1 social capital first rises and then falls with age 2 social capital declines with expected mobility 3 social capital rises in occupations with greater returns to social skills 4 social capital is higher among homeowners 5 social connections fall sharply with physical distance 6 people who invest in human capital also invest in social capital we fail to find robust evidence that social capital investments fall with the value of time or that geographic religious groups generate social capital complementarities

migration remittances and capital accumulation evidence from rural mexico this paper studies the link between migration remittances and productive assets accumulation for a panel of poor rural households in mexico over the period 19972006 in a context of nancial markets imperfections migration may act as a substitute for imperfect credit and insurance provision through remittances from migrants and thus exert a positive eect on investment however it may well be the case that remittances are channelled towards increasing consumption and leisure goods exploiting within family variation and an instrumental variable strategy we show that migration indeed accelerates productive assets accumulation moreover when we look at the eect of migration on consumption of non productive assets durable goods we nd instead a negative eect our results then suggest that

unemployment vs mismatch of talents reconsidering unemployment benefits we develop an equilibrium search matching model with risk neutral agents and two sided ex ante heterogeneity unemployment insurance has the standard effect of reducing employment but also helps workers to get a suitable job we show through calibrations how the mere difference on unemployment insurance when countries experience a common skilled biased technological shock may result in differences in unemployment productivity growth and wage inequality these results are consistent with the contrasting performance of the labour market in europe and the united states in the last twenty five years the model is used to address some political economy issues

uncertainty and the dynamics of r d uncertainty varies strongly over time rising by 50 to 100 in recessions and by up to 200 after major economic and political shocks this paper shows that higher uncertainty reduces the responsiveness of r d to changes in business conditions a caution effect making it more persistent over time thus uncertainty will play a critical role in shaping the dynamics of r d through the business cycle and its response to technology policy i also show that if firms are increasing their level of r d then the effect of uncertainty will be negative while if firms are reducing r d then the effect of uncertainty will be positive

principles of network development and evolution an experimental study this paper reports on an experimental investigation of the evolution of networks and the individual decision making processes that guide it inasmuch as there is no history of experimental work on network formation part of the paper is devoted to the formulation of problems that can be examined experimentally the results are that networks composed of decentralized decision makers are capable of overcoming complex coordination and learning problems and converge to stationary when it does not occur significant and persistent inefficiencies can result the models of equilibration based on the principle of nash equilibrium are more reliable than models based on the alternative principles of efficiency seeking or focalness of the network configuration however individual decision making within networks is not in accordance with the simple decision rules of nash best response instead we observed complicated strategies that appear to trade short term profits in order to signal to and teach other agents the strategies required for long term profit maximization

immigration and firms integration in international production networks abstract this paper uses panel data on cross border migration and transaction level trade for swiss municipalities to identify the effect of migration networks on specific margins of the integration of firms in global value chains we find that the stability of an international supplier buyer relationship is strongly associated with a priori knowledge about the supplier s origin as measured by the migrant network with the same country of origin present in the buyer s immediate environment here a municipality not only do firms engage in more stable input trading relationships and intensify relationships in terms of input trading volume but they reduce the total number of suppliers in a given country in response to an increase of immigration from there these results are in line with a theoretical framework where firms sourcing strategies are subject to incomplete information firms diversify their foreign supplier network in order to be less susceptible to potential bad shocks once informational barriers are lifted firms contract fewer suppliers but purchase a larger volume from each of them

the trade creating effects of business and social networks evidence from france using theory grounded estimations of trade flow equations this paper investigates the role that business and social networks play in shaping trade between french regions the bilateral intensity of networks is quantified using the financial structure and location of french firms and bilateral stocks of migrants compared to a situation without networks migrants are shown to double bilateral trade flows while networks of firms multiply trade flows by as much as four in some specifications finally taking network effects into account divides the estimation of the impact of transport costs and of the effect of administrative borders by around three

the effect of alcohol use on wages 1988 the effect of alcohol use on wages applied economics vol 20 no 10 pp 1343 1351

isolating the network effect of immigrants on trade within the migration trade nexus literature this paper proposes a more carefully defined measure of migration business networks and quantifies its impact on bilateral trade using cross sectional data and controlling for the overall bilateral stock of migrants the share of migrants employed in managerial business related occupations has a strong additional effect on trade those immigrants should be the ones directly involved in the diffusion and transmission of information relevant for companies trading with other countries their presence is found to increase the volume of trade especially of imports beyond the already known effect of immigrants or highly educated immigrants when we control for the presence of highly educated immigrants the share of immigrants in business network occupations shows a particularly large effect on trade in differentiated goods we also find that highly educated individuals in business related occupations are those contributing to stimulate import and export by the largest margin business network effects seem particularly important in stimulating exports to culturally different countries such as those with different language and legal origin

ethnic networks and trade intensive versus extensive margins abstract ethnic networks have been associated with increased international trade although studies have not differentiated between entry into foreign markets and trade expansion we find that ethnic networks increase trade on the intensive margin but not on the extensive margin

identifying the causal effect of income on religiosity using the earned income tax credit abstract how do economic conditions income and the generosity of social insurance affect religious behavior this paper provides novel evidence for the united states using variation in earned income tax credit benefits across states over time and by number of children in the raw data income and religiosity have a trivial relationship in contrast the instrumental variables strategy shows that increases in income from the eitc are found to sizably reduce religious attendance among low income individuals among individuals who attend the results indicate that an additional 1000 in annual income is associated with a decrease of roughly 1 service per year as compared to an average of 16 services per year the effect arises mainly along the intensive margin decreasing devout behavior and increasing more marginal attendance but having little impact on whether an individual participates at all or on beliefs there are also minimal effects on the occurrence and amount of contributions to religious organizations the results extend our understanding of the determinants of religiosity the relationship between governmental income support and religious behavior and the social effects of the earned income tax credit

factor movements and commodity trade as complements abstract several models are presented in which factor mobility leads to an increase in the volume of world trade the models share the common characteristic that the basis for trade is something other than differences in relative factor endowments these alternative bases for trade include returns to scale imperfect competition production and factor taxes and differences in production technology taken together the models suggest a more general idea the widely held notion that trade in goods and factors are substitutes is in fact a rather special result which is a general characteristic only of factor proportions models

endogenous job contact networks we use the uk quarterly labour force survey to document the presence of two phenomena first a positive correlation between unemployment rate and the proportion of job seekers who use social networks to nd jobs network use second a non monotone relation between unemployment rate and the proportion of recently employed workers who found their job through friends or relatives network productivity this second relation is positive for low levels of unemployment rate while it becomes negative for high levels of unemployment rate existing models of social networks and labor market generally assume that social networks are exogenous this assumption implies a negative correlation between unemployment rate and network productivity we develop a model where social networks are used to collect job oers but workers decide strategically how much to invest in their network we show that equilibrium job contact networks are dense and more productive in transmitting information when labor market turnover is moderate while they are less productive and segmented into clusters for either high or low turnover the equilibrium response of job contact networks to changes in labor market conditions is sucient to generate

anonymous market and group ties in international trade abstract history provides many examples of cohesive groups dispersed over several countries who exploit the ties between their members to gain entry into foreign markets the phenomenon is well established empirically and noteworthy because it suggests the importance of informational barriers in international transactions we present a simple model where output is produced through a joint venture and agents have complete information domestically but are unable to judge the quality of their match abroad a minority of individuals otherwise identical to all others can exploit complete information in international matches between group members if they so choose group ties increase aggregate trade and income but hurt the anonymous market because they deprive it disproportionately of the group s more productive members

bayesian learning in social networks we study the perfect bayesian equilibrium of a sequential learning model over a general social network each individual receives a signal about the underlying state of the world observes the past actions of a stochastically generated neighbourhood of individuals and chooses one of two possible actions the stochastic process generating the neighbourhoods defines the network topology we characterize pure strategy equilibria for arbitrary stochastic and deterministic social networks and characterize the conditions under which there will be asymptotic learning convergence in probability to the right action as the social network becomes large we show that when private beliefs are unbounded meaning that the implied likelihood ratios are unbounded there will be asymptotic learning as long as there is some minimal amount of expansion in observations we also characterize conditions under which there will be asymptotic learning when private beliefs are bounded

toward an integrated approach to industry dynamics and labor mobility industrial dynamics and labour mobility are two fields of economic research that have developed fast in recent years but along what are essentially separate lines this paper shows that the processes those two fields deal with can be highly interdependent and demonstrates the usefulness of and the opportunity for an integrated approach to the dynamics of industries and labour mobility it concludes with a list of questions that inform a research agenda dedicated to such approach

internal and external labor markets and the scope of the firm abstract the scope of integration is characterized in the context of worker learning about job preferences and adverse selection integration mitigates inefficiencies arising from incomplete information on both the demand and supply sides of the labor market worker learning about job preferences comes at a productivity cost which is important in how firms determine the scope of integration

estimating incentive and welfare effects of nonstationary unemployment benefits the distribution of unemployment duration in our equilibrium matching model with spell dependent unemployment benefits displays time varying exit rates building on semi markov processes we translate these rates into an expression for the aggregate unemployment rate structural estimation using german microdata allows us to discuss the effects of an unemployment benefit reform hartz iv the reform reduced unemployment by less than 0 1 percentage points contrary to general beliefs the net wage for most skill and regional groups increased taking the insurance effect of unemployment benefits into account however the reform is welfare reducing for 76 of workers

frictional unemployment on labor flow networks abstract we develop an alternative theory to the aggregate matching function in which workers search for jobs through a network of firms the labor flow network the lack of an edge between two companies indicates the impossibility of labor flows between them due to high frictions in equilibrium firms hiring behavior correlates through the network generating highly disaggregated local unemployment hence aggregation depends on the topology of the network in non trivial ways this theory provides new micro foundations for the beveridge curve wage dispersion and the employer size premium we apply our model to employer employee matched records and find that network topologies with pareto distributed connections cause disproportionately large changes on aggregate unemployment under high labor supply elasticity

the intergenerational effects of political influence evidence from china this paper considers the effects of fathers political influence on their offspring s labour market outcomes in china political influence refers to the ability to convert political power into econ

employment hours of work and the optimal taxation of low income families the optimal design of low income support is examined using a structural labour supply model the approach incorporates unobserved heterogeneity fixed costs of work childcare costs and the detailed non convexities of the tax and transfer system the analysis considers purely pareto improving reforms and also optimal design under social welfare functions with different degrees of inequality aversion we explore the gains from tagging and also examine the case for the use of hours contingent payments using the tax schedule for lone parents in the uk as our policy environment the results point to a reformed non linear tax schedule with tax credits only optimal for low earners the results also suggest a welfare improving role for tagging according to child age and for hours contingent payments although the case for the latter is mitigated when hours cannot be monitored or recorded accurately by the tax authorities acknowledgements this study is part of the research program of the esrc centre for the microeconomic analysis of public policy at the ifs we thank stuart adam mike brewer roger gordon guy laroque ian preston emmanuel saez florian scheuer seminar participants at harvard mit jerusalem niesr sole and participants in the mirrlees review the editor and the referees for helpful comments we are alone responsible for all errors and interpretations

o papel das redes sociais na condicao do desempregado uma analise usando a teoria de matching the paper investigates whether the size of social networks can aect the unemployment rate of the economy therefore based on a theoretical model of matching i propose a technique for simulating the eects of networks on the employability of workers the proposal is applied to a database of portugal noting evidence that there is an optimal size of network that minimizes the unemployment rate

alcoholism work and income this article reports on an empirical analysis of the relationships between alcoholism and income and working we show that the relationships between alcoholism and labor market success have important age or life cycle dimensions we present evidence that alcoholism may affect income more by restricting labor market participation than by affecting the wages of workers finally we demonstrate that the effects of alcoholism on earnings depend on the extent to which one controls for other covariates associated with alcoholism as such we suggest that there may be important indirect as well as direct effects of alcoholism on labor market success

old boy networks as screening mechanisms this paper studies a fulfilled expectations equilibrium in situations in which intermediaries provide personal opinions on the likelihood of success of personnel projects or investments each referee must recommend some candidates from a group of people about whom he has private information the employer uses the recommendations to choose the workers using his expectations about the quality of the recommended and the nonrecommended applicants although the referees use their information strategically the competition among them produces optimal use of the information in the sense that employers make the same choices in equilibrium as they would if they had the same information as the referees

factor mobility trade and welfare abstract the paper develops a north south model which is driven by scale economies in the modern sector the model predicts that skilled and unskilled labor migrate from south to north and capital migrates from north to south migration of skilled labor and capital exhibits complementarity with trade while migration of labor may exhibit complementarity or substitutability if the terms of trade effects are ignored small movements of all factors affect the welfare of the population in south negatively and of that in north positively the effects of migration on the terms of trade are ambiguous in general

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

equilibrium search and tax credit reform an empirical equilibrium job search model with wage posting is developed to analyze the labor market impact of uk tax reforms the model allows for a rich characterization of the labor market with hours responses accurate representations of the tax and transfer system and both worker and firm heterogeneity the model is estimated with pre reform longitudinal survey data using a semi parametric estimation technique and the impact of actual tax reform policies is simulated the model predicts that the british working families tax credit and contemporaneous reforms increased employment with equilibrium effects found to play a relatively minor role

experimental games on networks underpinnings of behavior and equilibrium selection in this paper we describe a series of laboratory experiments that implement specific examples of a general network structure specifically actions are either strategic substitutes or strategic complements and participants have either complete or incomplete information about the structure of a random network since economic environments typically have a considerable degree of complementarity or substitutability this framework applies to a wide variety of settings we examine behavior and equilibrium selection the degree of equilibrium play is striking in particular with incomplete information behavior closely resembles the theoretical equilibrium whenever this is unique when there are multiple equilibria general features of networks such as connectivity clustering and the degree of the players help to predict informed behavior in the lab people appear to be strongly attracted to maximizing aggregate payoffs social efficiency but there are forces that moderate this attraction 1 people seem content with in the aggregate capturing only the lion s share of the efficient profits in exchange for reduced exposure to loss and 2 uncertainty about the network structure makes it considerably more difficult to coordinate on a demanding but efficient equilibrium that is typically implemented with complete information

labor market equilibrium with rehiring consistent with the empirical evidence this article analyzes a labor market in which separations are not permanent and reactivated firms prefer to rehire former employees instead of seek new ones workers engage in job search due to the uncertain prospects of rehiring if firms can commit to wages contingent on rehiring they backload wages to provide incentives for workers to reduce their unobservable search effort under risk aversion and incomplete markets if productivity at reactivation is sufficiently high the tension between wage backloading and consumption smoothing leads to excessive search in equilibrium

employment wages and alcohol consumption in russia 1 introductionconcerns regarding the relationship between alcohol consumption and labor market productivity are well grounded if problem drinking or alcoholism is considered a disease then it may have depressant effects on labor market productivity causing reductions in employment earnings and other labor market outcomes mullahy and sindelar 1993 1996 kenkel and ribar 1994 however there is a medical literature that documents a u shaped relationship between alcohol consumption and the risk of cardiovascular disease according to this literature moderate drinkers have a lower risk of cardiovascular disease than do either abstainers or heavy drinkers beaglehole and jackson 1992 doll et al 1994 consistent with this evidence several economists have found a positive association between moderate drinking and earnings berger and leigh 1988 french and zarkin 1995 heien 1996 hamilton and hamilton 1997 zarkin et al 1998 macdonald and shields 2001 this article investigates the impact of alcohol consumption on employment and wages in russia the primary contributions of the article are twofold first it enhances the economic literature on the relationship between alcohol consumption and labor market behavior by using data from a longitudinal survey the use of a longitudinal data set enables the estimation of a fixed effects model which helps avoid the potential bias caused by unobserved individual factors not captured in cross sectional models the use of a fixed effects model is an important extension to the literature because the data sets used in previous studies are cross sectional and usually lack adequate variables that could serve as identifying instruments to control for the endogeneity of alcohol consumption 1 furthermore the richness of the data set used in this article allows for the application of three alternative measures of alcohol consumption in the empirical analysis this is important because the relationship between alcohol consumption and labor market outcomes may be sensitive to the alcohol measure that is used the second notable contribution of this article is that it provides the first empirical evidence on the association between alcohol consumption and labor market outcomes in russia excessive alcohol consumption is a widespread problem in russia where per capita alcohol consumption is around 14 liters per year the world health organization who considers 8 liters to be a sign that a country has a critical consumption level for health problems quinn judge 1997 furthermore the dramatic fluctuations in mortality rates experienced in russia over the past 15 years have generated considerable attention to the potential effect of alcohol consumption on the overall health of the russian population it is important to investigate how labor market outcomes would be affected by alcohol consumption in a country which demonstrates such dramatic fluctuations in alcohol consumption and mortality consistent with the previous studies cross sectional results generally support the hypothesis of an inverse u shaped relationship between alcohol consumption and wages and employment results from the fixed effect models are found to be quite different from those of cross sectional models the positive effect of alcohol consumption on employment disappears for both males and females once the individual fixed effects are controlled for the results of the wage model lend support to a small and linear return to alcohol consumption but the effects are significant only at the 10 level the fixed effects estimates are smaller in magnitude and estimated with less precision compared with cross sectional estimates section 2 reviews the previous literature section 3 discusses the conceptual issues and empirical strategy section 4 introduces the data set section 5 provides a discussion of the results and sensitivity analyses section 6 concludes the article

communication and coordination in social networks i model people in a coordination game who use a communication network to tell each other their willingness to participate the minimal sufficient networks for coordination can be interpreted as placing people into a hierarchy of social roles or stages initial adopters then followers and so on down to late adopters a communication network helps coordination in exactly two ways by informing each stage about earlier stages and by creating common knowledge within each stage we then consider two examples first we show that low dimensional networks can be better for coordination even though they have far fewer links than high dimensional networks second we show that wide dispersion of insurgents people predisposed toward participation can be good for coordination but too much dispersion can be bad although collective action depends on both social structure and individual incentives these integral aspects have been formalized separately in the fields of social network theory and game theory by considering them together this paper engages the classic question of which structures are conducive to coordination and shows that structure and strategy are related in a mutually interesting way here we consider a coordination game in which each person wants to participate only if others participate social structure is thought of as a communication network by which people tell each other their willingness to participate each person knows whether her neighbours in the network are willing but does not know about anyone else our model is thus a game of incomplete information in which each person given his local knowledge decides whether to participate the main result is a characterization of the minimal sufficient networks for coordination in terms of a hierarchy of social roles or stages initial adopters then followers and so on down to late adopters for example a communication network helps coordination in exactly two ways by informing each stage about earlier stages and by creating common knowledge within each stage we also consider two simple examples first we show that low dimension or strong link networks can be better for coordination even though they have far fewer links than high dimension or weak link networks second we show that wide dispersion of insurgents people predisposed toward participation can be good for coordination but too much dispersion can be bad this paper is built on the assumption that the most basic and common mechanism for coordination is the i ll go if you go mechanism individuals first communicate with each other about their preferences and then each individual chooses whether to participate or not hence a person s participation depends on what he knows about his neighbours it does not depend solely on their participation itself either through learning adaptation or social influence the physical analogies of contagion or diffusion are not

personal networks and nonagricultural employment the case of a farming village in the philippines abstract this article based on an intensive village survey in the philippines analyzes the effects of personal networks on rural villagers access to nonagricultural occupations and the terms of employment given to them a key finding is that personal networks are selectively used to reduce transaction costs and their impacts on employment conditions vary by size and by location of enterprises we find that when villagers are employed in unskilled work at small enterprises those who use family relative networks receive wage premiums however if we limit our sample to small enterprises located near our study village the family relative network premiums become insignificant presumably because of the overriding influence of the community wide network within a narrow local community contrary to the case of small enterprises unskilled workers wages at large enterprises are not much affected by personal networks but are largely determined by years of schooling and work experience the recent developmen

networks in the modern economy mexican migrants in the u s labor market this paper attempts to identify job networks among mexican migrants in the u s labor market the empirical analysis uses data on migration patterns and labor market outcomes based on a sample of individuals belonging to multiple origin communities in mexico over a long period of time each community s network is measured by the proportion of the sampled individuals who are located at the destination the united states in any year we verify that the same individual is more likely to be employed and to hold a higher paying nonagricultural job when his network is exogenously larger by including individual fixed effects in the employment and occupation regressions and by using rainfall in the origin community as an instrument for the size of the network at the destination

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

alcohol and earnings does drinking yield a wage premium this paper examines the relationship between alcohol consumption and earnings for prime age males wage differentials for non moderate and heavy drinkers are estimated using a polychotomous choice model which accounts for the endogenous relationship be tween drinking and earnings we find that moderate alcohol consumption leads to increased earnings relative to abstention however heavy drinking leads to reduced earnings relative to moderate drinking heavy drinkers possess flatter age earnings profiles and attain lower returns for higher education than non and moderate drinkers these results are in contrast to previous research on substance abuse which finds no earnings drop off for heavy users

local and personal networks in employment and the development of labor markets evidence from the cut flower industry in ethiopia summary we examine the roles of local and personal networks in the employment process and the emergence and development of the labor market in ethiopia s growing cut flower industry using primary survey data of 320 workers randomly sampled from all 64 farms we find that workers who were recruited informally using the social ties were paid less than the formally recruited workers at hiring however these workers quickly increased their productivity and the effect of social ties on wages disappeared over time further we find that the development of labor market for this newly emerged industry took place particularly within the industrial cluster

reconciling the pattern of trade with the pattern of migration aspects of the brain drain are considered in a theoretical context the emphasis is on the migration of those with managerial skills between countries with abundant skilled labor and those with abundant unskilled labor the results indicate that countries with abundant skilled labor therefore export managers e g through multinational subsidiaries and skilled labor intensive goods yet import skilled employees the brain drain excerpt

how large are search frictions textabstractthis paper presents strong evidence for the concavity of wages in job and worker characteristics by adding second order terms to a mincerian earnings function for 6 oecd countries under a standard normality assumption this concavity cannot be attributed to unobserved components in those characteristics an assignment model with search frictions provides a parsimonious explanation for our findings this model yields two restrictions on the coefficients which fit the data very well the impact of search frictions on wages is large our results relate to the literature on industry wage differentials on structural identification in hedonic models and on wage posting versus nash bargaining in search models

an empirical model of wage dispersion with sorting we estimate an equilibrium on the job search model with endogenous search intensity workers differ by skill firms by productivity workers respond to mismatch by intensive search and sorting may result from complementarities in the match level production function the model is estimated on danish matched employer employee data firms are ranked through revealed preference by the fraction of hires that is poached from other firms the poaching rank identification is obtained by firm rank conditional mobility and wage patterns wage variation is decomposed into four sources sorting 40 worker heterogeneity 32 firm heterogeneity 18 and frictional competition 10 a social planner can improve output net of search cost by 1 5 relative to the decentralized solution

on the job search productivity shocks and the individual earnings process individual labor earnings observed in worker panel data have complex highly persistent dynamics we investigate the capacity of a structural job search model with i i d productivity shocks to replicate salient properties of these dynamics such as the covariance structure of earnings the evolution of individual earnings mean and variance with the duration of uninterrupted employment or the distribution of year to year earnings changes specifically we show within an otherwise standard job search model how the combined assumptions of on the job search and wage renegotiation by mutual consent act as a quantitatively plausible internal propagation mechanism of i i d productivity shocks into persistent wage shocks the model suggests that wage dynamics should be thought of as the outcome of a specific acceptance rejection scheme of i i d productivity shocks this offers an alternative to the conventional linear arma type approach to modelling earnings dynamics structural estimation of our model on a 12 year panel of highly educated british workers shows that our simple framework produces a dynamic earnings structure which is remarkably consistent with the data