testing intertemporal budget constraints theory and applications to u s federal budget and current account deficits this paper extends previous tests of intertemporal budget balance and present value relationships by expanding the set of allowable deficit processes and by deriving a testable condition that is sufficient to ensure intertemporal budget balance as long as the expected discount rate is strictly positive using these tests the authors find that both the postwar federal budget deficit process and the process governing accumulation of u s assets by foreigners are consistent with intertemporal budget balance copyright 1991 by ohio state university press

pricing for system security power tariffs security in power systems refers to the ability of the system to withstand imminent disturbances contingencies maintaining security is an issue which must be addressed at the system level it is shown in this paper however that it is possible to maintain power system security in an operating environment with many participants power companies independent power producers co generators consumers each attempting to optimize their own benefit through pricing incentives and appropriate information exchange rates for power generation consumption and for an offer to use during a contingency as well as information on the probability distribution of contingency need for each participant are derived so that individual optimization will lead to the socially optimal solution in which power system security is optimized and the aggregate benefit is maximized

common trends the government s budget constraint and revenue smoothing abstract the requirement that the government s budget be balanced in present value terms is shown to be equivalent to the condition that government expenditures inclusive of interest tax receipts and seignorage be cointegrated the condition is in fact stronger requiring that the deficit inclusive of interest be stationary stationarity of the net of interest deficit is neither necessary nor sufficient for intertemporal budget balance however it does have implications for barro s tax smoothing hypothesis data for the period 1890 1986 are consistent with intertemporal budget balance but not with tax smoothing

oppositional identities and employment for ethnic minorities evidence from england where a community or group is socially excluded from a dominant group some individuals of that group may identify with the dominant culture and others may reject that culture the aim of this article is to investigate this issue by empirically analysing the potential trade off for ethnic minorities between sticking to their own roots and labour market success we find that the social environment of individuals and attachments to culture of origin has a strong association with identity choice our results also suggest that those non whites who have preferences that accord with being oppositional do experience an employment penalty

pricing flexible electricity contracts this paper is concerned with pricing of electricity contracts that allow flexible scheduling of the supply or demand of electric energy the contracts are priced based on the principle of no arbitrage variables of the contracts are used to determine arbitrage opportunities and the price of contracts pricing of flexible contracts involves a scheduling policy by representing the spot price with an appropriate stochastic process the scheduling policy can be found using stochastic dynamic programming simulation examples illustrate the tradeoffs between prices and scheduling flexibility

assimilation to a welfare state labor market performance and use of social benefits by immigrants to finland this paper documents the economic performance of immigrants in a country characterized by an extensive welfare state and a short immigration history upon arrival immigrants to finland have substantially lower employment rates than comparable natives while they experience rapid employment growth only men from oecd countries catch up with natives despite the persisting employment and earnings differences between non oecd immigrants and natives the differences in income transfers disappear in roughly 20 years the immigrant native employment gaps are larger in finland than in australia canada or the us

monetary policy and exchange rate volatility in a small open economy we lay out a small open economy version of the calvo sticky price model and show how the equilibrium dynamics can be reduced to a simple representation in domestic inflation and the output gap we use the resulting framework to analyse the macroeconomic implications of three alternative rulebased policy regimes for the small open economy domestic inflation and cpi based taylor rules and an exchange rate peg we show that a key difference among these regimes lies in the relative amount of exchange rate volatility that they entail we also discuss a special case for which domestic inflation targeting constitutes the optimal policy and where a simple second order approximation to the utility of the representative consumer can be derived and used to evaluate the welfare losses associated with the suboptimal rules

outage costs in chilean industry this paper estimates the cost of energy shortages to chilean industry the information was obtained from a sample survey carried out shortly after the 1989 electricity restriction the results obtained show that a 10 one month equiproportional restriction involves an average net outage cost of us 7 7 kw h 1 in the same scenario the average outage cost drops to us 3 2 kw h 1 when a limited selective restriction is applied we show that under current legislation the outage cost in fact lies between the costs of an equiproportional and a selective restriction however subtle modifications to legislation would make it possible to allocate the scarce supply efficiently

subsidy free pricing of interruptible service contracts abstract this article analyzes the issue of cross subsidy in the pricing structure of a utility offering interruptible service contracts utilizing a simple theoretical model in which available capacity is subject to random shocks we derive a set of sufficient conditions for the presence of subsidies in the pricing of priority service we find that low priority customers receive no subsidies whenever they pay prices in excess of variable costs a test for subsidies to high priority customers is derived that can be implemented utilizing available information extensions of the analysis are discussed

occupational transition and country of origin effects in the early stage occupational assimilation of immigrants some evidence from australia we examine the occupational attainment of recent immigrants at 2 years post migration in order to study their early stage assimilation into the labour market in australia human capital endowments and country of origin effects are examined for six occupational groups we also study transitions across occupations from source to host country the empirical approach utilizes the ordered generalized extreme value ogev model which embodies differing utility functions across occupational outcomes as well as accounting for any ordering in these outcomes the results suggest that the transferability of knowledge and skills is affected by cultural and social backgrounds and that non western immigrants are disproportionately channelled into inferior jobs post migration the investigation of the country of origin effect on the skilled migrants occupational transition process is especially apt in the context of skill shortages in many host countries

the influence of entrepreneur s personal characteristics on mses growth through innovation abstractresearch in the separate areas of innovation and growth has considerably intensified in recent years however little scholarly attention has been paid to the entrepreneurs personal characteristics that might explain the growth of micro and small enterprises mses through innovation this study examines the key entrepreneurs personal characteristics affecting micro and small enterprises mses upgrading defined here as substantial growth through innovation six major determining types of entrepreneurs characteristics were identified from the innovation and the growth literature education work experience gender motivations nationality and age the empirical results which are based on t tests of the differences between upgraders and non upgraders the linear probability model and the logit model all suggest that work experience and motivations are cornerstones in the likelihood that an mse will upgrade the policy implications of this study on promoting mses upgrading are also discussed

using yield management to shift demand when the peak time is unknown traditional peak load and stochastic peak load models assume firms have prior information about when peak demand occurs however price dispersion such as is typically used by firms practicing yield management can achieve some of the same efficient demand shifting even when the peak time is unknown equilibrium price dispersion arises because of stochastic demand and price rigidities but a previously unexplored benefit of price dispersion is its ability to reduce equilibrium capacity costs through demand shifting the model also suggests how yield management now more commonly called revenue management might actually benefit business travellers contrary to the popular prejudice

the effect of literacy on immigrant earnings we examine the impact of literacy on immigrant earnings and the sources of lower returns to education and experience among immigrants we find that the native born literacy distribution dominates that for immigrants however the two groups obtain similar returns to literacy skills contrary to discrimination based explanations for immigrant native born earnings differentials among the university educated literacy differences account for about two thirds of the earnings gap however low returns to foreign experience have a larger impact on this differential among the less educated literacy differences and differences in the returns to experience have similar effects on the earnings differential

earning trajectories of highly educated immigrants does place of education matter the author compares the earnings and earning trajectories of u s college educated immigrants with those of similar immigrants who completed their education abroad using cross sectional and longitudinal data from the 1993 and 2003 national surveys of college graduates adjusting for demographics results based on cross sectional data suggest that the annual earnings of college educated foreign born men were 9 less than those of similar u s born men whereas the annual earnings of college educated foreign born women were 3 less than those of similar u s born women after further adjusting for place of education however the gap narrowed by 42 for men and vanished for women an analysis of longitudinal data reveals that in the first 15 years after arrival u s educated foreign born science and engineering s e professionals had higher earnings growth relative to native born s e professionals than their foreign educated counterparts evidence also indicates that attrition was associated with labor

language and urban labor market segmentation theory and evidence abstract i propose a language theory of labor market segmentation people of different language origins form separate urban labor submarkets and can switch between submarkets two types of wage differentials emerge namely the within labor market wage gap and the within language group wage gap the average wage in each market and a worker s choice of the labor market depend on the population sizes of the relevant groups these implications are tested using the 2001 census of canada public use microdata a unique feature of these data is the reported work language which helps me to identify labor market segments the empirical evidence supports my theory

understanding the native immigrant wage gap using matched employer employee data evidence from germany in this article the author proposes a new method for measuring wage discrimination that builds on the methodology first developed by hellerstein and neumark 1999 the author s method has three m

markets and pricing for interruptible electric power a market is proposed for interruptible or callable forward contracts for electric power in which the consumer grants the power supplier the right to interrupt a given unit of load in return for a price discount the callable forward contracts are traded continuously until the time of use this allows recourse for those customers with uncertain demand while risk averse consumers can minimize their price risk by purchasing early callable forward contracts are simple in form and can be directly incorporated into the utility s economic dispatch procedure

immigration wage effects by origin we estimate the direct partial wage effects of immigrant induced increases in labor supply using the national skill cell approach with longitudinal records drawn from norwegian administrative registers the results show overall negative but heterogeneous wage effects with larger effects on immigrant wages than on native wages and with native wages more responsive to inflows from nordic countries than from developing countries these patterns are consistent with natives and nordic citizens being close substitutes while natives and immigrants from developing countries are imperfect substitutes estimates are sensitive to accounting for effective immigrant experience selective native participation and variation in demand conditions and native labor supply

brain waste educated immigrants in the u s labor market the authors investigate the occupational placement of immigrants in the u s labor market using census data they find striking differences among highly educated immigrants from different countries even after they control for individuals age experience and level of education with some exceptions educated immigrants from latin american and eastern european countries are more likely to end up in unskilled jobs than immigrants from asia and industrial countries a large part of the variation can be explained by attributes of the country of origin that influence the quality of human capital such as expenditure on tertiary education and the use of english as a medium of instruction performance is adversely affected by military conflict at home which may weaken institutions that create human capital and lower the threshold quality of immigrants the selection effects of u s immigration policy also play an important role in explaining cross country variation the observed under placement of educated migrants might be alleviated if home and host countries cooperate by sharing information on labor market conditions and work toward the recognition of qualifications

immigrant language fluency in the low skilled labor market using longitudinal linked employer employee data the author investigates the returns to being a native speaker for immigrant men in the low skilled labor market she compares the two main recent immigrant groups in portugal brazilians who are portuguese native speakers and eastern europeans who are not findings show that both wage level and wage growth of the two groups are similar to better understand this surprising result the author studies two mechanisms through which language fluency may lead to higher wages sorting across occupations and across firms brazilians do sort into occupations that require greater language skills however this does not translate into a wage premium considerable workplace segregation occurs in portugal but brazilians are not less segregated from natives than are eastern europeans evidence in this article suggests that language skills are not a major driver of economic assimilation in the low skilled labor market

revenue implications of money creation under leviathan most governments possess a monopoly franchise in the creation of money economists provide an analytical justification for this institutional arrangement either in terms of the use of monetary aggregates for macro economic stabilization or in terms of the alleged inability of competitive markets to generate tolerably efficient monetary results any complete case for the government s monetary monopoly must however depend on a comparison of market and political arrangements a comparison that requires predictions about how governments are likely to behave once a monopoly franchise is assigned similarly such predictions are crucial in evaluating restrictions that might be imposed on the government s exercise of its money creation power in designing a monetary constitution in the analysis of political arrangements the revenue implications of the money creation power are probably more significant than considerations of either macro economic stability or optimality in the money supply although those revenue implications are incidental to demonstrating the nature of market failure in monetary arrangements they are fundamental in understanding how the government might exploit a monopoly in money creation once granted our interest in the revenue effects of money creation stems from a broader study of constitutional restrictions on the revenueraising authority of government see our book the power to create money is naturally encompassed in this restrictions on the revenue raising power must embody restrictions on the power to create money consequently the fiscal constitution has important implications for the monetary constitution in this paper we examine both the revenue implications of money creation and desirable consitutional restrictions on the money creation power within the context of a specific model of political processes

the performance of immigrants in the canadian labor market in this article we examine the economic assimilation of immigrants to canada we provide new evidence on immigrants who arrived in the 1970s and document an increase in the dispersion of labor market outcomes across immigrants of different vintages over time our results confirm u s evidence of permanent differences across immigrant cohorts what distinguishes the canadian experience is small or negative rates of assimilation for most cohorts over the sample period finally we test the overidentification of the assimilation process specified in previous studies and fail to reject the usual cohort fixed effect specification

immigrant earnings age at immigration matters a correlation between age at immigration and earnings is observed in canadian census data the evidence supports three underlying sources of the effect first work expe rience in the source country yields virtually no return in the host country second the return to education varies with age at immigration and finally an acculturation effect is observed for immigrants who are visible minorities or whose mother tongue is not english further it is found that educational attainment and relatedly earnings vary systematically across age at immigration with those arriving around age 15 to 18 obtaining fewer years of education

education credentials and immigrant earnings using 1981 to 2001 census data we study how the human capital of immigrants is rewarded in canada we distinguish between years of schooling and degrees obtained in order to estimate sheepskin effects the gain in earnings associated with receipt of a degree controlling for years of schooling we find that immigrant years of schooling and immigrant work experience accumulated before arrival is valued much less than canadian experience of comparable natives however for immigrants the increase in earnings associated with completing educational programs is generally higher than that of comparable natives we provide both signalling and human capital interpretations of this finding a l aide des donnees de recensement entre 1981 et 2001 on examine la facon dont le capital humain des immigrants est reconnu et remunere au canada on fait la distinction entre les annees de scolarite et les grades obtenus afin de calibrer les effets du diplome les gains associes a l obtention du grade apres avoir pris en compte les annees de scolarite on decouvre que les annees de scolarite et d experience accumulees par les immigrants avant leur arrivee recoivent une ponderation moins grande que l experience comparable des canadiens cependant pour les immigrants le fait de completer leur programme a un effet sur l accroissement des revenus qui est plus important que pour les canadiens de souche on suggere des interpretations de ces resultats a partir de theorisations fondees sur le capital humain et la theorie des signaux

immigrant underemployment across us metropolitan areas from a spatial perspective a significant number of immigrants fail to realise their full potential in the us labour markets as evidenced by those working in occupations requiring skill levels far below their own level of ed

migration unemployment and skill downgrading in this paper we analyze the labor market impacts of immigration under flexible and rigid labor market regimes a general equilibrium framework is developed accounting for skill heterogeneity and labor market frictions where unemployed medium skilled manufacturing workers are downgraded into low skilled service jobs while low skilled service workers might end up unemployed the analytical analysis shows that medium skill immigration decreases low skilled unemployment under the flexible regime indicating a complementarity effect while the rigid regime induces a substitution effect leading to low skilled unemployment moreover it leads to wage polarization in a numerical analysis the economic effects of different migration scenarios are quantified

immigration skill heterogeneity and qualification mismatch we investigate the effects of us immigration on native workers in a search and matching environment that allows for skill heterogeneity differential search cost cross skill matching and imperfect transferability of human capital across borders we find that cross skill matching benefits the unskilled and hurts the skilled native workers similarly new unskilled immigration benefits the low skilled native workers and hurts the high skilled on the other hand new skilled immigration benefits both skilled and unskilled natives moreover when we simulate the effects of the actual us immigration influx that took place between the years 2000 and 2009 we find that both skilled and unskilled native workers gain we also find that initially an improvement in the transferability of human capital benefits the high skilled natives at the expense of the low skilled nevertheless below a certain overeducation ratio further improvements in the transferability of human capital make both types of native workers worse off

the labour market performance of recent migrants migrant workers constitute a vital component of many western labour markets although migrants can benefit greatly by moving to higher wage economies it is important to compare their labour market outcomes with those of native born workers in this paper we discuss factors that have been found to influence labour market success in the receiving country and examine the actual performance of recent migrants to the uk the uk provides a good case study for conducting such an exercise because of the very large increases in immigration that have been seen over the past decade we find that labour market performance varies greatly between migrant groups and that outcomes have changed noticeably following the uk government s decision to allow migrants from poland and other central and eastern european countries more or less free access to the labour market after eu enlargement in 2004

a two stage mechanism to improve electricity rationing electricity cannot be stored economically and must be generated on demand because electricity demand is subject to cyclical and random fluctuations an equilibrium price would change constantly and spot pricing would generate substantial information and transactions costs in the absence of spot prices the utility must install enough capacity to meet peak demand with a given probability and design a rationing plan for when the reserve margin proves inadequate to avoid building new generation facilities electric utilities have devised innovative rationing plans these plans referred to as load management programs allow the utility to curtail loads of a pre determined group of consumers interruptible curtailable i c programs are among the most popular much of the analysis of these mechanisms has focused on the efficiency losses due to the absence of complete contingent contracts because transaction costs prevent the implementation of contracts which fully represent the states of nature there is inefficiency in allocation at the time of interruption there exists a second type of inefficiency which has largely been ignored a central hypothesis underlying all of these models is that the relative order or ranking of consumers willingness to pay remains unchanged throughout the contract period this is a fairly restrictive assumption in much the same way that prohibitive transaction costs preclude the use of complete contingent contracts these costs also make it necessary that i c contracts have relatively long durations say 3 5 years within a long contract period it seems unrealistic to assume invariance in the ordering of consumers willingness to pay thus it becomes impossible to achieve an efficient allocation at the time of interruption without some revelation by consumers of their willingness to pay at the time of interruption

allocating uncertain and unresponsive resources an experimental approach we identify an important class of economic problems that arise naturally in several applications the allocation of multiple resources when there are uncertainties in demand or supply unresponsive supplies no inventories and fixed capacities and significant demand indivisibilities rigidities examples of such problems include scheduling job shops airports or supercomputers zero inventory planning and the allocation and pricing of nasa s planned space station using experimental methods we show that the two most common organizations used to deal with this problem markets and administrative procedures can perform at very low efficiencies 60 65 efficiency in a seemingly robust example thus there is a need to design new mechanisms that more efficiently allocate resources in these environments we develop and analyze two mechanisms that arise naturally from auctions used to allocate single dimensional goods these new mechanisms involve computer assisted coordination made possible by the existence of networked computers both mechanisms significantly improve on the performance of administrative and market procedures

priority service pricing investment and market organization tingent forward delivery contracts offered by a seller each customer s selection of one contract from the menu determines the customer s service order or priority in each contingency the seller rations supplies by serving customers in order of their selected priorities until the supply is exhausted or all customers are served various forms of priority service are widely

the impact of host country schooling on earnings a study of male immigrants in the united states immigrants in the united states who acquire u s schooling earn higher wages than other immigrants using data from the u s censuses and the national longitudinal survey of youth we show that this wage advantage results from both greater educational attainment and higher returns to education the higher returns are not the consequence of ability bias or greater english proficiency of those who acquire u s schooling returns to years of non u s education are higher for immigrants who complete their schooling in the united states consistent with the view that u s schooling upgrades or certifies education received in the source country for those without u s schooling returns are higher for immigrants from highly developed countries and countries for which english is an official language

learn english not the local language ethnic russians in the baltic states this paper analyzes the return to dominant language fluency for ethnic russians in the baltic states we look at male workers using estonian labor force survey for years 2000 2010 and the 1998 wave of a panel of high school graduates of 1982 the results indicate that the ethnic russian men enjoy little income premium on their skills of the dominant language we identify positive returns only in the low end of the income distribution and in public administration sector surprisingly the returns to english fluency are far larger these outcomes point toward segregation and discrimination at the upper end hiring

efficient and competitive rationing abstract the contracts that interest us here are called priority service contracts the salient feature of such contracts is that they specify each customer s priority in obtaining service that is they specify the tank order in which a customer is served out of the available supply until all customers are served or supply is exhausted such contracts essentially establish queues for customers in section 1 the author provides some background about priority service section 2 formulates a basic model and offer several illustrations also describes two main examples that motivate the theoretical development section 3 derives some key results that show how the prices of priority service contracts are designed to induce customers to self select efficient service orders in section 4 the author discusses various ways that state enterprises can organize markets that implement priority service efficiently in section 5 we study the operation of competitive markets for priority service section 6 concludes with some summary remarks two themes are emphasized one is that a state enterprise can promote substantial efficiency gains by substituting priority service for absent spot markets the other is that oligopolistic firms may have insufficient incentives to offer efficient product diversity consequently allocative efficiency depends on entry of numerous firms even so dispersal of supplies among many firms can prevent productive efficiency when there are advantages from pooling supplies

the effect of minimum wages on immigrants this study examines how minimum wage laws affect the employment and earnings of low skilled immigrants and natives in the united states minimum wage increases might have larger effects among low skilled immigrants than among natives because on average immigrants earn less than natives due to lower levels of education limited english skills and less social capital results based on data from the current population survey for the years 1994 2005 do not indicate that minimum wages had adverse employment effects among adult immigrants or natives who did not complete high school however low skilled immigrants may have been discouraged from settling in states that set wage floors substantially above the federal minimum

the dynamic impact of immigration on natives labor market outcomes evidence from israel abstract this paper studies the short and medium run impact of highly skilled immigrants from the former soviet union to israel on natives wages and employment if immigrants are relatively good substitutes for native workers the impact of immigration will be largest immediately upon the immigrants arrival and may become smaller as the labor market adjusts to the supply shock conversely if immigrants upon arrival are poor substitutes for natives the initial effect of immigration is small and increases over time as immigrants acquire local labor market skills and compete with native workers we empirically examine these alternative hypotheses using data from israel between 1989 and 1999 we find that wages of both men and women are negatively correlated with the fraction of immigrants with little local experience in a labor market segment a 10 percent increase in the share of immigrants lowers natives wages in the short run by 1 3 percent but this effect dissolves after 4 7 years this result is robust to a variety of different segmentations of the labor market to the inclusion of cohort effects and to different dynamic structures in the residual term of the wage equation on the other hand we do not find any effect of immigration on employment neither in the short nor in the medium run

the immigrant and native born wage distributions evidence from united states censuses recent studies document a large widening of the immigrant native born mean wage gap since about 1970 a trend that some observers ascribe to post 1965 changes in u s immigration policy these studies are limited however by their exclusive focus on men which ignores important gender differences in the wage gap and by the inadequacy of the mean wage for characterizing the gap when as in recent decades the wage distribution dramatically changes this study of recent immigrants examines changes across the entire wage distribution for both genders the authors find evidence based partly on gender differences that minimum wages strongly influenced the gap a counterfactual analysis also indicates that if recent immigrants in 1970 had faced the 1990 wage structure their wage distribution would have closely resembled that of recent immigrants in 1990 these and other results suggest that the increasing wage gap is linked to changes in the wage structure

the legacy of immigration labour market performance and education in the second generation previous research finds that the children of immigrants or the second generation earn at least as much as other native born but that there are persistent ethnic differences in the intergenerational transmission of education and wages we explain why these results are not incompatible and extend the empirical evidence in several directions using the canadian survey of labour and income dynamics first we estimate a model of wages earnings and hours worked using modern econometric techniques to corroborate earlier us results of complete integration by the second generation in the labour market we find that ethnic differences in labour market performance are significant but that these difference do not alter conclusions about the relative performance of the second generation second we find a source of superior labour market performance for the second generation in higher educational attainment which constitutes an important legacy of immigration that should not be ignored third we find that the de

cointegration and unit roots this paper provides an updated survey of a burgeoning literature on testing estimation and model specification in the presence of integrated variables integrated variables are a specific class of non stationary variables which seem to characterise faithfully the properties of many macroeconomic time series the analysis of cointegration develops out of the existence of unit roots and offers a generic route to test the validity of the equilibrium predictions of economic theories special emphasis is put on the empirical researcher s point of view

cross country differences in the quality of schooling abstract this paper constructs a cross country measure of the quality of education using a novel approach based on international test scores data the first main finding is that there are large differences in education quality one year of schooling in the u s is equivalent to three or more years of schooling in a number of low income countries i incorporate the estimated series for schooling quality in an accounting framework calibrated using evidence on mincerian returns this leads to the second important finding which is that the fraction of income differences explained by the model rises substantially when one includes education quality the increase is around 22 percentage points

public debt in brazil sustentability and its implications abstract this paper tests sustainability of brazilian public debt in the period 1991 to 2009 and analyzes implications of requiring that the brazilian fiscal policy be primarily committed to the sustainability of the public debt the retrospective analysis utilizes a set of unit root tests and avoids some of the criticism leveled at previous studies by using data which has not previously been used for this purpose and concludes that the public debt was sustainable in the period we consider the prospective analysis is based on the dsge model proposed by jodi gali et al 2007 calibrated for brazil using the conclusions of the retrospective analysis for the fiscal parameters the scenarios produced with the help of the model show that maintaining the sustainability of the public debt is consistent with the monetary policy of inflation targeting we also conclude that it is possible to reduce interest rates to levels below those prevalent at the end of 2010 simultaneously maintaining the stability of the trajectory of the public debt

the labor market skills of recent male immigrants evidence from the current population survey using data from special supplements to the current population survey cps the authors track the education and hourly earnings of recent male immigrants to the united states in terms of these measures of labor market skills the cps data suggest that immigrants who came in the late 1980s were more skilled than those who arrived earlier in the decade this pattern represents a break from the steady decline in immigrant skill levels observed in 1940 80 census data despite the encouraging trend over the 1980s however the average skills of recent immigrants remain low by historical standards

you can t take it with you immigrant assimilation and the portability of human capital the national origin of an individual s human capital is a crucial determinant of its value education and labor market experience acquired abroad are significantly less valued than human capital obtained domestically this difference can fully explain the earnings disadvantage of immigrants relative to comparable natives in israel variation in the return to foreign schooling across origin countries may reflect differences in its quality and compatibility with the host labor market the return to foreign experience is generally insignificant acquiring additional education following immigration appears to confer a compound benefit by raising the return to education acquired abroad

explaining differences in job retention between alien and nonalien workers after an in company training this study focuses on the job retention of unemployed workers after they attended a subsidized in company training programme in flanders using a new large scale dataset of the flemish labour exchange we look for differences in the probability of employment between aliens and nonaliens during the 36 months following their on the job training we further investigate whether differences persist after controlling for several socio economic characteristics and labour market related variables estimating a modified probit model we find that on average being an alien lowers the probability of employment after training by approximately 15 this effect reduces to 10 when controlling for other variables the effect of education on a trainee s employment chances differs for aliens and nonaliens aliens have a markedly lower return on investment in education good language skills and a longer in company training period also increase employment probability but more so for aliens other control variables do not

immigration from the former soviet union to israel who is coming when abstract average education of new immigrants from the former soviet union in israel declined during the 1990s we suggest that this is because the returns to investment in israeli human capital increase in the amount of imported human capital thus the more educated invest more and therefore have an incentive to spend a longer share of their working life in israel this translates into early migration using data from the 1995 israeli census and the 1995 1998 samples of the israeli labor force survey we test our hypothesis and find that being high skilled initiates early migration only for migrants participating in the labor market

the heterogeneity of immigrants host countries income and productivity a channel accounting approach this article exploits changes in the distribution of immigrants across 20 organization for economic co operation and development countries from 1960 to 2005 in order to assess their contribution to income of destination countries the non random sorting of immigrants across countries is addressed by using an instrumental variable strategy the instrument is built by estimating a bilateral migration model incorporating exogenous origin country determinants of migration aggregate results reveal that immigrants have a positive effect on income that works primarily through total factor productivity tfp we further construct a novel dataset from censuses and labor force surveys to explore the information on the age of immigrants contrasting income effects are found across age groups a higher share of immigrants among the youth has a negative impact on aggregate income while a higher share of immigrants among prime aged workers has a positive effect we interpret this disparity as short term versus medium term effects adjustments over time involve changes in tfp but also in the human capital of the native born jel f22 j24 j31 o31

are foreign it workers cheaper u s visa policies and compensation of information technology professionals the use of h 1b and other work visas to hire foreign information technology it professionals in the united states has attracted significant controversy and policy debates on one hand hiring high skill foreign it professionals on work visas can be advantageous for u s firms and the overall economy on the other hand high skill immigration can adversely impact the wages of foreign and american it professionals this study uses data on skills and compensation of more than 50 000 it professionals in the united states over the period 2000 2005 to study patterns in compensation of foreign and american it professionals to inform these debates contrary to the popular belief that foreign workers are a cheap source of labor for u s firms we find that after controlling for their human capital attributes foreign it professionals those without u s citizenship and those with h 1b or other work visas earn a salary premium when compared with it professionals with u s citizenship the salary premiums for non u s citizens and for those on work visas fluctuate in response to supply shocks created by the annual caps on new h 1b visas setting lower and fully utilized annual caps results in higher salary premiums for non u s citizens and those with work visas we discuss implications of this study for crafting informed visa and immigration related policies by the u s government for staffing practices of firms and for human capital investments by it professionals

redistribution fertility and growth the effect of the opportunities abroad abstract this article analyzes the effect of the opportunities abroad on the growth path that a small open economy in which redistribution policy in favor of less prosperous segments takes place is expected to follow the model shows that redistribution policy raises fertility among the unskilled recipients lowers fertility among the contributing skilled slows human capital accumulation and reduces per capita output growth the paper demonstrates that the opportunities abroad determine the share of income redistributed and ultimately induce the offspring of the unskilled to invest in human capital and decrease their family size

estimating a fiscal reaction function the case of debt sustainability in brazil this article reviews recent trends in fiscal performance in brazil estimates fiscal reaction functions for the consolidated public sector and different levels of government and tests for the sustainability of the public debt dynamics the empirical analysis based on monthly data for the period 1995 2004 suggests that all levels of government react strongly to changes in indebtedness by adjusting their primary budget surplus targets in addition the central government appears to follow a spend and tax policy changes in revenue are affected strongly by expenditure about two thirds of changes in primary spending are offset by higher revenue over the longer term institutions are also found to matter for fiscal sustainability the responsiveness of the sub national fiscal stance to indebtedness as well as that of central government revenue to changes in primary spending appears to have become stronger after 1998 when ceilings on indebtedness were introduced

when minority labor migrants meet the welfare state life cycle employment of minority labor migrants who entered norway in the early 1970s diverges from that of natives immigrant employment was nearly complete during early years but declined to 50 by the year 2000 compared to 87 for a native comparison group we find that immigrant employment is particularly sensitive to the business cycle and that economic downturns of the 1980s and 1990s accelerated their labor market exit we trace part of the decline to migrants being overrepresented in shrinking industries but we also identify welfare disincentives that contribute to poor life cycle employment performance of immigrants with many dependent family members

does high inequality attract high skilled immigrants this study examines how the sources and levels of income inequality affect how a country attracts and retains high skilled workers with parameter values that yield realistic levels of emigration our model shows that emigration rates increase with education when the returns to education are higher abroad however the relationship between unobservable skills residual wages and emigration can display an inverse u shaped pattern if unobservable skills are composed of both general and country specific skills using data on israeli emigrants before they decide to emigrate we find strong empirical evidence in support of the model s predictions

pricing of electric power under uncertainty information and efficiency schemes for pricing electric power are compared in terms of how well they coordinate the decisions of participants consumers suppliers regulators a scheme is analyzed along two dimensions the aspects of participants private information that the scheme reveals and the efficiency of the allocation the scheme reaches information aspects are studied within the framework of economic mechanism theory allocation efficiency is studied within a stochastic recourse model which takes into account consumer loss due to rationing

contributions of neoclassical economics to public utili iy analysis neoclassical economics the dominant economics paradigm has influenced and been influenced by developments in regulated industries we identify major theoretical and empirical accomplishments discuss the impactofthese accomplishmentsonpolicydevelopment andlist the channelsthrough which the impacts are madepossible we then discuss regulatorypolitics lack ofresearchperspective an overly narrow focus on economic efficiency and the academic profession as factors limiting the impact of neoclassical economics on public policy

the place premium bounding the price equivalent of migration barriers large international differences in the price of labor can be sustained by differences between workers or by natural and policy barriers to worker mobility we use migrant selection theory and evide

equilibrium price dispersion under demand uncertainty the roles of costly capacity and market structure when capacity is costly and prices are set in advance firms facing uncertain demand will sell output at multiple prices and limit the quantity available at each price i show that the optimal price strategy of a monopolist and the unique pure strategy nash equilibria of oligopolists both exhibit intrafirm price dispersion moreover as the market becomes more competitive prices become more dispersed a pattern documented in the airline industry while generating similar predictions the model differs from the revenue management literature because it disregards market segmentation and fare restrictions that screen customers

fiscal sustainability and monetary versus fiscal dominance evidence from brazil 1991 2000 under a monetary dominant md regime the primary surplus adjusts to limit debt growth permitting monetary policy to be conducted independently of fiscal financing requirements in brazil some evidence favours an md regime for 1995 1997 but not for the decade of the 1990s as a whole while fiscal adjustments of 1999 yielded a primary surplus of about 3 of gdp consistent with solvency a credible md regime would require further adjustments of the primary surplus if debt increases growth falls or interest rates rise

monopoly price dispersion under demand uncertainty when a monopolist sets its price before its demand is known then it may set more than one price and limit the availability of its output at lower prices this article adds demand uncertainty and price rigidities to the standard model of monopoly pricing when there are two states of demand and the ex post monopoly price is greater when demand is high then the monopolist s optimal ex ante pricing strategy is to set two prices and limit purchases at the lower price

new evidence on the economic progress of foreign born men in the 1970s and 1980s this study examines the economic progress of foreign born men in the united states europeans entered the united states with relatively high wages and earned wages comparable to natives over their life course japanese korean and chinese men entered with lower wages but quickly caught up with u s born workers mexicans and central americans entered with low wages and the wage gap between themselves and u s born workers has not shrunk disparities in completed years of education and whether education was received in the united states can explain a large share of the differences in the level of wages for immigrants from some countries it is found that more highly educated men assimilate more quickly the rate of economic progress has not improved for more recent arrivals from any country but this is most problematic among mexicans and central americans because of their relatively low rates of wage growth excerpt

are experience and schooling complementary evidence from migrants assimilation in the bangkok labor market abstract this paper models the assimilation process of migrants and shows evidence of the complementarity between their destination experience and upon arrival human capital bayesian learning is assessed using panel data of wages from bangkok thailand it is found that i schooling returns are lower for migrants than for natives ii the accumulation of destination experience raises wages for migrants iii the experience effect is greater for more educated agents and iv the complementarity increases as destination experience accumulates the results imply that more educated migrants have higher learning efficiency and can perform tasks of greater complexity ultimately yielding higher wage growth in the destination market

labor mobility of immigrants training experience language and opportunities summary statistics observations percent mean sdschooling 419 14 58 2 74age on arrival 419 38 05 9 15white collar in fsu 284 67 78 blue collar in fsu 127 30 31 did not work in fsu 8 1 91 married 363 86 63 english 419 1 76 0 94hebrew before migration 50 11 93 ulpan attendance 386 92 12 ulpan completion 332 79 24 ulpan length months 387 5 61 1 34hebrew1 rst survey 419 2 71 0 82hebrew2 second survey 316 2 98 0 83t able a2 transitions between the labor market states quarters 8 9quarters 3 4 wc bc wt bt ue obs wc 79 57 10 75 3 23 2 15 4 30 93bc 2 58 80 80 1 72 2 87 12 03 349wt 51 28 28 21 0 00 0 00 20 51 39bt 23 81 52 38 0 00 0 00 23 81 21ue 18 93 47 93 6 51 1 78 24 85 169quarters 14 15quarters 8 9 wc bc wt bt ue obs wc 90 52 6 90 0 00 0 86 1 72 116bc 4 56 90 88 0 35 0 70 3 51 285wt 41 18 41 18 0 00 0 00 17 65 17bt 25 00 66 67 0 00 0 00 8 33 12ue 23 86 44 32 0 00 0 00 31 82 88quarters 18 19quarters 14 15 wc bc wt bt ue obs wc 96 72 3 28 0 00 0 00 61bc 2 47 90 12 2 47 4 94 81wt bt 0 00 100 00 0 00 0 00 1ue 30 00 20 00 0 00 50 00 10

native immigrant wage differentials in greece discrimination and assimilation abstractthis article applies the blinder oaxaca methodology in order to dissect the average earnings differentials between greek workers and three different groups of immigrants into a part attributed to differences in characteristics and a part due to discrimination it also seeks to identify the effect of assimilation i e postmigration human capital on immigrants earnings we use information about 8429 individuals of which 1185 are immigrants the data are drawn from the greek labour force survey 2009 our results suggest that discrimination is significantly higher for immigrants originating from non eu countries than it is for eu foreigners while it is negative for those who terminated education in greece also there is evidence that i post migration human capital is a significant determinant of immigrants earnings ii there is limited transferability of skills between sending countries and greece and iii education is the main determinant of the wage gap between natives and immigrants

house of green cards statistical or preference based inequality in the employment of foreign nationals this study contributes to the labor market inequality and organizations literature by investigating the role that government agents play in shaping the employment of immigrants using unique data o

strategic rate making in the context of dynamic ramsey pricing as a result of the public utilitie regulatory policies act of 1978 purpa state public utility commissions have begun to implement cost based rate setting procedures in order to rationalize energy choices made by utilities and utility customers this rationalization had been necessary in view of the increased competition characterizing the eletric utility industry taking these regulatory and competitive change as a point of departure we develop and implement an electricity rate setting model which is cost based which explicitly accounts for static and dynamic competitive pressures and which is welfare maximizing the model extends standard ramsey methods to include bothshort run andlong run price responses in the inverse elasticity rule we use the estimated model to evalute and design alternative rates our analysis takes a distincly strategic approach explicitly addressing competition from other fuels and the possibility of competitive bypass

skill transferability migration and development evidence from population resettlement in indonesia we use a natural experiment in indonesia to provide causal evidence on the role of location specific human capital and skill transferability in shaping the spatial distribution of productivity from 1979 1988 the transmigration program relocated two million migrants from rural java and bali to new rural settlements in the outer islands villages assigned migrants from regions with more similar agroclimatic endowments exhibit higher rice productivity and nighttime light intensity one to two decades later we find some evidence of migrants adaptation to agroclimatic change overall our results suggest that regional productivity differences may overstate the potential gains from migration

trigger points and budget cuts explaining the effects of fiscal austerity we propose and solve an optimizing model which explains counterintuitive effects of fiscal policy in terms of expectations if government spending follows an upward trending stochastic process which the public believes may fall sharply when it reaches specific trigger points then optimizing consumption behavior and simple budget constraint arithmetic imply a nonlinear relationship between private consumption and government spending this theoretical relation is consistent with the experience of several countries jel e62 e21 textbook aggregate demand models suggest simple relationships between the government budget and economic activity a cut in the government deficit for example depressing consumption and output though such models heavily influence the design of stabilization policies their micro foundations are unclear and their sharp predictions are not always consistent with reality in many countries large cuts in government spending carried out as part of stabilization programs have led to expansions rather than contractions in economic activity the absence of simple relationships be

on the wage growth of immigrants israel 1990 2000 this paper develops a descriptive methodology for the analysis of wage growth of immigrants that is based on human capital theory the sources of the wage growth are 1 the rise of the return to imported human capital 2 the impact of accumulated experience in the host country and 3 the mobility up the occupational ladder in the host country the model implies a nonlinear wage function that includes interactions between imported skills and local wage growth using data on native israelis and immigrants from the former soviet union of israel we estimate wage equations jointly for the two groups we find that upon arrival immigrants receive non return for imported skills in the ten years following arrival wages of highly skilled immigrants grow at 8 percent a year rising prices of skills occupational transitions accumulated experience in israel and an economy wide rise in wages account for 3 4 1 1 1 5 and 1 5 percent each in the long run the return for schooling converges to 0 027 substantially below the 0 069 return for natives we do not reject the hypothesis that the return for experience converges to that of natives and that immigrants receive a higher return for their unmeasured skills we find that there is some downgrading in the occupational distribution of immigrants relative to that of natives moreover the average wages of immigrants approach but do not converge to the wages of comparable natives the main reason for this is the low return to their imported skills jel j24 j31 j60

multilevel demand subscription pricing for electric power abstract this paper investigates a general demand subscription pricing policy for electric power service ie a menu of service contracts for assigning different interruption probabilities and prices to different load levels this interruptibility feature is combined with a nonlinear energy price schedule to encourage load flattening we derive a customer value model and a weighted sum objective function for the supplier and consumers for selecting optimal price structures of this type the general form of the optimal price policy is derived and discussed and the implementation methodology is outlined an illustrative example is solved in detail