the empirical content of the roy model this paper clarifies and extends the classical roy model of self selection and earnings inequality the original roy model based on the assumption that log skills are normally distributed is shown to imply that pursuit of comparative advantage in a free market reduces earnings inequality compared to the earnings distribution that would result if workers were randomly assigned to sectors aggregate log earnings are right skewed even if one sectoral distribution is left skewed most major implications of the log normal roy model survive if differences in skills are log concave however few implications of the model survive if skills are generated from more general distributions we consider the identifiability of the roy model from data on earnings distributions the normal theory version is identifiable without regressors or exclusion restrictions sectoral distributions can be identified knowing only the aggregate earnings distribution for general skill distributions the model is not identified and has no empirical content with sufficient price variation the model can be identified from multimarket data cross sectional variation in regressors can substitute for price variation in restoring empirical content to the roy model

generating conditional expectations from models with selectivity bias abstract this paper discusses how conditional expectations should be generated from models with sample selectivity we argue that the conventional method ignores relevant and available information and produces unreliable results an alternative approach is suggested and the empirical example of black white wage differentials is presented

does a multi sectoral design improve indicator based forecasts of the gdp growth rate evidence from switzerland this article presents a multi sectoral composite indicator for the swiss gdp growth rate targeting a lead of two quarters the in sample period ranges from 1991 to 2002 and 14 data points are reserved as out of sample to assess the forecasting performance the results appear promising in terms of both phase and amplitude comparisons with two other uni sectoral composite leading indicators for the same reference series the traditional kof konjunkturforschungsstelle barometer as published until march 2006 and a uni sectoral composite indicator computed from the same indicators as the multi sectoral instrument show that the new approach is superior to the alternatives which is due to both its broader information basis as well as to the structure that is imposed by the multi sectoral design yet there are pronounced differences regarding the accuracy of the sectoral forecasts so that there is scope for improvement

do government agencies use public data the case of gnp in 1991 the u s council of economic advisers undertook an initiative to increase the quality of economic statistics one specific objective was to reduce the size of revisions in gnp estimates we present evidence that one straightforward and inexpensive way of forwarding this objective is for the department of commerce to utilize better publicly available information released by other governmental agencies an important caveat however applies the relationship appears to be non linear specifically the inefficient use of information is concentrated in those quarters where the change in the preliminary gnp estimate is large in absolute value

measuring the effect of subsidized training programs on movements in and out of employment despite over two decades of u s experience in operating large scale subsidized training programs for low income and unemployed workers the effects of these programs are still highly controversial the controversy arises from the difficulty of specifying the model of participant outcomes in the absence of training that is necessary in any nonexperimental program evaluation in this paper we suggest that some of these difficulties may be overcome by focusing on a very simple measure of outcomes namely the probability of employment we present a variety of estimates of the effect of training on the probability of employment for the 1976 cohort of adult male participants in the comprehensive employment and training act ceta program our methods range from a simple comparison of pre and post training employment probabilities between trainees and nonparticipants to a fully specified first order markov model of employment probabilities with individual heterogeneity there is consistent evidence across methods that ceta participation increased the probability of employment in the three years after training by from 2 to 5 percentage points classroom training programs appear to have had significantly larger effects than on the job programs although the estimated effects of both kinds of programs are positive we also find that movements in and out of employment for trainees and nonparticipants are reasonably well described by a first order process conditional on individual heterogeneity in the context of this model ceta participation appears to have increased both the probability of moving into employment and the probability of continuing employment

frictional labour mobility we build a dynamic model of migration where in addition to standard relocation costs workers face spatial frictions that decrease their ability to compete for distant job opportunities we estimate the model on a matched employer employee panel dataset describing labour market transitions within and between the 100 largest french cities our identification strategy is based on the premise that frictions affect the frequency of job transitions while mobility costs impact the distribution of accepted wages we find that 1 controlling for spatial frictions reduces mobility cost estimates by one order of magnitude 2 the urban wage premium is driven by better opportunities for local job to job transitions in larger cities 3 migration reduces lifetime inequalities by providing insurance against unsatisfactory initial location draws 4 labour mobility policies based on relocation subsidies are inefficient unlike switching from nationwide to local minimum wages

immigration and inequality immigration is often viewed as a proximate cause of the rising wage gap between highand low skilled workers nevertheless there is controversy over the appropriate theoretical and empirical framework for measuring the presumed effect and over the precise magnitudes involved this paper offers an overview and synthesis of existing knowledge on the relationship between immigration and inequality focusing on evidence from cross city comparisons in the u s while some researchers have claimed that a cross city research design is inherently flawed i argue that the evidence from cross city comparisons is remarkably consistent with recent findings based on aggregate time series data in particular cross city and aggregate time series comparisons provide support for three key conclusions 1 workers with below high school education are perfect substitutes for those with a high school education 2 high school equivalent and college equivalent workers are imperfect substitutes with an elasticity of substitution on the order of 2 3 within education groups immigrants and natives are imperfect substitutes together these results imply that the average impacts of recent immigrant inflows on the relative wages of u s natives are small the effects on overall wage inequality including natives and immigrants are larger reflecting the concentration of immigrants in the tails of the skill distribution and higher residual inequality among immigrants than natives even so immigration accounts for a small share 5 of the increase in u s wage inequality between 1980 and 2000

does industrial composition matter for wages a test of search and bargaining theory does switching the composition of jobs between low paying and high paying industries have important effects on wages in other sectors in this paper we build on search and bargaining theory to clarify a key general equilibrium channel through which changes in industrial composition could have substantial effects on wages in all sectors in this class of models wage determination takes the form of a social interaction problem and we illustrate how the implied sectoral linkages can be empirically explored using u s census data we find that sector level wages interact as implied by the model and that the predicted general equilibrium effects are present and substantial we interpret our results as highlighting the relevance of search and bargaining theory for understanding the determination of wages and we argue that the results provide support for the view that industrial composition is important for understanding wage outcomes

big locational unemployment differences despite high labor mobility considerable labor mobility exists across us states enough that if migration arbitrages local unemployment one might expect very low unemployment differences across states however cross state data reveal large unemployment differences an equilibrium multi location model with stochastic worker location match productivity and within location trading frictions can account for these facts in the model some workers move to or stay in a location with high unemployment because they are more productive there than elsewhere according to the model labor mobility and aggregate unemployment are negatively related this prediction is in stark contrast to standard sectoral reallocation theory but consistent with the us data

semiparametric estimation of selection models some empirical results among the central theoretical developments in the econometric analysis of nonexperimental microeconomic data has been the analysis of selectivity bias following the work of james heckman 1974 statistical techniques were developed in the 1970s to consistently estimate the parameters of these models one potential drawback to the application of these techniques is their sensitivity to the assumed parametric distribution of the unobservable error terms in the model in recent years a number of estimation methods for selection models have been developed which do not impose parametric forms on error distributions these methods are termed semiparametric since only part of the model of interest the regression function is parametrically specified while the statistical theory of these semiparametric estimators has received much attention practical applications of the methods are lacking an exception being the paper by joel horowitz and george neumann 1987 in this paper we use semiparametric methods to reanalyze data on the labor supply of married women first studied by thomas mroz 1987 using parametric methods the object of this reanalysis is to determine whether mroz s results are sensitive to his parametric assumptions

credibly identifying social effects accounting for network formation and measurement error understanding whether and how connections between agents networks such as declared friendships in classrooms transactions between firms and extended family connections influence their socio economic outcomes has been a growing area of research within economics early methods developed to identify these social effects assumed that networks had formed exogenously and were perfectly observed both of which are unlikely to hold in practice a more recent literature both within economics and in other disciplines develops methods that relax these assumptions this paper reviews that literature it starts by providing a general econometric framework for linear models of social effects and illustrates how network endogeneity and missing data on the network complicate identification of social effects thereafter it discusses methods for overcoming the problems caused by endogenous formation of networks finally it outlines the stark consequences of missing data on measures of the network and regression parameters before describing potential solutions

are preliminary announcements of the money stock rational forecasts abstract we develop a theoretical framework of analyzing preliminary announcements of economic data and then apply this framework to the money stock we find that preliminary announcements of the money stock are best characterized as measured with classical errors in variables that is the revision is not correlated with the true value of the series the revision is however forecastable using information available at the time of the preliminary announcement our ability to forecast the revision implies that preliminary announcements are not rational estimates of the true money stock

what do we know about economic growth or why don t we know very much summary the last 10 years has seen an explosion in cross country econometric studies of growth driven by two factors new mathematical models of the growth process that lend themselves to econometric testing and new data sets that make such testing possible this paper looks at a selective review of these studies it concludes that the results are disappointing in that no model has proven robust to trial by repeated regression the paper suggests some reasons for this including that the tested models tend to be ahistorical and over simple in terms of their causal accounts it concludes with possible lessons for econometric work in this area 2000 elsevier science ltd all rights reserved

the acquisition and commercialization of invention in american manufacturing incidence and impact abstract recent accounts suggest the development and commercialization of invention has become more open greater division of labor between inventors and innovators can enhance social welfare through gains from trade and economies of specialization moreover this extensive reliance upon outside sources for invention also suggests that understanding the factors that condition the extramural supply of inventions to innovators is crucial to understanding the determinants of the rate and direction of innovative activity this paper reports on a recent survey of over 5000 american manufacturing sector firms on the extent to which innovators rely upon external sources of invention our results indicate that between 2007 and 2009 16 of manufacturing firms had innovated meaning had introduced a product that was new to the industry of these 49 report that their most important new product had originated from an outside source notably customers suppliers and technology specialists i e universities independent inventors and r d contractors we also compare the contribution of each source to innovation in the us economy although customers are the most common outside source inventions acquired from technology specialists tend to be the more economically significant in term of their gross commercial value as a group external sources of invention make a significant contribution to the overall rate of innovation in the economy innovation policies both public and private should pay careful attention to the external supply of invention and the efficiency of the mechanisms affecting the relationships between inventors and innovators

migration trade and foreign direct investment in mexico part of the rationale for the north american free trade agreement nafta was that it will increase trade and foreign direct investment fdi flows creating jobs and reducing migration to the united states u s since poor data on illegal migration to the united states make direct measurement difficult data on migration within mexico where census data permit careful analysis are used instead to evaluate the mechanism behind predictions on migration to the united states specifications are provided for migration within mexico incorporating measures of cost of living amenities and networks contrary to much of the literature labor market variables enter very significantly and as predicted once possible credit constraint effects are controlled for greater exposure to fdi and trade deters outmigration with the effects working partly through the labor market finally some tentative inferences are presented about the impact of increased fdi on mexico u s migration on average a doubling of fdi inflows leads to a 1 5 to 2 percent drop in migration

a nested logit migration model with selectivity in this paper we specify a multiple choice migration model with selectivity we estimate this model using observations on individuals drawn from the 1971 census of venezuela there are two main innovations in this paper we apply a correction for the presence of selectivity in wage equations in the context of a multiple choice migration model and we apply a less restrictive technique for modelling multiple discrete choices than in previous studies we study the choices of individuals among 23 states of venezuela each individual is observed to have chosen one state so one wage is observable per person our hypothesis is that individuals choose where to locate on the basis of an evaluation of costs and benefits associated with choosing each state we measure the benefits associated with choosing a given state by means of the wage a person could earn in this state since we observe only one wage for each person we have to impute the unobserved wages for the states this person did not choose in order to study the role of wages in migration however it is possible that unobserved factors which affect both an individual s choice of location and his wages may result in sample selection bias if we try to estimate state specific wage equations by ols on the basis of the self selected samples we apply an estimator proposed by lee 1983 to estimate state specific wage equations free from sample selection bias the wage equations permit us to investigate whether individuals who choose particular states earn different wages from observationally identical individuals drawn from the population at random in the context of a developing country where internal migration flows are large evidence on the selectivity of migration will enhance our understanding of an important labor market adjustment mechanism evidence that people who choose particular locations earn more in those locations than would observationally identical individuals drawn at random from the population positive selection will suggest that migration decisions are made according to the principle of comparative advantage in modelling the choice of location we test whether subsets of states are more highly similar to each other than to other states unobserved similarities between states may arise because of similar amenities or economic conditions which are not otherwise explicitly controlled for in the model we implement the

an analysis of a panel of spanish gdp forecasts this article undertakes an analysis of the forecasts included in the panel of spanish forecasts in order to highlight the fact that the predictions made and the errors committed by the entities participating on this panel contain information that is particularly useful in analysing the evolution of the spanish economy here a study is undertaken of the gdp growth forecasts for the spanish economy for the period 2000 to 2002 made in distinct forecast time horizons specifically it analyses whether the forecasts are optimistic or pessimistic and whether new information concerning the variable being predicted is used efficiently in revising earlier forecasts

internal and international migration in mexico 1995 2000 using micro data from mexico and us 2000 population censuses and following a multi choice variant of roy s 1951 model this article pools into one model the determinants of internal and international migration in mexico while paying explicit attention to the potential problem of self selection the results reveal that ignoring multiple destinations in the migration decision might lead to erroneous inferences about the determinants of migration and the type of selection after controlling for wage differences the results suggest that single adult men with low schooling levels tend to migrate to the us while married women and men with higher levels of schooling tend to migrate within mexico we also found that there are strong differences between domestic and international social networks

an integrated model of regional and local residential sorting with application to air quality we examine the interconnectedness of demand for regionally and locally varying public goods using a residential sorting model we propose a version of the model that describes household choices at the city msa level and conditional on city the neighborhood census tract level we use a two stage budgeting argument to develop an empirically feasible sorting model that allows us to estimate preferences for regionally varying air quality while accounting for sorting at the local level our conceptual and empirical approach nests previous sorting models as special cases allowing us to assess the importance of accounting for multiple spatial scales in our predictions for the cost of air pollution furthermore our preferred specification connects the city and neighborhood sorting margins to the upper and lower elements of a nested logit model thereby establishing a useful correspondence between two stage budgeting and nested logit estimation empirically we find that estimates from a conventional model of sorting across msas imply a smaller marginal willingness to pay for air quality than estimates from our proposed model we discuss how the difference is attributable in part to the omitted variable problems arising when tract level sorting is ignored

crossing the border self selection earnings and individual migration decisions many empirical studies on the determinants of international migration flows rely exclusively on macro data and do not account for migrants self selection we analyze a very interesting episode in international migration for which we are able to gather individual level data covering all relevant countries namely the exodus of ecuadorians to spain and the us in the aftermath of the economic collapse of 1999 specifically we produce selection corrected predictions of counterfactual individual earnings and use them to estimate a discrete choice migration equation that allows for correlated errors across destinations and a rich structure of migration costs we find that earnings significantly shape individual migration decisions even in an episode in which ecuadorians mostly chose spain where earnings were lower than in the us and they contribute to explaining the observed composition of migration flows moreover our estimates show that changes in earnings at a particular destination have a larger effect on destination choice conditional on migration than on the scale of migration

informal employment in developing countries opportunity or last resort there is an ongoing debate among researchers and policy makers whether informal sector employment is a result of competitive market forces or labor market segmentation more recently it has been argued that none of the two theories sufficiently explains informal employment but that the informal sector shows a heterogenous structure for some workers the informal sector is an attractive employment opportunity whereas for others rationed out of the formal sector the informal sector is a strategy of last resort to test the empirical relevance of this hypothesis we formulate an econometric model which allows for several unobserved segments within the informal sector and apply it to the urban labor market in cote d ivoire

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

on the use of instrumental variables in accounting research abstract instrumental variable iv methods are commonly used in accounting research e g earnings management corporate governance executive compensation and disclosure research when the regressor variables are endogenous while iv estimation is the standard textbook solution to mitigating endogeneity problems the appropriateness of iv methods in typical accounting research settings is not obvious drawing on recent advances in statistics and econometrics we identify conditions under which iv methods are preferred to ols estimates and propose a series of tests for research studies employing iv methods we illustrate these ideas by examining the relation between corporate disclosure and the cost of capital

spatial wage disparities sorting matters spatial wage disparities can result from spatial differences in the skill composition of the workforce in non human endowments and in local interactions to distinguish between these explanations we estimate a model of wage determination across local labour markets using a very large panel of french workers we control for worker characteristics worker fixed effects industry fixed effects and the characteristics of the local labour market our findings suggest that individual skills account for a large fraction of existing spatial wage disparities with strong evidence of spatial sorting by skills interaction effects are mostly driven by the local density of employment not controlling for worker heterogeneity leads to very biased estimates of interaction effects endowments only appear to play a small role

fixed effect estimation of highly mobile production technologies we consider fixed effect estimation of a production function where inputs and outputs vary over time space and cross sectional unit we exploit variability in the spatial dimension to identify time varying individual effects without parametric assumptions on the effects while estimation is unbiased asymptotics along the spatial dimension allow estimation of robust standard errors and asymptotic normality of the marginal products also if inference on the estimates of the individual effects is warranted then spatial asymptotics provide asymptotic normality while precluding an incidental parameters problem caused by asymptotics along the time or crosssectional dimensions we apply our results to a production function of bottom trawler fishing vessels in the flatfish fisheries of the bering sea we find significant spatial variability of output catch which we exploit in estimation of a harvesting function we conclude that vessel individual effects did not change across the period 2002 to 2004 we apply the theory of ranking and selection to determine that individual effects are not statistically significant across vessels

how can african agriculture adapt to climate change a counterfactual analysis from ethiopia we analyze the impact of different adaptation strategies on crop net revenues in the nile basin of ethiopia we estimate a multinomial endogenous switching regression model of climate change adaptation and crop net revenues and implement a counterfactual analysis households data are combined with spatial climate data we find that adaptation to climate change based upon a portfolio of strategies significantly increases farm net revenues changing crop varieties has a positive and significant impact on net revenues when coupled with water conservation strategies or soil conservation strategies but not when implemented in isolation jel q54 q56

the sensitivity of an empirical model of married women s hours of work to economic and statistical assumptions this study undertakes a systematic analysis of several theoretic and statistical assumption s used in many empirical models of female labor supply using a singl e data set psid 1975 labor supply data the author is able to replic ate most of the range of estimated income and substitution effects fo und in previous studies in this field he undertakes extensive specif ication tests and finds that most of this range should be rejected du e to statistical and model misspecifications the two most important assumptions appear to be the tobit assumption used to control for sel f selection into the labor force and exogeneity assumptions on the wi fe s wage rate and her labor market experience copyright 1987 by the econometric society

does school quality matter returns to education and the characteristics of public schools in the united states this paper estimates the effects of school quality measured by the pupil teacher ratio average term length and relative teacher pay on the rate of return to education for men born between 1920 and 1949 using earnings data from the 1980 census we find that men who were educated in states with higher quality schools have a higher return to additional years of schooling rates of return are also higher for individuals from states with better educated teachers and with a higher fraction of female teachers holding constant school quality measures however we find no evidence that parental income or education affects average state level rates of return

mobility and the return to education testing a roy model with multiple markets self selected migration presents one potential explanation for why observed returns to a college education in local labor markets vary widely even though u s workers are highly mobile to assess the impact of self selection on estimated returns this paper first develops a roy model of mobility and earnings where workers choose in which of the 50 states plus the district of columbia to live and work available estimation methods are either infeasible for a selection model with so many alternatives or place potentially severe restrictions on earnings and the selection process this paper develops an alternative econometric methodology that combines lee s 1983 parametric maximum order statistic approach to reduce the dimensionality of the error terms with more recent work on semiparametric estimation of selection models e g ahn and powell 1993 the resulting semiparametric correction is easy to implement and can be adapted to a variety of other polychotomous choice problems the empirical work which uses 1990 u s census data confirms the role of comparative advantage in mobility decisions the results suggest that self selection of higher educated individuals to states with higher returns to education generally leads to upward biases in ols estimates of the returns to education in state specific labor markets while the estimated returns to a college education are significantly biased correcting for the bias does not narrow the range of returns across states consistent with the finding that the corrected return to a college education differs across the u s the relative state to state migration flows of college versus high school educated individuals respond strongly to differences in the return to education and amenities across states

does access to foreign markets shape internal migration evidence from brazil this paper investigates how internal migration is affected by brazil s increased integration into the world economy it analyzes the impact of regional differences in access to foreign demand on sector specific bilateral migration rates between the brazilian states for the years 1995 to 2003 using international trade data a foreign market access measure is computed at the sectoral level which is exogenous to domestic migration a higher foreign market access is associated with a higher local labor demand and attracts workers via two potential channels higher wages and new job opportunities results show that both channels play a significant role in internal migration further we find a heterogeneous impact across industries according to their comparative advantage on the world market however the observed impact is driven by the strong reaction of low educated workers to changes in market access this finding is consistent with the fact that brazil is exporting mainly goods that are intensive in unskilled labor

net migration and state labor market dynamics existing empirical estimates of net migration models are not identified because they lack an explicit measure of expected future conditions i find that using actual one period ahead net migration at the state level to control for expectations reduces the strength of the relationship between current wages and net migration by more than one third i use the case of michigan to show how existing empirical models mischaracterize the response of migration to shocks that are expected to be transitory i add migration to a labor market model and simulate responses to permanent and transitory demand shocks

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

trends in quality adjusted skill premia in the united states 1960 2000 this paper presents new evidence that increases in college enrollment lead to a decline in the average quality of college graduates between 1960 and 2000 resulting in a decrease of 8 percentage points in the college premium the standard demand and supply framework katz and murphy 1992 card and lemieux 2001 can qualitatively account for the trend in the college and age premia over this period but the quantitative adjustments that need to be made to account for changes in quality are substantial furthermore the standard interpretation of the supply effect can be misleading if the quality of college workers is not controlled for to illustrate the importance of these adjustments we reanalyze the problem studied in card and lemieux 2001 who observe that the rise in the college premium in the 1980s occurred mainly for young workers and attribute this to the differential behavior of the supply of skill between the young and the old our results show that changes in quality are as important as changes in prices to explain the phenomenon they document

is a group of economists better than one than none can economists forecast the direction of economic growth casual observation indicates that individual economists make poor predictions of economic growth and that their forecasts are highly correlated this article discusses the loss of information resulting from correlation and develops a method of combining forecasts that are cross sectionally correlated this approach greatly increases the accuracy of near term forecasts of the direction of economic growth although the individual with the best historical performance is better over longer horizons overall when the data are properly aggregated economists predict the direction of near term economic growth and call turning points reasonably well copyright 1996 by university of chicago press

self selection and the earnings of immigrants this paper analyzes the way in which the earnings of the immigrant population may be expected to differ from the earnings of the native population because of the endogeneity of the decision to migrate the empirical study shows that differences in the u s earnings of immigrants with the same measured skills but from different home countries are attributable to variations in political and economic conditions in the countries of origin at the time of migration excerpt

redistributive taxation in the roy model we consider optimal redistribution in a model where individuals can self select into one of several possible sectors based on heterogeneity in a multidimensional skill vector we show that when the government does not observe the sectoral choice or underlying skills of its citizens the constrained pareto frontier can be implemented with a single non linear income tax we derive formulas for this optimal tax schedule if sectoral inputs are complements a many sector model with self selection leads to optimal income taxes that are less progressive than the corresponding taxes in a standard single sector model under natural conditions however they are more progressive than in a multi sector model without occupational choice or without overlapping wage distributions as in stiglitz 1982

wages rents and amenities differences among workers and regions what explains persistent regional earnings differences this paper argues that regional differences in amenities can account for the wage differences in contrast cost of living variations do not account for wage differences but actually exacerbate them this conclusion results from a model in which variations in rents and wages are equalizing differences for amenity differences empirical results are consistent with the model

two sides of the same coin u s residual inequality and the gender gap abstract we show that the narrowing gender gap and the growth in earnings inequality are consistent with a simple model in which skills are heterogeneous and the growth in skill prices has been particularly strong for skills with which women are well endowed empirical analysis of dot cps and nlsy79 data finds evidence to support this model a large increase in the prices of cognitive and people skills skills with which women are well endowed and a decline in the price of motor skills account for up to 40 percent of the rising inequality and 20 percent of the narrowing gender gap

crime scars recessions and the making of career criminals recessions lead to short term job loss lower levels of happiness and decreasing income levels there is growing evidence that workers who first join the labour market during economic downturns suffer from poor job matches that have a sustained detrimental effect on their wages and career progression this paper uses a range of us and uk data to document a more disturbing long run effect of recessions young people who leave school in the midst of recessions are significantly more likely to lead a life of crime than those graduating into a buoyant labour market these effects are long lasting and substantial

understanding gross worker flows across u s states abstract the main cross sectional and time series properties of state level gross and net worker flows wages and rents are characterized using micro data from the u s census a dynamic general equilibrium model of worker migration is introduced to explain the stylized facts in the model a location may experience simultaneous inflows and outflows of workers recent migrants choose to migrate more often than incumbent workers thus locations that attract high numbers of migrants also tend to experience high outflow rates this pattern is a robust feature of the data and cannot be explained by models of net flows only

self selection and the distribution of hourly wages this article formulates and estimates alternative equilibrium models of industrial wage determination and self selection in explaining industrial wage differentials we find that it is important to account for heterogeneous sector specific skills and self selection decisions by agents concerning their sector of employment the classical roy model is rejected so is an efficiency units model of the labor market a revised roy model that accounts for comparative advantage in the choice of industrial sectors and choice between market and nonmarket work is much more successful in explaining cross section wage distributions and their evolution over time

evaluating the oecd s forecasts for economic growth the size and nature of the errors in gdp forecasts in the g 7 countries from 1968 to 1995 are examined these gdp estimates are published by the organization for economic cooperation and development in oecd economic outlook two alternative hypotheses are tested concerning why revisions arise the first hypothesis is that preliminary announcement is simply the true variable measured with error in this case the preliminary announcement is an unconditionally unbiased but irrational forecast of the true value that is the revision is correlated with known variables in particular it is correlated with the preliminary announcement itself the second hypothesis is that revisions arise because the early gdp estimates are a rational forecast of the true variable in this case the error is a rational forecast error and is therefore uncorrelated with known information

is the new immigration really so bad this article reviews the recent evidence on us immigration focusing on two key questions 1 does immigration reduce the labour market opportunities of less skilled natives 2 have immigrants who arrived after the 1965 immigration reform act been successfully assimilated overall evidence that immigrants have harmed the opportunities of less educated natives is scant on the question of assimilation the success of the us born children of immigrants is a key yardstick by this metric post 1965 immigrants are doing reasonably well even children of the least educated immigrant origin groups have closed most of the education gap with the children of natives

a note on aggregation of skills and labor quality we use a unique new data set that combines data on individual workers and their employers to estimate marginal productivity differentials among different types of workers we then compare these to estimated relative wages leading to new evidence on

the computation of opportunity costs in polychotomous choice models with selectivity this article provides general formulas for the computation of opportunity costs or foregone earnings of chosen alternatives in sample selection models with polychotomous choices with observed choice probabilities and outcomes of alternatives chosen by some individuals the opportunity costs for individuals who do not choose those alternatives can be evaluated for the probability indexed sample selection models with logit choice probabilities which include the polychotomous choice model of lung fei lee 1983 the formulas are simple and reveal restrictions implicitly imposed on those models these formulas can be useful for empirical studies copyright 1995 by mit press

spatial changes in labour market inequality abstract we study spatial changes in labour market inequality for us states and msas using census and american community survey data between 1980 and 2010 we report evidence of significant spatial variations in education employment shares and in the college wage premium for us states and msas and show that the pattern of shifts through time has resulted in increased spatial inequality because relative supply of college versus high school educated workers has risen faster at the spatial level in places with higher initial supply levels we also report a strong persistence and increased inequality of spatial relative demand bigger relative demand increases are observed in more technologically advanced states that have experienced faster increases in r d and computer usage and in states where union decline has been fastest finally we show the increased concentration of more educated workers into particular spatial locations and rising spatial wage inequality are important features of labour market polarization as they have resulted in faster employment growth in high skill occupations but also in a higher demand for low wage workers in low skill occupations overall our spatial analysis complements research findings from labour economics on wage inequality trends and from urban economics on agglomeration effects connected to education and technology

self selection and internal migration in the united states abstract within the conceptual framework of the roy model this paper provides an empirical analysis of internal migration flows using data from the national longitudinal survey of youth the theoretical approach highlights regional differences in the returns to skills regions that pay higher returns to skills attract more skilled workers than regions that pay lower returns our empirical results suggest that interstate differences in the returns to skills are a major determinant of both the size and skill composition of internal migration flows persons whose skills are most mismatched with the reward structure offered by their current state of residence are the persons most likely to leave that state and these persons tend to relocate in states which offer higher rewards for their particular skills

spatial equilibrium with unemployment and wage bargaining theory and estimation abstract in this paper we present a spatial equilibrium model where search frictions hinder the immediate reallocation of workers both within and across local labor markets because of the frictions firms and workers find themselves in bilateral monopoly positions when determining wages although workers are not at each instant perfectly mobile across cities in the baseline model we assume that workers flows are sufficient to equate expected utility across markets we use the model to explore the joint determination of wages unemployment house prices and city size or migration a key role of the model is to clarify conditions under which this type of spatial equilibrium setup can be estimated we then use u s data over the period 1970 2007 to explore the fit and quantitative properties of the model our main goal is to highlight forces that influence spatial equilibria at 10 year intervals

education mobility and the college wage premium abstract motivated by large educational differences in geographic mobility this paper considers a simple dynamic extension of roy s 1951 model and analyzes it using new evidence on net versus excess mobility and the individual level relationship between mobility and wages according to the model the dispersion of a labor income shock specific to a worker location match is greater for more educated workers and accounts for large educational differences in mobility in the model labor mobility raises both the average wage and the college wage premium a prediction consistent with differences between europe and the u s

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

are workers close to cities paid higher nonagricultural wages in rural china in the present study we investigate whether workers close to cities are paid higher non agricultural wages than workers in outlying rural areas we find that workers close to urban areas not only benefit from more opportunities to engage in non agricultural activities but also from better paid jobs in addition distance exhibits a strongly nonlinear impact distance always has a negative impact on wages but the effect is more detrimental the closer the village is to the urban center we also find evidence of urban hierarchy effects workers living close to bigger cities are paid higher wages finally we provide evidence on the transmission channels at work

field of study earnings and self selection why do individuals choose different types of post secondary education and what are the labor market consequences of those choices we show that answering these questions is difficult because individuals choose between several unordered alternatives even with a valid instrument for every type of education instrumental variables estimation of the payoffs require information about individuals ranking of education types or strong additional assumptions like constant effects or restrictive preferences these identification results motivate and guide our empirical analysis of the choice of and payoff to field of study our context is norway s post secondary education system where a centralized admission process covers almost all universities and colleges this process creates credible instruments from discontinuities which effectively randomize applicants near unpredictable admission cutoffs into different fields of study at the same time it provides us with strategy proof measures of individuals ranking of fields taken together this allows us to estimate the payoffs to different fields while correcting for selection bias and keeping the next best alternatives as measured at the time of application fixed we find that different fields have widely different payoffs even after accounting for institutional differences and quality of peer groups for many fields the payoffs rival the college wage premiums suggesting the choice of field is potentially as important as the decision to enroll in college the estimated payoffs are consistent with individuals choosing fields in which they have comparative advantage we also test and reject assumptions of constant effects or restrictive preferences suggesting that information on next best alternatives is essential to identify payoffs to field of study