fiscal disparity institutions and asymmetric yardstick competition abstract this letter introduces a disparity in the costs of rent appropriation in a yardstick competition model and shows that the yardstick bias caused by fiscal disparity might be mitigated in particular the incumbent of the fiscally rich jurisdiction can no longer fully exploit his or her fiscal advantage

how hurricanes affect wages and employment in local labor markets currently a growing literature is emerging on estimating the impact of exogenous shocks using the difference in difference dd tech nique essentially this technique compares the impact of an unexpected event in a particu lar locale called the treatment experimental group to a location or set of locations called a control group similar to the experimental group in all respects except for the shock itself one challenge many dd studies face is how to choose the control group and there is now a growing literature on this joshua a angrist and alan b krueger 1999 jeffrey d kubik and john r moran 2003 and alberto abadie alexis diamond and jens hainmueller 2007 another challenge is whether one can general ize one s results based on a single experimental group as is typical for most dd analysis this paper adopts a generalized difference in dif ference gdd technique outlined in ariel r belasen and solomon w polachek forthcom ing to examine the impact of hurricanes on the labor market this technique incorporates many experimental as well as many control groups and as such this approach addresses a number of shortcomings in current dd analyses we find that earnings of the average worker in a florida county rise over 4 percent within the first quarter of being hit by a major category four or five hur ricane relative to counties not hit and rise about wa percent for workers in florida counties hit by less major category one to three hurricanes concomitantly employment falls between wi and 5 percent depending on hurricane strength on the other hand the effects of hurricanes on neighboring counties have the opposite effects moving earnings down between 3 and 4 percent in the quarter the hurricane struck to better examine the specific shocks we also observe sectoral employment shifts finally we conduct a time series analysis and find that over time there is somewhat of a cobweb with earnings and employment rising and falling each quarter over a two year time period

does eu enlargement increase agro food export duration this paper examines the impact of eu enlargement on agro food export performance across 12 new eu member states and five newly independent states in the eu markets covering the period 1999 to 2007 the performance is examined by duration of export and hazard model we find larger duration for the agro food exports from the new eu member states the results confirm gains from the eastward eu enlargement and governance on export increases and longer duration for exporting higher value added specialized consumer ready food and more competitive niche agro food products

long term impacts of droughts on labour markets in developing countries evidence from brazil abstract climate shocks have well documented impacts on the short term welfare of rural households in developing countries we investigate the impact of droughts on brazilian labour markets we find long term rural wage losses beyond the immediate impact of the drought with affected workers taking five years to catch up with their peers findings are robust to model specification the severity of the losses varies with the dependence on agricultural income supporting the notion of diversifying portfolio strategies in rural areas to reduce climate related income risk

how product innovation in the north may immiserize the south a new look at the ricardian model with a continuum of goods abstract the paper proposes a theoretical model investigating the welfare consequences of technological shocks in a ricardian framework a la dornbush fisher and samuelson 1977 contrary to the existing literature the model incorporates a nonhomothetic demand function whose price and income elasticities are endogenously determined by technology nonhomothetic preferences are modeled as the result of the hierarchical consumption of luxury and necessity goods the nature of technical progress determines the consumption pattern and notably the magnitude of the substitution effect between necessities and luxuries the model is applied to the case of trade between two economies with different development levels it is shown in particular that the developing country can suffer a fall in utility as a result of technical progress in the developed country biased towards luxury goods this configuration depends on the size of the development gap and reflects the fact that southern goods are less attractive the higher the range of goods consumed this result suggests that there is an optimal level of development gap to avoid ldcs being harmed by technical progress in the north

intellectual property rights foreign direct investment and industrial development this paper develops a north south product cycle model in which innovation imitation and the ow of fdi are all endogenously determined in the model a strengthening of ipr protection in the south reduces the rate of imitation and it increases the ow of fdi indeed

the production life cycle tasks in production have different dynamics in comparison with individual products we build a general equilibrium model where three forces offshoring learning and wage interact to determine how production fragmentation evolves over time we show that the production process follows a life cycle its fragmentation emerges deepens and converges our model is stylized and versatile which can be used to tractably characterize the loci of global output productivity welfare and value added distribution as production fragmentation progresses this article is protected by copyright all rights reserved

effect of flood on agricultural wages in bangladesh an empirical analysis summary this paper analyzes the effects of riverine floods on agricultural wages in bangladesh drawing upon the district wise monthly data over 1979 2000 we model wages as a dynamic process we find that floods have positive implications for wages in the long run in flood months however agricultural wages decline in the inundated districts we obtain difference in difference estimates to show that the magnitude of impact of flood depends on the relative flood proneness of a district and the relative severity of flood conditions our results indicate that favorable demand and supply conditions in the agricultural labor market can mitigate the impact of disasters on wages in bangladesh

the effect of migration on wages evidence from a natural experiment the objective of this paper is to employ the hurricane katrina evacuation into houston tx as a natural experiment to estimate the effect of large scale in migration on regional earnings given the characteristics of the evacuees their influx would have caused the supply of applicants for lower skilled jobs to increase proportionately more than for higher skilled jobs we utilize a differences in differences in differences methodology in which we compare differences in average earnings in the low skill non traded goods industries to the corresponding differences in the set of high skill industries in the houston and dallas fort worth msas before and after the katrina induced migration unlike previous studies we include a measure of the post storm increase in demand for local goods and services on the demand for labor we find evidence that the relative average payroll in the low skill non tradable goods industries in houston decreased by 7 when compared to the relative change for the same group of industries in dallas our findings also suggest that failure to account for demand side influences following the migration results in significant under estimation of wage effects due to the shift in labor supply

the alaskan labor market during the pipeline era built between 1974 and 1977 the trans alaska pipeline was the largest privately financed construction project in world history the alaskan labor market during the pipeline era provides an ideal opportunity to view labor market responses to a large anticipated and temporary shock to labor demand the paper presents several theoretical models of market responses to temporary demand shocks and then assesses the ability of each model to explain the alaskan data among the findings are that alaskan wages were very flexible labor supply was quite elastic on both the intensive hours per worker and extensive number of workers margins and even a major short run demand shock need not have a long run impact

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

el nino or el peso crisis poverty and income distribution in the philippines using household survey data for 1998 the authors assess the distributional impact of the recent economic crisis in the philippines the results suggest that the impact of the crisis was modest leading to a five percent reduction in average living standards and a nine percent increase in the incidence of poverty with larger increases indicated for the depth and severity of poverty the greater shock came from el nino rather than through the labor market the labor market shock was progressive reducing inequality while el nino shock was regressive increasing inequality not all households were equally vulnerable to the crisis induced shocks household and community characteristics affected the impact of the shocks ownership of land made households more susceptible to the el nino shocks higher levels of education made households more vulnerable to wage and employment shocks the impact of the crisis was greater in more commercially developed communities occupational diversity within a household helped mitigate the adverse impact there is some evidence of consumption smoothing by the households affected by the crisis but the poor were less able to protect their consumption which is a matter of policy concern

migration risk and liquidity constraints in el salvador abstract this article utilizes panel data from el salvador to investigate the use of transnational migration as an ex post risk management strategy i show that adverse agricultural conditions in el salvador increase both migration to the united states and remittances sent back to el salvador i show that in the absence of any agricultural shocks the probability that a household sent members to the united states would have decreased on average by 24 26 i also show that the 2001 earthquakes reduced net migration to the united states a one standard deviation increase in earthquake damage reduced the average probability of northward migration by 37 11 the evidence suggests that the effects of the earthquakes had more to do with households retaining labor at home to cope with the effects of the disaster than with the earthquakes disrupting migration financing

the macroeconomic consequences of disasters abstract natural disasters have a statistically observable adverse impact on the macro economy in the short run and costlier events lead to more pronounced slowdowns in production yet interestingly developing countries and smaller economies face much larger output declines following a disaster of similar relative magnitude than do developed countries or bigger economies a close study of the determinants of these adverse macroeconomic output costs reveals several interesting patterns countries with a higher literacy rate better institutions higher per capita income higher degree of openness to trade and higher levels of government spending are better able to withstand the initial disaster shock and prevent further spillovers into the macro economy these all suggest an increased ability to mobilize resources for reconstruction financial conditions also seem to be of importance countries with more foreign exchange reserves and higher levels of domestic credit but with less open capital accounts appear more robust and better able to endure natural disasters with less adverse spillover into domestic production

household income strategies and natural disasters dynamic livelihoods in rural nicaragua this paper assesses the impact of hurricane mitch on livelihood strategies of rural households in nicaragua through destruction or distress sales of productive assets a hurricane or another natural hazard could induce people with relatively remunerative livelihoods to choose more defensive strategies which allow them to survive but at a permanently lower welfare level than before using panel data from before and after hurricane mitch we find that livelihood strategies can be grouped into three welfare categories annual farming and farm employment generate low incomes whereas nonfarm wage employment and livestock farming result in relatively high incomes perennial farming nonfarm self employment and annual cropping with nonfarm employment take an intermediate position high welfare strategies were associated with high levels of capital and the number of people involved was very similar between different years suggesting that households following low welfare strategies were trapped in poverty however many households moved actively between strategies of different welfare levels this indicates that there was no absolute poverty threshold but also that being able to initiate a relatively profitable livelihood strategy was no guarantee that this strategy could be maintained there is no evidence that hurricane mitch affected livelihood strategy transitions livelihood mobility was similar for households inside and outside mitch affected areas

using weather variability to estimate the response of savings to transitory income in thailand this paper measures the extent to which farmers are able to use savings and dissavings to smooth consumption in response to unexpected shocks to income time series information on regional rainfall is used to construct estimates of transitory income due to rainfall shocks the relationship between these measures of transitory income and savings indicates that farm households save a significantly higher fraction of transitory income than nontransitory income jel d91 016 the incomes of farm households in developing countries are notorious for being both low and uncertain policies that increase the incomes of farmers may well be different

smoothing consumption by smoothing income hours of work responses to idiosyncratic agricultural shocks in rural india while research has demonstrated that farm households in developing economies are able to protect consumption from idiosyncratic crop shocks little evidence shows how this is achieved this paper examines the extent to which labor markets allow households to shift labor from farm to off farm employment and the extent to which such a shift explains the observed lack of correlation between consumption and idiosyncratic crop shocks the empirical analysis uses a novel measure of the idiosyncratic crop income shock which utilizes information on start of season cropping choices to more accurately estimate household expectations of weather

incumbent behavior vote seeking tax setting and yardstick competition this paper develops a model of the political economy of tax setting in a multijurisdictional world where voters choices and incumbent behavior are determined simultaneously voters are assumed to make comparisons between jurisdictions to overcome political agency problems this forces incumbents into a yardstick competition in which they care about what other incumbents are doing we provide a theoretical framework and empirical evidence using u s state data from 1960 to 1988 the results are encouraging to the view that vote seeking and tax setting are tied together through the nexus of yardstick competition

asymmetric yardstick competition and municipal cooperation this paper addresses the issue of inter jurisdictional cooperation when incumbents are pure rent seekers asymmetric fiscal needs bias yardstick competition as in allers 2012 while incumbents gain control over the political yardstick competition by cooperating this bias leads to asymmetric rent share cooperation is also intrinsically unstable furthermore incentives such as matching grants or economies of scale may enhance cooperation but will not increase political accountability

yardstick competition fiscal disparities and equalization abstract the theory of political yardstick competition states that a comparison of public service levels and tax rates with those in nearby jurisdictions can provide voters with a useful instrument to assess politicians performance however we argue that fiscal disparities bias this yardstick and that this bias may be removed through fiscal equalization

measuring the labor market impacts of hurricane katrina migration evidence from houston texas hurricane katrina made landfall on the us gulf coast as a category three storm on the morning of august 29 2005 with winds reach ing speeds of 130 miles per hour and storm surges as high as 27 feet katrina caused unprec edented damage along the coasts of alabama mississippi and louisiana unofficial estimates suggest that 100 000 to 150 000 evacuees moved to the houston texas metropolitan area repre senting a 3 to 4 percent increase in the population adrian campo flores 2005 some anecdotal evidence suggests that many evacuees expect to stay in the houston metro area indefinitely 2 katrina disproportionately affected minorities and the disadvantaged thomas gabe et al 2005 find that the evacuees who were most acutely affected by the storm were significantly more likely to be black poor and unemployed and were significantly less educated compared to other evacuees and compared to the nation on average in this paper i examine the effect of the migration of katrina evacuees on the houston metropolitan area labor market using current population survey cps data from september 2000 to august 2006 to quantify the effect of hurricane katrina migration i compare wages and employment before and after the storm among nonevacuees residing in houston or native houstonians and in other metro areas that were not directly or indirectly affected by the storm in addition i allow the effects to vary by gender education and race and ethnicity the existing studies of the effect of immigra tion on the labor market outcomes among native born workers provide a good point of comparison for this analysis see rachel m friedberg and jennifer hunt 1995 and david card 2005 for reviews of this literature in a study similar to this one adriana kugler and mutlu yuksel 2006 find negative employment effects among low educated native workers and positive wage effects among highly educated workers in the us border states after hurricane mitch struck central america in october 1998 more gener ally there are numerous studies that examine the impact of an unexpected increase in the local labor supply due to immigration including papers by card 1990 hunt 1995 william carrington and pedro de lima 1996 and friedberg 2001 collectively these studies find small and insig nificant effects of immigration on local labor market outcomes for native workers other studies estimate the effect of immi gration on local labor markets using varia tion across receiving areas and across time in the immigrant share of the labor force and these studies produce conflicting results card 2001 2005 finds that local labor market out comes for unskilled natives are only marginally affected by immigration while george j borjas 2006 shows that the wage effect of immigra tion increases when the labor market is defined at the national level instead of at the local level since workers are more likely to migrate between localities than between countries in response to increased labor market competition due to immigration however gianmarco i p ottaviano and giovanni perri 2006 argue that by ignoring capital mobility and by assuming that immigrant and native workers are perfect substitutes in the labor market borjas overstates the size of the effect industrial relations section firestone library prince ton university princeton nj 08544 e mail mfifer princeton edu i am grateful to henry f rber elizabeth fussell alan krueger michael rothschild jesse rothstein and cecilia rouse for their guidance and leandro carvalho jason deparle matthew ericson jane fortson and participants at the princeton university graduate labor lunch and public finance working group and at the tulane university disaster and migration conference for helpful comments and suggestions i am responsible for the contents and for all remaining errors 1 jason de parle katrina s tide carries many to hope ful shores new york times april 23 2006 2 susan saulny putting down new roots on more solid ground new york times september 7 2005 simon romero shelters grow empty as apartments open up new york times september 8 2005

putting things in order trade dynamics and product cycles we develop a procedure to rank order objects using censored panel data sets we illustrate this by ranking countries and commodities using disaggregated american import data and find evidence that

the growth aftermath of natural disasters this paper provides a description of the macroeconomic aftermath of natural disasters it traces the yearly response of gross domestic product growth both aggregated and disaggregated into its agricultural and non agricultural components to four types of natural disasters droughts floods earthquakes and storms the paper uses a methodological approach based on pooling the experiences of various countries over time it consists of vector auto regressions in the presence of endogenous variables and exogenous shocks varx applied to a panel of cross country and time series data the analysis finds heterogeneous effects on a variety of dimensions first the effects of natural disasters are stronger for better or worse on developing than on rich countries second while the impact of some natural disasters can be beneficial when they are of moderate intensity severe disasters never have positive effects third not all natural disasters are alike in terms of the growth response they induce and perhaps surprisingly some can entail benefits regarding economic growth thus droughts have a negative effect on both agricultural and non agricultural growth in contrast floods tend to have a positive effect on economic growth in both major sectors earthquakes have a negative effect on agricultural growth but a positive one on non agricultural growth storms tend to have a negative effect on gross domestic product growth but the effect is short lived and small future research should concentrate on exploring the mechanisms behind these heterogeneous impacts

aid dutch disease and manufacturing growth abstract we examine the effects of aid on the growth of manufacturing using a methodology that exploits the variation within countries and across manufacturing sectors and corrects for possible reverse causality we find that aid inflows have systematic adverse effects on a country s competitiveness as reflected in the lower relative growth rate of exportable industries we provide some evidence suggesting that the channel for these effects is the real exchange rate appreciation caused by aid inflows we conjecture that this may explain in part why it is hard to find robust evidence that foreign aid helps countries grow

selling labor low wage responses to productivity shocks in developing countries productivity risk is pervasive in underdeveloped countries this paper highlights a way in which underdevelopment exacerbates productivity risk productivity shocks cause larger changes in the wage when workers are poorer less able to migrate and more credit constrained because of such workers inelastic labor supply this equilibrium wage effect hurts workers in contrast it acts as insurance for landowners agricultural wage data for 257 districts in india for 1956 87 are used to test the predictions with rainfall as an instrument for agricultural productivity in districts with fewer banks or higher migration costs the wage is much more responsive to fluctuations in productivity

natural disasters and labor markets abstract while it is clear that natural disasters have serious welfare consequences for affected populations less is known about how local labor markets in low income countries adjust to such large shocks combining data from the indonesia family life survey the desinventar database the u s geological survey and district level employment indicators this paper explores how a large earthquake in indonesia affected labor market outcomes in particular the evolution of wages across sectors i find that the earthquake had a positive effect on wage growth for workers who were employed in the agricultural sector at baseline i propose two mechanisms for this result a higher growth rate of the price of rice and a downward shift in the supply of workers in the agricultural sector i show that evidence mainly supports the latter labor shifted out of the agricultural sector into the construction sector raising the marginal product of labor in agriculture

the export skill content learning by exporting and economic growth abstract we empirically investigate whether countries export mix influences their economic growth using panel data from 86 countries covering the period between 1970 and 1990 we identify a statistically significant positive relationship between export skill content and economic growth the evidence supports the idea that after controlling for the levels of gdp per capita education openness to foreign trade and political and macroeconomic stability a higher export content of skill intensive goods generates higher per capita gdp growth rates

moving up or moving out a unified theory of r d fdi and trade abstract this paper introduces industrial heterogeneity in r d productivity into the quality ladder model of the north south trade to study how firms choices made between r d and foreign direct investment fdi vary across industries and how such choices consequently determine the evolution of comparative advantage and trade it shows that trade reveals product cycle dynamics in medium tech industries but remains static in others high tech industries experience continued innovation in the north with no migration of product lines medium and low tech industries migrate south via fdi to exploit low production costs with the south then replacing the north as the dominant exporter however medium tech industry production eventually shifts back to the north when superior products are marketed by northern innovators making the end of one complete product cycle and the start of the next because of marginal r d productivity the relocated low tech industries are not presented with the option of moving up and thus stagnate

on market integration and liberalisation method and application to ethiopia the article suggests further improvements in the methodology to analyse market integration it provides corrections to and methodological extensions of recent work in this journal it also presents a way of applying market integration techniques to the analysis of shocks such as market liberalisation and war the method is applied to the effects of liberalisation and the end of the civil war on food markets in ethiopia the conclusion is that liberalisation had important effects on the long run and short run integration of food markets