education poverty and terrorism is there a causal connection the paper investigates whether there is a connection between poverty or low education and terrorism we review evidence on hate crimes which are closely related to terrorism the occurrence of hate crimes is largely independent of economic conditions we analyze data on support for attacks against israeli targets from public opinion polls conducted in the west bank and gaza strip support for violent attacks does not decrease among those with higher education and higher living standards the core contribution of the paper is a statistical analysis of the determinants of participation in hezbollah militant activities having a living standard above the poverty line or a secondary or higher education is positively associated with participation in hezbollah we also find that israeli jewish settlers who attacked palestinians in the west bank in the early 1980s were overwhelmingly from high paying occupations although our results are tentative and exploratory they suggest that neither poverty nor education has a direct causal impact on terrorism

temporary foreign workers and firms theory and canadian evidence abstract temporary foreign worker tfw programs have grown considerably in size when uncapped we develop a simple efficiency wage model to explain this phenomenon and examine the empirical evidence for it we also use the model to evaluate the implications of tfw programs for domestic workers in our framework firms that have been unable to find domestic workers may hire tfws at the wage previously advertised to domestic workers due to the lower outside option for tfws than domestic workers tfws will exert more effort for the same wage firms would thus prefer to hire otherwise identical tfws rather than domestic workers our model identifies an unintended consequence of a tfw program since the repercussions of a failed domestic job search are less severe if a tfw may be hired instead firms have an incentive to lower their wage offers made to domestic workers using canadian data we find that relative to domestic workers tfws work longer hours have lower rates of absenteeism and are less likely to be laid off consistent with higher effort in our model moreover for tfws from home countries with a relatively high outside option effort is lower than for tfws from other countries resume travailleurs etrangers temporaires et entreprises theorie et exemple canadien en l absence de plafonnement les programmes de travailleurs etrangers temporaires ptet se sont considerablement developpes afin d expliquer ce phenomene et d en examiner les preuves empiriques nous avons developpe un modele simple de salaire d efficience nous avons egalement utilise ce modele pour evaluer l incidence des ptet sur les travailleurs domestiques dans notre cadre d etude les entreprises peinant a trouver une main d uvre locale peuvent embaucher des travailleurs etrangers temporaires au salaire prealablement propose aux travailleurs domestiques compte tenu d options exterieures plus faibles les travailleurs etrangers temporaires deploieront davantage d efforts pour le meme salaire les entreprises prefereront donc embaucher des travailleurs etrangers par ailleurs identiques plutot que des travailleurs domestiques notre modele identifie une consequence inattendue aux ptet etant donne que les consequences d une recherche d employes domestiques infructueuse sont attenuees par l embauche de travailleurs etrangers temporaires les entreprises sont incitees a diminuer les offres salariales proposees aux travailleurs locaux en exploitant les donnees propres au canada nous avons decouvert que les travailleurs etrangers temporaires travaillaient plus d heures avaient des taux d absenteisme inferieurs et etaient moins susceptibles de se faire congedier que les travailleurs domestiques conformement au concept d effort accru developpe dans notre modele en outre pour les travailleurs etrangers temporaires originaires de pays a options exterieures relativement elevees l effort sera moindre que pour ceux provenant d autres pays

rates of return to human capital a test using el salvador data most of the empirical work on human capital has been confined to conditions in developed countries this is probably due to difficulties in obtaining data for other countries it would be interesting to see how robust the theory and its associated models are in conditions regarded as typical for developing countries this will be considered here using a large data set describing the el salvador labor market two questions will be examined namely a how well does the earnings function of the human capital theory explain earnings distribution in el salvador and b does the return to training called experience here approximate the return to school as is often assumed in human capital research the latter issue is of course related to the notion of overtaking the point in the experience profile when the flat earnings stream is intersected from below by the earnings stream affected by postschool investments

the highs and lows of the minimum wage effect a time series cross section study of the canadian law we examine the effects of minimum wage legislation in canada over the period 1975 93 for teenagers we find that a 10 increase in the minimum wage is associated with roughly a 2 5 decrease in employment we also find that this result is driven by low frequency variation in the data at high frequencies the elasticity is positive and insignificant the difference in the elasticity across the bandwidth has implications for the interpretation of employment dynamics as a result of minimum wage policy and experimental design in minimum wage studies it also provides a simple reconciliation of the new minimum wage research which reports very small negative or positive elasticities

entrepreneurial human capital and the long run survival of firms in india abstract this paper analyses the characteristics of entrepreneurs that contribute to firms survival in less developed countries ldcs the study which relies on data collected in a 1971 survey of entrepreneurs in south india and a follow up survey of surviving firms in 1993 finds that entrepreneurial human capital greatly influences firm survival the results indicate that firms founded by older entrepreneurs in higher castes are most likely to survive but that increased education of the founding entrepreneur reduces survival these results provide evidence that opportunities of entrepreneurs outside the firm ignored in most theories are important in firm survival

entrepreneurship start up costs and employment abstract we study the effects of business start up costs on employment in a model with managers workers and matching we show that higher start up costs discourage entrepreneurs and increase the fraction of the population who become workers job creation suffers and employment settles at a lower level we illustrate with evidence from major oecd economies where large variations in start up costs are correlated with large variations in employment levels

formal schooling and workforce participation in a rapidly developing economy evidence from compulsory junior high school in taiwan abstract using 18 consecutive household surveys this study explores the impact of taiwan s extension of tuition free education from 6 to 9 years upon schooling and labor market outcomes participation sector class of activity and work income i estimate upward shifts relative to preexisting trends of more than 0 4 years of education for males and 0 25 years for females in the first six cohorts affected by compulsory junior high schooling utilizing inter cohort variation within an instrumental variables iv strategy i find larger effects of schooling on females workforce participation and total earnings even controlling for selection

the consequences of minimum wage laws some new theoretical ideas economists generally agree that the effect of a binding minimum wage law is to move firms backward along the demand curve for low skill workers however this prediction of worker displacement depends critically on the assumption that the productivity of firms labor is not dependent on the wage in this paper we show that in a conventional efficiency wage model a minimum wage may increase the level of employment in low wage jobs the formal logic of our model is similar to the case of labor demand under monopsony but arises in a model with a large number of employers

if we knew ability how would we tax individuals abstract the suggestion to tax people on earnings capacity instead of earnings has been around for a long time and is attractive in terms of economic efficiency in this paper we reflect on the feasibility of such a system and give an exploratory empirical implementation we apply the leyden welfare function of income a survey based measure of an individual s welfare associated with income to derive implications for ability taxation under the assumption that iq and schooling reflect earnings capacity we derive the tax functions using different criteria to distribute the utility loss due to taxation

the ins and outs of unemployment in canada 1976 2008 this paper studies the flows into and out of unemployment in canada at an aggregate and a number of disaggregated levels i find that inflows into unemployment are countercyclical and outflows are procyclical at an aggregate level changes in the rate at which individuals leave unemployment account for most of the changes in unemployment rates in canada between 1976 and 2008 however flows into unemployment matter more at some disaggregated levels there are also some differences in the contributions of flows into and out of unemployment to changes in unemployment rates across the 1981 82 and 1990 92 recessions ce texte etudie les entrees et sorties du chomage au canada au niveau agrege et a un certain nombre de niveaux de desagregation on decouvre que les entrees en chomage sont contre cycliques et les sorties pro cycliques au niveau agrege les changements dans le taux de sorties du chomage expliquent le gros des changements dans les taux de chomage au canada entre 1976 et 2008 cependant les flux a l entree sont plus importants a certains niveaux de desagregation on note aussi des differences dans la contribution des flux a l entree et a la sortie du chomage aux changements dans les taux de chomage au cours des recessions de 1981 82 et de 1990 92

long term impact of minimum wages on workers careers evidence from two decades of longitudinal linked employer employee data i acknowledge the support of the spanish ministry of the economy severo ochoa programme for centres of excellence in r d sev20150563 the aei spain and feder ue grant eco2016 76734 p

happy birthday you re fired the effects of an age dependent minimum wage on youth employment flows in the netherlands the dutch minimum wage for workers aged 15 to 23 is defined as a stepwise increasing function of a worker s calendar age using dutch administrative records the author shows that the birthday disc

separations sorting and cyclical unemployment abstract this paper establishes a new fact about the compositional changes in the pool of unemployed over the us business cycle using microdata from the current population survey for the years 1962 2012 it documents that in recessions the pool of unemployed shifts toward workers with high wages in their previous job and that these shifts are driven by the high cyclicality of separations for high wage workers the paper finds that standard theories of wage setting and unemployment have difficulty in explaining these patterns and evaluates a number of alternative theories that do better in accounting for the new fact jel e24 e32 j31 j63 j64

the contribution of schooling in development accounting results from a nonparametric upper bound how much would output increase if underdeveloped economies were to increase their levels of schooling we contribute to the development accounting literature by describing a nonparametric upper bound on the increase in output that can be generated by more schooling the advantage of our approach is that the upper bound is valid for any number of schooling levels with arbitrary patterns of substitution complementarity another advantage is that the upper bound is robust to certain forms of endogenous technology response to changes in schooling we also quantify the upper bound for all economies with the necessary data compare our results with the standard development accounting approach and provide an update on the results using the standard approach for a large sample of countries

minimum wage effects on labor market outcomes under search matching and endogenous contact rates building upon a continuous time model of search with nash bargaining in a stationary environment we analyze the effect of changes in minimum wages on labor market outcomes and welfare although minimum wage increases may or may not lead to increases in unemployment in our model they can be welfare improving to labor market participants on both the supply and demand sides of the labor market we discuss identification of the model using current population survey data on accepted wages and unemployment durations and show that by incorporating a limited amount of information from the demand side of the market it is possible to obtain credible and precise estimates of all primitive parameters we show that the optimal minimum wage in 1996 depends critically on whether or not contact rates can be considered to be exogenous and we note that the limited variation in minimum wages makes testing this assumption problematic

good jobs versus bad jobs this article develops a model of noncompetitive labor markets in which high wage good and low wage bad jobs coexist minimum wages and unemployment benefits shift the composition of employment toward high wage jobs because the composition of jobs in the laissez faire equilibrium is inefficiently biased toward low wage jobs these labor market regulations increase average labor productivity and may improve welfare

market organisation and trading relationships in this paper we give a theoretical model of buyers behaviour on a market for a perishable good where no prices are posted we show that if buyers learn from their own previous experience there is a sharp division between those who learn to be loyal to certain sellers and those who continue to shop around this feature remains in more general models which are simulated and is consistent with empirical data from the marseille fish market

earnings functions for the self employed comment abstract the standard human capital earnings model is applied to data from a 1975 socioeconomic survey conducted in tehran iran results show that the returns to schooling for the self employed not including street vendors canvassers and newsvendors are statistically equivalent to those of wage and salary workers thus in contradiction to conclusions drawn from a study by chiswick 1976 the high rates of return to schooling found in many studies of less developed countries do not appear to be the result of the systematic exclusion of the self employed from the estimating samples in other words when wage and salary workers are compared with the self employed in similar occupations their earnings profiles are similar

auctions an introduction abstract this is a detailed introduction to auction theory it begins with a simple analysis of standard auctions and then uses a strikingly simple general solution of symmetric private values auctions to prove the payoff equivalence of many auction rules the basic framework is then modified to admit risk aversion multi unit and repeated auctions as well as collusion then follows an introduction to optimal auctions with and without stochastic entry and to common value auctions and the winner s curse problem the survey closes with a sample of applications from the regulation of natural monopolies to price competition in oligopoly and the government securities market

schooling externalities technology and productivity theory and evidence from u s states abstract the literature on schooling externalities in u s cities and states is rather mixed positive external effects of average education levels are hardly found while positive externalities from the share of college graduates are more often identified we propose a simple model to reconcile this mixed evidence our model predicts positive externalities from increased college education and negligible external effects from high school education using compulsory attendance child labor laws push driven immigration of highly educated workers and the location of land grant colleges as instruments for schooling attainments we test and confirm the model predictions with data on u s states for the period 1960 2000

the minimum wage and the employment of youth evidence from the nlsy using panel data on individuals from the national longitudinal survey of youth we find that employed individuals who were affected by the increases in the federal minimum wage in 1979 and 1980 were about 3 percent less likely to be employed a year later even after accounting for the fact that workers employed at the minimum wage may differ from their peers in unobserved ways

wage structure as implicit insurance on human capital in developed versus underdeveloped countries abstract this paper explores the role of wage structure as implicit insurance on human capital it illustrates how smaller wage differentials in the developed world can be welfare enhancing by acting as implicit insurance while larger wage differentials in underdeveloped countries make investments in human capital riskier in other words with smaller wage differentials the students in a developed country are insured against poor educational outcomes through the existence of well paid alternative employments which are not present in the economy of a less developed country this result arises as multiple equilibria in a general equilibrium model when there are no insurance markets for human capital

getting handcuffs on an octopus theoretical work on minimum wage policy emphasizes labor market dynamics but the resulting implications for worker mobility remain largely untested the authors show that in the teenage labor market higher minimum wage standards reduce worker flows and increase job stability furthermore they find that the employment effects of a relatively higher minimum wage vary considerably across markets with different levels of turnover and labor market tightness results help to explain the small effects of minimum wage standards on employment commonly found in the aggregate data and are consistent with labor market models that involve search frictions

market structure marketing method and price instability data for metals sold on commodity exchanges and at prices set by producers are used to test the relationship between the organization of markets and the behavior of prices on the production side the question is whether prices are more stable in concentrated industries and on the sales side the question is whether markets where buyers are consumers have more stable prices than those with consumers and speculators the recent increase in metal price instability is explained by changes in the market structure and organization variables foremost is increased reliance on commodity exchanges declines in concentration are of less importance

searching for price parity in the european whitefish market the purpose of this paper is to test for price parity across different species of whitefish in the european union price parity is defined by a system of cointegrated prices and would be evidence of a single european market for whitefish whitefish are of interest because eu fishers receive the largest share of their income from these fish species notwithstanding the single market policy of the eu by establishing national and regional associations to stabilize or increase the local price of fish fishers operate as if the european market is made up of separate submarkets with price being determined largely within each submarket if whitefish markets were price cointegrated such associations would be largely ineffective in that case what are required are regulations that encompass the european market

industry dynamics and the minimum wage a putty clay approach we document two new findings about the industry level response to minimum wage hikes first restaurant exit and entry both rise following a hike second there is no change in employment among continuing restaurants we develop a model of industry dynamics based on putty clay technology that is consistent with these findings in the model continuing restaurants cannot change employment and thus industry level adjustment occurs gradually through exit of labor intensive restaurants and entry of capital intensive restaurants interestingly the putty clay model matches the small estimated short run disemployment effect of the minimum wage found in other studies but produces a larger long run disemployment effect

returns to education a further international update and implications this paper updates evidence on the returns to investment in education by adding estimates for new countries and refining existing estimates to bring the total number of country cases to over 60 the new cross country evidence confirms and reinforces earlier patterns namely that returns are highest for primary education the general curricula the education of women and countries with the lowest per capita income the findings have important implications for directing future investment in education which for efficiency and equity purposes should concentrate on these priority areas

testing the heckscher ohlin vanek theory with a natural experiment i use the historical episode of near elimination of commuting from the west bank into israel to test three key predictions of the heckscherohlinvanek model of trade and find strong support for them on the production side i use variation between districts and find that wage changes were not correlated with the size of the shock to the labour force factor price insensitivity and that districts that received larger influx of returning commuters shifted production more towards labour intensive industries rybczynski effect on the consumption side data are consistent with identical homothetic preferences which combined with the production results supports the heckscherohlinvanek theorem on the factor content of trade

the declining price anomaly in sequential auctions of identical commodities with asymmetric bidders empirical evidence from the nephrops norvegicus market in france the declining price anomaly for sequential sales of identical commodities challenges auction theory which predicts constant prices within a day among other hypotheses explaining the phenomenon stands the dual value of goods including a risk premium in early transactions we consider that asymmetric bidder groups primary processors fishmongers supermarket buyers and seasonal landings may also affect the daily price pattern on the basis of stylized facts and several panel data models this hypothesis is tested on a redundant french fish market of homogenous goods live nephrops norvegicus when the time effects high and low seasons weekday effect affecting the demand and supply conditions are taken into consideration all models support the evidence of a daily declining pattern but not to the same extent for all days and seasons and all categories of buyers our results also show an earlier and steeper decline on periods of lower supply or higher demand supporting the theoretical hypothesis of risk averse behaviors of bidders especially fishmongers with respect to primary processors and supermarkets

minimum wage effects throughout the wage distribution this paper provides evidence on a wide set of margins along which labor markets can adjust in response to increases in the minimum wage including wages hours employment and ultimately labor income not surprisingly the evidence indicates that low wage workers are most strongly affected while higher wage workers are little affected workers who initially earn near the minimum wage experience wage gains nevertheless their hours and employment decline and the combined effect of these changes on earned income suggests adverse consequences on net for low wage workers

the local effects of an innovation evidence from the french fish market in this paper we investigate the effect on quality quantity and prices of an innovative fishing gear introduced for a subsample of vessels on a single wholesale fish market in france estimations are conducted using transaction data over the 2009 2011 period during which the innovation was introduced using a difference in differences approach around the discontinuity we find that for the treated the innovation has a large effect on quality 29 2 percentage points and prices 23 2 percentage points a shift in caught fish species is observed and new targeted species are fished very intensively we also quantify the treatment effect on the treated market from aggregate market data using factor models and a synthetic control approach we find a sizable effect of the innovation on market quality which is consistent with non treated vessels adapting their fishing practices to remain competitive the innovation has no effect on market quantities and prices

the economic returns to schooling in the west bank and gaza strip the author uses micro data from the labor force surveys conducted in the west bank and the gaza strip during 1981 91 to show that during 1981 87 wage differences between schooling groups fell by well over one half this sharp reduction is associated with large increases in the size of the educated palestinian labor force since the returns to schooling for israeli jews were stable the decline in returns to schooling for palestinians is consistent with the notion that the returns to schooling in the territories were determined largely by the forces of supply and demand in a segmented market for skilled labor copyright 1995 by american economic association

multiple equilibria and minimum wages in labor markets with informational frictions and heterogeneous production technologies it is often argued that a mandatory minimum wage is binding only if the wage density displays a spike at it in this article we analyze a model with search frictions and heterogeneous production technologies in which imposition of a minimum wage affects wages even though after imposition the lowest wage in the market exceeds the minimum wage the model has multiple equilibria as a result of the fact that the reservation wage of the unemployed and the lowest production technology in use affect each other imposition of a minimum wage may improve social welfare

evaluating the law of one price using micro panel data the case of the french fish market this paper investigates spatial variations in product prices using an exhaustive micro dataset on fish transactions the data includes all transactions between vessels and wholesalers that occurred within local fish markets in france during 2007 spatial disparities in fish prices are sizable even after taking into account fish quality time and unobserved seller and buyer heterogeneity the price difference between local fish markets can be explained to some extent by distance but mostly by a coast effect related to market locations on the atlantic and mediterranean coasts we also propose a new approach for identifying groups of interconnected local fish markets based on the activity of sellers and buyers within these markets we show that most markets on the atlantic coast are well connected and that variation in prices across these markets is very small and in line with the law of one price

wage functions and occupational selection in a rural less developed country setting economists are just beginning to develop empirical knowledge about the basic relationships that determine the distribution of incomes and allocation of resources in the poor rural regions of the world understanding interactions between agriculture and the rest of the economy is particularly important in this context this paper empirically investigates the allocation of human resources between farm work and other jobs and the compensation received by individuals for their work in agriculture and elsewhere specifically two related tasks are undertaken in this paper 1 the estimation of wage functions and 2 the estimation of functions determining the allocation of time among occupations there have been a series of papers which estimate the earnings function using data from poor countries for examples see blaug 1974 chiswick 1977 and valdes 1971 however this study focuses not on total earnings but on the wage rates a person may earn in labor market work because the wage rate is the relevant price of time for many allocative decisions for example in dividing the work year between self employed farming and work as an employee off the farm a key price is the potential wage rate the person can earn in the labor market for discussion and evidence on this issue see sumner 1978 recently a few studies have appeared which illustrate the importance of understanding potential wage variations across individuals in less developed countries rosenzweig 1978 uses wage estimates from aggregate indian data in a model determining the impact of land reform bardhan 1979 develops wage functions from a sample survey in rural india as a step in estimating labor supply for rural households kusnic and davanzo 1980 use wage functions to impute potential incomes and to measure the full income distribution these previous studies illustrate the importance of understanding the determinants of market wages the present paper develops wage functions in more detail focusing especially on industrial differentials in many rural areas employment opportunities may be usefully categorized into 1 self employment mainly on small farms 2 work for wages on large farms and 3 work for wages in non farm industries the combination of selfemployment and work as an employee is also important in many rural areas in both rich and poor countries this paper examines the impact of personal characteristics on the choice to participate in work for wages and on the choice of industry these estimates also form a basis for studying industrial wage differentials tentative estimates of the dependence of participation on expected wages are also presented below the empirical analysis in this paper is based on a 1974 sample of five villages in central guatemala see corona 1978 and stein 1978 one village petapa is larger richer and more urban than the others it lies south of guatemala city within commuting distance of the capital the other villages are outside the capital city region the population sampled is almost exclusively ladino spanish culture as opposed to indian data are available on the earnings hours of work industry age schooling literacy and village of 1 005 male heads of households approximately one third of the sample work as both self employed farmers and hired workers and most of these men work on fincas large plantations another quarter of the sample work as self employed farmers and do no work for wages the suburban village has mostly nonagricultural workers whereas the four other villages have predominantly farmers and farm employees in received for publication june 21 1979 revision accepted for publication december 31 1980 north carolina state university research on this paper began while i was a rockefeller foundation supported post doctoral fellow in the labor and population group of the economics department of the rand corporation and continued at north carolina state university supported by the agricultural research service at rand robert newman served as my research assistant and at n c state james cochell provided able assistance i have benefited from the comments of colleagues at both institutions and from members of the labor economics workshop at the university of north carolina at chapel hill i also thank two anonymous referees for useful suggestions this is paper number 6558 of the journal series of the north carolina agricultural research service raleigh n c

disentangling the minimum wage puzzle an analysis of worker accessions and separations changes in the legislation in the mid 1980s in portugal provide remarkably good conditions for analysis of the employment effects of mandatory minimum wages as the minimum wage increased sharply for a very specific group of workers relying on a matched employer employee panel data set we model gross worker flows accessions and separations in continuing firms as well as in new firms and those going out of business using a count regression model applied to proportions employment trends for teenagers the affected group are contrasted to those of older workers before and after the raise in the youth minimum wage the major effect on teenagers of a rising minimum wage has been the reduction of separations from the employer which during the period under analysis has compensated for the reduction of accessions to new and continuing firms in this sense our results can reconcile some of the previous evidence in the empirical literature when analyzing the aggregate impact of the minimum wage on youth employment without decomposing it by type of worker flow jel d21 j23 j38

the effect of minimum wages on youth employment in canada a panel study previous u s panel estimates of minimum wage effects have been criticized on the grounds that their identification rests on comparisons of low wage and high wage workers using canadian panel data for 1988 90 i compare estimates based on the traditional u s methodology with those based on samples of low wage workers exclusively the results would appear to vindicate the critics the minimum wage effect from the latter approach is virtually zero yet estimates from different subgroups of low wage workers indicate that there is a significant disemployment effect for those with longer low wage employment histories this highlights the heterogeneity within low wage workers and the importance of carefully defining the target group not solely based on workers wages

labor market effects of demographic shifts and migration in oecd countries the labor force of each industrial country is being shaped by three forces ageing education and migration drawing on a new database for the oecd countries and a standard analytical framework this paper focuses on the relative and aggregate effects of these three forces on wages across different skill and age groups over 2000 to 2010 the variation in the age and educational structure of the labor force emerges as the dominant influence on wage changes the impact is uniform and egalitarian in almost all countries the changes in the age and skill structure favor the low skilled and hurt the highly skilled across age groups immigration plays a relatively minor role except in a handful of open countries like australia and canada where it accentuates the wage equalizing impact of ageing and education emigration is the only inegalitarian influence especially in ireland and a few eastern european countries which have seen significant outflows of high skilled labor to western european union countries

the long term educational cost of war evidence from landmine contamination in cambodia abstract the economic impact of war may be visible in the long run and particularly through its impact on human capital this paper uses unique district level data on landmine contamination intensity in cambodia combined with survey data on individuals to evaluate the long run impact of cambodia s 30 years of war 1970 1998 on education levels and earnings these effects are identified using difference in differences dd and instrumental variables iv estimators in the dd framework i exploit two sources of variation in an individual s exposure to the conflict age in 1970 and landmine contamination intensity in the district of residence the iv specification uses the distance to the thai border as an exogenous source of variation in landmine contamination intensity the most conservative result indicates that individuals who were too young to have attended school before the start of the war received on average 0 5 less years of education and immediately after the war there was no visible effect on e

globalization brain drain and development this paper reviews four decades of economics research on the brain drain with a focus on recent contributions and on development issues we first assess the magnitude intensity and determinants of the brain drain showing that brain drain or high skill migration is becoming a dominant pattern of international migration and a major aspect of globalization we then use a stylized growth model to analyze the various channels through which a brain drain affects the sending countries and review the evidence on these channels the recent empirical literature shows that high skill emigration need not deplete a country s human capital stock and can generate positive network externalities three case studies are also considered the african medical brain drain the exodus of european scientists to the united states and the role of the indian diaspora in the development of india s information technology sector we conclude with a discussion of the implications of the analysis for education immigration and international taxation policies in a global context

theory general equilibrium and political economy in development economics i discuss the role of economic theory in empirical work in development economics with special emphasis on general equilibrium and political economy considerations i argue that economic theory plays should play a central role in formulating models estimates of which can be used for counterfactual and policy analysis i discuss why counterfactual analysis based on microdata that ignores general equilibrium and political economy issues may lead to misleading conclusions i illustrate the main arguments using examples from recent work in development economics and political economy

effects of the minimum wage on employment dynamics the voluminous literature on minimum wages offers little consensus on the extent to which a wage floor impacts employment we argue that the minimum wage will impact employment over time through changes in growth rather than an immediate drop in relative employment levels we show that commonly used specifications in this literature especially those that include state specific time trends will not accurately capture these effects using three separate state panels of administrative employment data we find that the minimum wage reduces job growth over a period of several years this finding is supported using several empirical specifications

recent immigrants as labor market arbitrageurs evidence from the minimum wage this paper investigates the local labor supply effects of changes to the minimum wage by examining the response of low skilled immigrants location decisions canonical models emphasize the importance of labor mobility when evaluating the employment effects of the minimum wage yet few studies address this outcome directly low skilled immigrant populations shift toward labor markets with stagnant minimum wages and this result is robust to a number of alternative interpretations this mobility provides behavior based evidence in favor of a non trivial negative employment effect of the minimum wage further it reduces the estimated demand elasticity using teens employment losses among native teens are substantially larger in states that have historically attracted few immigrant residents

changes in the returns to education in costa rica abstract i document patterns in the returns to education in costa rica from 1976 to 1992 the most important change during this period was that from the late 1970s to the mid 1980s the return to education fell by about one fourth i construct demand and supply indices within a fixed manpower requirements framework to estimate demand and supply shifts i find a significantly positive relationship between measures of demand for education and a significantly negative relationship between measures of supply for education these findings suggest that calculations based on the returns to education such as the returns to social investments in education must take into account future changes in the returns to education as supply and demand conditions develop

skill complementarity and the dual economy abstract i propose a new explanation for the large productivity gaps between agriculture and nonagriculture observed in developing countries namely that the elasticity of substitution between skilled and unskilled workers is higher in agriculture than in nonagriculture i estimate the elasticities in a cross country data set and use the results to simulate a simple two sector model in which heterogeneous elasticities of substitution affect relative sectoral productivity levels through the allocation of human capital calibrated to match data from the united states the model predicts sizable agricultural productivity gaps in countries where the share of highly educated workers in the labor force is low

efficiency gains from liberalizing labor mobility in this paper we quantify the effect of a complete liberalization of cross border migration on the world gdp and its distribution across regions we build a general equilibrium model endogenizing bilateral migration and income disparities between and within countries our calibration strategy uses data on effective and potential migration to identify total migration costs and visa costs by education level data on potential migration reveal that the number of people in the world who have a desire to migrate is around 400 million this number is much smaller than that predicted in previous studies and reflects the existence of high incompressible migration costs in our benchmark framework liberalizing migration increases the world gdp by 11 5 12 5 percent in the medium term our robustness analysis reveals that the gains are always limited in the range of 7 0 percent with schooling externalities to 17 9 percent if network effects are accounted for

the labor market impact of immigration in western germany in the 1990 s in this article we estimate the wage and employment effects of recent immigration in western germany using administrative data for the period 1987 2001 and a labor market equilibrium model we find that the substantial immigration of the 1990s had very little adverse effects on native wages and on their employment levels instead it had a sizeable adverse employment effect on previous immigrants as well as a small adverse effect on their wages these asymmetric results are partly driven by a higher degree of substitution between old and new immigrants in the labor market and in part by the rigidity of wages in less than flexible labor markets in a simple counter factual experiment we show that in a world of perfect wage flexibility and no unemployment insurance the wage bill loss of old immigrants would be much smaller

the price effect of expanding fish auction markets abstract fish markets can be expanded by two means first by attracting newcomers in a local trading room and secondly by allowing remote bidders to participate in both cases electronic systems have played a key role in french primary fish markets the computerisation of trading rooms started in the mid 1980s while connection through intranet or internet systems first started in the mid 1990s and then has spread more actively in france since 2007 however the socioeconomic impact on prices for example of expanding markets by electronic means is far from being clearly predictable first based on an econometric analysis this article presents evidence of increases in price level and variability after the implementation of local electronic auction systems secondly a comprehensive survey of the 40 fish auction markets in france brings additional information about the effects of electronic remote bidding on fish prices the analysis of these two empirical outcomes uses the cross fertilization of the positivist auction theory in economics with the constructionist approach of actor network theory ant in sociology to enrich the potential hypotheses lying behind the study of the structural impact of electronic systems on market prices

returns to schooling and bayesian model averaging a union of two literatures abstract in this paper we review and unite the literatures on returns to schooling and bayesian model averaging we observe that most studies seeking to estimate the returns to education have done so using particular and often different across researchers model specifications given this we review bayesian methods which formally account for uncertainty in the specification of the model itself and apply these techniques to estimate the economic return to a college education the approach described in this paper enables us to determine those model specifications which are most favored by the given data and also enables us to use the predictions obtained from all of the competing regression models to estimate the returns to schooling the reported precision of such estimates also account for the uncertainty inherent in the model specification using u s data from the national longitudinal survey of youth nlsy we also revisit several stylized facts in the returns to education literature and examine if they continue to hold after formally accounting for model uncertainty

identifying human capital externalities theory with applications the identification of aggregate human capital externalities is still not fully understood the existing mincerian approach confounds positive externalities with wage changes due to a downward sloping demand curve for human capital as a result the mincerian approach yields positive externalities even when wages equal marginal social products we propose an approach that identifies human capital externalities whether or not aggregate demand for human capital slopes downward another advantage of our approach is that it does not require estimates of the individual return to human capital applications to u s cities and states between 1970 and 1990 yield no evidence of significant average schooling externalities copyright 2006 wiley blackwell

heterogeneity in returns to schooling econometric evidence from ethiopia this paper investigates whether returns to schooling in ethiopia vary across the wage distribution of individuals to do so it adopts an instrumental variables quantile regression framework that allows for both endogeneity of schooling resulting from unmeasured ability and possible heterogeneity in the impact of schooling the empirical estimates indicate that education contributes more to the earnings of individuals at a lower end of the income distribution

employment effects of the new german minimum wage evidence from establishment level microdata the authors present the first evidence on the consequences of the new statutory minimum wage in germany which was implemented on january 1 2015 using the iab establishment panel they identify e

minimum wage policy with optimal taxes and unemployment abstract using a search model i derive a formula that links the welfare gains from the minimum wage to its effect on low skilled labor force participation and employment this formula shows that the minimum wage is welfare improving if pushing the low skilled labor market tightness downwards brings it closer to its efficient level i estimate the causal effect of the minimum wage on low skilled labor force participation and employment using federal and state minimum wage variation i discuss the policy implications of my estimates when viewed through the lens of the marginal welfare gain formula

poverty and the political economy of public education spending evidence from brazil a large body of literature has emphasized the elite capture of democratic institutions as the explanation for the low levels of spending on public education in many low income democracies this paper provides an alternative to that longstanding hypothesis motivated by new cross country facts and evidence from brazilian municipalities we hypothesize that many democratic developing countries might invest less in public education spending because poor decisive voters prefer the government to allocate resources elsewhere one possible explanation is that low income voters could instead favor redistributive programs that increase their incomes in the short run such as cash transfers to test for this possibility we design and implement an experimental survey and an incentivized choice experiment in brazil the findings from both interventions support our hypothesis

minimum wage impacts on youth employment transitions 1993 1999 abstract the longitudinal nature of the master file of the survey of labour and income dynamics slid for the period 1993 9 enables comparing transitions from employment to non employment for individuals affected by minimum wage changes with appropriate comparison groups not affected by minimum wages this is based on the large number 24 of minimum wage changes that have occurred across the different provincial jurisdictions in canada over the 1990s the results indicate that the minimum wage increases have increased the transition from employment to non employment of employed low wage youths who are at risk of being affected by a minimum wage increase by around 6 percentage points ranging from 4 to 8 percentage points these disemployment effects in turn imply minimum wage elasticities of about 0 4 ranging from 0 3 to 0 5

simultaneous allocation of bundled goods through auctions assessing the case for joint bidding we study the costs and benefits of allowing joint bidding in multiple simultaneous first price sealed bid auctions for bundled goods with private values joint bidding raises the prospect of higher allocative efficiency but also reduces the number of bidders resulting in an ambiguous net impact on seller revenue the research was carried out using laboratory experiments in which groups of up to six buyers competed for eight bundles of two separable goods each the main results show that in our experimental environment allowing joint bidding increases efficiency by 11 3 and revenue by 9 4 the research has immediate applications to the sale of public forest stands that arbor a mixture of species for this reason we explore how the results are affected by excess supply the presence of dominant firms and the removal of an allocation rule requiring multiple bidders under certain circumstances

the impact of minimum wages on labour market transitions we investigate dierences in labour market transition rates in high versus low minimum wage regimes using canadian data spanning 1979 to 2008 the data include consistent questions on job tenure and reason for job separation for the whole period over the same time frame there were over 140 minimum wage changes in canada we nd that higher minimum wages are associated with lower hiring rates but also with lower job separation rates importantly the reduced separation rates are due mainly to reductions in layos occur in the rst 6 months of a job and are present for unskilled workers of all ages our estimates imply that a 10 increase in the minimum wage generates a 3 9 reduction in the layo rate we present a search and matching model that ts with these patterns and test its implications overall our results imply

lobbying for minimum wages using a common agency lobbying framework this paper illustrates how the minimum wage set reflects the interaction between economic and political factors and under what circumstances will the policymaker be induced through lobbying to change the minimum wage specifically when the labor demand elasticity is large lobbying is successful in inducing the policymaker to set the minimum wage in accordance with her political ideology however the paper also shows the conditions under which lobbying will reverse the ideological preference and induce a business friendly government to increase the minimum wage empirical analysis on a panel data for ten canadian provinces gives considerable support for theoretical predictions the real minimum wage decreases in skill adjusted union density and political ideology while larger labor demand elasticity reinforces the influence of political ideology in the presence of lobbying jel j38 d72 d78

schooling and labor market consequences of school construction in indonesia evidence from an unusual policy experiment between 1973 and 1978 the indonesian government engaged in one of the largest school construction programs on record combining differences across regions in the number of schools constructed with differences across cohorts induced by the timing of the program suggests that each primary school constructed per 1 000 children led to an average increase of 0 12 to 0 19 years of education as well as a 1 5 to 2 7 percent increase in wages this implies estimates of economic returns to education ranging from 6 8 to 10 6 percent

the diffusion of computers and the distribution of wages abstract when the costs are decreasing workers adopt technology at the point where the costs equal the increased productivity output per worker increases immediately while productivity benefits increase only gradually if costs continue to fall as a result workers in computer adopting labor market groups experience an immediate fall in wages due to increased supply on the other hand adopting workers experience wage increases with some delay this model explains why increased computer use does not immediately lead to higher wage inequality more specifically the results of the model are shown to be consistent with the question why within group wage inequality among skilled workers as a result of computer technology adoption in the united states increased in the 1970s while between group wage inequality and within group wage inequality among the unskilled did not start to increase until the 1980s the model also predicts that the more compressed german wage structure leads to a lagged diffusion of computer technology along with smaller changes in wage inequality our empirical analysis suggests that this is consistent with the actual developments in germany since the 1980s finally the theoretical predictions seem to be of the right magnitude to explain the empirical quantities observed in the data

auctions versus negotiations which is the more profitable way to sell a company an auction with no reserve price or an optimally structured negotiation with one less bidder we show under reasonable assumptions that the auction is always preferable when bidders signals are independent for affiliated signals the result holds under certain restrictions on the seller s choice of negotiating mechanism the result suggests that the value of negotiating skill is small relative to the value of additional competition the paper also shows how the analogies between monopoly theory and auction theory can help derive new results in auction theory jel d44 g34 there are close analogies between standard price theory and the theory of auctions in an absolute english auction in which the price rises continuously until only one bidder remains and the seller is required to accept the final bid the sale price equals the lowest competitive price at which supply equals demand in the theory of optimal auctions the seller is treated as a monopolist who can choose any

wage inequality and the distribution of education abstract this paper analyzes the relationship between education and wage inequality in metropolitan brazil the study is based on data from ten brazilian annual household surveys pnads which are available for the period 1976 1986 the universe of analysis is limited to occupied prime age males the inequality measure used was theil s second measure which is analytically convenient for a study of the determinants of inequality it is shown that there exist sharp differences in wage inequality across metropolitan areas to identify whether these large regional differences in inequality are directly associated with differences in educational levels or with differences in the steepness of the wage education profiles some simulations are conducted the results indicate that regional differences in the distribution of education are not able to explain much of the regional differences in wage inequality as a matter of fact the differences in wage inequality were shown to be intrinsically associated with differences in the steepness of the wage education profiles

schooling and earnings distributions with endogenous labour force participation marital status and family size this paper investigates the impact of various schooling investment strategies on family and per capita earnings within a framework that integrates effects on earnings family size marital status and labour force participation data are from a 1977 1978 survey of urban nicaraguan women aged 15 45 excerpt

credit constraints and human capital accumulation in the open economy abstract this paper analyzes the implications of capital market imperfections for understanding the causes and consequences of international trade credit constraints in financing education and exogenous income distribution affect patterns of comparative advantage and are crucial in determining the impact of international trade unlike the standard results in the trade literature in the model here trade liberalization in a skill scarce country leads to higher investments in human capital

long run substitutability between more and less educated workers evidence from u s states 1950 1990 we estimate the aggregate long run elasticity of substitution between more educated workers and less educated workers the slope of the inverse demand curve for more relative to less educated workers at the u s state level our data come from the five 1950 1990 decennial censuses our empirical approach allows for state and time fixed effects and relies on time and state dependent child labor and compulsory school attendance laws as instruments for endogenous changes in the relative supply of more educated workers we find the aggregate long run elasticity of substitution between more and less educated workers to be around 1 5

the labour market effects of immigration and emigration in oecd countries in this paper we quantify the labor market effects of migration flows in oecd countries during the 1990 s based on a new global database on the bilateral stock of migrants by education level we simulate various outcomes using an aggregate model of labor markets parameterized by a range of estimates from the literature we find that immigration had a positive effect on the wages of less educated natives and it increased or left unchanged the average native wages emigration instead had a negative effect on the wages of less educated native workers and increased inequality within countries

education earnings and the canadian g i bill canadian second world war veterans benefited from an extensive educational pro gram similar to the u s g i bill because of differences in military enlistment rates how ever a much lower fraction of quebec men were eligible for these benefits than men from other provinces building on this fact we analyse inter cohort patterns of education and earnings for english speaking men from ontario using french speaking men from quebec as a control group we find that the instrumental variables estimates of the return to school ing are typically as big or bigger than the corresponding ols estimates jel classification j24 i21

returns to investment in education a global update the author updates compilations of rate of return estimates to investment in education published since 1985 and discusses methodological issues surrounding those estimates some key patterns among the three main levels of education primary education continues to exhibit the highest social profitability in all world regions private returns are considerably higher than social returns because of the public subsidization of education the degree of public subsidy increases with the level of education which is regressive social and private returns at all levels generally decline by the level of a country s per capita income overall the returns to female education are higher than those to male education but at individual levels of education the pattern is more mixed the returns to the academic secondary school track are higher than the vocational track since unit cost of vocational education is much higher and the returns for those who work in the private competitive sector of the economy are higher than in the public noncompetitive sector and the returns in the self employment unregulated sector of the economy are higher than in the dependent employment sector controversies in the literature are discussed in the light of the new evidence the undisputable and universal positive correlation between education and earnings can be interpreted in many ways the causation issue on whether education really affects earnings can be answered only with experimental data generated by randomly exposing different people to various amounts of education given the fact that moral and pragmatic considerations prevent the generation of such pure data researchers have to make do with indirect inferences or natural experiments some have been attempted the author looks at the research on overeducation or surplus schooling the conclusions reinforce earlier patterns they confirm that primary education continues to be the number one investment priority in developing countries they also show that educating females is marginally more profitable than educating males that the academic secondary school curriculum is a better investment than the technical vocational tract and that the returns to education obey the same rules as investment in conventional capital that is they decline as investment is expanded