the labor market status of immigrants effects of the unemployment rate at arrival and duration of residence combining current population survey samples from november 1979 april 1983 june 1986 and june 1988 all of which included data on country of birth and year of immigration the authors examine pat

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

is workfare cost effective against poverty in a poor labor surplus economy workfare schemes impose work requirements on beneficiaries this has seemed an attractive idea for self targeting transfers to poor people this incentive argument does not imply however that workfare is more cost effective against poverty than even poorly targeted options given hidden costs of participation in particular even poor workfare participants in a labor surplus economy can be expected to have some forgone income when they take up such a scheme a survey based method is used to assess the cost effectiveness of india s employment guarantee scheme in bihar participants are found to have forgone earnings although these fall well short of market wages on average factoring in these hidden costs the paper finds that for the same budget workfare has less impact on poverty than either a basic income scheme providing the same transfer to all or uniform transfers based on the government s below poverty line ration cards for workfare to dominate other options it would have to work better in practice reforms would need to reduce the substantial unmet demand for work close the gap between stipulated wages and wages received and ensure that workfare is productive that the assets created are of value to poor people cost effectiveness would need to be reassessed at the implied higher levels of funding

bond pricing and the term structure of interest rates a new methodology for contingent claims valuation this paper presents a unifying theory for valuing contingent claims under a stochastic term structure of interest rates the methodology based on the equivalent martingale measure technique takes as given an initial forward rate curve and a family of potential stochastic processee for its subsequent movements a no arbitrage condition restricts this family of processes yielding valuation formulae for interest rate sensitive contingent claims which do not explicitly depend on the market prices of risk examples are provided to illustrate the key results in relation to the term structure of interest rates arbitrage pricing theory has two purposes the first is to price all zero coupon default free bonds of varying maturities from a finite number of economic fundamentals called state variables the second is to price all interest rate sensitive contingent claims taking as given the prices of the zero coupon bonds this paper presents a general theory and a unifying framework for understanding arbitrage pricing theory in this context of which all existing arbitrage pricing models are special cases in particular vasicek 1977 brennan and schwartz 1979 langetieg 1980 ball and torous 1983 ho and lee 1986 schaefer and schwartz 1987 and artzner and delbaen 1988 the primary contribution of this paper however is a new methodology for solving the second problem i e the pricing of interest rate sensitive contingent claims given the prices of all zero coupon bonds the methodology is new because i it imposes its stochastic structure directly on the evolution of the forward rate curve ii it does not require an inversion of the term structure to eliminate the market prices of risk from contingent claim values and iii it has a stochastic spot rate process with multiple stochastic factors influencing the term structure the model can be used to consistently price and hedge all contingent claims american or european on the term structure and it is derived from necessary and more importantly sufficient conditions for the absence of arbitrage the arbitrage pricing models of vasicek 1977 brennan and schwartz 1979 langetieg 1980 and artzner and delbaen 1988 all require an iformerly titled bond pricing and the term structure of interest rates a new methodology

moving up or just surviving nonfarm self employment in india the classical economic development literature argues that growth is accompanied by a reduction in agriculture s share and an increase in nonagriculture s share of employment yet growth of the nonfarm sector does not necessarily signal increasing levels of development as the sector may serve as subsistence employment for many individuals this ambiguity is heightened by a surprising lack of microevidence regarding sectoral and occupational choice and especially how government policies impact these decisions in this article i make a simple observation regarding how nonfarm self employment reacts to market conditions households and individuals that enter into nonfarm self employment for subsistence reasons are more likely to exit the sector when wages increase or when more stable employment becomes available with this assumption as a starting point i examine the effects of the mahatma gandhi national rural employment guarantee act which increased prevailing wages in rural india the program significantly decreases days spent in nonfarm self employment in addition the implied labor elasticity is three times higher than economy wide estimates suggesting rural nonfarm self employment is a sector of last resort for many individuals additional analyses suggest this impact is driven primarily by two mechanisms higher wages and alternative options for risk management

transfer benefits from public works employment evidence for rural india current knowledge provides little guidance on one of the key questions in evaluating public employment schemes aimed at directly reducing poverty what are the net income gains to participating workers this paper offers an answer for rural public employment in two villages in the state of maharashtra in india a model of intrahousehold time allocation is proposed and estimates are made using household data over six years the empirical implementation indicates that the projects induce significant behavioral responses transfer benefits are large and are greatly underestimated using prevailing market wage rates for similar work to estimate forgone incomes copyright 1994 by royal economic society

a poor means test econometric targeting in africa proxy means testing is a popular method of poverty targeting with imperfect information in a now widely used version a regression for log consumption calibrates a proxy means test score based on chosen covariates which is then implemented for targeting out of sample in this paper the performance of various proxy means testing methods is assessed using data for nine african countries standard proxy means testing helps filter out the nonpoor but excludes many poor people thus diminishing the impact on poverty some methodological changes perform better with a poverty quantile method dominating in most cases even so either a basic income scheme or transfers using a simple demographic scorecard are found to do as well or almost as well in reducing poverty however even with a budget sufficient to eliminate poverty with full information none of these targeting methods brings the poverty rate below about three quarters of its initial value the prevailing methods are particularly deficient in reaching the poorest

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

workfare versus transfers in rural india abstract prevailing methods for evaluating workfare schemes are inconsistent with the arguments made for workfare in poor rural economies those arguments emphasize the existence of higher involuntary underemployment among the poor and the fact that the type of work provided by these schemes gives disutility deterring non poor households from participating to include these features the consumption based welfare metric used in past assessments of workfare schemes in underemployed developing countries is generalized to incorporate a welfare loss from casual manual work while allowing the government to independently value the work done for other reasons using data for india s national rural employment guarantee scheme nregs the paper shows that the policy ranking switches in favor of a basic income guarantee big over workfare allowing for a welfare loss from casual manual labor implies a more poor poor targeting performance but this is not sufficient to compensate for the direct welfare loss from the work requirement for plausible parameter values a big dominates nregs for a given total outlay on workfare wages

forecasting development outcomes under alternative surplus labour assumptions abstracteconomic forecasts are useful to policymakers both as aids to planning and as baselines against which counterfactual scenarios can be compared however policy makers should be aware that assumptions relating to model structure can influence forecast results we explore the sensitivity of forecasts to one aspect of model structure important in modelling developing economies surplus agricultural labour we outline a framework for modelling surplus agricultural labour that relies on average product remuneration we embed this within a model of a developing economy the philippines characterized by surplus agricultural labour we compare the results of two forecasts that differ in their treatment of the agricultural labour market in the first the surplus labour theory is activated establishing average product remuneration in agriculture in the second the surplus labour theory is not activated creating a failure to recognize average product remuneration in agriculture by comparing the two si

is india s economic growth leaving the poor behind there has been much debate about how much india s poor have shared in the economic growth unleashed by economic reforms in the 1990s the authors argue that india has probably maintained its 1980s rate of poverty reduction in the 1990s however there is considerable diversity in performance across states this holds some important clues for understanding why economic growth has not done more for india s poor india s economic growth in the 1990s has not been occurring in the states where it would have the most impact on poverty nationally if not for the sectoral and geographic imbalance of growth the national rate of growth would have generated a rate of poverty reduction that was double india s historical trend rate states with relatively low levels of initial rural development and human capital development were not well suited to reduce poverty in response to economic growth the study s results are consistent with the view that achieving higher aggregate economic growth is only one element of an effective strategy for poverty reduction in india the sectoral and geographic composition of growth is also important as is the need to redress existing inequalities in human resource development and between rural and urban areas

trade policy and redistribution when preferences are non homothetic this paper compares redistribution through trade restrictions versus domestic lump sum transfers when preferences are non homothetic even domestic lump sum transfers affect relative prices thus contrary to the conventional wisdom domestic lump sum transfers are not necessarily superior to distortionary trade policy the paper develops this argument in the context of the food export bans imposed by many developing countries in the late 2000s

tax induced clientele effects in the market for british government securities abstract this paper develops a new methods for measuring tax effects in bond markets and presents empirical results for british government securities the basic idea is to construct a least cost portfolio which for investors in a given tax bracket dominates a given bond a portfolio is said to dominate a bond if it provides cash flows which are at least as great in every period and has a lower price in effect our method calculates an upper bound on the value of a bond to investors in a given tax bracket the results demonstrate i the existence of clientele effects and ii the absence of an effective tax rate

a comparison of yield curve estimation techniques using uk data abstract i compare different methods of estimating the term structure of interest rates on a daily uk treasury bill and gilt data that spans the period from january 1995 to january 1999 in sample and out of sample statistics reveal the superior pricing ability of certain methods characterised by an exponential functional form in addition to these standard goodness of fit statistics model performance is judged in terms of two trading strategies based on model residuals both strategies reveal that parsimonious representations of the term structure perform better than their spline counterparts characterised by a linear functional form this is valid even when abnormal returns are adjusted for market movements linear splines overfit the data and are likely to give misleading results

models of the yield curve and the curvature of the implied forward rate function abstract we examine several alternative models of the uk gilt yield curve using daily data for the period 12 july 1996 10 february 2010 we select the best models according to two criteria low out of sample errors in pricing bonds and low curvature of the implied forward rate curve function we suggest additions to some of the models that significantly improve their performance some of the new models out perform those typically used by the central banks in particular this paper suggests that the model used by the canadian central bank which both outperforms other models and is particularly easy to estimate is well suited to the uk gilt market

identifying earnings assimilation of immigrants under changing macroeconomic conditions failure to account for differences between immigrants and natives in their responsiveness to changes in macroeconomic conditions may bias estimates of assimilation effects on immigrant earnings using norwegian register data from 1980 to 1996 we first establish that earnings of immigrants from non oecd countries exhibit greater sensitivity to local unemployment than do earnings of natives the empirical analysis further reveals that standard methods of estimation which fail to consider differential immigrant and native responsiveness understate earnings growth and overstate cohort differentials among non oecd immigrants these biases are attributable to trends in macroeconomic conditions over the sample period

a theory of dual labor markets with application to industrial policy discrimination and keynesian unemployment this paper develops a model of dual labor markets based on employers need to motivate workers in order to elicit effort from their workers employers may find it optimal to pay more than the going wage this changes fundamentally the character of labor markets the model is applied to a wide range of labor market phenomena it provides a coherent framework for understanding the claims of industrial policy advocates it also can provide the basis for a theory of occupational segregation and discrimination that will not be eroded by market forces finally the model provides the basis for a theory of involuntary unemployment

employment wages and the economic cycle differences between immigrants and natives in this paper we analyse differences in the cyclical pattern of employment and wages of immigrants and natives for two large immigrant receiving countries germany and the uk we show that despite large differences in their immigrant populations there are similar and significant differences in cyclical responses between immigrants and natives in both countries even conditional on education age and location we decompose changes in outcomes into a secular trend and a business cycle component we find significantly larger unemployment responses to economic shocks for low skilled workers relative to high skilled workers and for immigrants relative to natives within the same skill group there is little evidence for differential wage responses to economic shocks we offer three explanations for these findings an equilibrium search model where immigrants experience higher job separation rates a model of dual labour markets and differences in the complementarity of immigrants and natives to capital

estimating the benefit incidence of an antipoverty program by propensity score matching this brief summarizes the results of a gender impact evaluation study entitled estimating the benefit incidence of an antipoverty program by propensity score matching conducted between 1997 and 1998 in argentina the study observed that the average direct gain to the participant is found to be about half the gross wage over half of the beneficiaries are in the poorest decile nationally and 80 percent are in the poorest quintile the propensity score matching psm estimator is reasonably robust to a number of changes in methodology participants are more likely to be poor than non participants participants are less well educated live in poorer neighborhoods and are more likely to be members of neighborhood associations and political parties average gains are similar between men and women but are higher for younger workers funding for the study derives from the world bank research committee

u s labor market dynamics revisited the picture of u s labor market dynamics is opaque empirical studies have yielded contradictory findings and debates have emerged regarding their implications this paper aims at clarifying the picture which is important for the understanding of the operation of the labor market for the study of business cycles for the explanation of wage behavior and for the formulation of policy the paper determines what facts can be established what are their implications and what remains to be further investigated the main contributions made here are i listing of data facts that can be agreed upon these indicate that there is considerable cyclicality and volatility of both accessions to employment and separations from it hence both are important for the understanding of the business cycle ii presenting the business cycle facts of key series iii pointing to specific gaps in the data picture disparities in the measurement of the sizeable flows between employment and the pool of workers out of the labor force disagreements about the relative volatility of job finding and separation rates across data sets and the fact that the fit of the gross flows data with net employment growth data differs across studies and is not high the definite characterization of labor market dynamics depends upon the closing of these data gaps

guaranteed employment or guaranteed income abstract the paper critically reviews the arguments for and against both employment guarantees and income guarantees when viewed as rights based policy instruments for poverty reduction in a developing economy decentralized implementation of the right to work poses serious challenges in poor places evidence on india s national rural employment guarantee act does not suggest that the potential for either providing work when needed or reducing current poverty is realized despite pro poor targeting instead work is often rationed by local leaders and the poverty impact is small when all the costs are considered the option of income support using cash transfers also has both pros and cons widely used methods for finely targeting cash transfers tend to miss many poor people and can discourage those reached from earning extra income yet it cannot be presumed that switching to a universal basic income will reduce poverty more than workfare or finely targeted transfers that is an empirical question and the answer will undoubtedly vary across settings belying the generalizations often heard from advocates nonetheless more incentive neutral universal and or state contingent transfer schemes merit consideration in settings in which existing public spending is skewed against poor people and or there is scope for raising taxes on the rich

immigrants labour market performance and social insurance using longitudinal data from the date of arrival we study long term labour market and social insurance outcomes for all major immigrant cohorts to norway since 1970 immigrants from high income countries performed as natives while labour migrants from low income source countries had declining employment rates and increasing disability programme participation over the lifecycle refugees and family migrants assimilated during the initial period upon arrival but labour market convergence halted after a decade and was accompanied by rising social insurance rates for the children of labour migrants of the 1970s we uncover evidence of intergenerational assimilation in education earnings and fertility

direct and indirect effects of malawi s public works program on food security labor intensive public works programs are important social protection tools in low income settings intended to supplement income of poor households and improve public infrastructure in this evaluation of the malawi social action fund an at scale government operated program across and within village randomization is used to estimate effects on food security and use of fertilizer there is no evidence that the program improves food security and some negative spillovers to untreated households these disappointing results hold even under modifications to the design of the program to offer work during the lean rather than harvest season or increase the frequency of payments

is there less discrimination in occupations where recruitment is difficult the authors empirically test the cross sectional relationship between hiring discrimination and labor market tightness at the level of the occupation to this end they conduct a correspondence tes

ethnic discrimination in hiring labour market tightness and the business cycle evidence from field experiments several studies using observational data suggest that ethnic discrimination increases in downturns of the economy we investigate whether ethnic discrimination depends on labour market tightness us

long term behavior of yield curves the flattening of yield curves at long term maturities is proven to be approximately pro portional to the reciprocal of the time to maturity under general conditions this is a con sequence of the persistence of earlier forward rates in the averaging process which pro duces yields from forward rates this relationship suggests the use of a reciprocal maturity yield curve which significantly facilitates the interpretation ofthe behavior of long term yields by linearizing them for display over a shorter interval this is illustrated using a yield curve for u s treasury bills

evolution and human nature from an economic perspective on individual decision making human beings have three key characteristics preferences beliefs and rationality beliefs are the probabilities with which people think various outcomes will occur conditional on information that might be available preferences are the rankings over the set of gambles that are based on such beliefs over the outcomes rationality is the extent to which people succeed in choosing optimal actions in the light of their beliefs and preferences and the extent to which their beliefs are appropriately modified by their information economists typically impose only rather weak assumptions on preferences for example preferences are taken to be transitive and sometimes less explicitly exogenous and unchanging stronger assumptions are typically imposed on preferences in specific contexts however for example preferences over time might be represented by an additively separable function with constant rate of discount despite widespread recognition that this case is a special one further attitudes to risk are often represented by the expected utility theorem which rests on assumptions that are strong if also appealing the assumptions made on rationality in particular are usually very strong that is rationality in economic models usually entails the exact optimization of preferences and modification of beliefs in accordance with bayes theorem the economist s basic picture of preferences beliefs and rationality has been subject to challenges from a growing number of empirical anomalies the proposed explanations of these anomalies involve relaxing the assumptions that economists make on these preferences beliefs or rationality for example preferences

the marginal rate of corruption in public programs evidence from india abstract optimal fiscal policy depends on the marginal benefits of public spending in developing countries corrupt officials often embezzle funds so optimal policy should reflect marginal corruption we analyze marginal corruption in the context of a statutory wage increase in india s employment guarantee scheme strikingly workers received none of the increase even though initially they were on average overpaid the data are inconsistent with theories of voice in which the threat of complaints limits corruption but consistent with theories of exit in which outside options in the private sector limit how much rent officials can extract

essays in social experimentation what experiments are needed for manpower policy experiments where prospective participants are randomly assigned into experimental and control groups are often regarded as the ideal approach to evaluation of manpower policies this examination shows that such experimental designs can yield misleading and incomplete information about program impacts in cases where program effects vary among individuals when individual heterogeneity is present such designs at best provide unbiased estimates of average program effects not of marginal effects the latter are often more important for policy than the former this paper proposes alternative experimental designs that permit estimation of the marginal as well as average program impacts

inequality in a global perspective the basic story of global inequality in the last three decades has been an overall decline but one which is composed of quite intricate patterns there has been a decline in between country inequality as china and india have grown relative to the us and other rich countries this has been accompanied by an increase in within country inequality but this is itself composed of rising inequality in some countries such as china india and the us and declining inequality in other countries including large economies in latin america section ii of the paper reviews these patterns highlighting country diversity to make the central point that policy matters section iii addresses a normative question what relative weight should be given to within country and between country inequality in making an overall global assessment this section brings on board recent philosophical discourse including on inequality of opportunity in a global frame section iv returns to the policy matters theme and takes up global constraints on national redistribution policy in a globalized world for example a race to the bottom on taxation to attract and keep capital and talent and possible global institutional responses to alleviate these constraints

local unemployment and the relative wages of immigrants evidence from the current population surveys abstract we provide evidence on wage profiles of immigrants using current population survey data from 1979 to 2003 taking into account that changes in labor market conditions impact natives and immigrants differently high rates of immigrant wage assimilation in general and relatively high wages of immigrant cohorts that arrived during the 1990s in particular can to a large extent be explained by a negative trend in unemployment in the data relating immigrant and native period effects to local labor market unemployment we find that wage assimilation among lesser educated immigrants is negligible for high school and college educated male immigrants rates of wage assimilation during early years in the united states are procyclical suggesting that rising unemployment slows accumulation of u s specific human capital