government deficits the real interest rate and ldc debt on global crowding out abstract the paper uses a three regions model of global saving investment balance to present a global crowding out interpretation of present economic trends the model builds on data which point to a possible shortage of savings explosive growth of social expenditures structural public sector deficit in north and south changes of the age pyramid real wage rigidity in many industrial countries

changes in labor force composition and male earnings a production approach models of aggregate production are estimated and used to investigate the effects of changes in labor force composition on the recently observed decline in the earnings of college graduates relative to other workers and on the fall in the earnings of younger workers relative to older workers changes in labor force composition explain substantial proportions of these observed earnings changes the most important compositional change appears to have been the rapid increase in the number of young male college graduates projections outside the sample are consistent with depressed earnings throughout the lifetimes of the large baby boom cohorts especially among college graduates but do not suggest that depressed college graduate earnings are a permanent phenomenon for all birth cohorts

international taxation and the direction and volume of cross border m as we show that the parent subsidiary structure of multinational firms created by cross border mergers and acquisitions is affected by the prospect of international double taxation specifically the likelihood of parent firm location in a country following a cross border takeover is reduced by high international double taxation of foreign source income at the same time countries with high international double taxation attract smaller numbers of parent firms a unilateral elimination of worldwide taxation by the united states is simulated to increase the proportion of parent firms locating in the united states following cross border mergers and acquisitions from 53 to 58

population growth and savings in ldcs a survey article both population growth and savings have traditionally taken a certain place of pride among models of growth and development the purpose of this paper is to examine the literature concerning the hypothesis that the savings rate itself is a function of the population growth rate and this effect exacerbates the negative effect of population on economic growth the evidence is examined from three perspectives i macroeconomic effects of variations in the age structure of the population ii choice theoretic models of family decision making particularly the joint determination of fertility decisions and savings decisions and iii market level interactions of variables which determine individual decisions the paper concludes that both population growth and savings rates are inextricably tied up in the process of economic development there are many ways in which the two variables may interact but no generalizations can be safely made across countries

labour force substitution and the effects of an ageing population 1986 labour force substitution and the effects of an ageing population applied economics vol 18 no 8 pp 901 913

the finance growth nexus evidence from bank branch deregulation this paper provides evidence that financial markets can directly affect economic growth by studying the relaxation of bank branch restrictions in the united states we find that the rates of real per capita growth in income and output increase significantly following intrastate branch reform we also argue that the observed changes in growth are the result of changes in the banking system improvements in the quality of bank lending not increased volume of bank lending appear to be responsible for faster growth

input demand elasticities for heterogeneous labor firm level estimates and an investigation into the effects of aggregation labor economists have paid increasing attention to the estimation of demand elasticities for heterogeneous labor the majority of these studies investigate the effect on wage rates resulting from exogenous changes in factor quantities i e the measurement of elasticities of complementarity examples of these studies abound borjas for example investigates the impact of differences in labor market representation on the earnings of racial groups 8 in another paper borjas defines immigrants as a separate labor group and is able to determine the impact of immigration on the wages earned by natives 9 berger defines labor inputs along education and gender lines thereby allowing for the investigation of changes in the age education composition of the work force on wage rates 5 and grant and hamermesh study the effect of increasing female labor force participation on the wages earned by youth and adults 17 less attention has been paid to the study of the responsiveness of employment to exogenous changes in wage rates i e the measurement of elasticities of substitution less attention has been focused on this issue because the data requirements are more stringent since in order to presume that wage rates are exogenously determined the unit of observation must be small ideally establishmentor firm level data would be used the relative inaccessibility of these type of data has led researchers to use more aggregated figures such as smsa level or industry level data to address microissues as long as wage rates are determined exogenously the unit of observation chosen is appropriate there are real concerns however about the adequacy of more aggregated units to describe the behavior of firms 2 this study addresses the issue of whether micro level data are in fact needed to accurately measure elasticities of substitution among labor groups a firm level data set that includes input

labor market competition among youths white women and others we estimate substitution possibilities among a set of age race sex groups in the labor force the estimates are based on cross section data from smsas in 1969 and they allow us to consider how substitutable adult women are for young women or young men the estimates are used along with assumptions about the extent of wage rigidity and elasticities of labor supply to simulate the direct and indirect effects of the growth of the female labor force on job opportunities for youth assuming rigid wages for young workers and on the wage rates of adult males assuming these wages are flexible this abstract was borrowed from another version of this item

the effect of cohort size on earnings growth a reexamination of the evidence this study reexamines the effect of cohort size on earnings growth finis welch finds that individuals in larger cohorts experience depressed earnings conditions on entry into the labor market but that their earnings grow at faster rates than in smaller cohorts thus a large portion of the cohort size effect on earnings dissipates after a few years however using data almost identical to those of welch but estimating less restrictive models it is found here that cohort size not only depresses earnings at entry but also seems to slow down early career earnings growth the evidence suggests that earnings ini larger cohorts do not approach normal levels after at brief period in the labor force rather the negative cohort size effect on earnings appears to worsen with experience

the translog approximate function substitution among inputs in manufacturing evaluated at sample means abstract this paper shows the translog function can approximate any first degree homogeneous function around any expansion point estimates for 1987 manufacturing confirm no weak separability of labor from capital but do not confirm lower production than non production worker substitution with capital

migration regional equilibrium and the estimation of compensating differentials in this study we have developed an improved model of net migration that encompasses both equilibrium and disequilibrium components instrumental variables fixed effects estimates of the model with time series data for 51 areas in the united states over the period 1971 1988 support the importance of both equilibrium and disequilibrium factors in migration excerpt

schooling choices and demographic cycles this paper examines the effect of demographic cycles on schooling choices and the timing of school completion utilizing data from the u s national longitudinal surveys of labor market experience and from the panel study of income dynamics we find that men and women born during the upswing of a demographic cycle obtain more schooling and take longer to finish a year of schooling than comparable individuals born during the downswing of a demographic cycle the patterns that we document are more complex than would be predicted by any of the theoretical models of educational responses to demographic cycles that have been presented in the literature excerpt

four themes in fertility research this study is concerned with four main themes that have been combined to describe u s fertility trends since 1920 these themes are identified as a time adjustment mechanism income the wifes labor force activities and some intergenerational factor in order to obtain an unambiguous picture each theme will be represented by only one variable after selecting the variables and estimating a model an examination of the changing role these variables have had in explaining changes in fertility the total fertility rate throughout much of this century will be made finally the implications these themes have for future fertility will be examined the authors conclude that in interpreting historical u s fertility rates the results seem to indicate that much of the early decline in u s fertility was due to falling infant mortality after the second world war fertility rose sharply as the age structure variable declined and income rose eventually both womens labor force participation rates and the age structure variable rose and consequently fertility fell they also suggest that the age structure variable may cause a temporary upward swing in fertility in the near future excerpt

valuing urban lakeview amenities using implicit and contingent markets amenities influence individual location decisions and affect overall social well being this comparative study focuses on the potential complementarity of implicit and contingent market approaches

the substitutability of occupational groups using firm level data abstract labor demand elasticity estimates are presented for a model in which labor groups are defined by occupation while most studies construct labor groups according to non productive characteristics such as race or gender the results corroborate much of the existing research

optimal debt endogenous fertility and human capital externalities in a model with altruistic bequests abstract this paper explores optimal debt in a model with altruistic bequests endogenous fertility and human capital externalities because of such externalities education investment is too low and fertility is too high while education subsidies are the conventional means to deal with these problems we show that the optimal policy also comprises debt even when distortionary taxes are used the reason is that debt tips the usual trade off between children s quantity and quality in favor of the latter by increasing the bequest cost of children the optimal debt output ratio exceeds 10 for plausible parameterization

the impact of banking deregulation on inbound foreign direct investment transaction level evidence from the united states abstract we evaluate the effects of state level banking deregulation that resulted in improved access to cheaper local finance on foreign firms investing in the u s we provide direct micro level evidence from u s inbound foreign direct investment transactions showing that interstate banking but not intrastate branching deregulation increased the number of transactions reduced the average transaction value and boosted overall investment by foreign multinationals we also show that lower cost of local credit and greater local bank competition in each state following the interstate banking deregulation are potential mechanisms that stimulated fdi activity finally we demonstrate that after the adoption of the interstate banking deregulation both the number and the average value of transactions increased in industries that are more dependent on external finance relative to industries that are less dependent

the retirement wealth of the baby boom generation abstract the paper compares the well being of the baby boom generation ages 40 55 in 2001 with the same age group in 1983 i find little evidence that their relative position deteriorated over the period by some indicators this generation has seen an improvement in terms of income the 40 55 age group was at about the same relative position in 2001 as in 1983 in terms of conventional wealth there was some slippage over the period in terms of mean augmented wealth net worth plus pension and social security wealth their relative position improved somewhat but in terms of median augmented wealth there was again some slippage

money and endogenous growth the ramsey romer model of endogenous growth is extended to allow for holdings of real money balances and government debt as well as capital and for non interconnected generations of households tax financed increases in government consumption and debt depress growth prospects and boost inflation as long as a positive birth rate ensures that future taxes are shouldered by future yet unborn generations debt financed increases in government consumption depress growth and boost inflation even more money financed increases in government consumption depress growth less but increase inflation by more giving subsidies through an increase in monetary growth is non neutral since this increases real growth and thus inflation increases by a lesser amount than monetary growth bond financed increases in monetary growth lead to a larger increase in real growth and a smaller increase in inflation if there are cost adjustment for investment cuts in monetary growth and increases in government debt and government consumption induce an increase in the real interest rate copyright 1994 by ohio state university press

the nature of the savings function in developing countries a survey of the theoretical and empirical literature the savings rate marginal or average is regarded as a key performance indicator by development economists and foreign aid practitioners admonish their clients to increase their savings ratio as a primary condition for achieving a satisfactory rate of economic growth however not only have questions been raised regarding the significance of the savings effort as an independent determinant of economic progress but the formulation of policies designed to increase the savings propensity has suffered from a dearth of knowledge regarding the nature of the savings function in developing countries a number of alternative savings hypotheses derived mainly from the literature relating to developed economies have been advanced but the paucity of reliable data has made it difficult to test these hypotheses and obtain results which warrant a reasonable degree of confidence the purpose of this article is a to review the theoretical and empirical literature on the savings function in developing countries b to assess critically the findings with respect to the major hypotheses and c to summarize the state of our knowledge on this important topic we shall begin with a brief review of the nature of the data on savings in developing countries with which economic analysts must work

on barro s theorem of debt neutrality the irrelevance of net wealth the effects of national debt on real economic activity has been a recurring topic in the literature on macroeconomic policy analysis since the time of adam smith the problem is usually stated as follows for a given level of government spending is the economy sensitive to the financing mix between tax and debt historically attention has focused on the question of whether or not individuals perceive government bonds as net wealth the link between wealth and real activity being taken as given the main point of debate is well established the issue of bonds raises private assets by the full value of the bonds the corresponding tax liabilities for interest payments and retirement of the debt extend indefinitely into the future the perception of bonds as net wealth would then appear to depend on the length of the individual s optimization horizon the most recent contribution to this debate was made by robert barro 1974 in which he argued that despite the limitation of finite lives bonds will not be regarded as net wealth in a system characterized by operative intergenerational transfers the essence of his argument is that inclusion of a bequest motive effectively converts a finite horizon into an infinite one in that paper barro acknowledged a potential limitation on his proof of the neutrality result it was only valid for bonds that are redeemed at a known point in the future this limitation was raised again in a subsequent exchange with martin feldstein in which barro 1976 agreed that for a growing economy an increase in steady state per capita debt will generate net wealth if the rate of growth is greater than the interest rate however he argued that such a steadystate growth situation would not be consistent with rational utility maximizing behavior the main theme of this paper is that the literature has focused attention on the wrong question the real effects of national debt are independent of whether or not individuals perceive the debt as net wealth the correct question is whether or not changes in the level of debt force individuals into patterns of intertemporal consumption that they are unable to neutralize by adjustments in their portfolio behavior viewing neutrality in this light leads to some reinterpretation of the conditions under which neutrality is likely to hold my analysis starts where barro and feldstein leave off within the framework of the overlapping generations model with gift and bequest motives i show that steady state equilibrium growth is consistent with a growth rate in excess of the interest rate indeed without specific knowledge of the parameters of the economy there are no a priori grounds on which to expect any particular relationship between the growth and interest rates more importantly so long as it is valid to view the aggregate economy as behaving like a composite individual changes in the steady state level of government debt are neutral regardless of which relationship prevails provided one or the other of the intergenerational transfer motives is operative i will refer to this as the extended neutrality theorem section i presents an analysis of steadystate growth with gift and bequest behavior the steady state growth path is shown to lie above the golden rule solution if the gift

the effects of social security on population and output growth in this paper we have considered two unfunded social security programs under the conventional system benefits are related to aggregate fertility under the hypothetical fertility related system benefits are directly linked to individual fertility the effects on fertility and per capita growth rates of the two social security systems are examined in the context of endogenous growth the relative merits of the two systems for developing and developed countries are considered the authors conclude that the conventional social security system existing in many developed nations may be desirable to developing countries in reducing population and promoting economic growth on the other hand the hypothetical fertility related system may be useful to developed countries as far as increasing fertility is concerned

regional decentralization and fiscal incentives federalism chinese style abstract aligning the interests of local governments with market development is an important issue for developing and transition economies using a panel data set from china we investigate the relationship between provincial government s fiscal incentives and provincial market development we report three empirical findings first we find that during the period of fiscal contracting system the discrepancy between ex ante contracts and ex post implementation was relatively small suggesting that the fiscal contracts were credible second we find a much higher correlation about four times between the provincial government s budgetary revenue and its expenditure during 1980s and 1990s as compared to 1970s demonstrating that provincial governments faced much stronger ex post fiscal incentives after reform third we find that stronger ex ante fiscal incentives measured by the contractual marginal retention rate of the provincial government in its budgetary revenue are associated with faster development of the non state sector as well as more reforms in the state sector in the provincial economy this holds even when we control for the conventional measure of fiscal decentralization finally we compare federalism chinese style to federalism russian style

population dependency rates and savings rates stability of estimates challenging the notion that increasing dependency rates lower the national savings rate in developing countries this study explored the stability of dependency effects over time while holding constant the sample of countries in an attempt to examine the link between the two rates specifically researchers estimated savings rate equations for 1975 1980 and 1985 and looked at regionally differential effects of dependency ratios on the national savings rate these equations were estimated separately for each year for developing countries in africa latin america and asia the model structure proved generally unstable for the years between 1975 and 1980 and for countries in africa and latin america between 1975 and 1985 the savings model structure was significantly different across each region for each of the 3 years examined as population variables on savings rates varied among developing countries depending on their geographical location results concurred with findings from earlier research suggesting the impact country composition included in the estimation has upon study results broadly speaking however dependency rate effects did not significantly change over time no strong evidence was produced to support generalizations that increasing dependency rates lower the national savings rate data sources and savings equations and variables are discussed in the report

the impact of regional financial depth on outbound cross border mergers and acquisitions abstract drawing on china s experience this study examines the role of source province credit conditions and its interplay with host country financial openness in determining the intensity of cross border mergers and acquisitions m as we first show that improved credit conditions in source provinces of china measured by the number of newly established bank branches boost the volume and frequency of their firms cross border m as the effect is stronger for deals where cash is mainly used as the payment method then we identify a complementary effect between the financial openness in host countries and the improved financial depth in source regions more importantly by defining the members of china s the belt and road initiative as countries with higher political openness to china we find that acquirers in china especially the firms affiliated to central government are more political oriented than market oriented when choosing target countries additionally we show that acquirers facing lower political uncertainty from source province benefit more from the enhanced bank access

economic effects of immigrants on native and foreign born workers complementarity substitutability and other channels of influence the authors use standard metropolitan statistical area smsa data constructed from 1980 census microdata files and other sources to estimate a structural model of native foreign born labor demand and labor supply which distinguishes the effects upon real wages of each type of labor and on the employment of natives the authors specify econometrically estimate and simulate the structural model which incorporates not only a production structure channel through which immigrants influence area real wages and employment but also demand and native labor supply channels it is noted that while these are not the only channels through which immigrants may affect native workers the model nonetheless constitutes a step in the direction of a general equilibrium approach in the production structure channel immigrants and natives are found to be substitutes in production immigration lowers foreign born wage rates and leads to lower wages for natives the negative effects of the production channel usually are ameliorated through the demand channel further immigrants add to local demand through their earnings and potentially through non labor income while also lowering unit costs and local prices which enhances real incomes and potentially net exports and thus the demands for local output and area labor the author discusses findings of interest from the simulation results based upon an analysis of all areas

the effects of demographic change on the distribution of wages 1967 1990 a multiple skills model was used to examine the impact of changes in labor force composition on the wage distribution of workers by age sex education and race in the us from 1967 through 1990 the model provided for a higher level of specification than previous studies of wage distribution changes in previous investigations workers were grouped into arbitrary and a priori categories and workers in each category were assumed to be perfectly interchangeable in contrast the multiple skills model assumed that each worker had multiple skills that each skill had a productive value and that each skill was an imperfect substitute for other skills the model further assumed that changes in labor force composition would alter the distribution of skills in the labor force which in turn would produce changes in relative wages analysis revealed that wages of young college educated white and nonwhite males relative to the wages of older college educated white and nonwhite males declined since 1967 and were expected to decline throughout the 1980s in contrast the wages of young high school educated white and nonwhite males relative to the wages of older high school educated white and nonwhite males did not decline since 1967 and were not expected to decline during the 1980s the wages of white females of all ages and of all educational levels relative to the wages of males of all ages and of all educational levels declined throughout the period and were expected to decline in the future nonwhite workers made greater gains in wages since 1967 than white males and this trend was expected to continue through the 1980s however the wages of nonwhite males remained absolutely lower than those of white males by 1985 the wages of nonwhite females were expected to surpass those of white females these findings were similar to those observed in other studies except that other studies failed to detect the differential impact on the wages of high school and college educated males

labour market segmentation a local labour market analysis using alternative approaches earlier studies have generally attempted to establish the presence or otherwise of labour market segmentation using a single technique using data drawn form the british social and economic life initiative sceli for six local labour markets this paper tests for segmentation using four different methods of analysis a simple career non career model cluster analysis and switching regressions the results in general suggest that explanatory power is not improved by analysing the labour market in different segments but this simple career model points to higher rewards for given characteristics in the career sector and the results of the switching regression model are consistent with duality in one of the six markets

the effect of tax transfer policies on fertility in canada 1921 88 this paper estimates the effect on fertility of the personal tax exemption for children child tax credit family allowances and maternity leave benefits in canada using time series data from 1921 to 1988 it is found that the exemption child tax credit and family allowances all have significant and positive effects on fertility the results are robust to a variety of specifications including first differencing while the three tax transfer programs seem to be very distinct the null hypothesis that they have no differential effects on fertility can hardly be rejected all the results also hold for the cumulative effect of the three tax transfer programs the estimates predict that a large increase in the value of the tax transfer programs would be needed to increase fertility to the replacement level

the saving of the elderly in micro and macro data examination of household micro data on the elderly has generally concluded that they do not dissave significantly whereas estimates using aggregate macro data have shown that the presence of a large elderly population leads to a lower saving rate this paper shows that if interactions between generations are important one would not expect these estimates to be the same the paper presents new evidence that bequests are plausibly the source of this discrepancy examination of data from young households that have received or expect bequests confirms that bequests are indeed an important factor determining the saving of the young

reaching out access to and use of banking services across countries the authors 1 present new indicators of banking sector penetration across 99 countries based on a survey of bank regulatory authorities 2 show that these indicators predict household and firm use of banking services 3 explore the association between the outreach indicators and measures of financial institutional and infrastructure development across countries and 4 relate these banking outreach indicators to measures of firms financing constraints in particular they find that greater outreach is correlated with standard measures of financial development as well as with economic activity controlling for these factors the authors find that better communication and transport infrastructure and better governance are also associated with greater outreach government ownership of financial institutions translates into lower access while more concentrated banking systems are associated with greater outreach finally firms in countries with higher branch and atm penetration and higher use of loan services report lower financing obstacles thus linking banking sector outreach to the alleviation of firms financing constraints

children as income producing assets the case of teen illegitimacy and government transfers this paper develops a classical model of the teen fertility decision in the presence of public income transfers the theoretical model predicts that welfare payments will encourage fertility holding constant other economic opportunities and that better economic opportunities will discourage fertility considering the possible simultaneity of illegitimacy rates and benefit levels due to the collective choice process the authors confirm the theoretical models predictions with state level data from 1980 through 1990 the authors find that including fixed effects in the regression to control for unobserved differences between states does not sufficiently control for endogeneity after controlling for endogeneity real welfare benefits are strongly and robustly related to teen illegitimacy the point estimates of the elasticity with respect to changes in the illegitimacy rate are around 1 3 for white teens and 2 1 for black teens real wages for women with a high school education or less are negatively related to teen illegitimacy for white teens with an elasticity of around 0 4 finally male wages appear to have little effect on the illegitimacy rate for white teens but appear negatively correlated with the illegitimacy rate for black teens in some model specifications authors

lost in translation the effect of cultural values on mergers around the world we find strong evidence that three key dimensions of national culture trust hierarchy and individualism affect merger volume and synergy gains the volume of cross border mergers is lower when countries are more culturally distant in addition greater cultural distance in trust and individualism leads to lower combined announcement returns these findings are robust to year and country level fixed effects time varying country pair and deal level variables as well as instrumental variables for cultural differences based on genetic and somatic differences the results are the first large scale evidence that cultural differences have substantial impacts on multiple aspects of cross border mergers

the fertility effect of dependent tax exemptions estimates for the united states the effect of the dependent tax exemption on the fertility rate in the united states is estimated the estimation is an improvement on previous work in that a non linear specification is used to better capture the shape of the demand for children it is found that the marginal effect of the dependent exemption decreases with the level of the exemption this suggests that although subsidies for childbearing will increase fertility it becomes increasingly difficult for countries to increase fertility through this type of scheme

troubled banks impaired foreign direct investment the role of relative access to credit during the 1980 s theories were developed to explain the striking correlation between real exchange rates and foreign direct investment fdi however this relationship broke down for japanese fdi in the 1990 s as the real exchange rate appreciated while fdi plummeted we propose the relative access to credit hypothesis and show that unequal access to credit by japanese firms contributes to the explanation of declining japanese fdi using bank level and firm level data sets we find that financial difficulties at banks were economically and statistically important in reducing the number of fdi projects by japanese firms into the united states jel g21 f36

government debt human capital and endogenous growth the effect of government debt on capital accumulation has been debated for more than a century the debate has focused on the validity of the ricardian equivalence hypothesis which asserts that the mix of government debt and nondistorting taxes to finance government expenditures has no real effect on an economy in models with infinitely lived agents government bonds increase private assets by the full amount that offsets the rise in future tax liabilities for interest payments and the retirement of public debt even in a model with finitely lived agents barro 1 showed that government debt is neutral when private intergenerational transfers are positive and when the rate of growth is lower than the interest rate with operative intergenerational transfers carmichael 4 extended the debt neutrality into a regime where the rate of growth is greater than the interest rate while suggesting some sources of nonneutrality of public debt such as heterogeneous tastes and uncertainty moreover drazen 6 argued that when intergenerational transfers take the form of investments in human capital which have higher marginal returns than investments in physical capital government bonds affect the equilibrium solution and increase welfare in contrast assuming that private intergenerational transfers are zero van der ploeg and alogoskoufis 10 argued that an increase in government debt depresses real growth through reducing savings in an endogenous growth overlapping generations model with constant population the models mentioned above ignore possible responses of fertility to changes in government debt in an overlapping generations model with operative bequests becker and barro 3 showed that the neutrality of social security needs modification if fertility is endogenous lapan and enders 9 extended the insight of becker and barro 3 to examine the effects of government debt and found that a rise in government debt reduces fertility and raises capital intensity through increasing bequests which are part of the cost of having children wildasin 11 also obtained similar results while endogenizing fertility none of these models has endogenous growth of per capita income

educational attainment and cohort size we argue that the postwar baby boom caused substantial fluctuations in both the economic rewards to education and educational attainment over the last 3 decades if substitutability between young and old workers diminishes with education the present value of lifetime earnings for a boom cohort is depressed more for highly educated workers reducing incentives for educational attainment the opposite is true for pre and postboom cohorts the diminishing substitutability hypothesis explains the declines in both the returns to college and college completion rates in the 1970s and predicts a substantial increase in educational attainment for postboomers

federalism as a commitment to reserving market incentives the authors advance a new perspective in the study of federalism their approach views federalism as a governance solution of the state to credibly preserving market incentives market incentives are preserved if the state is credibly prevented from compromising on future economic success and from bailing out future failures the salient features of federalism decentralization of information and authority and interjurisdictional competition help provide credible commitment or these purposes in addition the authors suggest that some federalism are self sustaining

dollars and dreams a reduced middle class alternative explanations we decompose annual earnings into hours of work and hourly earnings and analyze male female differences in earnings inequality using canadian data our results indicate that the larger female inequality in earnings is due to a greater inequality in the

the overeducated canadian changes in the relationship among earnings education and age for canadian men 1971 81 individual data from six surveys of consumer finances are used to assess recent changes in the earnings profiles of canadian males with particular emphasis upon the role of cohort size the data reveal a marked compression of earnings differences across levels of education at most ages the slope of age earnings profiles did not change systematically regression analysis confirms that cohort size has a negative impact on earnings that diminishes with age however the estimated effects of cohort size do not explain the observed decline in earnings differences across levels of education le canadien trop instruit a propos des changements dans les rapports entre gains age et niveau d instruction pour les hommes canadiens 1971 81 l auteur analyse les changements recents dans les profils de revenus des hommes canadiens en s attachant en particulier a examiner l impact de la taille de la cohorte a l aide des donnees individuelles tirees de six enqu es sur les finances des consommateurs les donnees revelent une compression marquee de la fourchette de revenus pour divers niveaux d instruction et ce pour la plupart des ages la pente du profil age revenus ne change pas systematiquement l analyse de regression montre que la taille de la cohorte a un impact negatif sur le revenu mais un impact qui diminue avec l age cependant les effets calibres de la taille de la cohorte n expliquent pas la chute observee dans les differentiels de revenus pour des canadiens ayant des niveaux d instruction differents

dynamic savings behaviour in an oil dependent economy abstract this paper tests for the influence of income demography terms of trade export orientation and real interest rates on savings behaviour in trinidad and tobago within an error correction formulation it finds evidence in favour of the error correction mechanism under which the savings rate varies procyclically in the short run but remains constant in the steady state in addition long run and short run significant effects are found for income real interest rates and export orientation demography is significant only in the long run while the terms of trade is not significant in either the short or long run

segmented labour markets theory and evidence this paper examines the possibility of accepting the labour market segmentation approach as a valid alternative to the classical and neo classical analysis of labour markets it consists of three main parts the urst part contains a historical analysis of both the distant and recent origins of the labour market segmentation hypothesis part two outlines the central ideas of both segmentationalists and radical theorists who attempted to explain the fragmented nature of labour markets and the importance of institutional and social inuuences upon pay employment and mobility of individual workers between different labour market sectors the third part examines the case for labour market segmentation using four alternative techniques and discusses the issue of mobility among different labour market segments it is thereby concluded that the lack of agreement among the segmented labour market theorists on both theoretical and methodological issues has prevented them from developing a consistent and convincing argument based on veriuable empirical evidence to validate their thesis

testing spanish labour market segmentation an unknown regime approach this paper studies the existence of two differentiated segments primary and secondary in the spanish labour market for this a methodology switching regression model with unknown regimes is used which on the one hand does not demand a priori demarcation of segments and on the other enables the allocation of workers to the segments to be treated as a factor endogenous to the model itself and closely connected with the wage setting mechanisms operating in the segments the empirical results show that the assignment to segments is not random and that there are substantial differences in the wage determination process between the two sectors furthermore the model estimated has allowed analysis of the ex post composition of the segments and corroboration to a large extent of the predictions of the dual labour market theory

uncertainty and cross border banking flows abstract while global uncertainty measured by the vix has proven to be a robust global push factor of international capital flows there has been no systematic study assessing the role of uncertainty in driving bilateral capital flows this paper examines the effects of higher country specific uncertainty on cross border banking flows using data from the bank for international settlements locational banking statistics the bilateral structure of this data allows disentangling supply factors from demand factors thereby helping identify the effect of higher uncertainty on cross border banking flows from other confounding factors the results of this analysis suggest that i uncertainty in a source country domestic economy is both a lender specific push and pull factor that robustly predicts a decrease in outflows cross border lending and inflows cross border borrowing ii the decline in cross border borrowing is larger than the decline in cross border lending that is the net cross border position of the banking sector increases iii despite a decline in cross border bank lending in the absolute sense the share of cross border bank lending in total bank lending increases suggesting a portfolio rebalancing iv this rebalancing occurs only when banks are lending to borrowers in advanced economies but not to those in emerging market economies

knowledge seeking and location choice of foreign direct investment in the united states to what extent do firms go abroad to access technology available in other locations this paper examines whether and when state technical capabilities attract foreign investment in manufacturing from 1987 1993 we find that on average state r d intensity does not attract foreign direct investment most investing firms are in lower tech industries and locate in low r d intensity states suggesting little interest in state technical capabilities in contrast we find that firms in research intensive industries are more likely to locate in states with high r d intensity foreign firms in the pharmaceutical industry value state r d intensity the most at a level twice that of firms in the semiconductor industry and four times that of electronics firms interestingly not only firms from technically lagging nations but also some firms from technically leading nations are attracted to r d intensive states this suggests that beyond catching up firms use knowledge seeking investments also to source technical diversity

fertility and pension programs in ldcs a model of mutual reinforcement surveys of the determinants of fertility decline often include adoption of state sponsored pension programs among the many socioeconomic changes responsible for smaller average family size old age insurance appears in analyses of the western demographic experience pension programs have also been suggested as a policy tool that third world governments might use to reduce fertility 2 the theoretical literature on the pension fertility relationship has thus far emphasized the substitution of old age benefits provided by the state for help received from children and the implications of this substitution for the value of children and desired family size quantitative analysis of the pension fertility relationship has likewise proceeded in terms of the presumed impact of old age insurance 3 very little attention has been given to the possibility that pension programs might be implemented in response to fertility decline and to consequent shifts in the demand for old age security and in the ability of the government to finance such programs it is even possible that the pension response to falling levels of fertility could be mistaken for the assumed fertility effect of old age security programs our purpose is to consider and analyze both directions of effect the literature addressing the determinants of pension expenditure has not yet been linked with the literature addressing the determinants of fertility doing so will not only increase our understanding of fertility patterns but will make an important contribution to the study of how demographic demand factors influence social welfare policy for example aaron and wilensky have utilized the percentage of the population over 65 in their models of pension expenditure 4 although

a note on long term determinants of the private savings ratio abstract this note presents some new evidence about cross country differences in the private savings ratios opposite to claims forcefully proposed e g by feldstein social security benefit variables do not contribute to explain these differences instead our results suggest that variables describing degree of development of monetary systems perform strikingly better according to our estimation results there is a clear positive relationship between these variables and the private savings ratio

the role of intergenerational transfers in aggregate capital accumulation this paper uses historical u s data to directly estimate the contribution of intergenerational transfers to aggregate capital accumulation the evidence presented indicates that intergenerational transfers account for the vast majority of aggregate u s capital formation only a negligible fraction of actual capital accumulation can be traced to life cycle or hump savings a major difference between this study and previous investigations of this issue is the use of more accurate longitudinal age earnings and age consumption profiles these profiles are simply too flat to generate substantial life cycle savings this paper suggests the importance of and need for substantially greater research and data collection on intergenerational transfers life cycle models of savings that emphasize savings for retirement as the dominant form of capital accumulation should give way to models that illuminate the determinants of intergenerational transfers

capital accumulation income distribution and endogenous fertility in an overlapping generations general equilibrium model abstract this paper studies the intertemporal relationships among population growth income distribution inter generational social mobility skill composition of the labor force and household income in an overlapping generations general equilibrium model that aggregates household decisions regarding fertility savings and investment in human capital of children it shows that as a consequence of endogenous fertility the equilibrium path attains steady state from the second generation income tax transfer child taxation and social security taxation policies that can be devised to affect these variables are also analyzed the model provides a structural explanation for the inverse household income child quantity and negative child quality quantity relationships that are observed in developing countries it also shows that group interests may hinder the emergence of perfect capital markets with private initiatives

endogenous fertility ricardian equivalence and debt management policy abstract the paper develops a model in which dynastic families optimally determine fertility government debt represents a tax on future generations and on childbearing the ricardian equivalence hypothesis does not hold debt is welfare reducing in that it distorts the fertility decision an increase in government debt induces a decline in fertility and an increase in the steady state capital labor ratio if a government inherits an existing stock of debt the first best policy is to eliminate the debt immediately in other situations the optimal debt management policy will not in general entail a total elimination of the debt

an empirical test of the segmented labour market theory for the netherlands in this paper an orthodox segmented labour market theory slm theory is tested by means of the data provided by the research project quality of labour 1977 zanders et al 1977 the segmented labour market theory is restricted to the dual labour market approach although a major extension is taken into account a primary segment consisting of two tiers the segments are created by making use of an objectivemethod nine quality characteristics of jobs are taken into account a number of logit estimations are carried out to test the competing theories of human capital and the segmented labour market the conclusion is that although discrimination in the labour market appears to exist the slm theory has to be rejected

the sensitivity of labor demand functions to choice of dependent variable this paper investigates whether the parameters of labor demand functions are sensitive to alternative methods of estimation the assumption that the production technology is of the generalized leontief type implies that the demand system can be estimated by analyzing cross section differences in earnings across labor markets by studying longitudinal changes in earnings within a labor market or by investigating cross section differences in labor force participation rates across labor markets the estimation of these models on the 1970 and 1980 public use samples from the u s census reveals that the estimates of labor demand functions are indeed quite robust to major specification changes this abstract was borrowed from another version of this item

immigrants in the american labor market quality assimilation and distributional effects this paper provides evidence on immigrants performance and impact in the u s labor market we document that new immigrants do bring fewer marketable skills to the united states than did earlier cohorts and that changes in the source countries of recent immigrants account for all of this decline in immigrant quality we find no important evidence that quality has declined within immigrant ethnic groups we also show that immigrants assimilate rapidly in the u s market 10 years of u s experience offsets most of the earnings disadvantage of new immigrants and that assimilation is more rapid for groups who start with lower initial wages excerpt

a framework for analyzing the impact of cohort size on education and labor earning the paper analyzes three models of labor demand solving for the change in wages of a given labor group due to a change in the size of a birth cohort when the production function includes age schooling groups as separate factors an increase in the size of one birth cohort changes the size of several labor market groups also in this case the demand effect of changing factor size is joined by a supply effect of changing schooling proportions ignoring the supply effect may cause us to overestimate the effect of a large birth cohort on wages of young skilled workers

a cointegration model of age specific fertility and female labor supply in the united states 1 introductionmodels of fertility based on economic theories of behavior have been subjected to rigorous conceptual and empirical scrutiny for surveys see olsen 1994 and macunovich 1996a for critical reviews see murphy 1992 and smith 1981 however much empirical analysis of aggregate fertility patterns in the united states has relied on traditional regression methods with little influence from recent developments in multiple time series methods appropriate for nonstationary variables although important theoretical propositions are testable with individual data understanding of trends and patterns in fertility behavior at the societal level requires aggregate analysis ryder 1980 the aggregation of individual effects to make statements about total fertility is problematic as the composition of the population changes over time some effects that are measured at the individual level may reflect changes in individuals positions within a society and these effects will not be present at the societal level alternatively social interaction may induce behavioral changes across a population that are not reflected in individual responses as described by kohler 2001 changes in societal norms and institutions can create feedback loops between aggregate variables and individual incentives toward childbearing so that effects between aggregates may exceed substantially the responses measured at the level of the household 1analysis of aggregate time series data has its own considerable challenges fertility and its determinants are most likely nonstationary time series that trend or drift persistently away from their initial values such nonstationarity may undermine classical estimation and inference with traditional regression procedures leading to spurious inferences about relations among variables furthermore the principal determinants of fertility for example women s wages and education levels female labor force participation unemployment rates and husband s incomes are quite possibly endogenously determined in conjunction with fertility decisions this problem of endogenous regressons can undermine the identifiability of the fertility model rendering the relations unestimable even if the relations are identified the problem of endogenous regressors leads to inconsistent least squares estimators of model parameters the objective of this paper is to revisit a simple economic model of fertility employing the cointegration model of johansen 1995 that is appropriate for analyzing relations between nonstationary time series johansen s procedure allows the empirical determination of the number of stationary relations and produces maximum likelihood estimators of the parameters of these relations that are consistent and normally distributed even in the presence of endogenous explanatory variables furthermore to capture information on both the level and the timing of fertility the analysis is applied to two age specific fertility rates covering the prime childbearing years of u s women 2 empirical studies of fertility with aggregate dataeconomic models of fertility are grounded in either easterlin s 1980a relative income hypothesis or the new home economics nhe of willis 1973 and becker 1981 the former theory emphasizes the role of male incomes relative to economic aspirations as the driving force behind fertility and female labor force participation economic aspirations of young adults are determined by material conditions prevailing in their parental homes during their teenage years when their parents would be close to their prime in earnings capacity an increase in relative income shifts preferences in favor of childbearing and away from labor force activity by young adult women in the full easterlin model relative income is determined by the size of the young adult cohort relative to that of prime aged adults both measured contemporaneously easterlin 1980b

social security and endogenous growth abstract this paper examines the effects of social security on the steady state growth of per capita income in an endogenous growth model in which agents care about their own consumption the number of children and the welfare of each child it shows that an unfunded program may simulate growth by reducing fertility and increasing the ratio of human capital investment per child to per family income when bequests are positive also it may cause faster growth than funded programs especially when receipts from funded programs are independent of contributions when voluntary saving is positive funded social security is neutral if receipts are linked to contributions and most likely depresses growth if receipts are independent of contributions

does environmental regulation drive away inbound foreign direct investment evidence from a quasi natural experiment in china abstract this paper investigates whether environmental regulation affects inbound foreign direct investment the identification uses the two control zones tcz policy implemented by the chinese government in 1998 in which tougher environmental regulations were imposed in tcz cities but not others our difference in difference in differences estimation explores three dimension variations specifically city i e tcz versus non tcz cities industry i e more polluting industries relative to less polluting ones and year i e before and after the tcz policy we find that tougher environmental regulation leads to less foreign direct investment meanwhile we find that foreign multinationals from countries with better environmental protections than china are insensitive to the toughening environmental regulation while those from countries with worse environmental protections than china show strong negative responses

local financial development and growth using a unique sample of net domestic product data for districts in india i investigate the connection between banking sector development human capital and economic growth at the sub national level using disaggregate data avoids many of the omitted variable problems that plague cross country studies of the finance growth connection and facilitates an instrumentation strategy the findings show that the growth of many districts in india is financially constrained due to lack of banking sector development and that the relationship between finance and growth may be non linear for the districts in the sample moving from the 75th percentile of credit net domestic product to the 25th percentile implies an average loss of 4 percent in growth over the 1990s this indicates that the gains from increased banking sector outreach may be large the analysis shows that human capital deepening can reduce the effect of the financial constraint and help decouple growth from financial development in a district at the 25th literacy percentile the implied growth loss due to a constrained banking sector is twice as large as in a district at the 75th literacy percentile thus higher levels of human capital may activate alternative growth and production channels that are less finance intensive

sociopolitical instability and the behavior of savings in less developed countries the paper argues for the introduction of sociopolitical instability as a factor in explaining saving behavior it also provides empirical evidence in regard to the quantitative and qualitative relationship between these two variables the empirical results point towards an inverse relationship between sociopolitical instability and savings our estimates are based on a sample of 7 observations from 60 countries a new pooling procedure is used to address the problems of autocorrelation and heteroskedasticity

redistribution in a decentralized economy growth and inflation in china under reform despite expanding at an annual rate of nearly 9 percent china s economy has exhibited a marked cyclical pattern periods of rapid growth accompanied by accelerating inflation are followed by contractions during which both growth and inflation fall a widening gap also emerged between the output contribution of the state sector and its share of investment and employment in this paper we offer a consistent explanation for this behavior that reflects several key institutional features of china s economic reform i economic decentralization ii the government s commitment to the state sector and iii the credit plan and credit control

empirical evidence on consumption smoothing and intergenerational transfers in this study i examine empirically intergenerational linkage in terms of resources transfers in the extended family in particular conditional on a household s and its parents or children s liquidity constraints status i look at how far the household can smooth its consumption in face of negative income shocks the permanent income hypothesis postulates that households make their consumption decisions based on their lifetime resources thus their consumption trajectory follows a smooth path in face of shocks to their income however in various tests 8 10 the unconditional form of the hypothesis has been rejected it is conjectured and generally agreed that the rejections of the hypothesis are mainly due to the presence of liquidity constraints i e capital market imperfections see zeldes 22 for a recent empirical investigation and hayashi 12 for an excellent survey moreover the works by cochrane 4 and mace 19 further confer cogency on the liquidity constraints capital market imperfections argument in testing whether households have full consumption insurance or equivalently the existence of complete markets against idiosyncratic shocks they reject their null of the existence of full consumption insurance in some of their tests

the response of aggregate production to fertility induced changes in population age distribution with a particular focus upon long term supply effects the authors explored the implications of different population age distributions for the productive capacity of an economy a multilevel aggregate production process was specified plausible values assigned to its parameters and steady state solutions obtained under a range of alternative fertility assumptions the theoretical model was calibrated to conform with canadian data and published estimates of age sex substitution elasticities the study found productive capacity to be related to age distribution although the output effects exceed 8 regardless of the structure of the economy only when total fertility rate is less than 1 6 or well above 3 0 within the range of variation productive capacity and output per capita are lower for both younger and older populations altering the elasticity of substitution between different tasks has negligible effects upon the sensitivity of the economy to changes in age distribution altering the elasticity of substitution between different age sex groups for a given task has a markedly greater effect introducing either increasing or decreasing returns to scale has only a minor effect upon the sensitivity of the economy to changes in age distribution and marginal products are quite sensitive to changes in age distribution for both younger and older workers but far less sensitive for middle aged workers

union membership determination and industry characteristics recent literature on the economics of unionism has expanded beyond its customary focus on the wage and nonwage effects of collective bargaining and given increased attention to the determinants of union membership previous union membership studies have been couched primarily within an individual choice framework whereby utility maximizing individuals choose either to join or not to join a union empirical work typically treats membership as a function of some vector of personal characteristics 1 2 10 11 21 it is our contention that such studies can best be interpreted as explaining the determination of the union status of jobs and that several industry and firm characteristics in addition to personal characteristics can be expected to affect significantly union membership in this paper theory and evidence relating to the effects of firm and industry characteristics on union membership are presented industry level data are bridged with a large microdata set containing individual characteristics in order to examine the determinants of unionism among workers in manufacturing utilizing a simultaneous model and controlling for sample selection bias we find that product market concentration capital intensity establishment size and job risk significantly affect the likelihood of union membership

savings rates and income distribution further evidence from ldcs a cross country test for the existence of kaldor effects in less developed countries is developed earlier attempts have been inconclusive and have led to a perception that the effect is unimportant it is argued that previous tests may have ben misspecified within a standard life cycle framework a savings rate function that also incorporates two distribution variables one involving measures of income inequalities across income classes and the other a broad measure of inequalities among sectors was specified and estimated the results indicate that regardless of the inequality measure employed some sort of kaldor effect may be at work this suggests that the traditional conflect between growth and equity warrants continued investigation

simultaneous equations analysis of fertility in the u s a comment comments on a study by conger and campbell which postulated a 6 equation dynamic model including a fertility equation estimated by 2 stage least squares on the basis of aggregate data for the u s the authors present a table with 3 sets of estimates for each of the 6 structural equations specified in the earlier study 2 stage least squares estimates obtained for 1946 70 and 1946 76 and the estimates obtained by conger and campbell are indicated the authors report that they were unable to obtain the results reported by the latter their estimates were quite different and did not seem to support the conclusions offered in the earlier study estimates for the longer period were substantially different from those for the shorter the authors believe that the conger campbell data also do not support the conger campbell conclusions each point is discussed with reference to the table the equations are used to evaluate fertility female participation infant mortality income education and medical expenditure

does local financial development matter we study the effects of differences in local financial development within an integrated financial market we construct a new indicator of financial development by estimating a regional effect on the probability that ceteris paribus a household is shut off from the credit market by using this indicator we find that financial development enhances the probability an individual starts his own business favors entry of new firms increases competition and promotes growth as predicted by theory these effects are weaker for larger firms which can more easily raise funds outside of the local area these effects are present even when we instrument our indicator with the structure of the local banking markets in 1936 which because of regulatory reasons affected the supply of credit in the following 50 years overall the results suggest local financial development is an important determinant of the economic success of an area even in an environment where there are no frictions to capital movements

a political economic analysis of labor migration and income redistribution we present a two country political economic model of income redistribution with internationally mobile labor migration can be exogenous and or endogenous i e determined by labor income differentials political influence is determined by the size and homogeneity of the groups where the latter can be affected by immigration we show that immigration can increase the transfers to and the income of the mobile group we also investigate the possibility of migration regulation tax transfer policy competition and coordination and finally coordination of regulation policies it is shown that the selection of any of those regimes will depend on the particular distribution of political influence among the relevant social groups in the two countries

government and the financing of health care over the past two decades government financing of health care has increased fourteenfold in 1960 prior to the enactment of the medicaid and medicare programs public expenditures on health care were 6 6 billion in 1965 they were 11 billion in 1975 56 billion and by 1979 they had reached 91 4 billion in addition there was a notable shift from state and local to federal outlays in 1960 state and local expenditures were slightly larger than federal expenditures by 1975 federal expenditures were twice the size of state local expenditures the focus of this paper is twofold i will examine both medicare and medicaid and an indirect health care subsidy namely tax expenditures this expenditure consists of losses in federal revenue resulting from tax savings for certain groups of taxpayers allowed by the tax code the logic of calling these revenue losses expenditures is that a reduction in tax liability is equivalent to an expenditure in the same way that a forgiveness of debt is equivalent to a payment congressional budget office in the case of health losses in federal revenue and thus savings to tax payers result from the exclusion of employer paid health insurance premiums from their employees taxable income and from the deductibility of certain medical expenses for the purpose of computing personal income tax liabilities regarding such tax expenditures on health as a major federal program is not a new concept nor is it unique to compare tax expenditures on health with the amounts spent on medicare and medicaid see for example martin feldstein and elizabeth allison eugene steuerle and ronald hoffman ronald vogel the contribution of the present paper is to provide better estimates of employer provided health insurance premiums and therefore tax expenditures and more importantly to show the distributional effects of each of these programs