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

interconnectedness in the cds market concentrated risks in the market for credit default swaps cdss are widely considered to have contributed significantly to the 2007 08 financial crisis we examine the structure of the cds market using a network based approach that allows us to capture the interconnectedness between dealers and nondealers of cds contracts we find a high degree of interconnectivity among major market participants our work helps assess the stability of the cds market and the potential contagion among market participants our findings are of practical importance because even after central clearing becomes mandatory counterparty risk will remain a relevant systemic consideration owing to the long term nature of cds contracts

using local labor market data to re examine the employment effects of the minimum wage using quarterly census data for 1996 2000 the author evaluates how minimum wages affected teenage employment at the county level an analysis that includes all counties yields small and statistically insignificant effects consistent with previous research using state panels however in counties where the minimum wage was likely binding above the market clearing wage for teens the negative impact on employment was considerably larger the effect was strongest in small counties was restricted to transitory jobs and new hires and apparently was not experienced by young adults ages 19 22 the small employment effects found in much of the literature the author argues at least partly reflect the estimates inclusion of local labor markets where the minimum wage is not binding by averaging the effects across all areas with no disaggregation based on where the minimum wage is binding and where it is not these studies overlook important regional variation

anticipation of future variety reduces satiation from current experiences abstractsatiation frequently occurs from repeated consumption of the same items over time however results from five experiments show that when people anticipate consuming something different in the future they satiate at a slower rate in the present the authors find the effect in both food and nonfood consumption settings using different approaches to measure satiation this effect is cognitive specifically anticipating variety in future consumption generates positive thoughts about that future experience the authors find two boundary conditions the future consumption outcome must be 1 in a related product category and 2 at least as attractive as the present consumption outcome the authors rule out potential alternative explanations such as mere exposure to variety the possibility that the future experience is more attractive rather than just different than the current one and perceptions of scarcity associated with the item consumed in the present

who minimum wage increases bite an analysis using monthly data from the sipp and the cps 1 introduction neoclassical competitive models of firm behavior predict that wage increases reduce the quantity of labor demanded by firms and holding the wage rate constant that the least valued workers are the first fired or the last hired minimum wage legislation exogenously increases the price of labor and data from periods when the minimum wage changes can be used to empirically test its effect on the employment of vulnerable workers however a new body of research using such data suggests that minimum wage increases do not reduce employment and may even increase it card 1992a b katz and krueger 1992 card katz and krueger 1994 card and krueger 1994 1995 from a theoretical perspective this new economics of the minimum wage has been characterized as an assault on the law of demand ehrenberg 1995 if modest increases in the minimum wage have no employment effects then the appropriateness of this method in helping the working poor is strictly a distributional issue 2 however if minimum wage increases reduce employment and if the jobs lost are concentrated among the vulnerable groups the policy claims to assist then policy makers must consider this unintended consequence hence estimating the elasticity of employment with respect to minimum wage increases is more than simply an empirical test of economic theory in this paper we use monthly data from the survey of income and program participation sipp and the current population survey cps to examine the effect of raising the minimum wage on employment in contrast to much of the new minimum wage literature we find that minimum wage increases significantly reduce employment moreover we find that the elasticity of demand for labor with respect to increases in the minimum wage is greatest for the most vulnerable groups in the working age population young adults who have low levels of education young black adults and teenagers and teenagers we also find that minimum wage increases reduce the overall employment of young adults and teenagers though the estimated elasticities are smaller 2 the new economics of the minimum wage the new minimum wage literature is dominated by studies that find that minimum wage increases have an insignificant or in some cases a positive and significant effect on the employment of young adults and teenagers aged 16 24 or on other subgroups within that population card 1992a b katz and krueger 1992 card katz and krueger 1994 card and krueger 1994 1995 most of these studies have now generated replies arguing that raising the minimum wage significantly decreases employment in these populations neumark and wascher 1992 1994 1996 in press deere murphy and welch 1995 taylor and kim 1995 burkhauser couch and wittenburg in press because these new studies of the minimum wage vary widely in their techniques we focus our discussion on those that use cps data and employ an estimation strategy related to the one we use in this paper neumark and wascher 1992 1994 1996 card katz and krueger 1994 card and krueger 1995 deere murphy and welch 1995 burkhauser couch and wittenburg in press 3 specifically we review studies that use a pooled time series cross sectional approach to estimate the employment effects of minimum wage increases on vulnerable groups such as teenagers with cps data deere murphy and welch 1995 also use pooled repeated cross sectional data from the cps to estimate the impact of minimum wage increases but their specification differs in some important ways from the studies discussed above deere murphy and welch 1995 estimate the effect of minimum wage increases over the period from 1985 through 1993 they construct intervals of monthly data from 1985 through 1993 that begin on the first day of april of each year and end on the last day of match during the following year for each interval they create annual averages of variables

learning from mixed feedback anticipation of the future reduces appreciation of the present consumers can evaluate their past choices by comparing their obtained outcome to other possible outcomes we demonstrate that how people process this comparative feedback depends on whether they use it to prepare for future decisions in particular the anticipation of similar future choices increases consumers sensitivity to comparisons with better alternatives and reduces their liking of the chosen option our findings indicate that forward looking consumers selectively test the hypothesis that their current choice can be improved on and as a result disproportionately attend to the unfavorable comparisons and fail to appreciate the value of their current choice

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

using regional variation in wages to measure the effects of the federal minimum wage the imposition of a national minimum wage standard provides a natural experiment in which the treatment effect varies across states depending on the fraction of workers initially earning less than the new minimum the author exploits this fact to evaluate the effect of the april 1990 increase in the federal minimum wage on teenagers wages employment and school enrollment comparisons of grouped and individual state data confirm that the rise in the minimum wage increased teenagers wages there is no evidence of corresponding losses in teenage employment or changes in teenage school enrollment

the economic impacts of minimum wage laws a new look at an old question this article uses a radically different methodology to address the question of the impact of minimum wage laws on employment and earnings the methodology uses the adult wage structure which exists prior to a change in the federal minimum wage to identify the members of the subminimum wage population this allows the parameterization of the disemployment effects of the minimum wage amendment on the subminimum population and the spillover employment effects on the above minimum population the members of the subminimum population are found to experience considerably reduced employment probabilities and annual hours worked conditional on employment some evidence of above minimum spillover effects is also found the paper evaluates the impact of the minimum on the earnings distribution and concludes that the burden of the minimum wage falls most severely on females this effect on adult females is surprisingly neutral with respect to race the greatest beneficiaries of the minimum among the adult populati

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

securitization and bank performance theory suggests that securitization provides financial institutions with an opportunity to lower the cost of funding improve credit risk management and increase profitability in practice however it might lead to adverse consequences through a number of indirect channels therefore the net impact of securitization on bank performance is ambiguous this study aims to evaluate whether banks improve their performance through the use of the securitization market by applying a propensity score matching approach in other words we build a counterfactual group of banks to assess what would have happened to the securitizing banks had they not securitized using us commercial banking data from 2001 to 2008 we first test these hypotheses using univariate analysis and find that securitizing banks are on average more profitable institutions with higher credit risk exposure and higher cost of funding however the propensity score matching analysis does not provide evidence of significant causal effects of securitization on the performance of banks therefore securitization does not seem to outperform alternative funding risk management and profitability improvement techniques used by banks that have ex ante similar characteristics to those securitizing our evidence raises important questions about the motives for banks increasing securitization activities and consequent implications for the banking system

the effect of the tipped minimum wage on employees in the u s restaurant industry according to federal law in 2013 employers can take a credit of up to 5 12 for tips received by workers in satisfying the minimum wage requirement of 7 25 this article uses interstate variation in laws regarding tip credits and minimum wages to identify the effects of reducing or eliminating the tip credit on employment hours and earnings in the u s restaurant industry using data from the quarterly census of employment and wages and the current population survey we find that a reduction in the tip credit increases weekly earnings but reduces employment in the full service restaurant industry and for tipped workers the results are robust to controls for spatial heterogeneity in employment trends and are supported by a series of falsification tests

small business loan securitization and interstate risk sharing do credit risk transfers in general and loan sales and securitizations in particular by financial institutions enhance credit availability and financial stability or do they allow assets of poor credit quality to spread to unprotected investors and thus create financial crises and destroy values in this paper we contribute to the continuing debate by examining the effect of small business loan securitizations on interstate personal income insurance using data of u s banks for the period 1995 2008 we find that small business loans securitizations contribute to the smoothening of state personal income volatility and that this contribution is stronger in states where small businesses play a more important role in the local economy

off balance sheet activity under adverse selection the european experience abstract in the crisis that started in 2007 banks off balance sheet activity has been blamed for flooding the market with low quality assets and contributing to spreading risk throughout the economic system nevertheless this view is hardly sustainable within the context of sophisticated markets this paper puts forward an alternative interpretation of the off balance sheet market the so called adverse selection hypothesis according to this hypothesis an adverse selection problem characterizes the relation between banks and their counterparties in off balance sheet deals empirically this implies that off balance sheet activity is expected to be negatively related to failure risk whereas it is expected to be positively related to the quality of the assets used for off balance sheet operations we test the adverse selection hypothesis for a sample of banks in the 27 member countries of the european union during the pre crisis period 1996 2006 and the crisis period 2007 2009 in addition we check for possible differences between banks in the first 15 members of the european union and those in the 12 new members

wage shocks and the technological substitution of low wage jobs we extend the task based empirical framework used in the job polarization literature to analyze the susceptibility of low wage employment to technological substitution we nd that increases in the cost of low wage labor via minimum wage hikes lead to relative employment declines at cognitively routine occupations but not manuallyroutine or non routine low wage occupations this suggests that low wage routine cognitive tasks are susceptible to technological substitution while the short run em

reflections on northern rock the bank run that heralded the global financial crisis in september 2007 television viewers and newspaper readers around the world saw pictures of what looked like an old fashioned bank run that is depositors waiting in line outside the branch offices of a united kingdom bank called northern rock to withdraw their money the previous u k bank run before northern rock was in 1866 at overend gurney a london bank that overreached itself in the railway and docks boom of the 1860s bank runs were not uncommon in the united states up through the 1930s but they have been rare since the start of deposit insurance backed by the federal deposit insurance corporation in contrast deposit insurance in the united kingdom was a partial affair funded by the banking industry itself and insuring only a part of the deposits at the time of the run u k bank deposits were fully insured only up to 2 000 pounds and then only 90 percent of the deposits up to an upper limit of 35 000 pounds when faced with a run the incentive to withdraw one s deposits from a u k bank was therefore very strong for economists the run on northern rock at first seemed to offer a rare opportunity to study at close quarters all the elements involved in their theoretical models of bank runs the futility of public statements of reassurance the mutually reinforcing anxiety of depositors as well as the power of the media in galvanizing and channeling that anxiety through the power of television images however the storyline of the northern rock bank run does not fit the conventional narrative on september 13 2007 the bbc s evening television news broadcast first broke the news that northern rock had sought the bank of england s support the next morning the bank of england announced that it would provide emergency liquidity support it was only after that announcement that is after the

international diversification an extreme value approach abstract international diversification has costs and benefits depending on the degree of asset dependence we study international diversification with two dependence measures correlations and extreme dependence we discover that dependence has typically increased over time and document mixed evidence on heavy tails in individual countries moreover we uncover three additional findings related to dependence first the timing of downside risk differs depending on the region surprisingly recent latin american returns exhibit little downside risk second latin america exhibits a great deal of correlation complexity third according to the empirical results correlation does not vary with returns but extreme dependence does vary monotonically with regional returns our results are consistent with a tradeoff between international diversification and systemic risk they also suggest international limits to diversification and that international investors demand some compensation for joint downside risk during extreme events

do minimum wage increases influence worker health this study investigates whether minimum wage increases impact worker health in the united states we consider self reported measures of general mental and physical health we use data on lesser skilled workers from the 1993 to 2014 behavioral risk factor surveillance survey among men we find no evidence that minimum wage increases improve health instead we find that such increases lead to worse health outcomes particularly among unemployed men we find both worsening general health and improved mental health following minimum wage increases among women these findings broaden our understanding of the full impacts of minimum wage increases on lesser skill workers jel i1 i11 i18

are minimum wages a silent killer new evidence on drunk driving fatalities abstract in volume 94 of this review adams blackburn and cotti abc using fatal accident reporting system data from 1998 to 2006 find that a 10 increase in the minimum wage is associated with a 7 to 11 increase in alcohol related fatal traffic accidents involving teen drivers we find this result does not hold when the analysis period is expanded to include 1991 through 2013 in addition auxiliary analyses provide no support for income driven increases in alcohol consumption the primary mechanism posited by abc together our results suggest that minimum wage increases are not a silent killer

are the effects of minimum wage increases always small a reanalysis of sabia burkhauser and hansen in a 2012 article sabia burkhauser and hansen reported very large negative effects of the 2004 to 2006 increase in the new york state minimum wage on the employment of young less educated workers hoffman reexamines their estimates using data from the full current population survey cps rather than the smaller cps morg files they used and finds no evidence of a negative employment impact the full cps which is the source of u s official labor market statistics is certainly the more appropriate and reliable data source furthermore when hoffman repeats the analysis using three states and the district of columbia which also had a substantial increase in the state minimum wage in the same time period he finds evidence of a small positive employment effect together the two findings are consistent with other more recent research that reports very weak or zero employment effects of the minimum wage

booms and banking crises banking crises are rare events that break out in the midst of credit intensive booms and bring about deep and long lasting recessions this paper presents a textbook dynamic stochastic general equilibrium model to explain these phenomena the model features a nontrivial banking sector where bank heterogeneity gives rise to an interbank market moral hazard and asymmetric information in this market may lead to sudden market freezes banking crises credit crunches and severe financial recessions those recessions follow credit booms and are not necessarily triggered by large exogenous adverse shocks

the effect of discount frequency and depth on consumer price judgments the intensity of price discounting by retailers and manufacturers raises important questions about consumer price judgments in the extreme discounting can take the form of frequent but shallow discounts or deep but infrequent discounts the research reported here explores the effects of these strategies on consumer estimation of price levels for competing stores and brands in an initial experiment in which subjects made brand choices over time a depth effect was observed that contrasted with the frequency effect found in previous research subsequent experiments identified the conditions under which depth vs frequency characteristics of price data dominate consumers price estimation judgments frequency information is more influential when sets of interstore or interbrand comparative prices exhibit complex and overlapping distributions hence creating processing difficulty in contrast a depth bias occurs when prices have a simpler dichotomous distribution these results place pragmatically meaningful limitations on the influence of frequency information and illustrate the importance of context in determining consumer price judgments in a promotional environment

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

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

a reassessment of the new economics of the minimum wage literature with monthly data from the current population survey we estimate the employment effects of federal minimum wage increases using monthly current population survey cps data from 1979 through 1997 we find that the empirical differences in the new minimum wage literature based on cps data primarily can be traced to alternative methods of controlling for macroeconomic conditions we argue that the macroeconomic controls commonly included in models where no employment impact is found are inappropriate we consistently find a significant but modest negative relationship between minimum wage increases and teenage employment using alternative controls or allowing employer responses to the policy to occur with some delay

do minimum wages fight poverty i introduction one of the most compelling rationales for a national minimum wage floor is to raise the incomes of poor or near poor families with members in the workforce this general point however is often missed in the debates over the merits of a higher minimum wage in contrast to these oft stated distributional goals much of the focus in such debates has been on the employment effects of minimum wages especially among the teenage population in large part this focus is probably attributable to the extensive body of economic research on the effects of minimum wages on employment of low skilled workers however although negative employment effects represent a cost of minimum wages such costs do not necessarily imply that minimum wages constitute bad social policy in particular the employment losses associated with a higher minimum wage may be more than offset by positive effects on low income families especially if minimum wages are a significant factor in helping move families out of poverty 1 this is not to argue that research on employment effects of minimum wages is irrelevant but such research may be more important as a test of the theory of labor demand and as a method of learning how employers and individuals adjust to exogenous wage increases than as a method of assessing the wisdom of the policy in addition we do not mean to suggest that the short run effects of minimum wages on the incomes of poor families should be the sole criterion for evaluating such policies other studies have found evidence suggesting for example that minimum wage increases reduce school enrollment rates and training neumark and wascher 1996a hashimoto 1982 factors that may affect longer run earnings or earnings growth these deleterious longer run effects might offset the benefits of shorter run effects of minimum wages on family incomes nonetheless our perception is that potential increases in the incomes of poor families provide the main motivation for raising the minimum wage making it important to assess the evidence on whether minimum wage increases achieve this goal in this regard there are two questions that pertain to the influence of minimum wages on family incomes generally and on poverty in particular first there is the question of the effects of minimum wages on low wage workers that is do the wage gains received by employed workers more than offset the lost earnings suffered by those who lose or cannot find jobs 2 second there is the question of how minimum wages affect workers in different parts of the family income distribution because many roughly speaking a large minority of minimum wage workers are in relatively affluent families gramlich 1976 card and krueger 1995 burkhauser et al 1996 which workers gain and which lose will have an important influence on the effects of minimum wages on the distribution of family incomes in this article we present evidence on the effects of minimum wages on family incomes focusing in particular but not solely on the effectiveness of minimum wages in reducing poverty using matched march current population surveys cpss we estimate the effects of minimum wages on the probabilities of various transitions in the family income distribution such as transitions into and out of poverty given that federal changes in minimum wages may be confounded with other aggregate level shocks influencing family income we rely heavily on state level changes in minimum wages to identify minimum wage effects in a nutshell our empirical strategy is to compare rates of transition through the family income distribution in states in which minimum wages do and do not increase for example if poor families are more likely to escape from poverty when minimum wages increase in their states of residence we would infer that minimum wage hikes help families move out of poverty on the other hand if transitions in to poverty are more common when minimum wages increase we would infer that the disemployment effects of minimum wages play a dominant role among the low income population

the minimum wage and the great recession evidence of effects on the employment and income trajectories of low skilled workers abstract we estimate the minimum wage s effects on low skilled individuals employment and income trajectories following the great recession our approach exploits two dimensions of the data we analyze first we compare individuals in states that were fully bound by the 2007 to 2009 increases in the federal minimum wage to individuals in states that were not second we use variation in the minimum wage s bite across skill groups to separate our samples into target and within state control groups using the 2008 panel of the survey of income and program participation we find that binding minimum wage increases had significant negative effects on the employment and income growth of targeted workers although there are important limitations to our research designs our estimates are robust to adopting a range of alternative strategies to construct our analysis samples and to account for variation in the great recession s underlying severity across states in aggregate our estimates suggest that this period s minimum wage increases reduced aggregate employment rates by at least half of a percentage point in states that were bound by the federal minimum wage increases because our estimates are large relative to what one would infer from past research we emphasize the relevance of the historical episode we analyze

securitization risk transferring and financial instability the case of spain abstract the 2007 2010 financial crisis has hit a variety of countries asymmetrically the case of spain is particularly illustrative as it exemplifies in a vivid manner most of the core issues largely responsible for the crisis this country experienced a pronounced housing bubble partly funded via spectacular developments in its securitization markets leading to looser credit standards and subsequent financial stability problems we analyze the sequential deterioration of credit in spain considering rating changes in securitized deals using a sample of 20 286 observations on securities and rating changes from 2000q1 to 2010q1 we build a model in which loan growth on balance sheet credit quality and rating changes are estimated simultaneously our results suggest that loan growth significantly affects on balance sheet loan performance with a lag of at least two years additionally loan performance is found to explain rating changes with a lag of four quarters importantly bank characteristics in particular observed solvency cash flow generation and cost efficiency also affect ratings considerably additionally these other bank characteristics seem to a higher weight in the rating changes of securities issued by savings banks as compared with commercial banks

an empirical analysis of internal and external reference prices using scanner data single source yogurt data are used to examine whether both internal and external reference prices affect purchase decisions internal reference prices are memory resident prices based on actual fair or other price concepts external reference prices are observed stimuli such as regular prices that stores may display along with a sale price for comparability discrete choice models with variables representing the two types of reference prices are estimated and both types of variables are found to have significant effects on purchase probabilities this suggests that consumers may use multiple reference points in evaluating price in purchase decisions in addition a model using an indicator of a sale price discount explains purchase probabilities as well as one that models the actual discount which suggests that consumers may be reacting to the indication of savings rather than to the amount of the discount

emergence of a core periphery structure in a simple dynamic model of the interbank market abstract this paper studies a simple dynamic model of interbank credit relationships starting from a given balance sheet structure of a banking system with a realistic distribution of bank sizes the necessity of establishing interbank credit connections emerges from idiosyncratic liquidity shocks banks initially choose potential trading partners randomly but over time form preferential relationships via an elementary reinforcement learning algorithm as it turns out the dynamic evolution of this system displays a formation of a core periphery structure with mainly the largest banks assuming the roles of money center banks mediating between the liquidity needs of many smaller banks statistical analysis shows that this evolving interbank market shares the majority of the salient characteristics of interbank credit relationship that have been put forth in recent literature preferential interest rates for borrowers with strong attachment to a lender may prevent the system from becoming extortionary and guarantee the survival of the small peripherical banks

securitization and lending competition we study the eects of securitization on interbank lending competition when banks see private signals of local applicants repayment chances if banks cannot securitize the outcome is e cient they lend to their most creditworthy local applicants with securitization banks lend also to remote applicants with strong observables in order to lessen the lemons problem they face in selling their securities this reliance on observables is ine cient raises the mean default risk and may lead to a deceptive rise in credit scores

shadow banks and macroeconomic instability we develop a macroeconomic model in which in which commercial banks can o oad risky loans to a highly levered shadow banking sector and financial intermediaries trade in securitized assets we highlight the liquidity creation role played by securitization we show how an endogenous tightening of credit constraints can exacerbate the e ect of shocks by limiting the ability of shadow banks to supply collateral and of banks to securitize the model is able to reproduce the cyclical behavior of bank and non bank credit and leverage macroeconomic shocks that directly impact the worth of financial sector are particularly harmful to economic activity but purely redistributive intra financial shocks can also generate recessions we discuss how government policy can stabilize the securitization market when the shadow banking system becomes impaired

minimum wages and poverty will a 9 50 federal minimum wage really help the working poor using data drawn from the march current population survey we find that state and federal minimum wage increases between 2003 and 2007 had no effect on state poverty rates when we then simulate the effects of a proposed federal minimum wage increase from 7 25 to 9 50 per hour we find that such an increase will be even more poorly targeted to the working poor than was the last federal increase from 5 15 to 7 25 per hour assuming no negative employment effects only 11 3 of workers who will gain live in poor households compared to 15 8 from the last increase when we allow for negative employment effects we find that the working poor face a disproportionate share of the job losses our results suggest that raising the federal minimum wage continues to be an inadequate way to help the working poor

are the effects of minimum wage increases always small new evidence from a case study of new york state the authors estimate the effect of the 2004 6 new york state nys minimum wage increase from 5 15 to 6 75 per hour on the employment rates of 16 to 29 year olds who do not have a high school diploma using data drawn from the 2004 and 2006 current population survey they employ difference in difference estimates to show that the nys minimum wage increase is associated with a 20 2 to 21 8 reduction in the employment of less skilled less educated workers with the largest effects on those aged 16 to 24 their estimates imply a median employment elasticity with respect to the minimum wage of around 0 7 large relative to previous researchers estimates the authors findings are robust to their choice of geographically proximate comparison states the use of a more highly skilled within state comparison group and a synthetic control design approach moreover their results provide plausible evidence that state minimum wage increases can have substantial adverse labor demand effects for low skilled i

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

leveraged network based financial accelerator abstract in this paper we build on the network based financial accelerator model of delli gatti et al 2010 modelling the firms financial structure following the dynamic trade off theory instead of the packing order theory moreover we allow for multiperiodal debt structure and consider multiple bank firm links based on a myopic preferred partner choice in case of default we also consider the loss given default rate lgdr we find many results i if leverage increases the economy is riskier ii a higher leverage pro cyclicality has a destabilizing effect iii a pro cyclical leverage weakens the monetary policy effect iv a central bank that wants to increase the interest rate should previously check if the banking system is well capitalized v an increase of the reserve coefficient has an impact similar to that produced by raising the policy rate but for the enlargement of bank reserves that improves the resilience of the banking system to shocks

international diversification a copula approach abstract the viability of international diversification involves balancing benefits and costs this balance hinges on the degree of asset dependence in light of theoretical research linking diversification and dependence we examine international diversification using two measures of dependence correlations and copulas we document several findings first dependence has increased over time second we find evidence of asymmetric dependence or downside risk in latin america but less in the g5 the results indicate very little downside risk in east asia third east asian and latin american returns exhibit some correlation complexity interestingly the regions with maximal dependence or worst diversification do not command large returns our results suggest international limits to diversification they are also consistent with a possible tradeoff between international diversification and systemic risk

the influence of prior beliefs frequency cues and magnitude cues on consumers perceptions of comparative price data a widespread practice in grocery store advertising is to compare the advertised store s prices to a competitor s prices on multiple items an important but largely unexplored issue is how this information is processed and used in conjunction with prior beliefs to influence price perceptions in our initial studies we manipulated prior beliefs and two data based cues frequency of price advantage and magnitude of price advantage to determine their relative influence on consumer price perceptions results indicate that prior beliefs affected price perceptions but that the frequency cue exerted a dominating influence several follow up studies demonstrate the robustness of this phenomenon across a variety of presentational and instructional conditions

when good measurement goes wrong new evidence that new york state s minimum wage reduced employment hoffman s 2015 replication of sabia burkhauser and hansen sbh 2012 suggests that unlucky measurement error in low skilled employment in the current population survey outgoing rotation group

the employment effect in retail trade of california s 1988 minimum wage increase in this article we study the labor market effect of california s 1988 minimum wage increase in the retail trade industry two different approaches to evaluating the minimum wage effects suggest that the textbook economic analysis of minimum wages pertains employment growth in california s low wage retail trade sector appears to have been tempered by the minimum wage increase

systemic risk in financial systems we consider default by firms that are part of a single clearing mechanism the obligations of all firms within the system are determined simultaneously in a fashion consistent with the priority of debt claims and the limited liability of equity we first show via a fixed point argument that there always exists a clearing payment vector that clears the obligations of the members of the clearing system under mild regularity conditions this clearing vector is unique next we develop an algorithm that both clears the financial system in a computationally efficient fashion and provides information on the systemic risk faced by the individual system firms finally we produce qualitative comparative statics for financial systems these comparative statics imply that in contrast to single firm results even unsystematic nondissipative shocks to the system will lower the total value of the system and may lower the value of the equity of some of the individual system firms

the solvency of financial institutions in spain lessons from securitization on analysing a sample of spanish banks we find that securitization has a slightly negative impact on the soundness of the issuing entity an unbalanced dynamic panel model was estimated using the forward orthogonal deviations gmm method and used to analyse 537 traditional securitizations issued by 61 banks between 1998 and 2012 the analysis revealed that the entities soundness became weaker immediately prior to the crisis but this effect became insignificant after 2007 securitization has facilitated a process of regulatory capital arbitrage leading to lower capital requirements while at the same time giving rise to a slight worsening of the quality of the originators portfolios it was found that profitability liquidity and inflation positively affect solvency while changes in short term interest rates affect it negatively

revisiting the minimum wage employment debate throwing out the baby with the bathwater we revisit the minimum wage employment debate which is as old as the department of labor in particular we assess new studies claiming that the standard panel data approach used in much of the new minimum wage research is flawed because it fails to account for spatial heterogeneity these new studies use research designs intended to control for this heterogeneity and conclude that minimum wages in the united states have not reduced employment we explore the ability of these research designs to isolate reliable identifying information and test the untested assumptions in this new research about the construction of better control groups our evidence points to serious problems with these research designs we conclude that the evidence still shows that minimum wages pose a tradeoff of higher wages for some against job losses for others and that policymakers need to bear this tradeoff in mind when making decisions about increasing the minimum wage

the effect of plausible and exaggerated reference prices on consumer perceptions and price search this article examines whether advertisers regular price claims affect consumer perceptions and price search behavior experiments involving simulated shopping via personal computers indicate that compared to an ad with no reference price an ad with a plausible reference price raised subjects estimates of the advertiser s regular price and the perceived offer value an exaggerated reference price had generally the same positive effects on perception as a plausible reference price even for the more skeptical subjects further when subjects were presented with an advertised sale price above the lowest expected price the exaggerated reference price increased the percentage of subjects who purchased the product from the advertiser without checking other stores prices

leverage and asset bubbles averting armageddon with chapter 11 an iconic model with high leverage and overvalued collateral assets is used to illustrate the amplification mechanism driving asset prices to overshoot equilibrium when an asset bubble bursts threatening widespread insolvency and what richard koo calls a balance sheet recession besides interest rates cuts asset purchases and capital restructuring are key to crisis resolution the usual bankruptcy procedures for doing this fail to internalise the price effects of asset fire sales to pay down debts however we discuss how official intervention in the form of super chapter 11 actions can help prevent asset price correction causing widespread economic disruption

a generalized utility model of disappointment and regret effects on post choice valuation in this paper we show that performance information about forgone alternatives i e alternative that were considered but not chosen can have a significant impact on post choice valuation our approach introduces a new and parsimonious way of looking at satisfaction that combines the literature on post choice valuation with research regarding generalized expected utility theory while the post valuation literature focuses on the selected brand as the valuation s basis e g anderson and sullivan anderson e w m w sullivan 1993 the antecedents and consequences of customer satisfaction for firms marketing sci 12spring 125 143 bolton and drew bolton r j drew 1991 a multistage model of customers assessments of service quality and value j consumer res 17 375 384 we draw on a stream of research in generalized expected utility theory that considers both chosen and forgone alternatives as the basis for valuation e g bell bell d 1983 risk premiums for decision regret management sci 29 1156 1166 and bell d 1985 disappointment in decision making under uncertainty oper res 33 1 27 loomes and sugden loomes g r sugden 1982 regret theory an alternative theory of rational choice under uncertainty the econom j 92 805 824 and loomes g r sugden 1986 disappointment and dynamic consistency in choice under uncertainty rev econom stud 53 271 282 the result is a combined model of post choice valuation that explicitly incorporates both concepts specifically we extend the existing paradigm of post choice valuation to include buyers regret concerning forgone alternatives proposing a generalized utility theory based treatment of post choice product assessment that uses the intuitively appealing concepts of disappointment and regret as the basis we propose a model for conceptualizing post choice valuation that is consistent with the existing literature discuss how this model extends the construct to consider the influence of forgone alternatives and report results of an empirical test that contrasts our model to important recent work in the area e g boulding et al boulding w a kalra r staelin v a zeithaml 1993 a dynamic process model of service quality from expectations to behavioral intentions j marketing res 30february 7 27 our generalized model of post choice valuation is based on the sum of three components that represent factors that may contribute to consumers assessment of a chosen product or service the first component is expected performance the second component is disappointment which captures the discrepancy between actual and expected performance much as the disconfirmation construct in traditional satisfaction research the third component is regret which captures the difference between the performance of the chosen product service and the performance of a forgone product service this perspective is useful in that risk is captured by the disappointment and regret terms providing an intuitively appealing decomposition of post choice valuation and offering several advances over previous representations of disappointment and regret we test our model via a choice experiment participants in the empirical study were asked to make choices between successive lottery pairs they were then given outcome feedback on the forgone alternative as well as on the chosen alternative in each lottery pair immediately following outcome feedback for each choice subjects were asked to evaluate their decision our results clearly suggest an effect of regret on post choice valuation information about the forgone alternative influenced subjects valuation of the chosen alternative we also find evidence that as predicted the effects of disappointment and regret on post choice valuation are asymmetric specifically the negative effect of disappointment on post choice valuation was greater than the positive effect of elation similarly the negative effect of regret was greater than the positive impact of rejoicing our research offers five contributions to the literature on post choice valuation first our results illustrate the advantage of using generalized utility theory as the basis for conceptualizing and modeling post choice valuation we derive a model of post choice valuation that formally captures the components of disappointment and regret and show that the outcome of both the chosen alternative through disappointment and a forgone alternative through regret can influence the chosen alternative s valuation second we formally integrate the concepts of disappointment and regret which have been examined separately for many years into a single model based on a multiattribute preference structure third we argue that the effects of disappointment and regret on post choice valuation are asymmetric and present empirical evidence in this regard fourth our results suggest that word of mouth regarding forgone alternatives may affect post choice valuation extending research that has not heretofore considered forgone outcomes role in this process finally our development provides a preconsumption measure of potential disappointment and regret in modeling choice at the time of choice consumers may visualize the feelings of disappointment and or regret that will be derived at consumption taking into account both the chosen brand and forgone brands our generalized utility theory based approach to the post choice valuation construct can be useful in examining the role of disappointment and regret as preconsumption constructs

securitisation and financial stability a widespread opinion before the credit crisis of 2007 8 was that securitisation enhances financial stability by dispersing credit risk after the credit crisis securitisation was blamed for allowing the hot potato of bad loans to be passed to unsuspecting investors both views miss the endogeneity of credit supply securitisation enables credit expansion through higher leverage of the financial system as a whole securitisation by itself may not enhance financial stability if the imperative to expand assets drives down lending standards the hot potato of bad loans sits in the financial system on the balance sheets of large banks rather than being sold on to final investors since the aim of financial intermediaries is to expand lending in order to utilise slack in balance sheet capacity