THE HOME MARKET EFFECT IN INTERNATIONAL ARMS TRADE

I show that military spending contributes to international arms proliferation through a push effect: large demand encourages production growth in the domestic market if transport costs are non‐negligible. Under increasing returns to scale, the country can then supply weapons on the global market at low prices. This is a manifestation of the home market effect (HME), which states that countries with higher demand for a differentiated good will be net exporters of that good. I construct a monopolistic competition model of international trade that accounts for differences in demand across countries, and test its predictions using post‐Cold War data. (JEL F1, H5, R1)     

INTERNATIONAL TRADE AND LABOR‐MARKET DISCRIMINATION

Discrimination reduces the matching probability and output in the skill‐intensive differentiated‐product sector so that discrimination‐induced comparative advantage may overshadow technological comparative advantage in determining the pattern of trade. Trade liberalization generates a decrease in the skilled‐worker wage gap in the country that is an exporter of goods from the simple sector but increases it in the country that is a net exporter of differentiated products. Trade liberalization has an opposite effect on firms. In the country that is an exporter of simple goods, trade liberalization reduces the profits of the nondiscriminatory firms by more than those of the discriminatory firms. (JEL F16, F66, J71)     

INTERNATIONAL SUPPLY CHAINS AND THE VOLATILITY OF TRADE

Were the large import fluctuations around the 2007–2009 recession because of increasing trade volatility? I show that import volatility relative to gross domestic product (GDP) increased in the 2000s and examine whether vertical specialization (VS) trade can explain this increase. I develop and calibrate a model of VS trade that generates most of the observed increase in relative import volatility from the 1960s to the 2000s. The increase is because of GDP's shift to less volatile services production. VS trade has a negligible impact. VS causes trade to fall more in recession but also increases the share of output that is traded, leaving volatility unaffected. It increases volatility by shifting trade to more volatile sectors, but this effect is quantitatively small. (JEL E3, F1)     

INTERMARRIAGE AND THE LABOR MARKET OUTCOMES OF ASIAN WOMEN

The impact of intermarriage with natives, on labor market outcomes of immigrants, is not homogeneous across ethnic groups. Wages of Asian women are compared with non‐Asians. Both ordinary least squares and instrumental variables estimates of the effects of intermarriage on the wages of Asian women are negative and significant. Non‐Asian women earn a wage premium that becomes insignificant when controls for selection into marriage are introduced. One possible explanation for the intermarriage penalty for Asians is an income effect of having a high‐earning native husband. Intermarriage penalties rise with husband's education. Assimilation patterns of intermarried Asians indicate that they have lower initial wages, market hours, and employment, but exhibit faster rates of growth over their years of stay. The results are robust across Asian subgroups and husband's ethnicity. (JEL J16, J12, J31, J61)     

THE TERMS OF TRADE AND THE INTERNATIONAL COORDINATION OF FISCAL POLICY

This paper develops an example of a noncooperative game between fiscal authorities in two countries. The key strategic link between countries is the terms of trade. An equilibrium without cooperation is characterized by excessive tax rates and public spending levels in each country. The outcome is analogous to the Nash equilibrium of the static optimal tarif game in trade theory. But in this model there is also a dynamic distortion caused by noncooperative behaviour. This dynamic distortion depresses capital accumulation and reduces the equilibrium capital stock in each country. Numerical examples suggest a significant welfare benefit of cooperation.     

INTERNATIONAL OUTSOURCING AND THE PRODUCTIVITY OF LOW-SKILLED LABOR IN THE EU

This article presents first insights into the role of international outsourcing on the productivity of low-skilled workers in EU manufacturing. Whereas in the short run international outsourcing exhibits a negative marginal effect on real value added per low-skilled worker, the long-run parameter estimates reveal a positive impact. This may be explained by imperfections in European labor and goods markets, which prohibit an immediate adjustment in the factor employment and the output structure. The change in the outsourcing intensity since 1993 alone acounts for a long-run increase of about 6.0% in the real value added per low-skilled worker. (JEL C33 , F14 , F15 )     

LABOR FORCE COMPOSITION AND THE PHILLIPS CURVE

This paper presents a model of unemployment and wage inflation based on Phillips curves estimated by age-sex-color groups. The model is estimated using data for the period 1949–1967 with projections for the period 1968–1973. The paper concludes that when allowances are made for changes in the age-sex-color composition of the labor force the standard Phillips curve framework is quite capable of explaining the 1968–1973 period without resorting to the notion of a "natural rate of unemployment" or a "long run Phillips curve."     

LABOR MARKET REGULATION AND THE WINNER'S CURSE

This paper analyzes the impact British Columbia's 1992 Skill Development and Fair Wage Policy (SDFWP) on bid price determination. Econometric analysis of the public school projects tendered between 1989 and 1995 shows that prior to the SDFWP, the common values auction model applied, and bidders facing higher competition surcharged cost estimates in order to avoid the winner s curse. After the SDFWP, collective uncertainty concerning wages declined, and the independent values model became relevant. During this period, bidders responded to rising competition by lowering their bids. This adjustment explains, at least in part, why wage regulation did not raise bid prices. ( JEL D44, J38, L74, H57)     

TRADE COSTS AND TRADE COMPOSITION

In this paper, we investigate whether countries' trade costs act like other national endowments by affecting the composition of countries' exports. Using an econometric approach that controls for endogeneity by accounting for potentially relevant omitted variables, we find strong evidence for a sample of 37 industrialized and transition countries that national trade costs systematically affect the composition of trade and can be viewed therefore as a source of comparative advantage. Industries located in countries with low trade costs capture significantly higher shares of world exports, where this effect is stronger in trade cost intensive industries. (JEL F11, F14)     

EMPLOYER RECRUITMENT STRATEGIES AND THE LABOR MARKET OUTCOMES OF NEW HIRES

The results in this article suggest, among other things, a strong association between recruitment choices and starting wages. The theoretical framework motivating the empirical analysis is a wage‐posting game in which firms make wage offers and choose recruitment strategies while recognizing a trade‐off between hiring speed and match quality. Introducing this theoretical framework to the recruitment literature, I present new evidence on employers' choices of recruitment methods to answer the questions “How do employer recruitment choices vary by firm and vacancy characteristics and the skill requirements of jobs?” and “How do vacancy duration and starting wages vary with recruitment choices?”(JEL MS1)     

LABOR MARKET OPENNESS,H‐1B VISA POLICY,AND THE SCALE OF INTERNATIONAL STUDENT ENROLLMENT IN THE UNITED STATES

International students have long comprised an important part of U.S. higher education. However, little is known regarding the factors that encourage students from across the world to enroll in U.S. colleges and universities each year. This paper examines the relationship between international enrollment and the openness of the United States' skilled labor market, currently regulated by the H‐1B program. Gravity regressions reveal that H‐1B visa issuances to a country are positively and significantly related to the number of international students from that country. Causal estimates of the impact of labor market openness are achieved by exploiting a dramatic fall in the H‐1B visa cap in October 2003. Triple difference estimates show that the fall in the cap lowered foreign enrollment by 10%. (JEL F22, I21, J11)     

THE LABOR MARKET IN THE ART SECTOR OF BAROQUE ROME

We analyze the labor market for painters in Baroque Rome using unique data on primary sales of portraits, still lifes, genre paintings, landscapes, and figurative paintings. In line with the traditional artistic hierarchy of genres, average price differentials between them were high. The matched painter‐patron nature of the dataset allows us to evaluate the extent to which price heterogeneity is related to unobservable characteristics of painters and patrons. We find that the market allocated artists between artistic genres to the point of equalizing the marginal return of each genre. Residual price differences at the employer level can be explained in terms of incentive mechanisms to induce effort in the production of artistic quality and compensating wage differentials. (JEL C23, D8, J3, Z11)     

LABOR MARKET PERFORMANCE EFFECTS OF DISCRIMINATION AND LOSS OF SKILL

We examine the impact of discrimination on labor market performance when workers are subject to a risk of losing skills during an unemployment experience. Within a search and matching framework, we show that both natives and immigrants are affected by discrimination. Discrimination in one sector has positive spillovers, inducing employment to increase in the other sector and the effect on labor market performance therefore depends on whether discrimination is present in only one sector or in both. Discrimination may induce workers to train more or less than natives after having lost their skills, dependent upon in which sector there is discrimination. Net output tends to be most negatively affected by discrimination among high‐skilled workers. (JEL J15, J31, J61, J64, J71)     

PRODUCT QUALITY, MARKET SIGNALING AND THE DEVELOPMENT OF EAST WEST TRADE

Countertrade, a contractual form in which there is a two-way flow of goods, occupies a position of significance in East-West trade. In this paper, it is shown that countertrade can solve problems which arise when the quality of Eastern European products is unknown. Using the market signaling literature, a theory is formulated in order to make predictions concerning the use of countertrade. Countertrade will be particularly useful when quality information is important but cannot be obtained directly and when a country has a poor quality reputation. These predictions are supported by empirical tests.     

TRANSITION OF INTERNATIONAL SCIENCE,TECHNOLOGY, ENGINEERING,AND MATHEMATICS STUDENTS TO THE U.S. LABOR MARKET: THE ROLE OF VISA POLICY

I analyze how visa policies affect international students' transition to the U.S. labor market. The Optional Practical Training (OPT) program permits international students to work via a student visa for a limited period after graduation before obtaining a work visa—an uncertain process due to the binding visa cap. I find that the extension in the length of OPT terms for students in science, technology, engineering, and mathematics (STEM) increases their likelihood of initially staying in the United States and using OPT. This result suggests that uncertainties about obtaining work visas hinder international STEM students' participation in the U.S. labor market. (JEL J61, K37, I23).     

ECONOMIC GLOBALIZATION AND WOMEN'S STATUS IN THE LABOR MARKET:

This study examines the effects of economic globalization on occupational sex segregation and occupational inequality. A theory of global economic restructuring and its impact on the quality of women's work suggests that national integration into the world economy significantly expands opportunities for women in the workplace but does not remove barriers to women's advancement or ameliorate the predominance of low-paying, menial jobs held by women. Two measures of gender occupational differentiation are employed as dependent variables in cross-sectional OLS regression analyses of fifty-six countries using data from 1970–1990. Results indicate that global economic forces reduce occupational sex segregation and inequality. However, these effects are determined by a country's world system position and region. The analyses illustrate that global economic restructuring is a gendered process that transforms and builds upon existing gender inequalities. Therefore, the inclusion of global structural characteristics into comparative research on occupational sex differentiation is essential.