LONG‐RUN EFFECTS OF YOUTH TRAINING PROGRAMS: EXPERIMENTAL EVIDENCE FROM ARGENTINA

We study the effect of a job training program for low‐income youth in Cordoba, Argentina. The program included life‐skills and vocational training, as well as internships with private sector employers. Participants were allocated by means of a public lottery. We rely on administrative data on formal employment, employment spells, and earnings, to establish the effects of the program in the short term (18 months), but also—exceptionally for programs of this type in Latin America and in developing countries in general—in the medium term (33 months) and in the long term (48 months). The results indicate sizable gains of about 8 percentage points in formal employment in the short term (about 32% higher than the control group), although these effects dissipate in the medium and in the long term. Contrary to previous results for similar programs in the region, the effects are substantially larger for men, although they also seem to fade in the long run. Program participants also exhibit earnings about 40% higher than those in the control group, and an analysis of bounds indicates that these gains result from both higher employment levels and higher wages. The detailed administrative records also allow us to shed some light on the possible mechanisms underlying these effects. A dynamic analysis of employment transitions indicates that the program operated through an increase in the persistence of employment rather than from more frequent entries into employment. The earnings effect and the higher persistence of employment suggest that the program was successful in increasing the human capital of participants, although the transient nature of these results may also reflect better matches from a program‐induced increase in informal contacts or formal intermediation. (JEL J08, J24, J68, O15)     

PEER PRESSURE: EXPERIMENTAL EVIDENCE FROM RESTROOM BEHAVIOR

We provide experimental evidence on the effect of peer pressure on individual behavior. Specifically, we study the effect of being exposed to an observer in a public restroom on handwashing and urinal flushing behavior. Our estimates show that being exposed to an observer increases the probability of handwashing by 13 percentage points and the probability of urinal flushing by 15 percentage points. Given that handwashing and urinal flushing have social benefits that exceed individual benefits, our findings provide support for peer pressure as an additional way of addressing the social suboptimality arising from externalities. (JEL C91, C93)     

The impact of physical activity on employment

Using cross-sectional data from 25 European countries this study estimates the probability of an individual being employed controlling for his/her participation and frequency of participation in physical activity. Accounting for endogeneity, the regional prevalence of physical activity calculated from the sample is used as an instrument for individual participation suggesting a causal effect of physical activity on employment, especially for males.     

The Impact of Job Displacement on Employer Based Health Insurance Coverage

We analyze the effect of job displacement on the probability that employer based health insurance is made available to workers. Using fixed and random effects logit models, we do find that displacement is associated with a lower probability of having access to an employer based health insurance plan. Overall this penalty is quite small (between 2 and 3 percentage points), but it becomes substantial (about 16 percentage points) for displaced workers who have been with the current employer for less than 6 months. While we do not find evidence that the penalty associated with being displaced has worsened in recent years, we do find that employers respond to economic hardship by cutting back on fringe benefits.     

Locus of Control and low-wage mobility

We investigate whether non-cognitive skills – in particular Locus of Control – are important determinants of mobility processes for male workers at the low-wage margin. Our results reveal a significant amount of state dependence in low pay even after controlling for non-cognitive skills. Furthermore, compared to individuals with an external Locus of Control, individuals with a more internal Locus of Control have a significantly higher probability of being higher-paid instead of low-paid. Conditional on being low-paid, individuals with an internal Locus of Control have a significantly higher probability of moving to higher-paid employment in the following year than individuals with an external Locus of Control. Our results suggest that having an internal Locus of Control is an important non-cognitive skill in the context of low wages. It may help individuals to avoid low-wage jobs and to move from low-paid jobs to higher-paid jobs.     

Interview: Sukaynah Salameh,director of the Vocational Development Association (VDSA), Lebanon

In this interview, Sukaynah Salameh, director of the nongovernmental Vocational Development Association (VDA) of Lebanon, states that the VDA was created to provide Palestinian and Lebanese youth with employment skills appropriate for local market conditions. The young men and women served by the VDA have had their education curtailed by 15 years of civil war and deteriorating economic conditions in their country. The situation is particularly difficult for Palestinian refugee women who face employment opportunities limited by scarce jobs, laws regulating the employment of refugees, competition by cheaper migrant labor, and women's unequal status. Most training programs provide refugee women with skills that do little but enhance their housekeeping skills. The VDA offers 6-9 month training courses using its own curricula. In addition, the VDA keeps a roster of its graduates to evaluate the usefulness of its training. This record-keeping allowed the VDA to determine that the market was being saturated with the skills they were offering. Therefore, the VDA conducted a market analysis that focused on the socioeconomic status of refugee women. This research revealed that the number of refugee girls enrolled in primary and intermediate school has gradually declined, although most young women 15-25 years old want to learn skills in order to find jobs. In order to increase the level of female enrollment in its vocational courses, the VDA decided to provide women who already have basic education skills with additional training in subjects the market is demanding, like architecture and design and computer studies. In addition, the VDA has begun an individual outreach program to promote the idea of female education and employment and has developed a network to help women find jobs.     

Does child care availability play a role in maternal employment and children’s development? Evidence from Italy

This paper investigates the effects of public child care availability in Italy in mothers’ working status and children’s scholastic achievements. We use a newly available dataset containing individual standardized test scores of pupils attending the second grade of primary school in 2009–2010 in conjunction with data on public child care availability. Our estimates indicate a positive and significant effects of child care availability on both mothers’ working status and children’s Language test scores. We find that a percentage change in public child care coverage increases mothers’ probability to work by 1.3 percentage points and children’s Language test scores by 0.85 percent of one standard deviation; we do not find any effect on Math test scores. Moreover, the impact of a percentage change in public child care on mothers’ employment and children’s Language test scores is greater in provinces where child care availability is more limited.     

SINGLE MOTHERS WORKING AT NIGHT: STANDARD WORK AND CHILD CARE SUBSIDIES

This article examines the effect of child care subsidies on the standard work decision of single mothers. Results suggest that child care subsidy receipt is associated with about a 7 percentage point increase in the probability of working at a standard job. When the effect of subsidy receipt is allowed to differ between welfare recipients and nonrecipients, results indicate that subsidy receipt has a large and positive effect among welfare recipients, whereas the effect on nonrecipients is much smaller. These findings underscore the importance of child care subsidies in helping low-income parents, especially welfare recipients, gain standard employment. ( JEL J13, I38)     

Remittances as an Insurance Mechanism in the Labor Market

The probability that Mexican households receive remittances increases in response to temporary loss of employment by household heads. Evidence indicates that the probability doubles in the short-term, with a stronger effect in the first quarter of unemployment. Taking into account inter-household transfers within Mexico, the increase in the probability of private transfers is similar in households with low and high access to migratory networks in the U. S. The effectiveness of private transfers as an insurance mechanism has been reduced in an environment of economic crisis.     

Can Benefits and Work Incentives Counseling be a Path to Future Economic Self-Sufficiency for Individuals with Disabilities?

In this paper, I estimate the relationship between benefit counseling and work incentive services and various labor market outcomes in the case of Supplemental Security Income /Social Security Disability Insurance beneficiaries who from 2003 to 2009 participated in the Vocational Rehabilitation programs in New York State. Using the propensity score matching approach, I find that counseling services can increase the probability of successful case closure by 5.2 percentage points. At the same time, these services can increase the earnings and working hours of beneficiaries by $42 and 3.3 h per week, respectively. Moreover, there is a $0.59 per hour increase in the wage rate for service recipients. From these results I conclude that providing benefit counseling and work incentive services helps beneficiaries who have strong employment goals achieve financial independence.     

Income Inequality in Host Countries and Remittances: A Discussion of the Determinants of Portuguese Emigrants' Remittances

The evolution of income inequality in host countries affects the migrants working there. As a significant number of these migrants do not earn high incomes, this evolution tends to significantly affect migrants' abilities to send money back to their home countries. We test this hypothesis considering the evolution of income inequality in 59 countries with Portuguese emigrants through observations from 1996 to 2014. Using the system generalized method of moments (GMM) estimator, we found that an increase in income inequality leads to fewer remittances per emigrant. We also controlled income inequality with several determinants of remittances, including the real GDP per capita, unemployment rate, education skills, and the self‐employment rates of the host countries.     

Return of talent programs: rationale and evaluation criteria for programs to ameliorate a 'brain drain'

The term, brain drain, describes the loss of skilled professionals and the nonreturn of students from advanced study abroad. It is now used almost exclusively in reference to mobility from less developed countries to more developed countries. Controversy centers on whether needed skills are being drawn off unfairly at subsidized rates from developing to developed countries or whether excess capability is being utilized in developed countries rather than underemployed or wasted at home. Some causes of high level personnel migration include: 1) wage differentials between sending and receiving countries; 2) absence of opportunities for career development or mobility for reasons other than merit or accomplishment; 3) lack of high quality facilities, equipment, time, and other costly supports in developing countries; 4) employer's lack of knowledge of employee work and the resulting wages; and 5) political disagreement or persecution. Prospects for closing wage gaps and upgrading working conditions on a large scale in developing countries are dim. Growth of the labor force coupled with national needs that are not congruent with professions requiring costly facilities, supplies, and equipment make this a slim possibility. Increasing career mobility possibilities seems to be a more promising route to reducing brain drain. One form of preventive measure is offering study abroad which requires service at the end of the study period; a variation is to guarantee employment for university graduates or for certain sectors, such as scientists. Restructuring decisions on hiring and promotion would have a positive effect, as would developing a better evaluation of expected productivity by type of training. Successful return of talent programs will be relatively modest in terms of the number of people returning and should be thought of as a part of human capital investment. Programs that are concerned with filling positions rather than with luring talent home are more likely to be efficient. The employing agency should be involved and should have some flexibility in negotiation with employment candidates to curb the unnecessary use of resources. In summary, return of talent programs should be used as a tool for development that reduces the incentives for nonreturn from training of for emigration by experienced professionals, not as a brain drain cure.     

EU-Mediterranean youths in the crisis: substitution vs. income effect

The economic crisis that erupted in 2008 has had particularly adverse effects on the youth labour market outcomes in the European Union Mediterranean economies. So far little evidence is available on the reaction of the young to the adverse conditions their household members faced due to the crisis. Youths could have decided to prolong or stay in education instead of participating on the labour market (substitution effect) or they could have decided to increase their participation (income effect). By using the EU Labour Force Survey data, we explore the probability of young adults changing their labour market status from (i) inactivity to employment, (ii) inactivity to unemployment, (iii) employment to education, and (iv) unemployment to education in response to labour market outcome changes in their households: (i) both parents losing the job; (ii) one of the parents losing the job, (iii) both parents becoming inactive, (iv) one of the parents becoming inactive, and (v) both parents remaining unemployed. Estimated probit models include seven EU Mediterranean countries during the 2006–2015 period. Results support both income and substitution effect, without clear identification of the dominance of one effect over the other.     

What are the likely interactions among innovation,government debt,and employment?

The study here analyzes the interactions among labor, R&D intensity, and public expenditure on education (indicators of innovation), considering public debt of countries. The study is based on 27 European countries over the 1995–2009 and applies multiple regression analysis. Main findings seem to be: a significant interaction of public expenditure on education and R&D intensity with employment rate, whereas an increase of general government consolidated gross debt has a negative interaction for employment rate as well as for technology indicators. The theoretical framework and empirical evidence suggest vital political economy implications to support employment rate during contractions of the business cycle. In particular, considering the specificity of the economic structure of countries, a fruitful lung-run political economy of growth should slowly dry out public debt by supporting GDP growth, rather than reducing government debt with high taxation and balanced-budget rules, in order to decrease frictional effects for patterns of economic, technological, and employment growth.     

HAPPINESS,GROWTH, AND PUBLIC POLICY†

If society's goal is to increase people's feelings of well‐being, economic growth in itself will not do the job. Full employment and a generous and comprehensive social safety net do increase happiness. Such policies are arguably affordable not only in higher income nations but also in countries that account for most of the population of the less‐developed world. These conclusions are suggested by an analysis of a wide range of evidence on happiness in countries throughout the world. (JEL I31, I38, O21, F20, D60, E60)     

The Economic Adjustment of Recently Arrived Bosnian,Afghan and Iraqi Refugees in Sydney,Australia1

Research on the early settlement experience of refugees from Bosnia, Iraq and Afghanistan is absent, both in Australia and overseas. The current study, based on questionnaire results and the application of SPSS results, explores the impact that pre‐migration and post‐arrival experiences have on the initial post‐arrival economic adjustment in Sydney, Australia of recently arrived refugees from these three countries. Guided by a summary of previous findings and surveyed results of key service providers in Sydney, two propositions based on pre‐migration and post‐migration background variables have been developed and tested with mixed results. As expected, there was a significant relationship between English language competency and the likelihood of being gainfully employed. However, there was, for example, no significant association between current employment status and the time spent in detention camp or the extent of negative exit conditions experienced, and there were no significant differences in employment outcomes for those with or without qualifications. This study concludes with a number of recommendations, in particular, the need for early intervention with adequate English language tuition, employment skills training and career counseling which could greatly assist humanitarian entrants in finding employment and reducing welfare dependence.     

THE FINANCIAL AND TAX EFFECTS OF MONETARY POLICY ON INTEREST RATES

Standard analysis of monetary policy effects on interest rates in terms of liquidity, income, and expectations effects is incomplete. After a change in monetary policy, substitution among securities will increase as time elapses and so reduce or eliminate financial effects caused by short-run financial market segmentation. Also, the standard expectations effect omits the transfer of income tax liability on that part of the interest payment representing a return of real capital. So a 1 percentage point increase in the expected inflation rate should increase the nominal interest rate by 1/(1 —τ) percentage points, τ being the marginal tax rate.     

Impact of Rising World Rice Prices on Poverty and Inequality in Burkina Faso

Between January 2006 and April 2008, the prices of most agricultural products rose considerably in international markets. Empirical studies show that this spike in world food prices increased the number of poor households in developing countries, but the extent was not the same in all countries. This article assesses the impact of rising rice prices on poverty and income inequality in Burkina Faso, using a methodology based on the concept of compensating variation combined with the net benefit ratio (NBR) developed by Deaton (1989) and a living standard survey (QUIBB, 2003). The results show that higher prices have a negative impact on income and poverty in the regions with a large proportion of households that are net buyers of rice. The poverty rate increases by 2.2 to 2.9 percentage points depending on the assumptions, the increase being higher in urban areas than in rural areas. Rising rice prices also increase income inequality, which increases particularly in urban areas and in relatively rich regions, but decreases in poor regions with a large proportion of rice producers.     

Labour segmentation and outmigration in Japan: Evidence using firm–worker matching data

Determinants of foreigner outmigration from host countries have attracted considerable attention. However, minimal research examines the influence of firms’ working environments. Although the third largest economy, Japan's inability to attract skilled foreign labour remains a concern. This study is the first to investigate the effect of Japanese firms’ labour segmentation practices on foreign workers’ outmigration intentions. Segmentation refers to firms’ concentration on foreigner-specific skills, regarding foreign labour as complementary to local workers. This is widely practised because of immigration policy's avoidance of substituting Japanese labour or causing unemployment. The findings suggest that although foreigner-specific skills are highly valued in Japan, segmentation could significantly increase foreign workers’ outmigration intention. The lifetime employment system in Japan, job satisfaction and original migration motivations also affect outmigration. The results indicate that Japanese policies encouraging firms to employ foreign workers as complementary may harm its attractiveness to skilled foreign labour.