Assessing the effects of an early retirement program

We investigate induced retirement effects of the Norwegian early retirement program AFP and emphasize effects caused by relocations of some individuals from disability pension and unemployment to AFP. Theoretical considerations predict that AFP unambiguously induces more early retirement. Analyzing Norwegian register data 1994–96 with parametric and non-parametric methods, we demonstrate that i) economic incentives influence the retirement decision, ii) there is a significant net induced retirement effect, iii) by a conservative judgment, at least 50% of the AFP retirees would have stayed in the labor force without the scheme.All correspondence to Espen Bratberg. We are indebted to the referees for detailed remarks, which significantly improved the paper. Financial support from the Norwegian Research Council and the Ministry of Health and Social Affairs is greatly appreciated. We are grateful for valuable comments from Erik Hernæs and Astrid Grasdal, seminar participants at the Norwegian School of Management in Oslo, the Institute for International Economic Studies in Stockholm, and the University of Linz, the 2000 Conference of the European Society for Population Economics in Bonn, and the German-Norwegian Seminar on Social Insurance in Berlin, 2000. Bratberg would also like to thank the Humboldt University for its hospitality during a stay in the winter of 2003. Responsible editor: Christoph M. Schmidt.     

Labor market effects of immigration in the United States and Europe: substitution vs. complementarity

This paper examines the impact of immigrants on the income of various groups of resident workers in the United States and Europe. Our approach features the use of a production technology incorporating education, experience, and unskilled labor as inputs. This contrasts with the assumption used in earlier studies that native-born and immigrant labor are distinct inputs into production. We find that in both United States and European production, education, unskilled labor and experience are complementary inputs. Based on these results, simulations of the impact of immigration on residents are carried out. The absolute magnitude of these effects is found to be very small.This paper was presented at the Centre for Economic Policy Research Workshop, The Economics of International Migration: Econometric Evidence, February 26 and 27, 1993, Konstanz, Germany. We benefitted from the discussion at the conference and, particularly, the comments of Anton Muscatelli. We thank three referees and the managing editor of this journal for their suggestions. We also thank Selig Sechzer for his significant contributions to the empirical analysis in this paper. Ira Gang's work was partially supported by the Rutgers University Research Council.     

Public policy and the labor market adjustment of new immigrants to Australia

Two separate cohorts of immigrants to Australia are compared in order to assess the potential role of immigrant selection criteria, labor market conditions, and income-support policy in facilitating the labor market adjustment of new arrivals. Although these two cohorts entered Australia only five years apart, their initial labor market outcomes varied dramatically. The results indicate that changes in immigration policy may have led to increased human capital endowments that in turn resulted in higher participation rates and reduced unemployment. At the same time, improvement in Australian labor market conditions and changes in income-support policy over the 1990s – which most likely altered the returns to human capital – were probably instrumental in reinforcing the effects of tighter immigrant selection criteria. As much as half of the fall in unemployment rates among women and one third the decline among men appears to have occurred as the result of changes in the returns to demographic and human capital characteristics. Responsible editor:Christoph M. Schmidt     

Immigrant and native responses to welfare reform

We investigate the effect of welfare reform in the US on the employment and hours of work of low-educated foreign-born and native-born women. For foreign-born women, we investigate whether the effect of welfare reform differed by year of immigration. We also examine whether the immigrant provisions of welfare reform had a chilling effect on those who remained eligible for benefits. Results suggest that welfare reform induced low-educated women to increase their labor market attachment; reform had larger effects on the least educated native-born women and among foreign-born, larger effects on more recent arrivals. The chilling hypothesis is not supported.All correspondence to Robert Kaestner. The authors thank Lynn Karoly, Christoph Schmidt, seminar participants at the University of Illinois and New School University, and several anonymous referees for comments on a previous draft of this paper. Robert Kaestner is grateful to the Luce Foundation for partial support for this research. Responsible editor: Christoph M. Schmidt.     

Factors Affecting Birth Rates among White Women 20–24 Years of Age: A Trend Analysis (January 1972–march 1992)

Using Current Population Survey data, Vital and Health Statistics data, photoperiod data and temperature data, this article attempts to provide an interdisciplinary explanation of monthly (N = 243) variation in the dependent variable representing the birth rate (the rate of conceptions that become live births) for white women 20–24 years of age. Among the selected explanatory variables, four were found to play significant roles in accounting for the variation of the birth rate. They were rates of female absence from the labor market (nonparticipation plus unemployment), male employment rates, length-of-night variations and the days in the month of conception. Rainwater's concept of validating activities (1974) and recent quality of life research regarding domains serve as a basis for development of the concepts compensatory validation and contextual compatibility. Research and policy implications are discussed.     

Interstate migration of the US poverty population: Immigration “pushes” and welfare magnet “pulls”

This study evaluates the social and demographic structure of poverty migration during the 1985–90 period based on an analysis of recent census data. Particular attention is given to the roles of two policy-relevant factors that are proposed to be linked to poverty migration. The first of these is the role of immigration from abroad and its effect on the net out-migration of longer-term residents with below-poverty incomes, from States receiving the highest volume of immigrants. Such a response, it is argued, could result from job competition or other economic and social costs associated with immigration. The second involves the poverty population magnet effect associated with State welfare benefits (AFDC and Food Stamp payments) which has come under renewed scrutiny in light of the impending reform of the federal welfare program. The impact of both of these factors on interstate poverty migration is evaluated in a broader context that takes cognizance of other sociodemographic subgroups, and State-level attributes that are known to be relevant in explaining internal migration. This research employs an exceptionally rich data base of aggregate migration flows, specially tabulated from the full migration sample of the 1990 US census (based on the residence 5 years ago question). It also employs an analysis technique, the nested logit model, which identifies separately the push and pull effects of immigration, welfare benefits, and other State attributes on the migration process. Our findings are fairly clear. The high volume of immigration to selected US Statesdoes affect a selective out-migration of the poverty population, which is stronger for whites, Blacks and other non-Asian minorities as well as the least-educated. These results are consistent with arguments that internal migrants are responding to labor market competition from similarly educated immigrants. Moreover, we found that the impact of immigration occurs primarily as a push rather than a reduced pull. In contrast, State welfare benefits exert only minimal effects on the interstate migration of the poverty population—either as pulls or pushes, although some demographic segments of that population are more prone to respond than others. In addition to these findings, our results reveal the strong impact that a State's racial and ethnic composition exerts in both retaining and attracting migrants of like race and ethnic groups. This suggests the potential for a greater cross-state division in the US poverty population, by race and ethnic status.Data Used: 1990 US census tabulations of full migration (residence 5 years ago) sample. Note: Detailed 1990 census statistics on migration of the poverty and nonpoverty populations for individual states can be found in: William H. Frey Immigration and Internal Migration for US States: 1990 Census Findings by Poverty Status and Race, Population Studies CenterResearch Report No. 94-320.This research is supported by the University of Wisconsin Institute for Research on Poverty Small Grants Program and by NICHD grant No. R01 HD29725. The migration data for this paper were prepared at the Population Studies Center, University of Michigan from 1990 US Census files. The authors acknowledge Cathy Sun for computer programming assistance, and Ron Lue-Sang for preparing maps and graphics.     

Mothers in an insider-outsider economy: the puzzle of Spain

There is growing evidence that social policies towards mothers have important effects on their labour market behaviour. This article argues that these effects are less important in a Male Breadwinner Regime if there is employment insecurity in the household or if women intend to participate in the long-run. I consider the case of Spain, where the workforce has become polarized between insiders and outsiders and where social policies closely resemble the Male Breadwinner Regime. The results show that Spanish mothers fall into two groups: those who do not withdraw from the labor force after childbirth and those who withdraw and do not re-enter after their children arrive at school age. Entry or re-entry appears related to the husband's employment uncertainty. Married women in an insider household are less likely to be mobile than women in an outsider household.This research was initiated with the financial support from the Bank of Spain (Fondo para Estudios sobre el Mercado de Trabajo) and the CIRIT (Generalitat de Catalunya). An earlier version has been published in Spanish in Adam, 1995 a. I benefited from presentations in the session on Women's Labour Force Transitions in the ESPE ninth annual meeting at Lisbon, in the IESA (CSIC, Madrid) seminar, in the session on European Labour Markets in the IEA meeting at Tunis, and in the IGIER seminar. I thank Namkee Ahn, Siv Gustafsson, John Ermisch, Andrea Ichino, Sergi Jiménez, Dennis Snower, Robert Waldmann and an anonymous referee for comments. My very especial thanks go to my thesis supervisor, John Micklewright, to Gosta Esping-Andersen, John Myles and David Soskice. Responsible editors: Siv S. Gustafsson, John F. Ermisch.     

Native wage impacts of foreign labor: a random effects panel analysis

Natives often fear labor market competition of foreigners, as they may induce declining wages and rising unemployment as in the case of natives and immigrants being substitutes. However, there is also the potential that they are complements, producing positive wage and employment effects. This issue is examined in a framework with two types of labor, such that low qualified native and immigrant workers (blue collar), although substitutes for one another, are potentially complements to high qualified native workers (white collar). This is thought to accurately reflect the past West German immigration experience. Examining the wage functions of white and blue collar natives in a random effects panel model using a vast sample of micro data, we actually find that foreigners negatively affect the wages of Germans on the whole. Relatively small gains are made by white collar employees with less than 20 years experience, but these are outweighed by the larger negative effects experienced by blue collar employees.We wish to thank Don DeVoretz, Riccardo Faini, Andrea Ichino, and participants at the following 1993 conferences for their valuable comments where drafts of this paper were presented: The Economics of International Migration: Econometric Evidence at the University of Konstanz, Internationale Migration und Arbeitsmarkt der Schweizerischen Gesellschaft fur Statistik und Volkswirtschaftslehre at the University of St. Gallen, Adjustment Policies in Previously Centrally Planned Economies: Which Lessons from Developing Countries Experiences at the University of Brescia, and Congress of the European Society for Population Economics in Budapest. Substantial revisions were made following the valuable suggestions of two anonymous referees and the special issue editor Wolfgang Franz, for which we are grateful.     

A critique of the Urban Institute's claims of cost free immigration: Early findings confirmed

This text addresses the critiques from the Urban Institute and other immigrant advocacy groups concerning the findings of an earlier study, The Cost of Immigration released in the summer of 1993. That study showed that the public costs associated withimmigrants settling here since 1970 amounted, in 1992, to $42.5 billion more in services and assistance than the $20.2 billion which immigrants paid in taxes (Huddle, 1993). The updated assessment takes into account previously unavailable figures and revises some methods and assumptions used in the earlier work. The updated bottom line is fully consistent with initial findings on immigrant costs for 1992.     

The effect of maternal employment on teenage childbearing

This paper estimates the effect of a mothers employment on her teenage daughters likelihood of birth. Using data from the United States, the National Education Longitudinal Survey of 1988, the author finds that teenagers with working mothers who attend relatively wealthy schools are more likely (77%) to have a birth compared to teens who attend similar schools but have non-working mothers. In contrast, teenagers with working mothers who attend relatively poor schools are less likely (18%) to have a birth compared to teens who attend similar schools but have non-working mothers.I am indebted to Marcia Carlson, Thomas DeLeire, Angela Fertig, Brian Jacob, Darren Lubotsky, Scott Lynch, Susan Mayer, Sara McLanahan, Robert Michael, German Rodriguez, seminar participants at Princeton University and The University of Chicago, and two anonymous referees for insightful suggestions made on earlier versions of this paper. I also gratefully acknowledge financial support from a Northwestern University/University of Chicago Joint Center for Poverty Research Graduate Fellowship, a Robert R. McCormick Tribune Foundation Graduate Fellowship, the Bendheim-Thoman Center for Research on Child Wellbeing at Princeton University, and the Office of Population Research at Princeton University, which is supported by center grant 5 P30 HD32030 from the NICHD. Responsible editor: Junsen Zhang.     

Have the relative employment prospects for the low-skilled deteriorated after all?

Has the relative unemployment propensity for the low-skilled increased during the 1990s? We address this question empirically, based on two notions of low skills; i) low education, and ii) low ability, conditioned on education and work experience. Ability is identified by previous earnings. Evaluated by the education-based measure, we find that unemployment propensity has not developed unfavourably for the low-skilled. Evaluated by the ability-based measure, it has. We uncover a steady deterioration of employment prospects for persons with low ability relative to others with similar formal qualifications. The adverse employment effects of being low-skilled are stronger the higher is formal education.All correspondence to Knut Røed. The paper is part of the project Sorting, exposed groups and labour market programs financed by the Research Council of Norway. We wish to thank Rolf Aaberge, Paul Gertler, Harald Goldstein, Karl Ove Moene, Jon Strand, Steinar Strøm, Asbjrn Rødseth and an anonymous referee for helpful comments. Responsible editor: John F. Ermisch.     

Migrant stock vs. lagged migrant flow as a determinant of migrant settlement. A comment on Anjomani and Hariri

In a recent contribution to this Journal Anjomani and Hariri present an interesting study of United States interstate migration which explicitly incorporates so-called flow diversion and flow creation effects. Their discussion and evaluation of the model, however, are marred by several factors. This paper contrasts the roles of migrant stock and lagged migration in migration analysis and then addresses (a) the problems encountered when the family-friends effect is proxied with measures of lagged migrant flows, (b) the problem of using a two-period lagged value of earlier migrant flow as an explanatory variable, and (c) this paper suggests an alternative method of correcting the Anjomani-Hariri model's problems with multicollinearity.The author is grateful to Walter J. Wadycki and to David A. Macpherson for helpful comments and suggestions. The author, of course, bears full responsibility for all errors that remain. This research benefited from a grant from the Miami University Committee on Faculty Research.     

Premium differentiation in the Unemployment Insurance system and the demand for labor

We simulate the effect of the introduction of premium differentiation (experience rating) in the Dutch Unemployment Insurance system on the demand for labor for a variety of sectors in the Dutch economy. For the simulations we use the Bentolila and Bertola (1990) framework as a point of departure. In the simulations, the introduction of experience rating is modeled as expenditure neutral: in the absence of premium differentiation the cost of financing UI is modeled as a wage tax (independent of the number of workers fired by the firm), whereas in the presence of experience rating this cost is attributed to firing cost (affected by the firing action). Thus, the introduction of experience rating results in a shift from wage cost to firing cost. Following the political debate on the issue in the Netherlands, we assume that the introduction of experience rating does neither lead to a change in tax rates paid by workers nor to a change in eligibility rules or replacement rates of benefit claimants. Specific attention is paid to the distinction between young and old workers . In the model, labor adjustment costs (hiring and firing costs) are linear. The model allows for uncertainty in the business cycle.All correspondence to Hans Bloemen. Responsible editor: Alessandro Cigno     

The educational attainment of second-generation immigrants in The Netherland

Since the mid-1960s the Netherlands has had a positive net immigration, mainly because of man power recruitment from Turkey and Morocco and immigration from the former Dutch colony of Surinam. Immigrants havea weak labor market position, which is related to their educational leveland language skills. Children and grandchildren of immigrants are expected to have a better chance of integration into Dutch society. In this paper we investigate whether this is true with respect to the educational attainment of second-generation immigrants from Turkey, Morocco, Surinam and the Dutch Antilles.The authors thank an anonymous referee and both editors for helpful comments. Responsible editors: David Card and Christoph M. Schmidt.     

Immigration and internal migration “flight”: A California case study

Recent analyses of 1990 census migration data have pointed up disparities in the way immigration and internal migration contributions affect an area's demographic profile. They show that there is little overlap between states with large population gains from internal migration from other parts of the United States and states with large population gains from immigration from abroad. This emerging pattern, along with the fact that immigration and internal migration select on very different demographic characteristics, could lead toward a demographic balkanization of the nation's population. This paper evaluates immigration-induced out-movement from California, based on an analysis of recently released migration data from the 1990 U.S. census. The results presented here suggest that California's out-migration consists of two different migration systems: first, an immigration-induced flight that exports lower income and less-educated Californians, primarily, to the nearby states of Washington, Oregon, Nevada and Arizona. And second, a more conventional migration exchange with the rest of the United States that involves the redistribution of better educated, higher income migrants. It is the former migration system which appears to be most responsive to the low-skilled immigration flows, while the latter should be responsive to more conventional labor market employment characteristics. This implies that, irrespective of changing economic conditions in the state, the continued immigration of low-skilled migrants will lead to more losses of native-born internal migrants to neighboring states and metropolitan areas. However, these migrant streams will not be made up of the best and brightest residents that characterize most conventional migration streams.A longer version of this report with more extensive background statistics isResearch Report 94–306 (Frey, 1994b) available from Publications, Population Studies Center, The University of Michigan, Ann Arbor, MI 48104.     

Cohort effects in the educational attainment of second generation immigrants in Germany: An analysis of census data

Even though second generation immigrants make up ever increasing population shares in industrialized countries we know little about their social integration and wellbeing. This study focuses on the educational attainment of German born children of immigrants. Their schooling success still lags behind that of natives. This paper investigates school attendance and completed degrees of second generation immigrants and finds that even after controlling for characteristics the educational gap remains large and significant. The available evidence suggests that this group as a whole does not assimilate to native educational standards and instead increasingly falls behind.This research was completed while the author was guest at the Institute for the Study of Labor (IZA) in Bonn, Germany. I am grateful for IZAs hospitality and particularly for the help of Thomas K. Bauer. I thank the anonymous referees and the editors for very helpful comments. Responsible editors: David Card and Christoph M. Schmidt.     

Labour supply effects of a cash-for-care subsidy

From 1999, all parents in Norway with children aged one to three, who did not attend publicly subsidised daycare, became eligible for a cash-for-care (CFC) subsidy. One effect of the CFC-subsidy was to increase in the relative price of external child care. This article analyses whether the CFC-subsidy has led to a reduction in the labour supply of mothers. A framework for evaluating policy reforms when reforms are equally and nation-wide accessible is put forward. The results show that the CFC-subsidy has reduced womens labour supply. The results are sustained after controlling for contemporaneous macroeconomic shocks, using a triple difference approach.The author thanks Hege Torp, Erling Barth and Harald Dale-Olsen at The Institute for Social Research, as well as participants at the European Society for Population Economics (ESPE) conference in Bilbao in June 2002, participants at the Lunch-seminar at Statistics Norway, and two anonymous referees for valuable comments. The work is financed by the Norwegian Research Council, grant #137230/530. The financial support is gratefully acknowledged.Responsible editor: Deborah Cobb-Clark.     

The effect of immigration on wages in three european countries

We analyse the impact of immigrants on natives wages from reduced form wage equations for The Netherlands, United Kingdom and Norway. We find very small effects on natives wages and no dominant robust patterns of substitution and complementarity. Effects on earlier immigrants own wages are larger but less reliable. Further work should focus on these own effectsData on the Netherlands have been made available by CEREM, Statistics Netherlands(LSO 1997) and SEO (GPD). The British QLFS have been made available by the Office for National Statistics through the Data Archive, University of Essex. Norwegian KIRUT data have been made available by NSD, Bergen. We are grateful to these organisations. None of these organisations bear any responsibility for the analyses or interpretations of data sets used in this paper.Two anonymous referees and the editor-in-chief, Klaus Zimmermann, provided very valuable inputs for a substantial revision of an earlier draft. Responsible editor: Klaus F. Zimmermann.     

Macro-effects of changes in household preferences for children

The basic ideas underlying the analysis in this paper are that family size can be viewed as an economic life cycle decision and that there are decision trade-offs among fertility, consumption, and leisure. A micromodel of life cycle choice is developed and embedded in an economic-demographic macromodel. The macromodel is then used in a series of computer experiments to assess the effects on the population and the economy of changes in household preferences for children. The experiments include factual and counterfactual simulations of Canadian historical demographic experience and simulations of alternative future scenarios. The analysis and conclusions have general relevance for countries that have been through a fertility boom-and-bust sequence.We are grateful for the support received from Health and Welfare Canada's Review of Demography and Its Implications for Social and Economic Policy and from the Social Sciences and Humanities Research Council of Canada. We are grateful also to Christine H. Feaver, who carried out the computer-related aspects of the work on which this paper is based.