EMPLOYMENT DYNAMICS OF IMMIGRANTS VERSUS NATIVES: EVIDENCE FROM THE BOOM‐BUST PERIOD IN SPAIN, 2000–2011

This article studies whether the durations in unemployment and employment for immigrants and natives respond differently to changes in economic conditions and to the receipt of unemployment benefits. Using Spanish administrative data for the period 2000–2011, we estimate multi‐spell duration models that disentangle unobserved heterogeneity from true duration dependence. Our findings suggest that immigrants are more sensitive to changes in economic conditions both in terms of unemployment and employment hazards. The effect of the business cycle is not constant but decreases with duration at a higher rate among immigrants. We provide evidence that the higher job separation rates and lower capital‐labor complementarity of immigrants are mechanisms that are possibly compatible with these results. We also find evidence of a disincentive effect of unemployment benefits on unemployment duration, which is stronger for immigrants, but only at the beginning of the unemployment spell, especially under good economic conditions. Finally, unemployment benefits increase job match quality only for native workers with temporary contracts. (JEL J64, J61, C23, C41, J65)     

SELF‐EMPLOYMENT,EFFICIENCY WAGE,AND PUBLIC POLICIES

Empirical evidence suggests that unemployed workers are much more likely to become self‐employed than wage‐employed workers. Also, higher unemployment benefits significantly reduce the rate of self‐employment. This article develops a model of self‐employment which incorporates transitions between unemployment and self‐employment. It integrates two strands of theoretical literature—models of occupational choice and the efficiency wage models. In this model, a higher unemployment benefit reduces the self‐employment rate and the transition rate of unemployed workers to self‐employment, which is consistent with empirical evidence. (JEL J23, J58, J64)     

Marital Quality,Gender, and Markers of Inflammation in the MIDUS Cohort

Marital quality is an important factor for understanding the relationship between marriage and health. Low‐quality relationships may not have the same health benefits as high‐quality relationships. To understand the association between marital quality and health, we examined associations between two indicators of marital quality (marital support and marital strain) and two biomarkers of inflammation (interleukin‐6 and C‐reactive protein) among men and women in long‐term marriages using data from the Survey of Midlife in the United States (N = 542). Lower levels of spousal support were associated with higher levels of inflammation among women but not men. Higher levels of spousal strain were weakly and inconsistently associated with higher levels of inflammation among women and men; the effects were diminished with the addition of psychosocial and behavioral covariates. These findings suggest marital quality is an important predictor of inflammation, especially among women.     

INFORMATION,INSTITUTIONS, AND BANKING SECTOR DEVELOPMENT IN WEST AFRICA

Using a new West African panel data set, we provide evidence on the determinants of individual banks' loans and assets in some of the poorest countries in the world. Higher loan default rates reduce both the loans to assets ratio and the volume of assets. However, the size of these effects is sensitive to bank age and ownership structure. Younger, private, domestically owned banks are most affected, suggesting that such banks face the most severe informational disadvantages. Very old government‐owned banks benefit from high default rates. We also explore how the quality of governance impacts on loans and assets. (JEL G21, O16)     

COMBAT EXPOSURE,CIGARETTE CONSUMPTION,AND SUBSTANCE USE

This study estimates the relationship between combat exposure and several risky health behaviors: cigarette consumption, binge drinking, and drug use. We find that the U.S. active duty military personnel deployed to combat zones with enemy firefight are more likely to subsequently smoke cigarettes, consume alcohol, and use illicit drugs than their counterparts deployed to noncombat operations. Our results suggest that the mental health effects of combat can explain up to two‐thirds of the estimated association between combat exposure and risky health behaviors. (JEL H56, I12)     

YOUTH,REVOLUTION, AND REPRESSION

We develop a simple model to study the effect of age structure on the interactions between the state and dissidents. Younger populations are more prone to protest. As the population grows younger, states that can discriminately target repression to different groups, but cannot concede discriminately, decrease repression. In contrast, states that can target concession, but not repression, increase repression. We test these results in nonmilitary single‐party regimes and military regimes without political parties. Moreover, we study state response to dissent in East European communist regimes in the late 1980s, showing that state response was more repressive in countries with younger populations. (JEL D74)     

WOMEN PREFER LARGER GOVERNMENTS: GROWTH,STRUCTURAL TRANSFORMATION,AND GOVERNMENT SIZE

The increase in income per capita is accompanied, in virtually all countries, by two changes in economic structure: the increase in the share of government spending in gross domestic product (GDP), and the increase in female labor force participation. We argue that these two changes are causally related. We develop a growth model based on Galor and Weil (1996) where female participation in market activities, fertility, and government size, in addition to consumption and saving, is endogenously determined. Rising incomes lead to a rise in female labor force participation as the opportunity cost of staying at home and caring for the children increases. In our model, higher government spending decreases the cost of performing household chores, including, but not limited to, child rearing and child care, as in Rosen (1996) . We also use a wide cross‐section of data for developed and developing countries and show that higher market participation by women is positively and robustly associated with government size. We then investigate the causal link between participation and government size using a novel unique data set that allows the use of the relative price of productive home appliances as an instrumental variable. We find strong evidence of a causal link between female market participation and government size. This effect is robust to the country sample, time period, and a set of controls in the spirit of Rodrik (1998) . (JEL O4, E62, H11)     

MANDATORY RETIREMENT AND THE CONSUMPTION PUZZLE: DISENTANGLING PRICE AND QUANTITY DECLINES

This study investigates changes in household consumption at retirement based on a comprehensive, diary‐based household survey from China. We focus on disentangling price changes from quantity changes at retirement. The mandatory retirement policy in China provides a quasi‐experimental setting for nonparametric identification of the true causal effects of fully anticipated retirement. Using a regression discontinuity design, we find that food expenditure declines at retirement, particularly among the less‐educated group. We further show that this decline is driven by a reduction in prices rather than quantities. These findings, along with a documented increase in shopping time for food upon retirement among the less‐educated households, are consistent with a time allocation model in which education enhances the value of leisure. (JEL J26, C21)     

THE HETEROGENEITY OF IMMIGRANTS,HOST COUNTRIES' INCOME AND PRODUCTIVITY: A CHANNEL ACCOUNTING APPROACH

This article exploits changes in the distribution of immigrants across 20 Organization for Economic Co‐operation and Development countries from 1960 to 2005 in order to assess their contribution to income of destination countries. The non‐random sorting of immigrants across countries is addressed by using an instrumental variable strategy. The instrument is built by estimating a bilateral migration model incorporating exogenous origin country determinants of migration. Aggregate results reveal that immigrants have a positive effect on income that works primarily through total factor productivity (TFP). We further construct a novel dataset from censuses and labor force surveys to explore the information on the age of immigrants. Contrasting income effects are found across age groups: a higher share of immigrants among the youth has a negative impact on aggregate income, while a higher share of immigrants among prime‐aged workers has a positive effect. We interpret this disparity as short‐term versus medium‐term effects. Adjustments over time involve changes in TFP but also in the human capital of the native‐born. (JEL F22, J24, J31, O31)     

WORKFORCE COMPOSITION AND FIRM PRODUCTIVITY: EVIDENCE FROM TAIWAN

We study the relationship between workforce composition and firm productivity based on a new employee‐employer‐matched data set, using an array of workforce characteristics and three alternative measures of firm productivity. While firm age is not essential for the performance of firms, those of smaller size and those in the steel and transportation industries outperform others. Moreover, labor quality, particularly the middle‐aged with higher education, contributes significantly to firms' productivity. Furthermore, economic incentives and market competition both play important roles in the performance of firms. Finally, there is an employer‐size premium with larger firms paying higher wages and nonwage benefits. (JEL C33, D20, J30)     

URBAN TRANSPORT AND CRIME: EVIDENCE FROM UNANTICIPATED MASS TRANSIT STRIKES

We examine the effects of mass transit strikes on criminal behavior in Los Angeles County utilizing a unique dataset of reported crimes between 2000 and 2007. Geocoded location and time information pertaining to each offense accommodates a fine grained difference‐in‐differences panel data analysis. We find that in locations affected by the strike, aggravated assaults rose by 18.7% while aggregate property crimes increased by 5.7%, relative to their mean. This increase in crime was disproportionately larger in lower income neighborhoods, which report higher usage of mass transit, suggesting local isolation of both criminals and victims as a mechanism. (JEL J52, K42, K31)     

DO UNEMPLOYMENT BENEFITS AFFECT ON‐THE‐JOB SEARCH? EVIDENCE FROM LABOR TURNOVER BEFORE ESTABLISHMENT CLOSURES

We develop a job search model that predicts that potential job losers would reduce on‐the‐job search (OTJS) effort and job‐to‐job transitions before layoffs, in response to an increase in the potential duration of unemployment benefits (UB). To test this prediction, we exploit changes in the maximum potential duration of benefits in Germany to analyze how it affected labor turnover before establishment closings. The evidence supports the model prediction that workers with longer potential benefit duration are more likely to remain with their establishments until closure and to enter nonemployment. These findings indicate that the effects of UB on the OTJS decisions of potential job losers should be considered in the optimal design of the parameters of unemployment insurance systems. (JEL J63, J64, J65)     

DOES THE RIVER SPILL OVER? ESTIMATING THE ECONOMIC RETURNS TO ATTENDING A RACIALLY DIVERSE COLLEGE

This article evaluates the frequently argued but heretofore little tested hypothesis that increasing minority representation in elite colleges generates tangible benefits for majority‐race students. Using data on graduates of 30 selective universities, we find only weak evidence of any relationship between collegiate racial composition and the postgraduation outcomes of white or Asian students. Moreover, the strongest evidence we uncover suggests that increasing minority representation by lowering admission standards is unlikely to produce benefits and may in fact cause harm by reducing the representation of minority students on less selective campuses. While affirmative action may still be desirable for the benefits it conveys to minority students, these results provide little support for “spillover” effects on majority‐race students. (JEL I2, J15, J24)

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THE IMPACT OF TRADE COSTS ON FIRM ENTRY,EXPORTING, AND SURVIVAL IN KOREA

This study examines how changes in trade costs have affected entry, exit, productivity, and exporting in the Korean manufacturing sector. We verify several predictions of heterogeneous‐firm models of international trade. For example, falling import‐trade costs are associated with less entry and lower market shares among existing domestic firms, and higher total factor productivity for Korean manufacturing as a whole. The size of firms plays an important role in many of our results. New domestic firms are more likely to be small, but large firms are less likely to exit and more likely to have an increase in total factor productivity. (JEL F10, D24)     

QUALITY OF AVAILABLE MATES,EDUCATION, AND HOUSEHOLD LABOR SUPPLY

We investigate the impact of sex ratios by education and metropolitan area on spouses’ bargaining power and labor supplies, to capture the local and qualitative nature of mate availability. Using Current Population Survey and Census data for 2000, 1990, and 1980, we estimate these effects in a collective household framework. We find that a higher relative shortage of comparably educated women in the couple’s metropolitan area reduces wives’ labor supply and increases their husbands’. The impact is stronger for couples in higher education groups but not significant for high school graduates. Results are similar across decades. No such effects are found for unmarried individuals. (JEL D1, J22)     

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)     

LABOR CONTRACTS AND FLEXIBILITY: EVIDENCE FROM A LABOR MARKET REFORM IN SPAIN

This paper evaluates the effects of a labor market reform in Spain that removed restrictions on fixed‐term or temporary contracts. Our empirical results are based on longitudinal firm‐level data that cover observations before and after the reform. We posit and estimate a dynamic labor demand model with indefinite and fixed‐term labor contracts, and a general structure of labor adjustment costs. Experiments using the estimated model show important positive effects of the reform on total employment (i.e., a 3.5% increase) and job turnover. There is a strong substitution of permanent by temporary workers (i.e., a 10% decline in permanent employment). The effects on labor productivity and the value of firms are very small. In contrast, a counterfactual reform that halved all firing costs would produce the same employment increase as the actual reform, but much larger improvements in productivity and in the value of firms. (JEL J23, J32, J41)     

DYNAMIC TREATMENT EFFECTS OF TEACHER'S AIDES IN AN EXPERIMENT WITH MULTIPLE RANDOMIZATIONS

Using data from a large‐scale two‐stage experiment wherein students and teachers were randomized at both kindergarten entry and first grade to be sorted into classes either with or without full‐time teacher's aides, I estimate an econometric model that is uniquely suited to take advantage of this design to determine their effect on academic achievement. The identification strategy produces fully nonparametric dynamic average treatment effects for every treatment path. I find that the use of full‐time teacher's aides increases student achievement, but the benefits appear to accrue mostly to those of higher socioeconomic status and to White students. A cost‐benefit analysis shows that full‐time teacher's aides may be a competitive alternative to class size reductions in terms of net social benefits. (JEL I21, I28)     

Latin American Immigration,Maternal Education,and Approaches to Managing Children's Schooling in the United States

Concerted cultivation is the active parental management of children's educations that, because it differs by race/ethnicity, nativity, and socioeconomic status, plays a role in early educational disparities. Analyses of the Early Childhood Longitudinal Study–Kindergarten Cohort (n = 10,913) revealed that foreign‐born Latina mothers were generally less likely to engage in school‐based activities, enroll children in extracurricular activities, or provide educational materials at home when children were at the start of elementary school than were U.S.‐born White, African American, and Latina mothers, in part because of their lower educational attainment. Within the foreign‐born Latina sample, the link between maternal education and the three concerted cultivation behaviors did not vary by whether the education was attained in the United States or Latin America. Higher maternal education appeared to matter somewhat more to parenting when children were girls and had higher achievement.     

Maternal Employment,Nonparental Care,Mother‐Child Interactions,and Child Outcomes During Preschool Years

This study examines the relationships between maternal employment, nonparental care, mother‐child interactions, and preschoolers’ outcomes. Data from the Canadian National Longitudinal Survey of Children and Youth (N= 1,248) show that maternal employment during the previous year, especially full‐time employment, was related to care by nonrelatives, longer hours in school settings, fewer positive mother‐child interactions, and less reading with parents at ages 2 and 4. Controlling for these mediators, maternal employment was related to children’s lower hyperactivity, more prosocial behavior, and less anxiety at age 4, although little relationship was found at age 2. The results indicate that preschoolers may benefit from maternal employment, but benefits may be offset by long hours of nonparental care and fewer positive mother‐child interactions.