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)     

INTERNATIONAL TRADE AND THE COMPOSITION OF LABOR MARKET TURNOVER

The composition of labor market turnover is shown to influence patterns of international trade. Job and worker turnover have opposing marginal effects on industry export intensity, highlighting the importance of relative turnover shares on either side of the labor market, as opposed to total volumes of labor mobility, in shaping economic outcomes. Industries with relatively greater shares of worker turnover export more of total production, and those with higher job turnover export less. Furthermore, relatively high job turnover hinders industry adjustment following trade liberalization. These predictions receive support for U.S. manufacturing industries using turnover data in the Quarterly Workforce Indicators available from the U.S. Census Bureau. (JEL F16)     

UNEMPLOYMENT AND OTHER MEASURES OF LABOR MARKET INEFFICIENCY: A COMPARISON OF U.K. AND U.S. LABOR MARKETS 1931–96

Although unemployment is often used as a measure of labor market inefficiency, economic theory indicates that market inefficiency is determined by both the gap between and the elasticities of supply and demand. Using time series data for the United States and United Kingdom, this article investigates how good the unemployment rate is as a measure of labor market inefficiency by calculating the deadweight loss associated with unemployment rates over time. Results show that the loss arising from unemployment is low across time and countries and that the unemployment rate is often a weak proxy for comparing labor market inefficiency. (JEL J6 )     

THE ROLE OF THE MEDIAN LEGISLATOR IN U.S. TRADE POLICY: A HISTORICAL ANALYSIS

In this historical analysis of U.S. trade policy, we apply the median voter model to explain legislative decision making. In this model, the level of tariff protection is expected to change with changes in the median legislator. We show that this simple model does a remarkable job if explaining trade policy until the mid-1930s, when it breaks down. We offer several possible explanations for the breakdown of this model, focusing particularly on the impact of domestic and international institutional changes that may have altered the role of the median legislator in trade policy formation.     

THE EFFECTS OF ASSET PURCHASES AND NORMALIZATION OF U.S. MONETARY POLICY

This paper examines changes in the effects of unconventional monetary policies in the United States. To this end, we estimate a Markov-switching VAR model with absorbing regimes to capture possible structural changes. Our results detect regime changes around the beginning of 2011 and the middle of 2013. Before 2011, the U.S. large-scale asset purchases (LSAPs) had relatively large impacts on the real economy and prices, but after the middle of 2013, their effects were weaker and less-persistent. In addition, after the middle of 2013, which includes the monetary policy normalization period, the asset purchase (or balance sheet) shocks had slightly weaker effects than during the early stage of the LSAPs but stronger effects than during the late stage of the LSAPs, while interest rate shocks had insignificant effects on the real economy and prices. Finally, our results suggest that the positive responses of durables and capital goods expenditures to interest rate shocks weakened the negative impacts of interest rate hikes after the middle of 2013 including the period of monetary policy normalization. (JEL C32, E21, E52)     

THE U.S. LABOR INCOME SHARE AND AUTOMATION SHOCKS

The causes and consequences of the 1964–2016 swings in the U.S. labor income share/labor share (LS) are parsed through the lens of a structural model estimated on aggregate and LS series jointly. Where conventional models fall short, the present model yields a counter-cyclical LS unconditionally and in response to demand and monetary policy shocks, as well as a small wage pro-cyclicality, via moderate wage indexation. Shifts in automation, workers' market power, investment efficiency, and the relative price of investment account for 54%, 24%, 6%, and 4% of LS fluctuations, respectively. Automation shocks explain the lion's share of the post-2007 cyclical LS tumble and 11% of output cycles, and generate a distinctive counter-cyclical labor response. (JEL E32, E25, E52)     

THE ROLE OF REGULATORY ARBITRAGE IN U.S. BANKS' INTERNATIONAL FLOWS: BANK‐LEVEL EVIDENCE

I study the prevalence and profitability of regulatory arbitrage in U.S. banks' foreign activities. I analyze a publicly available bank‐level data set on bilateral lending flows to 75 countries over 2003–2013. U.S. banks' affiliates lend less to borrowers in host countries with stricter bank capital regulations, and are less likely to maintain affiliates in such countries. Banks substitute from (host‐regulated) affiliate toward (U.S.‐regulated) cross‐border lending in hosts with strict bank capital rules. This is particularly so for low‐capitalized banks with lower foreign ownership shares. Banks that reduce their exposure to stricter host capital rules are more profitable in foreign activities. (JEL F3, F4, G2)     

INTERNATIONAL EFFECTS OF EURO AREA VERSUS U.S. POLICY UNCERTAINTY: A FAVAR APPROACH

Estimating a large‐scale factor‐augmented vector autoregressive model for 18 Organisation for Economic Co‐operation and Development member countries, we quantify the global effects of economic policy uncertainty shocks. More specifically, we check whether the signs, the magnitude, and the persistence profile are consistent with the literature on the real and financial sector effects of uncertainty. In that respect, we compare the impacts of a U.S. and a Euro area policy uncertainty shock. According to our results, an increase in economic policy uncertainty has a strong negative impact on economic activity (gross domestic product), consumer prices, equity prices, and interest rates. Uncertainty shocks cause deeper recessions in Continental Europe (except Germany) than in Anglo‐Saxon countries. U.S. uncertainty shocks have a bigger impact than those for the Euro area. Economic policy uncertainty does not only affect that country where the shock originates but also has large cross‐border effects. We also find a high degree of synchronization among the responses of national variables to a (foreign) uncertainty shock, indicating evidence of an international business cycle. With respect to the responses of national long‐term interest rates to an economic policy uncertainty shock, our results reveal a strong “North‐South” divide within the Euro area with rates decreasing less significantly in the South. Moreover, economic policy uncertainty shocks emerging in one region quickly raise uncertainty outside the region of origin. (JEL C32, F42, D80)     

THE TECHNOLOGY FACTOR AND THE EXPORT PERFORMANCE OF U.S. MANUFACTURING INDUSTRIES

The paper examines two central theories advanced to explain the revealed comparative advantage of U.S. industries. The neo-technological account centers on the process of innovation among industries and is represented in the regression analysis by an R&D intensity variable. The neofactor theory advances both human and "physical" capital as important variables in determining countries' comparative advantage. Foreign protection is postulated to affect the export performance of U.S. industries. Generally the results suggest that U.S. revealed comparative advantage is most pronounced in R&D intensive industries that give the U.S. a temporary technological lead in world markets.     

WELFARE AND PUBLIC POLICY: THE ROLE OF INTERNATIONALIZED PRODUCTION

I incorporate internationalized production, whereby firms hire domestic and foreign production factors, into the model of Corsetti and Pesenti (2001). In contrast to their conclusion, I find that an expansionary monetary shock can be beggar-thy-neighbor and a fiscal shock can improve national welfare. The transmission mechanism of public policy here is different from theirs. In particular, a fiscal shock can affect the short-run exchange rate and generate long-run welfare effects even if it is temporary. Results in this article offer another rationale for international retaliation and coordination. (JEL F30, F40 )     

WAR AND PESTILENCE AS LABOR MARKET SHOCKS: U.S. MANUFACTURING WAGE GROWTH 1914–1919

This paper explores the effect of mortalities from the 1918 influenza pandemic and World War I on wage growth in the manufacturing sector of U.S. states and cities from 1914–1919. The hypothesis is that both events decreased manufacturing labor supply, thereby initially increasing the marginal product of labor and wages. The results reveal that states and cities having had greater influenza mortalities experienced higher wage growth—roughly 2–3 percentage points for a 10% change in per capita mortalities. World War I combat mortalities also had a positive, but smaller, effect on wage growth. ( JEL N62, N32, N92, I12)     

TRADE PROTECTION AND THE ROLE OF CAMPAIGN CONTRIBUTIONS IN U.S. FOOD AND TOBACCO INDUSTRIES

This article examines the determinants of both trade protection and campaign contributions for a sample of U.S. food and tobacco industries. Empirical findings indicate that while market structure variables are significant, campaign contributions are the key factor in explaining the inter-industry levels of trade barriers in those industries studied. Thus, regardless of industry characteristics, campaign contributions have a strong persuasive role, rather than the facilitative role that most previous studies suggest.     

MONITORING OF WORKERS AND PRODUCT MARKET COMPETITION: THE ROLE OF WORKS COUNCILS

Often the consent of worker representations, such as works councils, is required before firms are allowed to install technologies that monitor workers' behavior. Absent monitoring, workers produce low output, while at the same time receiving an information rent. To gain the works council's consent to the installation of a monitoring technology, firms need to compensate workers for the lost information rent. Hence, by making it more costly to produce high output, works councils can serve firms as an instrument to commit to low output levels. This provides a rationale for why works council rights are not opposed more strongly by employers. (JEL D43, D86, J83, L13)     

ACCOUNTING FOR URBAN CHINA'S RISING INCOME INEQUALITY: THE ROLES OF LABOR MARKET,HUMAN CAPITAL,AND MARRIAGE MARKET FACTORS

This paper analyzes China's rising family income inequality since the early 1990s when the urban labor market started its transformation from a centrally controlled to a market‐driven one. We document the trends in income inequality over the period of 1992–2009 using the Urban Household Survey data, and adopt the approach recently proposed by Eika et al. (2014) to decompose changes in income inequality. We find that labor market factors accounted for about three‐quarters of the overall increases in income inequality while falling marriage rate contributed the other quarter. Changes in human capital levels and marital assortativeness have not contributed to the rising inequality. (JEL D31, I26, J12)     

CORRUPTION,PRODUCT MARKET COMPETITION,AND INSTITUTIONAL QUALITY: EMPIRICAL EVIDENCE FROM THE U.S. STATES

This article argues that the effect of corruption on competition is dependent on the institutional environment. When institutions are relatively efficient, observed corruption is likely to be associated with relatively less competition. Conversely, in areas with low quality institutions (e.g., excessively burdensome regulations), corruption may lead to relatively more competition. I employ unique data on competition, corruption, and institutional quality across U.S. states from 1997 to 2009 and report that a higher level of corruption is associated with relatively more competition in states with low levels of institutional quality. However, as institutional quality improves, the effect of corruption worsens. Thus, institutional quality is a fundamental determinant of the corruption‐competition relationship. Improving institutional quality, while at the same time reducing corruption, will increase competition and likely improve economic outcomes. (JEL D73, O17, L26)     

MARKET STRUCTURE AND PRICE-COST MARGINS:A COMPARATIVE ANALYSIS OF U.K. AND U.S. MANUFACTURING INDUSTRIES

This paper reports a comparative study of market structure- performance relations in U. K. and U.S. manufacturing indus- tries. The multivariate regression results support the hypothesis of homogeneity of the links between market structure and the price-cost margin dimension of performance in manufacturing industries of the two countries. Furthermore, the results indicate that the differences in the legal and cultural environments of U.K. and U.S. industries do not significantly affect the pattern of similarity in the links.     

CONSTRAINED BY HOURS AND RESTRICTED IN WAGES: THE QUALITY OF MATCHES IN THE LABOR MARKET

This paper examines the explicit loss born by workers who face constraints in their working hours by analyzing differences in actual and desired hours and wages. Men tend to be underemployed while women are evenly split between over- and underemployment. Losses in surplus are generally small, but 10% of underemployed men and women experience losses of more than 34% or 50% of surplus, respectively. The loss measure is also an important determinant in predicting labor market transitions, meaning increases in surplus losses generate a higher probability of changing from workers' present jobs or changing the number of hours. ( JEL J22, J41)     

EXPROPRIATION OF MULTINATIONAL FIRMS: THE ROLE OF DOMESTIC MARKET CONDITIONS AND DOMESTIC RIVALRIES

The causes of expropriation of Multinational Firms (MNFs) by their host governments are investigated, based on social welfare analysis and also on public choice theory. A key feature is the presence of Cournot-Nash rivalry with domestic firms. Thus, the likelihood of expropriation differs according to whether or not a domestic rival exists. The likelihood also depends on the MNF's initial technological superiority over domestic technology, the host country's demand structure, the type of control to be exercised over the expropriated firm (private vs. state) and the strategic behavior of the MNF, ex anti, when under threat of expropriation.