Production and consumption externalities of human capital: an empirical study for Italy

The estimation of the effect of local human capital on wages only might not identify properly human capital spillovers. Appropriate identification requires considering the joint effect of local human capital on both wages and rents. Empirically, we study the effects of local human capital on household-level rents and individual-level wages for a sample of Italian local labour markets. Our results show a positive and robust effect of local human capital on rents, supporting the idea that human capital generates positive externalities at the local level. Our results also suggest that consumption and production externalities have a similar impact on wages.

Household skills and low wages

Household skills provide job skills when tasks in jobs and household production are similar and jobs produce substitutes for home-made services. Opportunity costs of higher education are foregone earnings during schooling and foregone household production while studying and later in life. I show that individuals in jobs requiring household skills accept lower wage rates than traditional human capital theory predicts, and that individuals with low household skills tend to enter higher education. According to these results, declining household skills may have contributed to the observed increasing demand for higher education by women.

The economic determinants of ethnic assimilation

A human capital model is developed that distinguishes between ethnic-specific skills (applicable only to a specific indigenous or immigrant group) and shared or general skills. An important determinant of assimilation is the extent to which these two forms of human capital are complements, thus promoting both assimilation and ethnic persistence, or anti-complements, promoting either assimilation or ethnic retention but not both. Implications of the model are developed for various applications including intermarriage, the effects of group size, language and religion as a basis for ethnic mergers, and the transfer society as a potential barrier to assimilation.

Physical capital taxation and labor income taxation in an endogenous growth model with new generations

This paper examines the growth and welfare effects of physical capital taxation and labor income taxation. It is found that the impact of a rise in the physical capital tax rate on the balanced growth rate is crucially related to the birth rate, but a rise in the labor income tax rate definitely reduces the balanced growth rate regardless of the birth rate. It is also found that an increase in the physical capital income tax rate will harm the older but will benefit the younger, while an increase in the labor income tax rate will benefit the older but will harm the younger.

Determinants of business success: an examination of Asian-owned businesses in the USA

Using confidential microdata from the US Census Bureau, we investigate the performance of Asian-owned businesses. Using regression estimates and a special non-linear decomposition technique, we explore the role that class resources, such as financial capital and human capital, play in contributing to the relative success of Asian businesses. We find that Asian-owned businesses are more successful than white-owned businesses for two main reasons—Asian owners have high levels of human capital and their businesses have substantial start-up capital. Using detailed information on both the owner and the firm, we estimate the explanatory power of several additional factors.

The role of marriage in immigrants’ human capital investment under liquidity constraints

This paper presents a two-period human capital investment model, which is used to study the optimal investment decisions of credit-constrained married immigrants relative to single immigrants and native couples facing a perfect capital market. The model predicts that: (1) The comparative advantage in investment in local skills of one of the spouses may emerge from his/her higher growth rate of imported human capital. (2) The optimal investment of each spouse is non-increasing in the level of imported human capital of the spouse with the comparative advantage in investment, while it is non-decreasing in the level of imported human capital of the other spouse. (3) When two immigrants get married, the spouse with the comparative advantage in investment invests more than when he/she was single whereas the other spouse invests less.

Imperfect goods and labor markets, and the union wage gap

Existing theoretical literature fails to explain satisfactorily the differences between the pay of workers who are covered by collective agreements and others who are not. This study aims at providing a model framework that is amenable to an analysis of this issue. Our general-equilibrium approach integrates a dual labor market and a two-sector product market. The results suggest that the so-called “union wage gap” is largely determined by the degree of centralization of the bargains and, to a somewhat lesser extent, by the expenditure share of the unionized sector's goods.

Sibling similarities and economic inequality in the US

I use a new methodological approach and larger US samples than previous studies and estimate that the sibling correlation across a range of economic outcomes is around 0.5. This suggests that half of economic inequality in the US can be attributed to family and community influences. A comparison with noneconomic outcomes suggests that individual choices rather than a simple mechanical relationship governs the intergenerational transmission of income. A decomposition of the sibling correlation suggests that the acquisition of human capital is an important channel through which family background affects future success but that noncognitive factors also play a role.

Welfare effects of illegal immigration

This paper analyzes the welfare effect of illegal immigration on the host country within a dynamic general equilibrium framework and shows that it is positive for two reasons. First, immigrants are paid less than their marginal product, and second, after an increase in immigration, domestic households find it optimal to increase their holdings of capital. It is also shown that dynamic inefficiency may arise, despite the fact that the model is of the Ramsey type. Nevertheless, the introduction of a minimum wage, which leads to job competition between domestic unskilled workers and immigrants reverses all of the above results.

The influence of market wages and parental history on child labour and schooling in Egypt

This paper examines the influence of adult market wages and having parents who were child labourers on child labour, when this decision is jointly determined with child schooling, using data from Egypt. The empirical results suggest that low adult market wages are key determinants of child labour; a 10% increase in the illiterate male market wage decreases the probability of child labour by 22% for boys and 13% for girls. The findings also indicate the importance of social norms in the intergenerational persistence of child labour: parents who were child labourers themselves are on average 10% more likely to send their children to work. In addition, higher local regional income inequality increases the likelihood of child labour.

Public transfers and marital dissolution

In this paper, we analyze determinants of marital dissolution, focusing on the alleged influences from public transfers, child allowance, and child support awards. We use a Norwegian panel of 2,806 couples with information on public and private transfers in cases of divorce. The sample was observed over a 5-year period, with the purpose of registering marital dissolution. We find that the level of transfers has a significantly positive effect on divorce probability and that the distribution of transfers in favor of the wife increases this probability. Our findings are consistent with noncooperative family models allowing for inefficient outcomes.

Ethnic and parental effects on schooling outcomes before and during the transition: evidence from the Baltic countries

This paper examines human capital gap between titular ethnicities and Russian-speaking minorities, which has emerged in Estonia, Latvia, and Lithuania during the transition and remains significant after controlling for parental education. For recent cohorts, unexplained gap is declining in Lithuania (despite absence of Russian language tertiary education) and in Estonia. Furthermore, we investigate intergenerational mobility in the Baltic countries. Parental education has a strong positive effect on propensity to obtain tertiary education, both in the Soviet era and post-Soviet period. Transition to the market has weakened mother’s education effect for titular ethnicities, while the opposite is true for minorities.

Socioeconomic status, sexual behavior, and differential AIDS mortality: evidence from Côte d’Ivoire

Lack of knowledge about differential AIDS mortality seriously hampers the study of the economic impact of AIDS in developing countries. We derive HIV infection risk differentials by age, education, and other microeconomic characteristics using the Ivorian Demographic and Health Survey. Our model is based on econometrically estimated equations using commonly available variables, therefore it can be used whenever such a survey is available but there is no representative information about HIV infection by socioeconomic group. For instance, we found that educated people have a higher risk of HIV infection, because they are more likely to have several sexual partners. However, this effect is partly offset by a higher probability of condom use relative to less educated people. The identification of the socioeconomic characteristics of low and high risk groups seems indispensable to set up adequate AIDS prevention and therapy policies in developing countries.

Does single parenthood increase the probability of teenage promiscuity,substance use,and crime?

There is longstanding evidence that youths raised by single parents are more likely to perform poorly in school and partake in “deviant” behaviors such as smoking, sex, substance use, and crime. However, there is not widespread agreement as to whether the timing of the marital disruption differentially impacts youth outcomes. Using the National Longitudinal Survey of Youth and its Young Adult Supplement, we find that an additional 5 years with the biological father decreases the probability of smoking, drinking, engaging in sexual activity, marijuana use, and conviction by approximately 5.3, 1.2, 3.4, 2.2 and 0.3 percentage points, respectively.

Temporary Work and Insecurity in Britain: A Problem Solved?

Temporary workers in Britain experience lower job quality. However, the proportion of employees on temporary contracts has fallen since a decade ago to just 5.5% in 2005. There have also been qualitative improvements. Many temporary workers now fall under the protection of the Fixed Term Employees’ (Prevention of Less Favourable Treatment) Regulations 2002, and the relative pay of fixed-term contract workers has since improved. In contrast, the subsequent fortunes of seasonal and casual workers with short contracts have been mixed. Furthermore, the Act excludes agency workers, and the paper calls for additional legislative action to ensure fair treatment for this group.

Social Capital and Community Heterogeneity

Recent findings indicate that more pronounced community heterogeneity is associated with lower levels of social capital. These studies, however, concentrate on specific aspects in which people differ (such as income inequality or ethnic diversity). In the present paper, we introduce the number of parties in the local party system as a more encompassing measure of community heterogeneity. This builds on the argument that the number of relevant socio-economic cleavages in the population (i.e. heterogeneity) determines the level of party system fragmentation. Using data on 307 Flemish municipalities, we find that municipalities with a more heterogeneous population indeed have lower levels of social capital. Hence, our study endorses—and generalizes—previous results linking community heterogeneity to lower levels of social capital.

Avowed Happiness in Confucian Asia: Ascertaining its Distribution,Patterns, and Sources

This study reviewed three philosophical accounts of happiness, and then tested those accounts with the Asiabarometer surveys conducted in six Confucian societies during the summer of 2006. Statistical analyses of these surveys reveal that East Asians tend to experience happiness to a greater extent when they experience enjoyment together with achievement and/or satisfaction. The preponderance of such multi-dimensional conceptions in all those societies poses a direct challenge to a single dimensional account of happiness in the West. The analyses also reveal that positive assessments of interpersonal relationships matter more than the amount of knowledge or wealth in living a happy life in Confucian societies.

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The emigration of immigrants, return vs onward migration: evidence from Sweden

This study analyzes emigration propensities for natives and immigrants delineating among immigrant emigrants between return and onward migration. Results indicate that emigrants are positively selected in terms of upper education. Well-educated immigrants have a higher probability of leaving for third-country destinations than returning to countries of origin. Predicted age–income profiles for immigrants show that return migrants have higher adjusted mean income levels than non-emigrants up to the age of 40. Onward migrants have lower predicted income levels across the age distribution due to this group’s composition and relatively low employment levels in Sweden. Separate estimations by region of origin indicate that within each group, onward migrants are more positively selected then return migrants in terms of income.

Environmental defensive expenditures,expectations and growth

Nowadays many agents meet defensive expenditures to protect themselves against environmental deterioration. Such expenditures may contribute to support economic growth. Environmental degradation, in fact, may induce agents to work harder to replace depleted environmental goods with substitute goods. The consequent rise in the activity level may further deplete the environment, worsening the agents’ expectations on the future environmental quality and increasing their demand for substitute goods. To examine this issue, we adopt a simple model in which agents formulate expectations on the future environment that can be right or wrong and examine how such expectations influence capital accumulation and growth.

The Catalan premium: language and employment in Catalonia

In this paper, I measure the contribution of knowing Catalan to finding a job in Catalonia. In the early 1980s, a drastic language policy change (normalització) promoted the learning and use of Catalan in Catalonia and managed to reverse the falling trend of its relative use vs Castilian (Spanish). Using census data for 1991 and 1996, I estimate a significant positive Catalan premium: the probability of being employed increases between 3 and 5 percentage points if individuals know how to read and speak Catalan; it increases between 2 and 6 percentage points for writing Catalan.