Estimating the effects of immigration in one city

This paper presents a new method of estimating the effects of immigration on the labor market that does not require variations in immigration across cities. With a two-stage CES model that aggregates immigrant groups by age cohorts and aggregates cohorts into effective labor, the econometric estimation and the interpretation of parameters are particularly straightforward. The paper uses data from Hong Kong to estimate the elasticities of complementarity associated with increased immigration. A simulation study indicates that a 40% increase in the stock of new immigrants will lower wages by no more than one percent. Received: 13 August 1997/Accepted: 7 December 1998     

Workers’ participation in wage setting: A gift-exchange experiment

This study analyzes the consequences of workers’ participation in the wage setting process on effort exertion. The experimental design is based on a modified gift-exchange game with firms specifying contract alternatives and workers deciding about the finally implemented alternative. The experimental data reveals that workers with participation rights are more sensitive to differences in wage offers: Low wage offers trigger negative reciprocity which dominates the positive incentive effects from high wage offers. On average, participation in the wage setting process leads to a decline in effort exertion.     

The Easterlin hypothesis in the recent experience of higher-income OECD countries: A panel-data approach

The Easterlin hypothesis emphasizes the effect of relative cohort size on fertility. Models based on the Easterlin hypothesis have performed well in explaining time series fertility data, although these results have been for long historical time series and have typically been restricted to single country studies. These models are not adequate to determine if the hypothesis still holds and if the success of the Easterlin hypothesis is an artifact of the time period chosen. We use panel data analysis and temporal causality tests to see of the Easterlin hypothesis holds for higher-income OECD countries. The results support the Easterlin hypothesis.All correspondence to Yongil Jeon. An earlier version, The Easterlin hypothesis in OECD countries, was presented at the annual conference of the European society for population economics, Bilbao, Spain, June 2002. We are grateful to two anonymous referees for their helpful comments. The usual caveat applies. Responsible editor: Junsen Zhang.     

Comment on specification of household engel curves by nonparamftric regression

ABSTRACT

This paper first derives an adaptive estimator when heteroskedasticity is present in the individual specific error in an error component model and then compares the finite sample performance of the proposed estimator with various other estimators. While the Monte Carlo results show that the proposed estimator performs adequately in terms of relative efficiency, its performance on the basis of empirical size is quite similar to the other estimators considered.     

Exits from Self-Employment: Is There a Native-Immigrant Difference in Sweden?1

It is well established that non-western immigrants in Sweden are more likely to be self-employed than natives. Whether there is also a difference in the exit rate out of self-employment remains an unexplored question. Using panel data for the period 1998–2002, this study analyzes the exit rates by looking at all exits, and also at exits to different labor market states. We find that the exit rate is about 7% points higher among non-western immigrants than among natives and exits to unemployment is 14% points higher. Decomposing these differences, we find that differences in industry and earlier labor market status are important explanatory factors.     

India’s Rural Employment Guarantee Scheme – How does it influence seasonal rural out-migration decisions?

India’s Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is the largest public-works based rural livelihood programme in the world. One of the important policy objectives of the Scheme is to curb rural out-migration by guaranteeing demand-driven employment opportunities for 100 days in a year in rural areas. This paper uses a large sample survey-based nationally representative data set and different probability models to investigate how MGNREGS influences individuals’ seasonal rural out-migration decisions. The results reveal that contrary to the policy objective, participation, the extent of participation and earnings from the Scheme increases an individual’s propensity to out-migrate. However, the Scheme serves broader and equally critical socio-economic goals of empowerment through income security and positive network effects. MGNREGS, on the one hand, significantly drives the decisions of aspirational migration of rural individuals, particularly females and the relatively advantaged. On the other, it curbs distress migration of the relatively disadvantaged by providing them with basic livelihood opportunities within the rural areas. Based on the findings, the paper draws several policy implications and discusses key policy imperatives towards expanding the scale and scope of the public-works Scheme.     

Reserve financing and government infrastructure investment: An application to China

This paper proposes a novel financing scheme, reserve financing, for government infrastructure investment in China. A two-sector open economy model explores the consequences and policy implications of a surge in infrastructure investment financed by international reserves. The results show that reserve financing, coupled with a managed float exchange rate system, can maintain the country's fast growth rate while mitigating fiscal pressure on local governments. Productive infrastructure capital stimulates domestic demand, reducing the country's dependence on exports. To promote growth and maintain price stability, three factors are critical: return on infrastructure, swift fiscal adjustment, and rapid infrastructure financing.     

What Drives the Demand for Temporary Agency Workers?

As part of the general trend towards increased employment flexibility temporary agency employment has grown steadily in most European countries. The paper examines, first, whether the deregulation of temporary agency employment is responsible for the growth of the flexible staffing industry. Second, we investigate the cyclical behavior of temporary agency employment. Using monthly data for Germany, we show that the liberalization of the law regulating the sector is not the main reason for the surge of this employment form. Our analysis reveals, moreover, that temporary agency employment exhibits strong cyclical behavior and correlates with main economic indicators in real time.     

MEDIA MERGERS AND MEDIA BIAS WITH RATIONAL CONSUMERS

We present an economic model of media bias and media mergers. Media owners have political motives as well as profit motives, and can influence public opinion by withholding information that is pejorative to their political agenda—provided that their agenda is not too far from the political mainstream. This is true even with rational consumers who understand the media owners’ biases, because the public do not know how much information the news organizations have and so do not know when news is being withheld. In line with conventional wisdom, this problem can be undone by competition; but competition can be defeated in equilibrium by media mergers that enhance profits at the expense of the public interest. We thus derive a motive for media merger policy that is completely distinct from the motives behind conventional antitrust. While media bias may reduce the profit incentives to merge, media markets nonetheless err by being insufficiently competitive, and the consequences of merger are more severe than in other markets.     

FINANCIAL DEVELOPMENT AND VERTICAL INTEGRATION: THEORY AND EVIDENCE

Existing evidence is mostly inconclusive on the relevance of financial development as a determinant of vertical integration. This paper presents evidence that, once industry heterogeneity in firm size distribution is taken into account, financial development is an important determinant of cross‐country differences in vertical integration. Financial development fosters entry of firms and increases competition in the industry. This reduces vertical integration of larger firms, but also leads smaller, non‐integrated, firms to exit the industry. As a result, higher financial development reduces vertical integration in industries where a high share of output is produced by small firms. The positive effect of financial development on entry also reduces vertical integration by fostering the development of input markets.