We analyze an immigration reform in Denmark that tightened refugee immigrants’ eligibility criteria for permanent residency to incentivize their labor market attachment and acquisition of local language skills. Contrary to what the reform intended, the overall employment of those affected decreased, while their average language proficiency remained largely unchanged. This was caused by a disincentive effect, where individuals with low prereform labor market performance reduced their labor supply. Our findings suggest that stricter permanent residency rules, rather than incentivizing refugees’ skill investment, may decrease the efforts of those who believe they cannot meet the new requirements.

This paper studies the effects of a large welfare benefit reduction on the children in the affected families. The welfare cut targeted adult refugees who received residency in Denmark, and it reduced their disposable income by 30 percent on average over the first five years. We show that children exposed to the welfare cut during preschool and school-age obtained lower GPAs, experienced reduced well-being and overall education levels, and suffered lower employment and earnings as adults. Children in their teens at exposure faced large increases in conviction probabilities for violent and property crimes. 

This article investigates the relationship between immigration and inequality in the UK over the past 40 years. This is a period when the share of foreign-born in the UK population increased from 5.3% in 1975 to 13.4% in 2015. We evaluate the impact immigration had on wage inequality in the UK through two channels: the first is the effect on the earnings distribution of natives and the second is the effect on the composition of the wage-earning population. We find both effects to be very small. We decompose wage inequality into inequality within the immigrant and native groups and inequality between the two groups. We find inequality among immigrants to be consistently higher than inequality among natives. We also examine the impact of immigration on the fiscal budget, and the potentially unequal impact of the ensuing tax implications on natives. In the UK, where immigrants are net fiscal contributors, this is not a factor that aggravates economic inequality. Even though the impact of immigration is found to be small, the way it is perceived across different population groups in the UK varies; a fact mostly attributed to racial and cultural concerns rather than perceived economic competition.

This paper analyzes the effects of Denmark's Start Aid welfare reform that targets refugees. Implemented in 2002, it enables us to study not only the reform's immediate effects but also its longer-term consequences and its repeal a decade later. The reform-induced large transfer cuts led to an increase in employment rates, but only in the short run. Overall, the reform increased poverty rates and led to a rise in subsistence crime. Moreover, local demand conditions generate substantial heterogeneity in the reform's effects on immediate and longer-term employment. 

Government transfers might have long-lasting consequences on electoral outcomes. We study a regional policy implemented in Italy over the second half of the twentieth century and leverage variation in transfers to show that parties promoting more state intervention in the economy performed better in the targeted areas relative to places that were not subsidized, decades after the end of the policy. This effect does not seem to mirror long-term differences in the economic performance of treated and control areas, which were small, nor other attitudes within the electorate.

In standard promotion tournaments, contestants are ranked based on their output or productivity. We argue that workers' career progression may also depend on their relative rankings in dimensions a priori unrelated to their job performance, such as visibility or in-person presence. Such implicit tournaments may rationalize a variety of seemingly counterproductive practices in the workplace, including long working hours, low uptake of statutory leave, and presenteeism. We illustrate the significance of implicit tournaments using the case of paternity leave among new fathers, where we exogenously vary a focal worker's ranking within a contest, not via his own leave status but that of his competitors, exploiting a policy reform. We show that the focal worker is put on a better earnings trajectory than otherwise when a larger share of his competitors take leave because of the reform. The focal worker's own absolute leave, however, has no direct effect on his earnings path as long as his own and his competitors' leave statuses are symmetric. With effective coordination, it should thus be possible for all fathers to utilize paternity leave without incurring unwarranted career costs. This has implications for statutory leave policies, flexible work arrangements, and gender equality.

We relate origin-destination real price differences to immigrants’ reservation wages and their career trajectories, exploiting administrative data from Germany and the 2004 enlargement of the European Union. We find that immigrants who enter Germany when a unit of earnings from Germany allows for larger consumption at home settle for lower entry wages, but subsequently catch up to those arriving with less favourable exchange rates, through transition to better-paying occupations and firms. Similar patterns hold in the United States data. Our analysis offers one explanation for the widespread phenomenon of immigrants’ downgrading, with new implications for immigrant cohort effects and assimilation profiles.

We analyze an immigration reform in Denmark that tightened refugee immigrants’ eligibility criteria for permanent residency to incentivize their labor market attachment and acquisition of local language skills. Contrary to what the reform intended, the overall employment of those affected decreased while their average language proficiency remained largely unchanged. This was caused by a disincentive effect, where individuals with low prereform labor market performance reduced their labor supply. Our findings suggest that stricter permanent residency rules, rather than incentivizing refugees’ skill investment, may decrease the efforts of those who believe they cannot meet the new requirements.

Children of refugees are among the most economically disadvantaged youth in several European countries. They are more likely to drop out of school and to commit crime. We find that a reform in Denmark in 1999 that expanded language training for adult refugees and was shown to improve their earnings and job market outcomes permanently, also increased lower secondary school completion rates and decreased juvenile crime rates for their children. The crime effect is entirely due to boys who were below school age when their parents received language training. The older cohorts who were in elementary school when their parents received language training performed better in lower secondary school. Boys were more likely to finish lower secondary school and to sit the final exams, and girls achieved higher grade point averages in the exams.

Using an identification strategy based on random assignment of refugees to different municipalities in Denmark between 1986 and 1998, we find strong evidence that gang crime rates in the neighbourhood at assignment increase the probability of boys to commit crimes before the age of 19, and that gang crime (but not other crime) increases the likelihood of teenage motherhood for girls. Higher levels of gang crime also have detrimental and long-lasting effects, with men experiencing significantly higher levels of inactivity and women experiencing lower earnings and higher levels of welfare benefit claims at ages 19 to 28.

The loss of a child is one of the most devastating shocks a parent can experience. We provide the first estimates of the direct effect of youth suicide on parental labour earnings. We use mortality data in the New Zealand Integrated Data Infrastructure to identify youth who died from intentional self-harm, and birth records to identify affected parents and their wage and salary information. We graph the parental earnings profiles before and after the suicide event, and construct counterfactual earnings profiles for the affected parents, using a comparison group of parents hit by the same shock in the future. Our results show that labour earnings for affected households drop by approximately 6.5% compared to their counterfactual earnings following the child loss, and that the earnings drop persists for at least two years following the suicide.

This paper investigates the effects of technological and organizational change (T&O) on jobs and workers. We show that although T&O reduces firm demand for routine relative to abstract task-based jobs, affected workers do not face higher probability of non-employment or lower earnings growth than unaffected workers. Rather, firms that adopt T&O offer routine workers retraining opportunities to upgrade to more abstract jobs. Older workers form an important exception: T&O increases the risk that they permanently withdraw from the labor market and reduces their earnings, regardless of the tasks they performed in the firm prior to T&O.

This paper investigates the sources of wage growth over the life cycle, where individuals have the possibility to acquire vocational training at the start of their career.  Wage growth is determined by sectoral and firm mobility, unobserved ability and the accumulation of human capital.  Workers may move between two occupational sectors that require cognitive-abstract (CA) and routine-manual (RM)skills, and job mobility is induced by non-pecuniary job attributes and persistent firm-worker productivity matches.   Estimating this model using longitudinal administrative data over three decades,  we show that  RM  skills are a  key driver of early wage growth while CA skills become important later on.  Moreover, job amenities are an important determinant of mobility decisions.  Vocational training has long-term effects on career outcomes, affecting the type and quality of matches, with substantial internal rates of return both to the individual as well as society.

Denmark has accepted refugees from a large variety of countries and for more than four decades. Denmark has also frequently changed policies and regulations concerning integration programs, transfer payments, and conditions for permanent residency. Such policy variation in conjunction with excellent administrative data provides an ideal laboratory to evaluate the effects of different immigration and integration policies on the outcomes of refugee immigrants. In this article, we first describe the Danish experience with refugee immigration over the past four decades. We then review different post-arrival refugee policies and summarize studies that evaluate their effects on the labor market performance of refugees. Lastly, we discuss and contrast these findings in the context of international studies of similar policies and draw conclusions for policy.

The trend of rising income inequality in Germany since the mid-1990s is strongly amplified when considering income after housing expenditure. The income share of housing expenditure rose disproportionally for the bottom income quintile and fell for the top quintile. Factors contributing to these trends include declining relative costs of homeownership versus renting, changes in household structure, declining real incomes for low-income households, and residential mobility towards larger cities. Younger cohorts spend more on housing and save less than older cohorts did at the same age, which will affect future wealth accumulation, particularly at the bottom of the income distribution.

We evaluate a Danish reform focused on improving language training for those granted refugee status on or after January 1, 1999. Using a Regression Discontinuity Design we find a significant, permanent, positive effect on earnings. This effect emerged after completion of language classes and was accompanied by additional schooling and higher probability of working in complex jobs, consistent with language training, rather than other minor aspects of the reform, produced the results.

We develop new indices of skill and skill use, drawing on the alley of skill and skill-use questions in the Programme for the International Assessment of Adult Competencies (PIAAC). We demonstrate that the proposed skill and skill use indices explain the wage gap between males and females, as well as the gap between immigrants and natives. We also show that the skill use index captures the side effect of parental-leave policies on females that conventional labor-market outcomes fail to capture. We discuss how the newly developed indices can be merged to conventional survey data.

We study the use of social expenditures and regulation for redistribution. When regulated goods are essential in the consumption bundle of the poor, a high poverty rate creates incentives to increase redistribution through regulation. By contrast, inequality directs redistribution towards social expenditures. We propose a theoretical model that captures the trade-off between these two redistributive policies and test the model implications with a novel municipality dataset on income and local government policies. Theory predicts and empirical evidence supports that failing to account for poverty biases the effect of inequality on redistribution. Our evidence also reflects the positive connection between poverty and the use of regulation for redistribution.

Obesity not only leads to immense medical costs associated with treating obesity-related illness but is also associated with lower employment prospects and earnings. This study shows that sunshine-induced vitamin D may have a preventive effect on obesity for children. It investigates the relation between sun intensity from pregnancy until infancy on obesity at age six, using population data of more than 600,000 children. Our findings show that the effects of sun intensity on subsequent obesity are concentrated in the first six months of life: 100 hours of additional sunshine over this period reduce overweight by 1.1 percent and severe obesity by 6.2 percent. We offer two main explanations for this pattern. First, infants’ vitamin D levels are particularly sensitive to sunshine in the first six months of life, when lactation is highest. Second, the first six months of life are a sensitive period for later obesity, as this is the period when infants rapidly gain weight and adipose tissue develops.

I examine worker effort as a potential margin of adjustment to a minimum wage hike using unique data on piece rate workers who perform a homogenous task and whose individual output is rigorously recorded. By employing a difference-in-differences strategy that exploits the increase in Florida’s minimum wage from $6.79 to $7.21 on January 1, 2009, and worker location on the pre-2009 productivity distribution, I provide evidence consistent with incumbent workers’ positive effort responses.

This paper develops and estimates a dynamic model where individuals differ in ability and location preference to evaluate the mechanisms that affect the evolution of immigrants’ careers in conjunction with their re-migration plans. Our analysis highlights a novel form of selective return migration where those who plan to stay longer invest more into skill acquisition, with important implications for the assessment of immigrants’ career paths and the estimation of their earnings profiles. Our study also explains the willingness of immigrants to accept jobs at wages that seem unacceptable to natives. Finally, our model provides important insight for the design of migration policies, showing that policies which initially restrict residence or condition residence on achievement shape not only immigrants’ career profiles through their impact on human capital investment but also determine the selection of arrivals and leavers.

This paper considers the role of school closures in the spread of the SARS-CoV-2 virus. To isolate the impact of the closures from other containment measures and identify a causal effect, we exploit variation in the start and end dates of the summer and fall school holidays across the 16 federal states in Germany using a difference-in-differences design with staggered adoption. We show that neither the summer closures nor the closures in the fall had a significant containing effect on the spread of SARS-CoV-2 among children or a spill-over effect on older generations. There is also no evidence that the return to school at full capacity after the summer holidays increased infections among children or adults. Instead, we find that the number of children infected increased during the last weeks of the summer holiday and decreased in the first weeks after schools reopened, a pattern we attribute to travel returnees.

Men who father their first child at a very young age are convicted of significantly fewer crimes in the first years after birth if the child is a son rather than a daughter. This leads to behavioral spillovers that reduce criminal convictions among other young men living in the same neighborhood, with the resulting crime multipliers affecting peers’ crime even after the primary impact on the focal individual has dissipated. Through social multipliers, prevention policies that target potential criminals at an early stage, therefore, lead to larger reductions in the cost of crime than suggested by primary effects alone.

We investigate the wage, employment, and reallocation effects of the introduction of a nationwide minimum wage in Germany that affected 15% of all employees. Based on identification designs that exploit variation in exposure across individuals and local areas, we find that the minimum wage raised wages but did not lower employment. It also led to the reallocation of low-wage workers from smaller to larger, from lower- to higher-paying, and from less to more productive establishments. This worker upgrading accounts for up to 17% of the wage increase induced by the minimum wage. Moreover, at the regional level, average establishment quality increased in more affected areas in the years following the introduction of the minimum wage.

This paper analyses the relation between risk attitudes and household migration decisions. Using data of rural-urban migrants in China and their family members left behind, we obtain three key findings: (i) conditional on migration gains, less risk averse individuals are more likely to migrate; (ii) conditional on own risk aversion, individuals are more likely to migrate the higher the risk aversion of the other household members; and (iii) conditional on average risk aversion, households with more dispersed risk preferences are more likely to send migrants. These findings are in line with a stylized model that we develop in the first part of the paper. Our results provide evidence that the distribution of risk attitudes within the household affects whether a migration takes place and who will emigrate. They also suggest that the risk diversification gain to other household members may lead to migrations that would not take place when decisions were made on individual level.

We estimate the effect of front-loading unemployment benefit payments on nonemployment duration and reemployment wages. Exploiting a sharp change in the path of benefits for those who claimed unemployment benefits after November 1, 2005 in Hungary, we show that nonemployment duration fell by two weeks, while reemployment wages rose by 1.4 percent as a result of front-loading. We show that these behavioral responses were large enough to offset the mechanical cost increase of the unemployment insurance. We argue that our results indicate that benefit front-loading was a Pareto improving policy reform as both unemployed and employed workers were made better off.

In this article, we describe how to test for the presence of measure- ment error in explanatory variables. First, we discuss the test of such hypotheses in parametric models such as linear regressions and then introduce a new com- mand, dgmtest, for a nonparametric test proposed in Wilhelm (2018, Working Paper CWP45/18, Centre for Microdata Methods and Practice, Institute for Fis- cal Studies). To illustrate the new command, we provide Monte Carlo simulations and an empirical application to testing for measurement error in administrative earnings data.

The Covid-19 pandemic has disrupted working life in many ways, the negative consequences of which may be distributed unevenly under lockdown regulations. In this paper, we construct a new set of pandemic-related indices from the Occupational Information Network (O*NET) using factor analysis. The indices capture two key dimensions of job task requirements: (i) the extent to which jobs can be adaptable to work from home; and (ii) the degree of infection risk at workplace. The interaction of these two dimensions help identify which groups of workers are more vulnerable to income losses, and which groups of occupations pose more risk to public health. This information is crucial for both designing appropriate supporting programs and finding a strategy to reopen the economy while controlling the spread of the virus. In our application, we map the indices to the labor force survey of a developing country, Thailand, to analyze these new labor market risks. We document differences in job characteristics across income groups, at both individual and household levels. First, low income individuals tend to work in occupations that require less physical interaction (lower risk of infection) but are less adaptable to work from home (higher risk of income/job loss) than high income people. Second, the positive occupational sorting among low-income couples amplifies these differences at the household level. Consequently, low-income families tend to face a disproportionately larger risk of income/job loss from lockdown measures. In addition, the different exposure to infection and income risks between income groups can play an important role in shaping up the timing and optimal strategies to unlock the economy.

Using administrative data on firms and workers in Germany, we quantify the spillover effects of mass layoffs. Our empirical strategy combines matching with an event study approach to trace employment and wages in regions hit by a mass layoff relative to suitable control regions. We find sizable and persistent negative spillover effects on the regional economy: regions, and especially firms producing in the same broad industry as the layoff plant, lose many more jobs than in the initial layoff. In contrast, negative employment effects on workers employed in the region at the time of the mass layoff are considerably smaller. Strikingly, workers younger than 50 suffer no employment losses, as geographic mobility fully shields them from the decline in local employment opportunities.

We provide an overview of the integration of refugees into the labor markets of a number of high-income countries. Discussing the ways in which refugees and economic migrants are differently selected and so might be expected to perform differently in a host country's labor market, we examine employment and wages for these groups over time after arrival. There is significant heterogeneity between host countries, but in general, refugees experience persistently worse outcomes than other migrants. While the gaps between the groups can be seen to decrease on a timescale of a decade or two, this is more pronounced in employment rates than it is in wages. We also discuss how refugees are distinct in terms of other factors affecting integration, including health, language skills, and social networks. We provide a discussion of insights for public policy in receiving countries, concluding that supporting refugees in early labor market attachment is crucial.

In this paper, we evaluate the effectiveness of place-based payroll taxes in stimulating local employment by exploiting a unique policy setting in Norway, where a system of geographically differentiated payroll taxes was suddenly abolished due to an EU regulation. The reform was enforced independently of the regional labor market developments, creating arguably exogenous variation in the payroll tax rates that firms in different local labor markets faced over time. We find evidence of partial shifting of payroll tax increases on to worker wages as well as a significant decline in local employment. These findings suggest that in settings with some degrees of wage rigidity, place-based payroll tax incentives can be effective in stimulating local employment.

We study the impact of school smoking bans on individual health behavior in Germany. Using a multiple difference-in-differences approach in combination with randomization inference, we find that for individuals affected by a smoking ban during their school time, the propensity toward smoking declines by 14–22 percent, while the number of smoked cigarettes per day decreases by 19–25 percent. After elaborating on treatment effect heterogeneity and intensity, we evaluate spillovers to smoking behavior of nontreated individuals living in the same household.

To estimate the causal effect of refugee migration on voting outcomes in parliamentary and municipal elections in Denmark, our study is the first that addresses the key problem of immigrant sorting by exploiting a policy that assigned refugee immigrants to municipalities on a quasi-random basis. We find that in all but the mosturban municipalities, allocation of larger refugee shares between electoral cycles leads to an increase in the vote share for right-leaning parties with an anti-immigration agenda, and we show large differences in voters’ responses to refugee allocation according to pre-policy municipal characteristics. However, in the largest and urban municipalities, refugee allocation has—if anything—the opposite effect on vote shares for anti-immigration parties. This coincides with a sharp divide in attitudes to refugees between urban and rural populations, which may be partly explained by distinctive interactions between natives and those with different background in cities and rural areas. Refugee allocation also has a large impact on the anti-immigration parties’ choice of where to stand for municipal election, and we provide some evidence that it influences voter turnout.

This paper provides a comprehensive assessment of the margins along which firms responded to a large and persistent minimum wage increase in Hungary. We show that employment elasticities are negative but small even four years after the reform; that around 75 percent of the minimum wage increase was paid by consumers and 25 percent by firm owners; that firms responded to the minimum wage by substituting labor with capital; and that disemployment effects were greater in industries where passing the wage costs to consumers is more difficult. We estimate a model with monopolistic competition to explain these findings.

Straightforward economic arguments point to the potential for large global output gains from the movement of labor from less to more productive locations. Yet the politics of receiving countries seems resistant, characterized rather by efforts to limit migration or to stop it altogether. In this article we examine the foundations of claims of large welfare gains through free mobility, studying implications of liberalizing migration for world welfare under a variety of models, paying attention not only to overall gains but also to how gains are distributed and reviewing attempts to quantify the benefits. We conclude by asking how far considerations beyond economics motivate keenness to impose restrictions on migration.

We estimate the effects of receiving additional schooling before age five on cognitive and noncognitive outcomes, exploiting unique school entry rules in England that cause variation in the age at school entry and the effective length of the first school year, and combining survey data with administrative school records up to six years after exposure. We find significant effects on both cognitive and noncognitive outcomes at ages five and seven, particularly so for boys with a disadvantaged parental background. At age 11, effects on cognitive outcomes have disappeared, while there is still evidence for effects on noncognitive outcomes.

Sir James Mirrlees, co-recipient of the 1996 Nobel Memorial Prize in Economic Sciences, passed away in August 2018. This article outlines how his work has transformed economists’ understanding of their discipline – from the principles of tax design to the theory of contracts and beyond. By conceiving of policy questions in terms of information asymmetries between governments and taxpayers, Mirrlees demonstrated how to conduct convincing analysis of redistributive objectives together with incentive effects in the design of general tax systems and public policy more broadly. His ability to simplify complex problems in ways that reveal their tractable essence means that his work has yielded insights that have reverberated throughout the discipline. It has also proved highly fruitful for practical policy design.

This paper provides new evidence on how the presence of immigrant peers in the classroom affects native student achievement. The analysis is based on longitudinal administrative data on two cohorts of vocational training students in Italy's largest region. Vocational training institutions provide the ideal setting for studying these effects because they attract not only disproportionately high shares of immigrants but also the lowest ability native students. We adopt a value added model, and exploit within-school variation both within and across cohorts for identification. Our results show small negative average effects on maths test scores that are larger for low ability native students, strongly non-linear and only observable in classes with a high (top 20%) immigrant concentration. These outcomes are driven by classes with a high average linguistic distance between immigrants and natives, with no apparent additional role played by ethnic diversity.

This paper studies the impact of air pollution spillover from China to South Korea. To isolate the effects of cross-border pollution spillover from that of locally generated pollution, we exploit within-South Korea and over-time variation in the incidence of Asian dust—a meteorological phenomenon exogenous to district–time cells in South Korea—together with temporal variations in China's air quality. We find that conditional on being exposed to Asian dust, increased pollution in China leads to increased mortality from respiratory and cardiovascular diseases in South Korean districts, with the most vulnerable being the elderly and children under five.

We conducted a field experiment to evaluate the impact of job search assistance on the employment of recently arrived refugees in Germany. The treatment group received job-matching support: an NGO identified suitable vacancies and sent the refugees’ CVs to employers. Six months after the start of the treatment, we find no evidence for positive treatment effects on employment. However, after twelve months, we detect positive treatment effects: marginally significant for the full sample and larger in magnitude and significant for lower educated refugees and those who have not yet received a refugee status. These individuals face higher uncertainty about their residence status, they do not search effectively, lack access to alternative support programmes and may be disregarded by employers due to perceived higher hiring costs. Our results suggest that personalised job search assistance can improve labour market integration of these refugee groups by alleviating labour market frictions.

How do workers and firms respond to comprehensive labor market reforms? We use detailed micro data to analyze the German Hartz Reforms through the lens of a structural model of the labor market. These reforms aimed at reducing unemployment, by increasing working hour flexibility, job matching and work incentives. In our setting, reforms directly affect the model parameters, which are estimated using matched data on 430,000 workers in 340,000 firms. Contrary to previous findings, our analysis shows that, although the reforms shortened the typical duration of unemployment, they did not reduce unemployment as a whole and led to a decline in wages. Low-skilled workers suffered the most in terms of employment and wage losses. Furthermore, we decompose the contribution of each reform wave to employment and wage changes, finding that the reduction in generosity of unemployment benefits was the principle driver in reducing wages.

We estimate the effect of minimum wages on low-wage jobs using 138 prominent state-level minimum wage changes between 1979 and 2016 in the United States using a difference-in-differences approach. We first estimate the effect of the minimum wage increase on employment changes by wage bins throughout the hourly wage distribution. We then focus on the bottom part of the wage distribution and compare the number of excess jobs paying at or slightly above the new minimum wage to the missing jobs paying below it to infer the employment effect. We find that the overall number of low-wage jobs remained essentially unchanged over the five years following the increase. At the same time, the direct effect of the minimum wage on average earnings was amplified by modest wage spillovers at the bottom of the wage distribution. Our estimates by detailed demographic groups show that the lack of job loss is not explained by labor-labor substitution at the bottom of the wage distribution. We also find no evidence of disemployment when we consider higher levels of minimum wages. However, we do find some evidence of reduced employment in tradeable sectors. We also show how decomposing the overall employment effect by wage bins allows a transparent way of assessing the plausibility of estimates.

This paper studies a fair trade program in which consumers provide a wage subsidy (bonus) to piece-rate tomato pickers. The total subsidy—determined by sales to participating buyers—is divided among workers based on their relative output: a worker who produces more gets a larger share of the bonus. Although seemingly mimicking the existing piece-rate pay scheme, the mechanism associated with the bonus payment is really a relative performance evaluation, as the size of total bonus is exogenous and invariant to workers' effort. Therefore, for a given sized subsidy, the combined total (or per worker average) utility gains would become the largest if the workers keep their efforts at the pre-program level. Empirical analysis shows that worker effort (and hence productivity) increases substantially in response to the program, suggesting that currently, workers' combined gains per dollar of subsidy are not being maximized.

In this article, we introduce the commands npiv and npivcv, which implement nonparametric instrumental-variable (NPIV) estimation methods without and with a cross-validated choice of tuning parameters, respectively. Both com- mands can impose the constraint that the resulting estimated function is mono- tone. Using such a shape restriction may significantly improve the performance of the NPIV estimator (Chetverikov and Wilhelm, 2017, Econometrica 85: 1303– 1320) because the ill-posedness of the NPIV estimation problem leads to uncon- strained estimators that suffer from particularly poor statistical properties such as high variance. However, the constrained estimator that imposes the monotonicity significantly reduces variance by removing nonmonotone oscillations of the esti- mator. We provide a small Monte Carlo experiment to study the estimators’ finite-sample properties and an application to the estimation of gasoline demand functions.

Immigration remains a highly antagonistic issue and its purported effects in the labour market are still contestable. Against this background, the UK looks set to undertake a large overhaul of its immigration policy following the decision to leave the EU. To try to inform the debate, this study summarises the key patterns and changes in the UK labour market regarding immigration in the run‐up to and the immediate aftermath of the Brexit vote. The paper then offers some ideas that could explain why immigration appears to have had little effect, either positive or negative, on the wage and employment outcomes of UK‐born residents. It next outlines the current state of the labour market and the role of EU immigrants in it as the UK edges toward Brexit. The paper then considers where change may be seen most strongly following Brexit and discusses the many possible immigration policy options open to the government after the UK leaves the EU.

In this paper, we exploit pension reform-induced changes in retirement eligibility requirements to assess the role of grandparental childcare availability in the labor force participation of women with children under 15. Our analysis shows that, among the women studied, those whose own mothers are retirement eligible have a 11% higher probability of being in the labor force than those whose mothers are ineligible. The pension eligibility of maternal grandfathers and paternal grandparents, however, has no significant effect on the women’s labor force participation. We also demonstrate that the eligibility of maternal grandmothers mainly captures the effect of their availability for childcare. Hence, pension reforms, by potentially robbing households of an important source of flexible, low-cost childcare, could have unintended negative consequences for the employment rates of women with young children.

This article estimates the causal effect of the prospect of legal status on the employment outcomes of undocumented immigrants. The identification strategy exploits a natural experiment provided by an Italian amnesty program that introduced an exogenous discontinuity in eligibility based on date of arrival. The authors find that immigrants who are potentially eligible for legal status under the amnesty program have a significantly higher probability of being employed relative to undocumented immigrants who are not eligible. The size of the estimated effect is equivalent to about half the increase in employment that undocumented immigrants in our sample normally experience during their first year in Italy. These findings are robust to several checks and falsification exercises.

This article extends a classic on‐the‐job search model of homogeneous workers and firms by introducing a shirking problem. Workers choose their effort levels and search on the job. Firms elicit effort through wages and monitoring; an inverse relationship between wages and monitoring rates is derived. Wages play a dual role by allocating labor supply and motivating employee effort. This gives rise to an equilibrium wage distribution that contrasts with existing literature. In particular, I show that a hump‐shaped and positively skewed wage distribution, as observed empirically, can be derived even when firms and workers are, respectively, identical.

When Romania and Bulgaria (the so-called A2 countries) joined the European Union in 2007, the United Kingdom imposed temporary restrictions on the employment and welfare entitlements of A2 citizens that lasted until January 1, 2014. This article analyzes the impact of the removal of these restrictions on the labor market outcomes and use of welfare benefits of A2 migrants. Applying difference-in-difference analysis to data from the UK’s Labour Force Survey, the results suggest that acquiring unrestricted work authorization had a significant negative impact on the incidence of self-employment among A2 migrants but there are no discernible effects on other labor market outcomes or on their receipt of a range of welfare benefits. The article offers potential explanations for these results.

This article shows that across multiple generations, the persistence of occupational and educational attainment in Germany is larger than estimates from two generations suggest. We consider two recent interpretations. First, we assess Gregory Clark's hypotheses that the true rate of intergenerational persistence is higher than the observed rate, as high as 0.75, and time†invariant. Our evidence supports the first but not the other two hypotheses. Second, we test for independent effects of grandparents. We show that the coefficient on grandparent status is positive in a wide class of Markovian models and present evidence against its causal interpretation.

We exploit two unusual policy features of academic high schools in Seoul, South Korea—random assignment of pupils to high schools within districts and conversion of some existing single-sex schools to the coeducational (coed) type over time—to identify three distinct causal parameters: the between-school effect of attending a coed (versus a single-sex) school; the within-school effect of school-type conversion, conditional on (unobserved) school characteristics; and the effect of class-level exposure to mixed-gender (versus same-sex) peers. We find robust evidence that pupils in single-sex schools outperform their counterparts in coed schools, which could be due to single-sex peers in school and classroom, or unobservable school-level covariates. Focusing on switching schools, we find that the conversion of the pupil gender type from single-sex to coed leads to worse academic outcomes for both boys and girls, conditional on school fixed effects and time-varying observables. While for boys, the negative effect is largely driven by exposure to mixed-gender peers at school-level, it is class-level exposure to mixed-gender peers that explains this disadvantage for girls.

We develop a model to understand the trade–offs faced by an elected representative in supporting an amnesty when a restrictive immigration policy is in place. We show that an amnesty is more desirable the more restricted are the occupational opportunities of undocumented immigrants and the smaller is the fiscal leakage to undocumented immigrants via the welfare state. Empirical evidence based on the voting behavior of U.S. Congressmen on the Immigration Reform and Control Act of 1986 provides strong support for the predictions of our theoretical model.

Do general amnesty programs lead to reductions in the crime rate among immigrants? We answer this question by exploiting cross-sectional and time variation in the number of immigrants legalized by the enactment of repeated amnesty programs between 1990 and 2005 in Italy. We address the potential endogeneity of the ‘legalization treatment’ by instrumenting the actual number of legalized immigrants with alternative predicted measures based on past amnesty applications patterns and residential choices of documented and undocumented immigrants. We find that, in the year following an amnesty, regions in which a higher share of immigrants obtained legal status experienced a greater decline in non-EU immigrant crime rates, relative to other regions. The effect is statistically significant but relatively small and not persistent. In further results, we fail to find any evidence of substitution in the criminal market from other population groups—namely, EU immigrants and Italian citizens—and we observe a small and not persistent reduction in total offenses.

This article analyses the way households in rural China use rural–urban migration and off-farm work as a response to negative productivity shocks in agriculture. I employ various waves of a longitudinal survey to construct a panel of individual migration and labour supply histories, and match them to detailed weather information, which I use to instrument agricultural productivity. For identification, I exploit the year-by-county variation in growing season rainfalls to explain within-individual changes in labour allocation. Data on days of work supplied to each sector allow to study the responses to weather shocks along both the participation and the intensive margin. Results suggest that farming is reduced by 4.5% and migration increased by about 5% in response to a 1 standard deviation negative rainfall shock. Increase in rural–urban migration derives from both longer spells in the city and from increment in the likelihood to participate in the urban sector. I find interesting heterogeneous response across generations driven by age-specific productivities in the different sectors and migration costs. Finally, land tenure insecurity seems to partially prevent households from freely reallocating labour away from farming in bad times.

In democracies, voters rely on media outlets to learn about politically salient issues. This raises an important question: how strongly can media affect public perceptions? This paper uses a natural experiment – the staggered introduction of the Digital TV signal in Italy – to measure the effect of media persuasion on the perceptions individuals hold. We focus on crime perceptions and, combining channel-specific viewership and content data, we show that the reduced exposure to channels characterized by high levels of crime reporting decreases individual concerns about crime. The effect is driven by individuals aged 50 and over, who turn out to be more exposed to television while using other sources of information less frequently. Finally, we provide evidence about the effect of the digital introduction on public policies closely related to crime perceptions and on voting behaviour.

We examine heterogeneous treatment effects of a universal child care program in Germany by exploiting variation in attendance caused by a reform that led to a large expansion staggered across municipalities. Drawing on novel administrative data from the full population of compulsory school entry examinations, we find that children with lower (observed and unobserved) gains are more likely to select into child care than children with higher gains. Children from disadvantaged backgrounds are less likely to attend child care than children from advantaged backgrounds but have larger treatment effects because of their worse outcome when not enrolled in child care.

We evaluate the effects of home visiting targeted towards disadvantaged first-time mothers on maternal and child health outcomes. Our analysis exploits a randomized controlled trial and combines rich longitudinal survey data with unique administrative health data. In a context in which the target group has comprehensive health care access, we find no effects of home visiting on most types of health utilization, health behaviors, and physical health measures. However, the intervention has a positive effect on some maternal mental health outcomes, reducing depression reported in the survey data by eleven percentage points and prescription of psycholeptics recorded in the administrative data by seven percentage points.

This paper reviews trends in labor productivity, wage growth, unemployment and inequality over the past two decades in nine advanced countries. We focus on the two largest countries in the eurozone, Germany and France, which experienced similar increases in productivity over the past 20 years. In France wages grew in tandem with productivity, inequality declined and unemployment remains stubbornly high. In Germany, in contrast, wages largely stagnated (until 2008), inequality increased (until 2010), but unemployment is now at a record low. We argue that the divergent development of Germany and France is in part a consequence of an unprecedented decentralization of the wage-setting process in Germany, from the sectoral level down to the level of the firm or the individual. In contrast, the distinctive characteristics of France’s system of industrial relations prevented France from a similar downward adjustment of wages.

We propose a simple model selection test for choosing among two parametric likelihoods, which can be applied in the most general setting without any assumptions on the relation between the candidate models and the true distribution. That is, both, one or neither is allowed to be correctly specified or misspecified, they may be nested, nonnested, strictly nonnested, or overlapping. Unlike in previous testing approaches, no pretesting is needed, since in each case, the same test statistic together with a standard normal critical value can be used. The new procedure controls asymptotic size uniformly over a large class of data-generating processes. We demonstrate its finite sample properties in a Monte Carlo experiment and its practical relevance in an empirical application comparing Keynesian versus new classical macroeconomic models. Supplementary materials for this article are available online.

Despite its efficiency in tailoring education to the needs of students, a tracking system has the inherent problem of misallocating students to tracks because of incomplete information at the time of the tracking decision. This paper investigates the effects of attending a more advanced track in middle school on long-term education and labor market outcomes for Germany, a country with a very rigorous tracking system where the risk of misallocating students to tracks is, due to the early age at which tracking takes place, particularly high. Our research design exploits quasi-random shifts between tracks induced by date of birth, and identifies the long-term effects of early track attendance for a group of marginal students most at risk of misallocation. Remarkably, we find no evidence that for these students, attending a more advanced track leads to more favorable long-term outcomes. We attribute this result to the up- and downgrading of students between tracks after middle school when more information about their potential is available. Overall, our findings underscore that flexibilities built into a tracking system, which allow students to revise initial track choices at a later stage, effectively remedy even a prolonged exposure to a less advanced school environment.

The ill‐posedness of the nonparametric instrumental variable (NPIV) model leads to estimators that may suffer from poor statistical performance. In this paper, we explore the possibility of imposing shape restrictions to improve the performance of the NPIV estimators. We assume that the function to be estimated is monotone and consider a sieve estimator that enforces this monotonicity constraint. We define a constrained measure of ill‐posedness that is relevant for the constrained estimator and show that, under a monotone IV assumption and certain other mild regularity conditions, this measure is bounded uniformly over the dimension of the sieve space. This finding is in stark contrast to the well‐known result that the unconstrained sieve measure of ill‐posedness that is relevant for the unconstrained estimator grows to infinity with the dimension of the sieve space. Based on this result, we derive a novel non‐asymptotic error bound for the constrained estimator. The bound gives a set of data‐generating processes for which the monotonicity constraint has a particularly strong regularization effect and considerably improves the performance of the estimator. The form of the bound implies that the regularization effect can be strong even in large samples and even if the function to be estimated is steep, particularly so if the NPIV model is severely ill‐posed. Our simulation study confirms these findings and reveals the potential for large performance gains from imposing the monotonicity constraint.

No abstract is available for this item.

Existing evidence on peer effects in the productivity of coworkers stems from either laboratory experiments or real-world studies referring to a specific firm or occupation. In this paper, we aim at providing more generalizable results by investigating a large local labor market, with a focus on peer effects in wages rather than productivity. Our estimation strategy--which links the average permanent productivity of workers' peers to their wages--circumvents the reflection problem and accounts for endogenous sorting of workers into peer groups and firms. On average over all occupations, and in the type of high-skilled occupations investigated in studies on knowledge spillover, we find only small peer effects in wages. In the type of low-skilled occupations analyzed in extant studies on social pressure, in contrast, we find larger peer effects, about one-half the size of those identified in similar studies on productivity.

By exploiting a commuting policy that led to a sharp and unexpected inflow of Czech workers to areas along the German-Czech border, we examine the impact of an exogenous immigration-induced labor supply shock on local wages and employment of natives. On average, the supply shock leads to a moderate decline in local native wages and a sharp decline in local native employment. These average effects mask considerable heterogeneity across groups: while younger natives experience larger wage effects, employment responses are particularly pronounced for older natives. This pattern is inconsistent with standard models of immigration but can be accounted for by a model that allows for a larger labor supply elasticity or a higher degree of wage rigidity for older than for young workers. We further show that the employment response is almost entirely driven by diminished inflows of natives into work rather than outflows into other areas or nonemployment, suggesting that “outsiders” shield “insiders” from the increased competition.

This paper investigates the effect of the differential pecuniary costs of sons and daughters on fertility decisions. The focus is on dowries in India, which increase the economic returns to sons and decrease the returns to daughters. The paper exploits an exogenous shift in the cost of girls relative to boys arising from a revision in anti-dowry law, which is shown to have decreased dowry transfers markedly. The reform is found to have attenuated the widely documented positive association between daughters and their parents' fertility. The effect is particularly pronounced for more autonomous women and for individuals living in areas characterised by strong preferences for sons.

This paper theoretically and empirically examines the impact of self-managed working time (SMWT) on employee effort. As a policy of increased worker autonomy, SMWT can theoretically increase effort via intrinsic motivation and reciprocal behaviour, but it can also lead to a decrease of effort due to a loss of control. Based on German individual-level panel data, we find that SMWT employees exert higher effort levels than employees with fixed working hours. Even after accounting for observed and unobserved characteristics there remains a modest positive effect. This effect is largely driven by employees who are intrinsically motivated, suggesting that intrinsic motivation is complementary to SMWT. However, reciprocal work intensification does not seem to be an important channel of providing extra effort.

We estimate a dynamic life cycle model of labor supply, fertility, and savings, incorporating occupational choices, with specific wage paths and skill atrophy that vary over the career. This allows us to understand the trade-off between occupational choice and desired fertility, as well as sorting both into the labor market and across occupations. We quantify the life cycle career costs associated with children, how they decompose into loss of skills during interruptions, lost earnings opportunities, and selection into more child-friendly occupations. We analyze the long-run effects of policies that encourage fertility and show that they are considerably smaller than short-run effects.

This paper provides a comprehensive analysis of refugee migration, with emphasis on the current refugee crisis. After first reviewing the institutional framework laid out by the Geneva Convention for Refugees, we demonstrate that, despite numerous attempts at developing a common European asylum policy, EU countries continue to differ widely in interpretation and implementation. We then describe key features of the current refugee crisis and document the overall magnitudes and types of refugee movements, illegal border crossings and asylum applications to EU Member States. We next study the labour market integration of past refugee migrants to EU countries and draw conclusions for the current situation. Finally, we turn to the economics of refugee migrations, contrasting economic and refugee migrants, discussing the trade-offs between long-term asylum and temporary protection and highlighting the benefits of well-coordinated national asylum policies. We conclude with several policy recommendations.

We analyze the effect of immigrants’ legal status on their consumption behavior using unique survey data that samples both documented and undocumented immigrants. To address the problem of sorting into legal status, we propose two alternative identification strategies as exogenous source of variation for current legal status: First, transitory income shocks in the home country, measured as rainfall shocks at the time of emigration. Second, amnesty quotas that grant legal residence status to undocumented immigrants. Both sources of variation create a strong first stage, and—although very different in nature—lead to similar estimates of the effects of illegal status on consumption, with undocumented immigrants consuming about 40% less than documented immigrants, conditional on background characteristics. Roughly one quarter of this decrease is explained by undocumented immigrants having lower incomes than documented immigrants. Our findings imply that legalization programs may have a potentially important effect on immigrants’ consumption behavior, with consequences for both the source and host countries.

We propose a model of job search with reference-dependent preferences, with loss aversion relative to recent income (the reference point). In this model, newly unemployed individuals search hard since consumption is below their reference point. Over time, though, they get used to lower income and thus reduce their search effort. In anticipation of a benefit cut, their search effort rises again, then declines once they get accustomed to the lower postcut benefit level. The model fits the typical pattern of exit from unemployment, even with no unobserved heterogeneity. To distinguish between this and other models, we use a unique reform in the unemployment insurance (UI) benefit path. In 2005, Hungary switched from a single-step UI system to a two-step system, with overall generosity unchanged. The system generated increased hazard rates in anticipation of, and especially following, benefit cuts in ways the standard model has a hard time explaining. We estimate a model with optimal consumption, endogenous search effort, and unobserved heterogeneity. The reference-dependent model fits the hazard rates substantially better than plausible versions of the standard model, including habit formation. Our estimates indicate a slow-adjusting reference point and substantial impatience, likely reflecting present-bias.

Estimates of the most common mobility measure, the intergenerational elasticity, can be severely biased if snapshots are used to approximate lifetime income. However, little is known about biases in other popular dependence measures. Using long Swedish income series, we provide such evidence for log-linear and rank correlations, and rank-based transition probabilities. Attenuation bias is considerably weaker in rank-based measures. Life-cycle bias is strongest in the elasticity, moderate in log-linear correlations, and small in rank-based measures. However, there are important exceptions: persistence in the tails of the distribution is considerably higher and long-distance downward mobility lower than estimates from short-run income suggest.

Is unemployment the overwhelming determinant of domestic violence that many commentators expect it to be? The contribution of this paper is to examine, theoretically and empirically, how changes in unemployment affect the incidence of domestic abuse. The key theoretical prediction is that male and female unemployment have opposite-signed effects on domestic abuse: an increase in male unemployment decreases the incidence of intimate partner violence, while an increase in female unemployment increases domestic abuse. Combining data on intimate partner violence from the British Crime Survey with locally disaggregated labor market data from the UK’s Annual Population Survey, we find strong evidence in support of the theoretical prediction.

Purpose - The purpose of this paper is to empirically assess whether immigrants suffer from unequal access to health care services, that add to prevailing socioeconomic barriers to care. Design/methodology/approach - Using a uniquely rich Italian health survey, the authors estimate the correlation between immigrant status and the probability of accessing health services, conditional on a rich set of individual and territorial characteristics. Findings - Results show that foreigners are more likely to contact emergency services and less likely to visit specialist doctors and use preventive care. Similar results hold for second-generation immigrants. Originality/value - The authors discuss the sources of observed inequities and suggest tentative policy implications to promote equal access.

This paper analyses the effect of local crime rates on residents' mental health. Using longitudinal information on individuals' mental well-being, we address the problem of sorting and endogenous moving behaviour. We find that crime causes considerable mental distress for residents, mainly driven by property crime. Effects are stronger for females, and mainly related to depression and anxiety. The distress caused by one standard deviation increase in local crime is 2-4 times larger than that caused by a one standard deviation decrease in local employment, and about one seventh of the short-term impact of the 7 July 2005 London Bombings.

No abstract is available for this item.

Many migrations are temporary -- a fact that has often been ignored in the economic literature on migration. Such omission may be serious in that expected migration temporariness can impart a distinct dynamic element to immigrants' economic behavior, generating possible consequences for nonmigrants in both home and host countries. In this paper, we provide a thorough examination of the various aspects of temporary migrations that matter for the analysis of economic phenomena. We demonstrate the extent of temporary migrations in population movements. We show how temporariness can affect the various economic choices and how better data have improved both the measurement of nonpermanent migrations and the analyses of various aspects of migrant behavior. We propose a general theoretical framework for modeling temporary migration decisions, based on which we outline the various motives for temporariness while simultaneously reviewing related literature and available data sources. We discuss the possible consequences of migration temporariness for nonmigrants in both home and host countries. (JEL F22, F24, J11, J61, K37, O15)

We classify the empirical literature on the wage impact of immigration into three groups, where studies in the first two groups estimate different relative effects, and studies in the third group estimate the total effect of immigration on wages. We interpret the estimates obtained from the different approaches through the lens of the canonical model to demonstrate that they are not comparable. We then relax two key assumptions in this literature, allowing for inelastic and heterogeneous labor supply elasticities of natives and the "downgrading" of immigrants. "Downgrading" occurs when the position of immigrants in the labor market is systematically lower than the position of natives with the same observed education and experience levels. Downgrading means that immigrants receive lower returns to the same measured skills than natives when these skills are acquired in their country of origin. We show that heterogeneous labor supply elasticities, if ignored, may complicate the interpretation of wage estimates, and particularly the interpretation of relative wage effects. Moreover, downgrading may lead to biased estimates in those approaches that estimate relative effects of immigration, but not in approaches that estimate total effects. We conclude that empirical models that estimate total effects not only answer important policy questions, but are also more robust to alternative assumptions than models that estimate relative effects.

The assumption that all migrations are permanent, which pervaded the early microdata-based research on immigrant career profiles, is not supported by the empirical evidence. Rather, many – if not most – migrations appear to be temporary. In this paper, therefore, we illustrate the estimation challenges when migrations are temporary. As in an overwhelming share of the selective out-migration literature, our basic structure assumes that the process that determines out-migration is unrelated to other choices that affect wage growth, such as human capital investment or labour supply decisions, which greatly simplifies the analysis. When the choice of whether and when to out-migrate also affects decisions that determine wage growth, the problem becomes inherently dynamic and requires a more structural approach to estimation, which we briefly discuss.

This article derives novel testable implications of referral-based job search networks in which employees provide employers with information about potential new hires that they otherwise would not have. Using comprehensive matched employer–employee data covering the entire workforce in one large metropolitan labour market combined with unique survey data linked to administrative records, we provide evidence that workers earn higher wages and are less inclined to leave their firms if they have obtained their job through a referral. These effects are particularly strong at the beginning of the employment relationship and decline with tenure in the firm, suggesting that firms and workers learn about workers' productivity over time. Overall, our findings imply that job search networks help to reduce informational deficiencies in the labour market and lead to productivity gains for workers and firms.

This paper provides an introduction into the estimation of marginal treatment effects (MTE). Compared to the existing surveys on the subject, our paper is less technical and speaks to the applied economist with a solid basic understanding of econometric techniques who would like to use MTE estimation. Our framework of analysis is a generalized Roy model based on the potential outcomes framework, within which we define different treatment effects of interest, and review the well-known case of IV estimation with a discrete instrument resulting in a local average treatment effect (LATE). Turning to IV estimation with a continuous instrument, we demonstrate that the 2SLS estimator may be viewed as a weighted average of LATEs and discuss MTE estimation as an alternative and more informative way of exploiting a continuous instrument. We clarify the assumptions underlying the MTE framework, its relation to the correlated random coefficients model, and illustrate how the MTE estimation is implemented in practice.

In this paper, we analyse the effect of emigration from Poland on Polish wages. Focusing on the 1998–2007 period for Poland, we use a unique dataset that contains information about household members who are currently living abroad, which allows us to develop region-specific emigration rates and to estimate the effect of emigration on wages using within-region variation. Our findings show that emigration led to a slight increase in wages for high- and medium-skilled workers, which are the two groups with the largest relative outmigration rates. Workers at the low end of the skill distribution might have experienced wage decreases.

The combination of increasing immigration pressures and restrictive policies imperfectly enforced by many destination countries has made illegal immigration widespread. This article provides an overview of the mechanisms behind the formation of migration policies and how they lead to or limit the presence of illegal immigrants. We also study how governments deal ex post with the presence of undocumented foreign workers by introducing immigration amnesties. We review the determinants of their introduction and address their desirability from the point of view of aggregate welfare. As countries in the European Union differ substantially in the implementation of both ex ante and ex post immigration policies, we emphasize the need for more coordination in the area of migration policy enforcement, both at the border and within each country (JEL codes: F22, J61).

The changing economic reality of the last decades has prompted large movements of people across and within national borders, which, in turn, have given rise to new opportunities and challenges. This volume addresses a number of key aspects of these developments, by bringing together a unique collection of chapters, written by leading scholars from three different disciplines: economics, sociology, and political science. The first part of the book - Economic Change - starts with two case studies: The mass migration from the former Soviet Union to Israel in the early 1990s, and the mass migration from rural to urban areas in China that started in the mid 1990s. The final chapter of the first part provides a thorough introduction and overview into methodologies that can help to address numerous issues faced by researchers working with migration data, of the type underlying the analysis in the first two chapters. The second part of the book - Social Challenge - discusses how societies are shaped by immigration. It investigates the pitfalls of policies that do not take account of the implications for decisions of individual migrants; explores the important aspect of family re-unification and discusses whether society should follow a path towards a multicultural society or a society that forces newcomers to adopt existing cultures. Finally, this volume ponders whether the diversity created through migration impacts negatively on the societal structure of the receiving countries. These chapters together, written by some of the foremost experts in the areas, provide intriguing insights into the complexity of migratory phenomena and the challenges to policy and society at large. Contributors to this volume - Jack Citrin, University of California, Berkeley Christian Dustmann, University College London Zvi Eckstein, IDC Herzliya Paul Frijters, University of Queensland Sarit Cohen Goldner, Bar Ilan University Robert G. Gregory, Australian National University Guillermina Jasso,

This paper analyzes how changes in the skill mix of local labor supply are absorbed by the economy, distinguishing between three adjustment mechanisms: wages, expansion in size of those production units using the more abundant skill group more intensively, and more intensive use of the more abundant skill group within production units. We contribute to the literature by analyzing these adjustments on the firm rather than industry level, using German administrative data. We show that most adjustments occur within firms through changes in relative factor intensities and that firms entering and exiting the market are an important additional absorption mechanism.

Programmes aimed at reducing the presence of unauthorized immigrants are often at the core of the migration policy debate in host countries. In recent years, a growing body of empirical literature has attempted to understand the effect of lacking legal status on immigrants’ outcomes and behaviour. The main difficulties in this field are the scarcity of data and the identification challenge posed by endogenous selection into legal status. The vast majority of these articles have therefore used amnesty programmes (or similar policy changes) to establish causal relationships. In this article, we propose a first systematic review of the empirical literature for the USA and Europe on the impact of legal status on different immigrants’ outcomes. We then present some new evidence of the relationship between labour market outcomes and legal status in the Italian context. In our empirical analysis, we first provide some descriptive evidence on differences in the outcomes for groups with different residence statuses, and we then exploit a specific amnesty programme to produce causal estimates of the impact of legal status. Our results confirm previous findings in the literature and show that the design of the specific amnesty analysed matters in shaping its effects. (JEL codes: F22, J61, K37).

No abstract is available for this item.

In this paper, we investigate the fiscal impact of immigration on the UK economy, with a focus on the period since 1995. We provide estimates for the overall immigrant population for the period between 1995 and 2012, and for more recent immigrants who arrived since 2000, distinguishing between immigrants from European versus non-European countries. Overall, our findings indicate that EEA immigrants have made a positive fiscal contribution, even during periods when the UK was running budget deficits. This positive contribution is particularly noticeable for more recent immigrants that arrived since 2000 in particular from EEA countries.

The impact of immigration on the public finances is an important influence on public opinion. This paper aims to provide a thorough conceptual survey, pointing out the complexities of a full understanding and the relevance of indirect effects and covering both static perspectives and longer run dynamic issues. It considers simple accounting approaches which are relatively neglectful of behavioural responses but also tries to bring out the complexities in the nature of the relationship between rates of immigration and the public exchequer that come with more sophisticated modelling of its economic effects.

Free-riding potentially limits the effectiveness of profit sharing in motivating workers. While reciprocity can mitigate this problem, it need not be uniformly productive. We show that the probability of receiving profit sharing takes an inverse U-shape as detailed individual survey measures of reciprocity increase. This is consistent with moderate but not extreme reciprocity stimulating productivity. We support one potential causation path by showing that extreme positive (negative) reciprocity is associated with extremely high (low) socializing and among workers receiving profit sharing, an intermediate degree of socializing is associated with the maximum amount of paid and unpaid overtime, a productivity proxy.

This paper investigates the effect of early exposure to neighborhood crime on subsequent criminal behavior of youth exploiting a unique natural experiment between 1986 and 1998 when refugee immigrants to Denmark were assigned to neighborhoods quasi-randomly. We find strong evidence that the share of young people convicted for crimes, in particular violent crimes, in the neighborhood increases convictions of male assignees later in life. No such effects are found for other measures of neighborhood crime including the rate of committed crimes. Our findings suggest social interaction as a key channel through which neighborhood crime is linked to individual criminal behavior.

The relation between income and migration intentions can be monotonically decreasing, increasing, or inverse U-shaped, dependent on the level of migration cost relative to wealth and if individuals are credit constrained. Using unique individual level data, covering countries in three geographic regions – sub-Saharan Africa, Asia, and Latin America – we show that migration intentions respond to individual wealth, and that the pattern differs across the country groups studied in a manner compatible with the predictions of our simple model. We also show that contentment with various dimensions of local amenities, such as public services and security, are key determinants of migration intentions.

No abstract is available for this item.

In the late 1990s and into the early 2000s, Germany was often called "the sick man of Europe." Indeed, Germany's economic growth averaged only about 1.2 percent per year from 1998 to 2005, including a recession in 2003, and unemployment rates rose from 9.2 percent in 1998 to 11.1 percent in 2005. Today, after the Great Recession, Germany is described as an "economic superstar." In contrast to most of its European neighbors and the United States, Germany experienced almost no increase in unemployment during the Great Recession, despite a sharp decline in GDP in 2008 and 2009. Germany's exports reached an all-time record of $1.738 trillion in 2011, which is roughly equal to half of Germany's GDP, or 7.7 percent of world exports. Even the euro crisis seems not to have been able to stop Germany's strengthening economy and employment. How did Germany, with the fourth-largest GDP in the world transform itself from "the sick man of Europe" to an "economic superstar" in less than a decade? We present evidence that the specific governance structure of the German labor market institutions allowed them to react flexibly in a time of extraordinary economic circumstances, and that this distinctive characteristic of its labor market institutions has been the main reason for Germany's economic success over the last decade.

This paper provides a comprehensive description of the nature and extent of ethnic segregation in Germany. Using matched employer–employee data for the universe of German workers over the period 1975 to 2008, I show that there is substantial ethnic segregation across both workplaces and residential locations and that the extent of segregation has been relatively stable over the last 30years. Workplace segregation is particularly pronounced in agriculture and mining, construction, and the service sector, and among low-educated workers. Ethnic minority workers are segregated not only from native workers but also from workers of other ethnic groups, although less so if they share a common language. From a dynamic perspective, for given cohorts of workers, the results show a clear pattern of assimilation, reminiscent of typical wage assimilation profiles, with immigrants being increasingly less likely to work in segregated workplaces with time spent in the host country.

We evaluate the impact on crime of a localized policing experiment that depenalized the possession of small quantities of cannabis in the London borough of Lambeth. We find that depenalization policy caused the police to reallocate effort toward nondrug crime. Despite the overall fall in crime attributable to the policy, we find that the total welfare of local residents likely fell, as measured by house prices. We shed light on what would be the impacts on crime of a citywide depenalization policy by developing and calibrating a structural model of the market for cannabis and crime.

This article analyzes the impact of five major expansions in maternity leave coverage in Germany on mothers' labor market outcomes after childbirth. To identify the causal impact of the reforms, we use a difference-in-difference design that compares labor market outcomes of mothers who give birth shortly before and shortly after a change in maternity leave legislation in years of policy changes and years when no changes have taken place. Each expansion in leave coverage reduced mothers' postbirth employment rates in the short run. The longer-run effects of the expansions on mothers' postbirth labor market outcomes are, however, small.

This paper focuses on empirical connections between crime and immigration, studying two large waves of recent U.K. immigration (the late 1990s/early 2000s asylum seekers and the post-2004 inflow from EU accession countries). The first wave led to a modest but significant rise in property crime, while the second wave had a small negative impact. There was no effect on violent crime; arrest rates were not different, and changes in crime cannot be ascribed to crimes against immigrants. The findings are consistent with the notion that differences in labor market opportunities of different migrant groups shape their potential impact on crime.

This paper concerns the decomposition of income risk into permanent and transitory components using repeated cross-section data on income and consumption. Our focus is on the detection of changes in the magnitudes of variances of permanent and transitory risks. A new approximation to the optimal consumption growth rule is developed. Evidence from a dynamic stochastic simulation is used to show that this approximation can provide a robust method for decomposing income risk in a nonstationary environment. We examine robustness to unobserved heterogeneity in consumption growth and to unobserved heterogeneity in income growth. We use this approach to investigate the growth in income inequality in the UK in the 1980s.

A rise in population caused by increased immigration, is sometimes accompanied by concerns that the increase in population puts additional or differential pressure on welfare services which might affect the net fiscal contribution of immigrants. The UK and Germany have experienced significant increases in immigration in recent years. This study uses longitudinal data from both countries to examine whether immigrants differ in their use of health services compared to native born individuals, both on arrival and over time. While immigrants to Germany, but not the UK, are more likely to self-report poor health than the native-born population, the samples of immigrants in both countries use hospital and GP services at broadly the same rate as the native born populations. Controls for observed and unobserved differences between immigrants and native-born sample populations make little difference to these broad findings.

It is standardly assumed that individuals react to perceived unfairness or norm violations in precisely the same area or relationship where the original offense has occurred. However, grievances over being exposed to injustice may have even broader consequences and also spill over to other contexts, causing non-compliant behavior there. We present evidence that such “fairness spillovers” can incur large economic costs: a belief that there is unfairness in taxation in the sense that the rich do not pay enough taxes is associated with a twenty percent higher level of paid absenteeism from work.

This paper analyses the effect immigration has on the wages of native workers. Unlike most previous work, we estimate wage effects along the distribution of native wages. We derive a flexible empirical strategy that does not rely on pre-allocating immigrants to particular skill groups. In our empirical analysis, we demonstrate that immigrants downgrade considerably upon arrival. As for the effects on native wages, we find a pattern of effects whereby immigration depresses wages below the 20th percentile of the wage distribution but leads to slight wage increases in the upper part of the wage distribution. This pattern mirrors the evidence on the location of immigrants in the wage distribution. We suggest that possible explanations for the overall slightly positive effect on native wages, besides standard immigration surplus arguments, could involve deviations of immigrant remuneration from contribution to production either because of initial mismatch or immigrant downgrading.

This paper investigates the impact of television on internal migration in Indonesia. We exploit the differential introduction of private television throughout the country and the variation in signal reception due to topography to estimate the causal effect of media exposure. Our estimates reveal important long and short run effects. An increase of one standard deviation in the number of private TV channels received in the area of residence as an adolescent reduces future inter-provincial migration by 1.7–2.7 percentage points, and all migration (inter and intra-provincial) by 3.9–6.8 percentage points. Short run effects are similar in magnitude. We also show that respondents less exposed to private television are more likely to consider themselves among the poorest groups in society. As we discuss in a stylized model of migration choice under imperfect information, these findings are consistent with Indonesian citizens over-estimating the net gains from internal migration when access to television is limited.

This paper evaluates the impact of three major expansions in maternity leave coverage in Germany on children's long-run outcomes. To identify the causal impact of the reforms, we use a difference-indifference design that compares outcomes of children born shortly before and shortly after a change in maternity leave legislation in years of policy changes, and in years when no changes have taken place. We find no support for the hypothesis that the expansions in leave coverage improved children's outcomes, despite a strong impact on mothers' return to work behavior after childbirth. (JEL J13, J16, J22, J32)

Swaziland and Lesotho are the countries with the highest HIV prevalence in the world. These countries have in common another distinguishing feature: during the past century, they sent massive numbers of migrant workers into South African mines. This paper examines whether mining activities in a bordering country affect HIV infections. A job in the mines implies spending a long period away from the household of origin surrounded by an active sex industry. This creates potential incentives for multiple concurrent partnerships. Using Demographic and Health Surveys, the analysis shows that migrant miners aged 30–44 are 15 percentage points more likely to be HIV positive and having a migrant miner as a partner increases the probability of infection for women by 8 percentage points. The study also shows that miners are less likely to abstain and to use condoms and that female partners of miners are more likely to engage in extra-marital sex. We interpret these results as suggesting that miners' migration into South Africa has increased the spread of HIV/AIDS in the countries of origin. Consistent with this interpretation, the associations between HIV infection and being a miner or a miner's wife are not statistically significant in Zimbabwe, characterised by a local mining industry.

This paper studies a possible market failure in the firm-based vocational training market: training may be too complex to be specified in a contract so that it is legally enforceable, resulting in the inability of firms to commit to training provision. We present a model of firm provided training and show that training is substantially lower in the no commitment than in the commitment case. Thus, firm-based vocational training schemes are more successful in countries where commitment to training provision is more widespread. (JEL J24, L25, M12, M53)

There is strong public opposition to increased immigration throughout Europe. Given the modest economic impacts of immigration estimated in most studies, the depth of antiimmigrant sentiment is puzzling. Immigration, however, does not just affect wages and taxes. It also changes the composition of the local population, threatening the "compositional amenities" that natives derive from their neighborhoods, schools, and workplaces. In this paper we use a simple latent factor model, combined with data for 21 countries from the 2002 European Social Survey (ESS), to measure the relative importance of economic and compositional concerns in driving opinions about immigration policy. The ESS included a unique battery of questions on the labor market and social impacts of immigration, as well as on the desirability of increasing or reducing immigrant inflows. We find that compositional concerns are 2-5 times more important in explaining variation in individual attitudes toward immigration policy than concerns over wages and taxes. Likewise, most of the difference in opinion between more- and lesseducated respondents is attributable to heightened compositional concerns among people with lower education.

No abstract is available for this item.

Using German employee data, we find that being raised by two religious parents and having no current religious affiliation is associated with higher earnings. This conforms to the hypothesis that people who are raised religiously and reject religion as adults are economically more successful as they combine a strong internalized work ethic with an increased interest in present consumption (as opposed to afterlife consumption).

This paper compares the educational attainment of second-generation immigrants with that of children born to native parents in several OECD countries. We show that the average gap in test scores of children of immigrants and natives differs widely across countries, and is strongly related to achievement differences in the parent generation. The disadvantage of immigrant children reduces, and even disappears for some countries, once we condition on parental background characteristics. A foreign language spoken at home is the single most important factor associated with the achievement gap. An alternative reference group to native children are children born to non-emigrants in the country of origin. We compare mathematics test scores of children of Turkish immigrants in several destination countries, to those of Turkish children in Turkey whose parents have not emigrated. We find that in most host countries, the test score achievement of the children of Turkish immigrants (although being lower than that of their native peers) is higher than that of children of their cohort in the home country. This is conditional and unconditional on parental background characteristics. The higher school- and peer- quality relative to that in the home country is a main determinant of the educational advantage of immigrant children.

While available evidence suggests that the events of September 11th negatively influenced the relative earnings of employees with Arab background in the US, it is not clear that they had similar effects in other countries. Our study for Germany provides evidence that the events also affected the relative earnings of Muslims outside the US. However, the results show that there was no uniform effect on all types of Muslims across all types of firms. Accounting for moderating factors, a significantly negative effect can primarily be found for low-skilled Muslims employed in small- and medium-sized firms. This conforms to theoretical expectations. Moreover, we demonstrate that defining appropriate treatment and control groups is crucial for identifying the effects.

This paper analyzes the effects on firms of a ban on smoking in public places. Our empirical strategy relies on comparing outcomes in Scotland before and after the Scottish smoking ban (introduced in March 2006) with those in northern England, where such a ban was not in place. Our analysis of survey data collected from public houses finds that the Scottish smoking ban reduced pub sales with no concomitant effect on prices. An event study analysis of the stock market performance of pub-holding companies corroborates the negative effect of the smoking ban on firm performance.

With the fall of the Berlin Wall, ethnic Germans living in eastern Europe and the former Soviet Union were given the opportunity to migrate to Germany. Within 15 years, 2.8 million individuals had done so. Upon arrival, these immigrants were exogenously allocated to different regions to ensure an even distribution across the country. Their inflow can therefore be seen as a quasi-experiment of immigration. I analyze the effect of these inflows on skill-specific employment rates and wages. The results indicate a displacement effect of 3.1 unemployed workers for every 10 immigrants that find a job, but no effect on relative wages.

Homelessness represents the most extreme form of poverty in industrialized countries and a critical consequence of economic crisis. The economic research on homelessness is almost non-existent because of the lack of reliable data. By interviewing homeless people in Milan and with a response rate of 62\%, this paper presents and discusses the results of the first representative survey in Europe among the homeless. We find an overwhelming majority of divorced males in the central part of their life. Respondents indicate unemployment and breakdowns in family relationships as the main reasons for their status. Further, almost one third of the sample works, suggesting a possible reintegration of unemployed homeless in the labour market. Unconditional welfare assistance is correlated with labour market inactivity and longer homelessness spells.

No abstract is available for this item.

In this paper, we analyse the association between spatial concentration of ethnic minorities, and racial harassment. Ethnic concentration relates to racial harassment through at least three channels: hostility in attitudes of majority individuals that find expression in harassment behaviour, the probability of minority individuals meeting majority individuals, and the cost of expressing hostility aggressively. Harassment can thus not simply be modeled as a stronger form of hostility. Using unique data for Britain, we show that, in area of higher local ethnic concentration, experience of harassment is lower, even though hostility on the side of the majority population is not.

Sjaastad (1962) viewed migration in the same way as education: as an investment in the human agent. Migration and education are decisions that are indeed intertwined in many dimensions. Education and skill acquisition play an important role at many stages of an individual's migration. Differential returns to skills in origin and destination country are a main driver of migration. The economic success of the immigrant in the destination country is to a large extent determined by his or her educational background, how transferable these skills are to the host country labor market and how much he or she invests in further skills after arrival. The desire to acquire skills in the host country that have a high return in the country of origin may be another important reason for a migration. From an intertemporal point of view, the possibility of a later migration may affect educational decisions in the home country long before a migration is realized. In addition, the decisions of migrants regarding their own educational investment and their expectations about future migration plans may affect the educational attainment of their children. But migration and education are not only related for those who migrate or their descendants. Migrations of some individuals may have consequences for educational decisions of those who do not migrate, both in the home and in the host country. By easing credit constraints through remittances, migration of some may help others to go to school. By changing the skill base of the receiving country, migration may change incentives to invest in certain types of human capital. In addition, migrants and their children may create externalities that influence educational outcomes of nonmigrants in the destination country. This chapter will discuss some of the key areas that connect migration and education.

The measles, mumps and rubella (MMR) controversy provides an interesting case where, for a short period of time, research publicized in the media, suggested a potential risk of serious side-effects associated with the vaccine, where there was also a sharp behavioral response from the public, and where the initial information was subsequently overturned. We consider the controversy from the perspective of health inequalities and the assimilation of information, focusing on whether and how vaccine uptake behavior in the wake of the controversy differed among groups of parents by education and income. Using panel data on the variation in the uptake of the MMR, and other childhood immunizations, across local Health Authority areas we find that the uptake rate of the MMR declined faster in areas where a larger fraction of parents had stayed in education past the age of 18 than in areas with less educated parents. We also find that the same areas reduced their relative uptake of other uncontroversial childhood immunizations, suggesting a "spillover" effect. Using a supplementary data source we find evidence of a corresponding positive income effect, indicating that wealthier parents avoided the MMR dilemma by purchasing single vaccines.

In this paper we present a model that explains migrations as decisions that respond to where human capital can be acquired more efficiently, and where the return to human capital is highest. The basic framework is a dynamic Roy model in which a worker possesses two distinct skills that can be augmented by learning by doing. There are different implicit prices, in different countries and different rates of skill accumulation. Our analysis contributes to the literature on the selection of immigrants and return migrants by offering a richer framework that may help to accommodate selection of emigrants and return migrants that are not immediately compatible with the one-dimensional skill model. Our analysis also has implications for the debate on brain drain and brain gain. In the two skills model presented here, return migration can lead to a mitigation of the brain drain, or even the creation of a "brain gain", where those who return bring the home country augmented local skills.

We present a model in which workers with greater ability and greater risk tolerance move into performance pay jobs to capture rents and contrast it with the classic agency model. Estimates from the German Socio-Economic Panel confirm testable implications drawn from our model. First, before controlling for earnings, workers in performance pay jobs have higher job satisfaction, a proxy for on-the-job utility. Second, after controlling for earnings, workers in jobs with performance pay have the same job satisfaction as those not in such jobs. Third, those workers in performance pay jobs who have greater risk tolerance routinely report greater job satisfaction. While these findings support models in which workers capture rent, they would not be suggested by the classic agency model.

We study noncooperative household models with two agents and several voluntarily contributed public goods, deriving the counterpart to the Slutsky matrix and demonstrating the nature of the deviation of its properties from those of a true Slutsky matrix in the unitary model. We provide results characterising both cases in which there are and are not jointly contributed public goods. Demand properties are contrasted with those for collective models and conclusions drawn regarding the possibility of empirically testing the collective model against noncooperative alternatives and the noncooperative model against a general alternative.

CEO compensation that is perceived to be excessive regularly causes agitation in the population. Using German data, we show that perceiving CEO pay to be unfair has economic repercussions in terms of lower work morale.

Using longitudinal data from Ukraine we examine the extent of any long-lasting effects of exposure to the Chernobyl disaster on the health and labour market performance of the adult workforce. Variation in the local area level of radiation fallout from the Chernobyl accident is considered as a random exogenous shock with which to try to establish its causal impact on poor health, labour force participation, hours worked and wages. There appears to be a significant positive association between local area-level radiation dosage and perception of poor health, though much weaker associations between local area-level dosage and other specific self-reported health conditions. There is also some evidence to suggest that those who lived in areas more exposed to Chernobyl-induced radiation have significantly lower levels of labour market performance 20 years on.

No abstract is available for this item.

Unemployment varies substantially over time and across sub-groups of the labour market. Worker flows among labour-market states act as key determinants of this variation. We examine how the structure of unemployment across groups and its cyclical movements across time are shaped by changes in labour-market flows. Using novel estimates of flow transition rates for the UK over the last 35 years, we decompose unemployment variation into parts accounted for by changes in rates of job loss, job-finding, and flows via non-participation. Close to two-thirds of the volatility of unemployment in the UK over this period can be traced to rises in rates of job loss that accompany recessions. The share of this inflow contribution has been broadly the same in each of the past three recessions. Decreased job-finding rates account for around one-quarter of unemployment cyclicality and the remaining variation can be attributed to flows via non-participation. Digging deeper into the structure of unemployment by gender, age, and education, the flow approach is shown to provide a richer understanding of the unemployment experiences across population sub-groups.

This paper investigates labor market dynamics for physicians in Vietnam, paying particular attention to geographic distribution and dual job holding. The analysis is based on a survey of a random sample of physicians in 3 regions in 2009–10. We found that the labor market for physicians in Vietnam is characterized by very little movement among both facility levels and geographic areas. Dual practice is also prominent, with over one-third of physicians holding a second job. After taking account of the various sources of income for physicians and controlling for key factors, there is a significant wage premium associated with locating in an urban area. This premium is driven by much higher earnings from dual job holding rather than official earnings in the primary job. There are important policy implications that emerge. With such low job turnover rates, policies to increase the number of physicians in rural areas could focus on initial recruitment. Once in place, physicians tend to remain in their jobs for a very long time. Lastly, findings from an innovative discrete choice experiment suggest that providing long-term education and improving equipment are the most effective instruments to recruit physicians to work in rural areas.

This article documents that at the start of school, pupils from most ethnic groups substantially lag behind White British pupils. However, these gaps decline for all groups throughout compulsory schooling. Language is the single most important factor why ethnic minority pupils improve relative to White British pupils. Poverty, in contrast, does not contribute to the catch-up. Our results also suggest the possibility that the greater than average progress of ethnic minority pupils in schools with more poor pupils may partly be related to teacher incentives to concentrate attention on particular pupils, generated by the publication of school league tables.

Rising immigration has undoubtedly been one of the most significant demographic developments experienced by the United Kingdom over the past fifteen years. This article reviews the evidence on the effects of immigration on the UK labour market. On average, it seems that immigration has not had much of an effect on either employment or pay. However, there may be some evidence of downward pressures on pay and jobs impact in the low skill sector, though these effects are not large.

In this paper we study the remittance behavior of immigrants and how it relates to temporary versus permanent migration plans. We use a unique data source that provides unusual detail on remittances and return plans, and follows the same household over time. Our data allows us also to distinguish between different purposes of remittances. We analyze the association between individual and household characteristics and the geographic location of the family as well as return plans, and remittances. The panel nature of our data allows us to condition on household fixed effects. To address measurement error and reverse causality, we use an instrumental variable estimator. Our results show that changes in return plans are related to large changes in remittance flows.

The recession of 2008-9 inflicted a larger cumulative loss of UK output than any of the other postwar recessions. Nevertheless, employment rates remained higher than might have been expected given the experience of previous recessions. The main reasons for this appear to be a combination of high firm profitability levels going into the recession, supportive monetary and fiscal policies during the recession, reductions in real producer wages and relatively buoyant real consumer wages. Unemployment had reached its lowest levels for 30 years going in to the latest recession and has also remained relatively subdued through the downturn, certainly compared to previous recessions. A combination of lower inflow rates into unemployment, allied with a relatively higher outflow rate into employment underlie this. As government support for the economy is scaled back, it may be however that it will take a long time for employment to return to levels last seen before the recession.

This paper investigates educational attainment and economic performance of ethnic minority immigrants and their children in Britain, in comparison to white British born. We find that ethnic minority immigrants and their children are on average better educated in comparison to their British born white peers. Educational attainment of British born minorities is far higher than that of their parent generation, and supersedes that of their white native born peers. Despite this, British born ethnic minorities exhibit on average lower employment probabilities. Their mean wages appear to be slightly higher than those of their white native born peers, but this is due to their higher educational attainment and their concentration in Greater London. Mean wages would be considerably lower for the same characteristics and the same regional allocation. Differences in wage offers do not explain employment differences of British born ethnic minorities. We discuss possible alternative explanations.

This paper assesses the fiscal consequences of migration to the UK from the Central and Eastern European countries that joined the EU in May 2004 (A8 countries). We show that A8 immigrants who arrived after EU enlargement in 2004, and who have at least one year of residence - and are therefore legally eligible to claim benefits - are 60\% less likely than natives to receive state benefits or tax credits, and 58\% less likely to live in social housing. Even if A8 immigrants had the same demographic characteristics of natives, they would still be 13\% less likely to receive benefits and 28\% less likely to live in social housing. We then compare the net fiscal contribution of A8 immigrants with that of individuals born in the UK, and find that in each fiscal year since enlargement in 2004, A8 immigrants made a positive contribution to public finance despite the fact that the UK has been running a budget deficit over the last years. This is because they have a higher labour force participation rate, pay proportionately more in indirect taxes, and make much lower use of benefits and public services.

A central concern about immigration is the integration into the labour market, not only of the first generation but also of subsequent generations. Little comparative work exists for Europe's largest economies. France, Germany and the UK have all become, perhaps unwittingly, countries with large immigrant populations albeit with very different ethnic compositions. Today, the descendants of these immigrants live and work in their parents' destination countries. This article presents and discusses comparative evidence on the performance of first and second-generation immigrants in these countries in terms of education, earnings and employment.

In this article we address three issues relating to immigrants' identity, measured as the feeling of belonging to particular ethnic groups. We study the formation of identity with home and host countries. We investigate how identity with either country relates to immigrants' and their children's labour market outcomes. Finally, we analyse the intergenerational transmission of identity. Our analysis is based on a unique longitudinal dataset on immigrants and their children. We find that identity with either country is only weakly related to labour market outcomes. However, there is strong intergenerational transmission of identity from one generation to the next.

We analyze the impact of exercising sports during childhood and adolescence on educational attainment. The theoretical framework is based on models of allocation of time and educational productivity. Using the rich information from the German Socio-Economic Panel (GSOEP), we apply generalized ordered probit models to estimate the effect of participation in sport activities on secondary school degrees and professional degrees. Even after controlling for important variables and selection into sport, we find strong evidence that the effect of sport on educational attainment is statistically significant and positive.

This paper reviews the labour market performance and educational attainment of ethnic minorities and second generation immigrants in the UK over the last three decades. We first describe the size and composition of the minority population and its regional distribution over time, and investigate their labour market performance relative to the white native population. We then present an intergenerational comparison of education, employment, and wages of different ethnic minority groups born in Britain to their parents' generation, and to equivalent groups of white native born individuals. We conclude with a summary of recent research on the school performance of children from ethnic minorities relative to their white peers.

This article studies how portable skills accumulated in the labor market are. Using rich data on tasks performed in occupations, we propose the concept of task-specific human capital to measure empirically the transferability of skills across occupations. Our results on occupational mobility and wages show that labor market skills are more portable than previously considered. We find that individuals move to occupations with similar task requirements and that the distance of moves declines with experience. We also show that task-specific human capital is an important source of individual wage growth, accounting for up to 52% of overall wage growth.

Comparisons of national labor market performance have conventionally relied on standard unemployment and employment rates (UR and ER) and these two 'quantity-of-employment' indicators have framed policy debates on the merits of reforms that would move European labor markets closer to the 'American Model.' This paper compares French and US performance using a variety of alternative indicators, including new measures that account for job quality. While the UR was much higher for France between 1984 and 2007, it was lower than the US rate before 1984 and the rates have since converged. It is also significant but not well-known that both prime-age ERs and youth unemployment-to-population rates have been quite similar in recent decades. We calculate two new summary indicators from each country's main household survey for 1993-2005 designed to account for the adequacy of pay and hours of work as well as the number of unemployed and employed (the underemployed share of the labor force and the adequately employed share of the working age population). France shows superior performance on both, especially for less-educated workers, and the French advantage has grown substantially since the late 1990s.

In this paper, we analyse differences in the cyclical pattern of employment and wages of immigrants and natives for two large immigrant receiving countries, Germany and the UK. We show that, despite large differences in their immigrant populations, there are similar and significant differences in cyclical responses between immigrants and natives in both countries, even conditional on education, age, and location. We decompose changes in outcomes into a secular trend and a business cycle component. We find significantly larger unemployment responses to economic shocks for low-skilled workers relative to high-skilled workers and for immigrants relative to natives within the same skill group. There is little evidence for differential wage responses to economic shocks. We offer three explanations for these findings: an equilibrium search model, where immigrants experience higher job separation rates, a model of dual labour markets, and differences in the complementarity of immigrants and natives to capital.

This paper estimates the impact of the reason for layoff (economic or personal) on the length of the subsequent unemployment spell, exploiting the French Labour Force Survey. In order to control for an eventual endogeneity of the reason for layoff, a joint model of the type of layoff and unemployment duration is proposed. The length of the unemployment spell is estimated to be significantly shorter after a layoff for economic reasons than after a layoff for personal reasons, especially for nonsupervisory workers with less than a high school degree. We interpret these findings as a sign that the type of layoff is used by prospective employers as a signal of unobserved worker's productivity.

In nonlinear regression models, such as probit or logit models, coefficients cannot be interpreted as partial effects. The partial effects are usually nonlinear combinations of all regressors and regression coefficients of the model. We derive the partial effects in such models with a triple dummy-variable interaction term. The formulas derived here are implemented in the Stata inteff3 command. The command also applies the delta method to compute the standard errors of the partial effects. We illustrate the use of the command with an em- pirical application, analyzing how the gender gap in labor-market participation is affected by the presence of children and a university degree. We find that the presence of children increases the gender gap in labor-market participation but that this increase is smaller for more highly educated individuals.

No abstract is available for this item.

This paper investigates whether unions, through imposing wage floors that lead to wage compression, increase on-the-job training. Our analysis focuses on Germany. Based on a model of unions and firm-financed training, we derive empirical implications regarding apprenticeship training intensity, layoffs, wage cuts, and wage compression in unionized and nonunionized firms. We test these implications using firm panel data matched with administrative employee data. We find support for the hypothesis that union recognition, via imposing minimum wages and wage compression, increases training in apprenticeship programs.

This paper shows that wage inequality in West Germany has increased over the past three decades, contrary to common perceptions. During the 1980s, the increase was concentrated at the top of the distribution; in the 1990s, it occurred at the bottom end as well. Our findings are consistent with the view that both in Germany and in the United States, technological change is responsible for the widening of the wage distribution at the top. At the bottom of the wage distribution, the increase in inequality is better explained by episodic events, such as supply shocks and changes in labor market institutions. These events happened a decade later in Germany than in the United States.

No abstract is available for this item.

This paper examines the link between income and consumption inequality. We create panel data on consumption for the Panel Study of Income Dynamics using an imputation procedure based on food demand estimates from the Consumer Expenditure Survey. We document a disjuncture between income and consumption inequality over the 1980s and show that it can be explained by changes in the persistence of income shocks. We find some partial insurance of permanent shocks, especially for the college educated and those near retirement. We find full insurance of transitory shocks except among poor households. Taxes, transfers, and family labor supply play an important role in insuring permanent shocks. (JEL D12, D31, D91, E21)

No abstract is available for this item.

Spain has traditionally been known as a country of emigrants. However, in the last decade, Spain has experienced an unprecedented boom of immigration from three localized areas: Latin America, Africa and East Europe. In this paper, we study the behaviour of recent immigrants in the Spanish labour market identifying the major differences with the native population and tracking whether these differences fade away as their years of residence in Spain increase. With this objective, we focus on four labour market outcomes: labour supply, unemployment, incidence of overeducation and incidence of temporary contracts. Results show that, compared to natives, immigrants face initially higher participation rates, higher unemployment rates, higher incidence of overeducation and higher incidence of temporary contracts. However, five years after their arrival we could broadly say that participation rates start to converge to native rates, unemployment rates decrease to levels even lower than those of natives, and the incidence of temporary contracts and overeducation remains constant: no reduction of the gap with Spanish workers is observed. Therefore, we conclude that the Spanish labour market is managing to absorb the immigration boom but at the expense of allocating immigrants in bad job-matches.

Using data from the British Household Panel Survey for 1991-99 and the German Socio-Economic Panel for 1984-99, the authors investigate job mobility and estimate the returns to tenure and experience. Job mobility was higher in the United Kingdom than in Germany. Returns to experience also seem to have been substantially higher in the United Kingdom, where the wage gain associated with ten years of labor market experience was around 80%, compared to 35% in Germany. The low returns to labor market experience in Germany appear to have been accountable to one group of workers: those with apprenticeship training, who tended to receive fairly high starting wages but to experience relatively low wage growth thereafter. Wage growth due to labor market experience was similar between the two countries for the other skill groups. Returns to tenure were close to zero in both countries.

In the first part of this paper, we present a stylised model of the labour market impact of immigration. We then discuss mechanisms through which an economy can adjust to immigration: changes in factor prices, output mix and production technology. In the second part, we explain the problems of empirically estimating how immigration affects labour market outcomes of the resident population and review some strategies to address these. We then summarise some recent empirical studies for the UK and other countries. We conclude with an outlook of what we believe are important avenues for future research.

This paper investigates the intergenerational transmission of language capital among immigrants, and the effect of language deficiencies on the economic performance of second-generation immigrants. Using a long panel that oversamples immigrants, we can follow their children after they have left the parental home. Our results show a sizeable significant association between parents’ and children’s fluency, conditional on parental and family characteristics. We find that language deficiencies of the second generation are associated with poorer labor market outcomes for females only. Finally, we find a strong relationship between parental fluency and female labor market outcomes, which works through the child’s language proficiency.

This paper studies parental investment in education and intergenerational earnings mobility for father-son pairs with native- and foreign-born fathers. We illustrate within a simple model that for immigrants, investment in their children is related to their return migration probability. In our empirical analysis, we include a measure for return probabilities, based on repeated information about migrants’ return intentions. Our results suggest that educational investments in the son are positively associated with a higher probability of a permanent migration of the father. We also find that the son’s permanent wages are positively associated with the probability of the father’s permanent migration.

Do migratory flows affect government educational policies? This work briefly summarizes my research on the effects of migration and remittances on educational policies of both developing and developed countries. An increase in foreign labour force is found to reduce public education expenditures in immigration countries where immigrants are more educated than natives. In developing countries, the effects of remittance inflows on public education expenditures depend on the amount of remittances received by the country.

In this paper we distinguish between three channels that determine attitudes to further immigration: labour market concerns, welfare concerns, and racial or cultural concerns. Our analysis is based on the British Social Attitudes Survey. A unique feature of the survey is that it includes questions on attitudes towards immigration from different origin countries, with populations differing in ethnic similarity to the resident population. It also contains sets of questions relating directly to the labour market, benefit expenditure and welfare concerns, and racial and cultural prejudice. Based on this unique data source, we specify and estimate a multiple factor model that allows comparison of the relative magnitude of association of attitudes to further immigration with the three channels, as well as comparison in responses across potential immigrant groups of different origin. Our results suggest that, overall, welfare concerns play a more important role in determination of attitudes to further immigration than labour market concerns, with their relative magnitude differing across potential emigration regions and characteristics of the respondent. In addition, we find strong evidence that racial or cultural prejudice is an important component to attitudes towards immigration; however, this is restricted to immigration from countries with ethnically different populations.

In recent years a number of panel estimators have been suggested for sample selection models, where both the selection equation and the equation of interest contain individual effects which are correlated with the explanatory variables. Not many studies exist that use these methods in practise. We present and compare alternative estimators, and apply them to a typical problem in applied econometrics: the estimation of the wage returns to experience for females. We discuss the assumptions each estimator imposes on the data, and the problems that occur in our applications. This should be particularly useful to practitioners who consider using such estimators in their own application. All estimators rely on the assumption of strict exogeneity of regressors in the equation of interest, conditional on individual specific effects and the selection mechanism. This assumption is likely to be violated in many applications. Also, life history variables are often measured with error in survey data sets, because they contain a retrospective component. We show how this particular measurement error, and not strict exogeneity can be taken into account within the estimation methods discussed.

In this article, we discuss forms of migration that are non‐permanent. We focus on temporary migrations where the decision to return is taken by the immigrant. These migrations are likely to be frequent, and we provide some evidence for the UK. We then develop a simple model that rationalizes the decision of a migrant to return to his/her home country, despite a persistently higher wage in the host country. We consider three motives for a temporary migration: (i) differences in relative prices between host and home country, (ii) complementarities between consumption and the location where consumption takes place, and (iii) the possibility of accumulating human capital abroad, which enhances the immigrant's earnings potential back home. For the last return motive, we discuss extensions that allow for immigrant heterogeneity, and develop implications for selective in‐ and out‐migration.

This paper analyses the labour supply decisions of a cohort of 16 year-olds who were born in 1958 in England and Wales. It traces through the effects of part-time employment by teenagers still in full-time education on subsequent academic performance and school leaving decisions within a three equation structural model. Our results show that part-time work, educational attainment and school leaving decisions are all related to each other. Our analysis examines the impact of a wide range of variables on these events. We find, for instance, that class size not only affects exam performance, but has also an impact on school leaving decisions.

No abstract is available for this item.

This paper develops an approach to studying how bias in favor of one party due to the pattern of electoral districting affects policy choice. We tie a commonly used measure of electoral bias to the theory of party competition and show how this affects party strategy in theory. The usefulness of the approach is illustrated using data on local government in England. The results suggest that reducing electoral bias leads parties to moderate their policies.

This comprehensive Handbook provides a survey of all the major research areas in sports economics written by almost all of the active researchers in this field. It offers not only an accessible insight into the major findings of the literature but also presents some of the world’s principal researchers’ views on the unanswered questions that face us today.

The main objective of this paper is to provide a comprehensive description of the economic outcomes and performance of Britain's immigrant communities today and over the last two decades. We distinguish between males and females and, where possible and meaningful, between immigrants of different origins. Our comparison group is white British-born individuals. Our data source is the British Labour Force Survey. We first provide descriptive information on the composition of immigrants in Britain, and how this has changed over time, their socio-economic characteristics, their industry allocation and their labour market outcomes. We then investigate various labour market performance indicators (labour force participation, employment, wages and self-employment) for immigrants of different origins, and compare them with British-born whites of the same age, region and other background characteristics. We find that over the last 20 years, Britain's immigrant population has changed in origin composition and has dramatically improved in skill composition — not dissimilar from the trend in the British-born population. We find substantial differences in economic outcomes between white and ethnic minority immigrants. Within these groups, immigrants of different origins differ considerably with respect to their education and age structure, their regional distribution and their sector choice. In general, white immigrants are more successful in Britain, although there are differences between groups of different origins. The investigation shows that immigrants from some ethnic minority groups, and in particular females, are particularly disadvantaged, with Pakistanis and Bangladeshis at the lower end of this scale.

No abstract is available for this item.

Using data from the British Labour Force Survey this article provides an empirical investigation of the way immigration affects labour market outcomes of native born workers in Britain, set beside a theoretical discussion of the underlying economic mechanisms. We discuss problems arising in empirical estimation, and how to address them. We show that the overall skill distribution of immigrants is remarkably similar to that of the native born workforce. We find no strong evidence that immigration has overall effects on aggregate employment, participation, unemployment and wages but some differences according to education.

This article studies bidding behaviour in the auction of radio spectrum for third generation mobile telephone services which took place in the UK in the Spring of 2000. We show that several companies' bidding behaviour deviates strongly from straightforward bidding with private values. In particular some companies' evaluation of the added advantage of having a large licence rather than a small licence seemed to change dramatically during the auction. No compelling explanation of this phenomenon seems available at this stage. We conclude that it is less well understood than previously believed how spectrum auctions work.

In this paper we study the sources of wage growth. We identify the contribution to such growth of general, sector specific and firm specific human capital. Our results are interpretable within the context of a model where the returns to human capital may be heterogeneous and where firms may offer different combinations of entry level wages and firm specific human capital development. We allow for the possibility that wages are match specific and that workers move jobs as a result of identifying a better match. To estimate the average returns to experience, sector tenure and firm specific tenure within this context, we develop an identification strategy which relies on the use of firm closures. Our data source is a new and unique administrative data-set for Germany that includes complete work histories as well as individual characteristics. We find positive returns to experience and firm tenure for skilled workers. The returns to experience for unskilled workers are small and insignificant after 2 years of experience. Their returns to sector tenure are also zero. However, their returns to firm tenure are substantial.

This assessment is an introduction to the Oxford Review of Economic Policy 's issue on gender and the life cycle. It sets the stage by providing background information on various dimensions of gender differences, pointing out differences across countries as well as over time, and relates this evidence to the papers that follow. It further briefly reviews the articles in the issue and puts them into context.

In this paper we investigate the economic activity of married or cohabiting female immigrants in Britain. We distinguish between two immigrant groups: foreign-born females who belong to an ethnic-minority group and their husbands, and foreign-born white females and their husbands. We compare these to native-born white women and their husbands. Our analysis deviates from the usual mean analysis and investigates employment, hours worked and earnings for males and females, as well as their combined family earnings, along the distribution of husbands' economic potential. We analyse the extent to which economic disadvantage may be reinforced at the household level and investigate the extent to which it can be explained by differences in observable characteristics. We find that white female immigrants and their husbands have an overall advantage in earnings over white native born, both individually and at the household level. Minority immigrants do less well, in particular at the lower end of the husbands' economic potential distribution. This is mainly due to the low employment of both genders, which leads to a disadvantage in earnings, intensified at the household level. Only part of this differential can be explained by observable characteristics.