COLLEGE MAJOR CHOICE AND CHANGES IN THE GENDER WAGE GAP

The distribution of college majors changed markedly between the 1970s and 1980s as fewer students completed degrees in low-skill fields such as education and letters and more graduated in high-skill fields such as engineering and business. This shift was most dramatic for females, who previously were concentrated in low-skill fields relative to those of males. This paper examines how this education-related skill upgrade, as represented by changes in the major distribution, affected the gender wage gap for college graduates during the 1980s. The results show that convergence in major distribution between males and females contributed to a decline in the gender wage gap for college graduates.     

IMMIGRANT RELATIVE WAGES AT THE GREAT RECESSION: EVIDENCE WITH MATCHED EMPLOYER‐EMPLOYEE DATA FOR SPAIN

The article examines relative wages of immigrants in Spain, with a particular focus on the impact of the Great Recession. The empirical analysis is restricted to men and is based on matched employer‐employee microdata and the decomposition techniques of Juhn et al. (1991, 1993) and Fortin et al. (2011). Our results show that the significant native‐immigrant wage gap that exists both in terms of average wages and of differentials along the wage distribution is essentially explained by differences in the endowments of observed characteristics so that, in general, immigrants tend to receive a similar wage treatment than Spaniards with analogous observed attributes. On the other hand, the Great Recession has had a noticeable impact on the relative wages of immigrants, given that the significant increase of the native‐immigrant wage gap observed during the previous expansionary period was mitigated during the economic downturn due to composition effects arising from the severe employment destruction pattern.     

THE ELASTICITY OF SUBSTITUTION BETWEEN TIME AND MARKET GOODS: EVIDENCE FROM THE GREAT RECESSION

We document a change in household shopping behavior during the Great Recession. Households purchased more on sale, larger sizes, and generic products and increased coupon usage and shopping at discount stores. We estimate a decline in returns to shopping during the recession. Therefore, the increase in shopping behavior implies a significant decrease in households' opportunity cost of time. Using the estimated cost of time and time use data, we estimate a high elasticity of substitution between market expenditure and time spent on nonmarket work. We find that households smooth a sizable fraction of consumption by varying their time allocation during recessions.     

THE GREAT RECESSION, “RAINY DAY” FUNDS,AND COUNTERCYCLICAL FISCAL POLICY IN LATIN AMERICA

We examine the fiscal policy options that were available to Latin American countries at the onset of the current global economic crisis, concluding that most of the major countries in the region possessed the fiscal space (as measured by credible fiscal sustainability and debt headroom) to run prudent countercyclical fiscal deficits. For those countries, the appropriate policy response involved a constrained fiscal expansion focused on productive public spending and financed by drawing on the “rainy day” funds—in the form of large stocks of foreign exchange reserves—that they accumulated in prior years, rather than by market borrowing. (JEL E62, E63, F34)     

KEEPING UP WITH THE JONESES, GROWTH, AND DISTRIBUTION

A recent class of models on ‘keeping up with the Joneses’ suggests that comparison with the consumption of other individuals affects individual utility. This paper nests three variants of the ‘Joneses’ effect into an otherwise standard growth model. Under some conditions, growth and distribution are jointly determined, presenting thus a unification of the relevant theories. These variants are however not equivalent in terms of their effects on growth and distribution. It is also shown that, at least if comparisons‐in‐mean predominate, rises in the mean skills level and in the exogenous skills variance increase both growth and inequality with ambiguous effects on aggregate welfare.     

BOOMS AND SLUMPS IN A GAME OF SEQUENTIAL INVESTMENT WITH THE CHANGING FUNDAMENTALS

Many less developed countries have experienced prolonged periods of expansions and reversals in foreign investment inflows. This paper presents a simple game-theoretic model that can explain hysteretic patterns of serial correlation in investment behavior. We develop a sequential move game of coordinated investment played by short-run players under the changing economic environment and demonstrate that in a unique equilibrium of the game, the economy fluctuates over multiple static equilibria, generating hysteresis.     

OUTPUT AND INFLATION IN MODELS OF THE BUSINESS CYCLE WITH NOMINAL RIGIDITIES: FURTHER COUNTERFACTUAL IMPLICATIONS

This paper examines the relationship between cyclical output and inflation in models commonly used for monetary policy analysis. This includes models that incorporate the New Keynesian, Fuhrer–Moore and backward‐looking Phillips curves. The main finding is that these models imply a strong negative relationship between inflation and output, a result that is at odds with the data. The fact that New Keynesian models yield counterfactual implications is not new; the novelty of the paper lies in the fact that the finding extends to the other variants, such as the backward‐looking Phillips Curve, which have been put forward as displaying superior dynamics.     

EFFECTS OF HEAVY DRINKING IN COLLEGE ON STUDY EFFORT, GRADE POINT AVERAGE, AND MAJOR CHOICE

This article measures the effects of college drinking on study hours, grade point average (GPA), and major choice using simultaneous equation models and data from the 1993 College Alcohol Study. Binging and intoxication decrease GPA directly and indirectly by reducing study hours. Greater frequency of drinking increases the effect on study hours but not the total effect on GPA. College drinking increases the probability of choosing a business major but decreases the probability of choosing engineering. Simulations show that the effects of heavy drinking on GPA and major choice reduce future weekly earnings by between 0.3 and 9.8%.     

THE RISE IN US BUSINESS FAILURES: CORRECTING THE 1984 DATA DISCONTINUITY

In 1984 Dun and Bradstreet expanded the business-failure series,making it discontinuous. We construct consistent spliced serieson the rate, size, and liabilities of business failures. Weshow that using published, discontinuous data can lead to misleadingresults.     

PRIVATIZATION OF PUBLIC HOUSING: DID IT CAUSE THE 1998 RECESSION IN HONG KONG?

The authors find evidence that a public housing privatization program produced adverse effects on housing transactions and the economy in Hong Kong. A scheme announced in December 1997, offering tenants an opportunity to buy their units at deeply discounted prices, reduced public housing tenants' bids for private homes and adversely affected home transactions. This effect is more pronounced than the effects of the Asian Financial Crisis. An effect on housing prices is also indirectly shown though a demonstration that a structural break in the housing price relationship occurred at the time the privatization program was introduced. Declines in housing prices further eroded employment and set off a vicious circle. ( JEL E32, R21, R31)     

LOCAL BENEFIT-SEEKING IN THE LEGISLATURE: AN INVESTIGATION OF CONGRESSIONAL STAFFING DECISIONS*

In prior work, I proposed a prisoner's dilemma theory for the partisan pattern that political ticket splitting has taken in the United States: where Republicans, since 1932, have done consistently better in races for the White House than in contests for Congressional seats. The theory relies on the key assumption that Democratic legislative representatives are more willing to engage in local benefit-seeking. By examining the personal staffing decisions made by members of the House this paper provides some empirical support for such an assumption. Relative to their Republican counterparts, Democratic legislators both hire more personal staff and allocate a higher percentage of the staff hired to district rather than Washington offices.     

THE PUBLIC SECTOR PAY GAP IN FRANCE, GREAT BRITAIN AND ITALY

We investigate public–private pay determination using French, British and Italian microdata. While traditional methods focus on parametric methods to estimate the public sector pay gap, in this paper, we use both non-parametric (kernel) and quantile regression methods to analyze the distribution of wages across sectors. We show that the public–private (hourly) wage differential is sensitive to the choice of quantile and that the pattern of premia varies with both gender and skill. In all countries the public sector is found to pay more to low skilled workers with respect to the private sector, whilst the reverse is true for high skilled workers. When comparing results across countries, we find that where pay formation is more regulated (i.e. as in France and Italy) the public sector pay gap is smaller; whilst where market factors play a larger role in pay determination (i.e. as in Great Britain) the public sector pay gap is larger—particularly in the lower part of the wage distribution—and females are much better off in the public sector as compared to the private sector.     

CENTRAL PLANNING LEGACIES: THE LINGERING EFFECTS OF THE GREAT LEAP FORWARD IN CHINA

The Great Leap Forward (GLF) (1958–61) in China was a natural experiment that removed private property rights to achieve rapid growth via central planning, producing immediate famine and death. Using three measures for the GLF, we find that it still exerts a significant negative effect on output per worker in 2004 across Chinese provinces. This result is robust to the use of political factors from the GLF period as instruments. The causal relationship persists after controlling for climate conditions and initial output per capita. Moreover, the causal relationship exists when we change the dependent variable to output per worker in 1978, which refutes the notion that market‐oriented reforms alone explain the difference in income in 2004. Therefore, the GLF has had a lasting, negative effect on output.     

BINGE DRINKING IN COLLEGE: THE IMPACT OF PRICE, AVAILABILITY, AND ALCOHOL CONTROL POLICIES

This paper estimates the effects of beer prices, alcohol availability, and policies related to driving under the influence of alcohol on drinking and binge drinking among youths and young adults. Data are from a nationally representative survey of students in U.S. colleges and universities. Separate estimates are obtained for underage male and female students, as well as for older male and female students. The estimates indicate that the drinking practices of male college students are generally insensitive to the price of beer. However, underage drinking and binge drinking by female students do respond significantly to price, although both are relatively inelastic. The results also show that strong drunk driving policies targeting youths and young adults significantly reduce drinking and binge drinking by male students. Similarly, these policies reduce drinking among female college students but appear to have little impact on their binge drinking. Instead, the results indicate that many elements of campus life (including participation in a fraternity or sorority, living on campus, and the ready availability of alcoholic beverages) are among the most important determinants of drinking and binge drinking among college students.     

SCALE ECONOMIES AND HETEROGENEITY IN BUSINESS MONEY DEMAND: THE ITALIAN EXPERIENCE

This paper investigates the demand for money by firms and the existence of economies of scale in the Italian manufacturing industry. We estimate a model for cash elaborated by Fujiki and Mulligan using a different estimation procedure from the previous literature. We then introduce an iterative procedure based on backward exclusion of firms from model estimation which points out the high heterogeneity of Italian companies in money demand. Our estimates show that the Italian manufacturing industry, considered as a whole, does not enjoy scale economies in money demand. However, our iterative procedure points out that the cause of this result has to be ascribed to small firms which are characterized by thin cash money holdings and a consequent very modest opportunity cost.