Labor market assimilation of immigrants in Spain: employment at the expense of bad job-matches?

During the last decade, Spain has experienced an unprecedented increase of immigration from three localized areas: Eastern Europe, Latin America, and Africa. Using data from the Labour Force Survey for the period 1996–2006, we study the labour characteristics of recent immigrants, identifying the major differences with the native population at arrival and tracking whether these differences fade away as their years of residence in Spain increase. We allow the returns to human capital and the sensitivity to the business cycle to differ between immigrants and natives. Overall, our results show that, compared to natives, immigrants face initially higher participation and unemployment rates, as well as higher incidence of overeducation and temporary contracts. However, 5 years after arrival immigrants’ participation rates start to converge to natives’ rates, unemployment rates decrease to levels even lower than those of natives, and the incidence of overeducation and temporary contracts remains roughly constant: no reduction of the gap with Spanish workers is observed. We are grateful to Christian Dustmann, Juan F. Jimeno, Claudio Michelacci, an anonymous referee, and seminar participants at the 2006 EALE Conference, 2006 Simposio de Análisis Económico, BBVA Economic Research Department, FEDEA, CReAM, INSIDE and LECG for helpful comments and suggestions.     

Small firms in Portugal: a selective survey of stylized facts,economic analysis,and policy implications

I survey a number of stylized facts pertaining to the dynamics of firm entry, growth, and exit in competitive industries. I focus particularly on data for Portugal, although I also consider, for comparison purposes, data from other countries. I then present a series of theoretical models that attempt to explain the stylized facts and evaluate the welfare impact of market distortions. Finally, I derive a number of policy implications, all centered around the notion of economic mobility.

Price determination and dynamic adjustments: An inverse demand system approach to meat products in the United States

In this study the process of retail meat price determination is depicted in the form of an inverse demand system taking into consideration the dynamic adjustments present in monthly consumption data. The general dynamic framework identifies both long run and short run effects in a systematic manner and allows direct estimation of the long run price and scale flexibilities that are consistent with theory. The empirical application based on monthly U.S. meat products data provides reasonable and promising results.The authors are senior econometrician, Department of Risk Management, TRS, American Express Co., Phoenix, and assistant professor, Department of Applied Economics, University of Minnesota, St. Paul, respectively. The work was performed when the first author was an assistant research scientist at the Center for Agricultural and Rural Development, Department of Economics, Iowa State University, Ames. Journal Paper No. J-15784 of the Iowa Agriculture and Home Economics Experiment Station, Ames, Iowa. Project No. 3109.     

A sectoral taxonomy of educational intensity

This paper classifies 49 manufacturing and service industries according to their educational workforce composition. Statistical cluster techniques are applied to data for the USA, Germany, France, the UK and Austria. Industries are first classified separately for each country, providing an appropriate tool for the analysis of national micro-data. Later, the paper proposes a common consensus classification, enabling comparative international studies. Validation of the cluster solution reveals considerable robustness to variations over time and between countries. Finally, regression analyses and ANOVA decompositions on various measures of sector performance confirm a significant tendency towards “education-biased structural change” between industries.

Measuring environmental efficiency of industry: a case study of thermal power generation in India

Technical and environmental efficiency of some coal-fired thermal power plants in India is estimated using a methodology that accounts for firm’s efforts to increase the production of good output and reduce pollution with the given resources and technology. The methodology used is directional output distance function. Estimates of firm-specific shadow prices of pollutants (bad outputs), and elasticity of substitution between good and bad outputs are also obtained. The technical and environmental inefficiency of a representative firm is estimated as 0.06 implying that the thermal power generating industry in Andhra Pradesh state of India could increase production of electricity by 6/ while decreasing generation of pollution by 6%. This result shows that there are incentives or win–win opportunities for the firms to voluntarily comply with the environmental regulation. It is found that there is a significant variation in marginal cost of pollution abatement or shadow prices of bad outputs across the firms and an increasing marginal cost of pollution abatement with respect to pollution reduction by the firms. This result calls for the use of economic instruments like pollution taxes instead of command and control regulation used currently in India to reduce air pollution.

An overlooked explanation of the declining saving rate

With a socioeconomic model of the determinants of savings that takes into account variables reflecting the abrupt changes in the divorce rate that occurred during the 1970s and the 1980s in the U.S., the increase in women's participation in the labour force, and their greater investrnent in education, we explain part of the measured decline in the saving rate. The uncertainty generated by the increased likelihood of divorces encourages households and women, in particular, to substitute human capital to financial or physical capital for precautionary savings.The authors thank Anna J. Schwartz and Pierre Perron for helpful suggestions and Anne-Marie El Hakim for her dedicated assistance on this project. The comments of the editor and of an anonymous referee contributed to improve the final version of the paper. The project was financed, in part, by a grant of the Quebec FCAR Fund.     

Fixed effects with interpersonal and intertemporal covariance

The paper considers the estimation of a fixed effects time series-cross section model where errors have both unspecified interpersonal and intertemporal covariance. Efficient estimators in the form of GLS are suggested, which can be implemented on the data in their actual form or in deviations from time-means. As an empirical example, the determinants of new residential construction activity in the New England states of the US during the 80's are investigated. Results show substantial sensitivity to changes in the interest rate and the unemployment rate, whilst responses to changes in income are more muted. Long term factors related to the region are also influential.     

Portuguese emigration 1958-1985: some empirical evidence

Supplying work in the home country or abroad must be seen as the result of the same decisional process. If that is true, the same set of variables should be used to explain the participation in the labor market and the emigration rates.Based upon empirical results, we discuss some of the traditional conclusions of the economic literature. Our empirical results, for example, show that: 1) there is a strong support for considering home wages and the wages in the country of destination asymmetrically, 2) imperfections in the capital markets seem to play an important role when workers must pay for their moving expenses and 3) there is a differential in coefficients between the period before 1974 and after that date, as 1974 is the year most of the Central European countries changed their immigration policies.     

Endogenous fertility, international migration and growth

An endogenous growth model with heterogeneous agents and endogenous rates of fertility is developed to study the relationships between population growth, human capital, migration and economic development. A variety of patterns of migration, from the migration of the unskilled to the brain drain is considered, where the decision to migrate reflects the agents’ optimising behaviour. The analysis yields implications which accord with the empirical evidence on the relationships between demography and development. Macroeconomic policy can foster growth by influencing labour mobility through taxation and the provision of public goods such as social infrastructure, sanitation, environmental control and medical research that affect locational preferences and child quality. The author is grateful for the comments of an anonymous referee on an earlier version of the paper. The usual disclaimer applies.     

Expected job loss in East Germany shortly before German unification

We investigate expectations concerning future job loss in the former German Democratic Republic (East Germany) shortly before the economic, monetary and social union in July 1990. In order to model these expectations, we take detailed account of individual heterogeneity, the availability and interpretation of information, and the economic and social environment of the individual. Our data base is the Socio-Economic Panel (SOEP) East. We find that, with some exceptions, East Germans hold expectations comparable to those held by indivduals having experienced a market economy, which is surprising given the lack of such an economy in the previous German Democratic Republic.Since these expectations are only observed ordinally, an adequate estimation method is the ordinal logit model. The corresponding stochastic assumptions are tested extensively using pseudo-Lagrange multiplier tests against omitted variables, non-linearity, asymmetry of distribution and heterosedasticity. Furthermore, we apply Hausman tests to check the validity of the classification of the endogenous variable.     

Alternative interpretations of hours information in an econometric model of labour supply

This paper examines the labour supply behaviour of married women in France. A sequence of models is specified and estimated which incorporate different amounts of information on observed weekly hours. In all models the distinction is drawn between search and non-participation among non-workers. We provide extensive specification diagnostics, including Heckman-Andrews tests, as well as Hausman tests for the comparison of different handlings of the hours information. It turns out that distinguishing between part-time, full-time and long hours gives virtually the same results as treating observed hours as reflecting desired hours.     

The impact of wages on job search in a transition economy - evidence with data from Eastern Germany

This study is concerned with the impact of wages on job search decisions in Eastern Germany immediately after reunification and in later periods. Several concepts measuring wage effects are used. The results of bivariate probit estimates with incomplete classification for a global and local job search show that the wage level had stronger effects on the former than on the latter job search decision directly after the collapse of the Berlin Wall. The degree of satisfaction with current income and the earnings capacities were irrelevant for the search decision. Low-paid East German workers had a higher propensity to search for a new job in the old Länder than others. This is contrary to the misleading result of isolated estimates about the job search in Western Germany. In the subsequent periods the situation has changed. The difference of earnings capacities between Eastern and Western Germany, specific East German wage premiums and intraregional wage inequality affect the decision to search for a new job in the west.For helpful comments I thank Michael Burda, Knut Gerlach, Robert A. Hart, Stefan Niermann, Liz Regan and two referees.