ECONOMY‐WIDE EFFECTS OF REDUCING ILLEGAL IMMIGRANTS IN U.S. EMPLOYMENT

We use an economy‐wide model to analyze the effects of three broad programs to reduce illegal immigrants in U.S. employment: tighter border security; taxes on employers; and vigorous prosecution of employers. After looking at macroeconomic industry and occupational effects, we decompose the welfare effect for legal residents into six parts covering changes in: producer surplus and illegal wage rates; skilled employment opportunities for natives; aggregate capital; aggregate legal employment; the terms of trade; and public expenditure. The type of program matters. Our analysis suggests a prima facie case in favor of taxes on employers. (JEL J61, C68)     

TEMPORARY EMIGRATION AND WELFARE: THE CASE OF LOW‐SKILLED LABOR

This article studies the implications of temporary emigration for the welfare of a source country. The framework is one of general equilibrium, where the economy's stocks of both capital and labor are endogenously determined by the saving and migration decisions of optimizing agents. Simulations of the model suggest that for realistic values of the parameters, welfare of nonmigrants of the source country is maximized when the migrants are employed abroad for a period in the range of roughly 8–12 years. The ideal duration is found to be an increasing function of the international wage differential, migration costs, and the degree to which the rights of migrants are protected in the host country.     

THE EFFICIENCY OF THE STATE‐OWNED FIRM AND SOCIAL WELFARE: A NOTE

We consider a mixed market where a state‐owned firm competes with private firms. If the number of firms is exogenous, then a deterioration of the efficiency of the state‐owned firm might improve social welfare. This situation occurs when the state‐owned firm is inefficient and private firms are efficient. However, if the number of firms is endogenous, then a deterioration of the efficiency of the state‐owned firm must reduce social welfare.     

MEASURING THE PERFORMANCE OF A COMMUNIST COMMAND ECONOMY: AN ASSESSMENT OF THE CIA ESTIMATES FOR THE U.S.S.R.

There are major methodological and practical problems in comparing the performance of capitalist and communist economies. They have been most carefully analysed for the former Soviet Union, for which there was a huge research input, mainly by the CIA. The CIA effort had considerable merit, particularly in assessing Soviet rates of growth. Unfortunately, it was terminated in 1991, partly because it suffered from unduly harsh criticism, partly because its political relevance waned. However, the CIA archives remain an important source for the study of comparative economic growth. It would be extremely useful if they were opened to scholars, a serious loss if they were destroyed.     

EFFECTS OF IMMIGRANTS ON THE 1980–1990 U.S. WAGE EXPERIENCE

This paper questions the claim that U.S. immigration should be reduced because the economy can no longer absorb immigrants as it has in the past. Analysis of male hourly wages shows that the effect of immigration on wages did not change between 1980 and 1990. Further, immigration had no negative effects on wages in 1980 or 1990. These results suggest that the capacity of the labor market to absorb immigrants has not been reduced. Additional analysis shows that, controlling for personal characteristics, the hourly wages of the average native and immigrant worker in areas of high and medium immigration relative to areas of low immigration increased between 1980 and 1990. However, Latino immigrants are affected negatively by immigration.     

ESTIMATING A DYNAMIC SPATIAL EQUILIBRIUM MODEL TO EVALUATE THE WELFARE IMPLICATIONS OF REGIONAL ADJUSTMENT PROCESSES: THE DECLINE OF THE RUST BELT

This article develops and estimates a new dynamic spatial equilibrium model to study the regional transition dynamics and its impact on individual and aggregate welfare. The model consists of a multiregion, multisector economy comprised of overlapping generations of individuals with heterogeneous skills and mobility costs. The empirical findings suggest that a large fraction of the decline of the Rust Belt can be attributed to the reduction in its region‐specific comparative advantage in the goods‐producing sector. This decline generated significant differences in welfare across regions. Policy experiments show that such inequality can be significantly reduced through place‐based policies.     

THE INEQUALITY OF EMPLOYMENT AND SELF-EMPLOYMENT INCOMES: A DECOMPOSITION ANALYSIS FOR THE U.K.

U.K. employment and self-employment income inequality are analysed over 1979–94/95. Robust inequality decompositions reveal occupation to be a relatively important and hitherto neglected determinant of earnings inequality. In contrast, self-employment income inequality is harder to explain, although occupation is also the most important single factor in the mid-1990s. The paper also provides a novel implementation of a decomposition of changes in Kolm's inequality index.     

ASSESSING THE WELFARE IMPACT OF TAX REFORM: A CASE STUDY OF THE 2001 U.S. TAX CUT

This paper implements a relatively simple methodological approach to estimate the impact on family welfare of a specific tax reform. The measured impact can differ greatly from simple marginal tax rate comparisons, and conclusions about the distribution of the welfare impact can vary depending on the basis of comparison. For example, absolute welfare gains from the 2001 U.S. tax reform were concentrated among the highest and lowest income families, whereas welfare gains measured as a share of pre‐tax income are found to be nearly monotonically declining in income.     

THE EFFECTS OF U.S.-CHINA TRADE ON EMPLOYMENT AND WAGES IN THE U.S.-MEXICO BORDER REGION

This article investigates the impact of foreign competition from China on employment and wages in four U.S.-Mexico Border counties: Santa Cruz, Arizona; San Diego, California; El Paso, Texas; and Webb, Texas. Using disaggregated industry-level data between 1992 and 2006, we find that increased trade with China is associated with significantly lower county-industry employment and wages. In contrast, and as expected, increased imports from Mexico are positively related to increased employment and wages in U.S.-Mexico border counties. The results indicate that the U.S.-Mexico supply-chain relationship related to the maquiladora industry is significantly affected by Chinese competition. Implications for policy include an increased focus on federal programs that are intended to diversify the border economy . ( JEL F13, F43, F23)     

A COMPARISON OF FERTILITY ADAPTATION BETWEEN MEXICAN IMMIGRANTS TO THE U.S. AND INTERNAL MIGRANTS IN MEXICO

This paper compares fertility levels of Mexican internal migrants with United States immigrants from Mexico, in an attempt to shed light on the issues of selection and adaptation in immigration literature. The data show that U.S. immigrants from Mexico have similar levels of fertility to those of urban-urban migrants in Mexico. Though somewhat speculative, the analyses suggest that some fertility adaptation does take place. New directions for research which would be of a less speculative nature are discussed.     

THE EFFECT OF WELFARE ASSET RULES ON AUTO OWNERSHIP,EMPLOYMENT, AND WELFARE PARTICIPATION: A LONGITUDINAL ANALYSIS

This paper investigates how asset tests for welfare eligibility affect auto ownership, employment, and welfare participation for single mothers without a college degree. We combine longitudinal data from the 1996 Survey of Income and Program Participation with data on state‐level welfare program rules from the Urban Institute and data on state‐level controls to test whether these single mothers were more likely to (1) own a car, (2) be employed, and (3) be off of welfare, depending on the welfare asset rules instituted in their state. We find evidence that, taken as a group, the asset rules have a statistically significant effect on the probability of car ownership. Ordinary least squares results and cross‐sectional two‐stage least squares (2SLS) results using the asset rules to instrument for car ownership show a large, positive, statistically significant effect of car ownership on employment. However, in 2SLS models controlling for prior car ownership and prior employment, the asset instruments are weaker and we do not find an effect of car ownership on employment. Of significance for policy makers, we find that the asset rules do not have a statistically significant joint effect on welfare participation, even after addressing possible endogeneity. (JEL I38, J68, J08)     

MODELING THE INCIDENCE OF SELF‐EMPLOYMENT: INDIVIDUAL AND EMPLOYMENT TYPE HETEROGENEITY

Modeling the incidence of self‐employment has traditionally proved problematic. Although the supply‐side characteristics of the self‐employed are well documented, we argue that the literature has neglected demand‐side aspects. We explore the determinants of self‐employment using the U.S. Survey of Consumer Finances. We present results from an econometric framework that allows us to model, separately and simultaneously, the influences of individual heterogeneity (i.e., supply‐side factors) and employment type heterogeneity (i.e., demand‐side factors) on the probability of self‐employment. Our findings suggest that while individual characteristics are important determinants of self‐employment, there are factors specific to the type of employment that influence self‐employment. (JEL J23, J33, C25, C10)     

DOUBLING U.S. EXPORTS UNDER THE PRESIDENT'S NATIONAL EXPORT INITIATIVE: IMPLICATIONS OF SUCCESSFUL IMPLEMENTATION

President Obama's National Export Initiative (NEI) is targeted at doubling U.S. exports between 2010 and 2015. We apply USAGE to quantify what the NEI would need to do to foreign import‐demand curves and domestic export‐supply curves to achieve this target. USAGE is a dynamic economy‐wide model of the U.S. incorporating recession‐relevant factor market specifications including excess capacity and wage/labor‐demand elasticities that vary with the level of employment. In our central simulation, export‐promotion policies compatible with the President's target reduce the cost of the current recession from about 70 million 1‐year jobs for the period 2008–2020 to 45 million jobs. (JEL E17, C68, E62, E65, F16)     

IS U.S. GROWTH UNDERSTATED BECAUSE OF THE UNDERGROUND ECONOMY? EMPLOYMENT RATIOS SUGGEST NOT

Has the underground economy caused the increase in United States GNP in recent years to be understated relative to earlier periods? The ratio of employment to population provides powerful evidence that it has not. This ratio’ was as high in the middle 1970s as in previous periods and in 1978–80 rose to its highest level of the postwar era, suggesting that employment growth has not been understated. Employment series based on both establishment reports and household surveys yield exceptionally high ratios in recent years. This article provides a step-by-step explanation of why employment data are pertinent to the question raised about GNP. This explanation may be summarized as follows. GNP measured as the sum of final products is not understated unless GNP measured as the sum of national income and other charges against GNP is also understated. Appreciable understatement of the growth of charges against GNP as a result of growth of the underground economy is highly unlikely in the absence of understatement of the growth of wages and salaries, because of the way the estimates are made. Understatement of the growth of wages and salaries without understatement of the growth of employment based on establishment reports is highly unlikely because of the way data are collected. The article explains briefly the relationship between income tax evasion and errors in measuring the various components of charges against GNP. It also explains how illegal activities are meant to be handled in GNP measurement.     

GAUGING THE SOURCES OF GROWTH OF HIGH‐TECH AND LOW‐TECH INDUSTRIES: THE CASE OF KOREAN MANUFACTURING*

Literature argues that the source of growth for high‐tech industries emanates from technological progress, while that for low‐tech industries comes from technical efficiency improvement. Also, some empirical studies have shown that technological progress is often accompanied by deterioration in technical efficiency. The focus in this study is to discuss a methodology and test the above two hypotheses with regard to Korean manufacturing data from 1970 to 1997. The study found that the 2.5 per cent average annual rate of technological progress during this period was the major contributor to total factor productivity (TFP) growth in Korean manufacturing whereas technical efficiency grew by a modest 1.1 per cent per annum. The analysis also showed that technological progress was responsible for TFP growth in both high‐tech and low‐tech industries and that both technological progress and technical efficiency improvement co‐existed in the case of Korean manufacturing industries.