SKILL BIAS AND EMPLOYMENT FRICTIONS IN THE U.S. LABOR MARKET 1970–1990*

This article studies simultaneous changes in four labor market variables: the unemployment rates for college and high‐school graduates, the education wage premium, and the level of college participation. It develops an equilibrium search and matching model of the labor market where education is endogenously determined. Then the model is used to investigate quantitatively whether the change in the above labor market variables from 1970 to 1990 in the United States can be traced to changes in the environment. A skill‐biased change in technology together with an increase in employment frictions can explain much of the observed variation in these variables.     

Inequality in Vietnamese Urban–Rural Living Standards, 1993–2006

We investigate urban–rural inequality in Vietnam using data from the Vietnam Living Standard Surveys between 1993 and 2006. We find that mean per capita expenditure of urban households is consistently twice as much as that of rural households and that the urban–rural gap monotonically increases from the poorer to the richer groups of the expenditure distribution. To isolate factors contributing to the urban–rural gap, we apply the Oaxaca–Blinder type decomposition to a newly developed unconditional quantile regression method. Factors contributing significantly to the high urban–rural gap include inter‐group differences in education, household age structure, labor market activity, geographic location and their related returns, with education playing the most important role. Over the period, consistent with the country's massive rural–urban migration, we find that domestic remittance plays a significant role in shortening the urban–rural expenditure gap in the later years, 2002 and 2006.     

Price Expectations and the Australian Price Level: 1901–30*

This paper examines the sources of change in Australian prices in the first three decades of this century. It probes the information content of simple ‘money is dominant’ models of inflation and of the expectations-augmented Phillips curve and shows that price expectations played a dramatically different role then than in the 1970s.     

Australian Public and Private Capital Formation, 1901–75*

We present new estimates of Australian public capital formation as a reasonably consistent time series for 1901 to 1975 and comment on some issues they raise. The series is disaggregated by level of government and by function and separates public enterprises from other junctions. Primarily because we recognize internal funding of capital formation by public enterprises the new estimates differ quite radically from existing estimates. After 1930 the government share of total capital formation declined from a traditional average of one half to less than 40 per cent. Associated with this relative restraint since the early 1950s were an increasingly ‘business-like’ management of public enterprise and a growing pressure on the private sector to provide additional infra-structure.     

On the Functional Form of Engel Curves: The Australian Household Expenditure Survey 1975–76*

This paper considers the properties of a class of models which is based on the Addilog demand system. These models not only fulfil the adding-up criterion but also ensure that the predicted expenditures are non-negative and a subset of these models permits the existence of saturation levels for certain commodities. A goodness of fit comparison between this class and other systems of Engel curves favours the Addilog model. The estimated expenditure elasticities compare favourably with previous estimates of Australian household expenditure patterns and it is observed that the elasticities for health and alcohol and tobacco expenditures have decreased substantially from their levels in the late 1960s.     

Interest Parity,Monetary Policy and the Volatility of Australian Short-Term Interest Rates: 1978–1982*

The period since the introduction of the Treasury note tender in December 1979 has been characterized by increased variability of Australian short-term interest rates. Using a methodology suggested by Evans, the increase in variability of the 90-day commercial bill rate is decomposed into that attributable to domestic monetary policy, seasonal influences, covered international interest rate movements and other miscellaneous influences. The results suggest that after December 1979 Australian short-term interest rates became more sensitive to surprises in the domestic monetary base, covered Eurodollar rate surprises and seasonal influences. Increased volatility of the covered Eurodollar rate also contributed to increased variance of domestic rates.     

Diversification into Emerging Markets – An Australian and the US Perspective Using a Time‐varying Approach

Over the past two decades, a number of studies have examined the benefits of diversifying equity investments internationally, particularly into emerging markets. In the portfolio construction process, many researchers have criticised Markowitz's Portfolio Theory because of its inherent assumptions such as symmetric and constant correlations. In this study, we use a conditional copula model to estimate the time‐varying asymmetric correlations of stock markets and construct optimal portfolios by using estimated correlations. We find that optimised portfolios provide significant benefits for both Australian and the US investors. Out‐of‐sample results show Copula model provides results closer to the in‐sample‐estimated benefits of diversification. The results have important implications for portfolio managers who seek to diversify into emerging markets.     

The wage gap between Francophones and Anglophones: a Canadian perspective, 1970–2000

Abstract. The wage gap between Francophone and Anglophone men from 1970 and 2000 fell by 25 percentage points within Quebec, but only by 10 points Canada‐wide, largely because the wages of Quebec Anglophones fell by 15 points relative to other Canadian Anglophones. Accordingly, the Canadian measure of the Francophone gap better reflects the changing welfare of Francophones than the Quebec measure. Over half of the reduction in the Canadian Francophone wage gap is explained by rising Francophone education levels. In Quebec, the declining number and relative wages of Anglophone workers is best explained by a falling demand for English‐speaking labour.     

The World Distribution of Income And Its Inequality, 1970–2009

This paper provides a full decomposition of world inequality, as measured by the Gini coefficient, in the period 1970–2009. In particular, using the Analysis of Gini (ANOGI), the paper describes the evolution of between inequality, within inequality, and the impact of overlapping on both factors. While there is evidence that between inequality in the last decade significantly declined due to the rapid Chinese growth, within inequality and overlapping went in the opposite direction. Furthermore, with the exception of some Asian countries, the rest of the world has not moved significantly. As a result, world inequality remains high by any standard.     

Structural Breaks and Convergence in the Regions of Peru: 1970–2010

The aim of this paper is the analysis of stochastic and β‐convergence in the relative regional per capita outputs using different unit root tests both with and without structural breaks and using a further test that is robust to the presence of I(0) or I(1) errors. It allows robust inference on the estimates of the initial per capita output (intercepts) and the respective growth rates (slopes). The results of the application of unit root tests without structural breaks show the absence of stochastic convergence. However, by incorporating the presence of endogenous breaks, the results are reversed for all regions. In the case of β‐convergence, the results of the robust test W_RQF show that all regions have a structural break at some point during the period 1970–2010. We find different behavior for different regions. There is a catching‐up process and a lagging‐behind process for different groups of regions towards more negative or more positive paths.     

Relative prices, income distribution and stabilization plans : The Argentine experience, 1967–1970

The objective of this paper is to analyze the anti-inflationary plan applied in Argentina in 1967, a plan which did not eliminate inflation. With respect to the failure of this plan, two different explanations have been offered: one according to which the problems were essentially political, and another, which maintained the program contained basic technical flaws. From the analysis of this paper it is clear that the truth lies much closer to the second explanation. In the last section of the paper, economic policy recommendations relevant for future anti-inflationary plans, be they implemented in Argentina or in other inflationary economies, are presented.