Earnings and Languages in the Family: Second‐Generation Australians*

This paper uses Household, Income and Labour Dynamics in Australia data to assess the performance of second‐generation Australians in full‐time employment in 2007. It examines the role of job mismatch and cultural and linguistic diversity at the individual and family levels. The study accounts for non‐random sample selection. The new evidence shows that: (i) over‐education and over‐skilling carry a wage penalty; (ii) there are significant but heterogeneous second‐generation effects; and (iii) language effects explain most of the disadvantage associated with non‐English‐speaking background.     

ARE SOME BANKS TOO LARGE TO FAIL? MYTH AND REALITY

At the time of the Continental Illinois National Bank insolvency, bank regulators considered some commercial banks "too large to fail" (TLTF) and were reluctant both to legally fail such banks and to impose pro rata losses on any of the uninsured creditors of these insolvent banks and their parent holding companies. This policy was introduced due to widespread fears that large bank failures would set off a domino effect bringing down other banks and possibly even the macroeconomy as it did during the 1930s. Also, because these banks are considered special in that they provide money and credit to their communities, many feared that their failure could reduce greatly the availability of these services.
This paper analyzes the validity of these fears by examining both theory and the historical record. It concludes that neither theory nor history provides strong support for either fear. In addition, the paper finds that the costs of regulatory forbearance granted to insolvent banks and their creditors greatly exceed the alleged benefits. It also reviews how policy makers apply the TLTF principle in practice. The paper concludes that the policy has been modified progressively over time so that some large banks now are declared legally insolvent and all creditors of bank holding companies—and some uninsured creditors of the banks themselves—incur losses. One may reasonably expect that TLTF will be modified further as the large societal costs become more evident to the public and regulators alike.     

Single Beta Models and Currency Futures Prices

The conditional capital asset pricing model is applied to foreign currency futures prices, covariance risk being measured relative to excess returns from a broadly diversified international portfolio of equities. Positive time-varying risk premia are found in all five currencies tested when the difference between the US and the average foreign interest rates is used as an instrumental variable for the expected excess return from the common stock portfolio.     

Pricing the School Lunch—A Consumer Problem

To what extent do rising prices for school lunches cause students to cease their purchases of the hot Type A lunch? How many who cease buying become eligible for free lunches? Will a high drop out rate for students who buy, accompanied by a moderate increase in the number receiving free lunches, lower Federal lunch costs? These and related questions, and implications are treated relying upon data from a study in Pittsburgh as a basis for discussion.     

Using the Life Course Paradigm to Explain Mechanisms That Link Family Disruptions to Compulsive Buying

This research examines compulsive buying as an impulse‐control disorder, a form of maladaptive behavior believed to have its roots in early‐in‐life experiences of family adversities. Unlike previous research that has typically studied only the effects of family divorce on compulsive buying, this study examines the effects of disruptive family events within the broader multitheoretical life course framework. A sample of 327 young adults is used to test the hypothesized relationships derived from the main life course perspectives. The results show alternate paths leading to compulsive buying, beyond those uncovered in previous studies. By offering a broader overarching framework, the article shows how previous efforts to study compulsive buying can be improved, pointing to the value of the multitheoretical life course approach in understanding consumption phenomena .