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.     

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.     

TRADE UNIONS, EFFICIENCY WAGES, AND SHIRKING

Efficiency wage models typically study the determination ofwages and effort levels in the context of a labour market wherethe supply side is competitive. In this paper we examine theeffects of unionisation on wages and effort. In addition tothe monitoring technology where a noisy signal of each workersperformance is received, we propose and investigate a spot-checkmonitoring technology where the effort of a fraction of workersis measured exactly. We examine models where the union can bargainover wages alone, and over wages and effort. In all cases weshow that the popular wisdom that unions reduce effort is generallyfalse.     

BANK CAPITAL FORBEARANCE AND PUBLIC POLICY

Recently, the bank regulatory agencies have adopted capital forbearance programs to permit some troubled agriculture and energy banks to operate temporarily with capital levels below the regulatory minimum requirement. In a world with federal deposit insurance and a lender of last resort, bank capital is no longer viewed by all depositors as the primary protector of their funds. Thus, they reduce their market discipline. Bank owners/ managers are likely to respond by increasing their risk exposure in an attempt to regain profitability. If they win, they keep all the gains; if they lose, the losses are passed on to the Federal Deposit Insurance Corporation (FDIC). A preferred policy is to require these banks to raise additional capital at this time or to be sold. Capital forbearance is forbearance of incumbent bank management/owners, not of bank customers.     

INSOLVENCY AND RISK-TAKING IN THE THRIFT INDUSTRY: IMPLICATIONS FOR THE FUTURE

This paper puts the current problems facing the thrift industry, Federal Home Loan Bank Board, and Federal Savings and Loan Insurance Corporation into historical perspective. It discusses the development of federal deposit insurance and regulation of depository institutions. The paper discusses causes of the recent financial difficulties faced by thrift institutions and the policy responses to those problems. It then examines the effect of the recent 511 thrift failures on the risk-taking behavior of institutions and the Bank Board's policy responses to risk-taking. Finally, the paper suggests possible responses to the large and growing number of insolvent institutions that have an economic incentive to pursue extremely risky portfolio opportunities.