THE EFFECT OF PARENTAL EMPLOYMENT ON CHILD SCHOOLING

This paper presents a model that provides conditions under which a causal interpretation can be given to the association between childhood parental employment and subsequent educational attainments of children. The key parameter comes from theconditional demand function for children's future earning capacity. Its identification rests on having data on siblings and assumptions about the timing of parents' knowledge of their children's endowments. In addition to sibling differences, the useof a fixed‐effects instrumental‐variables estimator identifies the parameter under weaker conditions. Empirical analysis informed by the model reveals a negative and significant effect on the child's educational attainment of the months of the mother's full‐time employment when the child was aged 0–5. The effect of the mother's part‐time employment is smaller and less well determined, but again negative. These results suggest that the substitution effect of the mother's employment dominates the income effects. Stronger adverse effects are found for children of less‐educated mothers. Copyright © 2012 John Wiley & Sons, Ltd.     

Adult Outcomes for Children of Teenage Mothers

Using data from the British Household Panel Survey, this study examines the relationship between several outcomes in early adulthood (e.g. education, inactivity, earnings and health) and being born to a teenage mother. Besides standard cross‐sectional multivariate regression estimates, we also present evidence from non‐parametric estimates and from estimates that account for unmeasured family background heterogeneity by comparing siblings born to the same mother who timed their births at different ages. Regardless of the econometric technique, being born to a teenage mother is usually associated with worse outcomes. An important channel of transmission of this adverse effect is childhood family structure, which plays a more powerful role than childhood family poverty. Albeit smaller, some of the detrimental effects are also found for children of mothers who gave birth in their early 20s.     

?Media Events, Globalization and Cultural Change?

Ohne Zusammenfassung     

A Wald test for the cointegration rank in nonstationary fractional systems

This paper develops new methods for determining the cointegration rank in a nonstationary fractionally integrated system, extending univariate optimal methods for testing the degree of integration. We propose a simple Wald test based on the singular value decomposition of the unrestricted estimate of the long run multiplier matrix. When the “strength” of the cointegrating relationship is less than 1/2, the test statistic has a standard asymptotic distribution, like Lagrange Multiplier tests exploiting local properties. We consider the behavior of our test under estimation of short run parameters and local alternatives. We compare our procedure with other cointegration tests based on different principles and find that the new method has better properties in a range of situations by using information on the alternative obtained through a preliminary estimate of the cointegration strength.     

Do individual investors learn from their trading experience?

After analyzing retail investors’ stock trades for potential learning behavior, we present evidence that individual investors learn from their trading experience. Initially, we question whether investors’ previous forecasting ability (inferred from prior purchases’ subsequent risk-adjusted performance) affects their future trade profitability and activity. Indeed, as an investor's inferred ability increases, so does her ensuing trade profitability and intensity. Further, because additional investment experience allows more accurate ability inference, we posit that trading experience should help investors obtain better investment performance. Consistent with this hypothesis, not only do excess portfolio returns improve with account tenure, but we also find that trade quality (i.e., average raw and excess buy-minus-sell returns) significantly increases with experience (i.e., calendar time and account tenure). In sum, individual stock investors do learn, and they consequently adjust their behavior and thus effectively improve their investment performance.     

The effect of seasonal adjustment on the properties of business cycle regimes

We study the impact of seasonal adjustment on the properties of business cycle expansion and recession regimes using analytical, simulation and empirical methods. Analytically, we show that the X‐11 adjustment filter both reduces the magnitude of change at turning points and reduces the depth of recessions, with specific effects depending on the length of the recession. A Monte Carlo analysis using Markov‐switching models confirms these properties, with particularly undesirable effects in delaying the recognition of the end of a recession. However, seasonal adjustment can help to clarify the true regime when this is well underway. These results continue to hold when a seasonally non‐stationary process with regime‐dependent mean is misspecified as one with deterministic seasonal effects. The empirical findings, based on four coincident US business cycle indicators, reinforce the analytical and simulation results by showing that seasonal adjustment leads to the identification of longer and shallower recessions than obtained using unadjusted data. Copyright © 2008 John Wiley & Sons, Ltd.     

From Deficits to Debt and Back: Political Incentives under Numerical Fiscal Rules

Under numerical fiscal rules, such as those underpinning EMU,governments have strong temptations to use accounting tricksto meet the fiscal constraints. Given these political incentives,fiscal variables that in the past were regarded as a mere residualacquire a strategic role. This is the case of the so-calledstock-flow adjustment (SFA) which reconciles deficit and debtdevelopments. We develop a simple theoretical model where deficitsand two distinct SFA components (one that could be used to reducethe deficit figures and the other to impact debt figures instead)are determined as a result of a constrained optimisation byfiscal authorities. Econometric evidence provides results consistentwith the model findings. The SFA component related to the purposeto hide deficits rises with the recorded deficit, while thesales of financial assets designed to keep the debt under controlrise with both debt and deficit. When deficits are in excessof the 3 percent limit, accounting gimmicks become more sensitiveto the size of deficits. The SGP per se does not appear to increasethe extent to which higher deficits trigger more accountinggimmicks. However, the SGP seems associated with a more intenseuse of accounting gimmicks irrespective of the level of deficit.Such accounting practices have greatly contributed to the lossof credibility of Economic and Monetary Union's fiscal rules.If properly implemented, the reformed Pact, which stresses durableadjustment and long-run sustainability, should help curb suchperverse incentives. (JEL codes: E61, H62, H87)     

Stochastic dominance with pair-wise risk aversion

A class of stochastic orders is defined on the set of bivariate distribution functions. This class of orders is linearly orderable by inclusion. A family of utility functions, coherent with each of the stochastic orders previously defined, is determined. These utility functions represent pair-wise risk aversion. The relations with univariate stochastic orders are examined.