Economics Letters

Published by Elsevier
Print ISSN: 0165-1765
"Evidence from the 1940 [U.S.] census reveals that southern-born blacks who left the region prior to 1935 had higher incomes than non-southern born blacks. The income gap between migrants and non-migrants declined with schooling."
We propose an adaptive truncated product method that facilitates the selection of the truncation point among a set of candidates. To efficiently estimate the distribution of the proposed method when the p-values are correlated, we develop a single-layer bootstrap procedure.
"Unlike the case for individual migration, education may reduce the migration of families by enhancing their ability to adjust to local disequilibrium and stay at their preferred location. Estimates of family migration probabilities in Costa Rica support this hypothesis."
"This paper considers the effect of altruism on the relationship between the size of households and the migration decision. It is shown that when the parent has higher altruism toward her children, (i) the household is more likely to migrate, and (ii) the marginal gain from migration increases as the size of the household increases."
The consequences of the social welfare function of Bentham and Mill (B–M) for optimal population size are explored when individuals' utility is a function of own consumption, the number of progeny, and the welfare of those children.
"While black-white earning ratios have been rising over time across cohorts [in the United States] there is some evidence that they have been dropping over time within cohorts of recent entrants to the labor market. This has coincided with the entry of the large baby boom cohorts into the labor market. This paper examines the role of race differences in cohort size effects on black-white earnings ratios for male high school graduates using Current Population Survey data. In larger cohorts, the black-white earnings ratio is lower at entry and falls as the cohort progresses through the career, consistent with recent evidence."
We study human capital depletion and formation in an economy open to out-migration, as opposed to an economy which is closed. Under the assumption of asymmetric information, the enlarged opportunities and the associated different structure of incentives can give rise to a brain gain in conjunction with a brain drain. Migration by high-skill members of its workforce notwithstanding, the home country can end up with a higher average level of human capital per worker. (C) 1997 Elsevier Science S.A.
PIP This model shows that LDC's brain drain triggers emigration of unskilled labor and capital exports, skilled workers and agricultural capitalists gain, unskilled workers and industrial capitalists lose, and demodernization of the economy results. Demodernization of the economy occurs when labor force and output of the industrial sector decrease, and employment and production in agriculture increase. The problem analyzed in this model is what happens to the incomes of those who are left behind when some of the skilled workers migrate abroad. The results show that with the exodus of both skilled labor and capital, the marginal productivity of unskilled workers in industry also falls below the unskilled wage. Although one would expect a brain drain to result in gains for those skilled workers who remain in the source country, and for the capital owners who receive unskilled workers as a result of emigration, the losers are the unskilled workers and the capitalists in the sector where the migrants worked.
We use data from the British Household Panel Survey to examine the labor market premium in height. Most of the premium is explained by higher average educational attainment and sorting into higher-status occupations and industries by those who are taller.
We use individual-level data to show that divorce is pro-cyclical on average, a finding robust to the inclusion of a wide range of controls. Pro-cyclical divorce is concentrated among women who married young and/or do not have a college degree.
PIP This paper examines a model of the intertemporal distribution of births recently proposed by Cigno that concludes 1) the optimal time profile will satisfy the Hotelling rule of natural resources depletion, and 2) women with high initial endowments of human capital will have all their children early in married life while those with low initial endowments will spread childbearing more evenly over the fertile period. This paper argues that Cigno's model is inconsistent with the empirical evidence. Specifically, it is claimed that: 1) the natural resource analogy has been misapplied; 2) the stated 1st order conditions are incorrect; 3) optimal birth profiles do not satsify the Hotelling rule; and 4) the optimal time profile is for all women, regardless of their human capital, to concentrate births at the end of the fertile period. Since the discounted opportunity cost of a birth declines over time, it always pays to postpone a birth as long as possible. However, again, the theoretical prediction of delayed childbirth is not consistent with available evidence, suggesting that important factors have been omitted from this model.
PIP This is a 1st attempt at an explicitly intertemporal, microeconomic theory of the distribution of births over a woman's fertile period. The main results are that: 1) the optimal time-profile will satisfy the Hotelling rule for the depletion of a natural resource (in the present case of the women's stock of human capital at marriage); and 2) under certain simplifying assumptions, women with "high" initial endowments of human capital will have all their children in the 1st part of married life and then return to full-time employment, while women with "low" initial endowments will spread childbearing more evenly over the fertile period. It must also be pointed out that the characteristics of the optimal fertility profile might be different if utility depended directly on the profile itself--e.g., if the quality of children increased with the interval between the pregnancies, as assumed in the literature on birth spacing.
"This paper presents an approach of constructing confidence intervals by means of Monte Carlo simulation. This technique attempts to incorporate the uncertainty involved in projecting the [West] German population by letting the fertility, mortality and net immigration rates vary as a random variable with a specific distribution. Since fertility and migration are by far the most volatile, and therefore, the most critical components to population forecasting, this technique has the potential of accounting for this uncertainty, if the subjective distributions are specified with enough care."
"It is argued that circular migration [in Africa] should be seen as an optimization problem, where the household allocates its labour resources across activities, including work which requires migration, so as to maximize the joint family utility function. The migration problem is illustrated in a simple diagram, which makes it possible to analyse economic aspects of migration."
Results from the Philippine Quality Improvement Demonstration Study show that a policy that expands insurance coverage improves quality of care, as measured by clinical performance vignettes, among public physicians, and induces a spillover effect that improves quality among private physicians.
"This paper challenges the prediction of Todaro's model of rural-to-urban migration that an 'increase in urban employment increases urban unemployed.' It is shown that if the urban demand for labor is isoelastic or inelastic, creation of urban jobs causes urban unemployment to decline and urban-to-rural migration to take place. Moveover, urban job creation always reduces the rate of urban unemployment. The paper then remodels the urban job search process and derives the result that equilibrium urban unemployment would not vanish even if the urban-rural wage gap were eliminated." The geographical focus is on developing countries.
Demographic transitions are often characterized by a period of declining death rates and high or even rising birth rates. This note summarizes an economic explanation for the period which is based on (1) the response of fertility to the expectation of the death of children, and (2) the distinction between actual and desired family size.
"In this paper we study earnings determination at the firm level in Austria. We distinguish firms who employ immigrant workers and those who do not. By using a switching regressions model we find that native workers in firms with immigrant employees face rising earnings-tenure profiles whereas natives in other firms do not."
"Using data from Taiwan, this paper shows that marriage age is negatively (positively) related to the wage rate in the sample with nonworking (working) wives. The results reconcile the two contrasting hypotheses on the relation between wages and marriage age for men."
"Many applications in economics require the selection of an objective function which enables the comparison of allocations involving different population sizes. The two most commonly used criteria are the Benthamite and the Millian welfare functions, also known as classical and average utilitarianism, respectively. The former maximizes total utility of the society and thus represents individuals, while the latter maximizes average utility and so represents generations. Edgeworth (1925) was the first to conjecture, that the Benthamite principle leads to a larger population size and a lower standard of living.... The purpose of this paper is to examine Edgeworth's conjecture in an endogenous growth framework in which there are interactions between output and population growth rates. It is shown that, under conditions that ensure an optimum, the Benthamite criterion leads to smaller population and higher output growth rates than the Millian."
"In this paper, an equilibrium model of human migration is presented which can handle many classes of migrants and locations, in addition to equalities and inequalities. The equilibrium conditions are stated and then formulated as a variational inequality problem. Qualitative properties and computational aspects are briefly discussed."
"The paper presents a model which shows that the probability of migrants being mobile after migration depends on the number of previous waves. The model concludes that low order waves provide positive externalities to higher order waves. This conclusion is empirically tested by comparing the interindustry mobility of two sequential waves of political migrants to Israel."
Summary statistics for women age 35 to 44 and 45 to 54.
PIP A researcher examined the effect of women's schooling on fertility, paying particular attention to whether women's schooling is an exogenous determinant of fertility. The analyzed data were from the US National Opinion Research Center's General Social Survey for the years 1985-91. This survey is a random sample of 1500 English-speaking people, at least 18 years old, who live in noninstitutional settings. Estimates were made of children ever born to women aged 35-44 and 45=54 using ordinary least squares and two-stage least squares (with the latter including the schooling of the respondent's parents as variables). Other variables used besides schooling were age, being Black, region at age 16 (relative to the south), type of residence at age 16 (relative to cities of 250,000). being Catholic, being Mormon, and survey year. Using the Hausman test to regress the variable of schooling on the exogenous variables results in a residual, and a t-test on the coefficient for the residual will test for endogeneity. In each group of women, the t-statistic on the residual was 1.1, suggesting that schooling is not highly endogenous with fertility. Schooling does, however, have a highly negative effect on fertility in both estimates. A 10% increase in schooling is associated with a 10-12% decline in fertility for women aged 35-44 and with a 7-10% decline for women aged 45-54. Therefore, schooling can be used as an independent variable without leading to false acceptance of socioeconomic theories of fertility. Schooling may reduce fertility by increasing a woman's income, thus making child rearing more expensive, or by enhancing a woman's ability to control fertility.
PIP Phelps' model of the research process with technical progress endogenous, which yields the conclusion that the rate of growth is faster and the consumption level is higher with a higher rate of growth of the labor force, is generalized and made more realistic by removing the restriction of homogeneity of degree one in the technical progress function and adding income and education as influences on technical progress. Even with the extensions, the results retain the simplicity of Phelps' results, and reinforce the conclusion that higher population growth implies a faster equilibrium rate of growth of the standard of living, exactly the opposite of conventional growth theory with technical progress exogenous. The more general function can be embedded in growth-theoretic models without upsetting the basic structure of their theory.
"A time-minimizing problem of attaining a full employment state is solved in a dual-economy model with [the] Harris-Todaro migration mechanism and with a positive level of urban unemployment in the starting period. It appears that the optimum solution lies in the specialization of investment in the urban sector at least in the initial stage of development if the per-capita stock in the urban sector is very small in the starting period."
"We use a data set of immigrants to West Germany to simultaneously study both savings and remittances which we relate to individual characteristics, economic variables, migration experiences and remigration plans. Section 2 discusses the basic hypotheses and explains the data. Section 3 presents the empirical study and Section 4 summarizes." The results suggest that "savings and remittances of migrants can be well explained by remigration plans and economic as well as demographic variables. However, the planned future duration of residence in Germany has a negative and significant effect only on remittances."
In this paper we introduce a new method to detect lags in time series by using permutation entropy. The method is applied to several well-known dynamic processes. The good power performance of the new method in detecting memory structure/lags is notable and gives rise to an expectation that it may form a suitable basis for constructive specification searches.
This paper derives short-term interest rate volatility forecasts from various interest rate models. While models that specify both GARCH and levels effects are superior in their forecasts accuracy, they systematically under predict interest rate volatility more frequently than simple short rate models.
Many studies investigate the relationship between R&D and patents applying knowledge production functions. Using aggregated R&D may underestimate the productivity of ‘R’, as mainly ‘R’ but not ‘D’ leads to patents. Disaggregating ‘R’ and ‘D’ shows a significant premium of ‘R’ towards patenting.
In autumn 2008, euro area governments announced comprehensive rescue packages for banks. This induced decreasing bank and increasing government credit spreads. Moreover, the sensitivity of perceived sovereign credit quality to further crisis aggravations increased, and vice versa for banks.
Small sample properties of Lagrange multiplier (LM), likelihood ratio (LR) and Wald test statistics are studied for GARCH(1,1) and IGARCH(1,1) models. Under non-normally distributed errors, it is shown that the robust LM test statistic performs best. © 1997 Elsevier Science S.A.
The estimated persistence parameter in the GARCH(1,1)-model is biased upwards when the parameters of the model are not constant throughout the sample. The present paper explains the mechanics of this behavior for a particular class of estimates.
I consider Bonferroni correction in identifying seasonal cointegrating ranks. Without the correction, the Type I error for the set of all seasonal cointegrating rank tests is substantially inflated because there simultaneously exist several seasonal unit roots in seasonal cointegration.
A band-pass filter approximating the ideal seasonal filter proposed by Sims [Journal of the American Statistical Association 69 (1974) 618] is constructed and its properties are compared to those of the Census X-11 filter. This highlights some properties of the X-11 filter and shows that the proposed band-pass filter is simpler and more flexible.
This paper analyzes the duration of firms in Chapter 11 bankruptcy using a flexible model without assuming any probability distribution. We use bootstrap techniques to make inference on the estimators, and propose a new bootstrap procedure for censored samples.
The use of log-transformed data has become standard in macroeconomic forecasting with VAR models. However, its appropriateness in the context of out-of-sample forecasts has not yet been exposed to a thorough empirical investigation. With the aim of filling this void, a broad sample of VAR models is employed in a multi-country setup and approximately 16 Mio. pseudo-out-of-sample forecasts are evaluated. The results show that, on average, the knee-jerk transformation of the data is at best harmless.
I correct Propositions 1, 2, 3 and 4 in Lioui and Rangvid [Economics letters 96(2007)]. Their conclusion that money demand is not well-defined for plausible parameter values under the ratio specification of habit is wrong.
Unit root tests results suggest that inflation in Argentina for the period 1810–2005 is a stationary series when account is taken of structural breaks that coincide with bouts of hyperinflation. A GARCH (1,1) model of annual inflation suggests a positive short-run relation between the mean and variance of inflation, supporting Friedman's hypothesis that high inflation is associated with more variable inflation.
Across Prussian counties and towns, Protestantism led to more schooling already in 1816, before the Industrial Revolution. This supports a human capital theory of Protestant economic history and rules out a Weberian explanation of Protestant education just resulting from industrialization.
This paper reports evidence of major increases in the persistence of output as well as contributions of low frequency components to the variance of output growth for the United Kingdom during 1856–1990; these results are contrary to those obtained by Jaeger (1990).
A non-parametric production frontier approach is used to analyze the influence of education on the productivity of a sample of U.S. farms for the year 1860. This approach avoids many of the pitfalls of traditional approaches to measuring the impact of education on farmer productivity.
This paper considers the relationship between cointegration and causality and uses tests of cointegration as pre-tests for Granger tests of causality. Such methods are utilized on Portuguese data, 1865–1985, where the export-led growth hypothesis is rejected in favour of reverse causality.
Dynastic models are widely used in economics, but the extent of dynastic behavior is unclear. I calculate a simple measure of dynastic success, the probability of dynastic extinction. Extinction probabilities were roughly 50% through the early 20th Century, fell over the next two decades to roughly 14%, and increased to 28% by the 1954 cohort.
We apply recent econometric techniques to the demand for money in the United States over a period of some hundred years, using data previously analyzed by Friedman and Schwartz (1982). Our results parallel those of Hendry and Ericsson's (1991) UK study. We find evidence of a unique long-run money demand function and of a stable short-run demand function which passes a range of diagnostic tests and exhibits parameter constancy. Also, parameter non-constancy in an inverted equation where prices appear as the dependent variable is inconsistent with the hypothesis of exogenous money determining prices through the money demand function.
Top-cited authors
Yongcheol Shin
  • The University of York
Hashem Pesaran
  • University of Southern California
Anil K. Bera
  • University of Illinois, Urbana-Champaign
Chunrong Ai
  • University of Florida
Edward Norton
  • University of Michigan