Three Alternative Approaches to Test the Permanent Income Hypothesis in Dynamic Panels

In this paper we consider three alternative approaches to test the Permanent Income Hypothesis (PIH) in the context of dynamic panels: the aggregate consumption approach, the Euler equation approach and finally Friedman (1957)'s original characteristic tests. Our empirical evidence, using the British Household Panel Survey (BHPS) data, strongly supports the PIH. This analysis can, thus, be considered as supporting the view that empirical tests of PIH, based on aggregate time-series data, might suffer from misspecification or overlook some fundamental characteristics of micro data.Permanent Income Hypothesis, British Household Panel Survey

Gravity Models of the Intra-EU Trade: Application of the Hausman-Taylor Estimation in Heterogeneous Panels with Common Time-specific Factors

In this paper we follow recent developments of panel data studies and explicitly allow for the existence of unobserved common time-specific factors where their individual responses are also allowed to be heterogeneous across cross section units. In the context of this extended panel data framework we generalize the Hausman-Taylor estimation methodology and develop the associated econometric theory. We apply our proposed estimation technique along with the conventional panel data approaches to a comprehensive analysis of the gravity equation of bilateral trade flows amongst the 15 European countries over 1960-2001. Empirical results clearly demonstrate that our proposed approach fits the data reasonably well and provides much more sensible results than the conventional approach based on the fixed time dummies. These findings may highlight the importance of allowing for a certain degree of cross section dependence through unobserved heterogeneous time specific common effects, otherwise the resulting estimates would be severely biased.Gravity Models of Trade, Heterogeneous Panel Data, Hausman-Taylor Estimation, Time-specific Common Factors, Intra-EU Trade.

Higher education and equality of opportunity in Italy

This paper proposes a definition of equality of educational opportunities. Then, it develops a comprehensive model that allows to test for the existence of equality of opportunity in a given distribution and to rank distributions according to equality of opportunity. Finally, it provides an empirical analysis of equality of opportunity for higher education in Italy.Equality of Opportunity, Higher Education, Stochastic Dominance

Fair and unfair income inequalities in Europe

This paper analyses the extent of income inequality and opportunity inequality in 25 European countries. The present work contributes to understanding the origin of standard income inequality, helping to identify potential institutional setups that are associated to opportunity inequality. We distinguish between ex-ante and ex-post opportunity inequality. We find that ex-ante equality of opportunity exhibits positive correlation with public expenditure in education, whereas ex-post equality of opportunity is also positively associated to union presence and to fiscal redistribution.Inequality of opportunity, income inequality.

Fair and Unfair Income Inequalities in Europe

This paper analyses the extent of income inequality and opportunity inequality in 25 European countries. The present work contributes to understanding the origin of standard income inequality, helping to identify potential institutional setups that are associated to opportunity inequality. We distinguish between ex ante and ex post opportunity inequality. We find that ex ante equality of opportunity exhibits positive correlation with public expenditure in education, whereas ex post equality of opportunity is also positively associated to union presence and to fiscal redistribution.inequality of opportunity, income inequality

Effects of transfers on liabilities of pension schemes

Mestrado em Actuarial ScienceNos últimos anos, as regras de adesão aos planos de pensões no Reino Unido tornaram-se mais flexíveis e a maioria dos membros passou a ter a possibilidade de mudar de um plano para outro, de acordo com as suas necessidades pessoais e financeiras. Isto significa que um dado membro, se assim o desejar, pode transferir o valor acumulado das contribuições feitas em seu favor para um outro fundo. A opção de transferir é justificada sobretudo pelo facto de os planos CD serem mais flexíveis na forma como os benefícios são recebidos e, às vezes, permitirem um maior controlo do membro sobre a forma como o dinheiro é investido - As transferências são um procedimento complexo do ponto de vista atuarial: os administradores precisam de calcular o montante que deve ser entregue ao membro que sai, uma tarefa realizada com a assistência do atuário do plano, que tem que definir os pressupostos económicos e demográficos necessários para o cálculo. Este trabalho resulta de um estágio no Lisbon Service Centre da Willis Tower Watson, onde estive envolvido no processo de avaliação de fundos de pensões do Reino Unido, com o objetivo de projetar as responsabilidades futuras dos planos. A legislação impõe que as empresas do Reino Unido realizem avaliações, pelo menos, a cada três anos, dada a importância, tanto para os membros como para as empresas, de conhecer o respetivo nível de financiamento e a situação financeira, em geral.In the last years the regulations for pension plans membership became more flexible and most members have now the possibility to move from a scheme to another, according to their personal and financial needs. This means members are able to move their accumulated pots through a transfer, and this usually happens from a Defined Benefit (DB) to a Defined Contribution (DC) scheme. The option to transfer is justified because DC schemes are characterized by more freedom regarding the way benefits are collected and sometimes more control on the way the money is invested - although the member will take on the investment risk, the longevity risk and the income management risk. Transfers are a complex procedure from the actuarial point of view: trustees need to calculate the lump sum to be provided to the member leaving the scheme, a task performed with the assistance of actuaries, who are asked to set the economic and demographic assumptions required for the calculation. This work is a result of an internship at the Lisbon Service Center of Willis Tower Watson, where I have been involved in the UK pension fund valuation process, with the objective of projecting the future liability of schemes. Legislation imposes that UK firms must perform valuations of the schemes at least every three years, given the importance, both for members and clients, of knowing their funding position and financial situation.info:eu-repo/semantics/publishedVersio

Fairness in education: The Italian university before and after the reform

In 2001 the Italian tertiary education system embarked in a broad process of reform. The main novelty brought by the reform was a reduction of the length of study to get a first level degree together with the introduction of a 2-years, second level, master degree. This paper aims at studying the effects of the reform in terms of fairness in educational opportunity. In order to do so we first define fairness criteria following a well-developed responsibility sensitive egalitarian literature, we then discuss existing inequality of opportunity measures consistent with these criteria, we show their relationship, and we adapt them to the educational framework. We finally employ this set of measures to show the evolution of fairness in the access to university in Italy before and after the reform.Equality of opportunity, higher education.

Intentions to Return of Irregular Migrants: Illegality as a Cause of Skill Waste

In this paper we show that highly skilled illegal migrants may be more likely to return home than migrants with low or no skills when illegality causes skill waste, i.e. reduced ability of making use of individual capabilities both in the labor and the financial markets. This result is in contrast with common wisdom on return migration, according to which low-skill individuals are more likely to go back home rather than high-skill migrants. The simple theoretical life-cycle framework that shows the former result is tested on a sample of illegal migrants crossing Italian borders in 2003. The estimation results confirm that highly skilled illegal migrants are more willing to return home.Illegal migration, labor skills, skill waste.

Gravitymodels of interprovincial migration flows in Canada with hierarchical multifactor structure

Following recent contributions on migration flows, we contribute to the literature by relaxing restrictions on how multilateral resistance to migration (MRM) may affect province-pair-specific migration flows. We follow recent advancements in the three dimensional (3D) panel data models with a hierarchical multifactor structure and develop the more flexible specification for MRM. In addition to including unobserved global (country) factors with province-pair-specific coefficients, we can control for local origin (destination)-specific factors that have heterogeneous effects on destinations (origins). We apply the 3DCCE estimator advanced by Kapetanios et al. (J Econom, 2020) to an analysis of the determinants of interprovincial migration flows in Canada from 1976 to 2014. In particular, we find that the recent rise in the internal migration flows, registered in Canada from 2009 onwards, is more likely to be associated with the relative income inequality and network presence rather than the conventional long-run determinants such as income and unemployment differentials