Who benefits from labor market regulations? Chile 1960-1998

Economists have examined the impact of labor market regulations on the level of employment. But there are many reasons to suspect that the impact of regulations differs across types of workers. In this paper the authors take advantage of the unusually large variance in labor policy in Chile to examine how different labor market regulations affect the distribution of employment and the employment rates across age, gender, and skill levels. To this effect, they use a sample of repeated cross-section household surveys spanning the period 1960-98 and measures of the evolution of job security provisions and minimum wages across time. The results suggest large distribution effects. The authors find that employment security provisions and minimum wages reduce the share of youth and unskilled employment as well as their employment rates. They also find large effects on the distribution of employment between women and men.Labor Policies,Labor Management and Relations,Environmental Economics&Policies,Public Health Promotion,Health Monitoring&Evaluation,Environmental Economics&Policies,Health Monitoring&Evaluation,Labor Management and Relations,Labor Standards,Youth and Governance

What determines the quality of institutions?

In trying to explain institutional quality, different authors have come to conflicting conclusions. In tackling the problem themselves, the authors show three things. First, openness is positively and pretty robustly associated with institutional quality. To minimize selection bias, the authors use data sets with the greatest cross-country coverage, though they also test the significance of the variables for smaller sample sizes. The results confirm that both natural and policy measures of openness are important. Concentration of trade in natural resource exports continues to be associated with poor institutional quality after openness in trade is accounted for. Second,"social"variables, such as income inequality or ethnic diversity, are not associated with institutional quality. The significance of the inequality variable disappears when continent dummy variables are included for Africa and Latin America. Third, features of specific institutions, such as freedom of the press and checks and balances in the political system, are positively associated with overall perceptions of institutional quality. These findings hold strongly across different data sets and samples even after the authors control for the variables commonly used in the literature.Decentralization,Environmental Economics&Policies,Public Institution Analysis&Assessment,Economic Theory&Research,Poverty Monitoring&Analysis,Governance Indicators,Economic Policy, Institutions and Governance,Public Institution Analysis&Assessment,Economic Theory&Research,Poverty Monitoring&Analysis

Aggregate agricultural supply response in developing countries : a survey of selected issues

The authors review several studies of the aggregate agricultural supply response. Using both economic and econometric reasons, they argue that time series estimation typically generates a downward-biased estimate of the response to a credible reform. Even though time series estimates can provide an accurate picture of past behavoiral relations, they do not provide an adequate basis for forecasting the impact of policy reform. This is especially true in developing countries, where policy reforms involve large changes and have included agricultural price reform, industrial trade liberalization, financial sector reform, and macroeconomic stabilization. Under those circumstances, parameters values obtained under the former policy regime have little relevance in the new regime. The authors also argue that investment in public goods should be viewed as complementary to, not competitive with, price policy. They claim that to select the policy with the biggest impact on output makes no sense. They provide what they consider to be better criteria for choosing the best from alternative policies.Environmental Economics&Policies,Payment Systems&Infrastructure,Economic Theory&Research,Markets and Market Access,Labor Policies,Economic Theory&Research,Environmental Economics&Policies,Access to Markets,Markets and Market Access,Inequality

Time Series Analysis of Export Demand Equations: A Cross-Country Analysis

The paper estimates export demand elasticities for a large number of developing and industrial countries, using time-series techniques that account for the nonstationarity in the data. The average long-run price and income elasticities are found to be approximately -1 and 1.5, respectively. Thus, exports do react to both the trade partners' income and to relative prices. Africa faces the lowest income elasticities for its exports, while Asia has both the highest income and price elasticities. The price and income elasticity estimates have good statistical properties. Copyright 1999, International Monetary Fund

The place premium : wage differences for identical workers across the US border

This paper compares the wages of workers inside the United States to the wages of observably identical workers outside the United States-controlling for country of birth, country of education, years of education, work experience, sex, and rural-urban residence. This is made possible by new and uniquely rich microdata on the wages of over two million individual formal-sector wage-earners in 43 countries. The paper then uses five independent methods to correct these estimates for unobserved differences and introduces a selection model to estimate how migrants'wage gains depend on their position in the distribution of unobserved wage determinants. Following all adjustments for selectivity and compensating differentials, the authors estimate that the wages of a Bolivian worker of equal intrinsic productivity, willing to move, would be higher by a factor of 2.7 solely by working in the United States. While this is the median, this ratio is as high as 8.4 (for Nigeria). The paper documents that (1) for many countries, the wage gaps caused by barriers to movement across international borders are among the largest known forms of wage discrimination; (2) these gaps represent one of the largest remaining price distortions in any global market; and (3) these gaps imply that simply allowing labor mobility can reduce a given household's poverty to a much greater degree than most known in situ antipoverty interventions.,Population Policies,Income,Economic Theory&Research,Labor Markets

The Place Premium: Wage Differences for Identical Workers across the US Border

We estimate the “place premium”—the wage gain that accrues to foreign workers who arrive to work in the United States. First, we estimate the predicted, purchasing-power adjusted wages of people inside and outside the United States who are otherwise observably identical—with the same country of birth, country of education, years of education, work experience, sex, and rural or urban residence. We use new and uniquely rich micro-data on the wages and characteristics of over two million individual formal-sector wage-earners in 43 countries (including the US). Second, we examine the extent to which these wage ratios for observably equivalent workers may overstate the gains to a marginal mover because movers may be positively selected on unobservable productivity in their home country. New evidence for nine of the countries, combined with a range of existing evidence, suggests that this overstatement can be significant, but is typically modest in magnitude. Third, we estimate the degree to which policy barriers to labor movement in and of themselves sustain the place premium, by bounding the premia observed under self-selected migration alone. Finally, we show that the policy induced portion of the place premium in wages represents one of the largest remaining price distortions in any global market; is much larger than wage discrimination in spatially integrated markets; and makes labor mobility capable of reducing households’ poverty at the margin by much more than any known in situ intervention.migration, wage discrimination, price distortions, policy barriers, place premium, poverty.

How are youth faring in the labor market ? Evidence from around the world

This paper uses a new standardized micro database for a large set of developing countries to (1) describe the patterns of labor market outcomes for youth, and (2) explain the contributions of supply and demand factors to youth outcomes. The paper shows that youth face various difficulties in transitioning to work. This is reflected in their relatively higher unemployment rate, higher incidence of low paying or unpaid work, and a large share of youth who are neither working nor in school. This is especially true for young girls who are found outside the labor market, some engaged in home production. Finally, the paper also finds that cross-country estimates show that changes in the youth relative cohort size is unlikely to have a large effect on how youth are faring in the labor market.Labor Markets,Youth and Governance,Adolescent Health,Population Policies,Children and Youth

Economic freedom, human rights, and the returns to human capital : an evaluation of the Schultz hypothesis

According to T.W. Schultz, the returns to human capital are highest in economic environments experiencing unexpected price, productivity, and technology shocks that create"disequilibria."In such environments, the ability of firms and individuals to adapt their resource allocations to shocksbecomes most valuable. In the case of negative shocks, government policies that mitigate the impact of the shock will also limit the returns to the skills of managing risk or adapting resources to changing market forces. In the case of positive shocks, government policies may restrict access to credit, labor, or financial markets in ways that limit reallocation of resources toward newly emerging profitable sectors. This paper tests the hypothesis that the returns to skills are highest in countries that allow individuals to respond to shocks. Using estimated returns to schooling and work experience from 122 household surveys in 86 developing countries, this paper demonstrates a strong positive correlation between the returns to human capital and economic freedom, an effect that is observed throughout the wage distribution. Economic freedom benefits those workers who have attained the most schooling as well as those who have accumulated the most work experience.Debt Markets,Political Economy,Economic Theory&Research,Labor Policies,Population Policies

Comparable Estimates of Returns to Schooling Around the World

Rates of return to investments in schooling have been estimated since the late 1950s. In the 60-plus year history of such estimates, there have been several attempts to synthesize the empirical results to ascertain patterns. This paper presents comparable estimates, as well as a database, that use the same specification, estimation procedure, and similar data for 139 economies and 819 harmonized household surveys. This effort to compile comparable estimates holds constant the definition of the dependent variable, the set of control variables, the sample definition, and the estimation method for all surveys in the sample. The results of this study show that (1) the returns to schooling are more concentrated around their respective means than previously thought; (2) the basic Mincerian model used is more stable than may have been expected; (3) the returns to schooling are higher for women than for men; (4) returns to schooling and labor market experience are strongly and positively associated; (5) there is a decreasing pattern over time; and (6) the returns to tertiary education are highest