A theoretical model of wage discrimination with inspection fines

In neoclassical models, workers are classified a priori into discrimination groups. We develop a probabilistic model of wage discrimination in which workers need not be classified a priori. Our model is a generalization of the standard framework, whereas Becker's model is an extreme case. A second implication is that the traditional approach to measuring discrimination (the Oaxaca–Blinder approach) must be modified to take into account this probabilistic framework.

ON THE ECONOMIC LINK BETWEEN ASSET PRICES AND REAL ACTIVITY

This paper presents a model linking two financial markets (stocks and bonds) with the real business cycle, in the framework of the Consumption Capital Asset Pricing Model with Generalized Isoelastic Preferences. Besides interest rate term spread, the model includes a new variable to forecast economic activity: stock market term spread, which constitutes the slope of expected stock market returns. The empirical evidence documented in this paper suggests systematic relationships between the state of the business cycle and the shapes of two yield curves (interest rates and expected stock returns). Results are robust to changes in measures of economic growth, stock prices, interest rates and expectation-generating mechanisms.

Returns to foreign languages of native workers in the EU

Most papers on returns to languages are concerned with immigrants. We use the European Community Household Panel Survey (ECHP) to infer returns on non-native languages by non-immigrants in nine countries of the European Union. We differ fromthe few other studies that deal with the same problem in three respects. First, we correct for time-dependent measurement errors in self-reporting as suggested by Dustmann and Van Soest and find that the resulting IV estimates are much larger than those obtained by OLS. We also suggest that there is little room for time-persistent errors and heterogeneity, and that therefore our estimates should not suffer from the other usual biases. Secondly, instead of using a dummy for each language, we use the ratio of the population that is not proficient in a language in each country considered. Finally, we estimate instrumental variable quantile regressions to illustrate how returns to languages vary at different points of the distribution of earnings.