High-School Dropouts and Transitory Labor Market Shocks: The Case of the Spanish Housing Boom

This paper addresses the implications of transitory changes in labor market conditions for low versus high educated workers on the decision to acquire education. To identify this effect, I use the improvement in the labor market prospects of low educated workers motivated by the increases in employment and wages in the construction sector during the recent housing boom. The estimation strategy is based on the fact that changes in the labor market driven by the construction sector affect only men. Increases in construction activity are found to increase men's propensity to drop out of high-school, relative to women. According to this finding, policies promoting education should strengthen when in the presence of transitory shocks in the labor market that make dropping out more attractive.high-school dropout, housing boom, Spain

The Effect of Product Market Competition on Job Instability

This paper assesses the impact of product market competition on job instability as proxied by the use of fixed-term labor contracts. Using both worker data from the Spanish Labor Force Survey and firm data from the Spanish Business Strategies Survey, I show that job instability rises with competition. In particular, a one standard deviation increase in competition in an economic sector decreases the probability that a fixed-term worker gets an open-ended contract within that sector in a given year by more than 30%. The effect is identified by means of exogenous shifts in competition brought about by changes in legislation.fixed-term employment, product market competition, labor contract

Network Effects on Migrants' Remittances

This paper explores the existence of network effects in migrants’ remittance behavior. In this study, networks are defined as groups of immigrants from the same country that live in the same locality. Using the National Immigrant Survey, a unique database for Spain, immigrants are found to be more likely to remit and to remit more money if they belong to high remitting country groups. This finding sheds new light on the determinants of the decision to remit, as well as on the scope of immigrant networks.immigrant networks, remittances, Spain

Fostering the emancipation of young people: Evidence from a Spanish rental subsidy

In Southern Europe youngsters leave the parental home significantly later than in Northern Europe and United States. In this paper, we study the effect of a monthly cash subsidy on young adults' emancipation, family formation, and fertility. The subsidy, introduced in Spain in 2008, is conditional on young adults renting accommodation, and it amounts to almost 20 percent of the average youngsters' wage. Our identification strategy exploits the subsidy eligibility age threshold to assess the causal impact of the cash transfer. Difference-in-Differences and Regression Discontinuity estimates show that the policy increases emancipation rates by 0.9-2.3 percentage points, couple cohabitation by 1.2-2.4 percentage points, and the probability of having children by 4.8-8.1 percentage points for 22 year-olds compared to 21 year-olds. The effect is larger among young adults earning lower incomes and living in high rental price areas. This is consistent with the hypothesis that youngsters delay emancipation and family formation because they are budget constrained

Should I Stay or Should I Go? Sibling Effects in Household Formation

In Southern Europe youngsters leave the parental home significantly later than in Northern Europe and United States. Policies have been implemented in Southern Europe to incentivize young adults to leave parental home earlier. Do peer effects among siblings amplify the effects of these policies? Estimating peer effects is challenging because of problems of reflection, endogenous group formation, and correlated unobservables. We overcome these issues in the context of a Spanish rental subsidy, exploiting the subsidy eligibility age threshold to analyse peer effects among siblings. Instrumental variable estimates show that peer effects among siblings are negative, and that the effect is explained by the presence of old or ill parents. Findings indicate that policy makers should target the household rather the individual, and combine policies for young adults together with policies for elderly

Immigrant networks and remittances: Cheaper together?

We estimate the causal effects of immigrant networks on individuals’ remittance sending behavior for migrants from many different countries residing in Spain. Our methodology addresses typical issues that arise when estimating network effects: reverse causality, common unobserved factors, and self-selection. In particular, we instrument the size of networks by predicting the number of migrants in each location using the location's accessibility by distinct methods of transportation and information about how migrants from each country initially arrived in Spain. Our findings show that immigrants from above-average remitting countries remit more if they live in larger networks. For a subset of countries that receive large remittance flows from Spain, we show that migrants in larger networks are less likely to use most expensive remittance channels, and that cost spreads between the most expensive and cheapest remittance service provider are lower for countries characterized by stronger networks. Our results suggest that network effects could boost policy efforts to lower remittance pricesZoë Kuehn acknowledges financial support from the Ministerio de Economía Industria y Competitividad (ECO2017-82882-R) in Spai

Education Policies and Migration across European Countries

This paper tests whether and how two education policies: (i) increasing the length of compulsory education and (ii) introducing foreign languages into compulsory school curricula, affect subsequent migration across European countries. We construct a novel data base that includes information on education reforms for thirty-one countries spanning four decades. Combining this data with information on recent migration flows by cohorts, we find that an additional year of compulsory education reduces the number of emigrants by almost 10%. Increasing the length of compulsory education shifts educational attainment for a significant fraction of the population from low towards medium levels. Our findings are thus in line with the fact that in the majority of European countries medium educated individuals display lower emigration rates than low educated individuals. Introducing a foreign language into compulsory school curricula on the other hand, almost doubles the number of emigrants to the country where the language is spoken and increases the total number of emigrants by 20%. Depending on the specific content of an education policy, "more education" can thus have opposite effects on migration

Does Foreign Language Proficiency Foster Migration of Young Individuals within the European Union?

Speaking the language of the host country eases migrants' integration and tends to boost their economic success in the country of destination. However, the decision to acquire language skills may in itself be determined by the intention to migrate. In addition, conditional on being a migrant, the relation between language skills and migrants' integration and economic success goes both ways. Using data on the study of foreign languages during compulsory education in European countries, we test whether and how much language proficiency determines migration flows across Europe. The European Union with basically unlimited labor mobility and pronounced differences in youth unemployment rates provides an ideal testing ground for our hypothesis. We find that speaking the language of a country increases the likelihood to migrate to that country almost fivefold

Newborn Health and the Business Cycle: Is It Good to Be Born in Bad Times?

We study the effect of the cycle on the health of newborn babies using 30 years of birth-certificate data for Spain. We find that babies are born healthier when the local unemployment rate is high. Although fertility is lower during recessions, the effect on health is not the result of selection, since the main result survives the inclusion of parents' fixed-effects. Analysis of National Health Survey data shows that fertility-age women engage in healthier behaviors during recessions (in terms of exercise, sleep, smoking and drinking) and report better overall health. We conclude that maternal health is a plausible mediating channel