Skill-biased technological change and the business cycle

Over the past two decades, technological progress in the United States hasbeen biased towards skilled labor. What does this imply for business cycles?We construct a quarterly skill premium from the CPS and use it to identifyskill-biased technology shocks in a VAR with long-run restrictions. Hours fallin response to skill-biased technology shocks, indicating that at least part of thetechnology-induced fall in total hours is due to a compositional shift in labordemand. Skill-biased technology shocks have no effect on the relative price ofinvestment, suggesting that capital and skill are not complementary in aggregateproduction.

Credible redistributive policies and migration across US States

Does worker mobility undermine governments ability to redistribute income? Thispaper analyzes the experience of US states in the recent decades. We build a tractablemodel where both migration decisions and redistribution policies are endogenous. Wecalibrate the model to match skill premium and worker productivity at the state level,as well as the size and skill composition of migration flows. The calibrated modelis able to reproduce the large changes in skill composition as well as key qualitativerelationships of labor flows and redistribution policies observed in the data. Our resultssuggest that regional di¤erences in labor productivity are an important determinantof interstate migration. We use the calibrated model to compare the cross-section ofredistributive policies with and without worker mobility. The main result of the paperis that interstate migration has induced substantial convergence in tax rates acrossUS states, but no race to the bottom. Skill-biased in-migration has reduced the skillpremium and the need for tax-based redistribution in the states that would have hadthe highest tax rates in the absence of mobility.

Why do emerging economies borrow short term?

We argue that one reason why emerging economies borrow short term is that it is cheaperthan borrowing long term. This is especially the case during crises, as in these episodes therelative cost of long-term borrowing increases. We construct a unique database of sovereignbond prices, returns, and issuances at di¤erent maturities for 11 emerging economies from 1990to 2009 and present a set of new stylized facts. On average, these countries pay a higher riskpremium on long-term than on short-term bonds. During crises, the di¤erence between the tworisk premia increases and issuance shifts towards shorter maturities. To illustrate our argument,we present a simple model in which the maturity structure is the outcome of a risk sharingproblem between an emerging economy subject to rollover crises and risk averse internationalinvestors.

Immigration and the survival of the welfare state

This paper analyzes the political sustainability of the welfare state in a model where immigration policy is also endogenous. In the model, the skills of the native population are affected by immigration and skill accumulation. Moreover, immigrants affect future policies, once they gain the right to vote. The main finding is that the long-run survival of redistributive policies is linked to an immigration policy specifying both skill and quantity restrictions. In particular, in steady state the unskilled majority admits a limited inflow of unskilled immigrants in order to offset growth in the fraction of skilled voters and maintain a high degree of income redistribution.Interestingly, equilibrium immigration policy shifts from unrestricted skilled immigration,when the country is skill-scarce, to restricted unskilled immigration, as the fraction of native skilled workers increases. The analysis also suggests a new set of variables that may help explain international differences in immigration restrictions.

Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model for outpatient and inpatient episodes

This paper analyses whether or not tax subsidies to private medicalinsurance are self-financing by means of a structural approach. Weconstruct a simulation routine based on a microeconometric discretechoice model that allows us to evaluate the impact of premium changeson the utilisation of outpatient and inpatient health care services. Wesimulate the 1999 Spanish tax reform that abolished the tax deductionfor expenditures on private health insurance using a representativesample of the Catalan population. Prior to this reform, foregone taxrevenue arising from deductions after the purchase of private insuranceamounted to 69.2 M. per year. In contrast, the elimination of thesubsidies to private policies is estimated to generate an extra costfor the public sector of about 8.9 M. per year.

Implications of dynamic trading for insurance markets

We study the interaction between insurance and capital markets within singlebut general framework.We show that capital markets greatly enhance the risksharing capacity of insurance markets and the scope of risks that areinsurable because efficiency does not depend on the number of agents atrisk, nor on risks being independent, nor on the preferences and endowmentsof agents at risk being the same. We show that agents share risks by buyingfull coverage for their individual risks and provide insurance capitalthrough stock markets.We show that aggregate risk enters private insuranceas positive loading on insurance prices and despite that agents will buyfull coverage. The loading is determined by the risk premium of investorsin the stock market and hence does not depend on the agent s willingnessto pay. Agents provide insurance capital by trading an equally weightedportfolio of insurance company shares and riskless asset. We are able toconstruct agents optimal trading strategies explicitly and for verygeneral preferences.

Wage inequality in a frictional labor market

Wage inequality in the United States has grown substantially in thepast two decades. Standard supply-demand analysis in the empiricsof inequality (e.g.Katz and Murphy (1992)) indicates that we mayattribute some of this trend to an outward shift in the demand forhigh skilled labor. In this paper we examine a simple static channelin which the wage premium for skill may grow -increased firm entry.We consider a model of wage dispersion where there are two types ofworkers and homogeneous firms must set wages and preferences forwhat type of worker they would like to hire. We find that both thewage differential and the demand for high skill workers can increasewith the proportion of high skill workers -these high skill workerstherefore 'create' their own demand without exogenous factors. Inaddition, within group wage inequality can increase in step with thebetween group wage inequality. Simulations of the model are providedin order to compare the findings with empirical results.

The risk of divorce and household saving behavior

We analyze the impact of an increase in the risk of divorce on the savingbehaviour of married couples. From a theoretical perspective, the expected sign of theeffect is ambiguous. We take advantage of the legalization of divorce in Ireland in 1996as an exogenous increase in the likelihood of marital dissolution. We analyze the savingbehaviour over time of couples who were married before the law was passed. We proposea difference-in-differences approach where we use as comparison groups either marriedcouples in other European countries (not affected by the law change), or Irish familieswho did not experience a significant increase in the expected risk of divorce (such as veryreligious families, or single individuals). Our results suggest that the increase in the riskof divorce brought about by the law was followed by an increase in the propensity to saveof married couples, consistent with a rise in precautionary savings interpretation. Anincrease in the risk of marital dissolution of about 40 percent led to a 7 to 13 percent risein the proportion of married couples reporting positive savings.

Serial defaults, serial profits: Returns to sovereign lending in Habsburg Spain, 1566-1600

Philip II of Spain accumulated debts equivalent to 60% of GDP. He also defaulted four times onhis short-term loans, thus becoming the first serial defaulter in history. Contrary to a commonview in the literature, we show that lending to the king was profitable even under worst-casescenario assumptions. Lenders maintained long-term relationships with the crown. Lossessustained during defaults were more than compensated by profits in normal times. Defaultswere not catastrophic events. In effect, short-term lending acted as an insurance mechanism,allowing the king to reduce his payments in harsh times in exchange for paying a premium intranquil periods. © 2010 Elsevier Inc. All rights reserved.

The determinants of the prevalence of single mothers: A cross-country analysis

This paper examines the effect of public assistance, labor market and marriage marketconditions on the prevalence of single mother families across countries and over time. Amultinomial logit derived from a random utility approach is estimated using individualleveldata for 14 countries. I find evidence that increases in the level of public support are significantly and positively associated with a higher incidence of both never marriedand divorced mothers. The results also suggest that single mothers are more prevalentwhen female wages are lower. Higher male earnings and employment opportunities in awoman s marriage market appear to lead to fewer never married mothers, but more divorced mothers. Higher child support or alimony payments are associated with a higher prevalence of divorced mothers.

Malthusian dynamism and the rise of Europe: Make war, not love

This paper argues that Malthusian regimes are capable of sustained changes in per capita incomes. Shifting mortality and fertility schedules can lead to different steady-state income levels, with long periods of growth during the transition. Europe checked the downward pressure on wages through late marriage, which reduced fertility, and a mortality regime that combined high death rates with high incomes. We argue that both emerged as a result of the Black Death.

Strike outcomes and wage settlements in Spain

This paper analyzes collective bargaining using Spanish firm level data. Centralto the analysis are the joint determination of wage and strike outcomes in adynamic framework and the possibility of segregate wage equation for strike andnon-strike outcomes. Conditional to strikes taking place, we confirm a negativerelationship between strike duration and wage changes in a dynamic context.Furthermore, we find selection in wage equations induced by the strike outcome.In this sense, the possibility of wage determination processes being differentin strike and non-strike samples is not rejected by the data. In particular,wage dynamics are of opposite sing in both strike and non-strike equations.Finally, we find evidence of a 0.33 percentage points wage change strike premium.

Like Man, Like Woman: Roman Women, Gender Qualities and Conjugal Relationships at the Turn of the First Century

Modern scholarship often discusses Roman women in terms of their difference from their male counterparts, frequently defining them as 'other'. This book shows how Roman male writers at the turn of the first century actually described women as not so different from men: the same qualities and abilities pertaining to the domains of parenthood, intellect and morals are ascribed by writers to women as well as to men. There are two voices, however: a traditional, ideal voice and an individual, realistic voice. This creates a duality of representations of women, which recurs across literary genres and reflects a duality of mentality. How can we interpret the paradoxical information about Roman women given by the male-authored texts? How does this duality of mentality inform us about gender roles and gender hierarchy? This work analyses well-known, as well as overlooked, passages from the writings of Pliny the Younger, Tacitus, Suetonius, Quintilian, Statius, Martial and Juvenal and sheds new light on Roman views of women and their abilities, on the notions of private and public and on conjugal relationships. In the process, the famous sixth satire of Juvenal is revisited and its topic reassessed, providing further insights into the complex issues of gender roles, marriage and emotions. By contrasting representations of women across a broad spectrum of literary genres, this book provides consistent findings that have wide significance for the study of Latin literature and the social history of the late first and early second centuries.