International Corporate Taxation and U.S. Multinationals’ Behavior: an Integrated Approach

Using data from the International Revenue Service, this paper explores the effcts of corporate taxation on U.S. capital invested abroad and on tax planning practices (dividend payments, income shifting, and passive investment). The econometric analysis first indicates that investment is strongly influenced by average tax rates, with a magnified impact for particularly low-tax rates implying that the attractiveness of low-tax countries is not weakened by anti-deferral rules and cross-crediting limitations. Further explorations suggest that firms report higher profit and are less likely to repatriate dividends when they are located in low-tax jurisdictions. Firms also report higher Subpart F income in countries in which they shift their profit, suggesting that cross-crediting provides an incentive to shift passive income in low-tax countries and that passive investment can be an alternative strategy to minimize taxes when active investment opportunities are lacking. Finally, the paper estimates the role of effective transfer pricing regulation on income shifting activities using the quality of host countries' law enforcement. It appears that low degrees of law enforcement are associated with higher income-shifting.

Modeling U.S. Inflation Dynamics: A Bayesian Nonparametric Approach

This paper uses an infinite hidden Markov model (IIHMM) to analyze U.S. inflation dynamics with a particular focus on the persistence of inflation. The IHMM is a Bayesian nonparametric approach to modeling structural breaks. It allows for an unknown number of breakpoints and is a flexible and attractive alternative to existing methods. We found a clear structural break during the recent financial crisis. Prior to that, inflation persistence was high and fairly constant.

Comparing the early research performance of PhD graduates in labor economics in Europe and the USA

This paper analyzes the early research performance of PhD graduates in labor economics, addressing the following questions: Are there major productivity differences between graduates from American and European institutions? If so, how relevant is the quality of the training received (i.e. ranking of institution and supervisor) and the research environment in the subsequent job placement institution? The population under study consists of labor economics PhD graduates who received their degree in the years 2000 to 2005 in Europe or the USA. Research productivity is evaluated alternatively as the number of publications or the quality-adjusted number of publications of an individual. When restricting the analysis to the number of publications, results suggest a higher productivity by graduates from European universities than from USA universities, but this difference vanishes when accounting for the quality of the publication. The results also indicate that graduates placed at American institutions, in particular top ones, are likely to publish more quality-adjusted articles than their European counterparts. This may be because, when hired, they already have several good acceptances or because of more focused research efforts and clearer career incentives.

A labor market with targeted wage offers

We model a market for highly skilled workers, such as the academic job market. The outputs of firm-worker matches are heterogeneous and common knowledge. Wage setting is synchronous with search: firms simultaneously make one personalized o¤er each to the worker of their choice. With large frictions (delay costs), efficient coordination is not possible, but for small frictions efficient matching with Diamond-type monopsony wages is an equilibrium.

Economic Principles and Determination of Infrastructure Third Party Tariffs in the UK Continental Shelf (UKCS)

NORTH SEA STUDY OCCASIONAL PAPER No. 116

The rise and fall of piecework–timework wage differentials: market volatility, labor heterogeneity, and output pricing

Based on detailed payroll data of blue collar male and female labor in Britain’s engineering and metal working industrial sectors between the mid-1920s and mid-1960s, we provide empirical evidence in respect of several central themes in the piecework-timework wage literature. The period covers part of the heyday of pieceworking as well as the start of its post-war decline. We show the importance of relative piece rate flexibility during the Great Depression as well as during the build up to WWII and during the war itself. We account for the very significant decline in the differentials after the war. Labor market topics include piecework pay in respect of compensating differentials, labor heterogeneity, and the transaction costs of pricing piecework output.

Service offshoring and white-collar employment

This paper empirically studies the effects of service offshoring on white-collar employment, using data for more than one hundred U.S. occupations. A model of firm behavior based on separability allows to derive the labor demand elasticity with respect to service offshoring for each occupation. Estimation is performed with Quasi-Maximum Likelihood, to account for high degrees of censoring in the employment variable. The estimated elasticities are then related to proxies for the skill level and the degree of tradability of the occupations. Results show that service offshoring increases high skilled employment and decreases medium and low skilled employment. Within each skill group, however, service offshoring penalizes tradable occupations and benefits non-tradable occupations.

Service offshoring and the skill composition of labor demand

This paper studies the effects of service offshoring on the skill composition of labor demand, using novel comparable data for nine Western European countries between 1990 and 2004. The empirical analysis delivers three main results. First, service offshoring is skill-biased, because it increases the demand for high and medium skilled labor and decreases the demand for low skilled labor. Second, the effects of service offshoring are similar to those of material offshoring, both qualitatively and quantitatively. Third, the economic magnitude of these effects is not large.

Commentary on: Berger-Karin C, Hendricks U, Geyer-Lippmann J. Comparison of natural and artificial aging of ballpoint inks

We would like to comment this study recently published in JFS. It is a short technical note proposing an artificial aging technique for the dating of ballpoint pen inks. This is a very difficult and controversial topic, and we are worried about the nature of this paper. The authors propose several ideas to differentiate fast aging and slow aging inks, but their experimental data is not validly represented and/or discussed. The data is insufficient to draw any conclusions about any potential of the method for ink dating purposes. This lack of information on the subject must be filled before proposing such methods for practical caseworks. These are preliminary and unconvincing results from development research performed in a laboratory on controlled samples without due warnings about potential shortcomings. They cannot be used or even compared to results obtained in real situations on uncontrolled specimens of limited size, unknown composition and undefined storage conditions. This can leave an undeserved feeling that these methods are ready for implementation when the task of ensuring their scientific validity is still far away.

Movilidad ocupacional de los inmigrantes en una economía de bajas cualificaciones. El caso de España

Esta investigación analiza la movilidad ocupacional de los inmigrantes entre sus países de origen y España, así como sus principales determinantes. La misma se basa en los microdatos de la Encuesta Nacional de Inmigrantes y el uso de una escala de estatus ocupacional de carácter internacional (ISEI). La evidencia muestra que, por lo general, los inmigrantes sufren una fuerte degradación ocupacional en España con respecto a sus países de origen. Ésta se explica en buena medida por la intensa degradación que suelen experimentar al incorporarse al mercado de trabajo español, puesto que la mejora ocupacional asociada a su estancia en nuestro país es limitada. La degradación ocupacional al llegar es mayor para las mujeres, los inmigrantes de mayor nivel educativo y los procedentes de países en desarrollo. La recuperación posterior confirma la hipótesis de una movilidad ocupacional en forma de U profunda para los dos últimos colectivos, mientras que las mujeres padecen mayores dificultades para progresar ocupacionalmente. Residir en España, convalidar estudios extranjeros, aprender castellano y regularizar la situación documental mejoran el estatus ocupacional, pero, excepto en el último caso, de forma lenta. Acceder al primer empleo en España a través de redes informales tiene un efecto negativo sobre el logro ocupacional. Por último, mayor tiempo buscando empleo y una búsqueda de trabajo que incluya la movilidad geográfica se traducen en una mejora ocupacional mayor, mientras que el desempleo tiene un efecto negativo.

Immigrants'assimilation process in a segmented labor market

While much of the literature on immigrants' assimilation has focused on countries with a large tradition of receiving immigrants and with flexible labor markets, very little is known on how immigrants adjust to other types of host economies. With its severe dual labor market, and an unprecedented immigration boom, Spain presents a quite unique experience to analyze immigrations' assimilation process. Using data from the 2000 to 2008 Labor Force Survey, we find that immigrants are more occupationally mobile than natives, and that much of this greater flexibility is explained by immigrants' assimilation process soon after arrival. However, we find little evidence of convergence, especially among women and high skilled immigrants. This suggests that instead of integrating, immigrants occupationally segregate, providing evidence consistent with both imperfect substitutability and immigrants' human capital being under-valued. Additional evidence on the assimilation of earnings and the incidence of permanent employment by different skill levels also supports the hypothesis of segmented labor markets.

The Part-time pay penalty in a segmented labor market

This paper is the first to examine the implications of switching to PT work for women's subsequent earnings trajectories, distinguishing by their type of contract: permanent or fixedterm. Using a rich longitudinal Spanish data set from Social Security records of over 76,000 prime-aged women strongly attached to the Spanish labor market, we find that PT work aggravates the segmentation of the labor market insofar there is a PT pay penalty and this penalty is larger and more persistent in the case of women with fixed-term contracts. The paper discusses problems arising in empirical estimation (including a problem not discussed in the literature up to now: the differential measurement error of the LHS variable by PT status), and how to address them. It concludes with policy implications relevant for Continental Europe and its dual structure of employment protection.