We survey and assess the literature on the positive and negative effects of ethnic diversity on economic policies and outcomes. Our focus is on both focus both cities in developed countries (the US) and villages in developing countries. We also consider the endogenous formation of political jurisdictions and we highlight several open issues in need of further research.

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Ethnic Diversity and Economic Performance

We survey and assess the literature on the positive and negative effects of ethnic diversity on economic policies and outcomes. Our focus is on communities of different size and organizational structure, such as countries, cities in developed countries, and villages and groups in developing countries. We also consider the endogenous formation of political jurisdictions and highlight several open issues in need of further research, in particular the endogenous formation of ethnic identity and the measurement of ethnic diversity.

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This article surveys the literature on tourism and economic development, identifying the contribution that tourism can make to development, including foreign currency, income and employment, and the costs that it entails. Single equation and system of equations models for estimating tourism demand are provided, indicating developing countries’ potential to benefit from increasing expenditure on tourism but their susceptibility to deterioration in price competitiveness. The main sectors of tourism supply ‐transportation, tour operators, travel agents and accommodation ‐are examined and the importance of cross‐country integration between firms is highlighted. The article argues that many of the problems associated with the use of environmental resources for tourism stem from market failure, and it considers methods for increasing, sustainably, the returns from them.

Tourism and economic development: A survey

This paper presents a simple two-step nonparametric estimator for a triangular simultaneous equation model. Our approach employs series approximations that exploit the additive structure of the model. The first step comprises the nonparametric estimation of the reduced form and the corresponding residuals. The second step is the estimation of the primary equation via nonparametric regression with the reduced form residuals included as a regressor. We derive consistency and asymptotic normality results for our estimator, including optimal convergence rates. Finally we present an empirical example, based on the relationship between the hourly wage rate and annual hours worked, which illustrates the utility of our approach.

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Nonparametric estimation of triangular simultaneous equations models

We analyze credit applications, loan denials, and interest rates paid by small businesses across owner gender, race, and ethnicity. In addition, we examine data from owners who said they did not apply for credit because they believed that their applications would have been turned down. After controlling for a rich set of explanatory variables, including personal and business credit histories, substantial differences in denial rates between firms owned by African Americans and white males remain. Moreover, consistent with Becker’s classic theories (1957), we find evidence that increases in competition in the firm's local banking market reduces these differences.

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Competition, Small Business Financing, and Discrimination: Evidence from a New Survey*

In this paper, the authors examine the consequences of adopting the random utility hypothesis as an approach for randomizing a system of demand equations. Random utility models are appealing since they allow the usual assumption of deterministic utility-maximizing behavior by each consumer to coexist with the apparent randomness across individuals that is exhibited by data. Their results show that the use of random utility models implies that the disturbances of the demand equations may not be homoskedastic, but must be functions of prices and/or income. Copyright 1989 by The Econometric Society.

The Random Utility Hypothesis and Inference in Demand Systems

This paper conducts an empirical analysis of the cultural affinity hypothesis put forth by Calomiris, et al. (1994) in the mortgage lending market. This hypothesis implies that white loan officers, because of a lack of familiarity with minority applicants, will rely more heavily on characteristics that can be observed at low cost (e.g., objective loan application measures) in evaluating the creditworthiness of minority applicants relative to white applicants. Using a cleansed sample of 1,991 loan applications drawn from data collected by the Federal Reserve Bank of Boston, the results of the analysis were consistent with the cultural affinity hypothesis. In particular, we found that marginal black and Hispanic applicants appeared to be held to higher quantitative standards on such objective factors as credit history and debt obligation ratios than were similarly situated marginal white applicants.

The Cultural Affinity Hypothesis and Mortgage Lending Decisions

The effect of the differential tax treatment of married and unmarried couples the so-called marriage tax on the rate and timing of [U.S.] marriages is analyzed. Using time-series data we study the effect of the marriage tax on the fraction of unmarried women over the age of 15 years who marry in each year. We find no effect. We also investigate whether couples shift the timing of their marriage from the end of one year to the beginning of the next year in response to an increase in the marriage tax. We find empirical support for this behavior. (EXCERPT)

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The marriage tax and the rate and timing of marriage.

School districts use a variety of policies to close budget gaps and stave off teacher layoffs and furloughs. More schools are implementing four-day school weeks to reduce overhead and transportation costs. The four-day week requires substantial schedule changes as schools must increase the length of their school day to meet minimum instructional hour requirements. Although some schools have indicated this policy eases financial pressures, it is unknown whether there is an impact on student outcomes. We use school-level data from Colorado to investigate the relationship between the four-day week and academic performance among elementary school students. Our results generally indicate a positive relationship between the four-day week and performance in reading and mathematics. These findings suggest there is little evidence that moving to a four-day week compromises student academic achievement. This research has policy relevance to the current U.S. education system, where many school districts must...

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Does Shortening the School Week Impact Student Performance? Evidence from the Four-Day School Week

This study uses an empirical case study to investigate the revenue implications of reducing a discriminatory excise tax. The case study is Ireland, which provides a natural experiment because it has both imposed and removed such a discriminatory tax (on soft drinks) in the past two decades. The authors find that soft drink consumption is price elastic, income elastic, and sensitive to weather. They estimate that 30% of the amount of surrendered excise tax revenue is recaptured by the value-added tax and income tax. The remaining 70% loss is further reduced by a small reduction in welfare costs, elimination of administration costs, and reduced compliance costs. The rate-revenue curve has a negative slope, even though demand is price elastic, presumably because marginal costs are rising and the tax reduction is not fully captured in the price reduction. In effect, the authors find undershifting and no evidence of a Laffer effect.

Mary Beth Walker

Papers

The Random Utility Hypothesis and Inference in Demand Systems

The Cultural Affinity Hypothesis and Mortgage Lending Decisions

The marriage tax and the rate and timing of marriage.

Does Shortening the School Week Impact Student Performance? Evidence from the Four-Day School Week

The Uneasy Case Against Discriminatory Excise Taxation: Soft Drink Taxes in Ireland: