We investigate conditions sufficient for identification of average treatment effects using instrumental variables. First we show that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect. We then establish that the combination of an instrument and a condition on the relation between the instrument and the participation status is sufficient for identification of a local average treatment effect for those who can be induced to change their participation status by changing the value of the instrument. Finally we derive the probability limit of the standard IV estimator under these conditions. It is seen to be a weighted average of local average treatment effects.

Evolution and Rationality Some Recent Game-Theoretic Results. Identification and Estimation of Local Average Treatment Effects

A detailed review of the education sector in Australia as in the data provided by the 2006 edition of the OECD's annual publication, 'Education at a Glance' is presented. While the data has shown that in almost all OECD countries educational attainment levels are on the rise, with countries showing impressive gains in university qualifications, it also reveals that a large of share of young people still do not complete secondary school, which remains a baseline for successful entry into the labour market.

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Education at a Glance

The ability of a two-sector model to quantify the contribution of the housing market to business fluctuations is investigated using U.S. data and Bayesian methods. The estimated model, which contains nominal and real rigidities and collateral constraints, displays the following features: first, a large fraction of the upward trend in real housing prices over the last 40 years can be accounted for by slow technological progress in the housing sector; second, residential investment and housing prices are very sensitive to monetary policy and housing demand shocks; third, the wealth effects from housing on consumption are positive and significant, and have become more important over time. The structural nature of the model allows identifying and quantifying the sources of fluctuations in house prices and residential investment and measuring the contribution of housing booms and busts to business cycles.

/pdf/housing-market-spillovers-evidence-from-an-estimated-dsge-cw32z51gvs.pdf

Housing Market Spillovers: Evidence from an Estimated DSGE Model

This paper studies the role of credit-supply factors in business cycle fluctuations. For this purpose, we introduce an imperfectly competitive banking sector into a DSGE model with financial frictions. Banks issue collateralized loans to both households and firms, obtain funding via deposits and accumulate capital from retained earnings. Margins charged on loans depend on bank capital-to-assets ratios and on the degree of interest rate stickiness. Bank balance-sheet constraints establish a link between the business cycle, which affects bank profits and thus capital, and the supply and cost of loans. The model is estimated with Bayesian techniques using data for the euro area. The analysis delivers the following results. First, the existence of a banking sector partially attenuates the effects of demand shocks, while it helps propagate supply shocks. Second, shocks originating in the banking sector explain the largest share of the fall of output in 2008 in the euro area, while macroeconomic shocks played a limited role. Third, an unexpected destruction of bank capital has a substantial impact on the real economy and particularly on investment.

Credit and Banking in a DSGE Model of the Euro Area

This paper studies the role of credit-supply factors in business cycle ∞uctuations. To this end, an imperfectly competitive banking sector is introduced into a DGSE model with flnancial frictions. Banks issue loans to both households and flrms, obtain funding via deposits and accumulate capital out of retained earnings. Margins charged on loans depend on bank capital-to-asset ratio and on the degree of interest rate stickiness. Bank balance-sheet constraints establish a link between the business cycle, which afiects bank proflts and thus capital, and the supply and the cost of loans. The model is estimated with Bayesian techniques using data for the euro area. We show that shocks originating in the banking sector explain the largest fraction of the fall of output in 2008 in the euro area, while macroeconomic shocks played a smaller role. We also flnd that an unexpected reduction in bank capital can have a substantial impact on the real economy and particularly on investment. JEL: E30; E32; E43; E51; E52;

/pdf/credit-and-banking-in-a-dsge-model-of-the-euro-area-o8cxnpx1ou.pdf

Credit and banking in a DSGE model of the euro area

After an earthquake hit Southern Italy in 1980, young men from certain towns were exempted from compulsory military service. We show that the exemption raised high-school-graduation rates of boys by more than 2 percentage points. We do this by comparing high-school-graduation rates of young exempt men and older nonexempt men from the least damaged areas and men of the same age groups from nearby towns that were not hit by the quake. Similar comparisons show that graduation rates of young women in the affected areas also increased. Since in Italy women are not subject to the draft, the findings suggest the presence of spillover effects. (JEL I21, J13)

https://www.jstor.org/stable/info/30035028

Social interactions in high school : Lessons from an earthquake

The labour market status of many non-working persons is at the boundary between unemployment and inactivity. Like the unemployed, they seek and are available for work; unlike them, their last search action was not recent enough to meet the ILO definition of unemployment. In this paper we examine by non-parametric tests how the transition probabilities of these out-of-the-labour-force job seekers differ from those of the unemployed as well as the other non-participants. First, using data from the European Community Household Panel, we show that in most EU countries these job seekers constitute a distinct labour market state. Second, we rely on information only available in the Italian Labour Force Survey to derive a measure of search intensity which we use to break down the out-of-the-labour-force job seekers. On the basis of their transition probabilities, the most active are indistinguishable from the unemployed.

Does the ilo definition capture all unemployment

The paper presents estimates on the dispersion of earnings and the proportion of low-paid employees in Italy in the period 1977-1998, and it measures the differential impact of low pay and employment status on householdsi?½ poverty. The estimates are computed from the micro-data of the Historical Archive of the Bank of Italyi?½s Survey of Household Income and Wealth. The distribution of net earnings narrowed from the late 1970s until the end of the 1980s, abruptly widened in the early 1990s and experienced little modification in the rest of the decade. The trend in the share of low-paid workers evolved in parallel with that of earnings inequality. Finally, the probability of being in poverty is more closely correlated with the number of household members employed, particularly other than the head, than with low pay.

Earnings Dispersion, Low Pay and Household Poverty in Italy, 1977-1998

Students’ competencies are influenced by a host of factors, including the individual school’s effectiveness. Measuring this contribution is extremely difficult. One way of circumventing the problem is by focusing on changes in competencies over time, i.e. value-added measures. Using the results of an INVALSI survey of high schools, this paper implements these measures for Italy, in an attempt to identify a general pattern of value-added among schools. Purging the sample of measurement errors – which require the exclusion of schools with too few students tested – and taking into account the selection bias implied by the non-compulsory nature of schools’ participation in the survey, we find that the positive gap in favour of general programs (licei) when looking at the level of competencies tends to vanish (in maths and science) when focusing on value-added measures. By contrast, in the maths and science field schools located in the Southern regions are characterized not only by a lower starting level of competencies but also by a lower value-added. For maths at least, there is also a general tendency for teachers’ turnover to have a negative effect on student improvements.

https://www.jstor.org/stable/pdfplus/23248231.pdf

Value-Added Measures in Italian High Schools: Problems and Findings

ficulties we look at the composition of teachers’ pool and to their behaviour in the market in a first attempt to infer some information about their quality and motivation. We show that Italian teachers have traits and behaviour that are consistent with an implicit contract in which relatively low wages are compensated by low involvement in the job and low effort exerted. Next we look at the institutional features that might have motivated this implicit contract. In particular we examine the mechanism that allocates teachers to schools. For each school we construct three indicators; one indicating the level of turnover that we interpret as source of turmoil with potentially negative implications for pupils’ achievement; one that refers to the mismatch between tenured teachers and their school; the third indicator measures the quality of the school as evaluated by the whole population of tenured teachers and thus we name it “revealed preferences indicator”. We show that the geographical and across school distribution of these three indicators resemble that of perceived quality of the schools. While we do not attempt to identify, in any econometric sense, the causal link of these indicators with students performance, we do measure the association at the school level of our indicators with pupils achievement as provided by PISA 2003. It appears that our indicators are strongly correlated to the school’s performance, negatively to the turnover and to the mismatch indicator, positively to the revealed preferences expressed by the whole population of teachers. It seems that teachers know which are the best schools and gradually attempt to move there.

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Piero Cipollone

Papers

Social interactions in high school : Lessons from an earthquake

Does the ilo definition capture all unemployment

Earnings Dispersion, Low Pay and Household Poverty in Italy, 1977-1998

Value-Added Measures in Italian High Schools: Problems and Findings

Labour market for teachers: Demographic characteristics and allocative mechanisms