Institute for the Study of Labor

About: Institute for the Study of Labor is a nonprofit organization based out in Bonn, Germany. It is known for research contribution in the topics: Wage & Unemployment. The organization has 2039 authors who have published 13475 publications receiving 439376 citations.

International Migration and the Integration of Labor Markets

Abstract: This paper is concerned with the determinants and consequences of intercontinental migration over the past four centuries. It begins with a review of the history of primarily trans- Atlantic migration to the New World during the period of Colonial settlement. The contract and coerced migration from Europe and Africa gave way, from the 18th century, to an era of free European migration. The period 1850 to 1913 was one of mass migration, primarily from Europe to North America and Oceania and from parts of Asia (primarily India, China and Japan) to other parts of Asia, Africa and the New World. World wars, immigration restrictions and the Great Depression resulted in a period of low international migration (1913 to 1945). In the post-World War II period international migration again increased sharply, but with changes in the nature of the flows, and under the constraints of immigration controls. Europe joined North America and Oceania as a major destination, as did the oil producing Arab countries bordering the Persian Gulf. The paper then explores the reasons for this international migration. Important factors include the relative wages in the origin and destination, the cost of international migration, the wealth to finance the investment, chain migration (kinship and information networks), as well as government subsidies to and restrictions on the free flow of people. The impact of international migration is explored in the context of a two-factor and a threefactor aggregate production function. Implications are developed for the aggregate (average) impact, as well as for the impact on the functional and personal distributions of income. The gainers and losers from international migration are considered. With insights on impact, a political economy approach is used to analyze the determinants of immigration controls. The influence on policy of gainers and losers from immigration was mediated by institutional change and by interest group politics. The long run relati

Screening in New Credit Markets: Can Individual Lenders Infer Borrower Creditworthiness in Peer-to-Peer Lending?

Abstract: The current banking crisis highlights the challenges faced in the traditional lending model, particularly in terms of screening smaller borrowers. The recent growth in online peer-to-peer lending marketplaces offers opportunities to examine different lending models that rely on screening by multiple peers. While these market-based, non-hierarchical structures potentially offer screening advantages, especially in utilizing soft information, individual lenders likely lack financial expertise and lending experience. This paper evaluates whether lenders in such peer-to-peer markets are able to use borrower information to infer creditworthiness. We examine this ability in one such online market using a methodology that takes advantage of lenders not observing a borrower’s true credit score but only seeing an aggregate credit category. We find that lenders are able to use available information to infer a third of the variation in creditworthiness that is captured by a borrower’s credit score. This inference is economically significant and allows lenders to lend at a 140-basis-points lower rate for borrowers with (unobserved to lenders) better credit scores within a credit category. While lenders infer the most from standard banking "hard" information, they also use non-standard (subjective) information. Our methodology shows, without needing to code information contained in the pictures or personal descriptions posted by borrowers, that lenders learn even from such "softer" information, particularly when it is likely to provide credible signals regarding borrower creditworthiness. Our findings highlight the screening ability of peer-to-peer markets and suggest that these emerging markets may provide a viable complement to traditional lending markets, especially for smaller borrowers.

Immigration and housing booms: evidence from spain*

Abstract: We estimate empirically the effect of immigration on house prices and residential construction activity in Spain over the period 1998-2008. This decade is characterized by both a spectacular housing market boom and a stunning immigration wave. We exploit the variation in immigration across Spanish provinces and construct an instrument based on the historical location patterns of immigrants by country of origin. The evidence points to a sizeable causal effect of immigration on both prices and quantities in the housing market. Between 1998 and 2008, the average Spanish province received an immigrant inflow equal to 17% of the initial working-age population. We estimate that this inflow increased house prices by about 52% and is responsible for 37% of the total construction of new housing units during the period. These figures imply that immigration can account for roughly one third of the housing boom, both in terms of prices and new construction.

Comparing Labor Supply Elasticities in Europe and the United States: New Results

Abstract: We suggest the first large-scale international comparison of labor supply elasticities for 17 European countries and the United States using a harmonized empirical approach. We find that own-wage elasticities are relatively small and more uniform across countries than previously considered. Nonetheless, such differences do exist, and are found not to arise from different tax-benefit systems, wage/hour levels, or demographic compositions across countries, suggesting genuine differences in work preferences across countries. Furthermore, three other findings are consistent across countries: The extensive margin dominates the intensive margin; for singles, this leads to larger responses in low-income groups; and income elasticities are extremely small.

Does Terrorism Work

Abstract: This paper examines whether terrorism is an effective tool to achieve political goals. By exploiting geographic variation in terror attacks in Israel from 1988 to 2006, we show that local terror attacks cause Israelis to be more willing to grant territorial concessions to the Palestinians. These effects are stronger for demographic groups that are traditionally right-wing in their political views. However, terror attacks beyond a certain threshold cause Israelis to adopt a less-accommodating position. In addition, terror induces Israelis to vote increasingly for right-wing parties, as the right-wing parties move to the left in response to terror. Hence, terrorism appears to be an effective strategy in terms of shifting the entire political landscape to the left.