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.

What Do We Really Know about Fiscal Sustainability in the EU? A Panel Data Diagnostic

Abstract: We assess the sustainability of public finances in the EU15 over the period 1970-2006 using stationarity and cointegration analysis. Specifically, we use panel unit root tests of the first and second generation allowing in some cases for structural breaks. We also apply modern panel cointegration techniques developed by Pedroni (1999, 2004), generalized by Banerjee and Carrion-i-Silvestre (2006) and Westerlund and Edgerton (2007), to a structural long-run equation between general government expenditures and revenues. While estimations point to fiscal sustainability being an issue in some countries, fiscal policy was sustainable both for the EU15 panel set, and within subperiods (1970-1991 and 1992-2006).

The Elite Brain Drain

Abstract: We collect data on the movement and productivity of elite scientists. Their mobility is remarkable: nearly half of the world's most-cited physicists work outside their country of birth. We show they migrate systematically towards nations with large R&D spending. Our study cannot adjudicate on whether migration improves scientists' productivity, but we find that movers and stayers have identical h-index citations scores. Immigrants in the UK and US now win Nobel Prizes proportionately less often than earlier. US residents' h-indexes are relatively high. We describe a framework where a key role is played by low mobility costs in the modern world.

Macroeconomic Stability and the Preferences of the Fed. A Formal Analysis, 1961-98

Abstract: The rate of inflation in the US has declined from an average of 4.5% in the period 1960-79 to an average of 3.6% in 1980-98. Between those two periods, the standard deviations of inflation and the output gap have also declined. These facts can be attributed to a shift in central bank preferences, a reduction in the variability of aggregate supply shocks and a more efficient conduct of monetary policy. In this paper we propose a framework to identify the relative roles of these factors. Our framework is based on the estimation of a small structural macro model for the US economy jointly with the first order conditions, which solve the intertemporal optimization problem faced by the Fed. Overall, our results indicate that the policy preferences of the Fed, and in particular the (implicit) inflation target, have changed drastically with the advent of the Volcker-Greespan era. In addition, we find that the variance of supply shocks has been lower and also monetary policy has been conducted more efficiently during this period.

Intergenerational Mobility and Schooling Decisions in Germany and Italy: The Impact of Secondary School Tracks

Abstract: Intergenerational mobility in income and education is affected by the influence of parents on children's school choices. Our focus is on the role played by different school systems in reducing or magnifying the impact of parents on children's school choices and therefore on intergenerational mobility in general. We compare two apparently similar educational systems, Italy and Germany, to see how the common feature of separate tracks at Secondary School level may produce different impacts on children choices. Using data from a cross-country survey (PISA 2003), we study the impact of parental education on track choice, showing that the greater flexibility of the Italian system (where parents are free to choose the type of track) translates into greater dependence from parental background. These effects are reinforced when moving to post-secondary education, where the aspiration to go to college is affected not only by the school type but also (in the case of Italy only) by parental education. We then move to country-specific data sets (ISTAT 2001 for Italy and GSOEP 2001 and 2002 for Germany) to study the impact of family background on post-secondary school choices: we find this impact is greatly reduced when we control for secondary school tracks. Overall, we estimate large asymmetries by gender, with women's behavior more independent from family backgrounds than men's behavior.

Choosing the Joneses: On the Endogeneity of Reference Groups

Abstract: "A growing economic literature recognizes and deals with the fact that economic agents' utility and well-being is not solely determined by absolute achievements, but also by achievements relative to a reference standard or reference group. In this literature it is assumed that the reference standard is completely exogenous. Social psychologists have questioned the exogenous nature of the comparison process (""forced comparison conception"") and have emphasized that people play a more active role in the determination of their reference standards (""coping approach""). The present paper takes up this idea. In our model the reference standard is determined endogenously. Following the social comparison literature we assume that in choosing the optimal reference standard people pursue goals of self-improvement and self-enhancement. Our model predicts that the optimally chosen reference standard (or group) increases in people's abilities. We present new questionnaire data together with a review of various important findings from social perception studies (minimum income, happiness, subjective social class). It turns out that the empirical regularities conform well to the predictions of our model, but are difficult (if not impossible) to explain by both the standard economic approach (with its neglect of social comparison) and the forced comparison approach. "