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.

The Economics of Language: An Introduction and Overview

Abstract: This paper provides an introduction and overview of my research on the Economics of Language. The approach is that language skills among immigrants and native-born linguistic minorities are a form of human capital. There are costs and benefits associated with this characteristic embodied in the person. The analysis focuses on the economic and demographic determinants of destination language proficiency among immigrants. This is based on Exposure, Efficiency and Economic Incentives (the three E’s) for proficiency. It also focuses on the labor market consequences (earnings) of proficiency for immigrants and native-born bilinguals. The empirical testing for the US, Canada, Australia, Israel and Bolivia is supportive of the theoretical models.

Does Cash Flow Cause Investment and R&D?: An Exploration Using Panel Data for French, Japanese, and United States Scientific Firms

Abstract: The role of financial institutions and corporate governance in the conduct and performance of industrial firms, especially in the area of technological innovation and international competition, has been hotly debated in the recent past. The results presented here are a contribution to the empirical evidence on the behavior of individual firms that operate in somewhat different institutional environments. Using a Panel Data version of the Vector Auto Regressive (VAR) methodology, we test for the causal relationship among sales and cash flow on the one hand and investment and R&D on the other in three large panels of firms in the scientific (high technology) sectors in the United States, France, and Japan. Our findings are that both investment and R&D are more highly sensitive to cash flow and sales in the United States than in France and Japan. Correspondingly, investment and R&D predict both cash flow and sales positively in the United States, while their impact is somewhat more mixed in the other countries.

Intensive Math Instruction and Educational Attainment: Long-Run Impacts of Double-Dose Algebra

Abstract: We study an intensive math instruction policy that assigned low-skilled ninth graders to an algebra course that doubled instructional time, altered peer composition and emphasized problem solving skills. A regression discontinuity design shows substantial positive impacts of double-dose algebra on credits earned, test scores, high school graduation, and college enrollment rates. Test score effects underpredict attainment effects, highlighting the importance of long-run evaluation of such a policy. Perhaps because the intervention focused on verbal exposition of mathematical concepts, the impact was largest for students with below-average reading skills, emphasizing the need to target interventions toward appropriately skilled students.

General Training by Firms, Apprentice Contracts, and Public Policy

Abstract: Workers will not pay for general on-the-job training if contracts are not enforceable. Firms may if there are mobility frictions. Private information about worker productivities, however, prevents workers who quit receiving their marginal products elsewhere. Their new employers then receive external benefits from their training. In this paper, training firms increase profits by offering apprenticeships which commit firms to high wages for those trainees retained on completion. At these high wages, only good workers are retained. This signals their productivity and reduces the external benefits if they subsequently quit. Regulation of apprenticeship length (a historically important feature) enhances efficiency. Appropriate subsidies enhance it further.

Using a Social Experiment to Validate a Dynamic Behavioral Model of Child Schooling and Fertility: Assessing the Impact of a School Subsidy Program in Mexico*

Abstract: This paper studies the performance of a methodology that can be used to evaluate the impact of new policies that radically depart from existing ones. It uses data gathered from a randomized schooling subsidy experiment in Mexico (i) to estimate and validate a dynamic behavioral model of parental decisions about fertility and child schooling, (ii) to forecast long-term program impacts that extend beyond the life of the experiment, and (iii) to assess the impact of a variety of counterfactual policies. The behavioral model is estimated using data on families in the randomized-out control group and in the treatment group prior to the experiment, both of which did not receive any subsidy. Child wages provide a valuable source of variation in the data for identifying subsidy effects. Using the estimated model, we predict the effects of school subsidies according to the schedule that was implemented under the Mexican PROGRESA program. We compare the predicted impacts to the experimental benchmarks and find that the model's predictions track the experimental results closely. The model is also used to simulate the effects of counterfactual programs and to find an alternative subsidy schedule that provides greater impact on schooling achievement at similar cost to the existing program.