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.

Out of Sight, Out of Mind: Migration, Entrepreneurship and Social Capital

Abstract: The aim of this paper is to investigate whether return migrants are more likely to become entrepreneurs than non-migrants We develop a theoretical search model that puts forward the trade off faced by returnees since overseas migration provides an opportunity for human and physical capital accumulation but, at the same time, may lead to a loss of social capital back home We test the predictions of the model using data from Egypt We find that, even after controlling for the endogeneity of the temporary migration decision, an overseas returnee is more likely to become an entrepreneur than a non-migrant Although migrants lose their original social networks whilst overseas, savings and human capital accumulation acquired abroad over-compensate for this loss Our results also suggest that social networks have no significant impact on becoming entrepreneurs for returnees but matter for non-migrants

Does Pay Inequality Affect Worker Effort? Experimental Evidence

Abstract: We study worker behavior in an efficiency-wage environment where co-workers' wages can influence a worker's effort. Theoretically, we show that an increase in workers' responsiveness to co-workers' wages should lead profit-maximizing firms to compress wages. Our laboratory experiments, on the other hand, show that - while workers' effort choices are highly sensitive to their own wages - effort is not affected by co-workers' wages. This casts doubt on the notion that workers' concerns with equity might explain pay policies such as wage compression, or wage secrecy.

Schooling, Capital Constraints and Entrepreneurial Performance: The Endogenous Triangle

Abstract: To what extent is the performance of a small business venture, once started, affected by capital constraints at the time of inception and by the business founder's investment in human capital? We attempt to answer this question taking into account the potential endogeneity of human and financial capital, and also possible interdependence between these variables. A theoretical model is developed which generates predictions about the nature and directions of the interdependencies. Using a rich data set on Dutch entrepreneurs in 1995, we obtain findings that are broadly consistent with the theoretical model. Instrumental variable estimates indicate that a 1 percentage point relaxation of capital constraints increases entrepreneurs' gross business incomes by 2 per cent on average. Also, education enhances entrepreneurs' performance both directly - with a rate of return of 12.7 per cent - and indirectly, because each extra year of schooling decreases capital constraints by 1.18 percentage points. The indirect effect of education on entrepreneurs' performance is estimated to be between 0.8 and 2.4 per cent.

Examining the Role of Economic Opportunity and Amenities in Explaining Population Redistribution

Abstract: This paper develops a model of migration integrating equilibrium and disequilibrium components in which individuals and firms from rational expectations about future opportunities. Levels of migration are derived as functions of variations in factors influencing migrant labor demand ("economic opportunity") and migrant labor supply ("residential amenities"). The model is used to estimate the extent to which migration in the United States over the period 1950-1980 is determined by these two classes of exogenous factors.