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.

Lobbying, Corruption and Political Influence

Abstract: Conventional wisdom suggests that lobbying is the preferred mean for exerting political influence in rich countries and corruption the preferred one in poor countries. Analyses of their joint effects are understandably rare. This paper provides a theoretical framework that focus on the relationship between lobbying and corruption (that is, it investigates under what conditions they are complements or substitutes). The paper also offers novel econometric evidence on lobbying, corruption and influence using data for about 4000 firms in 25 transition countries. Our results show that (a) lobbying and corruption are substitutes, if anything; (b) firm size, age, ownership, per capita GDP and political stability are important determinants of lobby membership; and (c) lobbying seems to be a much more effective instrument for political influence than corruption, even in poorer, less developed countries.

The Dynamics of Criminal Behavior: Evidence from Weather Shocks

Abstract: The persistence of criminal activity is well documented. While such serial correlation may be evidence of social interactions in the production of crime, it may also be due to the persistence of unobserved determinants of crime. Moreover, there are good reasons to believe that, particularly over a short time horizon, there may actually be a negative relationship between crime rates in a particular area due to displacement. In this paper, we exploit the correlation between weather and crime to examine the short-run dynamics of criminal behavior. Drawing on crime-level data from the FBI's National Incident-Based Reporting System, we construct a panel of weekly crime data for 116 jurisdictions. Using the plausibly exogenous variation in lagged crime rates due to unexpected weather shocks, we find that the strong positive serial correlation documented in OLS is reversed. A ten percent increase in violent crime in one week is associated with a 2.6 percent reduction in crime the following week. The corresponding reduction for property crime is 2.0 percent. Additional displacement appears to occur over a longer time horizon. Furthermore, the results do not appear to be driven by persistence in weather conditions over time or displacement of non-criminal economic activity. These findings suggest that the long-run impact of temporary crime prevention efforts may be smaller than the short-run effects.

Public Sector Pay and Corruption: Measuring Bribery from Micro Data

Abstract: This study is the first to provide a systematic measure of bribery using micro-level data on reported earnings, household spending and asset holdings. We use the compensating differential framework and the estimated sectoral gap in reported earnings and expenditures to identify the size of unobserved (unofficial) compensation (i.e., bribes) of public sector employees. In the case of Ukraine, we find that public sector employees receive 24-32% less wages than their private sector counterparts. The gap is particularly large at the top of the wage distribution. At the same time, workers in both sectors have essentially identical level of consumer expenditures and asset holdings that unambiguously indicate the presence of non-reported compensation in the public sector. Using the conditions of labour market equilibrium, we develop an aggregate measure of bribery and find that the lower bound estimate of the extent of bribery in Ukraine is between 460m and 580m U.S. dollars (0.9-1.2% of Ukraine's GDP in 2003).

Coffee Production Effects on Child Labor and Schooling in Rural Brazil

Abstract: I use variation in coffee production to measure changes in local economic conditions, which proxy for the value of children's time. I test how this variation affects child labor and schooling in Brazilian coffee regions using seven rounds of household surveys. Increases in county-level value of coffee production led to more work and less schooling among boys, and lower schooling among girls. Girls without childcare responsibilities were more likely to work. Poorer boys and girls were withdrawn from school, while richer children were more likely to attend. Thus, during periods of economic growth, education of the poor is adversely affected.

Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania

Abstract: On April 1, 1992 New Jersey's minimum wage increased from $4.25 to $5.05 per hour. To evaluate the impact of the law we surveyed 410 fast food restaurants in New Jersey and Pennsylvania before and after the rise in the minimum. Comparisons of the changes in wages, employment, and prices at stores in New Jersey relative to stores in Pennsylvania (where the minimum wage remained fixed at $4.25 per hour) yield simple estimates of the effect of the higher minimum wage. Our empirical findings challenge the prediction that a rise in the minimum reduces employment. Relative to stores in Pennsylvania, fast food restaurants in New Jersey increased employment by 13 percent. We also compare employment growth at stores in New Jersey that were initially paying high wages (and were unaffected by the new law) to employment changes at lower-wage stores. Stores that were unaffected by the minimum wage had the same employment growth as stores in Pennsylvania, while stores that had to increase their wages increased their employment.