Showing papers in "Canadian Journal of Economics in 2020"

Aid and growth: New evidence using an excludable instrument

Abstract: We use an excludable instrument to test the effect of foreign aid on economic growth in a sample of 96 recipient countries over the 1974-2009 period. We interact donor government fractionalization with a recipient country’s probability of receiving aid. The results show that fractionalization increases donors’ aid budgets, representing the over-time variation of our instrument, while the probability of receiving aid introduces variation across recipient countries. Controlling for country- and period-specific effects that capture the levels of the interacted variables, the interaction provides a powerful and excludable instrument. Making use of the instrument, our results show no significant effect of aid on growth in the overall sample. We also investigate the effect of aid on consumption, savings, and investments, and split the sample according to the quality of economic policy, democracy, and the Cold War period. With the exception of the post-Cold War period (where abundant aid reduces growth), we find no significant effect of aid on growth in any of these sub-samples. None of the other outcomes are affected by aid.

Unions and Wage Inequality: The Roles of Gender, Skill and Public Sector Employment

Abstract: We examine the changing relationship between unionization and wage inequality in Canada and the United States. Our study is motivated by profound recent changes in the composition of the unionized workforce. Historically, union jobs were concentrated among low‐skilled men in private sector industries. With the steady decline in private sector unionization and rising influence in the public sector, half of unionized workers are now in the public sector. Accompanying these changes was a remarkable rise in the share of women among unionized workers. Currently, approximately half of unionized employees in North America are women. While early studies of unions and inequality focused on males, recent studies find that unions reduce wage inequality among men but not among women. In both countries, we find striking differences between the private and public sectors in the effects of unionization on wage inequality. At present, unions reduce economy‐wide wage inequality by less than 10%. However, union impacts on wage inequality are much larger in the public sector. Once we disaggregate by sector, the effects of unions on male and female wage inequality no longer differ. The key differences in union impacts are between the public and private sectors—not between males and females. Syndicats et inegalites salariales : importance du genre, des habiletes et de l’emploi dans le secteur public. Dans cet article, nous examinons l’evolution de la relation entre syndicalisation et inegalites salariales au Canada et aux Etats‐Unis. Notre etude se fonde sur les changements recents et profonds de la composition de la main d’œ uvre syndiquee. Historiquement, les emplois syndiques etaient occupes par des hommes peu qualifies travaillant dans les industries du secteur prive. Avec le declin regulier de la syndicalisation au sein du secteur prive et son influence croissante au sein du secteur public, la moitie des travailleurs syndiques fait desormais partie du secteur public. Ces changements ont ete accompagnes d’une hausse spectaculaire du pourcentage de femmes parmi les travailleurs syndiques. Actuellement, pres de la moitie des employes syndiques en Amerique du Nord sont des femmes. Tandis que les premieres etudes sur les syndicats et les inegalites portaient sur les hommes, certaines plus recentes ont montre que les syndicats permettaient de reduire les inegalites salariales entre les hommes, mais pas entre les femmes. Dans les deux pays, nous avons decouvert des differences frappantes entre secteur prive et secteur public relativement aux effets de la syndicalisation sur les inegalites salariales. Aujourd’hui, les syndicats permettent de reduire les inegalites salariales de moins de 10 % dans l’ensemble de l’economie. Neanmoins, l’influence des syndicats sur les inegalites salariale est bien plus forte dans le secteur public. En decomposant les donnees par secteur, les effets des syndicats sur les inegalites salariales entre hommes et femmes sont les memes. En matiere d’influence des syndicats, les differences fondamentales se situent entre le secteur prive et le secteur public, et non entre les hommes et les femmes.

Marijuana and alcohol: Evidence using border analysis and retail sales data

Abstract: We use retail scanner data on purchases of alcoholic beverages across US counties for 2006 to 2015 to study the link between medical marijuana laws (MMLs) and alcohol consumption. To do this, we exploit differences in the timing of marijuana laws among states and find that they are substitutes. We show that unlike traditional national‐level analysis, focusing on contiguous‐border county pairs provides unbiased estimates of the effect of MMLs on alcohol sales. Specifically, alcohol sales in counties located in MML states decreased by 12.4%. Results are robust to including placebo effective dates for MMLs in treated states. Marijuana et alcool: analyse transfrontaliere et donnees relatives a la vente au detail. Afin d’etudier la correlation entre les lois sur la marijuana medicale (LMM) et la consommation d’alcool, nous nous sommes appuyes sur les donnees de vente au detail de boissons alcoolisees dans differents comtes des Etats‐Unis entre 2005 et 2016. A cette fin, nous avons d’abord exploite le decalage dans le temps des mises en œ uvre des LMM dans les etats concernes, et avons decouvert qu’alcool et marijuana se substituaient l’un a l’autre. Nous montrons egalement qu’une analyse realisee sur des paires de comtes transfrontaliers, contrairement a une etude traditionnelle realisee a l’echelle nationale, permettait de fournir des evaluations fiables relativement a l’incidence des LMM sur les ventes d’alcool. Plus precisement, le volume mensuel des ventes d’alcool dans les comtes situes dans des etats ayant passe des lois sur la marijuana medicale a diminue de 12,4 %. Les resultats restent robustes meme en integrant de fausses dates de mise en œ uvre des LLM dans les etats etudies.

World steel production: A new monthly indicator of global real economic activity

Abstract: This paper proposes world steel production as an indicator of global real economic activity. World steel production data is published with only a one-month delay, thereby providing timely information for world real GDP forecasters. We find that world steel production and Lutz Kilian's (2009) index of global real economic activity generate large gains in forecasting world real GDP, relative to an autoregressive benchmark. A forecast combination of world steel production, Kilian's (2009) index of global real economic activity and an index of the industrial production of OECD countries plus six non-OECD emerging economies produces significant gains in forecasting world real GDP, relative to an autoregressive benchmark.

Computerization and immigration: Theory and evidence from the United States

Abstract: Recent technological changes have been characterized as “routine‐substituting” because they reduce demand for routine tasks and increase demand for analytical and service tasks. Little is known about how these changes have impacted immigration, or task specialization between immigrants and native‐born individuals. In this paper, we show that such technological progress has attracted immigrants who increasingly specialize in manual‐service occupations. We also suggest that openness to immigration attenuated the job and wage polarization faced by native‐born from technological changes. We explain these facts with a model of technological progress and endogenous immigration. Simulations show that unskilled immigration attenuates the drop in routine employment proceeding from technological change, enhances skill upgrading for native‐born and raises economy‐wide productivity and welfare. Informatisation et immigration aux Etats‐Unis : theorie et observations. Les mutations technologiques recentes se caracterisent par un remplacement des emplois les plus repetitifs. En effet, tandis que la demande en matiere de tâches routinieres diminue, celle ayant trait aux services et aux travaux analytiques augmente. On sait peu de choses sur la facon dont ces transformations ont une incidence sur l’immigration ou sur la specialisation des tâches entre immigrants et populations locales. Dans cet article, nous montrons qu’un tel progres technologique attire des immigrants de plus en plus specialises dans les services manuels. Nous montrons egalement que l’ouverture a l’immigration a permis d’attenuer la polarisation en matiere d’emploi et de salaire que les populations locales subissent face a de tels changements. Nous expliquons ces phenomenes grâce a un modele melant progres technologique et immigration endogene. Les simulations montrent que l’immigration non qualifiee attenue la baisse en matiere d’emploi repetitif engendree par le progres technologique, ameliore le perfectionnement des competences des locaux et augmente la productivite de tous les secteurs economiques ainsi que le bien‐etre.

An introduction to the economics of immigration in OECD countries

Abstract: The share of the foreign-born in OECD countries is increasing, and this article summarizes economics research on the effects of immigration in those nations. Four broad topics are addressed: labor market issues, fiscal questions, the political economy of immigration, and productivity/international trade. Extreme concerns about deleterious labour market and fiscal impacts following from new immigrants are not found to be warranted. However, it is also clear that government policies and practices regarding the selection and integration of new migrants affect labour market, fiscal and social/cultural outcomes. Policies that are well informed, well crafted, and well executed beneficially improve population welfare.

The Hotelling rule in non-renewable resource economics: A reassessment

Abstract: Harold Hotelling’s 1931 contribution is known for providing a basic principle – the Hotelling rule – to the economics of non-renewable resources. Nearly ninety years later, empirical tests conclude the rule lacks empirical validity, requiring strong amendments to describe the long-term, aggregate behavior of its target object. On the basis of Hotelling’s unpublished archival material, this paper revisits the place given to the Hotelling rule in non-renewable resource economics. Our reconstruction shows that Hotelling’s 1931 paper has been misinterpreted: from the outset, the Hotelling rule was not valid for mineral resources. In contrast, the consideration of two inherent geological constraints, alongside exhaustibility, offered the opportunity for an alternative basic framework, capable to generate bell-shaped and U-shaped equilibrium trajectories for supplies and prices, respectively. Inspired by this unknown aspect of Hotelling’s work brought to light by our archival investigation, we sketch this alternative basic model, enabling non-renewable resource economics to circumvent the empirical shortfalls of the Hotelling rule.

Public transit and air pollution: Evidence from Canadian transit strikes

Abstract: Little is known about the causal impacts of public transit on local air pollution. Exploiting variation in transit availability resulting from transit strikes in 18 Canadian cities between 1974 and 2011, this study identifies the short‐run effect of public transit on air pollution. Our findings indicate that transit leads to a 3.5 part per billion increase in nitrogen oxides while having no statistically significant effect on carbon monoxide or PM2.5. Estimates are robust to a series of specification tests and magnitudes are consistent with a calibrated simulation model. Overall, the results suggest that expanding the current configuration of public transit in North American cities is unlikely to yield improvements in local air quality. Transports publics et pollution de l’air : l’exemple des greves canadiennes. Il existe peu d’informations sur l’effet causal des transports publics sur la pollution de l’air a l’echelle locale. En exploitant les variations au niveau de la disponibilite des transports publics a la suite de greves dans 18 villes canadiennes entre 1974 et 2011, cette etude identifie l’effet a court terme des transports publics sur la pollution de l’air. Nos resultats montrent que les transports publics generent une augmentation de 3,5 parties par milliard d’oxyde d’azote, sans avoir d’effet statistiquement significatif sur les taux de monoxyde de carbone ou de particules fines type PM2.5. Nos estimations sont robustes a une serie de tests de specification, et les mesures sont coherentes relativement a un modele de simulation calibre. Dans l’ensemble, les resultats suggerent que l’expansion des transports publics en Amerique du Nord, dans leur configuration actuelle, n’ameliorera probablement pas la qualite de l’air a l’echelle locale.

Property rights on First Nations reserve land

Abstract: This paper examines the economic effects of existing private property rights on First Nations reserves. We focus on three regimes of land tenure: lawful possession, designated land and permits. These land regimes have been used to create individual landholdings and grant secure and transferable rights of use of reserve land. Using confidential census microdata and rich administrative data, we find evidence of a positive relationship between the use of these tenure regimes and homeownership rates, housing conditions and band's public spending. We also observe a positive relationship with average income. However, this last result is driven by the inflow of a non‐Indigenous population not by improvements in Indigenous households’ income or on‐reserve employment. Our findings thus suggest that while reforms to individual property rights on reserve have some positive effects, their scope remains limited and they are unlikely to constitute a transformative tool to alleviate poverty on reserve. Droits de propriete sur les terres de reserve des Premieres Nations. Cet article examine les effets economiques des droits prives de propriete existants sur les reserves des Premieres Nations. Nous nous attardons sur trois modes de possession des terres : la possession legitime, les terres designees et les permis. Ces regimes ont ete utilises a la fois pour creer des proprietes foncieres individuelles sur des terres de reserve, mais egalement pour garantir les droits d’utilisation proteges et transmissibles y afferant. A l’aide de micro‐donnees de recensement confidentielles et d’abondantes ressources administratives, nous avons decouvert une relation positive entre l’utilisation de ces regimes fonciers et les taux d’accession a la propriete, les conditions de logement et les depenses publiques des Premieres Nations. Nous avons egalement observe un rapport positif avec le salaire moyen. Cependant, cette derniere observation resulte davantage d’un afflux d’une population non autochtone plutot que d’une reelle amelioration des revenus des Autochtones ou de l’emploi dans les reserves. Ainsi, et bien que les reformes pour l’acces a la propriete privee dans les reserves ont eu quelques effets positifs, nos resultats suggerent que leur portee reste limitee et qu’elles ne constituent pas de reels outils de transformation pour reduire la pauvrete dans les reserves.

GSP expiration and declining exports from developing countries

Abstract: This paper investigates whether the 2011 expiration of the most comprehensive trade preference program (Generalized System of Preferences or GSP) offered by the US had a detrimental impact on the exports from developing countries. The effect of GSP expiration is examined with a triple difference‐in‐differences estimation that controls for both country‐ and product‐level export changes. Even though the duties collected during the period of expiration are ultimately refunded after GSP is reauthorized, the findings of this paper suggest that the expiration of GSP had a considerable impact on the level of exports to the US. On average exports dropped by 3% in 2011, with exports of agricultural products and textiles and clothing declining as much as 5% and 9%, respectively. The decline is increasing in the tariff rates and rates of utilization. The effect appears to be persistent over time as exports do not fully recover by 2012. The 2011 expiration is also found to be similar in magnitude to the 1995–1996 and 2013–2015 expirations, the longest episodes of expiration in the history of the GSP. Resume. Suspension du SGP et baisse des exportations en provenance des pays en voie de developpement. Cet article cherche a determiner si la suspension en 2011 du Systeme Generalise de Preferences (SGP) propose par les Etats‐Unis eut des consequences negatives sur les exportations en provenance des pays en voie de developpement. Nous etudions l’effet de la suspension du SGP grâce a une estimation basee sur la methode des triples differences tenant compte des changements en matiere d’exportation, a la fois au niveau des produits mais aussi des pays. Meme si les droits percus au cours de la periode d’interruption du SGP furent finalement restitues au moment de sa reintroduction, les conclusions de cet article suggerent que la suspension du SGP engendra des repercussions considerables quant au niveau des exportations vers les Etats‐Unis. En moyenne, les exportations chuterent de 3% en 2011; les exportations de produits agricoles et les exportations de textiles et de vetements chuterent quant a elles de 5% et 9% respectivement. Cette baisse entraina une hausse des droits de douane et des taux d’utilisation. Ces effets semblent persister dans le temps puisque les exportations en 2012 ne retrouverent pas totalement les niveaux anterieurs. Il apparait que la suspension du SGP en 2011 fut de meme ampleur que les interruptions de 1995–1996 et de 2013–2015, les plus longues de l’histoire du SGP.

Modelling and predicting the competitive effects of vertical mergers: The bargaining leverage over rivals effect

Abstract: A new competitive effect of vertical mergers, based on the Nash bargaining model, has begun to play an important role in antitrust authorities’ evaluations of vertical mergers in the United States, Canada and abroad. The key idea is that a vertical merger will increase the bargaining leverage of the merged firm over its downstream rivals. Its bargaining leverage increases because it now takes into account the additional profit that its own downstream division will earn if it withholds inputs from downstream rivals, which changes its threat point in the bargaining game with downstream rivals. Consequently, the merged firm can increase the price that it charges rival downstream firms for inputs. One strong appeal of this theory is that it provides a simple and very intuitive formula to measure the upward pricing pressure caused by a vertical merger due to changes in bargaining leverage, based on variables whose values can generally be estimated using available data. This article describes this new competitive effect, which will be called the bargaining leverage over rivals (BLR) effect, and derives the upward pricing pressure formula. It also explains why this new competitive effect is distinct from the older raising rivals’ costs (RRC) effect that has been widely discussed in the economics literature, and discusses the relationship between the two different effects. Modelisation et prevision des effets concurrentiels des fusions verticales : l’effet de levier de negociation sur la concurrence. En matiere d’integration verticale, un nouvel effet concurrentiel fonde sur le modele de negociation de Nash commence a jouer un role preponderant dans l’evaluation de ce type de fusion par les autorites de la concurrence aux Etats‐Unis, au Canada et ailleurs dans le monde. L’idee directrice est qu’une fusion verticale augmente le levier de negociation de la nouvelle entite par rapport a ses concurrents en aval. Cette situation s’explique par le fait que l’entite fusionnee prend desormais en compte le profit supplementaire que sa propre division en aval aura accumule en retenant les intrants de ses concurrents en aval. Dans le jeu de marchandage, et en presence des memes parties, son point de desaccord (ou point de menace) s’en trouve donc modifie. Par consequent, l’entite fusionnee peut augmenter les tarifs des intrants qu’elle applique aux entreprises concurrentes en aval. L’un des principaux avantages de cette theorie est qu’elle offre une formule simple et tres intuitive pour mesurer cette pression des prix a la hausse induite par une fusion verticale, et decoulant des mutations dans le rapport de force. Cette formule se fonde sur des variables dont les valeurs peuvent generalement etre evaluees grâce aux donnees disponibles. Cet article decrit cette nouvelle donne concurrentielle que nous appellerons effet de levier de negociation sur la concurrence (bargaining leverage over rivals, BLR), et developpe la formule relative a la pression des prix a la hausse. L’article explique egalement en quoi ce nouvel effet concurrentiel se distingue de l’ancien effet d’augmentation des couts de la concurrence (raising rivals’ costs, RRC) deja largement documente dans la litterature economique, et examine la relation entre les deux.

The effect of migration on terror: Made at home or imported from abroad?

Abstract: We analyze how a country's immigrant population—defined as the stock of people born abroad—affects the probability of a terrorist attack in the host country. Using data for 20 OECD host countries and 183 countries of origin over the 1980–2010 period our OLS and 2SLS regressions show that the probability that immigrants from a specific country of origin conduct a terrorist attack in their host country increases with a larger number of foreigners from such countries living there. However, this scale effect does not differ from the effect domestic populations have on domestic terror. We find scarce evidence that terror is systematically imported from countries with large Muslim populations or countries where terror networks prevail. Policies that exclude foreigners already living in a country increase rather than reduce the risk that foreign populations turn violent, and so do terrorist attacks against foreigners in their host country. Highly skilled migrants are associated with a significantly lower risk of terror compared with low skilled ones, while there is no significant difference between foreign‐born men and women. L’effet de l’immigration sur le terrorisme: pur produit domestique ou importe de l’etranger? Dans cet article, nous analysons la facon dont la population immigree d’un pays, c’est a dire la population nee a l’etranger, a une incidence sur la probabilite d’une attaque terroriste dans le pays d’accueil. En s’appuyant sur les donnees de 20 pays d’accueil de l’OCDE et 183 pays d’origine, nos regressions a moindres carres ordinaire (MCO) et a doubles moindres carres (2SLS) montrent que la probabilite que des immigrants d’un pays d’origine particulier commettent une attaque terroriste dans leur pays d’accueil augmente des lors que la population immigree de meme nationalite est importante au sein du meme pays. Neanmoins, cet effet d’echelle ne differe en rien de celui que peut avoir les populations nationales sur le terrorisme local. Nous n’avons pas degage de preuves evidentes corroborant le fait que le terrorisme est systematiquement importe de pays a vaste population musulmane ou de pays ou regnent de nombreux reseaux terroristes. Les politiques excluant les etrangers vivant deja dans un pays ont plutot tendance a augmenter le risque que cette population ne se tourne vers la violence que de le reduire, et il en va de meme pour les attaques terroristes visant les etrangers dans leur pays d’accueil. En matiere de terrorisme, les immigrants hautement qualifies sont associes a un risque sensiblement moindre que les immigrants peu qualifies, et il n’y a pas de difference significative entre les hommes et les femmes nes a l’etranger.

Do potential migrants internalize migrant rights in OECD host societies

Abstract: This paper analyzes how countries' provision of migrant rights affects potential migrants' destination choice. Combining data on bilateral migration desires from over 140 origin countries and data on migrant rights in 38 mainly OECD destination countries over the period 2007-2014, we find that potential migrants tend to favour destinations that are more open to the inclusion of immigrants into their society. In particular, better access to and conditions on the labour market as well as access to nationality and to permanent residency significantly increase the perceived attractiveness of a destination country. These results are robust across different specifications and hold for subsamples of origin countries as well as of destinations. Moreover, some results vary across types of respondents. Educational opportunities for migrants, for instance, affect the migration desires of individuals aged 15 to 24 years, but less so of individuals in other age groups.

Innovation, patents and trade: A firm‐level analysis

Abstract: Using microdata of firm exports and international patent activity, we find that Greek innovative exporters, identified by their patent filing activity, have substantially higher export revenues by selling higher quantities rather than charging higher prices. To account for this evidence, we set up a horizontally differentiated product model in which an innovative exporter competes for market share in a destination against many non‐innovative rivals. We argue that as the competition among the exporters of the non‐innovative product becomes more intense, the innovative firm exports more compared with its non‐innovative rivals in more distant markets, a prediction that is empirically confirmed in the dataset for Greek innovative exporters. Resume Innovation, brevets et commerce : analyse au niveau de l’entreprise. A l’aide de microdonnees d’entreprises relatives aux exportations et aux activites de brevetage international, nous montrons que les exportateurs grecs innovants, identifies par leurs depots de brevets, realisent des gains a l’exportation nettement superieurs en misant davantage sur les volumes de vente que sur l’augmentation des prix. Pour expliquer cette situation, nous avons elabore un modele de differenciation horizontale de produits dans lequel les exportateurs novateurs sont en competition avec de nombreux concurrents non innovants afin de gagner des parts de marche. Nous montrons qu’a mesure que la competition s’intensifie entre les exportateurs de produits non innovants, l’entreprise innovante exporte davantage que ses concurrents vers les marches plus eloignes ; cette prediction se verifie de facon empirique grâce aux donnees relatives aux exportateurs grecs innovants.

The macroeconomic impact of NAFTA termination

Abstract: US President Trump has threatened to leave the North American Free Trade Agreement. How much would each member country gain or lose if this threat were carried out? Would trade imbalances within the region diminish? What would the transition to new production and consumption patterns look like? I provide quantitative answers to these questions using a dynamic general equilibrium model with a multi‐sector input–output production structure, heterogeneous firms that make forward‐looking export participation decisions, and adjustment frictions in trade and factor markets. Regional trade flows would fall dramatically, and while the US trade deficit with Canada would decline, the deficit with Mexico would grow. Welfare would fall by 0.04%, 0.12%, and 0.2% in the United States, Canada, and Mexico, respectively, and transition dynamics would significantly affect welfare in both the short run and the long run. Fin de l’ALENA : l’impact macroeconomique. Le president des Etats‐Unis Donald Trump a menace de quitter l’accord de libre‐echange nord‐americain (ALENA). Si cette menace etait mise a execution, qu’auraient a gagner les membres signataires? Que pourraient‐ils perdre? Les desequilibres commerciaux se resorberaient‐ils dans la region? Comment se caracteriseraient les nouveaux types de depenses et de production? Dans cet article, j’apporte a ces questions des reponses quantitatives grâce a un modele dynamique d’equilibre general s’appuyant sur une structure de production multisectorielle type entrees‐sorties, des entreprises heterogenes prevoyant des decisions en matiere d’exportation et des frictions d’ajustement sur les marches de facteurs et commerciaux. Les flux commerciaux diminueraient drastiquement dans la region, et bien que le deficit commercial des Etats‐Unis avec le Canada se resorberait, celui avec le Mexique augmenterait. Le bien‐etre reculerait de 0,04 % aux Etats‐Unis, 0,12 % au Canada et 0,2 % au Mexique, tandis que les dynamiques de transition peseraient negativement et significativement sur ce meme bien‐etre a court comme a long terme.

The role of the gravity forces on firms’ trade

Abstract: This paper offers both a theoretical framework and empirical evidence on the role that the two gravity forces, namely market size and geographical distance, have indirectly through imports, on firms’ exports patterns. The model shows that sourcing from bigger and closer markets implies higher productivity gains which, in turn, increase firms’ ability to enter export market, as well as their export value. Exploiting data on product and destination-level transactions of a large panel of Italian firms, the paper shows that, on average, the indirect effects of the gravity forces are about one third of their direct effects.

Not just a work permit: EU citizenship and the consumption behavior of documented and undocumented immigrants

Abstract: This paper explores the impact of the 2007 European Union enlargement on the consumption behavior of immigrant households. Using data from a unique Italian survey and a difference-in-differences approach, we find that the enlargement induced a significant consumption increase for the immigrant households from new member states both in the short- and in the medium-run. This enlargement effect cannot be attributed to the mere legalization as it concerns both undocumented and documented immigrants, albeit through different channels. Detailed information on immigrants' legal status (undocumented/documented) and sector of employment (informal/formal) allows us to shed light on the exact mechanisms. Following the enlargement, previously undocumented immigrants experienced an increase in the labor income by moving from the informal towards the formal economy, whereas immigrants who were already working legally in Italy benefitted from the increased probability of getting a permanent contract. Enhanced employment stability in turn reduced the uncertainty about future labor income leading to an increase in documented immigrants' consumption expenditure.

Social connections and editorship in economics

Abstract: This paper investigates the determinants of editorial board membership, for 17 leading journals in economics, from 1997 to 2009. We find that the researcher's scientific profile and connections to the editors in charge are significant predictors of editorship. Ceteris paribus, after controlling for unobserved researcher heterogeneity, scholars with links to editors in the co‐authorship network are more likely to serve as editors and this advantage decreases sharply with the social distance. Being a present or former departmental colleague or protege of an editor‐in‐charge is positively associated with the probability of appointment to the board. Resume Liens sociaux et comites editoriaux en economie. Cet article explore les elements determinants relatifs a la composition des comites editoriaux de 17 revues economiques de premier plan entre 1997 et 2009. Nous avons constate que le profil scientifique du chercheur ainsi que ses relations avec les editeurs augmentent la probabilite d’etre membre d’un comite editorial. Toutes choses etant egales par ailleurs, et apres avoir neutralise l’heterogeneite non observee des chercheurs, il apparait que les chercheurs en lien avec des editeurs dans un reseau de coredaction sont davantage susceptibles de devenir editeurs a leur tour, et que cet avantage s’amenuise drastiquement avec la distance sociale. Le fait d’avoir ete collegue au sein d’un meme departement ou mentore par un editeur est associe de fac¸on positive a la probabilite d’integrer le comite editorial.

Individual attitudes towards migration: A re‐examination of the evidence

Abstract: In the literature about the determinants of attitudes towards immigration, some authors emphasize the role of economic factors, while others argue that attitudes are mostly determined by non‐economic factors. This paper evaluates the relative importance of the two. We estimate a structural model of individual attitudes towards immigration, accounting for unobserved individual factors, and use this model to carry out a decomposition analysis of attitudes in 20 European countries. We find that economic mechanisms are significant determinants of attitudes, but that other (non‐economic) factors play a more decisive role in the relation between individual education levels and attitudes to immigration. Resume. Attitudes individuelles face a l’immigration : reexamen de l’evidence empirique. Dans la litterature portant sur les facteurs qui determinent les attitudes face a l’immigration, certains auteurs soulignent le role des facteurs economiques tandis que d’autres affirment que ces attitudes sont principalement determinees par d’autres facteurs. Cet article evalue l’importance relative de ces deux approches. Nous estimons un modele structurel qui explique les attitudes individuelles face a l’immigration, et qui tient compte des facteurs individuels non observes. Nous utilisons ce modele pour proceder a une analyse par decomposition de ces attitudes dans 20 pays europeens. Nous trouvons que les mecanismes economiques influencent de maniere significative les attitudes. Cependant, les facteurs non economiques jouent un role plus important dans la relation entre le niveau d’education des individus et leurs attitudes face a l’immigration.

The role of institutions and immigrant networks in firms’ offshoring decisions

Abstract: The offshoring of production by multinational firms has expanded dramatically in recent decades, increasing these firms' potential for economic growth and technological transfers across countries. What determines the location of offshore production? How do countries' policies and characteristics affect the firm's decision about where to offshore? Do firms choose specific countries because of their policies or because they know them better? In this paper, we use a very rich dataset on Danish firms to analyze how decisions to offshore production depend on the institutional characteristics of the country and firm-specific bilateral connections. We find that institutions that enhance investor protection and reduce corruption increase the probability that firms offshore there, while those that increase regulation in the labor market decrease such probability. We also show that a firm's probability of offshoring increases with the share of its employees who are immigrants from that country of origin.

Going the distance: Estimating the effect of provincial borders on trade when geography (and everything else) matters

Abstract: . In the presence of often‐cited provincial non‐tariff trade barriers, one should observe provincial border effects in Canada. However, using provincial trade data leads to upward biased estimates of the border effect, because intraprovincial trade is skewed towards short distance flows that are poorly estimated by gravity models. We overcome this bias by using sub‐provincial trade flows generated from a transaction‐level transportation dataset. The results show that border effects fall as geographies are more fine‐grained and uniform. In contrast to the US, where state border effects were eliminated using similar approaches, provincial border effects remain, with an implied 6.9% tariff equivalent. Resume. Tenir la distance: estimation de l’effet frontalier provincial sur le commerce en tenant compte de la geographie. Lorsque l’on aborde la question tres discutee des obstacles non‐tarifaires aux echanges commerciaux, il convient d’observer l’effet des frontieres provinciales au Canada. L’utilisation de donnees commerciales interprovinciales se traduit neanmoins par des biais par exces au niveau de l’effet frontalier, les flux de courtes distances etant surrepresentes et mal evalues par les modeles gravitaires. Afin de resoudre ce probleme d’ecart systematique par exces, nous utilisons des donnees commerciales infraprovinciales issues d’un ensemble de donnees transactionnelles relatives au transport. Nos resultats montrent que l’effet frontalier diminue des lors que les unites geographiques sont plus petites et uniformes. En utilisant les memes approches, on constate que l’effet frontalier disparait aux Etats‐Unis. En revanche, au Canada, l’effet frontalier persiste avec un equivalent tarifaire implicite de 6,9 %.

Migration as a test of the happiness set‐point hypothesis: Evidence from immigration to Canada and the United Kingdom

Abstract: Strong versions of the set‐point hypothesis argue that subjective well‐being measures reflect primarily each individual's own personality and that deviations are temporary. International migration provides an excellent test, since life circumstances and subjective well‐being differ greatly among countries. With or without adjustments for selection effects, the levels and distributions of immigrant life‐satisfaction scores for immigrants to the United Kingdom and Canada from up to 100 source countries mimic those in their destination countries, and even the destination regions within those countries, rather than those in their source countries, showing that subjective life evaluations are substantially driven by life circumstances and respond when those circumstances change. L’immigration comme test de la theorie des seuils de bonheur : l’exemple du Canada et du Royaume‐Uni. Les principaux tenants de la theorie des seuils de bonheur " font valoir que les evaluations subjectives du bien‐etre refletent essentiellement la personnalite de chaque individu, et que les derogations a ces seuils ne sont que temporaires. L’immigration internationale offre un excellent moyen de mettre cette theorie a l’epreuve etant donne que les circonstances de vie ainsi que le bien‐etre subjectif varient considerablement d’un pays a l’autre. Avec ou sans ajustements relatifs a l’effet de selection, les niveaux et la distribution des taux de satisfaction face a la vie des immigrants originaires de 100 pays au Royaume‐Uni et au Canada sont davantage semblables a ceux de ces deux pays, voire a ceux des regions de destination a l’interieur meme de ces deux pays, qu’a ceux de leur pays d’origine. Cela montre que les evaluations subjectives de la vie sont en grande partie liees aux circonstances de la vie, et s’adaptent lorsque ces circonstances changent.

Occupational mobility and the returns to training

Abstract: The literature on the returns to training has pointed out that, immediately following a training episode, wages of participants in employer‐sponsored training increase substantially while wages of participants in government‐sponsored training hardly change. We argue that there is a potential selection issue—most of the government‐sponsored trainees are occupation switchers while most participants in employer‐sponsored training are occupation stayers. An occupational switch involves a substantial destruction of human capital, and once we account for the associated decline in wages, we find a large positive impact of both employer‐ and government‐sponsored training on workers’ human capital. Mobilite professionnelle et benefices des formations. Les etudes ayant trait aux benefices conferes par les formations professionnelles montrent que lorsque ces dernieres sont parrainees par l’employeur, le salaire des participants augmente significativement a l’issue de leur formation. En revanche, lorsqu’elles sont parrainees par le gouvernement, le salaire des participants n’evolue presque pas. Nous affirmons qu’il s’agit la d’un probleme de selection potentiel : dans le cadre des formations parrainees par le gouvernement, la plupart des participants sont tres mobiles en emploi tandis que dans le cadre des formations parrainees par l’employeur, les participants sont tres stables en emploi. Une plus grande mobilite professionnelle genere une destruction importante du capital humain, et des lors que l’on tient compte de la baisse concomitante des salaires, nous estimons que les formations parrainees a la fois par l’etat et l’employeur ont une incidence tres positive sur le capital humain des employes.

Temporary foreign workers and firms: Theory and Canadian evidence

Abstract: Temporary foreign worker (TFW) programs have grown considerably in size when uncapped. We develop a simple efficiency-wage model to explain this phenomenon and examine the empirical evidence for it. We also use the model to evaluate the implications of TFW programs for domestic workers. In our framework, firms that have been unable to find domestic workers may hire TFWs at the wage previously advertised to domestic workers. Due to the lower outside option for TFWs than domestic workers, TFWs will exert more effort for the same wage. Firms would thus prefer to hire otherwise identical TFWs rather than domestic workers. Our model identifies an unintended consequence of a TFW program: since the repercussions of a failed domestic job search are less severe if a TFW may be hired instead, firms have an incentive to lower their wage offers made to domestic workers. Using Canadian data, we find that, relative to domestic workers, TFWs work longer hours, have lower rates of absenteeism and are less likely to be laid off, consistent with higher effort in our model. Moreover, for TFWs from home countries with a relatively high outside option, effort is lower than for TFWs from other countries. Resume: Travailleurs etrangers temporaires et entreprises: theorie et exemple canadien. En l’absence de plafonnement, les programmes de travailleurs etrangers temporaires (PTET) se sont considerablement developpes. Afin d’expliquer ce phenomene et d’en examiner les preuves empiriques, nous avons developpe un modele simple de salaire d’efficience. Nous avons egalement utilise ce modele pour evaluer l’incidence des PTET sur les travailleurs domestiques. Dans notre cadre d’etude, les entreprises peinant a trouver une main d’œuvre locale peuvent embaucher des travailleurs etrangers temporaires au salaire prealablement propose aux travailleurs domestiques. Compte tenu d’options exterieures plus faibles, les travailleurs etrangers temporaires deploieront davantage d’efforts pour le meme salaire. Les entreprises prefereront donc embaucher des travailleurs etrangers par ailleurs identiques plutot que des travailleurs domestiques. Notre modele identifie une consequence inattendue aux PTET: etant donne que les consequences d’une recherche d’employes domestiques infructueuse sont attenuees par l’embauche de travailleurs etrangers temporaires, les entreprises sont incitees a diminuer les offres salariales proposees aux travailleurs locaux. En exploitant les donnees propres au Canada, nous avons decouvert que les travailleurs etrangers temporaires travaillaient plus d’heures, avaient des taux d’absenteisme inferieurs et etaient moins susceptibles de se faire congedier que les travailleurs domestiques, conformement au concept d’effort accru developpe dans notre modele. En outre, pour les travailleurs etrangers temporaires originaires de pays a options exterieures relativement elevees, l’effort sera moindre que pour ceux provenant d’autres pays.

International students and labour market outcomes of US‐born workers

Abstract: Do international students graduating from US colleges and universities affect labour market outcomes of similarly educated native‐born workers? I address this question by exploiting a change in US visa policy that results in increases in the labour supply of master’s‐level international students to the US labour market in science, technology, engineering and mathematics (STEM) fields. Estimates show that increases in their labour supply via temporary work permits in a certain field reduce employment of recently graduated native‐born holders of a master’s degree but increase earnings of experienced native‐born holders of a master’s degree in the same field. These findings support the hypothesis of substitution between skills of similarly educated immigrants and native‐born individuals in the same age group and complementarity between skills of those in different age groups. Etudiants internationaux et debouches sur le marche du travail pour les citoyens nes aux Etats‐Unis. A diplome egal, les etudiants internationaux sortant des universites et colleges americains ont‐ils un impact sur les debouches des travailleurs nes dans le pays sur le marche de l’emploi? Je pose cette question en exploitant les changements en matiere de politique de visas aux Etats‐Unis ayant eu pour consequence une augmentation du nombre d’etudiants qui detient une maitrise sur le marche du travail americain, notamment dans les secteurs des sciences, des technologies, de l’ingenierie et des mathematiques (STIM). Dans certains secteurs, les evaluations montrent que l’augmentation de la main d’oeuvre decoulant de l’octroi de permis de travail temporaires a engendre une reduction du nombre d’emplois devolus aux detenteurs d’une maitrise fraichement diplomes et nes dans le pays, tout en permettant aux plus competents d’entre eux d’augmenter leurs revenus. Ces constatations soutiennent l’hypothese d’une substitution entre les competences des immigrants et celles des natifs a diplome egal pour un meme groupe d’âge, et d’une complementarite differents groupes d’âge.

Leave it in the ground? Oil sands development under carbon pricing

Abstract: We evaluate the impact of internalizing the carbon emissions externality on new oil sands projects. Using data from recent oil sands projects and estimates of both the social costs of carbon and carbon prices consistent with meeting global climate change targets, we estimate the potential impact of action on climate change on the economic viability of oil sands investments. Our results indicate that oil sands are a marginal resource before they incur any carbon costs. Incorporating carbon costs, we find that the viability of oil sands depends on the coverage of carbon pricing across the life cycle emissions from oil sands and on the equilibrium incidence of carbon prices on producers. We show an important interaction between resource royalties and carbon charges that implies that the impact carbon pricing depends on not only the stringency and coverage of the carbon price but also its point of application of a carbon price. Finally, we explore the potential for technological change to mitigate the impacts of carbon pricing on oil sands investment viability. Cesser l’exploitation ? Le developpement des sables bitumineux avec la tarification du carbone. Dans cet article, nous evaluons l’effet de l’internalisation des couts externes des emissions de carbone pour les nouveaux projets de sables bitumineux. Grâce aux donnees provenant de projets industriels recents, ainsi que diverses estimations relatives aux cout sociaux du carbone et sa tarification a l’une des objectifs en matiere de changement climatique mondiaux, nous evaluons les consequences potentielles des mesures en faveur du climat sur la viabilite economique de nouveaux investissements dans les sables bitumineux. Nos resultats indiquent que ces derniers representent une ressource marginale avant meme d’engager les couts lies au carbone. En ajoutant ces couts, nous constatons que la viabilite des sables bitumineux depend de la couverture des prix du carbone pour les emissions generees par les sites d’exploitation sur l’ensemble de leur cycle de vie, ainsi que de l’incidence d’equilibre des tarifs du carbone sur les producteurs. Nous montrons une interaction importante entre redevances petrolieres et taxes sur le carbone : les consequences liees a la tarification du carbone ne dependent donc pas seulement de la couverture des prix du carbone et des exigences y afferant, mais egalement du point d’application d’un tarif du carbone. Enfin, nous explorons la possibilite d’une evolution technologique permettant d’attenuer les consequences des taxes carbone sur la viabilite des investissements dans les sables bitumineux.

Exposing false advertising

Abstract: Countries rely on different public and private agents to enforce consumer protection and fair competition regulations. To analyze the repercussions of different regimes on social welfare, we consider the possibility of false advertising by a firm in an environment with duopolistic competition and with consumers who can be rational or naive regarding the trustworthiness of advertising claims. We compare the incentives for and outcomes of false advertisement verification and injunction requests made by one of three parties: a government agency with a broad focus maximizing (ex post) total welfare and two narrowly focused parties, the first a public or private party focused on consumer welfare net of its own enforcement costs and the second a competitor interested exclusively in its own profits. Considering ex ante welfare, we find that having a narrowly focused party as the plaintiff can be optimal due to government agency commitment problems. The optimal regime depends on both the share of the population's naive consumers and the level of enforcement costs. Resume. Denonciation de la publicite mensongere. Pour veiller a l’application des reglementations en matieres de protection des consommateurs et de concurrence loyale, les etats s’appuient sur differents regimes de controle representes par des agents publics et prives. Afin d’analyser les repercussions de ces differents regimes sur le bien‐etre, nous evaluons la possibilite qu’une entreprise puisse diffuser de la publicite mensongere dans un environnement concurrentiel duopolistique avec des consommateurs potentiellement rationnels ou naifs relativement a la veracite des allegations publicitaires. Nous comparons les mesures incitatives pour controler la publicite mensongere et leurs resultats, ainsi que les mises en demeure initiees par l’une de ces trois parties : une agence gouvernementale a visee large aux fins de maximisation totale du bien‐etre ex post, et deux autres parties a visee plus ciblee: l’une publique ou privee tournee vers le bien‐etre des consommateurs, deduction faite de ses propres co___ts de mise en œuvre, et l’autre representee par un concurrent s’interessant exclusivement a ses propres profits. En tenant compte du bien‐etre ex ante, et en raison des problemes d’engagement des agences gouvernementales, nous constatons qu’une procedure peut s’averer optimale des lors que le demandeur represente une partie a visee plus ciblee. Le regime optimal depend a la fois de la proportion de consommateurs naifs et du niveau des couts de mise en œuvre.

Skill transferability and the earnings of immigrants

Abstract: Using data on immigrants from the Canadian Census, we compare immigrants who received a bachelor's degree from a Canadian university to immigrants who receive a bachelor's degree in their home country, in order to investigate the returns to skills acquired in Canada versus skills acquired abroad. Our measure of skill is based on postsecondary fields of study linked to the O*NET matrix of skills and competencies. We find that immigrants educated in Canada receive higher returns to their communication skills than those educated abroad. To a lesser degree, they also receive higher returns to their logical and technical skills. These gaps in skill returns explain the entirety of Canadian‐educated immigrant's 10% earnings advantage. Our results are robust to controlling for the quality of universities in the immigrant's country of study and for occupation and industry choice. The gaps are stable across time and across quantiles of the immigrant earnings distribution. Transferabilite des competences et revenus des immigrants. A partir de donnees issues du recensement canadien, et afin de determiner le rendement des competences acquises au Canada par rapport a celles acquises a l’etranger, nous avons compare le profil des immigrants titulaires d’un baccalaureat obtenu dans une universite canadienne a celui des immigrants titulaires d’un diplome equivalent delivre dans leur pays d’origine. Notre evaluation des competences se fonde sur les domaines d’etudes postsecondaires lies a la base de donnees O*NET sur les aptitudes et les competences. Comparativement aux immigrants ayant etudie a l’etranger, nous constatons que les immigrants ayant poursuivi leurs etudes au Canada possedent de meilleures competences en matiere de communication et, dans une moindre mesure, de meilleures competences logiques et techniques. Ces ecarts de competences suffisent a expliquer les 10 % de revenus supplementaires que gagnent les immigrants ayant ete scolarises au Canada. Nos resultats sont robustes et tiennent compte de la qualite des universites situees dans les pays de scolarisation des immigrants ainsi que des choix en matiere d’emploi et de secteur d’activite. Les ecarts sont stables dans le temps et entre chaque quantile de distribution de revenus des immigrants.

Financial stability and interest‐rate policy: A quantitative assessment of costs and benefit

Abstract: Should monetary policy use its short‐term policy rate to stabilize the growth in household credit and housing prices with the aim of promoting financial stability? We ask this question for the case of Canada. We find that, to a first approximation, the answer is no. Resume. Stabilite financiere et politique de taux d’interet: evaluation quantitative des couts et des avantages. Afin de favoriser la stabilite financiere, la politique monetaire devrait‐elle utiliser son taux directeur a court terme pour equilibrer la croissance de l’endettement des menages et du prix des logements ? Nous posons cette question pour le Canada. Dans une premiere approximation, notre reponse est negative.

Downstream Offshoring and Firm-level Employment

Abstract: When engaging in offshoring, firms do not only import intermediates they used to produce in-house, but also intermediates previously sourced from non-affiliated domestic suppliers. This leads to a negative demand shock for the latter that may affect domestic employment. Prior empirical re- search has so far neglected this channel through which offshoring may affect employment. We label this demand shock 'downstream offshoring' and develop a novel measure capturing its extent for a firm in a given upstream industry. According to our estimations for a representative sample of Belgian manufacturing firms over 1997-2007, downstream offshoring has a robust negative effect on employ- ment.