Volume 10 (2020): Issue 1 (March 2020)

There is a well-established literature that finds a strong causal association between remittance flows and economic growth and poverty. Owing to the poverty-alleviating and income-generating effects of remittances, it may theoretically reduce crime by increasing the opportunity cost of committing crime. This paper studies the effects of remittance receipts on crime outcomes in India. The identification strategy, exploits the variation in rainfall as an instrument for remittance receipts. The results suggest that remittance receipts have a negative effect on violent crimes and a positive effect on nonviolent crimes. Since remittance flows mean that more economic resources are available, remittances provide an incentive for certain crimes that thrive in the presence of economic resources. Therefore, an important implication of this result is that as remittance receipts increase income and welfare, there is a diverse effect on the costs and benefits of different types of crimes. It may result in unfavorable outcomes in the form of increases in certain nonviolent crimes.

This is a short paper analyzing the potential effects of a targeted school-building program on health indicators. The Kasturba Gandhi Balika Vidyalaya (KGBV) program in India intended to build residential schools for girls from historically disadvantaged sections of the society, providing a unique multifaceted policy setting with tenets of gender equality, affirmative action, and infrastructure reform in education. Exploiting the potentially exogenous cross-sectional variations generated by the institutional features of implementation of this intervention, I run triple-difference regressions to find that the program led to increases in body mass index (BMI) among the underweight. There seems to be a positive correlation between KGBV exposure and probability of being in the “healthy” band of BMI indicators.

Low-skilled immigration has been argued to lower the price of services that are close substitutes for household production, reducing barriers for women to enter the labor market. Therefore, policies that reduce the number of low-skilled immigrants who work predominantly in low-skilled service occupations may have an unintended consequence of lowering women’s participation in the labor market. This article examines the labor supply impact of the Legal Arizona Workers Act (LAWA), which led to a large decline in the low-skilled immigrant workforce of the state. The analysis shows no evidence that LAWA statistically significantly affected US-born women’s labor supply in Arizona. This finding is partly explained by an increase in native workers in household service occupations due to LAWA, which offset the decline in immigrants in these occupations and caused the cost of household services to be relatively uninfluenced by the passage of LAWA.

This paper studies how an introduction of paid parental leave (PPL) affects maternal labor market outcomes in the short run. Using a reform in Australia, the PPL scheme, that gave the primary caregiver of a child born or adopted on or after January 1 2011, $672.70 a week for a maximum of 18 weeks, this paper develops theoretical predictions of the effect of PPL on maternal labor market outcomes, and tests these predictions using confidential data from the Australian Pregnancy and Employment Transitions Survey. The theoretical results imply that after the introduction of PPL, hours of work in the pre-birth period should decrease for mothers who will qualify for PPL, and increase for mothers who are attempting to qualify for PPL. Post birth, the theoretical results imply that more mothers are out of work and on leave than would have been in the absence of PPL. The empirical results suggest that the PPL scheme had no significant effect on labor market outcomes pre birth or post birth.

Governments perform national, labor-intensive censuses on a regular schedule. Censuses represent many of the largest peacetime expansions and contractions in federal hiring. The predetermined occurrence and scale of the census offers an economic experiment in the effects of temporary government hiring. This paper describes the construction of a data series on census hiring in the United States since 1950 and also collects available data on census employment in England and Wales, Canada, Korea, and Japan. Regressing total employment changes on census hiring yields coefficients extremely close to 1, indicating that there is no spillover from census hiring to the rest of the economy. Using census hiring and occurrence as instruments for government hiring in the US, Canada, and Korea, I estimate the effect of federal hiring on overall employment. Different samples yield varying jobs multipliers, with point estimates varying from -0.01 to 1.48. Including Korean and Canadian data yields lower multipliers, while including pre-1990 US data yields higher multipliers. In no specification can I reject the hypothesis that the job multiplier equals 1. In all specifications, standard errors are large enough that I can reject neither Keynesian nor crowd-out effects.

Labor informality and poverty are at high levels in Latin America. In developing countries, poverty and the labor market are related not through unemployment but through employment. The purpose of this paper is to analyze the link between labor informality and poverty in Colombia. To do so, earnings gaps associated with labor informality are estimated; then, the effect of formalization on poverty is calculated, as the influence of changes in labor informality on Colombia’s poverty reduction from 2002 to 2013. The findings show that the earnings gap between formal and informal workers is 37–44%, and if informality were eliminated, poverty would decrease by approximately 40%. However, even though informality has great potential to reduce poverty, its actual effect on Colombia’s poverty reduction in the years analyzed was low.

The Earned Income Tax Credit (EITC) is one of the largest anti-poverty programs in the United States, providing over $67 billion to more than 27 million families for the tax year 2016, an average of $2,455. By subsidizing the earnings of low-income workers, the EITC reduces poverty both directly through the credit itself and indirectly through labor supply incentives. The two primary determinants of the amount a tax unit receives are earned income and number of children. Many studies define eligibility based on the presence of children in a household and separate analyses by marital status, a reflection of the fundamentally different incentives the EITC poses for single- and dual-earner households. However, as the EITC theoretically encourages fertility and generally discourages marriage, endogenous responses along these two dimensions could bias estimates which rely on them for identification and sample selection. In this paper, I revisit the classic question of the EITC’s labor market effects while exploiting a source of arguably exogenous variation in EITC receipt that does not rely on these potentially endogenous characteristics: birth timing around the end of the calendar year. Using the Survey of Income and Program Participation, my results show positive earnings and employment effects for unmarried women in the 12 months following their first/only child’s birth, including for those with a high school degree or less (low-ed). Overall, the results are usually small and insignificant for married women, with the exception of negative (and sometimes significant) effects on earnings for low-ed married women. Using a difference-in-discontinuities approach, I separate the income effect of the credit itself from the information effect, which, I argue, occurs when women receive the EITC for the first time. I show that, while the income effect is negative across all groups of women, the information effects are positive for unmarried women and negative for married women, again consistent with theory and the body of evidence on the EITC.

This article analyzes the effects on the West Bank economy of temporary Palestinian employment in Israel, using a new database and a computable general equilibrium model. The results show that Palestinian employment in Israel increases household incomes but distorts the operation of the West Bank labor market and increases domestic wages. Employment in Israel increases the real exchange rate of the West Bank leading to “Dutch disease” effects that inhibit the development of the West Bank economy. A decrease in the number of Palestinian workers in Israel reduces household welfare, and constraints on the West Bank economy restrict domestic absorption of the extra labor. Hence, the Palestinian National Authority may seek more labor exports to Israel. This article contributes to the broader discussion on the effects of migration policies on labor-sending economies by demonstrating the nontrivial benefits from labor migrations, but that these benefits come with costs. This article explores policy options for offsetting those costs.

Recent changes in New Zealand law decreased the cost of dismissing employees within their first 3 months with an employer, with the aim of encouraging firms to increase hiring by reducing the associated risk. We use monthly linked employer–employee data and exploit the staggered introduction of the policy to estimate its effect on hiring. We find that the policy had little effect on the number of hires, the hiring of jobseekers of unknown quality, or the stability of employment. Our results suggest that policies that temporarily lower dismissal costs do not necessarily increase firm hiring.

In this paper, we analyze the Individuals’ level of engagement on the labor market and the engagement heterogeneity across individuals in matters of labor market outcomes and the effectiveness of policy interventions. Emerging economies with highly segmented and distorted labor markets typically exhibit strong heterogeneity in labor market engagement. This paper develops an innovative index that measures individuals’ labor market engagement across three dimensions (preferences, intensity, and barriers) and across three labor market categories (employed, unemployed, and out-of-labor force) based on a recent special labor market survey in the Kingdom of Saudi Arabia (KSA). Clustering individuals with similar engagement levels permit more effective targeting of labor market interventions. Findings confirm the strong heterogeneity of labor market engagement in the KSA and the index’s usefulness in the construction of differentiated policies across these clusters.

This paper examines the impacts of trade on youth employment in the United States. The overarching goal is to link lessons from the decline of manufacturing jobs in the past decades to future prospects for the US economy. We find higher rates of job losses with exposure to import competition for US youth, than for older workers. Our analysis uses buyer–supplier relationships between sectors of the US economy to show that the direct effects of trade on the importing sectors underrepresent the impact of trade on jobs.

The benefits of place-based policies are still under debate. In this study, we analyze what is probably one of the boldest interventions in the recent history of Mexico and the rest of the world: the Northern Border Free Zone (NBFZ). Launched in January 2019, this program doubles the minimum wage and substantially lowers taxes in 43 municipalities along the border with the United States, aiming to improve living standards for low-wage workers and foster economic activity within the region. Given the unique features of the NBFZ, we estimate its short-run effects on labor outcomes: employment, wages, and formality. Our primary identification strategy follows a synthetic control method employing monthly administrative data at the municipality level for the period 2015–2019. Using administrative data for formal employment, we find that the policy substantially increased labor income in the NBFZ by approximately 9% over the control municipalities. The results for employment are less clear. Formal employment showed 1.6% less growth in the NBFZ than in the control municipalities, but the estimate is imprecise and we cannot reject a null impact of the program on employment. These results are robust to alternative control groups, including metropolitan areas in the United States. We also use the labor force survey to estimate the effects on formality at the individual level and find results closer to a null effect. These two results suggest that the NBFZ did not substantially affect employment, and the intersection of confidence intervals for the two estimates implies a maximum loss of employment of approximately 24,000 jobs.

Work impairment is an increasing concern in advanced economies, particularly among young people. Activation, rather than passively providing economic support, is often regarded as the preferred strategy for addressing this issue. However, little is known about which measures are effective for improving youth work impairment. A hazard rate competing risk model with unobserved heterogeneity applied to rich Norwegian panel data provides some insights. Wage subsidies, and to some extent education/training programs, have the intended effect. In other words, work-impaired youths who participate in these measures have a higher probability of obtaining work/starting an education and a lower probability of experiencing a transition to social security than those youths who do not participate in any measure. The impacts of follow-up initiatives and work practice programs are more mixed.

We examine whether there is any movement in the employment of native-educated nurses due to the influx of foreign-educated nurses. To avoid conflating the short- and long-term reactions to the entry of newly arrived foreign-educated nurses, we implement a multiple instrumentation procedure. We find that there is no significant effect of foreign-educated nurses on the employment of native nurses in both the short- and the long-runs. Our results suggest that relying on foreign-educated nurses to fill gaps in the US healthcare workforce does not harm the employment of native nurses.

The article analyzes and deals with the problems associated to exclusion of persons with disabilities from the workforce based on the impact it has in the context of economic and social dimensions, considering the fact that it results in high cost because of such exclusion. Specifically, it estimates the macroeconomic cost to the Spanish economy by modeling the incorporation of this collective into the job market. Varying types of inclusion are proposed, which are defined in terms of the different barriers that this collective encounters when attempting to access the job market. In this article, these barriers are divided between those that result from a labor gap and those that result from an education gap. The study then quantifies the macroeconomic benefits resulting from an increased participation of persons with disabilities in the workforce.

We assess the effects of a sharp minimum wage increase on wages, informality, and employment in Turkey, a large developing economy with one of the highest minimum wage-to-average wage ratios among OECD countries and widespread discrepancies between labor market outcomes of women and of men. We look at the quasi-experimental 2016 minimum wage increase and pay attention to identifying information coming from demographic groups. We find that the increase in the minimum wage had an economically substantial and statistically significant positive impact on wages. Despite the positive wage effects of the increase, we find no negative employment effects. However, we show that the minimum wage increase may have caused an increase in the share of informal employment among workers with less than tertiary education, especially for such workers working for small firms.

In 2016, the Polish government introduced a large child benefit, called “Family 500+”, with the aim to increase fertility and reduce child poverty. It is universal for the second and every further child and means-tested for the first child. We study the impact of the new benefit on female labor supply, using Labor Force Survey data. Based on a difference-in-differences methodology, we find that the labor market participation rates of women with children decreased after the introduction of the benefit compared to that of childless women. The labor force participation rate of mothers showed a drop of 2–3 percentage points by mid-2017 as a result of the “Family 500+” program. The effect was higher among women with lower levels of education and among women living in small towns.

We present experimental evidence on the effects of entrepreneurship training for unemployed workers in the U.S. at two different stages in the business cycle. In the context of a strong economy, training helped training participants – particularly those with prior self-employment experience – to start a business and become self-employed, while it may have persuaded others to pursue salary employment instead. During the Great Recession, training helped training participants become self-employed, particularly those with no prior self-employment experience. Regardless of economic conditions, positive impacts on self-employment were partly or largely offset by reductions in regular employment. These findings indicate that entrepreneurship training may help unemployed workers to become self-employed at different stages of the business cycle, but there is weak evidence that it can be an effective policy for combating unemployment, particularly during recessions.