This paper analyses the effect of the presence of German language learning opportunities abroad on migration to Germany. We use information on the presence of the Goethe-Institut (GI), which is an association that promotes German culture and offers language courses and standardized exams. Our unique dataset covers 69 countries for the period 1977 to 2014. In this multiple-origin and single-destination framework, we estimate fixed-effects models as our basic specification. We find evidence that the number of language institutes of the GI in a country is positively correlated with migration from that country to Germany. The correlation is higher for countries with lower income, larger linguistic distance and without wars. To establish causality, we consider Switzerland as an alternative destination country as the decision to open a language institute in a country is exogenous to migration flows from that country to Switzerland. We find that the institutes of the GI also affect migration flows to the German-speaking part of Switzerland, but not to the French- and Italian-speaking part. Backed by further extensions which control for the presence of multilateral resistance and omitted variable bias, we interpret our results as presenting a causal effect from language learning opportunities to migration flows.
{"title":"Presence of Language-Learning Opportunities and Migration","authors":"M. Huber, Silke Übelmesser","doi":"10.2139/ssrn.3362022","DOIUrl":"https://doi.org/10.2139/ssrn.3362022","url":null,"abstract":"This paper analyses the effect of the presence of German language learning opportunities abroad on migration to Germany. We use information on the presence of the Goethe-Institut (GI), which is an association that promotes German culture and offers language courses and standardized exams. Our unique dataset covers 69 countries for the period 1977 to 2014. In this multiple-origin and single-destination framework, we estimate fixed-effects models as our basic specification. We find evidence that the number of language institutes of the GI in a country is positively correlated with migration from that country to Germany. The correlation is higher for countries with lower income, larger linguistic distance and without wars. To establish causality, we consider Switzerland as an alternative destination country as the decision to open a language institute in a country is exogenous to migration flows from that country to Switzerland. We find that the institutes of the GI also affect migration flows to the German-speaking part of Switzerland, but not to the French- and Italian-speaking part. Backed by further extensions which control for the presence of multilateral resistance and omitted variable bias, we interpret our results as presenting a causal effect from language learning opportunities to migration flows.","PeriodicalId":360530,"journal":{"name":"CESifo Working Paper Series","volume":"15 3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125784420","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The COVID-19 pandemic has brought into sharp relief the connection between the epidemiology of a virus, the structure of the economy and society that becomes exposed to it, and the actions chosen by government and by individuals and communities to combat it or ameliorate its economic impact. Surprisingly, there has not been much research on the economy of the 1918-1920 influenza pandemic, even though it likely was the highest mortality event in the 20th century, more lethal than the two World Wars. This paper focuses on Japan, which as a minor participant, was not directly affected by World War I. We exploit the diversity of experiences with the pandemic and its attendant policy responses across Japanese prefectures; and investigate the importance of the pandemic (measured by excess mortality), and of non-pharmaceutical policy interventions (NPIs) in determining the economic impact of the pandemic. We do so by focusing on the production and employment in the textile sector, given the availability of data and the general importance of the sector for emerging economies (as Japan was at the time). We investigate the role of NPIs in ameliorating the economic costs for the sector during the pandemic years (1918-1920), and indeed find that the implemented NPIs were effective in ameliorating the pandemic’s economic consequences, rather than worsening them. In this case, there was no trade-off between money and life, but rather the two were complimentary.
{"title":"The Japanese Textile Sector and the Influenza Pandemic of 1918-1920","authors":"Ilan Noy, Toshihiro Okubo, E. Strobl","doi":"10.2139/ssrn.3724066","DOIUrl":"https://doi.org/10.2139/ssrn.3724066","url":null,"abstract":"The COVID-19 pandemic has brought into sharp relief the connection between the epidemiology of a virus, the structure of the economy and society that becomes exposed to it, and the actions chosen by government and by individuals and communities to combat it or ameliorate its economic impact. Surprisingly, there has not been much research on the economy of the 1918-1920 influenza pandemic, even though it likely was the highest mortality event in the 20th century, more lethal than the two World Wars. This paper focuses on Japan, which as a minor participant, was not directly affected by World War I. We exploit the diversity of experiences with the pandemic and its attendant policy responses across Japanese prefectures; and investigate the importance of the pandemic (measured by excess mortality), and of non-pharmaceutical policy interventions (NPIs) in determining the economic impact of the pandemic. We do so by focusing on the production and employment in the textile sector, given the availability of data and the general importance of the sector for emerging economies (as Japan was at the time). We investigate the role of NPIs in ameliorating the economic costs for the sector during the pandemic years (1918-1920), and indeed find that the implemented NPIs were effective in ameliorating the pandemic’s economic consequences, rather than worsening them. In this case, there was no trade-off between money and life, but rather the two were complimentary.","PeriodicalId":360530,"journal":{"name":"CESifo Working Paper Series","volume":"85 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-07-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124447371","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate occupation-specific aging patterns before and after retirement and test the level and rate effects of occupation predicted by the health capital model and the health deficit model. We use five waves of the Survey of Health, Aging, and Retirement in Europe (SHARE) and construct a frailty index for elderly men and women from 10 European countries. Occupational groups are classified according to low vs. high education, blue vs. white collar, and high vs. low physical or psychosocial job burden. Controlling for individual fixed effects, we find that, regardless of the classification used, workers from the first (low-status) group display more health deficits at any age and accumulate health deficits faster than workers from the second (high-status) group. We instrument retirement by statutory retirement ages (“normal” and “early”) and find that the health of workers in low-status occupations benefits greatly from retirement, whereas retirement effects for workers in high-status occupations are small and frequently insignificant. In support of the health deficit model, we find that the health status of individuals from low- and high-status groups diverges before and after retirement.
{"title":"Health and Aging Before and after Retirement","authors":"A. Abeliansky, H. Strulik","doi":"10.2139/ssrn.3634589","DOIUrl":"https://doi.org/10.2139/ssrn.3634589","url":null,"abstract":"We investigate occupation-specific aging patterns before and after retirement and test the level and rate effects of occupation predicted by the health capital model and the health deficit model. We use five waves of the Survey of Health, Aging, and Retirement in Europe (SHARE) and construct a frailty index for elderly men and women from 10 European countries. Occupational groups are classified according to low vs. high education, blue vs. white collar, and high vs. low physical or psychosocial job burden. Controlling for individual fixed effects, we find that, regardless of the classification used, workers from the first (low-status) group display more health deficits at any age and accumulate health deficits faster than workers from the second (high-status) group. We instrument retirement by statutory retirement ages (“normal” and “early”) and find that the health of workers in low-status occupations benefits greatly from retirement, whereas retirement effects for workers in high-status occupations are small and frequently insignificant. In support of the health deficit model, we find that the health status of individuals from low- and high-status groups diverges before and after retirement.","PeriodicalId":360530,"journal":{"name":"CESifo Working Paper Series","volume":"200 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115970138","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper explores the impact of credit market on the entrepreneurs and demand for credit in a credit constrained economy and the resultant impact on the capital flows. In standard trade models the capital flows across countries are explained as a result of the rate of return differentials due to presence/absence of capital among the countries whereby capital flows from the capital rich countries to capital poor countries. We show that the rate of return differentials could arise due to presence/absence of entrepreneurs, i.e., low price of capital in autarky may reflect lack of demand for credit due to scarcity of entrepreneurs and not capital abundance and eventually may lead to capital outflow from a capital scarce country. This is a different way of echoing the sentiment of the well-known “Lucas Paradox” which suggests that capital might flow from the poor to the rich countries. We also show the possibility of trade and capital flow being complements and not substitutes, as is usual in standard models.
{"title":"Credit Market Imperfection, Lack of Entrepreneurs and Capital Outflow from a Developing Economy","authors":"S. Marjit, Suryaprakash Mishra","doi":"10.2139/ssrn.3682015","DOIUrl":"https://doi.org/10.2139/ssrn.3682015","url":null,"abstract":"This paper explores the impact of credit market on the entrepreneurs and demand for credit in a credit constrained economy and the resultant impact on the capital flows. In standard trade models the capital flows across countries are explained as a result of the rate of return differentials due to presence/absence of capital among the countries whereby capital flows from the capital rich countries to capital poor countries. We show that the rate of return differentials could arise due to presence/absence of entrepreneurs, i.e., low price of capital in autarky may reflect lack of demand for credit due to scarcity of entrepreneurs and not capital abundance and eventually may lead to capital outflow from a capital scarce country. This is a different way of echoing the sentiment of the well-known “Lucas Paradox” which suggests that capital might flow from the poor to the rich countries. We also show the possibility of trade and capital flow being complements and not substitutes, as is usual in standard models.","PeriodicalId":360530,"journal":{"name":"CESifo Working Paper Series","volume":"95 2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-03-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126175847","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We describe a model of trade with input based product differentiation and non-proportional trade costs that is capable of predicting a positive correlation between firms’ export intensity, the price of their exports, and the wages they pay to their workers. These correlations arise in the model solely from comparative input scarcity and independently of any productivity differentials: in equilibrium, firms that employ workers with comparatively scarcer skills, other things equal, export a larger proportion of their output, pay higher wages and charge higher prices.
{"title":"Skills Scarcity and Export Intensity","authors":"Carlo Perroni, Davide Suverato","doi":"10.2139/ssrn.3468016","DOIUrl":"https://doi.org/10.2139/ssrn.3468016","url":null,"abstract":"We describe a model of trade with input based product differentiation and non-proportional trade costs that is capable of predicting a positive correlation between firms’ export intensity, the price of their exports, and the wages they pay to their workers. These correlations arise in the model solely from comparative input scarcity and independently of any productivity differentials: in equilibrium, firms that employ workers with comparatively scarcer skills, other things equal, export a larger proportion of their output, pay higher wages and charge higher prices.","PeriodicalId":360530,"journal":{"name":"CESifo Working Paper Series","volume":"104 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-03-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127962930","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jeronimo Carballo, Alejandro Graziano, Georg Schaur, Christian Volpe Martincus
We estimate import processing costs based on the time it takes to import. Our theory extends existing time-cost measures to account for uncertainty in import processing. We use detailed, highly disaggregated data on import processing dates and import values to provide evidence for our theory and estimate processing costs consistent with the theory. The evidence shows that our extensions to time-cost estimates are economically relevant to determine processing costs. We estimate that the tariff equivalent import processing costs is as high as 18 percent. WTO estimates suggest that the full implementation of the 2013 Trade Facilitation Agreement would reduce the time to trade by 1.5 days. In that case, processing costs would decrease to 13 percent.
{"title":"Import Processing and Trade Costs","authors":"Jeronimo Carballo, Alejandro Graziano, Georg Schaur, Christian Volpe Martincus","doi":"10.2139/ssrn.3885413","DOIUrl":"https://doi.org/10.2139/ssrn.3885413","url":null,"abstract":"We estimate import processing costs based on the time it takes to import. Our theory extends existing time-cost measures to account for uncertainty in import processing. We use detailed, highly disaggregated data on import processing dates and import values to provide evidence for our theory and estimate processing costs consistent with the theory. The evidence shows that our extensions to time-cost estimates are economically relevant to determine processing costs. We estimate that the tariff equivalent import processing costs is as high as 18 percent. WTO estimates suggest that the full implementation of the 2013 Trade Facilitation Agreement would reduce the time to trade by 1.5 days. In that case, processing costs would decrease to 13 percent.","PeriodicalId":360530,"journal":{"name":"CESifo Working Paper Series","volume":"65 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128157177","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Production processes are increasingly organized in international value-chain networks. The involved firms can be operating at arm’s length or be vertically integrated. Both the incidence and the direction of integration (backward or forward in the value chain) depend on specific characteristics of the firms and their economic environment. We propose a simple model of vertical integration in a supplier-producer relationship that is rooted in the property-rights theory to learn about the determinants of forward versus backward integrations. Generally, the profitability and direction of integration depend on the relative investment intensity of the producer and the supplier so as to align investment incentives and maximize joint surplus. Moreover, the organizational form depends on the fixed costs of firm integration and the market environment in the input market as well as the relative importance of the specific input for the final output. These results are strongly confirmed in a large panel of worldwide directed ownership linkages.
{"title":"Backward Versus Forward Integration of Firms in Global Value Chains","authors":"P. Egger, Katharina Erhardt, Gerard Masllorens","doi":"10.2139/ssrn.3863814","DOIUrl":"https://doi.org/10.2139/ssrn.3863814","url":null,"abstract":"Production processes are increasingly organized in international value-chain networks. The involved firms can be operating at arm’s length or be vertically integrated. Both the incidence and the direction of integration (backward or forward in the value chain) depend on specific characteristics of the firms and their economic environment. We propose a simple model of vertical integration in a supplier-producer relationship that is rooted in the property-rights theory to learn about the determinants of forward versus backward integrations. Generally, the profitability and direction of integration depend on the relative investment intensity of the producer and the supplier so as to align investment incentives and maximize joint surplus. Moreover, the organizational form depends on the fixed costs of firm integration and the market environment in the input market as well as the relative importance of the specific input for the final output. These results are strongly confirmed in a large panel of worldwide directed ownership linkages.","PeriodicalId":360530,"journal":{"name":"CESifo Working Paper Series","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127046892","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Mireia Borrell-Porta, Valentina Contreras, Joan Costa‐Font
Does employment during motherhood change peoples preferences? We study whether the experience of employment during motherhood exerts an effect on attitudes towards gender norms, and more specifically, attitudes towards the impact of women's employment on children's wellbeing (which proxy traditional gender attitudes). Drawing on a large, representative and longitudinal data and an instrumental variable (IV) strategy that exploits a Bartik instrument for employment, we find that, that non-mothers who work and mothers who do not work are more likely to agree that pre-school children suffer if mothers work, which we proxy as having more traditional views. However, this is not the case when women experience both working and motherhood it does not significantly change women's attitudes. These results suggest that exogenous changes in employment during motherhood confirm individuals priors, and point towards the critical role of early life value formation. That is, employment during motherhood is not a "value changing experience" but rather a "value preserving experience". Hence, the so-called 'motherhood penalty' cannot be fully explained by a change in attitudes after employment during motherhood.
{"title":"Is 'Employment During Motherhood' a 'Value Changing Experience'?","authors":"Mireia Borrell-Porta, Valentina Contreras, Joan Costa‐Font","doi":"10.2139/ssrn.3898320","DOIUrl":"https://doi.org/10.2139/ssrn.3898320","url":null,"abstract":"Does employment during motherhood change peoples preferences? We study whether the experience of employment during motherhood exerts an effect on attitudes towards gender norms, and more specifically, attitudes towards the impact of women's employment on children's wellbeing (which proxy traditional gender attitudes). Drawing on a large, representative and longitudinal data and an instrumental variable (IV) strategy that exploits a Bartik instrument for employment, we find that, that non-mothers who work and mothers who do not work are more likely to agree that pre-school children suffer if mothers work, which we proxy as having more traditional views. However, this is not the case when women experience both working and motherhood it does not significantly change women's attitudes. These results suggest that exogenous changes in employment during motherhood confirm individuals priors, and point towards the critical role of early life value formation. That is, employment during motherhood is not a \"value changing experience\" but rather a \"value preserving experience\". Hence, the so-called 'motherhood penalty' cannot be fully explained by a change in attitudes after employment during motherhood.","PeriodicalId":360530,"journal":{"name":"CESifo Working Paper Series","volume":"322 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134027514","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the nonlinear taxation of internationally mobile workers in general equilibrium. Contrary to conventional wisdom, in general equilibrium, migration lowers the bottom tax rate but raises the top tax rate, making the optimal tax system more progressive and moving tax rates closer to those in an economy with fixed wages. The intuition is that governments attract high-skilled workers by amplifying pre-tax wage inequality and partly offsetting trickle-down forces from production complementarities. This finding raises doubts about the importance of trickle-down for optimal taxation and offers a novel explanation for why globalization may increase tax progressivity and wage inequality.
{"title":"Nonlinear Taxation and International Mobility in General Equilibrium","authors":"E. Janeba, Karl Schulz","doi":"10.2139/ssrn.3864675","DOIUrl":"https://doi.org/10.2139/ssrn.3864675","url":null,"abstract":"We study the nonlinear taxation of internationally mobile workers in general equilibrium. Contrary to conventional wisdom, in general equilibrium, migration lowers the bottom tax rate but raises the top tax rate, making the optimal tax system more progressive and moving tax rates closer to those in an economy with fixed wages. The intuition is that governments attract high-skilled workers by amplifying pre-tax wage inequality and partly offsetting trickle-down forces from production complementarities. This finding raises doubts about the importance of trickle-down for optimal taxation and offers a novel explanation for why globalization may increase tax progressivity and wage inequality.","PeriodicalId":360530,"journal":{"name":"CESifo Working Paper Series","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114495372","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper challenges the common assumption of market segmentation in international trade. To analyze export entry and pricing decisions of firms in integrated vs. segmented markets, we develop a novel tractable approach based on stochastic export costs that allows us to compare firm-level and aggregate outcomes under arbitrary market interdependence. We find that allowing for potential re-exporting arbitrage between countries imposes constraints on export prices of firms and has first-order implications for trade and welfare.
{"title":"Integrated Versus Segmented Markets: Implications for Export Pricing and Welfare","authors":"Raphael N. Becker, Sergey Nigai, Tobias Seidel","doi":"10.2139/ssrn.3707942","DOIUrl":"https://doi.org/10.2139/ssrn.3707942","url":null,"abstract":"This paper challenges the common assumption of market segmentation in international trade. To analyze export entry and pricing decisions of firms in integrated vs. segmented markets, we develop a novel tractable approach based on stochastic export costs that allows us to compare firm-level and aggregate outcomes under arbitrary market interdependence. We find that allowing for potential re-exporting arbitrage between countries imposes constraints on export prices of firms and has first-order implications for trade and welfare.","PeriodicalId":360530,"journal":{"name":"CESifo Working Paper Series","volume":"210 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131929475","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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