Big-box retail stores arriving from foreign countries have transformed the way Mexican households shop for goods, sparking a “supermarket revolution”. Traditionally, consumers in developing countries have shopped at street markets and small, independent stores. However, consumers have switched to shopping at foreign retailers, who offer a larger variety of products at cheaper prices. Despite concerns that foreign retailers might adversely affect local employment and household incomes, our evidence shows that allowing them to operate their businesses in Mexico has generated substantial welfare gains for households across the income spectrum by lowering the cost of living, while having limited impacts on total employment, incomes, and local businesses closing.
We report on research that concerns the education and training people receive, the amount that they work, what they do, and what they earn. Topics of interest include:
• The wage and employment response to unemployment insurance, disability insurance, and income taxes and transfers
• School quality, educational attainment, and economic outcomes
• Regulations governing minimum wages, overtime pay, hiring and firing, and collective bargaining
• Discrimination in employment and pay
• The labour market effects of immigration
• The decision to retire
• Inequality and intergenerational mobility
• Marriage, fertility, and labour market behavior
The number of people who receive long-term disability payments has grown rapidly in many countries, raising the question of whether it is possible for some of them to return to gainful employment. Analysing the impact of a major disability reform in the Netherlands, this research finds that long-term recipients of disability insurance were on average able to replace about 60% of lost benefits with labour income. This is evidence of substantial remaining work capacity among recipients and it suggests that there is scope for disability insurance reform to tap into this capacity.
The increase in spatial sorting of college and non-college workers into very different cities calls into question whether the large increases in wage inequality over the past three decades truly represents a similar increase in inequality in economic well-being. Since college graduates are paying much higher housing costs than lower skill workers, it is possible […]
Can financial incentives encourage disability program participants to work? Due to a lack of randomized experiments with well-defined treatment and control groups, there is little evidence on this question. This paper helps to fill the void by exploiting a policy change in the Norwegian disability system that approximates a well-controlled policy experiment. The results show that financial incentives induce many disability recipients to work, enough so that overall program costs fall in spite of the added financial incentives. The analysis points to the possibility that incorporating financial incentives into the U.S. disability system could achieve similar results.
The landmark US welfare reform of 1996 provided strong incentives for poor women to work while receiving assistance – but it also provided incentives for some women to reduce their earnings to qualify for benefits. This research develops a new approach to detecting this ‘welfare opt-in’ effect and uses it to analyze data from a large randomized evaluation of welfare reform in Connecticut: the “Jobs First” program.
What’s the best way to match new doctors to medical residency programs? The medical residency matching problem is solved by a centralized coordination system that pairs market participants according to their preferences. This paper examines the evidence for the claim that the matching system depresses salaries and finds that an alternative explanation – low salaries represent an implicit tuition fee for medical training – is more promising.
Migration from rural areas of India to the city is surprisingly low compared with other large developing countries, leaving higher paying job opportunities unexploited. This research shows that well-functioning rural insurance networks are in part responsible for this misallocation in the labor market, creating incentives that keep adult males in the village. Policies that provide private credit to wealthy households or government safety nets to poor households would encourage greater rural-urban migration but they could also have unintended distributional consequences.
How long should we expect the labor market transition following a trade liberalization episode to last? To what extent will the potential gains from trade be reduced due to the slow adjustment of the economy to the new trade equilibrium? What are the characteristics of the workers who will lose the most from trade liberalization?
By regulating when divorce can occur and how resources are divided when it does, divorce laws can affect people’s behavior and their wellbeing both during marriage and at divorce. Household survey data from the United States shows that the introduction of unilateral divorce in states that imposed an equal division of property is associated with higher household savings and lower female employment rates among couples that are already married. This paper develops a model of household behavior to account for these effects and study how current laws can affect the wellbeing of different household members.
Over the past 50 years, many countries have seen a dramatic rise in the share of their adult population receiving disability benefits – and some argue that the explanation lies in a culture where dependency on welfare is passed from parents to children. By analysing a natural experiment provided by Norway’s system of disability insurance, this research presents some of the first causal evidence for the intergenerational transmission of ‘family welfare cultures’.