Suchergebnisse

This book provides rigorous analysis of some of the major episodes during Israel's economic transition and spells out, empirically, how globalization played a crucial role in advancing Israel's economic progress. Economists and policy makers can gain insights as to how a globalized economy can take advantage of international trade, labor mobility, its international financial links, while at the same time navigate shocks like the 2008 global financial crisis. It discusses the collapse of the Soviet Union and the massive wave of high skill immigration to Israel which followed; the Great Moderation in inflation and employment fluctuations in the advanced economies, and the convergence of Israel's inflation to the low world inflation rates; the 2008 Global Financial Crisis and the surprising robust performance of the Israeli economy; the rise of the Asian markets, recently opened up to Israel's exports, which became abundant source of outward foreign direct investments; the global information technology surge and its spillovers to the emerging high-tech sector in Israel; brain drain facilitated by Israel's higher education system; and the economic implications of the Palestinian-Israeli crisis. In addition to analyzing the past and current state of Israel, the book compares developments within the Israeli economy to developed and emerging-market economies in similar circumstances. It combines economic theory with empirical evidence, and includes a review of the literature covering earlier stages of Israel's economic development

Migration States and Welfare States focuses on a central tension faced by policy makers in countries that receive migrants from lower wage countries.--Provided by publisher

In this paper I provide some support to the Tiebout hypothesis. It suggests that when a group of host countries faces an upward supply of immigrants, tax competition does not indeed lead to a race to the bottom; competition may lead to higher taxes than coordination. We identify a fiscal externality (fiscal leakage) that causes tax rates (on both labor and capital), and the volume of migration (of both skill types), to be higher in the competitive regime than in the coordinated regime. If the population growth rate is positive the young are always in the majority. When raising period t payroll taxes the young voter has a tradeoff between the negative effect ( an income transfer to the old) and a general equilibrium income boosting effect on her private pension in period t+1 and the social security benefit in period t+1. Tax rate is positive if the (state variable) the capital stock is within a certain range, or zero, otherwise. Migration share of native born population is at the max if the state variable, the capital stock, is in the above mentioned range, or intermediate level, otherwise. In the case of private saving only regime, the migration share is intermediate level. Thus, migration shares in the social security-cum-private-savings regime are either the same, or is more liberal than in the private savings-only regime. A social security system effectively create an incentive, through the political-economy mechanism, for a country to bring in migrants

"This paper tests the differential effects of the generosity of the welfare state under free migration and under policy-controlled migration, distinguishing between source developing and developed countries. We utilize free-movement within the EU to examine the free migration regime and compare that to immigration into the EU from two other groups, developed and developing source countries, to capture immigration-restricted regimes. We standardize cross-country education quality differences by using the Hanushek-Woessmann (2009) cognitive skills measure. We find strong support for the "Magnet Hypothesis" under the free-migration regime, and the "Fiscal Burden Hypothesis" under the immigration- restricted regime even after controlling for differences in returns to skills in source and host countries. We also find a significant differences across host-country policy regimes in the effects of returns to skills on the skill mix of immigrants"--National Bureau of Economic Research web site

"The literature on tax competition with free capital mobility cites several reasons for the race-to-the-bottom hypothesis in the sense that tax competition may yield significantly lower tax rates than tax coordination. With a fixed (exogenously given) population that can move from one fiscal jurisdiction to another, the Tiebout paradigm suggests that tax competition among these jurisdictions yields an efficient outcome, so that there are no gains from tax coordination. The Tiebout paradigm considers the allocation of a given population among competing localities. Our model of international tax-transfer and migration competition among host countries deviates from the Tiebout paradigm in that the total population in the host countries and its skill distribution are endogenously determined through migration of various skills. As a result, competition needs not be efficient. This paper suggests that when a group of host countries faces an upward supply of immigrants, tax competition does not indeed lead to a race to the bottom; competition may lead to higher taxes than coordination"--National Bureau of Economic Research web site

"This paper revisits the magnet hypothesis and investigates the impact of the welfare generosity on the difference between skilled and unskilled migration rates. The main purpose of the paper is to assess the role of mobility restriction on shaping the effect of the welfare state genrosity. In a free migration regime, the impact is expected to be negative on the skill composition of migrants while in a restricted mobility regime, the impact will be the opposite, as voters will prefer selective migration policies, favoring skilled migrants who tend to be net contributors to the fiscal system. We utilize the free labor movement within EUR (the EU, Norway and Switzerland) and the restricted movement from outside of the EUR to compare the free migration"--National Bureau of Economic Research web site

"We survey three distinct types of financial crises which took place in the 1990s and the 2000s: 1) the credit implosion leading to severe banking crisis in Japan; 2) The foreign reserves' meltdown triggered by foreign hot money flight from frothy economies with fixed exchange rate regimes of developing Asian economies, and 3) The 2008 worldwide debacle rooted in financial institutional opacity and reckless aggregate demand management, epi-centered in the US, that spread almost instantaneously across the globe, mostly through international financial networks"--National Bureau of Economic Research web site

"The paper tests three hypotheses concerning foreign equity investment in the presence of liquidity risk. First, the FDI-to-FPI price differential is negatively related to liquidity risk (the "Price Discount Hypothesis"). The idea is that market participants do not know whether the FDI investor liquidates a firm because of an idiosyncratic liquidity shock, or because, as an informed investor, the firm is hit by a productivity shock. Second, the FDI-to-FPI composition of foreign equity investment skews towards FPI, if investors are expected to experience liquidity shortage in the future (the "Equity-Composition Hypothesis"). The idea is that because direct investments are more costly to liquidate, due to the price discount, the more severe is the expected liquidity shock, the smaller is the FDI-to-FPI ratio. Third, the FDI-to-FPI composition of foreign equity flows skews towards FDI, the larger are past FDI-to-FPI stocks (the "Strategic Complementarity Hypothesis"). The idea is that high liquidity need investors generate a positive information-externality for low liquidity need investors among investors who choose FDI, and further increases in the number of FDI investors comes from mainly high liquidity need investors. Such an increase reinforces the information externality, thereby lowering the FDI-to-FPI price discount, creating further incentives for investors to choose FDI. The paper brings these hypotheses to country level data consisting of a large set of developed and developing countries over the period 1970 to 2004. The evidence gives strong support to the hypotheses. To test the hypothesis, we apply also a dynamic panel model to examine the variation of FPI relative to FDI for source and host countries from 1985 to 2004. Country-wide sales of external assets are used as a proxy for liquidity problems. We estimate the determinants of liquidity problems, and then test the effect of expected liquidity problems on stock prices, the ratio of FPI to FDI and gross flows of FDI and FPI. We find strong support for the hypotheses: greater expected liquidity problems increase the price discount, have a significant positive effect on gross flows of FPI, negative effect on gross flows of FPI, and positive effect on the ratio between FPI and FDI"--National Bureau of Economic Research web site

It is often argued that tax competition may lead to a 'race to the bottom'. This result may indeed hold in the case of factor mobility (such as capital). However, in this paper we emphasize the unique feature of labor migration, that may nullify the 'race to the bottom' hypothesis. Labor migration is governed not only by net-of-tax factor rewards, but rather importantly also by the benefits that the welfare state provides. The paper analyzes fiscal competition with and without migration in a two-country, political-economy, model with labor of different skills. The paper assigns an active fiscal role for both the host and the source countries. It models the host country stylistically as a core EU welfare state, with tax financed benefits and migration policies, and the migration source country as an accession country (following the EU enlargement to 27 states), with its own welfare (tax-benefit) policy. We let these two asymmetric countries (in terms of their productivity) engage in fiscal competition. Using numerical simulations we examine how the migration and tax policies are shaped, and how they are affected by whether the skilled or the unskilled are in power. As the driving force behind migration is a productivity gap, we also analyze the implications of the productivity gap for the design of migration and tax policies.

The pay-as-you-go social security system, which suffers from dwindling labor force, can benefit from immigrants with birth rates that exceed the native-born birth rates in the host country. Thus, a social security system provides effectively an incentive to liberalize migration policy. The paper examines a political- economy, inter-generational, mechanism through which the social security system influences voter attitudes in favor of more liberal immigration regime. We demonstrate that the Markov equilibrium, with social security, consists of more liberal migration policies, than the corresponding Markov equilibrium with no social security.