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This paper estimates the incidence of corporate taxes on wages using a 20-year panel of German municipalities exploiting 6,800 tax changes for identification. Using event study designs and difference-in-differences models, we find that workers bear about one-half of the total tax burden. Administrative linked employer-employee data allow us to estimate heterogeneous firm and worker effects. Our findings highlight the importance of labor market institutions and profit-shifting opportunities for the incidence of corporate taxes on wages. Moreover, we show that low-skilled, young, and female employees bear a larger share of the tax burden. This has important distributive implications.

We use novel monthly survey data from 1993 to 2012 on small business managerial perceptions of financial constraints and other conditions, matched with information on banks in their local markets. The data suggest that small banks have comparative advantages in alleviating these constraints. These advantages tend to be greater during adverse economic conditions and do not appear to decrease or increase secularly. Small banks also appear to have comparative advantages in providing liquidity insurance to small business customers of large banks experiencing liquidity shocks during financial crises. Our findings suggest a source of social costs from ongoing consolidation of the banking industry.

This paper studies the implications of individuals' knowledge of future job loss for the existence of an unemployment insurance (UI) market Learning about job loss leads to consumption decreases and spousal labor supply increases. This suggests existing willingness to pay estimates for UI understate its value. But it yields new estimation methodologies that account for and exploit responses to learning about future job loss. Although the new willingness to pay estimates exceed previous estimates, I estimate much larger frictions imposed by private information. This suggests privately traded UI policies would be too adversely selected to be profitable, at any price.

We propose and estimate a model of endogenous informed trading that is a hybrid of the PIN and Kyle models. When an informed trader trades optimally, both returns and order flows are needed to identify information asymmetry parameters. Empirical relationships between parameter estimates and price impacts and between parameter estimates and stochastic volatility are consistent with theory. We illustrate how the estimates can be used to detect information events in the time series and to characterize the information content of prices in the cross-section. We also compare the estimates to those from other models on various criteria.

Classic finance theory observes that while debt can mitigate the conflict between equity and management, its issuance creates a conflict between debt and equity. We search for evidence of this conflict in the incidence of secured debt, which can be used by financially distressed firms to finance unduly risky projects for the benefit of equity at the expense of unsecured creditors. Skeptics of the debt-equity conflict’s practical importance believe that distressed-firm management avoids secured credit, which may compel equity to relinquish control of a firm. Consistent with the classic account, our controlled study shows a significant run-up of secured credit, as a proportion of assets and of liabilities, prior to bankruptcy filings of publicly traded firms. Together with recent evidence of inefficiency as firms approach bankruptcy, our results support proposals for the subordination of secured debt to nonconsensual claims and for enhanced enforcement of covenants against the issuance of secured credit.

Theory predicts that capping brokers’ compensation exacerbates the exploitation of retail investors. We show that regulated caps on mutual fund 12b-1 fees, effectively sales commissions, are associated with negative equity fund performance, but only after a structural shift toward maximum permitted levels of the fees around 2000. Past this break point, flow–performance sensitivity shifts from the middle- to the highest-performing funds, suggesting that the fee cap increases performance-chasing behavior by constraining brokers’ incentives to learn about lower-ranked funds. The policy implication is that regulators must reevaluate the efficacy of caps on brokerage fees.

When we classify factors of production by their tradability, the relative wage of nontraded labour influences the real exchange rate through the relative cost of distribution services. We confirm this prediction using monthly data on the sector-level US-Canada real exchange rate and the relative wage of service-producing labour. The relative wage accounts for 40% of the variability of the real exchange rate at a one-month horizon. Furthermore, when we use the effective nontraded labour content to classify goods into nontraded and traded ones, the variability of the price of the nontraded-goods basket accounts for more than half of the variability of the real exchange rate. Fluctuations des taux de change réels, rigidité des salaires, et échangeabilité des facteurs de production. Quand on classifie les facteurs de production selon leur échangeabilité, le salaire relatif du facteur travail non-échangé influence le taux de change réel via les coûts relatifs des services de distribution. On confirme cette prédiction à l'aide de données mensuelles sur le taux de change réel entre le Canada et les États-Unis au niveau sectoriel, et les salaires relatifs du travail dans la production de services. 40% de la variabilité dans le taux de change réel dans un horizon temporel d'un mois est attribuable au salaire relatif. De plus, quand on utilise la mesure effective du contenu de travail non-échangeable pour classifier les biens en échangeables et non-échangeables, plus de la moitié de la variabilité dans le taux de change réel est attribuable à la variabilité du prix du panier des biens non-échangeables.

This paper examines the determinants of youth unemployment in OIC countries during the period 1993-2012. The study used a dynamic panel data method for a sample of 32 OIC countries, focusing on the impact of economic, demographic and institutional factors. The empirical results show that youth unemployment in OIC countries is influenced by economic environment measured by GDP growth, inflation and domestic investment. Fertility rate is found to be one of the significant factors behind the high rate of youth unemployment. Moreover, the results pointed out that bureaucracy quality has a negative impact on youth unemployment in OIC member countries. To improve the employability of young workers, the paper recommended that the economic environment in OIC countries should be ameliorated through effective fiscal, monetary and trade policies. In addition, public and private investment need to be expanded to provide job opportunities for young workers. Moreover, serious efforts should be made at vocational and technical education aiming at developing skills and experiences of young people.

The cross-section distribution of U.S. import prices exhibits some of the fat-tailed characteristics that are well documented for the cross-section distribution of U.S. consumer prices. This suggests that limited-influence estimators of core import price inflation might outperform headline or traditional measures of core import price inflation. We examine whether limited influence estimators of core import price inflation help forecast overall import price inflation. They do not. However, limited influence estimators of core import price inflation do seem to have some predictive power for headline consumer price inflation in the medium term.

Current research indicates that for many developing countries, Foreign Direct Investment (FDI) inflows provide a major source of external financing, capital and technology transfer from developed countries. The Dominican Republic received $34.9 tn of FDI between 1993 and 2012. The objective of this paper is to understand the drivers of inward FDI into the Dominican Republic. The empirical analysis reveals that market size, infrastructure, trade openness, natural resource extraction, secondary education and labor force participation rate are statistically significant factors in attracting FDI inflows. Policy recommendations include increasing the reliability of electricity supply, outward-oriented trade policies, and investments in infrastructure, transportation networks, communication as well as education at the secondary level. Other recommendations include a more friendly business environment with increased credit availability, low inflation and controlled debt. Channeling FDI into sectors with high value-added outputs will improve the standard of living in the Dominican Republic.