Institute for the Study of the Ancient World

CONTROLLING IRREGULAR MIGRATION: THE CHALLENGE OF WORKSITE ENFORCEMENT Fieldwork Report Micah Bump, Andy Schoenholtz, Susan Martin, and B. Lindsay Lowell ... SeeContreras v. Corinthian Vigor Ins. Brokerage, Inc., 25 F.Supp.2d 1053 (ND, Cal., 1998). ...

Last year the United States admitted 137,000 temporary foreign workers on the Specialty H-1B visa. Little has been known until recently about the characteristics of these workers, and nothing has been known about their employers. This paper describes the characteristics of the ...

Purpose-The author augments an otherwise standard business-cycle model with a rich government sector and adds monopolistic competition in the product market and rigid prices, as well as rigid wages a la Calvo (1983) in the labor market. Design/methodology/approach-This specification with the nominal wage rigidity, when calibrated to Bulgarian data after the introduction of the currency board (1999-2018), allows the framework to reproduce better observed variability and correlations among model variables and those characterizing the labor market in particular. Findings-As nominal wage frictions are incorporated, the variables become more persistent, especially output, capital stock, investment and consumption, which help the model match data better, as compared to a setup without rigidities. Practical implications-The findings suggest that technology shocks seem to be the dominant source of economic fluctuations, but nominal wage rigidities as well as the monopolistic competition in the product market, might be important factors of relevance to the labor market dynamics in Bulgaria, and such imperfections should be incorporated in any model that studies cyclical movements in employment and wages. Originality/value-The computational experiments performed in this paper suggest that wage rigidities are a quantitatively important model ingredient, which should be taken into consideration when analyzing the effects of different policies in Bulgaria, which is a novel result.

0055.pdf 56 "A mismatch does not make any statement about an employee's immigration status and is not a basis, in and of itself, for taking any adverse action against an employee. Doing so could subject you to antidiscrimination labor law sanctions." Social Security Number Verification Service (SSNVS) Handbook,"

Regional unemployment rates in Great Britain have narrowed dramatically in recent years. However, significant differences still remain in terms of both employment and economic inactivity rates, which may now better reflect relative labour market performance. This paper examines these differences in labour market outcomes using a unified empirical framework that decomposes regional differences in employment, economic inactivity and unemployment into components due to either structural or composition effects. The analysis highlights the important role that ill health and structural deficits currently play in accounting for regional differences in both employment and economic inactivity rates.

A number of authors have recently emphasized that the conventional model of unemployment dynamics due to Mortensen and Pissarides has difficulty accounting for the relatively volatile behavior of labor market activity over the business cycle. We address this issue by modifying the MP framework to allow for staggered multiperiod wage contracting. What emerges is a tractable relation for wage dynamics that is a natural generalization of the period-by-period Nash bargaining outcome in the conventional formulation. An interesting side-product is the emergence of spillover effects of average wages on the bargaining process. We then show that a reasonable calibration of the model can account well for the cyclical behavior of wages and labor market activity observed in the data. The spillover effects turn out to be important in this respect.

Existing models of the business cycle have been incapable of explaining many of the stylized facts that characterize the US labor market. The standard real business cycle model is modified by introducing two-sided search in the labor market as an economic mechanism that propagates technology shocks. This new analytical environment can explain many phenomena of the business cycle that the standard model either has resolved in an unsatisfactory manner or has not been able to address at all.

Recent critiques have demonstrated that existing attempts to account for the unemployment volatility puzzle of search models are inconsistent with the procylicality of the opportunity cost of employment, the cyclicality of wages, and the volatility of risk-free rates. We propose a model that is immune to these critiques and solves this puzzle by allowing for preferences that generate time-varying risk over the cycle, and so account for observed asset pricing fluctuations, and for human capital accumulation on the job, consistent with existing estimates of returns to labor market experience. Our model reproduces the observed fluctuations in unemployment because hiring a worker is a risky investment with long-duration surplus flows. Intuitively, since the price of risk in our model sharply increases in recessions as observed in the data, the benefit from creating new matches greatly drops, leading to a large decline in job vacancies and an increase in unemployment of the same magnitude as in the data.

Clash of Cultures: Muslims and Christians in the Ethnosizing Process * The paper explores the evolution of ethnic identities of two important and distinct immigrant religious groups. Using data from Germany, a large European country with many immigrants, we study the adaptation processes of Muslims and Christians. Individual data on language, culture, societal interactions, history of migration and ethnic self-identification are used to compose linear measures of the process of cultural adaptation. Two-dimensional variants measure integration, assimilation, separation and marginalization. Christians adapt more easily to the German society than Muslims. Immigrants with schooling in the home country and with older age at entry as well as female Muslims remain stronger attached to the country of origin. Female Muslims integrate and assimilate less and separate more than Muslim men, while there is no difference between male and female Christians. Christians who were young at entry are best integrated or assimilated, exhibiting lower separation and marginalization in the later years, while for Muslims a similar pattern is observed only for assimilation and separation. Christian immigrants with college or higher education in the home country integrate well, but Muslims do not. For both religious groups, school education in the home country leads to slower assimilation and causes more separation than no education at home. While school education has no impact on integration efforts for Muslim, it affects similar attempts of Christians negatively.

Clash of Cultures: Muslims and Christians in the Ethnosizing Process * The paper explores the evolution of ethnic identities of two important and distinct immigrant religious groups. Using data from Germany, a large European country with many immigrants, we study the adaptation processes of Muslims and Christians. Individual data on language, culture, societal interactions, history of migration and ethnic self-identification are used to compose linear measures of the process of cultural adaptation. Two-dimensional variants measure integration, assimilation, separation and marginalization. Christians adapt more easily to the German society than Muslims. Immigrants with schooling in the home country and with older age at entry as well as female Muslims remain stronger attached to the country of origin. Female Muslims integrate and assimilate less and separate more than Muslim men, while there is no difference between male and female Christians. Christians who were young at entry are best integrated or assimilated, exhibiting lower separation and marginalization in the later years, while for Muslims a similar pattern is observed only for assimilation and separation. Christian immigrants with college or higher education in the home country integrate well, but Muslims do not. For both religious groups, school education in the home country leads to slower assimilation and causes more separation than no education at home. While school education has no impact on integration efforts for Muslim, it affects similar attempts of Christians negatively.

This paper builds and estimates a medium scale, small open economy DSGE model augmented with search-and-matching frictions in the labor market, and different wage setting behavior in new and existing jobs. The model is estimated using Hungarian data between 2001-2008. We find that: (i) the inclusion of matching frictions significantly improves the model's empirical fit; (ii) the extent of new hires wage rigidity is quantitatively important for key macro variables; (iii) labor market shocks do not play an important role in inflation dynamics, but the structure of the labor market influences the monetary transmission mechanism.

It is well known that the standard search and matching model with Rational Expectations (RE) is unable to generate amplification in unemployment and vacancies. We show that relaxing the RE assumption has the potential to provide a solution to this well known unemployment volatility puzzle. A model in which agents use Recursive Least Square algorithms to update their expectations as new information becomes available is presented. Firms choose vacancies by making infinite horizon forecasts over (un)employment rates, wages and interest rates at each point in time. Firms have much greater incentive for vacancy posting because of overoptimism about the discounted value of expected profits at the time a positive TFP shock hits the economy. The model with adaptive learning is able to match the relative volatility of labour market variables in US data and the properties of forecast errors of unemployment rates obtained from the Survey of Professional Forecasters.

A widespread result in monetary policy literature is that the price level should be stabilized and, as corollary, the nominal interest rate should vary with the Wicksellian determinants of the real interest rate. The present paper studies how this result is altered when the representative agent assumption is abandoned and financial wealth heterogeneity across households is introduced. I derive a welfare-based loss function for the policy maker which includes an additional target related to the cross-sectional distribution of household debt. My re- sults differ from standard ones in two respects. First, thanks to its ability to affect interest payments volatility, monetary policy has real effects even in a flexible-price cashless-limit environment. Second, in a setup with nominal rigidities, price stability is no longer optimal. The extent of deviation from price stability depends on the initial level of debt dispersion. I use US micro data to calibrate the model and I find that the ...

This paper analyzes search models within a framework of aggregate demand shocks and dominated by uncertainty. In this context, agents are bounded rational while wages are determined by some markup mechanism. Differently from the canonical search theories, unemployment is not only frictional but it can be dynamically determined by an unexpected fall in aggregate demand. Furthermore, by introducing stochastic productivity heterogeneity, a "systemic unemployment", due to both demand and supply aspects, can be generated. The model is cast in dynamic terms, while the main results are obtained by means of simulations.

CONTROLLING IRREGULAR MIGRATION: THE CHALLENGE OF WORKSITE ENFORCEMENT Fieldwork Report Micah Bump, Andy Schoenholtz, Susan Martin, and B. Lindsay Lowell ... SeeContreras v. Corinthian Vigor Ins. Brokerage, Inc., 25 F.Supp.2d 1053 (ND, Cal., 1998). ...

A dynamic Stackelberg game analyzes collective bargaining between a trade union (leader) and a firm (follower) in a monopoly union model. Frictional effects (FE) for the firm encompass symmetric adjustment costs linked to the number of hired and fired workers, plus a wage-dependent term (assuming wage-dependent hiring costs and wage discrimination against newcomers). The union faces marginally increasing costs in firings and marginally decreasing benefits from hirings. The two-part FE for the firm, the FE for the union, or both jointly considered differently affect employment and wages. Interestingly, standard adjustment costs increase hirings, even while the union reduces wages.

Unlike the classic market vision, where demand and supply meet immediately, at no cost, and prices are determined in such a way that demand equals supply, in the real world frictions occur in the searching process, the price offers of one of the parties are considered too high, be it the goods or services market, the real estate market or the labor market, so there are imbalances that vary over time, excess supply or excess demand. In this paper we aim to present the main models and theories in a labor market characterized by friction and wage rigidity, starting from contributions in the field of “frictions on search-based markets” by Peter A. Diamond, as well as from works belonging to economists Dale T. Mortensen and Christopher A. Pissarides, who developed and adapted the Diamond model to make it applicable to the labor market, thus resulting in one of the most used models for the analysis of unemployment and wage formation.

In this paper we analyse the effects of informal labour markets on the dynamics of inflation and on t he transmission of aggregate demand and s upply shocks. In doing so, we incorporate the informal sector in a m odified New Keynesian model with labour market frictions as in the Diamond-Mortensen-Pissarides model. Our main results show that the informal economy generates a "buffer" effect that diminishes the pressure of demand shocks on inflation. This finding is consistent with the empirical literature on the effects of informal labour markets in business cycle fluctuations. This result implies that, in economies with large informal labour markets, changes in interest rates are more effective in stimulating real output and there is less impact on inflation. Furthermore, the model produces cyclical flows from informal to formal employment, consistent with the data.

The Russian-Ukrainian Earnings Divide * Ethnic differences are often considered to be powerful sources of diverse economic behavior. In this paper, we investigate whether and how ethnicity affects Ukrainian labor market outcomes. Using micro data from the Ukrainian Longitudinal Monitoring Survey (ULMS) and Oaxaca-Blinder decomposition of earnings, we find a persistent and rising labor market divide between ethnic Russians and Ukrainians throughout Ukraine's transition era. We establish that language rather than nationality is the key factor behind this ethnic premium favoring Russians. Our findings further document that this premium is larger among males than among females.

This study examines the role of interest rate shocks in explaining emerging market business cycle characteristics in a small open economy real business cycle (SOE-RBC) model augmented with working capital requirement on firms' wage payments and searching and matching frictions in the labor market. The model is parameterized to quarterly Mexican data for the period 2006-2009. The results of the model with working capital requirement indicate that the model can generate some important characteristics of emerging market business cycles such as countercyclical interest rates, countercyclical net exports to GDP ratio and higher volatilities of consumption and wages relative to GDP. Moreover, imposing working capital requirement on wage bill leads to a higher positive correlation between interest rates and unemployment, thus the proposed model can be used to analyze the effects of a financial crisis on real sector.

This paper examines the role of firm turnover and financial friction in understanding inflation. I augment a standard New-Keynesian DSGE model with the two features and estimate with the Bayesian technique for the US economy. My findings demonstrate that entry cost and exogenous firm exit shocks are essential in explaining the dynamics of inflation at the business cycle frequency. Financial friction does not change relative importance of the structural shocks in explaining inflation, but helps the model to explain the effects of monetary shocks to firm turnover.

This paper uses a skill-neutral stochastic dynamic general equilibrium framework to investigate the causes of the unemployment gap observed between east and west Germany in the 1990's. By modifying a traditional matching model of unemployment to include a delay in the investment in capital equipment, we are able to identify and assess the relative importance of factors explaining the portion of the unemployment gap due to deficiencies in business skills and inferior infrastructure as identified by Burda and Hunt (2001). This setup proposes a propagation mechanism that slows the adjustment in employment following a mismatch shock and/or a technology shock, and consequently provides a rationale for the observed persistent unemployment in Germany.

est une chaire multi-institutionnelle qui s'appuie sur un partenariat avec les organisations suivantes : Les opinions et analyses contenues dans les cahiers de recherche de la Chaire ne peuvent en aucun cas être attribuées aux partenaires ni à la Chaire elle-même et elles n'engagent que leurs auteurs. Opinions and analyses contained in the Chair's working papers cannot be attributed to the Chair or its partners and are the sole responsibility of the authors.

This paper focuses on the Core Front End (CFE) activities of the innovation process to say, Opportunity Identification and Opportunity Analysis. In the CFE of innovation, several tools are used to facilitate and optimise decisions. To select them, managers of the product development team have to use several premises to decide which tool is more appropriate to which activity. This paper provides an overview of these mechanisms by looking inside five companies from two different countries. Those mechanisms underline the dimensions influencing the decision process before a specific tool is chosen and how those tools impact specific performance metrics. From the analyses and hypotheses testing performed, it clearly emerges that there is no link between being aware of basic requirements (inputs/outputs) to appropriately use a certain tool and dimensions such as tools' effectiveness, difficulty in usage, frequency of usage and estimate investment for using them. Also, interesting cross-case patterns emerge.

The Fuzzy Front End of innovation is the messy getting started part of the product development process before a solid product concept it in place. Since Smith and Reinertsen coined the term in 1991, several research teams have investigated it, focusing on defining what needs to be done in the fuzzy front end, finding mechanisms for taking the chaos out of this process, and developing processes or systems that firms can put in place to manage projects through the fuzzy front end.

The Russian-Ukrainian Earnings Divide Ethnic differences are often considered to be powerful sources of diverse economic behavior. In this paper, we investigate whether and how ethnicity affects Ukrainian labor market outcomes. Using micro data from the Ukrainian Longitudinal Monitoring Survey (ULMS) and Oaxaca-Blinder decomposition of earnings, we find a persistent and rising labor market divide between ethnic Russians and Ukrainians throughout Ukraine’s transition era. We establish that language rather than nationality is the key factor behind this ethnic premium favoring Russians. Our findings further document that this premium is larger among males than among females. JEL Classification: J15, J70, J82

Since the early 1990s, NAIRU estimates have declined and unemployment duration has risen relative to the unemployment rate. We argue that these developments can be explained by a combination of demographics and other factors that have reduced job turnover. The internal consistency of this hypothesis is assessed through simulations that show the effect of separations on the NAIRU and the duration-unemployment ratio. We then test the external consistency of this hypothesis by adding the durationunemployment ratio to a NAIRU model. Including this variable adds significant explanatory power in estimating the NAIRU and yields realistic estimates of the current NAIRU.

In most European countries, money wages are given in collective agreements or individual employment contracts, and the employer cannot unilaterally cut wages, even after the expiration of a collective agreement. Ceteris paribus, workers have a stronger bargaining position when they try to prevent a cut in money wages. If inflation is so low that some money wages have to be cut, workers' stronger bargaining position requires higher unemployment in equilibrium. However, inflation is more stable when money wage rigidity binds, providing an incentive for monetary policy makers to choose a low target for inflation, which is easier to fulfil.

, as well as participants at presentations at Harvard University and Virginia Polytechnic and State University, for useful comments on earlier drafts, to Larry Katz and Greg Mankiw for helpful discussions, and to NBER for the hospitality when this paper was written.

The paper explores the evolution of ethnic identities of two important and distinct immigrant religious groups. Using data from Germany, a large European country with many immigrants, we study the adaptation processes of Muslims and Christians. Individual data on language, culture, societal interactions, history of migration and ethnic self-identification are used to compose linear measures of the process of cultural adaptation. Two-dimensional variants measure integration, assimilation, separation and marginalization. Christians adapt more easily to the German society than Muslims. Immigrants with schooling in the home country and with older age at entry as well as female Muslims remain stronger attached to the country of origin. Female Muslims integrate and assimilate less and separate more than Muslim men, while there is no difference between male and female Christians. Christians who were young at entry are best integrated or assimilated, exhibiting lower separation and marginal...

There are few studies on occupational choices in Germany, and second-generation occupational choice and mobility is even less investigated. Such research is important because occupations determine success in the labour market. In a country like Germany occupations also reflect a general socio-economic standing. This Paper looks at the patterns of employment in Germany, analyses how individual men and women access jobs given their family background, and investigates why men and women have different occupational distributions. Based on the German Socio-Economic Panel we estimate multinomial logit models of occupational choice for the children of immigrants as well as for natives. Our findings are surprisingly similar for both natives and immigrants. For both Germans and immigrants, we find that gender significantly and differentially affects occupational choice, and that individuals with more education choose higher-ranking jobs. The role of experience is important for natives and qua...

Equilibrium Employment in a Model of Imperfect Labor Markets * This paper presents a simple model of imperfect labor markets with endogenous labor market participation and home production. We show that a two-sector economy (home and market) implies a three-state labor market when labor market imperfections take the form of an irreversible entry cost incurred by workers. This simple framework brings several results. First, it delivers an expression for the employment rate and as side-products, a measure of the unemployment rate and the size of the labor force. Second, it rationalizes several empirical works on the definition of unemployment in labor force surveys. Third, it derives endogenously all flows between three labor market states. Fourth, a calibration of the model rationalizes differences in employment rates: in the U.S., we find a market productivity premium of +30% and market frictions of-15% compared to France. Finally, the model is a very simple reduced form of search models with which it is fully consistent: the irreversible entry cost is the opportunity cost of search and depends on aggregate conditions.

In this paper we challenge the conventional view that increasing working time flexibility limits the amplitude of unemployment fluctuations. We start by showing that hours per worker in European countries are much less procyclical than in the US, and in some economies even co-move negatively with output. This is confirmed by the results from a structural VAR model for the euro area, in which working hours increase after a contractionary monetary shock, exacerbating the upward pressure on unemployment. To understand these counterintuitive results, we develop a structural search and matching macroeconomic model with endogenous job separation. We show that this feature is key to generate countercyclical adjustments in working hours. When we augment the model with frictions in working hours adjustment and estimate it using euro area time series, we find that increasing flexibility of working time amplifies cyclical movements in unemployment.

A widespread result in monetary policy literature is that the price level should be stabilized and, as corollary, the nominal interest rate should vary with the Wicksellian determinants of the real interest rate. The present paper studies how this result is altered when the representative agent assumption is abandoned and financial wealth heterogeneity across households is introduced. I derive a welfare-based loss function for the policy maker which includes an additional target related to the cross-sectional distribution of household debt. My re- sults differ from standard ones in two respects. First, thanks to its ability to affect interest payments volatility, monetary policy has real effects even in a flexible-price cashless-limit environment. Second, in a setup with nominal rigidities, price stability is no longer optimal. The extent of deviation from price stability depends on the initial level of debt dispersion. I use US micro data to calibrate the model and I find that the ...

This paper uses the concept of ethnic self-identification of immigrants in a two-dimensional framework. It acknowledges that attachments to both the country of origin and the host country are not necessarily mutually exclusive. There are three possible paths of adjustment from separation at entry, namely the transitions to assimilation, integration, and marginalization. We analyze the determinants of ethnic self-identification in this process using samples of first-generation male and female immigrants, and controlling for pre- and post-immigration characteristics. While we find strong gender differences, a wide range of pre-immigration characteristics like education in the country of origin are not important.

The labor market performance of Portuguese workers in Germany is analyzed in this article. While previous work has compared wages and characteristics of migrants to natives only, this study also matches the data set with an equivalent survey from the sending country. The findings show that Portuguese migrants as a whole are negatively selected, with the exception of blue-collar workers, the largest group among the movers. The finding that Portuguese migrants earn more than comparable Germans indicates that they have higher unobservable skills.

Clash of Cultures: Muslims and Christians in the Ethnosizing Process * The paper explores the evolution of ethnic identities of two important and distinct immigrant religious groups. Using data from Germany, a large European country with many immigrants, we study the adaptation processes of Muslims and Christians. Individual data on language, culture, societal interactions, history of migration and ethnic self-identification are used to compose linear measures of the process of cultural adaptation. Two-dimensional variants measure integration, assimilation, separation and marginalization. Christians adapt more easily to the German society than Muslims. Immigrants with schooling in the home country and with older age at entry as well as female Muslims remain stronger attached to the country of origin. Female Muslims integrate and assimilate less and separate more than Muslim men, while there is no difference between male and female Christians. Christians who were young at entry are best integrated or assimilated, exhibiting lower separation and marginalization in the later years, while for Muslims a similar pattern is observed only for assimilation and separation. Christian immigrants with college or higher education in the home country integrate well, but Muslims do not. For both religious groups, school education in the home country leads to slower assimilation and causes more separation than no education at home. While school education has no impact on integration efforts for Muslim, it affects similar attempts of Christians negatively.

Occupational Choice Across Generations * There are few studies on occupational choices in Germany, and the second generation occupational choice and mobility is even less investigated. Such research is important because occupations determine success in the labor market. In a country like Germany occupations also reflect a general socioeconomic standing. This paper looks at the patterns of employment in Germany, analyzes how individual men and women access jobs given their family background, and investigates why men and women have different occupational distributions. Based on the German SocioEconomic Panel we estimate multinomial logit models of occupational choice for the children of immigrants as well as for the natives. Our findings are surprisingly similar for both natives and immigrants. For both Germans and immigrants, we find that gender significantly and differentially affects occupational choice, and that individuals with more education choose higher ranking jobs. The role of experience is important for natives and qualified individuals only. Germans are more likely to choose occupations similar to their fathers' occupation when their father is in the white collar or professional category. In stark contrast, the immigrants' occupational choice is more influenced by their mother's education and not by their fathers' occupation.

Using a large new dataset, we analyze the labor market performance of Portuguese workers in Germany. While previous work compares wages and characteristics of migrants only to those of the natives, we match the data also with an equivalent survey from the sending country. We find that Portuguese migrants as a whole are negatively selected with the exception of blue-collar workers that are the greatest group among them. The observation that Portuguese migrants earn more than comparable Germans indicates that they have higher unobservable skills. Our results confirm the effectiveness of the German guestworker system JEL Classification: F22, J61

Recently, Pissarides (2009) has argued that the standard search model with sunk fixed matching costs increases unemployment volatility without introducing an unrealistic wage response in new matches. We revise the role of matching costs and show that when these costs are not sunk and, therefore, can be partially passed on to new hired workers in the form of lower wages, the amplification mechanism of fixed matching costs is considerably reduced and wages in new hired positions become more sensitive to productivity shocks.

In aggregate U.S. data, exogenous shocks to labor productivity induce highly persistent and hump-shaped responses to both the vacancy-unemployment ratio and employment. We show that the standard version of the Mortensen-Pissarides matching model fails to replicate this dynamic pattern due to the rapid responses of vacancies. We extend the model by introducing a sunk cost for creating new job positions, motivated by the well-known fact that worker turnover exceeds job turnover. In the matching model with sunk costs, vacancies react sluggishly to shocks, leading to highly realistic dynamics.

The Economics of Circular Migration * Circular migration receives increasing attention due to its empirical relevance and as a policy concept to manage labor flows. This review discusses the advantages and disadvantages of circular movements for all parties. It studies the characteristics of circular movers worldwide and investigates the consequences of restrictive migration policies. Recent policy initiatives that aim to manage circular labor movement are also analyzed.

Clash of Cultures: Muslims and Christians in the Ethnosizing Process * The paper explores the evolution of ethnic identities of two important and distinct immigrant religious groups. Using data from Germany, a large European country with many immigrants, we study the adaptation processes of Muslims and Christians. Individual data on language, culture, societal interactions, history of migration and ethnic self-identification are used to compose linear measures of the process of cultural adaptation. Two-dimensional variants measure integration, assimilation, separation and marginalization. Christians adapt more easily to the German society than Muslims. Immigrants with schooling in the home country and with older age at entry as well as female Muslims remain stronger attached to the country of origin. Female Muslims integrate and assimilate less and separate more than Muslim men, while there is no difference between male and female Christians. Christians who were young at entry are best integrated or assimilated, exhibiting lower separation and marginalization in the later years, while for Muslims a similar pattern is observed only for assimilation and separation. Christian immigrants with college or higher education in the home country integrate well, but Muslims do not. For both religious groups, school education in the home country leads to slower assimilation and causes more separation than no education at home. While school education has no impact on integration efforts for Muslim, it affects similar attempts of Christians negatively.

Clash of Cultures: Muslims and Christians in the Ethnosizing Process * The paper explores the evolution of ethnic identities of two important and distinct immigrant religious groups. Using data from Germany, a large European country with many immigrants, we study the adaptation processes of Muslims and Christians. Individual data on language, culture, societal interactions, history of migration and ethnic self-identification are used to compose linear measures of the process of cultural adaptation. Two-dimensional variants measure integration, assimilation, separation and marginalization. Christians adapt more easily to the German society than Muslims. Immigrants with schooling in the home country and with older age at entry as well as female Muslims remain stronger attached to the country of origin. Female Muslims integrate and assimilate less and separate more than Muslim men, while there is no difference between male and female Christians. Christians who were young at entry are best integrated or assimilated, exhibiting lower separation and marginalization in the later years, while for Muslims a similar pattern is observed only for assimilation and separation. Christian immigrants with college or higher education in the home country integrate well, but Muslims do not. For both religious groups, school education in the home country leads to slower assimilation and causes more separation than no education at home. While school education has no impact on integration efforts for Muslim, it affects similar attempts of Christians negatively.

We analyse the effects of money growth within a standard New Keynesian framework and show that the interaction between staggered nominal contracts and money growth leads to a long-run trade-off between output and money growth. We explore the microeconomic mechanisms that lead to this trade-off, and show that it remains even when the contract length is endogenised.

This paper studies labour market policy in a society where differently gifted individuals can invest in training to further increase their labour market productivity. Furthermore, the government seeks both efficiency and equity. Frictions in the matching process create unemployment and differently skilled workers face different unemployment risks. We show that in such an environment, training programmes targeted to the disadvantaged workers complement passive transfers (UI benefits), unlike a general training subsidy. Combining passive subsidies with a training subsidy conditioned on individual unemployment durationthe typical Active Labour Market Programme -implies a favorable trade-off between equity and efficiency which encourages relative high spending on training.

The successful matching model developed by Mortensen and Pissarides seems to find its hardest task in explaining the cyclical movements of some key labor market variables such as the vacancy rate and the vacancy-unemployment ratio. Several authors have discussed mechanisms compatible with the matching technology that are able to deliver the kind of correlations observed in the data. In this paper we explore the contribution of price rigidity, within the framework of a full-blown SDGE model, to explain the dynamics of these variables. We find that price rigidity greatly improves the empirical performance of the model, making it capable of reproducing second moments of the data, in particular those related to the vacancy rate and market tightness. Other realistic features of these models, such as intertemporal substitution, endogenous match destruction and capital accumulation, do not seem to play a relevant role in a flexible price setting.