We analyze the implications of labor market reforms for an open economy's human capital investment and future production. A stylized model shows that labor market deregulation can imply more positive current account balances if financial markets are imperfect and labor market institutions not...

A propensity to guess randomly rather than to admit ignorance answering "Don't know" is a plausible reason why frequent wrong answers are given to survey questions that aim to assess competence. We model this source of measurement error and assess its empirical relevance in two consecutive waves...

We document significant and robust empirical relationships in cross-country panel data between government size or social expenditure on the one hand, and trade and financial development indicators on the other. Across countries, deeper economic integration is associated with more intense...

Markets can deliver growth but need help from government provision of infrastructure, regulation, stabilization, and redistribution. In the 20 years since the 10th anniversary of the Single Market, growth in Europe has remained rela-tively slow. Two deep crises revealed underlying problems and...

This paper reviews the Italian unemployment experience, analyzing in particular the time-series behavior of unemployment rates along the path that brought Italy into Europe's Economic and Monetary Union, and their disaggregated structure across geographical and demographic dimensions. High...

Private school students do not always perform better in standardized tests. We suggest that this may be explained by choice of private schooling by less capable students in countries where government schools are better suited to talented students. To assess the empirical relevance of this...

Trading the cost of better performance off the probability that an imprecise test's performance estimate falls short of the pass threshold, an assessee may perform above the threshold (and fear failure because of negative errors) or below it (and hope to pass because of positive errors). This...

Additional retake opportunities generally increase the probability of eventually passing a given threshold at given competence, and decrease preparation for exams. Preparation work performed before the first attempt may increase only for very weak students, and may decline so much as to decrease...

Decarbonization and security are worthy goals, but it would be a mistake to think that protection and subsidization of domestic manufacturing reduce their cost. Trade restrictions decrease economic efficiency. Creating manufacturing jobs may sound like a benefit, but in advanced countries it...

Smoother labor incomes alleviate credit constraints by reducing workers' desire to borrow, and prospects of upward income mobility have smaller beneficial effects for currently poor workers when borrowing constraints are binding. These simple theoretical insights are consistent with the...