XREAP2015-05: Your language or mine?

Do languages matter beyond their communicative benefits? We explore the potential role of preferences over the language of use, theoretically and empirically. We focus on Catalonia, a bilingual society where everyone is fully proficient in Spanish, to isolate linguistic preferences from communicative benefits. Moreover, we exploit the language-in-education reform of 1983 to identify the causal effects of language skills. Results indicate that the policy change has improved the Catalan proficiency of native Spanish speakers, which in turn increased their propensity to find Catalan-speaking partners. Hence, the acquisition of apparently redundant language skills has expanded cooperation across speech communities.

Caminal, R.; Di Paolo, A. (AQR)

XREAP2015-05.pdf

XREAP2015-01: Estimating extreme value cumulative distribution functions using bias-corrected kernel approaches

We propose a new kernel estimation of the cumulative distribution function based on transformation and on bias reducing techniques. We derive the optimal bandwidth that minimises the asymptotic integrated mean squared error. The simulation results show that our proposed kernel estimation improves alternative approaches when the variable has an extreme value distribution with heavy tail and the sample size is small.

Bolance, C.; Bahraoui, Z.; Alemany, R.

XREAP2015-01.pdf

XREAP2015-02: An analysis of wage differentials between full- and part-time workers in Spain

This research examines wage differences between part-time and full-time workers using microdata from the Spanish Structure of Earnings Survey. The main contribution of the paper is related to the analysis of differences along the wage distribution using econometric decomposition methods and introducing a regional perspective. The evidence shows that part-time workers in Spain experience a significant wage disadvantage. This disadvantage is worse in the case of female workers and it is not homogenous along the wage distribution, being comparatively more relevant for the most qualified women and becoming positive for the most qualified men. However, the disadvantage is practically explained by the endowments of characteristics, with a leading role of segregation of part-time workers in low-wage firms. From a regional perspective, although in the majority of the regions wage differences tend to be explained by endowments of characteristics, there are several regions where the unexplained part of the differential is significant, particularly in the case of male workers. These regional differences seem to be related to differences in the market power of firms at the regional level.

Ramos, R. (AQR-IREA); Sanromá, E. (IEB); Simón, H.

XREAP2015-02.pdf

XREAP 2015-03: Bilingual Schooling and Earnings: Evidence from a Language-in-Education Reform

We exploit the 1983 language-in-education reform that introduced Catalan alongside Spanish as medium of instruction in Catalan schools to estimate the labour market value of bilingual education. Identification is achieved in a difference-in-differences framework exploiting variation in exposure to the reform across years of schooling and years of birth. We find positive wage returns to bilingual education and no effects on employment, hours of work or occupation. Results are robust to education-cohort specific trends or selection into schooling and are mainly stemming from exposure at compulsory education. We show that the effect worked through increased Catalan proficiency for Spanish speakers and that there were also positive effects for Catalan speakers from families with low education. These findings are consistent with human capital effects rather than with more efficient job search or reduced discrimination. Exploiting the heterogeneous effects of the reform as an instrument for proficiency we find sizeable earnings effects of skills in Catalan.

Cappellari, L.; Di Paolo, A. (AQR-IREA, XREAP)

XREAP2015-03.pdf

XREAP2015-04: Growing through trade: the role of foreign growth and domestic tariffs

This paper studies the role of trading partner’ growth and a domestic import tariff in the possibility of growing through trade. To this purpose, a Ricardian model is developed in which a backward economy seeks to increase its long-run growth rate simply by trading with a faster growing partner. It is found that domestic growth may be either negatively affected or unaffected by a domestic import tariff, while it is always positively impacted by foreign growth. Furthermore, convergence in growth rate can emerge both with an import tariff and under free trade. Ours results are consistent with the empirical evidence.

Álvarez-Albelo, C., D.; Manresa, A. (CREB); Pigem-Vigo, M. (CREB)

XREAP2015-04.pdf