RESEARCH

QUANTITATIVE

POLICY GROUP

Research and Published Articles

 

What Do Labor Market Outcomes Reveal About The Burden of Occupational Licensing Requirements?

Orphe Pierre Divounguy and Bryce Hill

October 2017

 

Non-Technical Summary

 

This paper proposes a novel methodology to provide evidence of the disproportionate burden licensing requirements imposed on job seekers. Using a dynamic model of the labor market, this paper investigates: Can expected labor market outcomes alone explain the decision to choose a licensed occupation? What is the role of licensing costs in explaining selection into licensed occupations conditional on schooling attainment and work-life expectancy?

 

A comparison of efficient outcomes relative to the observed numbers of licensed individuals provides a hint of the disproportionate burden of licensing across different groups of job seekers. This costly licensing process explains why few workers obtain a license. Declining work-life expectancy reduces the value of a license to a worker. For this reason, younger workers are much more likely to seek a license and an increase in the licensing burden would disproportionately harm younger workers. The estimated model of the labor market also reveals that the current licensing regime is more harmful to less educated workers than to those with a college degree.

 

The model suggests that if the burden of licensing requirements were reduced, individuals would get licensed at a higher rate because of the wage premium for being a licensed worker. However, as the number of licensed labor increases, the employment premium enjoyed by licensed individuals would decrease. This illustrates the mechanism by which higher licensing costs secure better employment prospects for licensed individuals.

 

 

Decomposing Economic Prosperity and the “Texas Miracle”

Rethinking Measures of Economic Freedom and The Role of Taxation

Orphe Pierre Divounguy

June 2017

 

[Preliminary and Incomplete]

 

ABSTRACT

How does production adjust, if taxes are changed? Can tax policy alone explain differences in economic outcomes across US states? In this paper, we use the balanced growth path of a neoclassical growth model to decompose differences in economic outcomes across states. Texas was chosen for its low tax regime and its relatively higher real per capita GDP. Ohio and Arkansas were chosen because of their weak economic performance and higher tax rates. Reducing the tax burden boosts investment and real economic output. However, we find that there exist large differences between states that cannot be overcome by tax policy alone. Factors such as Texas natural resources, reflected by the state’s large positive trade balance, account for less than half of the observed differences in real per capita output. Our findings provide quantitative support for a “Texas miracle”.

 

Taxation in the Global Economy: Balancing Competitiveness and Solvency

Orphe Pierre Divounguy

June 2017

 

According to Bloomberg’s Tracking Tax Runaways report, 57 corporations left the U.S. for more tax-friendly jurisdictions in the last 20 years. Ireland, with a corporate income tax rate of 12.5 percent, tops the list of recipient countries for US companies that shift their place of incorporation to another country. President Trump’s proposal to slash the corporate income tax to 15 percent aims to reverse this trend by making America competitive again. Fears of insolvency are unfounded. Fiscal solvency is a symptom of tax competitiveness while insolvency indicates a lack thereof. The bulk of evidence suggests that corporate tax cuts grow the tax base and improve aggregate welfare. This is precisely why good tax policy in a global economy begins with improving competitiveness.

 

 

Addressing Louisiana’s Budget Shortfall: Strategies for Growth

Orphe Pierre Divounguy with Rea Hederman Jr. and Lukas Spitzwieser

April 2017

 

ABSTRACT

Using a Small Open Economy Neoclassical Growth Model, we simulate the potential effects of various tax policies proposed by Louisiana's new Governor. We find that broadening the tax base by repealing some sales tax exemptions coupled with lowering the corporate income tax is the best strategy for growth. Eliminating the corporate income tax causes investment to increase and the state continues to benefit long after the policy is introduced.

 

The Impact of Renewables Portfolio Standards on The Ohio Economy

Orphe Pierre Divounguy with Rea Hederman Jr., Joe Nichols and Lukas Spitzwieser

December 2016

 

Why Dynamic State Revenue Estimates Really Matter

Theory and Measurement of the State Economy: A Case Study of Wyoming

Orphe Pierre Divounguy with Rea Hederman Jr.

December 2016

 

Fiscal policy, State Budgets and Dynamic Scoring: Why Many States Fall Behind

The Buckeye Institute

December 2016

 

Renewable Portfolio Standards and Their Consequences

The Buckeye Institute

November 2016

 

Tax Policy on the Road to the White House

The Buckeye Institute

November 2016

 

Renewable Portfolio Standards and Job Search: Can Energy Mandates Improve Employment Prospects?

Orphe Pierre Divounguy, Joe Nichols & Nicholas Umashev

July 2016

 

ABSTRACT

We construct a theory of the labor market where industry demand for electricity is modeled explicitly. The model is estimated to match hiring data and renewable electricity generation. The estimated cost of renewable generation exceeds that of conventional electricity. As a result, Renewable Portfolio Standards have a negative impact on electricity generation. Energy mandates lead to higher electricity prices and lower employment growth. While "green" jobs are not directly observed in the data, the model sheds light on the distribution of jobs before and after the introduction of the policy.

JEL Classification: J64, Q41

 

Public Assistance and the Labor Market: An equilibrium analysis

Orphe Divounguy

Preliminary

First Version: December 2015

 

ABSTRACT

In this paper,we construct an equilibrium search model of the labor market augmented to include lump sum taxes that finance government expenditures. Using the model, we can decompose the decline in labor force participation (LFP) into the policy effect (state provided income) and that of other factors such as declining economic output. The model is estimated using census data on labor market outcomes and welfare income in Ohio. We learn that if the economy resembled the pre-crisis period, the decrease in welfare income during the Kasich administration would have led to a small increase in LFP.

 

The Price of Safety: When Does Law Enforcement Become a Burden?

Orphe Divounguy

November 2015

 

ABSTRACT

In this paper, agents sacrifice some consumption for low risk of property crime. Our results suggest that the effect of an increase in the share of public spending that goes to law enforcement at the expense of Unemployment Insurance (UI) depends on which effect dominates: the deterrent effect of policing or the incentive effect of UI. The cost of crime reduction can cause aggregate welfare to decrease if this policy shift is not accompanied by an increase in productivity. When the government must run a balanced budget, spending on law enforcement requires a tax increase that when coupled with a decrease in UI, leave agents worse off in a safer, low crime regime.

Keywords: Directed Search, Crime

JEL Codes: H3, H4, H53, J01, K42

 

Illegal Status: A Brain Waste?

Orphe Divounguy and Jackline Wahba

November 2015

 

ABSTRACT

In this paper, we investigate whether legal status affects overseas human capital investments of temporary migrants. Our search model of the labor market with efficient on the job effort, calibrated to Egyptian micro-data reveals that documented migrants are more likely relative to undocumented migrants, to invest in new skills. Legal status has a long-run impact on workers productivity even after their return. Our findings show that undocumented migration leads to a penalty for the migrant and the country of origin.

Keywords: Directed Search, International Migration, Development, Brain Gain, Immigration Policy

JEL Codes: J08, J11, J21, J61, O15

 

Racist or Not? Auditing Police Stop and Search Activities

Orphe Divounguy

September 2015

 

ABSTRACT

In this paper, we investigate the extent of racist policing present in stop and search practices in the United Kingdom. We estimate a model of policing and criminal behavior using the Hampshire stop and search data. We learn that police are not indifferent between searching whites or non-whites. (1) The gains from search are not equal across both groups (2) The gains from search are lower for non-whites than for whites. These results suggest that police derive greater utility for searching whites relative to non-whites. We then ask: what would be the extent of statistical discrimination in the absence of this race related preference?

JEL Classification: K42

Keywords: Crime, Police Stop and Search, Discrimination

 

Raising Questions of Immigration Policy: Why We Educate Them and Lose Them

Orphe Divounguy

May 2015

 

ABSTRACT

Evidence from the UK suggests that although restricted immigrants (non-EEA) are more educated than EEA migrants, their fiscal contribution has been negative. Using a model of the labor market extended to include migration decisions, we find that restricted access to the labor market can cause the demand for student visas to increase. Migrants who become more educated are also less likely to choose to return. However, this policy of work restrictions that raised the quality of immigrants keeps them out of the market, thus contributing to their negative fiscal contribution. Alternatively, a less restrictive policy decreases the student visa incentive causing the stock of less skilled immigrant market participants to increase.

Keywords: Directed Search, Migration, Taxation, Tax Policy, Development, Brain Gain, Immigration Policy, Human Capital

JEL Codes: J08, J11, J21, J61, O15

 

Brain Drain into The Welfare State

Orphe Divounguy

August, 2015

 

ABSTRACT

This paper aims to contribute to the debate on the effects of state generosity on the skill composition of migrants. Firstly, higher UI in a more productive economy provides a subsidy for the exodus of the unemployed from a poorer state, causing the gains from migration to increase. Consistent with the brain drain literature, the migration opportunity increases the returns to schooling in the poorer state. However, since natives from the rich state are less likely to migrate, the returns to schooling decrease for natives from the rich state. A tax on human capital (progressive tax) exacerbates this effect. A higher tax burden on the most productive workers causes a decline in output in both states, while at the very least the unemployed in the rich state still enjoy higher unemployment compensation.

Keywords: Directed Search, Migration, Taxation, Tax Policy, Development, Brain Gain, Immigration Policy, Human Capital, Inequality

JEL Codes: J08, J11, J21, J61, O15

 

UK immigration policy and the economics of migration

Cayman Financial Review

March 2015

 

The Egyptian Labor Market in a Era of Revolution

Chapter 11 - Through the keyhole: International Migration in Egypt

Book Chapter Contribution with University of Southampton International Migration Expert Prof. Jackline Wahba

edited by Professor of Planning and Public Affairs Ragui Assaad, Caroline Krafft

 

Safety First! But hold on just one minute, Can the Policing Budget Become a Burden?

Orphe P. Divounguy

November 2015

 

The Truth about Why Capitalism Defused the Population Bomb

This article is a response to an article written by Chelsea German the managing editor of HumanProgress.org

Orphe Divounguy

April 2015

 

Ahead of the 2015 General Election: Is UK Immigration Policy Working?

Orphe Divounguy

January 2015

 

Inside MALAWI: A brief economic outlook and the case for Air Transportation

Orphe Divounguy

January 2015

 

Becker-Coase: Divorce Laws and Marriage Rates

Orphe Divounguy

June 2013

 

ABSTRACT

The divorce reforms of the 1970's introduced both unilateral divorce and equitable distribution. We use a simple directed search model of marriage with endogenous separations to compare marriage outcomes under two property division regimes: Community Property (CP) and Equitable Distribution (ED). We find that premarital differences consistent with a higher college premia in equitable states relative to community states can explain most of the observed differences across both regimes. We suggest an explanation for why empirical results from Rasul (2003) seem to suggest that unilateral divorce caused marriage rates to decrease more in one regime relative to the other. Our conclusions are consistent with the empirical results in Wolfers (2006). The observed effect of divorce laws is by no means an indication of the "breakdown" of bargaining within the married household as others had suggested in the existing literature.

Keywords: Directed Search, Marriage Markets, Divorce Laws, Match-specific investments

JEL Codes: J12, K36

Married Life and Household Production: Explaining the gender reversal in college completion

Orphe Divounguy

September 2012

 

ABSTRACT

Women are now more likely to invest in education than men compared to birth cohorts from the first half of the 20th century. Using a directed search model with premarital investments in schooling, we document relative changes in household values that are consistent with a gender reversal in college attainment as observed in the US data. The returns to household work have declined. The gains from marriage have decreased and more importantly, the decline of household output has had an asymmetric effect on the marital college premia. The marital college premium increased for women but decreased for men who now spend more time working in the household sector. The model predicts that holding household productivity fixed to early cohort levels for the new cohorts is counter-factual since it would have increased the gender schooling gap in favor of men rather than closed it.

Keywords: Directed Search, Marriage Markets, Divorce Laws, Match-specific investments

JEL Codes: J12, K36