Matthias Parey

Studying Abroad and the Effect on International Labour Market Mobility: Evidence from the Introduction of Erasmus

We investigate the effect of studying abroad on international labour market mobility later in life for university graduates. We exploit the introduction and expansion of the European ERASMUS student exchange programme as an instrument for studying abroad. We find that studying abroad increases an individuals probability of working in a foreign country by about 15 percentage points. We investigate heterogeneity in returns according to parental education and the students financial situation. Furthermore, we suggest mechanisms through which the effect of studying abroad may operate.

Nonparametric Estimation of a Nonseparable Demand Function under the Slutsky Inequality Restriction

We present a method for consistent nonparametric estimation of a demand function with nonseparable unobserved taste heterogeneity subject to the shape restriction implied by the Slutsky inequality. We use the method to estimate gasoline demand in the United States. The results reveal differences in behavior between heavy and moderate gasoline users. They also reveal variation in the responsiveness of demand to plausible changes in prices across the income distribution. We extend our estimation method to permit endogeneity of prices. The empirical results illustrate the improvements in finite-sample performance of a nonparametric estimator from imposing shape restrictions based on economic theory.

The Selection of High-Skilled Migrants

We measure selection among high-skilled emigrants from Germany using predicted earnings. Migrants to less equal countries are positively selected relative to nonmigrants, while migrants to more equal countries are negatively selected, consistent with the prediction in Borjas (1987). Positive selection to less equal countries reflects university quality and grades, and negative selection to more equal countries reflects university subject and gender. Migrants to the United States are highly positively selected and concentrated in STEM fields. Our results highlight the relevance of the Borjas model for high-skilled individuals when credit constraints and other migration barriers are unlikely to be binding.