We study the causal relationship between geographic connectedness and development using one of the earliest massive trade expansions: the first systematic crossing of open seas in the Mediterranean during the time of the Phoenicians. We construct a geography-based measure of connectedness along the shores of the sea. We relate connectedness to economic activity, which we measure using the presence of archaeological sites. We find an association between better-connected locations and archaeological sites during the Iron Age, at a time when sailors began to cross open water routinely on a large scale. We corroborate these findings at the world level.

We estimate the impact of compulsory schooling on earnings using changes in compulsory schooling laws in West Germany after World War II. Most estimates in the literature indicate returns in the range of 10% to 15%. While our research design is very similar to studies for various other countries, we find a zero return. We find no evidence that this is due to labor market institutions or the apprenticeship training system in Germany. The result might be due to the fact that the basic skills most relevant for the labor market are learned earlier in Germany than in other countries.

Previous tests for liquidity constraints using consumption Euler equations have frequently split the sample on the basis of wealth, arguing that low-wealth consumers are more likely to be constrained. We propose alternative tests using different and more direct information on borrowing constraints obtained from the 1983 Survey of Consumer Finances. In a first stage we estimate probabilities of being constrained, which are then utilized in a second sample, the Panel Study of Income Dynamics, to estimate switching regression models of the Euler equation. Our estimates indicate stronger excess sensitivity associated with the possibility of liquidity constraints than the sample splitting approach.

We analyze the impact of increased immigration on employment outcomes of natives in Germany using a data set of county-level variables for the late 1980s. In order to construct more unified labor market regions, we aggregate the 328 counties to 167 larger regions. We study two measures of immigration, the change in the share of foreigners between 1985 and 1989 as well as one-year gross and net flows of immigrants to an area. In order to address the potential problem of immigrant selection into local labor markets, we condition on previous labor market outcomes, which may serve as the basis of immigrant selection. This specification allows for mean reversion in the unemployment rate, which is strong in our data set and period of study. We show that this rules out some other approaches of identifying the impact of immigration. Our results indicate no detrimental effect of immigration. We find no support for the hypothesis that the absence of displacement effects is due to a response of native migration patterns.