A list of articles published by members of the Dallas Fed Research staff.

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2007 Academic Publications

Exported Retail Sales along the Texas–Mexico Border
Journals of Borderlands Studies, Spring 2007
Roberto A. Coronado and Keith R. Phillips
Abstract: Trade between the U.S. and Mexico has boomed over the past 10 years due partly to the significant reduction in tariffs from the North American Free Trade Agreement (NAFTA) and the strong growth in the maquiladora industry. While commercial trade between the countries is well documented, less is known about the size of the cross-border retail trade that occurs. Though the size of this activity is small in comparison to commercial trade, it is a significant part of the economies of many border cities. In 2005 alone, there were more than 45 million non-commercial crossings at the bridges along the Texas-Mexico border. Many of these individuals were coming to purchase goods to take back to their home country. Since most of the retail trade conducted on the U.S. side of the border is done in cash, it is difficult to document the share of retail spending accounted for by Mexican nationals. In this article we use several techniques based on a simple consumption function to estimate the size of retail spending that is essentially exported to Mexico via cross-border shoppers. We then check our estimates of the proportion of retail sales going to Mexican nationals in the Texas border metros to see if they are consistent with the impacts to retail sales of movements in the real peso-dollar exchange rate.

The Relative Price Effects of Monetary Shocks
Journal of Macroeconomics, March 2007
Mark A. Wynne and Nathan Balke
Abstract: We document the response of the individual components of the Producer Price Index (PPI) to commonly used measures of monetary shocks, and show that these responses are at variance with many widely used models of monetary nonneutrality. Monetary shocks are shown to have large relative price effects, resulting in an increase in the dispersion of the cross-section distribution of prices. Furthermore, in response to a contractionary (expansionary) monetary shock, a substantial number of prices tend to rise (fall). Most existing models of monetary nonneutrality are incapable of replicating these types of relative price responses.

Maquiladora Employment Patterns in Nuevo Laredo
Growth and Change, March 2007
Jesus Cañas
(No abstract)

Crime on the U.S.–Mexico Border: The Effect of Undocumented Immigration and Border Enforcement
Migraciones Internacionales 4, June 2007
Pia Orrenius and Roberto Coronado
Abstract: In the 1990s, the U.S. border led the nation in the decline of property-related crimes, while violent crime rates fell twice as fast in the U.S. as in the median border county. This paper asks how changes in undocumented immigration and border enforcement have played a role in generating these divergent trends. We find that migrant apprehensions—our proxy for the volume of undocumented immigration—are correlated with violent crime and that increased border enforcement has not had a deterrent effect on such crime. Rather, increased border enforcement in a sector has led to more violent crime in neighboring sectors. In contrast to the results for violent crime, property crime is not correlated with migrant apprehensions, and while there is some evidence that border enforcement has lowered property crime rates, this result is sensitive to the model's specification. Our findings also indicate that the improved border economy over this period, specifically rapid job growth, played a significant role in lowering property crime rates.

Quantifying Moral Hazard: A Reply to Gary Richardson
Econ Journal Watch, September 2007
Linda M. Hooks and Kenneth J. Robinson 
Abstract: In his comment on our 2002 Journal of Economic History paper, Gary Richardson (2007) proposes that our work specifies moral hazard too narrowly. Richardson posits that fixed-rate deposit insurance leads to moral hazard which takes many forms. These include not only the usual notion of risk-taking in the asset portfolio, but also mismanagement, malfeasance, and reduced incentives for depositor monitoring. We agree with his hypothesis and offer some evidence in support of additional avenues for moral hazard to have played a role in the activities of Texas banks in the 1920s.

Does Immigration Affect Wages? A Look at Occupation-Level Evidence
Labour Economics 14, October 2007
Pia Orrenius and Madeline Zavodny
Abstract: Previous research has reached mixed conclusions about the effect of higher levels of immigration on the wages of natives. This paper reexamines this question using data from the Current Population Survey and the Immigration and Naturalization Service and focuses on differential effects by skill level. Using occupation as a proxy for skill, we find that an increase in the fraction of foreign-born workers tends to lower the wages of natives in blue collar occupations—particularly after controlling for endogeneity—but does not have a statistically significant negative effect among natives in skilled occupations. The results also indicate that immigrants adjusting their immigration status within the U.S., but not newly arriving immigrants, have a significant negative impact on the wages of low-skilled natives. This suggests that immigrants become closer substitutes for natives as they spend more time in the U.S.

Employer Matching and 401(k) Saving: Evidence from the Health and Retirement Study
Journal of Public Economics, November 2007
Gary V. Engelhardt and Anil Kumar
Abstract: Employer matching of employee 401(k) contributions is often touted as a powerful incentive to save for retirement and is a key component in pension-plan design in the United States. Using detailed administrative contribution, earnings, and pension-plan data from the Health and Retirement Study, this analysis formulates a life-cycle-consistent econometric specification of 401(k) saving and estimates the determinants of saving accounting for non-linearities in the household budget set induced by matching. The participation estimates indicate that an increase in the match rate by 25 cents per dollar of employee contribution raises 401(k) participation by 5 percentage points. The parametric and semi-parametric estimates for saving indicate that an increase in the match rate by 25 cents per dollar of employee contribution raises 401(k) saving by $365 (in 1991 dollars). Overall, the analysis reveals that the 401(k) saving response to matching is quite inelastic, and, hence, matching is a rather poor policy instrument with which to raise retirement saving.