Browsing by Author "Haaparanta, Pertti, professor"
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Item The Baltic States' Integration into the European Union - Institutional Approach(Helsinki School of Economics, 2001) Pautola-Mol, Niina; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorItem Capital Gains Taxation and Realization Behaviour: Evidence from Finnish Panel Data(Helsinki School of Economics, 2000) Kukkonen, Matti; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorItem Carbon sinks in mitigating climate change : evaluation with models of varying scope(Helsinki School of Economics, 2010) Pohjola, Johanna; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorItem Central Bank Tenders : Three Essays on Money Market Liquidity Auctions(Helsinki School of Economics, 2003) Välimäki, Tuomas; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorItem Dynamic Behaviour of the Firm under Dual Income Taxation(Helsinki School of Economics, 1999) Kari, Seppo; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorItem Empirical essays on Russia's macroeconomic and integration development in transition era(Aalto University, 2012) Ledyaeva, Svetlana; Taloustieteen laitos; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorThe dissertation empirically studies macroeconomic and integration issues in Russia during transition period. In the first part of dissertation we focus on economic growth in Russia and in the second part we analyze patterns of foreign investment in Russian economy. Both issues are very important for achieving strategic goals of country’s development. The dissertation consists of four research essays. It makes contributions to two kinds of literature. First, it contributes to the literature on Russian economic transformation and second, it adds to the literature on international economics. In the first essay we specify a modification of Barro and Sala-i-Martin empirical framework of growth model to examine determinants of per capita growth in 74 Russian regions during period of 1996-2005. We find that in general regional growth in 1996-2005 is explained by the initial level of region’s economic development, the 1998 financial crisis, domestic investments, and exports. In the second essay we assess the direct and indirect impacts of oil price shocks on Russia and its main trading partners. The indirect impacts are transmitted through foreign trade. VAR models for different countries are linked together via a trade matrix. We find that in general Russia benefits from oil price shocks. However, Russian economy is hurt by indirect effects of positive oil price shocks (albeit this negative indirect effect is quite small), as economic activity in their exporter countries suffers. For Russia’s trading partners (all net oil-importers), the effects are more diverse. In some countries, output falls in response to an oil price shock, while other countries seem to be relatively immune to oil price changes. In the third essay we study the determinants and dominant strategies of FDI inflows into Russian regions before and after the 1998 financial crisis. We utilize a spatial autoregressive model of cross-sectional and panel data. We find that the important determinants of FDI inflows into Russian regions since transition are market size, the presence of large cities and sea ports, oil and gas availability, proximity to European market and political and legislative risks. Our results also indicate a shift from horizontal FDI strategy to vertical FDI strategy after 1998 financial crisis. The fourth essay examines how foreign ownership strategies in Russia are influenced by the corruption distance between the home country and Russia. It also examines how anticorruption regulation in the home country affects the modal choice. Based on transaction cost and resource-based theories, the modal choice is viewed as a trade-off between the benefits and costs of having a local partner. In the case of Russia, the benefits were found to exceed the costs, as corruption distance and anti-corruption legislation in force in the home country are positively related to shared ownership.Item Empirical Studies on Finnish Hospital Pricing Methods(Helsinki School of Economics, 2002) Mikkola, Hennamari; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorItem Essays in foreign aid, conflicts, and development(Helsinki School of Economics, 2005) Kuisma, Kirsti; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorItem Essays in Search Activity(Helsinki School of Economics, 2004) Virrankoski, Juha; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorA conventional wisdom regarding search models is that multiple unemployment equilibrium may result if the matching function has increasing returns to scale. Essays one and two challenge this view in models where projects are homogenous but the job seekers and firms choose their search intensities (essay one), or the job seekers choose their search intensity but firms enter the market according to a zero-profit condition (essay two). Multiple equilibrium may in principle be caused by strategic complementarity or by common pool externality. It turns out that large returns to scale do not endanger uniqueness but rather guarantee it. In directed search models, the identity of stayers and movers has traditionally been just assumed. In essay three, searching and waiting decisions of buyers and sellers are considered. One-sided search is an evolutionarily stable outcome in an economy where each buyer and seller can either search or wait, and where the trading mechanism is auction or bargaining. If the relative number of buyers to sellers increases, the likelihood of all sellers wait and all buyers search -equilibrium increases relative to the likelihood of all buyers wait and all sellers search -equilibrium. In two-sided search, bargaining is more efficient than auction. One-sided search is more efficient than two-sided search. In one-sided search, it is more efficient if the larger pool searches and the smaller pool waits, than vice versa. We can often see that similar goods are sold for different prices, which violates the law of one price. Up to now, the models resulting in price distribution have assumed imperfect information on prices or ex ante heterogenous agents. In the model of essay four, we develop a search model where price distribution results even if all the sellers are symmetric, all the buyers are symmetric, the commodity is homogenous, and all the buyers know all the prices. The sellers are in locations and post prices simultaneously. The buyers observe the prices, and each buyer visits one location. The buyers act independently and employ symmetric mixed strategies. We show that when there are several sellers in a location, the Nash equilibrium features price dispersion, i.e. the sellers post different prices. The equilibrium strategy of the sellers is a non-atomic distribution. Essay five studies the supply of pollution permits in a labor market -style search model. We look at economic implications of allowing pollution permit trading between developed countries (DC) and less developed countries (LDC). The firms in a given region are similar, but he DC-firms are assumed to have clean technology, whereas the LDC-firms have dirty technology that emits a lot of carbon dioxide. We assume that each firm in both regions is first allocated a pollution cap. However, the permits can be transfered by making an investment which reduces the emission rate for a host firm (in an LDC-country) below the host's permit endowment. The market for these emissions-reducing projects have friction: finding a suitable partner for a project takes time. Once emission reductions are made and verified, the permits are traded in a frictionless permit market. Our model combines the search market for projects with a frictionless permit market to quantify the supply-side frictions in the market. We also decompose the effects of frictions into the effects of search friction, bargaining, and bilateralism. A calibration using previous cost estimates of reductions illustrates changes in cost savings and allocative implicationsItem Essays in the Economics of Knowledge: Innovation, Collaboration, and Organizational Complementarities(Helsinki School of Economics, 2000) Leiponen, Aija; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorItem Essays in trade in services : difficulties and possibilities(Helsinki School of Economics, 2008) Ruotinen, Jukka; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorThis dissertation focuses on the trade in services and examines it from different perspectives to improve the existing knowledge on the matter. Considering trade negotiations, the first two essays handle controversial issues, whereas the third papers's topic enhances countries to promote trade. In the first theoretical essay, we study liberalization of health services. By liberalization we mean removing restrictions on doctor mobility between two countries. Because of the nonexistence of a useful model, we also receive results from constructing a health service model. The results state that when the government is faced with a minimum treatment requirement, it is also efficient to provide patients a limited amount of treatment by the public sector. In a two-country model, with a minimum treatment requirement, liberalization of health services increases welfare only, if at least one of the countries has a very limited amount of doctors. In the second essay we use a computable general equilibrium model to first estimate tariff equivalent reactions to exogenous increases in trade in transport services. After that welfare gains from liberalization of these barriers are analyzed. Independent of the assumption how much transport services are increased, the largest decrease of tariff equivalents needed for the corresponding increases are in the sea and air transport services. Vice-versa, this means that liberalization of given tariff equivalents in the other transport service sectors leads to a higher increase in trade than liberalization in the sea and air transport sectors. Judgemental total liberalization of transport, finance, and business services shows a moderate increase in global welfare. In the last essay, we study empirically trade-related technology spillover effects. The existing literature has focused on spillover e¤ects through trade in goods and FDI-flows. This paper concentrates on services, and shows that spillover gains can be received also with trade in services. Our results show that service flows contribute to total factor productivity in both developed and developing countries. Especially in developing countries the effects of spillovers through services are comparable with spillovers through goods. We find no evidence for indirect spillover benefits through trade in services, but for goods the indirect effects are significant. Our results are consistent with trade theory, and with papers that analyze spillover effects through trade in goodsItem Essays on commitment and government debt structure(Helsinki School of Economics, 2008) Korhonen, Iikka; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorValtionvelan määrä ja rakenne vaihtelevat suuresti eri maissa. Tämä tutkimus koostuu kolmesta esseestä, joissa tutkitaan valtion- velan rakenteen määräytymistä. Kaikkien esseiden yhteisenä teki- jänä on se, että valtionvelan korkea määrä laskee velan efektiivistä maturiteettia. Lisäksi sekä poliittiset että institutionaaliset tekijät vaikuttavat valtionvelaan rakenteeseen. Esseissä johdettuja teoreet- tisia malleja testataan myös empiirisellä aineistolla. Ensimmäisessä esseessä johdetaan malli, jossa tulevan hallitus- puolueen identiteetti on epävarma. Kahdesta puolueesta kumpikaan ei pysty sitoutumaan alhaisen in?aation politiikkaan, vaikka se olisi hyvinvoinnin kannalta optimaalista. Ennen vaaleja hallituksessa oleva puolue pystyy vaikuttamaan vaalien jälkeisen hallituksen toimintaan valitsemalla valtionvelan efektiivisen maturiteetin oikein. Efektiivistä maturiteettia pystytään käyttämään alhaisen in?aation politiikkaan sitoutumiseen. Kun puolue, joka vieroksuu enemmän veroja, on hal- lituksessa, hallituksen vaihtumisen todennäköisyys nostaa valtionve- lan suurinta mahdollista efektiivistä maturiteettia. Puoluekentän po- larisoituminen laskee efektiivistä maturiteettia. Malli pystyy selit- tämään valtionvelan rakenteiden muutokset varsin hyvin 13 OECD- maan aineistossa. Toisessa esseessä osittain itsenäinen keskuspankki auttaa osaltaan hallitusta sitoutumaan alhaisen in?aation politiikkaan. Tästä huoli- matta valtionvelan rakenne säilyttää tärkeytensä sitoutumisinstru- menttina. Mallin mukaan maissa, joissa keskuspankki on hyvin it- senäinen, valtionvelan efektiivinen maturiteetti voi olla korkea, vaikka velkaa olisi paljon. Keskuspankin itsenäisyys on noussut selvästi useissa maissa 1990-luvun alusta lähtien, ja tämä antaa hyvän mah- dollisuuden testata mallia empiirisesti. Kahdentoista OECD-maan aineisto osoittaakin, että keskuspankin itsenäisyys nostaa efektiivistä maturiteettia. Velan määrä itsessään laskee maturiteettia. Kolmannessa esseessä rakenteelliset uudistukset vaikuttavat val- tionvelan rakenteeseen. Onnistuneet rakenteelliset uudistukset voivat mm. laskea kotimaisen lainanoton hintaa, mutta tästä huolimatta rakennemuutosten ennustetaan nostavan ulkomaalaisen lainanoton osuutta. Tämä johtuu siitä, että hallitus ei voi uskottavasti sitoutua olemaan in?atoimatta kotimaista velkaa. Malli pystyy kuvaamaan varsin hyvin rakennemuutosten vaikutusta valtionvelan valuutta- jakaumaan Latinalaisessa AmerikassaItem Essays on Corporate Capital Structure Decisions(Helsinki School of Economics, 1991) Löyttyniemi, Timo; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorItem Essays on Dividends and Taxes(Helsinki School of Economics, 2000) Sorjonen, Pasi; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorItem Essays on euro area enlargement(Helsinki School of Economics, 2006) Henriksson, Marketta; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorThis dissertation examines issues related to the adoption of the euro by the new Central and Eastern European EU Member States. The first essay studies the interaction between fiscal policy and the price level in different exchange rate regimes. The theoretical framework is based on the Fiscal Theory of the Price Level (FTPL). The results show that a credibly fixed exchange rate is inconsistent with fiscal irresponsibility, which implies that fiscal discipline is a prerequisite for successful participation in the exchange rate mechanism ERM II, while countries unable to commit to sound ?scal policies, probably should not commit to a fixed exchange rate either. Paradoxically, adoption of the common currency enables a country to conduct irresponsible policies, with the result that a rise in the debt level of one country raises the common price level of the monetary union. In the second essay, a small open economy model is constructed, which allows the examination of the effects of Balassa-Samuelson-type growth - i.e. faster productivity growth in the traded goods sector than in the non-traded goods sector - in an intertemporal fixed exchange rate framework with a focus on the external balance, which has gained less attention in earlier research. The numerical simulations imply that the Balassa-Samuelson e¤ect may increase the vulnerability of the economy. However, trade account deficits would appear to be a temporary phenomenon, as the deficits are decreased by the natural shift in the composition of consumption towards non-traded goods that is characteristic of catch-up. The focus of the third essay is the effects of the EU fiscal policy rules on the fiscal variables, namely deficit and debt, and the external balance in the new Member States participating in ERM II. The numerical simulations show that a fiscal rule based on debt may be better at providing stability into the economy, while a deficit rule implies a smoother response to a transitory increase in output. External imbalances appear to be a natural part of the convergence process, which cannot be eliminated through the use of fiscal rules aloneItem Essays on globalization : policies in trade, development, resources and climate change(Helsinki School of Economics, 2009) Kerkelä, Leena; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorThis dissertation on globalization consists of an introduction on the methodology applied, a summary and four independent essays focussing on applied policy research in international trade. The study follows the CGE (Computable General Equilibrium) research tradition. The simulation environment is the publicly available GTAP model. The essays examine the specific topics of trade and aid policies, price liberalization of the Russian energy markets, trade preferences in the sugar sector of the EU and the role of carbon sinks in mitigating climate change. The introduction presents an overview of the GTAP model with a more detailed description, among others, of the welfare decomposition. Benefits and disadvantages of using these types of models are outlined, including a discussion related to the use of Armington nesting in international trade. The introduction also outlines the summaries of each essay. The first essay examines trade and aid policies in Mozambique. The essay analyses the impact of a number of alternative options available to Mozambique, including trade agreements, aid and trade facilitation. The results suggest that Mozambique has very little to gain from trade agreements or the Doha Round, although some agreements with the EU do yield some benefit. Trade facilitation and aid-for-trade programs on the other hand have the potential for larger benefits, but these need to be planned carefully. The case study for the aid-fortrade programs is focussed on the sugar sector. The second essay examines the impact of liberalizing Russia’s energy sector. Implementation with GTAP simulations is preceded by an analysis of implicit subsidies in the regulated prices of gas and electricity, which are then incorporated into the GTAP framework. The analysis focuses on the effect of different taxes and subsidies applied to the energy sector with respect to welfare and real GDP in Russia and abroad. The results are shown to be sensitive to the assumptions on foreign trade. The second part of the paper studies suggested increases in the prices of gas and electricity and indicates that they shift output from domestic markets to exports but the positive increase in efficiency is reliant on the underlying base data. The third essay investigates the impact of four alternative policy scenarios for liberalizing the EU’s sugar sector. The study commences with the explanation of the complexities of the EU sugar market, and continues with a presentation of the policy scenarios that range from the trade preferences granted to LDCs under the EBA and EPA agreements to full liberalization of the EU sugar sector. One of the alternatives is full liberalization in which differences in cost structures of the exporting economies are taken into account. This constraint in production has been implemented by adjusting the shocks in tariffs. The simulations are further analysed with a sensitivity analysis that considers alternative elasticities from the literature. The results highlight the winners and losers of the different scenarios. The fourth essay focuses on the effects of including carbon sinks into the analysis of the impacts of the Kyoto agreement. The impact of special treatment for Canada and Japan that allows them larger sinks is compared to the effects of the decision of the United States not to sign the Kyoto Protocol. The results indicate that larger sinks clearly benefit Canada and Japan, the role of sinks is also important in New Zealand and Sweden but the effect of the sinks on other countries is marginal. For the world economy and the emission reduction targets, the role of sinks is of minor importance, compared to the US withdrawal from the Kyoto Protocol.Item Essays on household time allocation decisions in a collective household model(Helsinki School of Economics, 2008) Silvennoinen, Heidi; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorThis thesis considers the consequences of traditional division of labour in households in a setting where spouses are allowed to have distinct preferences. This approach leads to different results compared to the traditional unitary approach and is better equipped to take into consideration gender related issues of household decision making. The thesis consists of three theoretical essays where the household production theory is applied in the collective household model. The first essay of the thesis considers joint consumption of the good produced in the household. The novelty of this essay is in simultaneous consideration of public consumption, non-marketable household production and corner solutions in the collective household model. For the model formulated in this essay the effects of exogenous changes in the female household member’s wage are analysed. The change in wage is assumed to affect the decision power in the household according to the bargaining view. Therefore the results obtained differ from those in the traditional framework. The contributions of this essay are threefold. First it is shown how the household consumption bundle adjusts as a result of a change in the decision power in the household. Secondly, it is shown how the time – market good – mix of the good produced in the household responses to the changes in the decision power in the household. Finally, it is shown that the change in the decision power in the household may induce shifts in household optimal time allocation regime. The second essay of the thesis analyses the effects of social norms on female household member’s time allocation decisions. Both unitary and bargaining household models predict that due to the increase in female wages the female household member’s share of the household work should decline. However, according to time use studies this has not happened. Traditional gender roles seem to be persistent in many Western societies despite the fact that female participation in the labour market has increased considerably. I argue that it is possible that social norms and customs of the society in question have their effect on female time allocation decisions. This essay analyses the effects of traditional gender roles on female household member’s time allocation decisions in the collective household model. It is shown that the response of the female household member’s time allocation with respect to strengthening norm for tradition depends on the household members’ attitudes towards the social norm of the society and on the distribution of decision power in the household. The essay analyses as well the policy implications in the presence of norm for tradition. It is shown that family policy can, depending on the policy measure, either reinforce or mitigate the effect of tradition on female labour supply. The third essay of this thesis extends the collective household production model into dynamic framework where time allocation decisions made in previous periods affect the decision making and allocation of resources in subsequent periods. It is widely argued in the literature that combining dynamics with endogenous decision power in the collective household model leads into solutions that fail Pareto efficiency. If decision making power in the household is driven by the household members’ actual earnings, the resulting labour supplies can be inefficiently high. This is because the household members recognize the decrease in their future bargaining power due to the time devoted into household work. Decreasing say in the household implies lower private consumption in the future for the individual in question. It is shown here that household solution will be on the efficient frontier when the joint consumption of the domestic good is taken into consideration. If attention is given only on the household members’ private consumptions, the solutions will fail Pareto efficiencyItem Essays on institutions and the other deep determinants of economic development(Helsinki School of Economics, 2008) Virta, Heli; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorThis dissertation consists of four essays on the three deep, or fundamental, determinants of economic development. The focus is on institutions but trade openness and geography are not completely forgotten either. The first essay studies the changes in the distribution of labor productivity between 1980 and 2000 in various groups of countries. Data envelopment analysis (DEA) is used to decompose the changes into changes in technical efficiency and best practice technology as well as physical and human capital accumulation. The results suggest that, in contrast to the development in high-income countries, labor productivity did not improve in developing economies during the two decades: the positive effect of improved efficiency was nullified by technological implosion and contraction in physical capital accumulation. The second essay continues to concentrate on technical efficiency. According to the model built in the essay, interactions between foreign aid, debt and efficiency are complicated. The difference and system GMM estimations of the empirical section indicate that aid seems to increase efficiency only in an environment with good policies or institutions. The same applies to external debt, although less robustly. The results also suggest that an inefficiency trap exists so that countries may get stuck in a low-efficiency equilibrium. The third essay examines the impact of corruption on the size of the shadow economy. A model is built to show that bribes to acquire projects have different consequences than bribes paid to reduce taxes. In the empirical analysis, an interaction term of the level of corruption and the tropical area fraction of a country is used to capture differences in the consequences of corruption between countries. IV regressions and bootstrapping indicate that corruption does not affect shadow economy size outside the tropics. Instead, the higher the tropical area fraction of a country, the greater is the enlarging impact of a certain level of corruption on the size of the shadow economy. Moreover, corruption and the shadow economy seem to be substitutes in the tropics. The fourth essay analyzes the relationship between corruption and democratization. The validity of the modernization hypothesis is also assessed. To begin with, the factors that determine the probability and type of democratization are examined through a model. The system GMM estimations of the empirical part do not provide evidence for the modernization hypothesis but imply, instead, that corruption affects changes in the level of democracy negatively. In contrast, the multinomial logit and bivariate probit estimations support the modernization hypothesis through the significant impacts of schooling and GDP per capita. There is likewise evidence of a resource curse: a higher share of fuel exports of merchandise exports inhibits democratization and may increase corruption. Also trade openness seems to have a negative impact on democratization. Both democracy and corruption seem to be highly persistent.Item Essays on labour market frictions and fiscal policy(Aalto University, 2012) Obstbaum, Meri; Taloustieteen laitos; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorThis thesis analyzes labour market fluctuations and fiscal policy from the perspective of a small monetary union member state, namely Finland. The first essay identifies how frictions in the labour market shape the responses of the economy to government spending shocks. The nature of offsetting fiscal measures is found to be critical for the effects of fiscal stimulus, due to the different effects of different tax instruments on the labour market. Shifting the debt-stabilizing burden towards distortionary labour taxes has detrimental effects on the labour market outcome and on general economic performance in a flexible wage regime. The results indicate that wage rigidity increases the effectiveness of fiscal policy in the short term but leads to a worse longer term development including unemployment above steady state levels. The analysis suggests that a closer look at the functioning of labour markets may help to identify fiscal policy transmission channels not captured by the standard New Keynesian model. The second essay investigates the unemployment volatility puzzle in Finland. The ability of the New Keynesian DSGE model with labour market frictions to reproduce key volatilities found in Finnish business cycle data is explored. We offer some plausible explanations of the "Shimer puzzle" for the Finnish case. Specific emphasis is put on modelling the wage bargaining framework as well as the cyclical behaviour of distortionary labour taxes. Wage rigidity is found to be a promising candidate for explaining Finnish labour market volatilities in the period 1994-2010. The much higher volatilities of the period 1981-1993 are also discussed. We find that most of the specific features that characterised the Finnish economy in that period, including during the exceptionally deep recession of the early 1990's, are such that they increase the magnitude of labour market fluctuations in the model economy. The third essay is a first attempt to estimate a DSGE model with labour market frictions and wage rigidity for the Finnish economy. The contribution is twofold. First, estimates of nominal rigidities and wage indexation that are well in line with the existing literature are obtained, and they give an economically plausible picture of the Finnish economy. Wage rigidity is found to be empirically relevant for the business cycle. A detailed assessment of the degree of wage rigidity and indexation in different model specifications is provided. Second, the estimation approach sheds more light on the magnitude and effects of labour market shocks. Labour market shocks are found to importantly drive fluctuations of labour market variables but they also account for a non-trivial share of output fluctuations.Item Essays on migration(Helsinki School of Economics, 2009) Sarvimäki, Matti; Kauppakorkeakoulu; School of Business; Haaparanta, Pertti, professorThis dissertation consists of four empirical essays and an introductory chapter on the economics of migration. The first two essays study the longterm effects of relocating 11% of the Finnish population after the World War II. The first essay suggests that this shock set off a self-reinforcing process, where municipalities receiving the largest flows of displaced persons grew faster also in later periods. The second essay shows that being displaced increased long-term income of men, but had no effect on income of women. A large part of the effect is attributed to faster transition from traditional (rural) to modern (urban) occupations among the displaced. The remaining essays focus on more recent immigrants to Finland. The third essay finds that upon arrival immigrants earn substantially less than comparable natives. Only men from OECD countries converge to natives' earnings over time. The last essay suggests that the a change in the integration policy in 1999 increased immigrants' employment and earnings and decreased their dependency on social benefits.