involuntary unemployment and implicit contracts this paper provides an explanation of involuntary umemployment arising as a consequence of asymmetric information between firms and workers involuntary unemployment is defined as a situation where ex post gains to trade exist a model of labor contracts is developed where the allocations are not ex post optimal it is shown that inferiority of leisure is a necessary and sufficient condition for the existence of involuntary unemployment

wage profiles and imperfect capital markets a positive analysis this paper examines the structure of long term employment contracts when labor is mobile and risk averse employers are unable to monitor workers outside job offers workers cannot borrow against future income and workers productivity is increasing in the length of service with the long term employer workers are then liquidity constrained and the contract trades off consumption smoothing against efficiency in turnover in contrast to previous papers which have examined this problem this paper provides a continuous time formulation that permits a detailed characterization of the properties of the wage profile

labour s shares and profitability crisis in the u s recent experience and post war trends extends work on u s rate of profit by t e weisskopf 1979 firstly the author finds by extending weisskopf s data into the early 1980s that continued downward pressure on profitability i s explained by capacity utilization in contrast to weisskopf s explanation of rising labor share secondly it is found that ri sing labor share in the post war period is largely composed of r ising levels of supplemental fringe benefits and is in the earl y part of the period also explained by rising nonproduction lab or costs production worker wage share falls secularly and this may be explained particularly in the 1960s by rising price mar k ups on direct cost copyright 1987 by oxford university press

what has been happening to aggregate concentration in the united states concern about bigness and about aggregate concentration the percentage of some national economic measure controlled by the leading companies in the nation has been a recurring theme in the united states 1 in the late i970s the us economy appeared to be going through another merger wave of large companies political concern over bigness and aggregate concentration was rising and legislation was introduced to limit large conglomerate mergers 2 the data marshalled to support or oppose limits on mergers are usually meager besides the data on mwergers themselves the main evidence usually focuses on concentration but aggregate concentration data for the entire economy are difficult to assemble instead data for individual sectors are provided but there is usually little mention of the limitations biases and misleading nature of much of this evidence for example there has been a wholly unwarranted emphasis on aggregate concentration in manufacturing despite the fact that manufacturing currently accounts for only a quarter of us gnp this paper will try to establish the recent trends in aggregate concentration in the us along the way we will discuss the merits of alternative measures the difficulties of compiling the data into an aggregate private sector measure and the various biases that are likely to plague a number of the measures

support for renewable energy in china a survey experiment with internet users abstract mitigating climate change requires reductions of carbon dioxide emissions and other greenhouse gases because china is the world s largest emitter of greenhouse gases global efforts to stop climate change depend on china s policies while renewable energy can replace coal in power generation to reduce carbon pollution the perceptions of renewable energy among the chinese public have not been studied people s perceptions are important because although china is not a democracy existing studies have shown that the government s legitimacy depends on popular support this article reports results from an online survey experiment among 2086 chinese internet users this methodology allows the exploration of the responsiveness of chinese respondents to various frames of the benefits and costs of renewable energy the levels of support for renewable energy among the respondents were high there was a positive and statistically significant response to an energy security framing while neither the air pollution nor the climate change frames had a statistically significant effect on the levels of public support economic concerns are also salient to the respondents as a counter frame emphasizing the cost of renewables undermined the effectiveness of the energy security frame similar to studies from other countries the cost and security of energy generation are priorities for the respondents if these findings apply more broadly to the chinese public the government can create public support for renewables by emphasizing energy security in communication

the rise and decline of general laws of capitalism economists have long been drawn to the ambitious quest of discovering the general laws of capitalism david ricardo for example predicted that capital accumulation would terminate in economic stagnation and inequality as a greater and greater share of national income accrued to landowners karl marx followed him by forecasting the inevitable immiseration of the proletariat thomas piketty s 2014 tome capital in the twenty first century emulates marx in his title his style of exposition and his critique of the capitalist system piketty is after general laws that will demystify our modern economy and elucidate the inherent problems of the system and point to solutions but the quest for general laws of capitalism is misguided because it ignores the key forces shaping how an economy functions the endogenous evolution of technology and of the institutions and the political equilibrium that influence not only technology but also how markets function and how the gains from various different economic arrangements are distributed despite his erudition ambition and creativity marx was led astray because of his disregard of these forces the same is true of piketty s sweeping account of inequality in capitalist economies in the next section we review marx s conceptualization of capitalism and some of his general laws we then turn to piketty s approach to capitalism and his general laws we will point to various problems in piketty s interpretation of the economic relationships underpinning inequality but the most important shortcoming is that

industry competitiveness using herfindahl and entropy concentration indices with firm market capitalization data while previous studies of industry concentration have traditionally utilized sales or market share data no studies that we are aware of have been done with market capitalization data if the markets are successful at valuing a firm s current and future prospects it can be argued that concentration indices and other metrics based on the market value of the firms in an industry should be a good proxy for market power within an industry this study presents a study of the market concentration using the herfindahl and entropy concentration indices for 13 industries

concentration trends and profitability in us manufacturing a comment 1991 concentration trends and profitability in us manufacturing a comment applied economics vol 23 no 4 pp 717 720

evaluating innovation and labour market relationships the case of italy in this paper the link between labour market flexibility and innovation is analysed paying particular attention to the different technological regimes of economic activities and the different geographical areas of the italian economy a dynamic panel data specification is used to assess the endogenous relationship between patents included as a proxy of the innovation and job turnover and wages which represent labour market indicators the results show that higher job turnover only has a significant and negative impact on patent activities in regional sectors of northern italy while a positive and significant impact of blue and white collar wages has been generally found

concentration of sales and assets of the top 25 fortune 500 firms 1967 90 the present paper using various indexes of concentration in business assesses the level of concentration of the top 25 united states industrial firms reported annually by fortune an overall conclusion is reached that concentration increased between 1967 and 1990 most noticeably during the 1980s

implicit contracts labor mobility and unemployment firms inability to monitor their employees search effort forces a tradeoff between risk bearing and incentive considerations when designing employment related insurance since the provision of insurance against firm specific shocks adversely affects workers incentives to find better jobs the optimal contract provides only partial insurance it prescribes low high wages and under over employment to encourage workers to leave stay at low high productivity firms and it employs quits and layoffs as alternative means of inducing separations at low productivity firms with the mix depending upon the relative efficiency of the on and off the job search technologies our analysis of implicit contracts with asymmetric search information establishes that any consistent explanation for worksharing layoffs severance pay quits and unemployment must focus on questions of labor mobility this abstract was borrowed from another version of this item

social security benefits and employer behavior evaluating social security early retirement benefits as a form of unemployment insurance employers often shed older workers by encouraging them to take early retirement an implicit contract model suggests that this behavior will be influenced by the social security early retirement program when demand is weak and layoffs are necessary social security benefits can act like a form of unemployment insurance effectively subsidizing workforce reductions by lowering the cost to the firm of shedding older workers since social security benefits are not subject to experience rating the result is an inefficiently high level of early retirements this paper concludes with a discussion of policies for restoring early retirements to efficient levels

reduction in the long term unemployment of the elderly a success story from finland in finland the elderly unemployed are allowed to collect unemployment benefits up to the age of 60 when they can retire via a particular unemployment pension in 1997 the eligibility age of persons benefiting from this scheme was raised from 53 to 55 we consider changes in the risk of unemployment unemployment durations and the exit states before and after the reform in the duration analysis a flexible treatment design is adopted by allowing for quantile treatment effects we apply three different non and semiparametric methods which all produce robust and coherent results since the reform the group aged 53 54 has had a lower risk of unemployment shorter unemployment durations and higher exit rates to employment and it is no longer distinguishable from the group aged 50 52 we estimate the amount of unemployment benefits saved due to the reform

causes of increased competition in the u s economy 1939 1980 examines the sources of increased competition in the united states u s between 1939 to 1980 in this paper authors consider the review of related literature trends and patterns of competitive structure in the u s economy influence of antirust actions on competition

a theory of quits and layoffs with efficient turnover this paper answers the efficient turnover literature s long silence regarding the quit layoff distinction treating quits as worker initiated separations and layoffs as firm initiated separations i establish that the existence of layoffs is compatible with optimizing workers and firms forming and dissolving employment matches to exploit all the gains from trade the efficient turnover approach is shown to be consistent with many empirical regularities that distinguish quits from layoffs structural implications of the model are tested on data from the psid

labor and credit contracts with asymmetric information and bankruptcy abstract this paper investigates the interaction between a firm s contracts for labor and its contracts for credit under asymmetric information and limited liability when workers are either always committed to their contract or they lack the power to commit ex post because arbitrage opportunities are available to them the analysis contains two main results first contrary to the perceptions of the limited liability literature where limited liability is thought of causing both underemployment and income underinsurance limited liability is in fact shown to only cause underemployment existence of outside sources of credit eliminates the underinsurance side of the inefficiency but can not eliminate underemployment second the factor that does cause underinsurance is the existence of ex post arbitrage opportunities for the worker worker mobility leads to underinsurance regardless of whether limited liability is binding or not and even if outside sources of credit exist thus underemployment stems from limited liability and underinsurance stems from worker mobility

subsidies in carbon finance for promoting renewable energy development abstract faced with decreasing exhaustible nonrenewable resources and climate change resulting from the use of fossil energy it is urgent to accelerate the development of renewable energy but the development of renewable energy requires abundant financial support both from banks and governments this article considers bank loans to develop renewable energy and highlights the effects of government subsidies by using a microeconomic model and taking all stakeholders including the government banks and shareholders of the firm into consideration this study finds that government subsidies raise outputs and debt levels of renewable energy firms and improve shareholder value as well more importantly financial debts stimulate firms outputs but decrease the net profit per unit of debt due to the limited liability effects finally subsidy policy plays a critical role in renewable energy development because environmental efficiencies of subsidies decrease with the subsidy degree other valuable conclusions would be achieved if principal agent problem and other corporate governance factors are employed

concentration trends and profitability in us manufacturing a reply and some new evidence 1991 concentration trends and profitability in us manufacturing a reply and some new evidence applied economics vol 23 no 4 pp 721 722

labor contracts under asymmetric information when workers are free to quit this paper examines the impact of workers ability to quit on the performance of labor contracts between workers and privately informed firms while the need to induce workers to remain with the firm necessarily lowers total welfare the effect on employment levels is to reduce the magnitude of the inefficiency due to asymmetric information whether this inefficiency is under or overemployment the model predicts that employment distortions increase with the strength of lock in effects on workers a prediction which contrasts with the results of efficiency wage models and which may help in empirical testing of labor contract theory

layoff unemployment risk shifting and productivity this paper is concerned with the theory of implicit labor contracts the implications of introducing hours worked or effort as an argument both in workers utility functions in addition to the wage rate and in firms production functions in addition to the number of workers are considered it is shown that layoffs can occur at equilibrium in the absence of unemployment compensation and value of leisure but only because of the inclusion of this additional variable

trends in aggregate concentration in the united states i assemble two rarely used data sets to measure aggregate concentration in the u s in the 1980s and 1990s despite the merger waves of those decades aggregate concentration declined in the 1980s and the early 1990s but rose modestly in the late 1990s the levels at the end of the decade were at or below the levels of the late 1980s or early 1990s the average size of firm and the relative importance of larger size classes of firms increased however gini coefficients for employment and payroll shares of companies showed moderate but steady increases from 1988 through 1999

pension portability and labor market efficiency a survey of the literature this paper reviews the theoretical and empirical literature evaluating the labor market effects of policies to enhance pension portability one perspective is that reducing the cost of job change w

wage secrecy as a social convention there is a time to keep silent and a time to speak out ecclesiastes 3 7 ask anyone who works for a living how much money he or she makes and you are likely to encounter a range of responses from evasion to outright hostility such responses however should not be surprising according to organizational etiquette it is considered gauche to ask others their salaries in a study at e i du pont de nemours all employees were asked if the company should disclose more payroll information so that everyone would know everyone else s pay only 18 voted for an open pay system dolan and schuler 1987 315 m any organizations have strict policies and norms about the secrecy of pay it is seen as inappropriate in most companies for employees to talk about what they earn and data are rarely given out even internally on salaries some organizations even fire individuals who release salary data this is one way to make it very clear that the organization means it when it says it believes in pay secrecy lawler 1990 239 t he issue of openness or secrecy in the communication of compensation information is one of the most important issues facing senior management henderson 1985 379 i introduction despite the general belief that a free flow of information enhances efficiency social convention appears to call for secrecy regarding individuals wages this paper provides an explanation for this convention we suggest that the role of wage secrecy is to reduce effective labor mobility and thereby enhance the feasibility of risk shifting contracts wage secrecy may yield a mix of mobility and risk shifting that is superior both to a spot market for labor and to a social convention that binds workers to their employers in promising to pay a worker a pre agreed wage rate labor contracts shift uncertainty from workers to employers and provide workers with insurance in particular if workers are risk averse and firms are risk neutral such contracts may enhance the welfare of workers without imposing a cost on firms since a risk shifting contract shields workers from the vicissitudes of the market wage rates need not equal the marginal product of labor in good outcomes workers pay the firm an insurance premium by accepting a wage rate that is lower than their marginal product in bad outcomes workers collect on their insurance policy earning a wage rate that exceeds their marginal product 1 if workers can move freely from one firm to another however risk shifting labor contracts may not be feasible given such freedom of movement workers will stay with their firm if the wage rate exceeds that offered elsewhere and move if they can obtain a higher wage rate in another firm hence without restrictions on labor mobility risk shifting contracts will not be offered and wage rates will vary with the marginal product of labor in this case the market in labor is a spot market the risk shifting role of labor contracts may be salvaged by a social convention that binds workers to their firms this would require that a worker who leaves his employer earlier than the accepted norm would be viewed as breaking a social convention and develop a damaging reputation we shall refer to this type of convention as a binding convention 2 it appears that a binding convention is assumed in most of the implicit contract literature binding however comes at a cost while facilitating risk shifting it may lead to inefficient resource allocation with a binding convention the tradeoff between the loss in output and the extent of workers exposure to risk depends on the nature of risks faced by the firm when the only risk that firms face is an aggregate shock defined as a shock that affects all firms in a sector in the same way binding does not reduce production efficiency if the marginal product of labor is the same in all firms the worker s place of employment does not affect output

a note on overemployment underemployment in labor contracts under asymmetric information abstract models of labor contracts under asymmetric information may predict either overemployment or underemployment this paper shows that this result depends crucially on whether or not leisure is a normal good if firms are risk neutral

implicit contracts a survey 7mplicit contracts resolve the distribution of uncertainty and utilization of specific human capital between risk averse workers and less risk averse firms incomplete contracts are required to yield involuntary layoffs in contract markets otherwise contracts are efficient and pareto optimal by construction there is a close relation between contract theory and neoclassical labor market theory contracts smooth consumption but increase the volatility of labor supply and labor utilization to demand disturbances because contractural insurance eliminates the income effects of socially diversifiable risks this result is similar to the intertemporal substitution hypothesis however the price mechanism in a contract is substantially different contracts embody a nonlinear two part pricing scheme the lump sum part allocates the income consumption consequences of risks and the marginal pricing part allocates production and labor utilization this implicit pricing mechanism is in all respects flexible though the observed average hourly wage combines both parts and may give the outward appearanceof rigidity furthermore the observed average wage rate in a contract does not reflect marginal conditions necessary for structural econometric estimation indivisibilities appear necessary to account for the split between work sharing and layoffs contracts with private information are also considered in the nonlinear pricing context this abstract was borrowed from another version of this item

issues of social acceptance on biofuel development alongside with biofuel development social acceptance issues have been underestimated while social acceptance can emerge as powerful barrier for biofuel development this article provides discussion on social acceptance in biofuel context an acceptance framework based on life cycle biofuel production had been referred for a better understanding on social acceptance issues malaysia has been referred for the discussion as the country has faced with acceptance issue in their biofuel program the discussion point out different societal groups will demand specific consideration for either support or oppose biofuel this paper concludes that biofuel development will be constraint if social acceptance issues remain neglect

a model of the natural rate of unemployment since the publication of edmund phelps volume the new macroeconomics has treated the labor market as a dynamic process of rational search by unemployed workers for available vacancies wages are viewed as at least potentially flexible though free contracting between workers and firms may lead to fixed wages in the short run imperfect information is a crucial element of the theory for it implies both a need for contracting and a need for rational search rather than simple market clearing in each period a positive rate of frictional unemployment may exist in equilibrium denoted as the natural rate this unemployment is due to the frictions in the search process and imperfections in information rather than to any deficiency in aggregate demand milton friedman defined the natural rate as the level that would be ground out by the walrasian system of general equilibrium equations provided there is embedded in them the actual structural characteristics of the labor and commodity markets including market imperfections stochastic variability in demands and supplies the cost of gathering information about job vacancies and labor availabilities the costs of mobility and so on p 8 this paper reexamines the micro foundations of the natural rate in a model of labor market equilibrium in which turnover flows and imperfect information are explicitly considered workers may quit their current jobs to enter the unemployment pool in order to search among available vacancies for a more preferred position firms economize on turnover by an appropriate wage policy

general productivity growth in a theory of quits and layoffs an efficient matching model of quits and layoffs is developed to account for several empirical regularities differences between quits and layoffs over the life and business cycles and across demographic groups are generated by differential rates of general productivity growth the standard approach to quits and layoffs based on wage rigidity is shown to be incapable of accounting for many of the empirical regularities although a formal test rejects a structural prediction of the efficient turnover model the specification does well in predicting both the level of and time series variation in the fraction of separations labeled quits

concentration trends and profitability in us manufacturing a further and some new and improved evidence the purpose of this note is to clear up several misconceptions presented by saghafi and attaran 1991 s a in their reply to my comment o neill 1991a the most egregious misconception being that s a failed to recognize the main point of my comment the entropy index values reported by attaran and saghafi 1988 a s are erroneous becouse they are based on incorrectly computed firm market share values the problem being that a s compute share values using the sales or assets or equity of the fortune 500 firms in the denominator of their share figures rather than using the total manufacturing sector saless or assets or equity this obviously overstates each firm s market share as stated in o neill 1991a the effect this has on the entropy index cannot be determined aa priori it depends on the data sample in the entirety of their rely not once do s a refute this claim a second perhaps more important point is that when the entropy index is computed using corrected market share values the t

concentration trends and profitability in the us manufacturing sector 1970 84 it has been suggested that the us economy is becoming more concentrated and less competitive concentration is also claimed to affect the return and risk of companies in this paper using the entropy technique the concentration index for the manufacturing sector of the us economy has been computed and the concentration trend has been analysed furthermore the impact of concentration on return and risk of manufacturing companies is investigated

the development of the renewable energy power industry under feed in tariff and renewable portfolio standard a case study of china s wind power industry abstract among the regulatory policies feed in tariffs fit and renewable portfolio standards rps are the most popular to promote the development of renewable energy power industry this paper uses system dynamics sd to establish models of long term development of the renewable energy power industry under fit and rps schemes and provides a case study of china s wind power industry by using scenario analysis method the model on the one hand not only clearly shows the complex logical relationship between the factors but also reveals the process of coordination between the two policy tools in the development of the renewable energy power industry on the other hand it provides a reference for scholars to study similar problems in different countries thereby facilitating an understanding of the renewable energy power s long term sustainable development pattern under fit and rps schemes and helping to provide references for policy making institutions the results show that the integrate implementation of fit and rps can promote long term and rapid development of china s wind power industry given the constraints and actions of the mechanisms of rps quota proportion the tradable green certificates tgc valid period and fines in addition in the period of the construction of the tgc market rps quota growth rate and fine have a no significant effect on industrial development however with tgc market game becoming more and more fierce both of them have a significant positive impact on the long term development of the industry tgc valid period has little effect on industrial development in our study at the end of the paper policy implications are offered as references for the government

the role of small firms in east germany this paper examines the role which small firms in east germany have played under the system of combines and the important contribution they can make in the current reform process the evolution of a striking trend towards the centralization of economic power in the gdr during the last three decades is documented not only has the share of economic activity accounted for by the combines greatly increased but the number of establishments and particularly small establishments has drastically decreased it is concluded that the establishment of a vital entrepreneurial sector is essential if east germany is to succeed in its process of economic reform and the transition to the market economy

contesting the magic of the market place black employment and business concentration in the urban context the spatial decentralisation of urban firms has been the primary focus of urbanists seeking to understand how black employment is impacted by the changing nature of business in the us very little attention has been given to the impact of market concentration on black employment in the urban environment using the most recent data available from the equal employment opportunity commission the paper finds that black male and female employment is positively associated with greater market concentration not greater market competition as predicted by some neo classical economists there is little support for the contention that economic forces at work in competitive markets tend to minimise discrimination either in the urban environment or in the nation as a whole the central city continues to be an important factor in black employment because central city firms are in industries with higher market concentration which tend to employ more black workers however increased market concentration is a crucial

labor turnover wage structures and moral hazard the inefficiency of competitive markets a multiperiod general equilibrium model of the labor market is developed in which risk averse workers are faced with job related uncertainty and labor turnover is costly if a worker is unlucky and suffers a bad job match he quits and joins another firm hoping that he will like its work environment more because the quality of a job match is unobservable workers cannot insure against the risk of a bad match the firm provides implicit insurance against job dissatisfaction typically by paying workers more than their net marginal products in their early years with the firm and less subsequently since the probabilities of the insured against events the quit rates over time are affected by the amount of such insurance provided this implicit insurance is characterized by moral hazard individuals quit when in the absence of insurance they would not the equilibrium contract balances out efficiency in risk bearing with efficiency in turnover incentives we show that the equilibrium contract is not con