prospects for economics this paper discusses the curent state of economics and ruminates about its future course conjectures are offered about developments in economics research and also about the evolution of the profession the discipline will become increasingly diverse both in its subject matter and in its analytical approaches much of the advance in economics science will come from those fusing theory with data yet there are powerful forces attracting economists away from this central ground and toward the wings of pure theory and pure data analysis copyright 1991 by royal economic society

strategic labour contracts labor contracts affect a firm s cost function and for this reason they can be used as a recommitment device to gain a strategic advantage against other firms in a model that is otherwise neutral it is found that if firms compete in prices then strategic considerations alone yield results similar to those obtained by c azariadis 1983 workers are underemployed and worse off in more adverse states of nature on the other hand if firms compete in quantities then the equilibrium contracts resemble those of j green and c kahn 1983 workers are overemployed and better off in more adverse states

unemployment profit sharing and japan s economic success abstract in this paper we examine the economic effects of profit sharing in a duopoly model where one firm engages in sharing profits with its union while the other firm does not the results show that profit sharing i reduces wages demanded by the unions ii tends to increase employment of the profit sharing firm and to increase employment in the entire industry and iii tends to increase the joint welfare of the profit sharing firm and the profit sharing union these results seem to suggest that the japanese success may be partly attributable to their informal profit sharing scheme

trade unions and firms product market power a production function model with efficient bargaining between oligopolistic firms and unions is developed to distinguish between product market power and union power in capturing economic rents the model is formalised using the generalized nash bargaining solution and is empirically tested on four belgian manufacturing sectors the conclusions are that product market power is significantly eroded by wage rents but firms retain most of their power during negotiations also the restrictions imposed on the data do not reject the hypothesis that wage erosion arises from efficient bargaining in accordance with other empirical findings for belgian manufacturing

evolution of the infant health production function michael grossman s seminal publication on the demand for health and health production grossman 1972 has spawned a substantial body of research focusing on the production of infant health this article provides a systematic review of the published literature to date on infant health production and how it has evolved over the past 3 4 decades as data have become more available computing has improved and econometric methods have become more sophisticated while empirical research in most fields has expanded in corresponding ways the infant health production research has become an important part of the broader and inherently multidisciplinary literature on intergenerational health the strongest and most robust findings are that policies matter for infant health particularly those affecting access to health care and that prenatal smoking and other chemical exposures substantially compromise infant health promising directions for future research include elucidating relevant pathways reconciling the largely inconsistent estimated effects of nutrition and education and exploring the roles of preconceptional and lifetime health care paternal factors social support housing complementarity and substitutability of inputs factors that modify effects of inputs and evolving medical technologies

the labor market four years into the crisis assessing structural explanations four years after the beginning of the great recession the labor market remains historically weak many observers have concluded that structural impediments to recovery bear some of the blame the author reviews such structural explanations but after analyzing u s data on unemployment and productivity he finds there is little evidence supporting these hypotheses he finds that the bulk of the evidence is more consistent with the hypothesis that continued poor performance is primarily attributable to shortfalls in the aggregate demand for labor

productivity and distribution effects of codetermination in an efficient bargaining model codetermination can be regarded as an extreme regulatory intervention of the legislator in the labor market which might affect the efficiency of production and the bargaining power of labor based on a model that covers both efficient bargaining and employment bargaining a simple equation is derived that is suited to empirical testing the empirical test is based on german data and includes years before and after the extension of german codetermination law in 1976 the estimates determine the productivity of labor and relative bargaining power of capital and labor it turns out that codetermination does not affect productivity but leads to a significant increase in workers bargaining power and the distribution of rents

sequencing strategically wage negotiations under oligopoly abstract should an industry wide union in a unionized oligopoly e g the united auto workers in the us negotiate new contracts by bargaining with firms simultaneously or should it strategically sequence its bargaining partners the models presented isolate two key factors affecting this decision pre existing contracts and the post negotiation product market game the better the preexisting contracts for the union the more attractive is the option of sequencing moreover a high wage negotiated with the first firm reduces product market competition increasing other firms ability to pay higher wages as well this adds to the attractiveness of strategic sequencing for the union

unions oligopoly and the natural range of employment a simple two sector general equilibrium macromodel is presented wi th oligopolistic price determination in the product market and a unionized labor market in the first stage unions set the nominal wage and in the second stage firms choose outputs given wages by altering the balance of fiscal policy between the two sectors the government can achieve a continuum of aggregate employment levels the natural range of employment a unique natural rate will occur only i f one requires fiscal policy to be the same in both sectors this indicates that the natural rate property of some single or representative sect or macromodels is a special case

multifirm unions and the incentive to adopt pattern bargaining in oligopoly abstract this paper develops a model of wage bargaining between an industry wide trade union and firms in an oligopoly and considers the circumstances under which the union prefers pattern bargaining that is negotiating contracts in a sequential manner to simultaneous bargaining with the firms the paper goes on to consider the importance of the bargaining order in pattern bargaining when the firms are asymmetric the analysis shows that the union gains by first targeting a firm which is in a relatively weak bargaining position i e impatient to settle or a firm with relatively large profits

the general equilibrium impacts of unemployment insurance evidence from a large online job board abstract during the great recession u s unemployment benefits were extended by up to 73 weeks theory predicts that extensions increase unemployment by discouraging job search a partial equilibrium effect using data from the large job board careerbuilder com i find that a 10 increase in benefit duration decreased state level job applications by 1 but had no robust effect on job vacancies job seekers thus faced reduced competition for jobs a general equilibrium effect calibration implies that the general equilibrium effect reduces the impact of unemployment insurance on unemployment by 39

separations sorting and cyclical unemployment abstract this paper establishes a new fact about the compositional changes in the pool of unemployed over the us business cycle using microdata from the current population survey for the years 1962 2012 it documents that in recessions the pool of unemployed shifts toward workers with high wages in their previous job and that these shifts are driven by the high cyclicality of separations for high wage workers the paper finds that standard theories of wage setting and unemployment have difficulty in explaining these patterns and evaluates a number of alternative theories that do better in accounting for the new fact jel e24 e32 j31 j63 j64

battle scars the puzzling decline in employment and rise in disability receipt among vietnam era veterans using current population survey and us army administrative data we document that between 2000 and 2010 the employment rate of vietnam era veterans fell markedly relative to non veterans of the same cohorts while simultaneously their enrollment increased steeply in the veterans disability compensation dc program which provides healthcare and transfer payments to veterans with service connected disabilities thirty percent of vietnam era army veterans enrolled in dc in 2006 received benefits for post traumatic stress disorder with median annual payments of 25 500 the declining employment and rising transfer payments to vietnam era veterans underscore the long term private and public costs of wartime service potentially stemming from both adverse health consequences and policies that have expanded benefits eligibility

corrigendum to the strategic choice of union oligopoly bargaining agenda int j ind organ 17 1999 1029 1040 abstract assuming cournot competition bughin 1999 the strategic choice of union oligopoly bargaining agenda international journal of industrial organization states that in a unionized oligopoly with firm specific negotiations efficient bargaining eb is always the industry equilibrium both under blockaded and non blockaded market structures extending bughin s 1999 framework to a conjectural variation model this note shows that eb emerges as equilibrium only for entry deterrence reasons in all other cases conflict of interests among the bargaining parties arise due todifference in dominant strategies whatever is the degree of competitiveness of the industry

pay and employment determination in britain what are labour contracts really like the recent growth of unemployment in western economies has prompted new research on the workings of the labour market there has been much interest in particular in the questions what determines the level of real pay and why is it apparently so insensitive to changes in aggregate demand and unemployment european economists now find it hard to take seriously the notion still taught to many undergraduate that wages are determined by the intersection of demand and supply curves roughly half of all british employees belong to trade unions a much higher percentage have their pay fixed by some kind of collective bargain in this country it is negotiations not impersonal com petitive markets which decide what most of us will be paid the difficult problem is that of how to understand this process or to put it differently of how to think up the right model of the world

rent sharing and workers bargaining power an empirical cross country cross industry panel analysis this paper studies how rents are shared between capital and labour using industry level panel data for 19 oecd countries over the 1988 2007 period the first step is an explanation of the rent creation process we provide evidence of a significant impact of regulation on value added prices at the industry level relative to the value added price for the overall economy rent in the second step we dissect the value added sharing process running ols and iv estimations our results confirm the blanchard giavazzi 2003 prediction the impact of rents on the capital share depends on workers bargaining power this article is protected by copyright all rights reserved

an integration of trade union models in a sequential bargaining framework this paper aims to embed two popular models of trade union behavior the monopoly model and the efficient bargaining model in a more general framework it does this by analyzing sequential bargaining models where wages are determined before employment and the power of the union in the two stages of the bargain differs as well as finding that the monopoly and efficient bargain models are special cases of this model a new class of models is also discovered this framework is used to analyze the relationship between union pow er and efficiency the empirical analysis of trade unions and the effects of trade union legislation copyright 1987 by royal economic society

efficient wage bargaining as a repeated game this paper builds a bridge between the two existing approaches for wage and employment determination in a unionized market the monopoly union model and the efficient bargaining model both fail to capture the dynamic aspects of wage bargaining when the repeated nature of the wage bargaining process is considered the equilibria are neither as inefficient as the monopoly union model predicts nor as fully efficient rather the two models can be regarded as particular cases with certain discount rates we apply our model to issues such as the endgame interpretation of the u s steel industry wage concessions and featherbedding

to be unionized or not to be a case for cost raising strategies under cournot oligopoly abstract this paper analyses the decision by firms under cournot oligopoly as to recognize unions in order to gain market power despite higher costs considering classical models of union firm bargaining namely right to manage rtm and efficient bargaining eb we show that for a sufficiently low level of union power eb firms might adopt cost raising strategies this theoretical prediction is compatible with some empirical evidence in favour of eb and adds to the theoretical finding that eb might dominate rtm under unionized cournot nash oligopoly it also suggests closer antitrust scrutiny as whether unions can provide cartel like services to oligopoly firms allowing them to distort product market competition at the expense of consumers

public health insurance expansions and hospital technology adoption abstract this paper explores the effects of public health insurance expansions on hospitals decisions to adopt medical technology specifically we test whether the expansion of medicaid eligibility for pregnant women during the 1980s and 1990s affects hospitals decisions to adopt neonatal intensive care units nicus while medicaid expansion provided new insurance to a substantial number of pregnant women prior literature also finds that some newly insured women would otherwise have been covered by more generously reimbursed private sources such crowd out combined with medicaid s low reimbursement rats leads to a theoretically ambiguous net effect of medicaid expansion on a hospital s incentive to invest in technology using american hospital association data we find that on average medicaid expansion has no statistically significant effect on nicu adoption however we also find that in geographic areas where more of the newly medicaid insured may have come from the privately insured population medicaid expansion slows nicu adoption this holds true particularly when medicaid payment rates are very low relative to private payment rates our findings are consistent with prior evidence on reduced nicu adoption from increased managed care penetration we conclude by discussing the policy implications of our work for insurance expansions associated with the affordable care act

job polarization and jobless recoveries job polarization refers to the shrinking share of employment in middle skill routine occupations experienced over the past 35 years jobless recoveries refers to the slow rebound in aggregate empl

worker substitutability and patterns of unionisation a strategic three party bargaining model is developed in which one distinguished party the firm has to reac h agreements with the other two each of which is a group of workers in the prebargaining stage the two worker groups decide whether to organize jointly or separately the main observation relates the equi librium pattern of unionization to the substitutability in production between the two groups the outcome is joint or separate unions acco rding to whether the two groups are substitute or complementary facto rs of production the analysis also considers possibilities for firm s strategic intervention in the unionization process copyright 1988 by royal economic society

a theory of dynamic oligopoly iii cournot competition abstract we study the markov perfect equilibrium mpe of an alternating move infinite horizon duopoly model where the strategic variable is quantity we exhibit a pair of difference differential equations that when they exist differentiable mpe strategies satisfy for quadratic payoff functions we solve these equations in closed form and demonstrate that the mpe corresponding to the solution is the limit of the finite horizon equilibrium as the horizon tends to infinity we conclude with a discussion of adjustment costs and endogenization of the timing

a theory of dynamic oligopoly ii price competition kinked demand curves and edgeworth cycles we provide game theoretic foundations for the classic kinked demand curve equilibrium and edgeworth cycle we analyze a model in which firms take turns choosing prices the model is intended to capture the idea of reactions based on short run commitment in a markov perfect equilibrium mpe a firm s move in any period depends only on the other firm s current price there are multiple mpe s consisting of both kinked demand curve equilibria and edgeworth cycles in any mpe profit is bounded away from the bertrand equilibrium level we show that a kinked demand curve at the monopoly price is the unique symmetric renegotiation proof equilibrium when there is little discounting we then endogenize the timing by allowing firms to move at any time subject to short run commitments we find that firms end up alternating thus vindicating the ad hoc timing assumption of our simpler model we also discuss how the model can be enriched to provide explanations for excess capacity and market sharing keiiwords tacit collusion markov perfect equilibrium kinked demand curve edgeworth cycle excess capacity market sharing endogenous timing

prenatal care and birthweight production evidence from south america research using us data has shown that increases in prenatal care have positive effects on birthweight and that the existence of unobserved health heterogeneity tends to reduce the measured effect of prenatal care this study extends extant research to the south american countries of bolivia brazil columbia and peru using data from the demographic and health surveys finding a positive effect of increased prenatal care use on birthweight furthermore the largest marginal effect of increased prenatal care use is found at low levels of usage the results highlight both the usefulness of existing methodologies for estimating the effect of prenatal care on birthweight and the importance of extending these methodologies to data from countries other than the usa

non nested tests of efficient bargain and labour demand models abstract in this paper efficient bargain and labour demand models derived from a variety of product market structures are compared using non nested test procedures data on wage employment outcomes are drawn from actual contract data from the canadian unionised sector results indicate that efficient bargain models are preferred to labour demand models

persistency in sticky price models abstract nominal rigidities imply that nominal shocks have an impact effect which may be propagated by standard mechanisms however the nominal adjustment process may in itself be a propagation mechanism causing persistent effects of nominal shocks this may be caused by inertia in nominal wage and price adjustment arising due to input output networks or multiperiod nominal contracting as captured in models with staggered price wage decisions it has recently been contested whether staggering can account for persistency of any quantitative importance this paper reviews the theory and empirical evidence on this issue and it is concluded that staggering may be a quantitative important propagation mechanism

the determination of profit margins in uk manufacturing this paper examines the determinants of profit margins in 91 u k manufacturing industries over the period 1983 86 it considers how the inclusion of labor market characteristics in empirical industrial organization specifications affects the estimated concentration margins relationship the empirical work pays detailed attention to the endogenous nature of variables derived from structural industrial organization models the authors report instrumental variables estimates of margins equations in which there emerges a significant role for labor market characteristics indeed both unionization and industrywide unemployment are found to depress profit margins the impact of concentration is seen to be biased downward when these variables are omitted

contractual union firm agreements and the theory of the firm under uncertainty abstract this article analyzes the consequence of introducing union firm contractual agreements in the theory of the firm under uncertainty generalizing the works on the labor managed firm it is shown that the risk averse firm produces more than the risk neutral firm or the firm operating under certainty as long as equilibrium employment is negatively related to union wages that is when union power over wages is higher than that over employment

counterinflationary policy in a unionised economy with nonsynchronised wage setting a model of the determination of wages and employment in a unionised economy with nonsynchronised wage setting is presented in this paper it is shown that a monetary deflation can lead to prolonged unemployment even though the unions act rationally and with full information about the change in policy the model generates a statistical phillips curve in which the rate of change of money wages depends on the anticipated growth rate of the money supply and on disequilibrium unemployment conventional incomes policies are shown to have desirable social effects but run counter to the perceived self interest of the trade unions and are therefore likely to be resisted taxes on wage increases have desirable long run effects but do not appear able to reduce the transitional unemployment costs of monetary deflation

a matching model with endogenous skill requirements we consider a labor market in which workers differ in their abilities and jobs differ in their skill requirements the distribution of worker abilities is exogenous but we model the choice of skill requirements by firms high skill jobs produce more output than low skill jobs but high skill jobs require high skill workers and thus are more difficult to fill we use a matching model together with a nash bargaining approach to wage setting to determine the equilibrium mix of job types along with the equilibrium relationship between worker and job characteristics wages and unemployment

aggregate pattern of time dependent adjustment rules i a game theoretic analysis of staggered versus synchronised wage setting this paper studies the benefits of staggered wage setting in reducing strategic conflicts it is shown that when wage setters interact strategically and dynamically they prefer moving alternatingly because by doing so they are able to commit temporarily not to offset the effects of each other s action it is also shown that synchronization represents a better arrangement when agents are able to coordinate these results are consistent with the presence of nonsynchronous and decentralized wage decisions in the united states and the united kingdom and the presence of synchronous bargaining in shunto and coordination in wage determination in japan copyright 1996 by royal economic society

strategic union delegation and strike activity we develop a model of wage determination with private information in which the union has the option to delegate the wage bargaining to either surplus maximizing delegates or to wage maximizing delegates such as senior union members we show that the wage outcome in case of surplus maximizing delegates is not necessarily smaller than the wage outcome in case of wage maximizing delegates even when the wage bargaining with private information is close to one with complete information however if it is commonly known that the union is stronger than the firm and the demand is sufficiently elastic then delegating to wage maximizing delegates definitely increases the wage at equilibrium the maximum delay in reaching an agreement is greater whenever the union chooses wage maximizing delegates instead of surplus maximizing delegates and remains finite even when the period length shrinks to zero

physician payments and infant mortality evidence from medicaid fee policy while efforts to improve the health of the uninsured have focused on demand side policies such as increasing insurance coverage supply side changes may be equally important yet there is little direct evidence on the effect of policies designed to increase the supply of medicaid services to the poor we provide such evidence by examining the relationship between infant mortality and the ratio of medicaid fees to private fees for obstetrician gynecologists we build a state and year specific index of the fee ratio for 1979 1992 a period of substantial variation in relative medicaid fees we find that increases in fee ratios are associated with significant declines in the infant mortality rate we also find that higher fees raise payments made to physicians and clinics under the medicaid program but reduce payments to hospitals finally we compare the cost effectiveness of reducing infant mortality by increasing fee ratios to the efficacy of reducing mortality by expanding the medicaid eligibility of pregnant women although our results are sensitive to the time period used we conclude that raising fee ratios is at least as cost effective as increasing eligibility this abstract was borrowed from another version of this item

housing booms and busts labor market opportunities and college attendance we study how the recent housing boom and bust affected college enrollment during the 2000s we exploit cross city variation in local housing booms which improved labor market opportunities for young men and women we find that the boom lowered college enrollment with effects concentrated at two year colleges the decline in enrollment during the boom was generally reversed during the bust however attainment remains persistently low for particular cohorts suggesting that reduced educational attainment is an enduring effect of the recent housing cycle the housing boom can account for approximately 25 percent of the recent slowdown in college attainment

aggregate pattern of time dependent adjustment rules ii strategic complementarity and endogenous nonsynchronization abstract this paper provides an explanation for an important institutional feature of staggered time dependent adjustment rules assumed in a number of macroeconomic models it identifies strategic complementarity as the crucial factor leading to nonsynchronized decisions in a game theoretic framework the paper first shows that nonsynchronization is the equilibrium outcome in an infinite horizon game in which strategic complementarity is present whether the players choose predetermined or fixed actions by pursuing the interpretation of a nonsynchronized move dynamic game as a series of games with symmetric stackelberg leadership it is further suggested that the relationship between strategic complementarity and the benefit to the stackelberg follower provides the insight to the game theoretic explanation of nonsynchronization the results of this paper reveal a link between strategic complementarity and nonsynchronization two important macroeconomic features journal of economic literature classification numbers e30 l16

the decentralization of collective bargaining a literature review and comparative analysis the author reviews evidence that the bargaining structure is becoming more decentralized in sweden australia the former west germany italy the united kingdom and the united states although in

trends in quality adjusted skill premia in the united states 1960 2000 this paper presents new evidence that increases in college enrollment lead to a decline in the average quality of college graduates between 1960 and 2000 resulting in a decrease of 8 percentage points in the college premium the standard demand and supply framework katz and murphy 1992 card and lemieux 2001 can qualitatively account for the trend in the college and age premia over this period but the quantitative adjustments that need to be made to account for changes in quality are substantial furthermore the standard interpretation of the supply effect can be misleading if the quality of college workers is not controlled for to illustrate the importance of these adjustments we reanalyze the problem studied in card and lemieux 2001 who observe that the rise in the college premium in the 1980s occurred mainly for young workers and attribute this to the differential behavior of the supply of skill between the young and the old our results show that changes in quality are as important as changes in prices to explain the phenomenon they document

political complements in the welfare state health care and social security abstract all oecd countries target a large majority of their welfare spending to the elderly through public pensions and health care programs spending in both programs has largely increased in the past decades often more than the share of elderly in the population we suggest that these phenomena may be due to political complementarities between these two transfer programs we show that these two programs may coexist because public health care may increase the political constituency in favor of social security and vice versa specifically public health decreases the absolute longevity differential between low and high income individuals therefore rising the retirement period and the total pension benefits of the former relatively to the latter this effect increases the political support for social security among the low income young we show that in a political equilibrium of a two dimensional majoritarian election a voting majority of low income young and retirees supports a large welfare state the composition between public health and social security is determined by intermediate median income types who favor the contemporaneous existence of these two programs since public health increases their longevity enough to make social security more attractive technological improvements in health care strengthens this complementarity and lead to more welfare spending

self selection and the earnings of immigrants this paper analyzes the way in which the earnings of the immigrant population may be expected to differ from the earnings of the native population because of the endogeneity of the decision to migrate the empirical study shows that differences in the u s earnings of immigrants with the same measured skills but from different home countries are attributable to variations in political and economic conditions in the countries of origin at the time of migration excerpt

wage premia price cost margins and bargaining power in belgian manufacturing abstract an asymmetric nash bargaining model as developed by j svejnar 1986 is empirically tested on industry wage negotiations in belgium union s relative bargaining power emerges from this model as the fraction of firm s profits per worker which the unions are able to capture in excess of the alternative wage the estimates of the bargaining power coefficients for blue as well as white collar workers reject the symmetric split the difference outcome determinants of the cross industry variation of bargaining power are explored as well

staggered vs synchronised wage setting in oligopoly abstract this paper analyses the dynamic equilibrium which emerges when wages are bargained upon at different times in the various firms operating in an oligopolistic industry unions set wages the management of the firms the output level and the outcome of this interaction is captured by the game theoretic concept of markov perfect equilibrium the steady state equilibrium is compared with that which would emerge if all wage negotiations occurred simultaneously it is shown that staggered wage setting leads to higher steady state levels of wage and unemployment than synchronised wage setting it is also shown that a longer duration for wage contracts leads other things equal to lower wages and higher employment the final part of the paper shows that allowing for nash bargaining between union and management and for risk averse unions does not alter the conclusions of the paper

the effects of employment while pregnant on health at birth today many pregnant women take a brief period of time off from work to give birth in this paper i identify the effects of pregnancy employment on health at birth my initial results show that pregnancy employment has beneficial effects however these effects often become statistically insignificant when i control for earnings from pregnancy employment when i exclusively examine women employed prior to the pregnancy and when i examine siblings in fixed effects models i conclude that beneficial effects of pregnancy employment are partially due to increased family income via earnings during the pregnancy and partially due to unobserved heterogeneity there is no evidence that increased female labor force participation adversely affects health at birth

endogenous scope of firm union bargaining with vertical pay comparisons abstract there is strong evidence that employees motivation and incentives in the workplace are affected by vertical pay comparisons in a stylized cournot duopoly model with firm specific unions that institutionalize workers vertical fairness concerns we show that universal wage employment w e bargaining may arise as the equilibrium scope of bargaining institution we thus propose that intra firm vertical fairness concerns may resolve the mismatch between recent findings in the empirical literature on labor market institutions and the predictions of traditional models that universal w e bargaining will never arise in equilibrium the scope of bargaining puzzle we derive a number of testable hypotheses that address the recent shift towards more decentralized bargaining institutions the decline in unions bargaining power and the prevalence of w e bargaining

asynchronized multiperiod commitments and cycles abstract we consider a game where agents can synchronize or stagger their decisions we compare the outcomes of both timing patterns and show that spillovers and strategic interactions are crucial for such a comparison a typology used in industrial organization distinguishing four cases fat cat top dog lean and hungry puppy dog allows us to compare the actions taken in the staggered variant and in the synchronized one the staggered variant exhibits cycles and players are both better off when there are strategic complementarities between them a timing game is then set up so as to endogenize the choice between the two variants we study two examples are developed i bertrand competition and ii a wage setting game when there are two monopoly unions in two interrelated firms we show that the staggering of price decisions generates counter cyclical mark ups in the first example and the staggering of wage decisions generates cycling output in the industry in the second example

strategic delegation and delay in negotiations over the bargaining agenda this paper develops a game theoretic model that endogenizes the items included in the bargaining agenda the model s equilibria suggest two possible sources of inefficiency 1 exclusion of items from the bargaining agenda and 2 delay to agreement due to negotiations over the bargaining agenda evidence from union contract negotiations is provided to demonstrate the relevance of these sources of inefficiency the model also allows strategic delegation by the union in certain equilibria the surplus maximizing union selects wage maximizing delegates such as senior union members to negotiate the contract

unions in oligopolistic vertically connected industries a model of two unionized vertically connected oligopolistic industries is analyzed economic performance measured by consumer prices depends on the institutional setting of wage bargaining two externalities may occur namely an integration and a competition externality which have contrary effects with decentralized bargaining no externalities can be internalized resulting in low consumer prices with bargaining at the industry level only the competition externality is internalized resulting in high prices with centralized bargaining both externalities can be internalized resulting again in low prices with at least two firms in each industry the decentralized setting performs best performance improves with an increase in the competition of the product markets author s abstract

excess worker reallocation workers face a trade off between macroeconomic and individual incentives to work in different occupations industries namely between search frictions and personal comparative advantages workers endowed with heterogeneous multi dimensional skills search for jobs that require different skill combinations in equilibrium specialized individuals contact few selected types of vacancies where they are likely to be hired those with weak comparative advantages are seldom chosen among competing applicants thus seek any job type in a tight labour market comparative advantages dominate waiting costs offsetting labour mobility across industries occupations excess worker reallocation is lower and matches are more successful consistently with direct and indirect evidence

recall and unemployment abstract we document in the survey of income and program participation covering the period 1990 2013 that a surprisingly large share of workers return to their previous employer after a jobless spe

longevity complementarities under competing risks many of the high expenditure health programs established by international organizations or national and subnational governments involve disease specific interventions such as measles vaccinations hiv education programs mammogram screening malaria prevention and lung cancer research typically these programs are evaluated solely upon the success or failure of their impact on the targeted disease this paper argues that such an exclusive evaluation may significantly underestimate the overall effect of disease specific interventions when multiple risks act as competing forces on life we suggest that programs that target one disease may have important spillover effects on the mortality and morbidity of other causes of death in order to better understand and evaluate the overall effects of disease specific programs it is necessary to understand and measure these spillover effects this paper provides a theoretical and empirical analysis of the incentives introduced by disease specific mortality interventions more precisely we discuss predictions about health investment incentives as implied by the competing risk model which is the empirical framework almost exclusively used to study multiple cause mortality we show that important complementary effects between niultiple causes of death operate to equalize the occurrence of the causes we argue that this complementarity should alter the evaluation of cause specific interventions by discrediting the argument that interventions are wasted because competing mortality risks are just around the corner in support of the existence of such complementarities we present substantive evidence from one of the most important public health programs ever introduced in developing countries the expanded programme on immunization epi of the united nations the paper is organized as follows section i provides a theoretical analysis arguing that the competing risk model of multiple causes of mortality corresponds to the leontief production function of survival this implies that there are inherent complementarities between investments in the prevention of cause specific mortality risks both on the individual level and on the aggregate level for competing risks the marginal benefit of investing to avoid one cause of death increases as a function of the survival rates of other causes the implications of this complementarity are important and have not received sufficient attention in theoretical or practical evaluations of causespecific interventions when mortality is treated as exogenous a disease specific intervention may seem wasteful if members of the targeted group are likely to die from a second cause as soon as the first has been eliminated then reducing the mortality from one cause of death would not appear to substantially increase life expectancy indeed this argument is repeatedly made by economists and demographers about medical care interventions in old age however it is sguided to use the preintervention background mortality when assessing the effectiveness of an interventionbehavior under one policy should not be assumed to prevail under a new policy as the leontief nature of competing risks predicts health investments will be focused upon he most immediate cause of death so that there are dow department of health policy and administration cb 7400 university of north carolina chapel hill nc 27599 philipson irving b harris graduate school of public policy studies department of economics and the law school university of chicago 1155 east 60th street chicago il 60637 sala i martin department of econornics columbia university 420 west 118th street 1005 new york ny 10027 and universitat pompeu fabra we are thankful to three anonymous referees for comments that substantially improved the paper and we especially acknowledge the contributions of jessica holmes who was a research assistant and co author on early drafts of this work we also thank gary becker kate howe steen jorgenson casey mulligan sherwin rosen paul schultz and participants at numerous workshops for discussions dow acknowledges financial support from national institute on aging grant no t32 ag00244 philipson from the national science foundation and the rockefeller foundation this research was begun while all authors were at yale university during 1994

estimating a household production function heterogeneity the demand for health inputs and their effects on birth weight the household production literature emphasizes that technical or biological processes condition input selection by households in their production activities along with prices and income exogenous variations in health to the extent that they are perceived by individuals heterogeneity lead to correlations between inputs and health outcomes that cannot be used to derive causal conclusions therefore estimates of health technology must be obtained from a behavioral model in which health inputs are themselves choices consistent estimates are reported of the effect of endogenous inputs such as medical care smoking and fertility on birth weight and fetal growth in the presence of health heterogeneity

the relative profitability of nash bargaining on the labour demand curve or the contract curve abstract given the nash bargaining solution with parametric bargaining strengths and threat points it is shown that profits are often higher if the bargaining agenda between a union and a single firm or two unions and cournot duopolists excludes employment

public health insurance and medical treatment the equalizing impact of the medicaid expansions abstract we investigate the impact of expanding public health insurance on the medical treatment received by women at childbirth using vital statistics data on every birth in the us over the 1987 1992 period the effects of insurance status on treatment are identified using the tremendous variation in eligibility for public insurance coverage under the medicaid program over this period among low education mothers who were largely uninsured before being made eligible for medicaid eligibility for this program was associated with significant increases in the use of a variety of obstetric procedures among women with more education however there is a countervailing effect on procedure use most of these women had private insurance before becoming medicaid eligible and some may have been crowded out onto the public program moving from insurance which reimburses medical care more generously to insurance with much less generous reimbursement this movement was accompanied by reductions in procedure use thus on net the medicaid expansions had an equalizing effect increasing the treatment intensity of the previously uninsured while lowering it among the previously insured

the strategic choice of union oligopoly bargaining agenda abstract this article analyzes the optimal choice of union oligopoly bargaining agenda i e right to manage versus efficient bargaining under possible market entry it is shown that agreement by both the union and the incumbent firm about efficient bargaining emerges as equilibrium in nash strategies even more so under non blockaded entry for deterrence motives this is consistent with the common empirical findings that unionized firms do not behave according to the prediction of the right to manage model that employment will be on the labor demand curve the entry deterrence effect highlighted in this paper also suggests that labor market organization should not be overlooked as a component of the welfare analysis of product market competition

asynchronous choice and markov equilibria we provide a theoretical foundation for the use of markov strategies in repeated games with asynchronous moves if admissible strategies must display finite arbitrarily long memory and each player incurs a complexity cost which depends on the memory length required by her strategy then every nash equilibrium must be in markovian strategies if in addition admissible strategies have uniformly bounded memory every rationalizable strategy must be markovian these results are robust to considerations of perfection and also yield interesting implications for equilibrium selection in simple contexts

internet job search and unemployment durations after decades of stability the technologies used by workers to locate new jobs began to change rapidly with the diffusion of internet access in the late 1990 s which types of persons incorporated the internet into their job search strategy and did searching for work on line help these workers find new jobs faster we address these questions using measures of internet job search derived from the december 1998 and august 2000 cps computer and internet supplements matched with job search outcomes from subsequent cps files we find that internet searchers are positively selected on observables but negatively selected on unobservables a beneficial unemployment duration reducing causal effect of internet job search is consistent with our estimates only if negative selection on unobservables is especially strong in other words only if the population of on line resumes is strongly adversely selected

the establishment level behavior of vacancies and hiring this paper is the first to study vacancies hires and vacancy yields at the establishment level in the job openings and labor turnover survey a large sample of u s employers to interpret the data we develop a simple model that identifies the flow of new vacancies and the job filling rate for vacant positions the job filling rate moves counter to aggregate employment but rises steeply with employer growth rates in the cross section it falls with employer size rises with worker turnover rates and varies by a factor of four across major industry groups we also develop evidence that the employer level hiring technology exhibits constant returns and that at the employer level and that employers rely heavily on other instruments in addition to vacancies as they vary hires we also develop evidence that effective recruiting intensity per vacancy varies over time accounting for about 41 of movements in aggregate hires in the 2007 to 2009 period our evidence and analysis provide useful inputs for assessing developing and calibrating theoretical models of search matching and hiring in the labor market

alternative time patterns of decisions and dynamic strategic interactions this paper offers a simple approach to study steady state markov perfect equilibria arising in dynamic games when players are obliged to commit their actions for several periods it highlights the importance of spillovers and dynamic strategic interactions when assessing the various time patterns conceivable in such games the obtained results are then applied to various either micro or macroeconomic issues where time patterns of decisions matter

nash in nash bargaining a microfoundation for applied work a nash equilibrium in nash bargains has become the workhorse bargaining model in applied analyses of bilateral oligopoly this paper proposes a non cooperative foundation for nash in nash bargaining that extends the rubinstein 1982 model to multiple upstream and downstream rms assuming there exists gains from trade for each rm pair we prove that there exists an equilibrium with immediate agreement and negotiated prices that correspond to rubinstein prices if and only if the marginal contribution of a set of agreements is weakly greater than the sum of the agreements marginal contributions we provide stronger conditions under which equilibrium prices are unique

margins concentration unions and the business cycle theory and evidence for britain abstract a number of recent studies have examined the cyclical relationship between price cost margins concentration and unions u s data has concluded that unions reduce margins margins vary over the cycle and concentration unionisation and the cycle interact in their effect on margins however there is almost no theory to account for these results we propose a simple theory that assumes only that there is overhead labour present at the firm this produces theoretical predictions that can explain these results and discriminate between existing theories we present results of our own using u k panel data and show similar findings to the u s

access to care provider choice and the infant health gradient poor women typically use different medical providers than the non poor resulting in de facto segregation of the poor in separate hospitals they also have worse birth outcomes this holds even for poor women with full insurance through medicaid and controlling for geographic location in this paper we explore the causes and consequences of using different providers we exploit an exogenous change in policy that occurred in california in the early 1990s that suddenly increased medicaid payments to providers we find that women with medicaid began delivering in the same hospitals as those with private insurance suggesting that lack of access was partly responsible for the segregation and the observed differences in health however we find that individual choice not just access also matters we find that black mothers responded least to the increase in provider access afforded by the policy change even though they benefited the most in terms of reduced neonatal mortality and fewer pre term births

first do no harm tort reform and birth outcomes in the 1980s and 1990s many states adopted tort reforms it has been argued that these reforms have reduced the practice of defensive medicine arising from excess tort liability we find that this does not appear to be true for a large and important class of cases childbirth in the united states using data from national vital statistics natality files on millions of individual births from 1989 to 2001 we ask whether specific tort reforms affect the types of procedures that are performed and the health outcomes of mothers and their infants we find that reform of the joint and several liability rule or the deep pockets rule reduces complications of labor and procedure use whereas caps on noneconomic damages increase them we show that these results are consistent with a model of tort reform that explicitly allows for variations in patient condition

physician payment and prenatal care access for heterogeneous patients i introduction following medicare s shift to the prospective payment system pps from cost based reimbursement to hospitals in 1983 many payers shifted to prospective fees for physician services physician payment for prenatal care for medicaid patients in washington state is one example in addition these prospective fees have changed over time physicians serving pregnant medicaid patients have received the predetermined lump sum payment for the entire course of prenatal care visits this prenatal care fee determined by the state increased between 1988 and 1990 despite the lack of variation represented in the fixed fee schedule the medicaid population is not uniform with respect to relative medical risk some patients such as women over 35 will likely require relatively more resources in treatment than other pregnant women in low risk age groups this paper explores physician behavior in response to changes in medicaid prospective fees in terms of their differential acceptance of patients according to their perceived medical risk the hypothesis that some patients may be favored due to cream skimming and others turned away is difficult to detect empirically the primary difficulty is that with many services those turned away are not observed in the sample prenatal care is an appropriate service to test for this behavior since patients who receive no prenatal care are observed once birth occurs empirical results are presented which use the changes in fees to physicians to detect differential acceptance of patients the sample is derived from medicaid data for prenatal care provision in washington state it is found that increasing fees are significant in earlier initiation of prenatal care for the average patient p less than 05 joint tests refute the null hypothesis of no differential fee effects across the range of maternal characteristics as fees rise however it is found that hispanics and single patients will have relatively greater access to care following a fee increase black mature and non white patients show no significant differential access relative to their dichotomous counterparts as a result of the fee increase theoretical models have addressed the issue of differential access to care due to patient selection by insurers and physicians pauly 1984 examines the issue of insurers cream skimming or denying medical insurance to those perceived as high risk and concludes that it theoretically should not occur since prices may adjust to compensate for financial risk newhouse 1984 notes however that the lack of price adjustments present in the insurance market allow cream skimming to occur ellis 1993 presents a model of physician behavior where cream skimming occurs on the basis of case severity he also examines the possibility of reducing quality skimping empirical models that have attempted to detect patient selection have analyzed aggregate level e g hospital level or state level data to detect changes in the pool of patients receiving care the results generally rely on the interpretation that a less medically risky pool is evidence of patient selection one body of work examines the average case severity at the hospital level following the implementation of medicare s pps as in russell and manning 1989 and newhouse 1989 changes in medicaid payments are also analyzed at the state level to determine their subsequent effect on changes in infant mortality by currie gruber and fischer 1994 more recently ellis and mcguire 1996 examine the changes in average case severity due to reimbursement changes in order to detect hospital selection of patients the literature on prenatal care is concerned with the effectiveness of care as well as the adequacy of care received huntington and connell 1994 note that various studies of the efficacy of prenatal care are flawed for a variety of reasons and note that ensuring that low income women receive prenatal care requires more than simply paying the bill for this care

upskilling do employers demand greater skill when workers are plentiful using a proprietary database of online job postings we find that education and experience requirements rose during the great recession these increases were larger in states and occupations that e

worker turnover at the firm level and crowding out of lower educated workers this paper investigates whether employers exploit cyclical downturns to improve the average skill level of their work force we use a unique dataset that contains information on workers jobs as well as firm characteristics our findings are that at each job level mainly lower educated workers leave during downturns furthermore at each level of job complexity workers with a higher education are not more productive than lower educated workers we find no evidence that higher educated workers crowd out lower educated workers during recessions

why did the ssi disabled program grow so much disentangling the effect of medicaid the number of participants in the ssi program grew by 1 1 million from 1987 to 1993 this paper examines the role of medicaid on the ssi participation decision i use the rapid growth in average medicaid expenditure as a proxy for its value ols estimates of medicaid s effect may be biased because of omitted variables bias and measurement error i therefore apply two stage least squares to estimate medicaid s effect using average medicaid expenditure for blind ssi recipients as an instrument these estimates show that rising medicaid expenditure significantly increased ssi participation among adults with low permanent incomes explaining 20 of the growth

immigration and inequality immigration is often viewed as a proximate cause of the rising wage gap between highand low skilled workers nevertheless there is controversy over the appropriate theoretical and empirical framework for measuring the presumed effect and over the precise magnitudes involved this paper offers an overview and synthesis of existing knowledge on the relationship between immigration and inequality focusing on evidence from cross city comparisons in the u s while some researchers have claimed that a cross city research design is inherently flawed i argue that the evidence from cross city comparisons is remarkably consistent with recent findings based on aggregate time series data in particular cross city and aggregate time series comparisons provide support for three key conclusions 1 workers with below high school education are perfect substitutes for those with a high school education 2 high school equivalent and college equivalent workers are imperfect substitutes with an elasticity of substitution on the order of 2 3 within education groups immigrants and natives are imperfect substitutes together these results imply that the average impacts of recent immigrant inflows on the relative wages of u s natives are small the effects on overall wage inequality including natives and immigrants are larger reflecting the concentration of immigrants in the tails of the skill distribution and higher residual inequality among immigrants than natives even so immigration accounts for a small share 5 of the increase in u s wage inequality between 1980 and 2000

on endogenously staggered prices taylor s model of staggered contracts is an influential explanation for nominal inertia and the persistent real effects of nominal shocks however in standard imperfect competition models if agents are allowed to choose the timing of pricing decisions they will typically choose to synchronize this paper provides a simple model of imperfect competition which produces stable staggering our argument relies on strategic interaction at two levels between firms within an industries and across industries and produces a continuum of staggered price equilibria these equilibria are strict and hence stable under a simple adaptive learning process an enduring problem for business cycle theory is an explanation for the persistent effects of nominal shocks explaining persistence is particularly problematic for theories based on nominal shocks as opposed to real shocks this is because rational expectations implies that nominal shocks themselves cannot be serially correlated since nominal shocks are the deviation of realized nominal magnitudes from expected values in two important papers taylor 1979 1980 provided an argument as to why a nominal shock can have persistent effects taylor s argument required two important assumptions first he assumed that firms could adjust prices only in alternate periods an assumption which may be justified by menu or information costs taylor s second assumption was that price setting was staggered half the firms were constrained to adjust prices in odd periods while the other half were allowed to adjust prices in even periods these two assumptions combined to provide dramatic results on nominal inertia the adjustment of prices to a nominal shock is slow and hence output effects are long lasting taylor s results on persistence arise due to strategic complementarity between price setting decisions this implies that each firm s optimal price is an increasing function of the aggregate price level if a shock arrives in an even period firms in the even cohort will not adjust fully to the nominal shock since firms in the odd cohort have fixed prices in the current period furthermore with rational expectations the even cohort also takes into account the fact that its own failure to adjust fully will also make for partial adjustment in future periods this elegant story has made taylor s model possibly the most influential of new keynesian models by providing a dynamic setting within which small nominal rigidities may result in persistent nominal inertia

prenatal care demand and birthweight production of black mothers infant mortality in the united states has declined by one half in the past 20 years for both blacks and whites though the black infant mortality rate has steadily remained twice the white rate helen wallace 1994 the incidence of low birthweight unfortunately has remained almost unchanged over the same time period again with the black rate being twice the white rate wallace 1994 these two trends taken together suggest that the reduced mortality rate is due entirely to medical advances which allow more small weak and sick newborns to survive this paper investigates the health of newborns using the approach of mark rosenzweig and paul schultz 1982 1983 see also eugene lewit 1983 their work is extended by incorporating the number of visits and a visitsxdelay interaction term into prenatal care demand the goal is to obtain consistent estimates of the impact of prenatal care on infant birthweight these estimates can then be used to design interventions aimed at reducing the incidence of low birthweight