the transition to the knowledge economy labor market institutions and income inequality in advanced democracies the transition from fordism to the knowledge economy in the world s advanced democracies was underpinned by the revolution in information and communications technology ict the introduction and rapid diffusion of ict pushed up wages for college educated workers with complementary skills and allowed top managers and ceos to reap greater rewards for their own talents despite these common pressures income inequality did not rise to the same extent everywhere income in the anglo saxon countries remains particularly unequally distributed to shed new light on this puzzle the authors carry out a panel data analysis of eighteen oecd countries between 1970 and 2007 their analysis stands apart from the existing empirical literature by taking a comparative perspective the article examines the extent to which the relationship between the knowledge economy and income inequality is influenced by national labor market institutions the authors find that the expansion of knowledge employment is positively associated with both the 90 10 wage ratio and the income share of the top 1 percent but that these effects are mitigated by the presence of strong labor market institutions such as coordinated wage bargaining strict employment protection legislation high union density and high collective bargaining coverage the authors provide robust evidence against the argument that industrial relations systems are no longer important safeguards of wage solidarity in the knowledge economy

unemployment growth and taxation in industrial countries unemployeement and taxes do taxes affect the rate of umemployeement to the layman the upward trend in european unemployment is related to the slowdown of economic growth we argue that the layman s view is correct the increase in european unemployment and the slowdown in economic growth are related because they stem from a common cause an excessively rapid growth in the cost of labour in europe labour costs have gone up for many reasons but one is particularly easy to identify higher taxes on labour if wages are set by strong and decentralized trade unions an increase in labour taxes is shifted onto higher real wages this has two effects first it reduces labour demand and thus creates unemployment secondly as firms substitute capital for labour the marginal product of capital falls over long periods of time this in turn diminishes the incentive to invest and to grow the data strongly support this view according to our estimates the observed rise of 14 percentage points in labour tax rates between 1965 and 1995 in the eu could account for a rise in eu unemployment of roughly 4 percentage points a reduction of the investment share of output of about 3 percentage points and a growth slowdown of about 0 4 percentage points a year francesco daveri and guido tabellini

are judges leading economic theory sunk costs the threat of entry and the competitive process in this paper we attempt to bring theoretical form to a particular entry argument that has found favor in the courts we suggest that sunk costs may not be a major impediment to entry when a group of customers can commit to an entry enhancing strategy buyers have strong incentives to adopt such strategies because they benefit directly from the resulting lower prices the simplest example involves a large buyer that is able to guarantee an entrant a market for its product long term contracts or even informal purchase commitments backed by customer reputation may also allow the entrant to obtain a guarantee of sufficient business to make the entry profitable once entry is thought likely to occur the existing competitors may be unwilling to attempt a price increase of any magnitude thus the threat of entry can maintain competitive prices even in the presence of sunk costs in section ii we motivate the analysis by discussing the current controversy over the role entry conditions play in an antitrust merger review then we discuss the necessary assumptions for a model of how the threat of entry can deter any price increase in the presence of sunk costs we note that these conditions are different from those commonly used in the economic literature

the labour market in the new information economy the extension of information and communication technologies to economic activity is changing the labour market in important ways this article shows that computerization and use of the internet are associated with greater hours worked as well as higher wages that it occupations are rapidly increasing their share of employment that job search and recruitment are moving rapidly to the web with consequences for matching employers and employees and possibly most important of all that trade unions have begun to use the internet as a tool for servicing members and carrying their message to the public raising the possibility of a major change in the nature of the union movement

price instability and inflation some tests based on rational expectations models abstract we test for a group of fourteen latin american countries the hypothesis that as inflation accelerates it also becomes more volatile our analysis uses time series data a less arbitrary measure of inflation volatility rational expectations models and seemingly unrelated regressions the empirical evidence supports the above hypothesis and strengthens the case against inflationary policies in latin america

the rising skill premium and deunionization abstract during the past 50 years the us economy has seen a rapid decline in labor union membership and a substantial rise in wage inequality since labor unions compress wages between skilled and unskilled workers a rising skill premium encourages skilled workers to withdraw from the union if this withdrawal is accompanied by a fall in the productivity of unskilled workers firms become reluctant to hire the relatively expensive union workers reinforcing the decline in the unionization rate evaluating this hypothesis we find that the rise in the skill premium explains about 40 of the decline in the unionization rate

deregulation shock in product market and unemployment in a dynamic general equilibrium model with endogenous markups and labor market frictions we investigate the effects of increased product market competition unlike most macroeconomic models of search we endogenize the labor supply along the extensive margin we find numerically that a model with endogenous labor force participation decision produces a decline in the unemployment rate which is almost three times larger than that in a model with fixed labor force for a calibration capturing alternatively the european and the us labor markets a deregulation episode which lowers the markup by 3 percentage points results in a fall in the unemployment rate by 0 17 and 0 05 percentage point respectively while the labor share is almost unaffected in the long run the sensitivity analysis reveals that product market deregulation is more effective in countries where product and labor market regulations are high unemployment benefits are small and labor force is more responsive

can the scala mobile explain the fall and rise of earnings inequality in italy a semiparametric analysis 1977 1993 this article uses survey of households income and wealth microdata to investigate the role the scala mobile played in the initial fall and subsequent rise in earnings inequality in italy between 1977 and 1993 the scala mobile was a wage indexation mechanism granting the same absolute wage increase to all employees as prices rose thereby potentially compressing wage differentials over time the potential equalizing effect of this mechanism fell this article argues that the rise in inequality from the mid 1980s was a response to the compression of differentials operated over the previous years by the scala mobile

the relationship between the inflation rate and its variability the issues reconsidered this paper empirically reexamines the hypothesis of a positive relationship between the inflation rate and its variability the sample consists of 66 countries for the 1955 85 sample period using pooled cross section time series data empirical tests are performed for nine different country groupings ranging from the g 7 developed countries to a group of 10 developing asian countries several important conclusions can be derived first irrespective of the variability measure employed the results indicate the presence of a significant positive relationship between the inflation rate and its variability this provides strong support to okun s hypothesis second this relationship is stronger during the flexible rather than the fixed exchange rate period third there appears to be an optimum zone of inflation rate within which the predictability of inflation is at its highest and hence uncertainty cost is at its lowest for the 1955 85 sample period this optimum zone of average inflation rate lies in th

costs of maintaining a cartel the costs of operating a cartel are determined by the effort spent on policing member firms and errors in detection of cheaters an output review is modeled that may be used with tr igger pricing in the presence of a wiener process to describe distur bances in demand the cartel uses trigger pricing first and then swit ches to an output review costs generated by cartel maintenance affec t social welfare and provide a foundation for analyzing the impact of a cartel on society copyright 1987 by blackwell publishing ltd

is the u s labor market really that exceptional a review of richard freeman america works is a splendid book and richard freeman is to be congratulated on producing a work that sets out what is right and what is wrong with the u s labor market while being a joy to read while i am generally sympathetic to both the analysis and the conclusions there are a number of points of disagreement that i highlight in this review in particular i would add to his policy recommendations by taking a gamble and enacting a law that entitled all employees in the united states to four weeks paid holiday per year in addition to public holidays this may transform summertime in the united states

altruism jealousy and the theory of optimal non linear taxation abstract this paper studies optimal non linear taxes in a world in which there is altruism and jealousy a formula for optimal marginal tax rates is derived which turns out to be a simple and intuitively appealing extension of a result due to mirrlees the paper shows that in this sort of economy all of optimal tax theory s general results either no longer hold or need not hold and it sets out appropriate modifications to standard tax rules

intra firm bargaining under non binding contracts we present a new methodology for studying the problem of intra firm bargaining based on the notion that contracts cannot commit the firm and its agents to wages and employment we develop and analyse a general non cooperative multilateral bargaining framework between the firm and its employees and consider outcomes which are immune to renegotiations by any party equilibrium firm profits are characterizable as both a weighted average of a neo classical non bargaining firm s profits and a generalization of shapley value for a corresponding cooperative game furthermore the resulting payoffs induce economically significant distortions in the firm s input and organizational design decisions

the level and uncertainty of inflation results from oecd forecasts bryce e kanago there is considerable evidence that inflation variability and the level of inflation are positively related across countries evidence of a within county relation is mixed evidence for a significant positive relation comes mostly from studies using some survey measure contrary evidence comes mostly from studies using regression errors our measure of uncertainty is the squared forecast error from organization for economic cooperation and development inflation forecasts most countries do not exhibit a positive and significant relation the greatest number of positive coefficients is for relative uncertainty regressed on contemporaneous inflation jel e310 e370 1342 1340 1323 i introduction although empirical studies have not reached a unanimous conclusion most economists believe one detriment of high inflation is the greater uncertainty it generates about future inflation affirmative evidence of a positive relation between inflation and uncertainty is most frequently found in cross country studies that regress some measure of variability or uncertainty for each country on their average inflation rate time series regressions for individual countries provide mixed results those time series studies that derive inflation uncertainty from a survey of forecasters conclude that higher inflation causes greater uncertainty time series studies that derive uncertainty from ex post regressions constructed by researchers provide most of the negative evidence 1 it is tempting to dismiss this negative evidence as the consequence of poorly or opportunistically constructed ex post forecasts in this paper we use annual inflation forecasts for organization for economic cooperation and development oecd countries that have been published in the oecd s economic outlook for about 30 years these data circumvent the problems of constructing forecasts after the fact for each date and each country a single forecast is provided by contrast survey data such as the livingston data average the forecasts of a number of respondents to the extent that the survey sample is representative of the population the surveys may provide a better approximation to the public s expectations however survey respondents have nothing to lose if their forecasts are wildly inaccurate whereas professional forecasters put their reputation on the line a distinct advantage of the published forecasts is that the oecd provides forecasts for 24 countries whereas surveys are available for only a few countries of course ex post forecasts could be constructed for the same set of countries while these ex post forecasts could utilize modern econometrics techniques such as autoregressive conditional heteroscedasticity arch and time varying parameters they cannot replicate the specialized human capital the judgment or the particular perspective of the times that were used to construct ex ante forecasts davis and kanago 1998 regressed the squared error from ex ante inflation forecasts produced and published by business international on inflation and found no significant relation for most countries this result makes it less tempting to dismiss the time series evidence of ex post inflation forecasts we extend the results of davis and kanago 1998 by computing the same regression but using squared errors from ex ante forecasts made by the oecd and published in economic outlook the 24 countries in the oecd data include canada iceland luxembourg new zealand the united states and turkey that are not included in the business international data for some countries the oecd data includes a few more years than the business international data the results from the oecd and business international data are broadly similar few countries show a significant relation between inflation and uncertainty we further test the robustness of these results by using relative uncertainty as the dependent variable

top incomes in germany and switzerland over the twentieth century this paper presents new homogeneous series on top income shares in germany 1891 1998 and switzerland 1933 1995 using data from income tax returns the general pattern is consistent with recent results for france the secular decline in income inequality is for the most part an accidental capital income phenomenon very top incomes were badly hurt by the major shocks of the 1914 1945 period and never fully recovered afterwards since 1945 top income shares have been relatively stable with no rise during recent years unlike in the u s the striking episode before wwii is how nazi power brought top income shares to almost double within five years the striking result after wwii is that german top incomes are more concentrated within the top decile than in other industrialized countries thus the german super rich were richer than their american counterparts until the 1990s this puzzle is related to the much lower inheritance tax rates observed in germany since wwii jel n33 n34 h23 h24 h23 h24 h23 h24 h23 h24

when more flexibility yields more fragility the microfoundations of keynesian aggregate unemployment abstract wages are an element of cost crucially affecting the competitiveness of individual firms but the wage bill is also a crucial element of aggregate demand hence it could be that more flexible and fluid labour markets while allowing for faster inter firm reallocation of labour may also render the whole economic system more fragile more prone to recession and more volatile in this work we investigate some conditions under which such a conjecture applies the paper presents an agent based model that investigates the effects of two archetypes of capitalism in terms of regimes of labour governance defined by the mechanisms of wage determination firing labour protection and productivity gains sharing upon i labour market regularities and ii macroeconomic dynamics long term rates of growth gdp fluctuations unemployment rates inequality etc the model is built upon the keynes meets schumpeter family of models dosi et al 2010 explicitly incorporating different microfounded labour market regimes our results show that seemingly more rigid labour markets and labour relations are conducive to coordination successes leading to higher and smoother growth

a quantile framework for analysing the links between inflation uncertainty and inflation dynamics across countries in contrast to the conventional conditional mean approaches this study uses quantile regression techniques to present some new statistical evidence on the links between inflation uncertainty and the level of inflation with cross sectional data from 90 countries during the period 1961 to 2006 the results suggest that positive inflation shocks have stronger impact on inflation uncertainty which varies across the quantiles furthermore popular time series models are evaluated for their ability to reproduce measures of uncertainty and indicate similar results regarding the relationships between inflation and inflation uncertainty

regional labor markets and the determinants of wage inequality from 1972 to 1990 the united states experienced the largest increase in wage inequality of any developed country the spread in log wages between the 90th and 10th percentiles of the male wage distribution increased by about 60 points and inequality increased within virtually every demographic or skill category of the labor force see chinhui juhn et al 1993 various explanations have been offered including changes in the relative demand for skill intensive goods international trade immigration of less skilled workers and increased labor force participation of women yet attempts to quantify the relative importance of these factors have not met with much success this leaves skill biased technical change as the residual claimant that rationalizes the data this paper uses regional differences in the evolution of wage inequality to provide new evidence on the determinants of relative wages using a model of factor demand in geographic markets i isolate contributions of i changing skill ratios in the labor force ii increased participation of women iii technical change and iv changes in the industrial composition of labor demand the data indicate that changing skill ratios and women s labor supply have affected the wages of low skilled men in the west the data indicate that increased immigration of less skilled hispanic and asian workers has adversely affected the wages of natives causing a greater increase in inequality there than in any other region of the country i modeling wage inequality in regional markets

market oriented institutions and policies and economic growth a critical survey this paper surveys recent evidence suggesting that market oriented institutions and policies are strongly related to economic growth focusing on studies using the economic freedom ef indicator of the fraser institute this index is critically discussed also various serious shortcomings of empirical studies using this index are identified nevertheless there are strong indications that liberalization i e an increase in the ef index stimulates economic growth this paper also reviews studies on the determinants of ef political liberalization is often found to enhance economic liberalization whereas there is less evidence for causality running in the other direction

the welfare state and competitiveness in all industrial countries fiscal policy is increasingly about redistribution in this paper the authors study redistribution across different types of agents in a world characterized by the presence of labor unions and distortionary taxation they show that an increase in transfers financed by distortionary taxation has nonlinear effects on unit labor costs relative to the other countries depending on the degree of centralization of the wage setting process in the labor market the authors find considerable empirical support for the model in a sample of fourteen oecd countries copyright 1997 by american economic association

optimal cartel trigger price strategies abstract a dynamical model of industry equilibrium is described in which a cartel deters deviations from collusive output levels by threatening to produce at cournot quantities for a period of fixed duration whenever the market price falls below some trigger price in this model firms can observe only their own production level and a common market price the market demand curve is assumed to have a stochastic component so that an unexpectedly low price may signal either deviations from collusive output levels or a downward demand shock

income inequality in the united states 1913 1998 this paper presents new homogeneous series on top shares of income and wages from 1913 to 1998 in the united states using individual tax returns data top income and wages shares display a u shaped pattern over the century our series suggest that the large shocks that capital owners experienced during the great depression and world war ii have had a permanent effect on top capital incomes we argue that steep progressive income and estate taxation may have prevented large fortunes from fully recovering from these shocks top wage shares were flat before world war ii dropped precipitously during the war and did not start to recover before the late 1960s but are now higher than before world war ii as a result the working rich have replaced the rentiers at the top of the income distribution

differences in hours worked in the oecd institutions or fiscal policies we study the determinants of the level and the evolution of per capita hours worked in a panel of oecd countries since the 1970s following pesaran 2006 our empirical strategy allows for the possibility of cross sectionally correlated error terms due to unobserved common factors which are potentially nonstationary we find that much of the variation in per capita hours worked across countries and over time can be explained by differences in the level and structure of taxes and government expenditures differences in the evolution of labor and product market institutions have much less of a role to play our results show that a careful treatment of the time series properties of the data is crucial

the role of shocks and institutions in the rise of european unemployment the aggregate evidence two key facts about european unemployment must be explained the rise in unemployment since the 1960s and the heterogeneity of individual country experiences while adverse shocks can potentially explain much of the rise in unemployment there is insufficient heterogeneity in these shocks to explain cross country differences alternatively while explanations focusing on labour market institutions explain current heterogeneity well many of these institutions pre date the rise in unemployment based on a panel of institutions and shocks for 20 oecd nations since 1960 we find that the interaction between shocks and institutions is crucial to explaining both stylised facts

selected works of michael wallerstein centralized bargaining and wage restraint the literature on corporatism has presented much evidence associating highly centralized systems of collective bargaining with wage restraint and relatively successful macroeconomic performance in addition centralized bargaining is associated with relatively small wage differentials this paper presents a model of the impact of centralized wage setting on both real wages and relative wages the central assumption is that the centralization of wage setting at the national level unites unions who are complements in production since a wage increase for one group of workers negatively affects the welfare of other workers who are complements in production centralized wage setters choose wages below the equilibrium of decentralized wage setting it is also shown that if the union confederation maximizes a utilitarian welfare function with equal weights centralized wage setting decreases wage dispersion while low paid workers clearly gain from centralized bargaining high paid workers may prefer that bargaining be decentralized

when unionization disappears state level unionization and working poverty in the united states although the working poor are a much larger population than the unemployed poor u s poverty research devotes much more attention to joblessness than to working poverty research that does exist o

self employment in the eu quality work precarious work or both this paper estimates the differences in earnings between self employed and employees in the eu using the european union statistics on income and living conditions data and quantile regression methods it finds that in both eastern and western europe self employment pays more than regular employment only for workers at the top of the earnings distribution and considerably less than regular employment for those below the median these differences are smaller in eastern europe reflecting lower protection of regular employees this pattern is not driven by low skilled workers and it can be observed in both high skilled and low skilled occupations results are robust to accounting for differences in taxation hours worked and individual unobserved characteristics the evidence provided points to the lack of protective rights for the self employed and low earnings at the beginning of the self employment spells as the main explanations for lower earnings for the majority of self employed

patterns of work across the oecd market work per person of working age differs widely across the oecd countries and there have been some significant changes in the last forty years how to explain this pattern taxes are part of the story but much remains to be explained if we include all the elements of the social security systems like early retirement benefits sickness and disability benefits and unemployment benefits then we can capture some aspects of the overall pattern but still a lot remains unexplained the story favoured by alesina et al cepr dp 5140 2005 is that the nexus of strong unions generous welfare and social democracy implies both high taxes and pressure in favour of work sharing in response to adverse shocks this story however falls foul of the simple fact that most scandinavian countries now do much more work than the french and germans despite having stronger unions more generous welfare higher taxes and more social democracy ultimately we are forced into the position that there is no simple story some of the broad patterns can be explained but there remain country specific factors which are hard to identify but lead to substantial differences from one country to another

on limiting the market for status signals abstract in many societies individuals care how others view them in their efforts to impress such individuals engage in consumption signals which attempt to establish higher levels of status than their true status type this leads to an inefficiency which offers the possibility of a pareto improving tax policy the impacts of tax policy and benefits on the signalling equilibrium are considered

the effect of unions on wage inequality in the u s labor market this study uses current population survey micro data for 1973 74 and 1993 to evaluate the effect of changing union membership on trends in male and female wage inequality unionization rates of men fell between the two sample periods with bigger declines among lower skill groups these trends account for 15 20 of the rise in male wage inequality union membership rates of low wage women also declined while unionization increased among higher wage women on balance shifting unionization accounts for very little of the rise in female wage inequality economy wide trends in unionization mask a sharp divergence between the private sector where unionism was declining and the public sector where it was rising comparisons across sectors suggest that unionization substantially slowed the growth in wage inequality in the public sector

constrained by hours and restricted in wages the quality of matches in the labor market this paper examines the explicit loss born by workers who face constraints in their working hours by analyzing differences in actual and desired hours and wages men tend to be underemployed while women are evenly split between over and underemployment losses in surplus are generally small but 10 of underemployed men and women experience losses of more than 34 or 50 of surplus respectively the loss measure is also an important determinant in predicting labor market transitions meaning increases in surplus losses generate a higher probability of changing from workers present jobs or changing the number of hours jel j22 j41

capital deepening and wage differentials germany versus us in flexible labour markets capital increases the productivity of skilled workers more than that of unskilled workers and in the us faster investment is associated with wider wage inequality but labour market institutions that keep unskilled workers wages high also imply that firms may find it profitable to invest so as to boost those workers productivity our empirical analysis based on industry level data confirms that a higher capital intensity in germany is associated with smaller wage differentials and with a larger share of unskilled workers in the labour costs changes in capital labour ratios during the 1980s reduced wage differentials by 5 8 in german industries while in the us capital deepening in such industries as machinery and retail was accompanied by an increase of wage differentials larger than 7 winfried koeniger and marco leonardi

economic change and rising income inequality in the oslo region the importance of knowledge intensive business services wessel t economic change and rising income inequality in the oslo region the importance of knowledge intensive business services regional studies the growth of market income inequality in the oslo region of norway between 1993 and 2004 is investigated using two measures it is shown that most of the change occurred within knowledge intensive business services and further within demographic subgroups changes in mean income between group inequality and shifts in the balance between segments of the economy are of minor importance the results support a combined focus on productive paths and institutions labour relations in particular appear as an important explanation however labour relations can hardly explain why men rather than women and western immigrants rather than non western immigrants converge towards employment in high profit businesses this particular pattern requires research beyond the economic and institutional landscape wessel t

do cognitive test scores explain higher u s wage inequality using microdata from the 1994 1998 international adult literacy survey for nine countries we examine the role of cognitive skills in explaining higher wage inequality in the united states we find that while the greater dispersion of cognitive test scores in the united states plays a part in explaining higher u s wage inequality higher labor market prices i e higher returns to measured human capital and cognitive performance and greater residual inequality still play important roles and are on average quantitatively considerably more important than differences in the distribution of test scores in explaining higher u s wage inequality

little innovation many jobs an econometric analysis of the italian labour productivity crisis during the past twenty years italy has realized changes in labour legislation leading to a decentralization of wage bargaining and increased flexibility in labour relations both these factors have helped to curb wage growth and to enhance employment growth but have also led to a crisis in italian labour productivity growth our estimates among 3 000 firms show that firms with high shares of flexible workers a high labour turnover and lower costs of labour relative to capital experienced significantly lower rates of labour productivity growth our findings raise doubts about the mainstream call for flexibilisation of european labour markets we argue hat the italian shift towards a low productive and labour intensive growth path is problematic gainst the background of an ageing population

job security provisions and employment european countries have enacted various job security provisions over the last 30 years employers are required to pay workers on separation or to give advance notice of termination in anything less than a perfectly functioning market there are effects of the provisions on employment incumbents are more likely to retain their jobs but new workers are less likely to be hired an examination of the european data suggests that severance pay requirements reduce employment

public employment and earnings inequality an analysis based on conditional and unconditional quantile regressions studies investigating the link between public employment and earnings inequality based on micro data typically make use of conditional quantile regressions such analysis reveals why earnings may be more or less dispersed among public sector than private sector workers but does not allow drawing conclusions about its impact on overall earnings inequality the unconditional quantile regression technique proposed by firpo et al 2009 overcomes this deficiency and this technique is applied here to show that a fall in public employment may raise or reduce earnings inequality depending on country specificities the paper also highlights the complementary roles of conditional and unconditional quantile regressions in investigating the determinants of earnings inequality

wage setting institutions and pay inequality in advanced industrial societies the distribution of pay differs significantly across countries and over time among advanced industrial societies in this paper institutional and political determinants of pay inequality are studied in sixteen countries from 1980 to 1992 the most important factor in explaining pay dispersion is the level of wage setting i e whether wages are set at the level of the individual the plant the industry or the entire private sector the impact of centralization is the same whether centralization occurs via collective bargaining or via government involvement in private sector wage setting the concentration of unions and the share of the labor force covered by collective bargaining agreements also matter after controlling for wage setting institutions other variables such as the governing coalition the size of government international openness and the supply of highly educated workers have little impact economic political and norm based explanations for the association of centralization with egalitarian outcomes are discussed

does decreasing working time reduce environmental pressures new evidence based on dynamic panel approach abstract there is a growing interest in the correlation between working time and environmental pressures but prior empirical studies were mostly focused on static methods within limited country groups to fill the gap this study aims to stimulate the discussion by distinguishing between different time periods for developed and developing country groups respectively in particular we contribute to a further understanding of the environmental effects of working time reduction policies by comparing the differences under the dynamic framework of system generalized method of moments we applied this dynamic panel regression approach for 55 countries worldwide over the period 1980 2010 and employing carbon emissions per capita as the environmental indicator in general results confirmed the significant relationship between hours of work and environmental impacts in developed economies although this is not the case for the developing counterparts interestingly the significant correlations for the developed country group turned from positive during the first sub period 1980 2000 to negative during the second sub period 2001 2010 connecting these results with previous literature we proposed the reasons of rebound energy use derived from certain leisure activities which were more energy intensive if excessive non working time provided

veblen effects political representation and the reduction in working time over the 20th century abstract we explain the substantial decline in work hours over the 20th century by the joint influence of the employees pecuniary emulation of the conspicuous consumption of top income earners and the balance of political power of employers and employees in the presence of conflicts of interest over the issue of working time we present a new labor discipline model incorporating veblen effects in which hours are determined by employers and subject to complete contracts but employee work effort is not we show that while veblen effects increase the hours sought by employees the hours selected by profit maximizing employers may exceed that preferred by employees who may then seek to reduce work hours by means of collective bargaining or governmental intervention we also identify conditions under which employees will prefer longer hours than offered by employers using newly available data on top income shares and on work hours from 10 major industrial economies and covering the entire past century we test two hypotheses that increases in the relative incomes of the very rich are associated with increased hours while increases in the political representation of workers have the opposite effect the estimated effects are large in economic magnitude highly significant and robust to alternative econometric specifications including country and time fixed effects using an alternative data set covering the last third of the past century we show that these results are robust to the inclusion of a measure of taxation and find that decentralized trade union bargaining but not centralized bargaining may raise working hours

additional evidence on inflation variability the experience of asian countries abstract the relationship between inflation and its variability has been examined by using time series data for eight asian countries it is found that this relationship also holds for countries which have enjoyed a period of long price stability furthermore this relationship also holds for highly industrialized countries

overeducation in the labor market this article examines the reasons for the observed discrepancy between workers actual and required levels of schooling and the resulting differences in returns to schooling overeducated workers are found to be younger and to have lower amounts of on the job training than workers with the required level of schooling they also have higher rates of firm and occupational mobility characterized by movement of higher level occupations the findings suggest that overeducation can be explained by the trade off between schooling and other components of human capital and by the mobility patterns of overeducated workers

poverty and worklessness in britain relative poverty in the uk has risen massively since 1979 mainly because of increasing worklessness rising earnings dispersion and benefits indexed to prices not wages the economic force underlying this is the significant shift in demand against the unskilled this has substantially weakened the low skill labour market which has increased both pay dispersion and worklessness particularly among low skilled men practical policies discussed include improving education and overall well being for children in the lower part of the ability range raising wage floors new deal policies tax credits and benefits for the workless

inflation and real growth some empirical results what is the relationship between the average rate of inflation and the variability of real economic growth recent studies by gordon 3 okun 7 logue and willett 6 klein 5 and jaffee and kleiman 4 have attempted to f1ll some of the gaps in our knowledge of inflation s effect on the economy these studies have generally demonstrated the positive empirical relationship between the rate of inflation and its variability or unpredictability such heightened uncertainty may produce greater variability of real growth which in turn undoubtedly increases welfare costs using annual data for twenty four countries we elnd a positive relationship between the mean inflation rate and the variability of real economic growth this finding strengthens the commonly held belief that inflation is undesirable on welfare grounds

greater wage inequality reduces average hours of work i argue that rising inequality in offered wages lowers average working hours if labour supply is concave in wages a decrease in the working hours of low paid workers is greater than an increase in working hours of high paid workers furthermore due to low market opportunities some low paid workers may leave the labour force using cps morg data for prime age men i find evidence in support of this explanation i establish empirically the concavity of the labour supply and find evidence that after controlling for the average wage wage inequality has a negative effect on labour supply

labor market institutions and wage inequality the authors investigate how labor market institutions such as unemployment insurance unions firing regulations and minimum wages have affected the evolution of wage inequality among male workers results of estimations using data on institutions in eleven oecd countries indicate that changes in labor market institutions can account for much of the change in wage inequality between 1973 and 1998 factors found to have been negatively associated with male wage inequality are union density the strictness of employment protection law unemployment benefit duration unemployment benefit generosity and the size of the minimum wage over the 26 year period institutional changes were associated with a 23 reduction in male wage inequality in france where minimum wages increased and employment protection became stricter but with an increase of up to 11 in the united states and united kingdom where unions became less powerful and in the united states minimum wages fell

ability biased technological transition wage inequality and economic growth thispaper develops a growthmodel characterizedbyability biasedtechnological transition in which the evolution of technology education attainment and wage inequality is consistent with the observed pattern in the united states and other advanced countries over the past several decades it argues that an increase in the rate of technological progress raises the return to ability and simultaneously generates an increase in wage inequality between and within groups of skilled and unskilled workers an increase in average wages of skilled workers a temporary decline in average wages of unskilled workers an increase in education and a productivity transitory slowdown

labour market institutions and the personal distribution of income in the oecd we examine what determines differences across countries and over time in the distribution of personal incomes in the oecd we first model the wage determination process and show that unemployment the labour share and the wage differential are all functions of labour market institutions next we show that in a model economy with only four types of agents capitalists skilled and unskilled workers and unemployed the gini coefficient of personal incomes can be expressed as a function of the above three variables labour market institutions hence affect income inequality though the sign of their impact is ambiguous stronger unions and or a more generous unemployment benefit tend to reduce inequality through reduced wage differentials a higher labour share and also higher unemployment we then use a panel of oecd countries for the period 1970 96 to examine these effects we find first that the labour share remains an important aspect of overall inequality patterns and second that stronger unions and a more generous unemployment benefit tend to reduce income inequality high capital labour ratios also emerge as a strong equalising factor which has in part offset the impact of increasing wage inequality on the us distribution of personal incomes

conspicuous consumption snobbism and conformism abstract we develop a model in which consumers purchase a conspicuous good in order to signal high income and thereby achieve greater social status in equilibrium the signalling value of conspicuous consumption depends in an identifiable way on the number of consumers and consumer behaviour is characterized by either snobbism or conformism the market demand curve for the conspicuous good may exhibit a positive slope if consumers are conformist we derive some unconventional policy implications concerning the taxation of luxuries and the voluntary provision of public goods

price instability and inflation the latin american case abstract this paper provides empirical evidence substantiating the existence of an over time relationship between inflation and price variability for 23 latin american countries by employing a novel measure of price instability based on price expectations

do minimum wages lead to job losses evidence from oecd countries on low skilled and youth employment the author investigates effects of minimum wage rates on low skilled female low skilled and youth employment the sample consists of 19 organisation for economic co operation and development oec

technological acceleration skill transferability and the rise in residual inequality this paper provides a quantitative theory for the recent rise in residual wage inequality consistent with the empirical observation that a sizable part of this increase has a transitory nature a feature that eludes standard models based on ex ante heterogeneity in ability an acceleration in the rate of quality improvement of equipment like the one observed from the early 1970s increases the productivity quality differentials across machines jobs in a frictional labor market this force translates into higher wage dispersion even among ex ante equal workers with vintage human capital the acceleration reduces workers capacity to transfer skills from old to new machines generating a rise in the cross sectional variance of skills and therefore of wages through calibration the paper shows that this mechanism can account for 30 percent of the surge in residual inequality in the u s economy or for most of its transitory component two key implications of the theory faster within job wage growth and larger wage losses upon displacement find empirical support in the data

the decline of labour market institutions and the rise in wage inequality in britain abstract at the same time as the role of labour market institutions declined very dramatically in britain there was a very sharp rise in wage inequality that since 1980 has increased at a faster pace than in most advanced countries britain in the 1980s and early 1990s therefore provides a very good testing ground for evaluating the importance of labour market institutions in explaining the evolution of the wage structure i look at this in terms of two institutions that have traditionally propped up wage levels at the bottom end of the wage distribution unions and minimum wages i find that their weakening has played an important part in the rise in wage inequality in britain

veblen effects in a theory of conspicuous consumption the authors examine conditions under which veblen effects arise from the desire to achieve social status by signaling wealth through conspicuous consumption while veblen effects cannot ordinarily arise when preferences satisfy a single crossing property they may emerge when this property fails in that case budget brands are priced at marginal cost while luxury brands though not intrinsically superior are sold at higher prices to consumers seeking to advertise wealth luxury brands earn strictly positive profits under conditions that would with standard formulations of preferences yield marginal cost pricing the authors explore factors that induce veblen effects and they investigate policy implications copyright 1996 by american economic association

explaining international differences in male skill wage differentials by differences in demand and supply of skill this paper explores the hypothesis that wage differentials between skill groups across countries are consistent with a demand and supply framework using micro data from 15 countries we find that about one third of the variation in relative wages between skill groups across countries is explained by differences in net supply of skill groups the demand and supply framework does an even better job at explaining relative wages of low skilled workers

the effects of minimum wages on employment theory and evidence from britain recent work on the economic effects of minimum wages has stressed that the standard economic model where increases in minimum wages depress employment is not supported by empirical work in some labor markets we present a general theoretical model whereby employers have some degree of monopsony power which allows minimum wages to have the conventional negative impact on employment but which also allows for a neutral or positive impact studying the industry based british wages councils between 1975 and 1992 we find that minimum wages significantly compress the distribution of earnings but do not have a negative impact on employment

rat race redux adverse selection in the determination of work hours in law firms this paper describes an organizational setting in which professional employees are required to work inefficiently long hours the focus of the authors investigation is large law firms the income sharing that characterizes legal partnerships creates incentives to promote associates who have a propensity to work very hard law firms use indicators of this propensity especially an associate s record of billable hours in promotion decisions reliance upon work hours as an indicator leads to a rat race equilibrium in which associates work too many hours the authors find evidence in support of this conclusion with data they collected from two large law firms copyright 1996 by american economic association

emulation inequality and work hours was thorsten veblen right we investigate the manner in which a desire to emulate the rich influences individuals allocation of time between labour and leisure greater inequality inducing longer work hours as a result data on work hours in ten countries over the period 1963 98 show that greater inequality is indeed associated longer work hours these veblen effects are large and the estimates are robust using country fixed effects and other specifications because consumption inequality is a public bad a social welfare optimum cannot be implemented by a flat tax on consumption but may be accomplished by more complicated progressive consumption taxes at the close of the nineteenth century thorsten veblen proposed what he termed pecuniary emulation as the foundation of a theory of consumption spending he maintained is driven by relative status considerations that is by the desire to be a particular type of person as much as bythedesire to enjoytheconsumer goodsper se the joneses with whom one had to keep up were not the neighbours but the rich theirleveloflivingbecamethenever attainableobjectiveinaconsumptionarmsrace among the less well to do in the theory of the leisure class he wrote the motive is emulation the stimulus of an invidious comparison especially in any community in which class distinctions are quite vague all canons and reputability and decency and all standards of consumption are traced back by insensible gradations to the usages and thoughts of the highest social and pecuniary class the wealthy leisure class 1934 p 81 while valued by some economists as capturing common sense aspects of consumption as a form of status seeking veblen s view of social preferences was soon eclipsed by the simpler and more tractable neoclassical theory of the consumer relegated to the underworld of economics veblen s ideas have nonetheless resonated over the ensuing years in the writing of duesenberry 1949 leibenstein 1950 and galbraith 1958 at the middle of the past century and schor 1998