profit maximising goes global the race to the bottom we explore four decades of cyclical and long run dynamics in income distribution and economic activity for a panel of 13 oecd countries as measured by the wage share and output gap when modeled as predator prey dynamics economic activity in oecd countries is weakly profit led convergence to a long run equilibrium is relatively slow delaying the profit squeeze stage for many years our race to the bottom model suggests that the oecd countries have been engaged in undercutting each other s real unit labour costs an extension of the model shows that the long run equilibrium has been shifting south west towards a lower wage share it may even be that this race has the undesirable consequence of decreasing economic activity

china as a reserve sink the evidence from offset and sterilization coefficients china has been stockpiling international reserves at an extremely rapid pace since the late 1990s and has surpassed japan to become the largest reserve holder in the world this paper undertakes an empirical investigation to assess the extent of de facto sterilization and capital mobility using monthly data between mid 2000 and late 2008 we find that china has been able to successfully sterilize a large portion of these reserve increases thus making it a reserve sink such as germany was under the bretton wood system

economic growth income distribution and climate change we present a model based on keynesian aggregate demand and labor productivity growth to study how climate damage affects the long run evolution of the economy climate change induced by greenhouse gas lowers profitability reducing investment and cutting output in the short and long runs short run employment falls due to deficient demand in the long run productivity growth is slower lowering potential income levels climate policy can increase incomes and employment in the short and long runs while a continuation of business as usual leads to a dystopian income distribution with affluence for few and high levels of unemployment for the rest

tax evasion on a social network abstract we relate tax evasion behavior to a substantial literature on social comparison in judgements taxpayers engage in tax evasion as a means to boost their expected consumption relative to others in their social network the unique nash equilibrium of the model relates optimal evasion to a bonacich measure of network centrality more central taxpayers evade more given that tax authorities are now investing heavily in big data tools that aim to construct social networks we investigate the value of acquiring network information we do this using networks that allow for celebrity taxpayers whose consumption is seen widely and who are systematically of higher wealth we show that there are pronounced returns to the initial acquisition of network information especially in the presence of celebrity taxpayers

attitudes towards climate policies in a macrodynamic model of the economy abstract in a recent article published in this journal guarini and porcile 2016 expanded the balance of payments constraint bopc growth model suggesting a way to make it possible to address some of the challenges posed by greenhouse gas emissions building on their set up we formalise into the model a mechanism that explains how people with different environmental attitudes or sentiments influence each other and contribute to the design of environmental policies we detail the concept of transition probabilities for the agent s switching from pro to anti environmental positions and vice versa and discuss the macroeconomic results that follow numerical simulations allow us to investigate in more detail the implications of the validity of porter s hypothesis as well as to discuss the feasibility of decoupling conditions a policy implication of our analysis is that we should encourage the dissemination of pro environmental attitudes among the public because this could lead to a more desirable equilibrium as important as enhancing public knowledge of climate change is to keep alive the debate at the collective level so as to influence the probability of switching sides

are cadre offspring in the fast lane evidence from the labour market for college graduates in china this paper studies the impact of having a cadre parent on the labour market performance and channels of the intergenerational transference using a recent data set we find that college graduates w

who gets the job referral evidence from a social networks experiment we use recruitment into a laboratory experiment in kolkata india to analyze how job networks select individuals for employment opportunities we present evidence that individuals face a tradeoff between choosing the most qualified individual for the job and the individual who is ideal from the perspective of their social network the experiment allows randomly selected subjects to refer members of their social networks to subsequent rounds of the experiment and varies the incentive schemes offered to these participants we find that when faced with performance pay individuals are more likely to refer co workers and less likely to refer family members high ability participants who are offered performance pay recruit referrals who perform significantly better on a cognitive ability task and also prove to be more reliable as evidenced by their choices in the trust game and performance on an effort task

economic growth effects of alternative climate change impact channels in economic modeling despite increasing empirical evidence of strong links between climate and economic growth there is no established model to describe the dynamics of how different types of climate shocks affect growth patterns here we present the first comprehensive comparative analysis of the long term dynamics of one time temporary climate shocks on production factors and factor productivity respectively in a ramsey type growth model damages acting directly on production factors allow us to study dynamic effects on factor allocation savings and economic growth we find that the persistence of impacts on economic activity is smallest for climate shocks directly impacting output and successively increases for direct damages on capital loss of labor and productivity shocks related to different responses in savings rates and factor specific growth recurring shocks lead to large welfare effects and long term growth effects directly linked to the persistence of individual shocks endogenous savings and shock anticipation both have adaptive effects but do not eliminate differences between impact channels or significantly lower the dissipation time accounting for endogenous growth mechanisms increases the effects we also find strong effects on income shares important for distributional implications this work fosters conceptual understanding of impact dynamics in growth models opening options for links to empirics

density social networks and job search methods theory and application to egypt we first develop a theoretical model in which individuals are embedded within a network of social relationships we show that conditional on being employed the probability to find a job through social networks relative to other search methods increases and is concave with the size of the network the effects are stronger for the uneducated there is however a critical size of the network above which this probability decreases we then test empirically these theoretical findings for egypt using the 1998 labor market survey the empirical evidence supports the predictions of our theoretical model

job search stigma effect and escape rate from unemployment this article formulates job search models incorporating certain types of the stigma effect of unemployment it is assumed that the probability of getting a job offer given the unemployment individual contacts the firm is influenced by the duration of unemployment and is justified in a signaling context the optimal search is analyzed for one sector as well as across several independent labor market segments it is shown that there are reasonably general conditions on the search environments for which both the individual reservation wage and escape rate are negative duration dependent a fact observed in empirical studies

social contacts and occupational choice social contacts help workers to find jobs but those jobs need not be in the occupations where workers are most productive hence social contacts can generate mismatch between a worker s occupational choice and his comparative productive advantage thus economies with dense social networks can exhibit apparently low labor force quality and as a result low returns to firms investment and depressed aggregate productivity we employ us and european data for the 1990 s to test the key prediction that social contacts distort workers occupational choices in a direction that reduces their apparent productivity we find that the use of social contacts helps find jobs one to two months sooner but leads to individual wage discounts of 5 to 7 and produces negative externalities on aggregate productivity

job search and cyclical unemployment a model economy is described that integrates job search and signal extraction analysis equilibrium differs from search models without signal extraction in that even with a fixed real sector unemployment fluctuates stochastically it differs from standard signal extraction models because search introduces persistence in fact unemployment follows a second order difference equation with coefficient that are functions of current and lagged values of the stochastic shocks thus the model has the potential to mimic actual business cycle data despite the fact that the underlying shocks are independently and identically distributed policy implications are discussed

synchronized business cycles in east asia and fluctuations in the yen dollar exchange rate because many authors have proposed stimulating the ailing japanese economy by monetary expansion and yen depreciation we explore the repercussions of depreciating the yen against the dollar on the other east asian economies which largely peg to the dollar since 1980 economic integration among japan s neighbors china hong kong indonesia korea malaysia philippines singapore and thailand has intensified and except for china their business cycles have been highly synchronized these cycles have been closely linked to fluctuations in the yen dollar exchange rate through changes in their export competitiveness and inflows of foreign direct investment we show that a major yen devaluation would have a negative impact on incomes in other east asian economies and that it is not a sensible policy option for japan

reserve flows and monetary autonomy under a fixed exchange rate the british experience under bretton woods abstractthis paper uses a stochastic intertemporal model to analyse reserve flows and monetary autonomy under a fixed exchange rate and applies the model to a study of the british experience under

principles of network development and evolution an experimental study this paper reports on an experimental investigation of the evolution of networks and the individual decision making processes that guide it inasmuch as there is no history of experimental work on network formation part of the paper is devoted to the formulation of problems that can be examined experimentally the results are that networks composed of decentralized decision makers are capable of overcoming complex coordination and learning problems and converge to stationary when it does not occur significant and persistent inefficiencies can result the models of equilibration based on the principle of nash equilibrium are more reliable than models based on the alternative principles of efficiency seeking or focalness of the network configuration however individual decision making within networks is not in accordance with the simple decision rules of nash best response instead we observed complicated strategies that appear to trade short term profits in order to signal to and teach other agents the strategies required for long term profit maximization

climate policies under climate model uncertainty max min and min max regret temperature responses and optimal climate policies depend crucially on the choice of a particular climate model to illustrate the temperature responses to given emission reduction paths implied by the climate modules of the well known integrated assessments models dice fund and page are described and compared a dummy temperature module based on the climate denialists view is added using a simple welfare maximising growth model of the global economy the sensitivity of the optimal carbon price renewable energy subsidy and energy transition to each of these climate models is discussed the paper then derives max min max max and min max regret policies to deal with this particular form of climate model uncertainty and with climate scepticism the max min or min max regret climate policies rely on a non sceptic view of global warming and lead to a substantial and moderate amount of caution respectively the max max leads to no climate policies in line with the view of climate sceptics

coping with collapse a stock flow consistent monetary macrodynamics of global warming abstract this paper presents a macroeconomic model that combines the economic impact of climate change with the pivotal role of private debt using a stock flow consistent approach based on the lotka volterra logic we couple its nonlinear monetary dynamics of underemployment and income distribution with abatement costs a calibration of our model at the scale of the world economy enables us to simulate various planetary scenarios our findings are threefold 1 the 2 c target is already out of reach absent negative emissions 2 the long term resp short term results of climate change on economic fundamentals may lead to severe economic consequences without the implementation resp in case of too rapid an application of proactive climate policies global warming resp too fast transition forces the private sector to leverage in order to compensate for output and capital losses resp to lower carbon emissions thus endangering financial stability 3 implementing an adequate carbon price trajectory as well as increasing the wage share fostering employment and reducing private debt make it easier to avoid unintended degrowth and to reach a 2 5 c target

can degrowth overcome the leakage problem of unilateral climate policy abstract unilateral climate policy suffers from carbon leakage i e the partial offset of the initial emission reduction by increases in other countries different than most typically discussed climate policies degrowth not only aims at reducing the fossil fuel use in an economy but rather besides other social and political goals at a reduction of all factor inputs which may lead to different leakage implications we conduct the first investigation of degrowth in a multi country setting in order to i compare the leakage effects of national pure emission reduction policies to degrowth scenarios ii identify underlying channels by decomposing the implied emission changes into scale composition and technique effects and iii investigate which country characteristics determine degrowth s relative effectiveness to overcome the leakage problem using a structural gravity model we find that degrowth indeed significantly reduces leakage by keeping the sectoral composition of the country more stable and reducing uncommitted countries incentives to shift towards more energy intensive production techniques the higher effectiveness of degrowth in reducing carbon emissions is most pronounced for small and trade open economies with comparatively clean production technologies

network effects and welfare cultures we empirically examine the role of social networks in welfare participation using data on language spoken at home to better infer networks within an area our empirical strategy asks whether being surrounded by others who speak the same language increases welfare use more for those from high welfare using language groups this methodology allows us to include local area and language group fixed effects and to control for the direct effect of being surrounded by one s language group these controls eliminate many of the problems in previous studies the results strongly confirm the importance of networks in welfare participation

endogenous job contact networks we use the uk quarterly labour force survey to document the presence of two phenomena first a positive correlation between unemployment rate and the proportion of job seekers who use social networks to nd jobs network use second a non monotone relation between unemployment rate and the proportion of recently employed workers who found their job through friends or relatives network productivity this second relation is positive for low levels of unemployment rate while it becomes negative for high levels of unemployment rate existing models of social networks and labor market generally assume that social networks are exogenous this assumption implies a negative correlation between unemployment rate and network productivity we develop a model where social networks are used to collect job oers but workers decide strategically how much to invest in their network we show that equilibrium job contact networks are dense and more productive in transmitting information when labor market turnover is moderate while they are less productive and segmented into clusters for either high or low turnover the equilibrium response of job contact networks to changes in labor market conditions is sucient to generate

job contact networks abstract many workers hear about or obtain their jobs through friends and relatives the aim of this paper is twofold first we relate both individual and aggregate labor market outcomes to the network structure of personal contacts second we study strategic network formation to this purpose we develop a model specifying at the individual level both the decision to form contacts with other agents and the process by which information about jobs is obtained and transmitted we show that equilibrium networks always exist and that only moderate levels of network asymmetry can be sustained at equilibrium also we establish a general non monotonicity result on information flow and unemployment with respect to network size in symmetric networks

can we sterilize theory and evidence under managed floating as under the bretton woods system central banks have intervened heavily in the foreign exchange market as before they have often attempted to divorce their intervention activities from their money supplies through offsetting operations in domestic financial markets an official purchase of foreign exchange can be sterilized through a corresponding openmarket sale of domestic securities the transaction which is equivalent to an official forward sale of domestic currency leaves relative money supplies unchanged but alters the relative supplies of foreign and domestic currency bonds available to the public regardless of the exchange rate regime sterilized intervention may be viewed as an attempt to attain independent exchange rate and money stock targets in the short run for this to be possible bonds denominated in different currencies must be imperfect substitutes in private portfolios if feasible sterilization may or may not be useful in attaining the long run objectives of the central bank

car ownership and the labor market of ethnic minorities we show how initial wealth differences between low skilled minorities and white workers can generate differences in their labor market outcomes this even occurs in the absence of a taste for discrimination against ethnic minorities or exogenous differences in distance to jobs because of the initial wealth difference minorities cannot afford to buy a car while whites can car ownership allows whites to reach more jobs per unit of time which gives them a better bargaining position in the labor market as a result in equilibrium ethnic minorities end up with both higher unemployment rates and lower wages than whites furthermore we also show that it takes more time for minorities to reach their jobs even though they travel less miles when employed those predictions are consistent with the data better access to capital markets or better public transportation will reduce the differences in labor market outcomes

frictional unemployment on labor flow networks abstract we develop an alternative theory to the aggregate matching function in which workers search for jobs through a network of firms the labor flow network the lack of an edge between two companies indicates the impossibility of labor flows between them due to high frictions in equilibrium firms hiring behavior correlates through the network generating highly disaggregated local unemployment hence aggregation depends on the topology of the network in non trivial ways this theory provides new micro foundations for the beveridge curve wage dispersion and the employer size premium we apply our model to employer employee matched records and find that network topologies with pareto distributed connections cause disproportionately large changes on aggregate unemployment under high labor supply elasticity

ecological macroeconomics an application to climate change ecological economics has not paid sufficient attention to the macroeconomic level both in terms of theory and modeling yet key topics debated in the field of ecological economics such as sustainable consumption reduction in working time the degrowth debate the energy exergy link and the rebound effect require a holistic and macro perspective while this deficiency has been identified before and keynesian economics has been generally suggested as a potent vehicle to establish economic system s thinking very little concrete theorizing and practical suggestions have been put forward we give further credence to this suggestion and demonstrate the value of tackling key concerns of ecological economics within a keynesian growth framework contextualized by an application to climate change we suggest that policy relevant recommendations need to be based on a consistent view of the macroeconomy we end with laying out key building blocks for a keynesian model framework for an ecological macroeconomics authors abstract

eroi of different fuels and the implications for society abstract all forms of economic production and exchange involve the use of energy directly and in the transformation of materials until recently cheap and seemingly limitless fossil energy has allowed most of society to ignore the importance of contributions to the economic process from the biophysical world as well as the potential limits to growth this paper centers on assessing the energy costs of modern day society and its relation to gdp our most important focus is the characteristics of our major energy sources including each fuel s energy return on investment eroi the eroi of our most important fuels is declining and most renewable and non conventional energy alternatives have substantially lower eroi values than traditional conventional fossil fuels at the societal level declining eroi means that an increasing proportion of energy output and economic activity must be diverted to attaining the energy needed to run an economy leaving less discretionary funds available for non essential purchases which often drive growth the declining eroi of traditional fossil fuel energy sources and the effect of that on the world economy are likely to result in a myriad of consequences most of which will not be perceived as good

the effects of social networks on employment and inequality we develop a model where agents obtain information about job opportunities through an explicitly modeled network of social contacts we show that employment is positively correlated across time and agents moreover unemployment exhibits duration dependence the probability of obtaining a job decreases in the length of time that an agent has been unemployed finally we examine inequality between two groups if staying in the labor market is costly and one group starts with a worse employment status then that group s drop out rate will be higher and their employment prospects will be persistently below that of the other group

understanding black white wage differentials 1960 1990 understanding black white wage differentials 1960 1990 author s james j heckman thomas m lyons petra e todd source the american economic review vol 90 no 2 papers and proceedings of the one hundred twelfth annual meeting of the american economic association may 2000 pp 344 349 published by american economic association stable url http www jstor org stable 117248 accessed 16 08 2008 00 56

foreign debt accumulation financial and fiscal effects and monetary policy reactions in developing countries abstract this paper analyzes the effects of the current account of government and government guaranteed foreign debt on the one hand and net foreign liabilities or the cumulated current account deficit on the other hand in a sample of 26 developing countries while the cumulated current account deficit generates stabilizing forces pissibly through financial and wealth effects large amounts of government and government guaranteed debt produce destabilizing effects by stimulating capital flight i also find that monetary policy reactions are stabilizing in the case of the cumulated current account deficit but desstabilizing in the case of a build up of government and government guaranteed foreign debt jel f32 f34

ranking unemployment duration and wages it explores the implication of one central assumption when firms receive multiple acceptable applications they hire the worker who has been unemployed for the least amount of time this assumption ranking is contrasted with the assumption of random hiring no ranking by embodying this assumption in a model of the labour market with job creation destruction and matching the joint behaviour of unemployment the distribution of unemployment durations and wages are characterized the implication that the re employment prospects of employed workers were they to become unemployed are better than those of the currently unemployed appears to have been an important feature of european unemployment experience in the 1980 s this paper examines the effects of the composition of unemployment on wage determination it explores one central assumption when firms receive multiple acceptable applications they hire the worker who has been unemployed for the least amount of time we refer to this assumption as ranking and contrast it throughout to the assumption of random hiring or no ranking by embodying this assumption in a model of the labour market with job creation destruction and matching we characterize the joint behaviour of unemployment the distribution of unemployment durations and wages ranking has a number of important implications first in addition to the obvious result that the exit rate from unemployment is a decreasing function of duration we show that the effect of duration is stronger the higher the rate of unemployment second with the wage depending on the distributions of prospective unemployment durations the presence of long term unemployed per se has little effect on wages third looking at the relation between the wage and the aggregate level of unemployment and comparing ranking to the case of no ranking the wage moves less with the level of unemployment but more with the change in unemployment put simply ranking and no ranking models show exactly the same aggregate unemployment slightly different long run responses of wages to unemployment and sharply different wage dynamics the paper is organized as follows section i characterizes the matching process and derives a matching function based on an urn ball process with vacancies as urns and applications by unemployed workers as balls thus the distribution of applications per vacancy depends on aggregate unemployment and vacancies vacancies with at least one acceptable application are filled when a vacancy receives more than one acceptable application firms use a rule to choose among applicants thus the rule determines who is hired but does not affect the number of hires section ii uses this matching function in a model of the labour market with continual job creation and destruction and characterizes the equilibrium values of unemployment vacancies and hires

climate change impacts on socioeconomic activities through labor productivity changes considering interactions between socioeconomic and climate systems abstract while human socioeconomic activity leads to climate change the latter also affects the former socioeconomic and climate systems have considerable interactions some studies have looked at the effects of climate change on labor productivity and gross domestic product yet they have not considered the interaction between socioeconomic and climate systems this study therefore examined that aspect as well as the economic impact of climate change induced labor productivity change business as usual and two emissions reduction scenarios 2 c and representative concentration pathway 4 5 were adopted data analysis employed a computable general equilibrium model and a simple climate model the results show that global economic impacts of climate change induced labor productivity change have not been large a negative effect on economic activities was found when the relationship between climate change and labor productivity was considered in the economic model although such impacts were larger in the business as usual scenario that was not the case in the 2 c scenario the results suggest that greater levels of climate change are in accordance with greater socioeconomic impact at the global level in particular impact on high temperature regions was found to be considerable interestingly not all regions experienced economic loss from climate change some in the low to medium temperature zones received a positive economic effect because of comparative advantage caused by differences in labor productivity changes among regions the coupled modeling scheme ultimately was effective in evaluating the interaction expanded assessment of climate change mitigation and adaptation will aid further understanding of the interaction of climate change and socioeconomic activities

city structure job search and labour discrimination theory and policy implications we consider a search matching model in which black workers are discriminated against and the job arrival rates of all workers depend on social networks as well as distance to jobs location choices are driven by the racial preferences of households both blacks and whites consciously choosing to trade off proximity to neighbors of similar racial backgrounds for proximity to jobs because of coordination failures in the location choices multiple urban equilibria emerge there is a spatial mismatch equilibrium in which blacks reside far away from jobs and experience high unemployment rates and a spatial match equilibrium in which blacks are closer to jobs and experience lower unemployment rates under some reasonable condition we demonstrate that all workers are better off in the spatial match equilibrium we then consider two policies affirmative action and employment subsidies to the firms which hire black workers we show that the optimal policy requires imposing larger quotas or subsidies in cities in which black workers reside far away from jobs than in cities in which they live closer to jobs

school quality and black white relative earnings a direct assessment the wage differential between black and white men fell from 40 percent in 1960 to 25 percent in 1980 it has been argued that this convergence reflects improvements in the relative quality of black schools to test this hypothesis we assembled data on pupil teacher ratios annual teacher pay and term length for black and white schools in the eighteen segregated states from 1915 to 1966 these data are linked to estimated returns to education for southern born men from different cohorts and states in 1960 1970 and 1980 improvements in the relative quality of black schools explain 20 percent of the narrowing of the black white earnings gap between 1960 and 1980

formal and informal job search i develop a model where workers decide how hard to look for a job via formal and informal search channels the intensity of formal search determines an individual s arrival rate of offers the strength of investment in informal search translates into a job contact network in which job offers are transmitted there are two equilibria one with high formal search and one with high informal search the former pareto dominates the latter

blacks hispanics and white ethnic groups are blacks uniquely disadvantaged despite the impression that the federal statistical system has been starved for resources the record over the last decade or so judged by conventional deflation methods has been one of rough stability the quality of u s international data on commodity and service trade direct investment and export and import prices has improved but there has been a serious deterioration in data on portfolio capital flows stocks and income where improvements have taken place the main source has been computerization both inside and outside the federal statistical system the standard deflators for expenditures do not adequately take account of the decline in the cost of computing and therefore impart a downward bias to the estimates of input despite the gains in some areas serious deficiencies remain for the increasingly important international sector the improvements that have occurred have resulted mainly from congressional and outside pressures while successive administrations have shown little concern with the quality of the data they produce and presumably use for policy making this abstract was borrowed from another version of this item