the employers cost of workers compensation insurance magnitudes determinants and public policy new estimates of the average cost of workers compensation insurance for a homogeneous group of employers by state are presented these data are used to estimate cost equations for a variety of alternative specifications the main finding is that when cost equations are estimated by ordinary least squares there is a unit elasticity of costs with respect to benefits but instrumental variable estimates of the effect of benefits yield a greater than unit elasticity finally the presence of a state insurance fund is associated with higher average costs for employers all else equal copyright 1990 by mit press

do employees sickness absences react to a change in costs for firms evidence from a natural experiment we analyse the impact of a social security reform that changed the costs incurred by firms due to sickness absences the reform abolished a compulsory insurance for firms which insured them against the wages paid to sick blue collar workers during the first year after its introduction we estimate that the reform resulted in about 6 3 percent fewer sickness absences and in about 8 6 percent fewer absence days we do not find evidence for changes in hiring or firing and we find only limited workforce composition changes we do not find spillover effects on the absences of white collar workers robustness checks confirm these results

price and quantity adjustments in the austrian labour market austria is among the very few countries in the european union which have managed to maintain comparatively low unemployment rates and high employment rates this study looks at the price and quantity adjustment mechanisms in the austrian labour market which may have contributed to this favourable outcome after reviewing briefly the basic theoretical reasoning an empirical investigation is began into gross flow dynamics in the labour market and the cyclical volatility of employment and unemployment in austria in international comparison austrian unemployment is very stable over the business cycle this is due mainly to the high sensitivity of the labour force on cyclical conditions and partly also on the relatively weak responsiveness of employment to cyclical fluctuations in output the latter being possibly attributable to the high degree of real wage flexibility in austria the study proceeds to show that the long run elasticity of wages with respect to unemployment is indeed quite high in austria

labor unemployment risk and corporate financing decisions this paper examines the impact of labor unemployment risk on corporate financing decisions theory suggests that firms choose conservative financial policies partly as a means of mitigating worker exposure to unemployment risk using changes in state unemployment insurance benefit laws as a source of variation in the costs borne by workers during layoff spells we explore the connection between unemployment risk and the corporate financing decisions of public firms in the united states we find that increases in legally mandated unemployment benefits lead to increases in corporate leverage the impact of reduced unemployment risk on financial policy is especially strong for firms that have greater layoff separation rates labor intensity and financing constraints the estimated premium required to compensate workers for unemployment risk due to financial distress is about 57 basis points of firm value for a bbb rated firm these findings suggest that labor market frictions have a significant impact on corporate financing decisions

a concern about low relative income and the alignment of utilitarianism with egalitarianism a utilitarian social planner who maximizes social welfare assigns the available income to those who are most efficient in converting income into utility however when individuals are concerned about their income falling behind the incomes of others the optimal income distribution under utilitarianism is equality of incomes

compensating differentials for cyclical and noncyclical unemployment the interaction between investors and employees risk aversion this paper integrates the labor and assets markets equilibria to determine and evaluate the wage differentials generated for cyclical and noncyclical risks of unemployment the relative wage differential is a linear function of unemployment risk measured by the covariance of an index of employment with the rate of change in aggregate output seniority and the hoarding of skilled labor are characteristics of minimum cost contracts because employees with more human capital prefer safer jobs empirical results suggest that a 14 41 wage differential can be explained by interindustry differences in unemployment risks

government spending cycles ideological or opportunistic this paper examines whether partisan and opportunistic motives affect government expenditure growth in the netherlands the time series analysis covering the period 1953 1993 allows for different types of government spending in general spending is inspired by ideological and opportunistic motives all government expenditure categories show an upward drift during election times and the partisan motives behind government spending are clearly revealed left wing cabinets attach greater importance to social security and health care than right wing cabinets and right wing cabinets value expenditure on infrastructure and defense more than left wing parties

labor unemployment insurance and earnings management abstract we provide new evidence that firms appear to manage long run earnings upward in order to manage rank and file employees perceptions of employment security in particular we exploit exogenous state level changes in unemployment insurance benefits and test for partial unwinding of prior upward earnings management when benefits increase consistent with the hypothesis we find a significant reduction in abnormal accruals increased recognition of special items and write downs and greater likelihood of net income reducing restatements following an increase in state level unemployment benefits a number of cross sectional results are also consistent with the hypothesis

industrial specialization and the returns to labor comparative advantage and the division of labor make geographic concentration of production within a nation profitable and cause many cities to be specialized in one or a few main industries specialized cities however suffer greater unemployment risk the theory of compensating wage differentials predicts that individuals living in more specialized cities will be compensated in the form of higher wage rates we study the effects of specialization on wages and unemployment in the united states we find evidence of compensating wage differentials that firms choose to locate in more specialized higher wage cities is indirect evidence of the gains to specialization

peer effects and selection effects on smoking among canadian youth a number of studies have indicated that peer smoking is a highly influential factor in a young person s decision to smoke however this finding is suspect because the studies often fail to account for selection and simultaneity bias this paper develops an econometric model of youth smoking that incorporates both peer effects and selection effects identification is achieved by using the degree of selection on observables as a proxy for the degree of selection on unobservables the results indicate that peers have some influence on a young person s decision to smoke but that influence is much weaker than is suggested by reduced form models jel classification c35 i12 effets des pairs et effets de selection sur la decision de fumer des jeunes au canada un nombre d etudes ont montre que le fait que les pairs fument est un facteur tres important dans la decision de fumer d une jeune personne cependant ce resultat pose probleme parce que ces etudes ne prennent souvent pas en compte les biais de selection et de simultaneite ce memoire developpe un modele econometrique du comportement de fumeur chez les jeunes qui incorpore a la fois les effets des pairs et les effets de selection on arrive a une identification en utilisant le degre de selection sur les sujets observables comme mesure approximative du degre de selection des sujets non observables les resultats indiquent que les pairs ont une certaine influence sur la decision de fumer d une jeune personne mais que cette influence est bien plus faible que ce que suggerent les modeles de forme reduite

an adverse social welfare effect of a doubly gainful trade abstract acknowledging individuals distaste for low relative income renders trade less appealing when trade is viewed as a technology that integrates economies by merging separate social spheres into one we define a trembling trade as a situation in which gains from trade are overtaken by losses of relative income with the result that global social welfare is reduced a constructive example reveals that a trembling trade can arise even when trade is doubly gainful in that it increases the income of every individual and narrows the income gap between the trading populations

the analytics of seasonal migration a framework that yields different possible patterns of migration as optimal solutions to a simple utility maximization problem is presented and explored it is shown that seasonal migration arises as an optimal endogenous response to a comparison of costs of living and of separation and returns to work over a set of three alternative options even if a year long migration is feasible

regional disadvantage employee non compete agreements and brain drain abstract a growing body of research has documented the local impact of employee non compete agreements but their effect on interstate migration patterns remains unexplored exploiting an inadvertent policy reversal in michigan as a natural experiment we show that non compete agreements are responsible for a brain drain of knowledge workers out of states that enforce such contracts to states where they are not enforceable importantly this effect is felt most strongly on the margin of workers who are more collaborative and whose work is more impactful

the vp function a survey of the literature on vote and popularity functions after 25 years vp functions explain the support for the government at votes and polls by economic and political variables most studies analyze macro time series we also cover studies of individual voters socio economic groups and regional cross sections the theory starts from the responsibil ity hypothesis voters hold the government responsible for economic conditions it works in two party block systems but not else voters in most countries are found to be sociotropic egotropic voting also occurs voters myopia is well established voting is retrospective as expectations are static it costs the average government almost 2 of the vote to rule

relative poverty as a determinant of migration evidence from poland we explore the relationship between aggregate relative poverty and migration we draw upon polish regional data and use a measure of aggregate relative poverty that is functionally related to the gini coefficient we find that the gini coefficient and migration are positively correlated holding the population s per capita income constant

an empirical model of collective household labour supply with non participation i present a structural empirical model of collective household labour supply that includes the non participation decision i specify a simultaneous model for hours participation and wages of husband and wife i discuss the problems of identification and statistical coherency that arise in the application of the collective household labour supply model the model includes random effects and it is estimated using a panel data set of dutch couples the estimates allow me to check the underlying regularity conditions on individual preferences and to obtain estimates of the sharing rule that governs the division of household income between husband and wife

social status and economic performance a survey abstract this survey combines ideas and results from sociology and economics recognizing that economic decisions are often shaped by social concerns and influences based on the sociological literature we define social status and describe its measurement we then describe the role of social status in economic analysis of saving and consumption wages and economic growth we review recent work on status determination in equilibrium including evolutionary models we conclude with some remarks on the need for further interaction between sociology and economics

a new view of political accountability for economic performance most political support models imply that in evaluating economic performance voters use a standard that would provide poor predictions of the future and leave the economy vulnerable to manipulation by vote hungry politicians drawing on macroeconomic theory we develop a simple standard of evaluation which encompasses a concern not only for current economic outcomes but also for accurately assessed future consequences of current policies we find that political support for the president can be explained as well by models that assume that voters use this sophisticated standard as by models that assume voter naivete our analysis questions the wisdom of measures typically used to assess voter evaluation of economic performance in a variety of theoretical contexts the results also help to explain the absence of convincing evidence that governments exploit voter ignorance in manipulating the economy

migration for degrading work as an escape from humiliation this paper develops a model of voluntary migration into degrading work the essence of the model is a tension between two bads that which arises from being relatively deprived at home and that which arises from engaging in humiliating work away from home balancing between these two bads can give rise to an explicit voluntary choice to engage in humiliating work the paper identifies conditions under which a migrant will choose to engage in degrading work rather than being forced into it to work abroad as a prostitute say rather than on a farm the paper delineates the possible equilibria and finds that greater relative deprivation will make it more likely that the equilibrium outcome will be engagement in prostitution it is shown that under well specified conditions every individual will work as a prostitute yet every individual would be better off working on a farm put differently when specific conditions are satisfied there is a possibility of a coordination failure if individuals believe that everyone else will choose to be a prostitute this belief will be self fulfilling in this case all the individuals choose to engage in prostitution which renders each of them worse off the paper discusses various policy implications it is shown that a policy intervention a crackdown on migrants engagement in prostitution if implemented strictly can increase everyone s welfare but when the policy is implemented loosely cracking down on prostitution will only reduce individuals welfare without reducing their engagement in prostitution

partisanship theory macroeconomic outcomes and endogenous elections recently there has been a surge of interest in partisanship theories of macroeconomic political interaction unlike political business cycle theory in which economic policy is motivated only by reelection concerns partisanship theory maintains that policy is motivated along ideological lines political parties differ with respect to economic policy and consequently economic performance may differ as well indeed not only is there evidence that political parties in the united states have quite different policy priorities but that this difference in policy priorities is translated into differences in economic outcomes 2

migration when social preferences are ordinal steady state population distribution and social welfare this paper adds three dimensions to the received literature it models migration when the individuals preferences regarding their relative incomes are ordinal it works out the resulting spatial steady state distribution of the individuals and it shows that the aggregate of the individuals migration choices in the spatial steady state distribution sums to the social optimum this finding does not apply when the individuals preferences regarding their relative incomes are cardinal we highlight the importance of the assumption about the nature of the individuals social preferences whether ordinal or cardinal to studying and predicting their migration behaviour and to elucidating the consequences of that behaviour for social welfare

measuring worker flows the study explores differences between two measurement concepts of worker flows widely used in the literature referred to as the turnover and reallocation concepts it is found that measuring worker flows by the turnover concept leads to substantially about 5 of total employment higher worker flow estimates and slightly increases age size and industry group effects on firm level worker flows as well as differences between growing and declining firms relative to the reallocation concept

adam smith may have been right after all a new approach to the analysis of compensating differentials abstract if workers with low wages compared to their level of human capital exaggerate their workplace disamenities estimates of compensating differentials will be biased evidence of such a bias is found in a matched employee employer survey

who wants political integration evidence from the swedish eu membership referendum abstract the regional voting pattern of the swedish european union eu membership referendum is analyzed to determine voters preferences over two fiscal regimes an autonomous sweden or sweden as part of the eu a major difference between these regimes is that autonomy gives greater national discretion to handle risk sharing and redistribution between regions i find that inhabitants of rich and stable regions with high levels of schooling small receipts of central government transfers and trade relations displaying comparative advantages towards the eu were relatively positive to membership a plausible interpretation is thus that voters in safe and rich regions voted in favor of dismantling the swedish transfer system

compensating wage differentials and the duration of wage loss a formal model of occupational choice is developed that shows the extent to which the compensation for increased duration exceeds that for increased risk using the panel study of income dynamics linked to industry data on injuries and unemployment we find nearly all the compensating wage differential for losses due to workplace injuries is for increases in the duration of loss and similarly for losses due to cyclical unemployment the compensating differentials for risk of injury are larger for union than for nonunion workers while those for cyclical unemployment are smaller for union workers

estimation of econometric models of some discrete games summary this paper discusses estimates and compares some microeconometric models for simultaneous discrete endogenous variables the models are based on the assumption that observed endogenous variables represent the outcome of a static discrete game i discuss models based on non cooperative equilibrium concepts nash stackelberg as well as models which presume pareto optimality of observed outcomes the models are estimated using data on the joint labor force participation decisions of husbands and wives in a sample of dutch households

flexible contracts and subjective well being theory suggests that when workers choose between permanent and flexible contracts their utility should tend to equalize across contract types new estimates of job satisfaction show the critical role played by unmeasured worker heterogeneity they reveal that flexible contracts are a strong negative determinant of satisfaction with job security but are often a positive determinant of other dimensions of job satisfaction as a consequence flexible contracts have either a weak negative influence or no influence on overall job satisfaction moreover flexible contracts generally have no impact on overall life satisfaction of the employed these results appear broadly consistent with the presence of equalizing differences jel j28 j41

integration social distress and policy formation i study the integration of regions in the form of a merger of populations which i interpret as a revision of people s social space and their comparison set i illustrate the way in which a merger can aggravate social distress and i consider policy responses specifically i view the merger of populations as a merger of income vectors i measure social distress by aggregate relative deprivation i demonstrate that a merger increases aggregate relative deprivation and i show that a social planner is able to reverse this increase by means of least cost post merger increases in individual incomes but is unable to counter it by relying exclusively on a self contained income redistribution that retains individual levels of wellbeing at their pre merger levels

endogenous selection of comparison groups human capital formation and tax policy this paper considers a setting in which the acquisition of human capital entails a change of location in social space that causes individuals to revise their comparison groups skill levels are viewed as occupational groups and moving up the skill ladder by acquiring additional human capital which in itself is rewarding leads to a shift in the individual s inclination to compare himself with a different and on average better paid comparison group which in itself is penalizing the paper sheds new light on the dynamics of human capital formation and suggests novel policy interventions to encourage human capital formation in the aggregate and at the same time reduce inter group income inequality

social status culture and economic performance in analysing the differences in productive capacity among economies it is usual to concentrate on the physical aspects of the population the different attributes of capital including human capital and on the available production technologies societies also differ in culture in ways which are relevant for economic performance the sociological literature recognises that different occupations have different social status and that workers benefit not only from the wage they receive but also from being associated with a particular occupation cultural differences among societies may translate into different status of occupations and can therefore affect the choice of education and occupation and consequently the equilibrium level of output and wages conversely the economic choices of individuals influence the social status of occupations in particular it is well established by sociological research that the social status of an occupation is influenced by economic attributes such as the average wage and the average level of education in the occupation a major objective of our work is to illustrate that sociological and economic approaches can be combined within a unified framework this is in contrast to some social scientists who view the two approaches as competing with each other phelpsbrown i 977 ch 4 in this paper we construct a simple general equilibrium model in which both wages and status are determined endogenously we show that changes in the demand for status triggered by changes in preferences or in income distribution influence the wage structure the level of aggregate output and economic welfare the link between status and aggregate output is created by the fact that differences in occupational status imply occupational wage differences among workers of the same skill the larger is the demand for status the larger is the wage gap and the lower is aggregate output our discussion of status is closely related to the economic analysis of discrimination against ethnic or racial groups becker i 97 i arrow i 973

the labor supply of fixed wage workers estimates from a real effort experiment abstract fixed wage workers comprise the bulk of the labor force and yet little is known about how they respond to changes in their wage given recent interest in theories of reciprocity and intrinsic motivation and their implications for effort provision the neoclassical prediction seems less obvious today to better understand the motivation of these workers i estimate their labor supply using a real effort experiment two results stand out first no one theory seems to fit the pooled data on average people work considerably harder than the minimum but they do not respond to changes in the wage second pooling the data is deceptive because there seem to be distinct types with differing responses to the wage most workers can be classified as reciprocal or intrinsically motivated and indeed these types respond as theory would predict reciprocators return wage gifts with increased effort and extrinsic incentives crowd out motivation for intrinsic workers

temporary layoff unemployment in austria empirical evidence from administrative data temporary layoffs rehires recalls have been widely recognized as an important feature of north america s labour markets for europe however several observers have suggested that tighter regulatory impediments to the recruitment and dismissal of employees are responsible for temporary layoff unemployment being virtually non existent against this background this paper uses administrative data to evaluate the quantitative importance of temporary separations among the unemployed in austria and to track its composition by industries the main finding of our empirical analysis is that about one third of all unemployment spells in austria in 1985 ended with the individual returning to the former employer since temporary layoff unemployment was found to be on average of shoter duration it comprised a somewhat lower fraction of total weeks of unemployment however temporary layoff unemployment thus accounts for the same proportion of unemployment in austria as in the us or canada

reconciling the rawlsian and the utilitarian approaches to the maximization of social welfare under a deadweight loss of tax and transfer there is tension between the optimal policy choices of a rawlsian social planner and a utilitarian social planner however when with a weight greater than a certain critical value the individuals utility functions incorporate distaste for low relative income a utilitarian will select exactly the same income distribution as a rawlsian

compensating wage differentials for schooling risk in denmark in this paper we analyse the association between wage differentials and risk using detailed information on length and type of education as seen in danish administrative registers our contribution to the literature is that we distinguish between transitory time series and permanent cross sectional income shocks and estimate the compensation for both sorts of risk we find that wage risk in a given education cell is associated with higher wages while skewness is associated with lower wages as a robustness check we see that ad hoc risk measures based on earnings mobility indicators confirm these findings

unionization and shareholder interests drawing on agency theory this study examines union nonunion differences in the allocation of both firm profits and business risk to employees and shareholders using a sample of more than 1 000 large private sector firms the authors find that over the period 1970 81 shareholders in unionized firms assumed less of the firm s business risk than shareholders in nonunion firms this finding is interpreted as evidence that managers of unionized firms attempted to minimize agency costs by capitalizing on the incentive effects of risksharing in addition risk adjusted returns to shareholders were lower in unionized firms than in nonunion firms the authors view the relatively poor performance of union firms as a primary motivating factor behind the restructuring of the american industrial relations system during the period studied

labour market participation in brazil a discrete game approach abstractthe article aims at investigating labour market participation of couples in brazil in 2013 the observed endogenous variables portraying participation are assumed to be the outcome of a sta

outsourcing labor market pooling and labor contracts this paper considers the interaction between input sharing and labor market pooling in urban areas in particular it examines the impact of the size of a city and business risks on the organizational structures of firms located in urban agglomerations and it also discusses the impact of organizational structure on incentives to insure workers against income risks it is shown that manufacturing firms suffer from a coordination game in their decision to outsource production the existence of idiosyncratic risks causes manufacturers to refrain from outsourcing the incentives to offer wage and employment protection to workers are more pronounced when manufacturers outsource the production of their inputs to a local market which mitigates the impact of labor market pooling

the attenuation of human capital spillovers abstract this paper uses 2000 census data to estimate the relationship of agglomeration and proximity to human capital to wages the paper takes a geographic approach and focuses on the attenuation of agglomeration and human capital effects differencing and instrumental variable methods are employed to address endogeneity in the wage agglomeration relationship and also to deal with measurement error in our agglomeration and human capital variables three key results are obtained first the spatial concentration of employment within five miles is positively related to wage second the benefits of spatial concentration are driven by proximity to college educated workers an instance of human capital spillovers third these effects attenuate sharply with distance

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

social norms savings behavior and growth we argue that many goods and decisions are not allocated or made through markets we interpret an agent s status as a ranking device that determines how well he or she fares in the nonmarket sector the existence of a nonmarket sector can endogenously generate a concern for relative position in for example the income distribution so that higher income implies higher status moreover it can naturally yield multiple equilibria it is thus possible to explain differences in growth rates across countries without recourse to differences in underlying preferences technologies or endowments different social organizations lead to different reduced form preferences which lead to different growth rates

the equilibrium distribution of income and the market for status this paper explores the implications for risk taking behavior and the equilibrium distribution of income of assuming that the desire for status positions is a powerful motive and that it raises the marginal utility of consumption in contrast to previous analyses we consider the case in which status positions are sold in a hedonic market we show that such a complete hedonic market in status positions can be perfectly replicated by a simpler arrangement with a status good and a social norm that assigns higher status to those that consume more of this good the main result is that for a wide range of initial conditions the equilibrium distribution over income status and consumption is the same that this allocation requires inequality of income and consumption and that this allocation coincides with the optimum of a utilitarian planner

biased beliefs and retrospective voting why democracies choose mediocre policies there are two well established empirical regularities about voters first they entertain systematically biased beliefs about how public policies affect economic outcomes second voters vote retrospectively they punish the incumbent for poor and reward him for good macroeconomic performance thus political parties face a trade off offering popular yet economically harmful policies increases the chance of being elected today but decreases the chance of re election we provide the first rigorous game theoretical analysis of the trade off the model addresses two questions how can biased beliefs and retrospective voting be explained consistently what policy outcomes emerge in party competition to micro found persistently biased beliefs we introduce the psychological concept of mental models deviating from earlier studies we allow parties to choose strategic mixtures of populist i e bad yet popular and good but less popular platforms we show that retrospective voting provides a self correction mechanism so that parties offer strategic mixtures of policies in equilibrium rather than purely populist or purely good policy platforms thus democracy is characterized by mediocre policy choices and half hearted reforms an incumbent bias or unclear responsibilities weaken the self correction mechanism

a discrete choice model with social interactions with an application to high school teen behavior we develop an empirical discrete choice interaction model with a finite number of agents we characterize its equilibrium properties in particular the correspondence between interaction strength number of agents and the set of equilibria and propose to estimate the model by means of simulation methods in an empirical application we analyze the individual behavior of high school teenagers in almost 500 school classes from 70 schools in our baseline model endogenous social interaction effects are strong for behavior closely related to school truancy somewhat weaker for behavior partly related to school smoking cell phone ownership and moped ownership and absent for behavior far away from school asking parents permission for purchases intra gender interactions are generally much stronger than cross gender interactions in a model with school specific fixed effects social interaction effects are insignificant with the exception of intra gender interactions for truancy copyright c 2007 john wiley sons ltd

re employment probabilities of unemployment benefit recipients this article studies transitions out of unemployment for benefit recipients in spain we analyse the duration of unemployment distinguishing between spells that end in recall workers returning to the previous employer and spells that end in exit to a new job this distinction allows us to find that the recall hazard rate increases around the time of exhaustion of benefits however this happens only for workers receiving unemployment insurance ui because we are unable to replicate this result for workers receiving unemployment assistance ua we believe the finding lends support to the hypothesis that in spain firms and workers make a strategic use of ui

two way migration between similar countries we develop a model to explain two way migration of high skilled individuals between countries that are similar in their economic characteristics high skilled migration results from the combination of workers whose abilities are private knowledge and a production technology that gives incentives to firms for hiring workers of similar ability in the presence of migration cost high skilled workers self select into the group of migrants the laissez faire equilibrium features too much migration explained by a negative migration externality we also show that for sufficiently low levels of migration cost the optimal level of migration while smaller than in the laissez faire equilibrium is strictly positive finally we extend our model into different directions to capture stylised facts in the data and show that our baseline results also hold in these more complex modelling environments

permanent differences in unemployment and permanent wage differentials this paper tests for the existence of wage premiums based on geographic and industry unemployment differences these differences are broken down into permanent and transitory components in equations controlling for variation in state generosity of unemployment insurance benefits findings indicate that wage premiums arise for long run unemployment differences but that negative short run shocks to industries generate wage cuts while positive shocks generate wage hikes therefore labor contracts accommodate long term anticipated unemployment and entail sharing of short term unemployment risks

recall expectations and duration dependence using novel administrative data from austria we investigate the nature of temporary layoffs and recalls we find that on average jobs ending in temporary layoffs lasted shorter but paid higher wages the majority of temporarily laid off workers return to their previous employer but also one fifth of those permanently laid off are recalled compared to job switchers recalls have shorter unemployment spells and do not experience wage losses negative duration dependence of unemployment only appears once recall exits are excluded for temporary and permanent layoffs however for temporary layoffs the aggregate pattern masks significant heterogeneity by pre unemployment tenure additional survey evidence suggests a lower average search level for temporary layoffs

a theory of migration as a response to occupational stigma a theory is developed of labor migration that is prompted by a desire to avoid social humiliation in a general equilibrium framework it is shown that as long as migration can reduce humiliation sufficiently migration will occur even between two identical economies migration increases the number of individuals who choose to perform degrading jobs and consequently migration lowers the price of the good produced in the sector that is associated with low social status moreover the greater an individual s aversion to performing degrading jobs the more likely it is that he will experience a welfare gain when the economy opens up

income redistribution going awry the reversal power of the concern for relative deprivation abstract we demonstrate that a rank preserving transfer from a richer individual to a poorer individual can exacerbate income inequality when inequality is measured by the gini coefficient this happens when individuals preferences depend negatively not only on work time effort but also on low relative income it is rigorously shown that the set of preference profiles that gives rise to this perverse effect of a transfer on inequality is a non empty open subset of all preference profiles a robust example illustrates this result

the economic consequences of labor unionization evidence from stock price crash risk this study investigates the impact of labor unionization on stock price crash risk we find that labor unionization is negatively associated with stock price crash risk such negative relation is more pronounced when firms can intimate more credible evidence on unfavorable prospects and when firms face more powerful labor unions our findings are consistent with the notion that firms take strategic actions to reduce the bargaining advantages enjoyed by labor unions and that labor unions force firms to take less risky investments and discontinue underperformed projects more timely which leads to lower stock price crash risk

worker investments in safety workplace accidents and compensating wage differentials the theory of compensating wage differentials cwds assumes that firms supply and workers demand workplace safety predicting a positive relationship between accident risk and wages this article allows for safety provision by workers which predicts a countervailing negative relationship between individual risk and wages firms pay higher wages for higher safety related productivity using national longitudinal survey of youth panel data and data on fatal and nonfatal accidents our precise cwds imply a value of a statistical injury of 45 4 thousand and a value of a statistical life of 6 3 million in line with our model individual risk and wages are negatively correlated

do wages compensate for anticipated working time restrictions evidence from seasonal employment in austria this article investigates the existence of compensating wage differentials across seasonal and long term jobs that arise due to anticipated working time restrictions using longitudinal information from the austrian administrative records we derive a definition of seasonality based on observed regularities in employment patterns as wages change across seasonal and long term jobs for the same individual over time we can control for individual specific effects and use variation in the starting month of seasonal jobs as an exogenous predictor of anticipated unemployment we find that employers pay on average a positive wage differential of about 11 for seasonal jobs

political and monetary institutions and public financial policies in the industrial countries institutions and policies vittorio grilli donato masciandaro and guido tabellini why do countries as similar as the industrialized oecd countries go through such different experience in terms of public deficits and debts or in terms of inflation the answer cannot come from macroeconomic policy responses to different disturbances nor from the principles of optimal taxation but rather from politics this article focuses on the role that particular institutions exert in providing constraints and incentives which shape the actions of policymakers the electoral process and political traditions affect the ability of governments to deal with deficits and mounting debts what seems to matter most it is found is the effect of the durability of governments governments with short horizons act myopically and never quite tackle the hard choices such governments typically exist in countries with an electoral system favouring many small political parties central bank independence promotes low inflation with no apparent costs in terms of real economic performance irrespective of the political institutions in fact there is no link between monetary and fiscal discipline these findings carry powerful implications for countries facing high indebtedness or stubborn inflation but also for the construction of the european economic and monetary union

quantifying equilibrium network externalities in the ach banking industry we seek to estimate the causes and magnitudes of network externalities for the automated clearinghouse ach electronic payments system using a panel data set on individual bank usage of ach we construct an equilibrium model of consumer and bank adoption of ach in the presence of a network the model identifies network externalities from correlations of changes in usage levels for banks within a network from changes in usage following changes in market concentration or sizes of competitors and from adoption decisions of banks outside the network with small branches in the network and can separately identify consumer and bank network effects we structurally estimate the parameters of the model by matching equilibrium behavior to the data using simulated maximum likelihood and a data set of localized networks and use a bootstrap to recover confidence intervals the parameters are estimated with high precision and fit various moments of the data reasonably well we find that most of the impediment to ach adoption is due to large consumer fixed costs of adoption the deadweight loss from the network externality is moderate the optimal number of ach transactions is about 16 higher than the equilibrium level

political accountability for price stability and unemployment in a multi party system with coalition governments a model of party popularity for multi party systems is presented and applied to the netherlands main conclusions are first inflation and unemployment and their interaction affect the popularity of parties second it is important to take into account that voters may reckon with a trade off between these variables third it is wrong to handle a coalition government as a homogeneous entity

economic outcomes and voting behaviour in a multi party system an application to the netherlands this paper is an empirical study to the effects of economic outcomes on party choice for the netherlands in the first part of the paper we employ a multinomial logit model to examine the links between voters characteristics and party choice the results suggest that there are long run movements in party choice which are unlikely be the result of changing economic outcomes in the second part we use time series analysis to determine the effects of economic conditions on short run and medium run movements in votes shares the estimations results provide support for the responsibility hypothesis and for the predictions of the partisan voter model that left wing right wing parties benefit suffer from favourable economic growth prospects

estimating coke s and pepsi s price and advertising strategies a semiparametric information based estimator is used to estimate strategies in prices and advertising for coca cola and pepsi cola separate strategies for each firm are estimated with and without restrictions from game theory these information entropy estimators are consistent and efficient these estimates are used to test theories about the strategies of firms and to see how changes in incomes or factor prices affect these strategies

consumption smoothing migration and marriage evidence from rural india a significant proportion of migration in low income countries particularly in rural areas is composed of moves by women for the purpose of marriage we seek to explain these mobility patterns by examining marital arrangements among indian households in particular we hypothesize that the marriage of daughters to locationally distant dispersed yet kinship related households is a manifestation of implicit interhousehold contractual arrangements aimed at mitigating income risks and facilitating consumption smoothing in an environment characterized by information costs and spatially covariant risks analysis of longitudinal south indian village data lends support to the hypothesis marriage cum migration contributes significantly to a reduction in the variability of household food consumption farm households afflicted with more variable profits tend to engage in longer distance marriage cum migration the hypothesized and observed marriage cum migration patterns are in dissonance with standard models of marriage or migration that are concerned primarily with search costs and static income gains

wages and the value of nonemployment nonemployment is often posited as a worker s outside option in wage setting models such as bargaining and wage posting the value of nonemployment is therefore a key determinant of wages we measure the wage effect of changes in the value of nonemployment among initially employed workers our quasi experimental variation in the value of nonemployment arises from four large reforms of unemployment insurance ui benefit levels in austria we document that wages are insensitive to ui benefit changes point estimates imply a wage response of less than 0 01 per 1 00 ui benefit increase and we can reject sensitivities larger than 0 03 the insensitivity holds even among workers with low wages and high predicted unemployment duration and among job switchers and recently unemployed workers the insensitivity of wages to the nonemployment value presents a puzzle to the widely used nash bargaining model which predicts a sensitivity of 0 24 0 48 our evidence supports wage setting models that insulate wages from the value of nonemployment

the dynamics of public support for coalition governments this article investigates the relationship between economic conditions and party support for coalition parties in denmark and the netherlands the article argues that the simple reward punishment model cannot fully account for changes in citizens support for parties given variable economic performance using aggregate public support data for political parties the article shows that citizens differentiate between coalition partners depending on the parties issue priorities instead of blaming or rewarding all coalition parties in a uniform fashion citizens shift support from one coalition party to another depending on the perceived competence of a party to deal with particular economic problems the article finds that the structure of responsibility in parliamentary democracies ruled by coalition governments is more complex than is often assumed therefore it is argued that students of economics and public opinion should pay particular attention to the institutional context in which citizens make ch

the central government private sector wage differential since ehrenberg and schwarz 1986 there has been a plethora of articles investigating the relationship between public and private sector wages this article examines part of this post 1986 literature by reviewing articles that examine central government private sector wage differentials in sum most articles find that there is a premium paid to central government workers although the premium has declined in recent years in developing countries however the differential is usually negative women and minorities tend to do better in the public sector relative to their private sector counterparts the evidence on union premiums between sectors is mixed although the premium tends to be higher in the private sector however public sector union workers do not do much better than private sector union members the magnitude of all of the wage differentials discussed are sensitive to the estimation technique and data source used the most common explanation for the public sector wage premium is economic rent accruing to government workers although the public sector wage determination literature suggests that the differential is due to returns to political and vote producing activities not relevant in the private sector

migration incentives migration types the role of relative deprivation the authors explore the role of relative deprivation versus absolute income as an incentive for migration in developing countries in section i of this paper we outline the relative deprivation model of migration and present an illustration of the divergent policy implications of a relative deprivation model versus an absolute income model an attempt is made to identify distinct empirical implications of relative and absolute income motives for migrating in section ii a migration decision model is estimated and is used to explore absolute and relative income motives for internal and international migration in a sample of rural mexican households as well as to test the extent to which discontinuity in labour markets shapes the choice of migrant destination in section iii we present our conclusions excerpt