individual and aggregate labor supply with coordinated working times i analyze two extensions to the standard model of life cycle labor supply that feature operative choices along both the intensive and extensive margin one assumes that individuals face continuous wage hours schedules while the other assumes that all work must be coordinated across individuals though similar qualitatively the two models have very different implications for aggregate labor supply responses to tax policy in the first model curvature in the individual utility from leisure function plays relatively little role but in the second model it is of first order importance the second model also has important implications for what data are best able to provide evidence on the extent of curvature in the utility from leisure function

optimal income taxation with adverse selection in the labour market this article studies optimal linear and non linear redistributive income taxation when there is adverse selection in the labour market unlike in standard taxation models firms do not know workers abilities and competitively screen them through non linear compensation contracts unobservable to the government in a miyazaki wilson spence equilibrium adverse selection leads to different optimal tax formulas than in the standard mirrlees 1971 model because of the use of work hours as a screening tool by firms which for higher talent workers results in a rat race and for lower talent workers in informational rents and cross subsidies the most surprising result is that if the government has sufficiently strong redistributive goals welfare is higher when there is adverse selection than when there is not policies that endogenously affect adverse selection are discussed the model has practical implications for the interpretation estimation and use of taxable income elasticities which are central to optimal tax design

a shred of credible evidence on the long run elasticity of labor supply all public policies regarding taxation and the redistribution of income rely on assumptions about the long run effect of wages rates on labour supply the variation in existing estimates calls for a simple natural experiment in which men can change their hours of work and in which wages have been exogenously and permanently changed we use a panel dataset of taxi drivers who choose their own hours and who experienced two exogenous permanent fare increases and estimate an elasticity of labour supply of 0 2 implying that income effects dominate substitution effects in the long run labour supply of males

production complementarities and flexibility in a model of entrepreneurship abstract the focus of this paper is the flexibility in working hours as a motive for entrepreneurship the model exhibits inflexibilities for workers and entrepreneurs which arise due to complementarities in production in addition it allows for volatile value of leisure to make flexibility in hours desirable differences in occupation specific flexibility disciplined with the observed patterns in hours level persistence dispersion and income persistence dispersion can explain relatively low income levels of entrepreneurs in the us and the occupation specific distributions of working hours and income policy relevance of the model features is discussed using experiments of workweek restrictions and income taxation

on competitive price adjustment for a storable good and abstention from trade the public good aspect of information is used to account for periods in which the aggregate level of trade is low it is shown that abstention from trade may occur when the uncertainty with respect to the market clearing price there is no auctioneer gets large relative to the cost of getting information about it and relative to the cost of postponing transactions in this case all agents are aware of bilateral pareto improving trading opportunities but these opportunities are not exploited

does work pay in france monetary incentives hours constraints and the guaranteed minimum income abstract this paper uses a representative sample of individuals on france s main welfare program the revenu minimum d insertion or rmi to estimate monetary incentives for employment among welfare recipients based on the estimated joint distribution of wages and hours potentially offered to each individual we compute potential gains from working in a very detailed manner relating these gains to observed employment we then estimate a simple structural labor supply model we find that potential gains are almost always positive but very small on average especially for single mothers because of the high implicit marginal tax rates embedded in the system employment rates are sensitive to incentives with extensive margin elasticities for both men and women usually below one conditional on these elasticities simulations indicate that existing policies devoted to reducing marginal tax rates at the bottom of the income distribution such as the interessement earnings top up program have little impact in this population due to their very limited scope the negative income tax prime pour l emploi seems to be an exception

how trading institutions affect financial market performance some laboratory evidence i introduction trading institutions vary considerably across contemporary financial markets 1 but most can be classified into one of two basic types the continuous double auction da allows traders to submit public offers to buy or to sell and to accept other traders offers at any moment in time the double auction institution offers immediacy but non uniform transaction prices the other basic trading institution the clearinghouse ch gathers offers and clears them at a unified price at a pre specified time it sacrifices immediacy for uniform transaction prices 2 the two types of institutions have co existed and evolved for centuries but now are emerging in new electronic versions market participants and policy makers would like to know which institution or variant or combination is most efficient but theoretical and empirical work to date provides little guidance this paper reports on a series of laboratory asset markets experiments designed to compare variants of the double auction and clearinghouse trading institutions the markets are small usually with eight or nine traders but the traders are profit motivated and experienced with the trading institutions the traded asset has uncertain market value and traders receive useful but inconclusive private information they can only learn the asset s true value during the course of trade laboratory markets offer several advantages for empirical study of financial market institutions first private information is observable even controllable in the laboratory and therefore the investigator can directly measure market efficiency 3 second the complexity of the environment can be varied systematically in the laboratory and its effects on market performance can be separated from the effects of the market institution and other forces finally the market institution itself is controllable in the laboratory so it is possible to make valid causal inferences on how the market institution shapes market performance i begin with a survey of relevant literature and other preliminaries in the rest of this section section ii outlines the laboratory procedures the creation of trading environments of varying complexity the electronic implementation of the clearinghouse and double auction trading institutions the computation of theoretical benchmark prices and allocations and the measurement of market performance section iii collects the results following an illustrative account of a double auction trading period and a clearinghouse trading period i use descriptive statistics to summarize market performance in each of the thirty nine experiments the main conclusions are based on statistical comparisons of market performance across alternative market institutions the clearinghouse institution does surprisingly well it delivers greater market depth than the double auction discovers prices at least as efficiently and produces final allocations almost as efficient as the double auction the main institutional variants examined in this paper concern the amount of information made public regarding order placement orderflow the data suggest that public display of the orderflow enhances double auction efficiency but may impair clearinghouse efficiency a study of trading volume shows higher volume in the double auction in both institutions volume increases when important private news arrives and when the trading period is about to end the paper concludes with a brief summary and discussion of the results a companion paper friedman 1991 considers the effects of awarding various privileges to some but not all traders copeland and friedman 1987 1991 provide useful background information on laboratory procedures and computerized double auction markets instructions for the current experiments are available on request the need for empirical work a skeptic might argue that empirical work is unnecessary the mere fact that the double auction and clearinghouse institutions both persist in major financial markets implies that both are highly efficient because a more efficient institution would displace less efficient institutions

estimating the cost of leisure time for recreation demand models abstract in this paper we propose a method of determining the opportunity cost of leisure time with an empirical recreation demand application typically the opportunity cost of leisure time is assumed to be some fraction of the wage rate this practice has limitations first it assumes that individuals can trade time for money at their wage second it offers no guidance about how to value the time of an individual who is not in the labor force this paper proposes a method of determining this cost that does not suffer from these drawbacks an empirical example is provided which demonstrates the proposed approach and contrasts it with commonly applied approaches

an examination of firms employment costs the existence of quasi fixed costs of work may affect firms desired employee hours and number of workers which has important implications for the estimation of labour supply parameters firm level data from the 1982 employment opportunity pilot project is used to estimate the importance to firms of employee quasi fixed costs related to searching hiring training and firing specifically this paper examines how these costs affect number of workers and hours per worker turnover and vacancies to the extent that the costs are determined by the firm s presumably exogenous industrial classification an attempt is made to control for biases due to employee heterogeneity as well results show that higher costs are associated with lower turnover fewer vacancies and longer hours as predicted by a model of labour demand

gender discrimination estimation in a search model with matching and bargaining this article develops a search model of the labor market with matching bargaining and employers taste discrimination in which under necessary but standard distributional assumption it is possible to separately identify gender discrimination and unobserved productivity differences the equilibrium shows that both prejudiced and unprejudiced employers wage discriminate maximum likelihood estimates on cps data indicate that half of the employers are prejudiced average female productivity is 6 5 lower and two third of the gender earning differential may be explained by prejudice an affirmative action policy is implemented resulting in a redistribution of welfare from men to women at no cost for employers welfare

the estimation of a joint wage hours labor supply model in this paper the standard cross sectional static model of labor supply is modified to make the wage endogenous and a joint wage hours model is estimated the econometric technique addresses the non linearity of the budget constraint by approximating the constraint by a series of discrete points the results show that the budget constraint is indeed nonlinear that hours affect the wage quadratically that true wage elasticities are lower as a result and that the model fits the hours distribution much better than the standard tobit model

the economics of moonlighting a double self selection model the model proposed here for obtaining the labor supply functions of moonlighters uses a double self selection system to explore the husband s decision to moonlight together with his wife s decision to work subsequently the labor functions are classified under two regimes depending on whether the wife works the model is estimated based on a cross section of 4 448 married couples from the survey of income and program participation wave 2 i find that the household production time of husbands and wives are substitutes and that specific human capital deters moonlighting copyright 1990 by mit press

the workers value of the remaining employment contract duration this paper introduces and applies a method for estimating workers marginal willingness to pay for job attributes employing data on job search activity worker s willingness to pay for the remaining duration of the employment contract is derived we provide evidence that workers attach substantial value to the remaining contract duration a temporary worker with a remaining contract of 6 months is willing to pay about 10 of the wage to increase the contract by one month

on the evidence of a working spouse penalty in the managerial labor market this analysis of march 1993 current population survey data suggests that managers with working wives earn lower wages than their counterparts with non working wives the labor supply decisions of managers wives appear to be unaffected by that is exogenous with respect to their husbands wages in contrast there is evidence that the labor supply decisions of non managers wives are affected by their husbands wages and when the analysis takes account of that endogeneity it is found that non managers do not suffer a working spouse penalty the analysis also highlights some important issues related to the use of instrumental variables

adaptive signal processing hierarchy and budgetary control in federal regulation control over agency budgets is a critical tool of political influence in regulatory decision making yet the causal mechanism of budgetary control is unclear do budgetary manipulations influence agencies by imposing resource constraints or by transmitting powerful signals to the agency i advance and test a stochastic process model of adaptive signal processing by a hierarchical agency to address this question the principal findings of the paper are two first presidents and congressional committees achieve budgetary control over agencies not by manipulating aggregate resource constraints but by transmitting powerful signals through budget shifts second bureaucratic hierarchy increases the agency s response time in processing budgetary signals limiting the efficacy of the budget as a device of political control i also show that the magnitude of agency response to budgetary signals increased for executive branch agencies after 1970 due to executive oversight reforms i conclude by discussing the limits of budgetary manipulations as a device of political control and the response of elected authorities to adaptive signal processing by agencies

compensating wage differentials for mandatory overtime this paper examines the extent to which individuals who are employed by firms that require mandatory overtime receive a compensating wage differential for this distasteful working condition while the empirical results indicate that the average worker does not receive a positive differential for this working condition the results do indicate that unionized workers and perhaps newly hired workers receive a positive differential the paper then develops a framework to determine if any observed compensating differential is in fact fully compensating the application of this framework to the mandatory overtime issue reveals that the fully compensating differential would be relatively small the methodology developed in this paper should prove useful in a variety of other contexts

the demand for leisure time in the presence of constrained work hours w douglass shaw this article presents a labor supply model designed to address situations of overemployment or underemployment in the labor market previous labor supply models have taken the possibility of work hour constraints into consideration but typically assumed that the existence of fixed work hours only influenced the decision of labor force participation this ignores situations in which individuals choose to be employed at fixed hour jobs even though these jobs do not offer the desired work hours jel j22 i introduction early attempts to incorporate time into consumer theory such as those by becker 1965 and by deserpa 1971 and to explain behavior in labor markets such as heckman s 1974 pioneering study relied on the assumption that individuals are able to freely adjust the hours they work the ability of an individual to achieve equilibrium in these models depends on flexible work hours for many individuals however hours of work are likely to be constrained individuals wishing to increase or decrease their work time may face a decision of either accepting the fixed hour schedule or exiting the labor force more refined models of labor force participation put forth by moffitt 1982 tummers and woittiez 1990 and zabel 1993 recognized this by incorporating a fixed hour constraint directly into the labor force participation decision generally these models assume that individuals decide whether or not to accept employment by comparing offered hours with desired hours if desired hours exceed offered hours then the individual enters the labor force models with a fixed hour constraint represent an improvement but they ignore the possibility that a large proportion of the labor force is likely to be either underemployed or overemployed due to the ubiquity of fixed hour employment the presence of these types of jobs is well documented in the literature schor 1991 lists several reasons including lack of lower skilled jobs costly fringe benefits and increased business competition why underemployment and overemployment is prevalent in the u s workplace prior studies by mossin and bronfenbrenner 1967 and by altonji and paxson 1988 document underemployment in the workplace in a study of the u s work force ham 1982 found that unemployed and underemployed workers ranged from 19 2 in 1973 to 28 2 in 1970 1 on the overemployment side tarling 1987 claims that recent evidence indicates that many employees would be prepared to forgo some of their earnings in order to reduce their hours of work p 85 bockstael et al 1987 make a simi lar observation noting that in their sample individuals with fixed working hours appear to value time much more highly than the wage rate and would be willing to trade work for leisure p 301 hahnel 1998 concluded that results from a 1994 survey suggest that u s workers have a slight preference for pay cuts in order to reduce their work hours about 50 of the respondents claimed they would accept a 10 reduction in pay in order to work a four day week well over half of the respondents in the survey claimed that it was either fairly difficult or almost impossible to reduce their work hours and over 60 reported that reducing their work hours would have a negative impact on their careers although the existence of underemployment and overemployment is well documented explicitly accounting for it in labor supply models remains largely unexplored in the literature in this paper the labor supply model originally analyzed by heckman 1974 is extended to recognize and incorporate fixed hour situations heckman s model which has been described as the most prevalent in the literature by zabel 1993 is derived by comparing reservation and market wages in its original form it posited a strong link between the labor force participation decision and the labor supply decision

household search or individual search does it matter most labor market search models ignore the fact that decisions are often made at the household level we fill this gap by developing and estimating a household search model with on the job search and labor supply we find that ignoring the household as a decision making unit has relevant empirical consequences in estimation the individual search model implies gender wage offer differentials almost twice as large as the household search model in the application the individual search model implies female lifetime inequality 30 lower than the household search model labor market policy effects on lifetime inequality are also sensitive to the specification

the 35 hour workweek in france straightjacket or welfare improvement workweek reduction laws may be beneficial if market interactions do not fully take into account the preferences reflected in declining secular trends in working hours the most recent law in france shortened the workweek from 39 to 35 hours in 2000 for large firms and in 2002 for small firms analysing differences between large and small firm employees before and after the law we find that aggregate employment was unaffected but labour turnover increased as firms shed workers who became more expensive survey responses indicate that the welfare impact of the law was different across groups of workers women but not men may have benefited from coordination to a shorter workweek and there is also evidence of negative welfare effects for managers possibly due to the law s administrative burden marcello estevao and filipa sa

work hour mismatch and job mobility adjustment channels and resolution rates this paper analyses the role of job changes in overcoming work hour constraints and the work hour mismatches resulting from these constraints i e differences between actual and desired work hours building on previous findings that job change increases the flexibility of actual work hours the study addresses two as yet neglected questions in the context i how do changes in desired work hours in addition to changes in actual work hours contribute to the resolution of these mismatches ii does the increased flexibility help actually to resolve work hour mismatches we exploit information about the magnitude of the prevailing mismatch to improve both the credibility and interpretation of the results we find that job change increases the probability of resolving work hour mismatches but far less than expected with free choice of hours across jobs instead large fractions of workers either stay or switch into overemployment we thoroughly investigate the robustness and heterogeneity of our results

increasing returns path dependence and the study of politics it is increasingly common for social scientists to describe political processes as path dependent the concept however is often employed without careful elaboration this article conceptualizes path dependence as a social process grounded in a dynamic of increasing returns reviewing recent literature in economics and suggesting extensions to the world of politics the article demonstrates that increasing returns processes are likely to be prevalent and that good analytical foundations exist for exploring their causes and consequences the investigation of increasing returns can provide a more rigorous framework for developing some of the key claims of recent scholarship in historical institutionalism specific patterns of timing and sequence matter a wide range of social outcomes may be possible large consequences may result from relatively small or contingent events particular courses of action once introduced can be almost impossible to reverse and consequently political development is punctuated by critical moments or junctures that shape the basic contours of social life

hierarchy and ecological control in federal budgetary decision making a central issue for fiscal sociology is the articulation between state and society operationally what is required is the embedding of bureaucratic decision making in history this article proposes the concepts of hierarcy and ecological control as one possible bridge between organization theorists and macro sociologists a stochastic process model of federal budgetary decision making within the executive branch is developed and tested using hud program allocation data from the johnson administration the model emphasizes that budgets emerge from the interaction of three levels of organizational decision making each of which is embedded in a distinct cultural context historical application focuses on the impact of the vietnam war on domestic antipoverty and housing programs

job changes and hours changes understanding the path of labor supply adjustment we use british panel data to investigate single women s labor supply changes in response to three reforms that affected individuals work incentives we use these reforms to identify changes in labor supply there is evidence of small hours of work effects for two of such reforms a third reform in 1999 instead led to a significant increase in single mothers hours of work the mechanism by which the labor supply adjustments were made occurred largely through job changes rather than hours changes with the same employer this is little overall effect of the reforms on wages

exchange rate fluctuations and immigrants labour market outcomes new evidence from australian household panel data abstract in this paper we exploit plausibly exogenous changes in exchange rates across home countries over time and panel data to identify the causal impact of exchange rate fluctuations on australian immigrants labour market outcomes we present new and robust evidence that unlike immigrants in the us those in australia as a whole do not reduce their yearly labour market outcomes when the local currency appreciates while female immigrants don t adjust their labour activities male immigrants reduce their weekly labour supply and hence earn less when the australian dollar appreciates this work also highlights the importance of controlling for individual heterogeneity as well as gender when modelling the labour market behaviour of immigrants

whose preferences are revealed in hours of work it has become orthodox in economics research to interpret the association between hourly earnings and working hours as the expression of the preferences of workers this convention originated in h gregg lewis explanation for the decline in hours of work since the nineteenth century his explanation rested on an explicit resolution of the identification problem inherent in any quantity hours price wage relation for over 40 years researchers have neglected this identification problem with the result that the findings in the purported labor supply literature are of questionable value jel j22 j23 c13

theoretical and practical arguments for modeling labor supply as a choice among latent jobs models of labor supply derived from stochastic utility representations and discretized sets of feasible hours of work have gained popularity because they are more practical than standard approaches based on marginal calculus in this paper we argue that practicality is not the only feature that can be addressed by means of stochastic choice theory this theory also offers a powerful framework for developing a more realistic model for labor supply choices founded on individuals having preferences over jobs and facing restrictions on the choice of jobs and hours of work we discuss and clarify how this modeling framework deviates from both the conventional discrete approach van soest 1995 as well as the standard textbook approach based on marginal calculus hausman 1985 we furthermore discuss how the model based on job choice offers the possibility of conducting a richer set of simulations of alternative policies

fixed costs and hours constraints hours constraints are typically identified by worker responses to questions asking whether they would prefer a job with more hours and more pay or fewer hours and less pay because jobs with different hours but the same rate of pay may be infeasible when there are fixed costs of employment or mandatory overtime premia the constraint in those cases may be illusory cross section estimates of reported hours constraints are consistent with this model implying that the overall level of hours constraints may exaggerate the extent to which the labor market is characterized by frictions and imperfections

employment contracts job search theory and labour turnover preliminary empirical results summary the empirical implications of a model in which a worker participates in a labour market in which a job offer consists of a wage hour pair are examined here hours are not freely adjustable and the wage rate is typically different from the marginal value of leisure a theoretical model is proposed some natural conjectures on effects of wage changes are shown not to hold and a preliminary empirical investigation based on denver income maintenance experiment data is undertaken the persistence of business cycles has led economists to consider explicitly potential sources of stickiness in wage and price adjustments particularly stickiness of nominal wages one explanation of slow adjustments of wages to shocks is that information arrives too rapidly with too much volatility or too much asymmetry for workers wages and hours to adjust so that the worker s wage is always equal to the value of his marginal product of labour and simultaneously to his marginal value of leisure time to avoid continuous adjustment workers and firms engage in implicit or explicit employment contracts azariadis 1975 modelled underemployment equilibria in a model with contracts baily 1977 studied a model in which certain fixed costs induce layoffs as firms respond to demand fluctuations more recent work by burdett and mortensen 1980 has considered the terms of equilibrium contracts in the labour market hart 1983 reviews the theory of optimal employment contracts emphasizing the role of asymmetric information fischer 1977a and implicitly phelps and taylor 1977 considered the effects of multiperiod contracts in dynamic macroeconomic models and found that certain policy neutrality results of the new classical macroeconomics could be invalidated under certain conditions it is worth mentioning at this point that keynes clearly recognized that the link between the real wage paid to workers and the value of their leisure time had to be broken before macropolicy of the keynesian type would be effective indeed keynesian macroeconomic problems arise because this link is broken keynes repeatedly refers to nominal wage bargains as providing the rigidity he wanted to model the importance of implicit or explicit employment agreements in economic theory has led to a small number of empirical studies which explicitly allow for divergence between the wage keynes 1936 ch 2 and 18 malinvaud 1977 provides a related discussion in some models contracts serve only to introduce a somewhat arbitrary rigidity barro 1977 notes that rational agents are unlikely to write contracts the provisions of which make all parties worse off see also the comment by fischer 1977b

labour supply search and taxes abstract classical labour supply theory is one of the most sophisticated parts of labour economics yet there is no compelling theoretical reason to believe in an outcome on a classical labour supply curve and it is unclear whether it is a good empirical description of the way in which labour markets actually work this paper uses the techniques of search theory to analyse the impact of changes in the tax system on incentives to work when individuals do not have flexibility of hours within jobs it is shown how the traditional comparative statics are of some use but are rarely the whole story and some comparative statics results are surprising

female labor supply with a discontinuous nonconvex budget constraint incorporation of a part time full time wage differential this paper incorporates the well documented part time full time wage differential into an empirical labor supply model with both a heterogeneity and a random error term and estimates that model fo

after work shopping employment effects of a deregulation of shop opening hours in the german retail sector abstract this study investigates the impact of a deregulation of shop opening laws on employment in the german retail sector exploiting the gradual change in the opening times of shops across states and using data from the german socio economic panel difference in differences estimates indicate an average increase in the employment probability driven by a rise in the likelihood of working marginal part time hours workers in small firms are likely to experience a reduction of their propensity to work for individuals facing high family related supply side constraints the change in shop opening hours has opposing effects on employment positive on lower and negative on upper parts of the hours distribution overall the deregulation is estimated to have raised the likelihood of working fewer hours than desired by the workers

the microeconomics of market making this paper examines the influence of risk aversion on the pricing policies of a market maker for securities it is shown that a market maker s bid ask spread can be decomposed into a portion for the known limit orders a risk neutral adjustment for expected market orders and a risk adjustment for market order and inventory value uncertainty it is dem onstrated that a risk averse market maker may set a smaller spread than a risk neutral specialist finally this paper demonstrates the pervasive role of inventory in affecting both the placement and size ofthe spread

market behavior in a clearing house one of the most fundamental market mechanisms is the clearing house where orders are accumulated over time and the market is cleared periodically the issue addressed in this study is the statistical behavior of the market under this neutral mechanism in the framework of a tractable stochastic model which captures the underlying uncertainties and indivisibilities in the demand and supply schedules applying renewal theory we derive closed form results for the behavior of prices and quantities and pursue the implications of the possibility of no trade and the multiplicity of market clearing prices

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

estimating compensating wage differentials using voluntary job changes evidence from germany the author develops a model predicting that in a labor market that attaches a wage premium to jobs with a disamenity a compensating wage differential the premium s upper bound will be defined by the average wage change of voluntary job movers whose consumption of the disamenity rises as a result of their move its lower bound by the wage change of those whose consumption of the disamenity falls these predictions will not hold if as predicted by a segmented labor market model the labor market attaches a wage penalty to workplace disamenities using longitudinal data on job characteristics and wages in germany in 1984 2001 the author estimates the market returns to four workplace disamenities heavy workload job insecurity poor hours regulation and a mismatch between skills possessed and skills required the results broadly support the existence of compensating differentials in the german labor market

on intraday risk premia this article presents a framework for analyzing the dynamic effects of anticipated large demand pressures on asset risk premia we show that large institutions who can time their entry into the market will trade either at the open or during periods of unusual demand pressures we show that if these institutions do enter later in the day they trade in the same direction as institutions which provide liquidity continuously institutions therefore appear to exhibit herding behavior we also explore how changing the uncertainty of demand pressures late in the day affects trading costs throughout the day most financial market investors do not continuously monitor intraday fluctuations in stock prices other activities e g outside employment often take precedence over following the stock market and there are limitations to processing information for example a reader of this page is likely to be unaware of current financial market prices in fact for many investors entry into financial markets occurs once a day or even less frequently given these institutional realities it is of interest to explore how asset markets react when it is known that a set of very large predictable demands will arrive during the afternoon does their arrival affect prices only when they arrive or throughout the day if the price impact is spread out then how do trading costs behave during the day if some traders have the flexibility to time their entry into the market when will they arrive during the day and how will their entry decisions affect asset risk premia if market participants anticipate that demands in the afternoon will be unusually volatile how does this affect the intertemporal behavior of prices and expected returns earlier in the day the primary focus of this article is the development of tractable methodologies that can address these issues

hours flexibility and retirement i introduction standard models of labor supply depict workers as choosing to work any positive amount of hours they wish at the competitive wage paid to persons of their type implicit in these models is the assumption that employers offer to workers at a particular wage a menu of infinitely many hours options from which workers may choose however this assumption seems fundamentally at odds with how the labor market functions in particular the distribution of weekly hours of work suggests that workers may be offered only a limited set of hours options by the employers 1 this study examines how employer imposed minimum hours of work requirements affect workers retirement decisions 2 we present a simple theoretical framework which shows that workers who cannot lower their hours of work in one period are more likely to retire by some subsequent date than workers not so constrained the intuition is straightforward given his characteristics and the wage he commands there is a particular hours level which a person desires to work in any period equivalently between any two time periods a worker initially working a given amount of hours desires that his hours change over time by a particular amount for workers with jobs that feature flexible hours the actual change in hours worked over time always perfectly matches the desired change if the worker desires to withdraw from the labor force then he does so if he desires to work fewer positive hours in the later period he changes his labor supply to precisely the desired level for workers with the same desired change in labor supply but who face hours constraints the only way to lower hours of work from one positive amount to another is to change jobs because such job changes are associated with transition costs the worker chooses from among a set of less than ideal options he can continue at the present job and be overemployed alternatively he can pay a transition cost and work the desired hours level in a new job or he can withdraw completely from the labor force thus unlike the worker whose hours are flexible the hours constrained worker retires both when he desires to work 0 h and when he wishes to work some positive amount less than he did previously but faces relatively high transition costs we tested the prediction that hours constrained workers are more likely to retire over time using a sample of retirement aged individuals from the health and retirement study hrs we found that a large fraction of workers aged 55 64 yr cannot lower their usual weekly hours of work in 1992 these constraints are prevalent for both men and women among people working different hours level and across all types of jobs exploiting the panel feature of the data and using a series of empirical tests we found that hours constrained workers are much more likely than their unconstrained peers to be retired by 1996 we document few differences in observed characteristics between constrained and unconstrained workers suggesting that the results do not derive from differences in latent retirement propensities across workers or to unmeasured job characteristics moreover we controlled carefully for demographic and job information we also conducted some simple tests to assess the likelihood that the results derive from sorting by job type constrained or unconstrained or simple measurement error and found that our main estimates continue to obtain the study s emphasis that hours constraints make it difficult for workers to satisfy changing labor supply preferences without changing jobs is also the main focus of altonji and paxson 1992 these authors showed that in a sample of prime aged women events likely to generate large changes in labor supply preferences such as the birth of a child or a child starting school tend to be associated with large changes in hours worked only for persons who change jobs

tax reform sector specific labor supply and welfare effects this paper focuses in particular on the 1992 tax reform in norway in this reform the top marginal tax rates were cut considerably we find that the impact on overall labor supply is rather modest but these modest changes shadow for stronger sectoral changes the tax reform stimulated the women to shift their labor from the public to the private sector and to work longer hours a calculation of mean compensated variation calculated within the framework of a random utility model shows that the richest households benefited far more from the 1992 tax reform than did the poorest households

micro adjustment toward long term equilibrium abstract a dynamic model is constructed in which the behavior of economic agents is based on adjustment decisions are made in disequilibrium prices respond to differences between supply and demand inventories capital is moved according to profitability differentials and money is issued by a bank which reacts to the general price level a proof of local stability of long term equilibrium with production prices is demonstrated we further distinguish between two aspects of the stability problem concerning the allocation of capital and relative prices stability in proportions and with respect to the general levels of activity and prices stability in dimension

determinants of voluntary overtime decisions determinants of voluntary overtime decisions i introduction since the passage of the fair labor standards act in 1938 the minimum legal overtime pay premium has remained time and one half for persons working more than forty hours per week in 1978 approximately 59 percent of the labor force was subject to this provision and coverage has not changed since then 1 the labor market effects of overtime provisions including the decision on the part of both employers and employees to utilize overtime has generated a great deal of intellectual debate for example union groups have long stressed the importance of raising the legal minimum premium in order to stimulat employment through a substitution of additional employees for longer e g overtime hours previous research by ehrenberg and schumann 1982 has estimated that these effects are likely to be quite small to date studies of overtime behavior such as ehrenberg 1971a have focused on the decisions of employers implicit in these studies is the assumption of a perfectly elastic supply response by the employee to employer overtime policy however just as employers attempt to minimize costs in demanding overtime hours taking into account quasi fixed labor costs in addition to overtime premiums employees attempt to maximize utility in supplying overtime hours from the worker s perspective the decision to work overtime and perhaps more generally to take a job where overtime is regularly available or required can be thought of as resulting from a comparison of the utility derived from an overtime versus a no overtime state within this framework the voluntary overtime decision depends on relative wages overtime to straight time and nonlabor income and will be strongly conditioned on such personal factors as the worker s marital status and age this study attempts to advance our knowledge of the labor market effects of overtime policies by explicitly modelling employee responses to variations in the legal parameters of the overtime system 2 our model allows us to estimate substitution and income elasticities for overtime and thereby enables us to evaluate the effects of a variety of policies on a worker s voluntary overtime decision policy simulations suggest that legislative changes to increase the overtime premium or reduce the number of hours after which the mandatory premium takes effect would induce greater voluntary overtime on the part of worker yet because of offsetting income and substitution effects the net induced effects of such policies are not quantitatively large we also find that mandatory overtime provisions are most likely to be found in settings where quasi fixed employment costs are highest the remainder of this paper is organized as follows section ii develops a theoretical model of the voluntary overtime decision section iii presents the empirical model to be estimated section iv discusses the data used in estimation and the construction of key variables section v presents the empirical findings section vi reports the results of a simulation analysis of the effects of a number of policy alternatives on the voluntary overtime decision section vii investigates the sensitivity of the policy simulations to the empirical specification finally section viii summarizes the major conclusions and gives suggestions for further research ii the voluntary overtime decision the voluntary overtime decision can be though of as resulting from a straightforward maximization of utility subject to a budget constraint consider a worker who possesses a monotonic strictly quasi concave utility function in market goods income and labor supply u y h where y is income and h is hours of work the budget constraint facing the worker is y wh n where w is the net of taxes wage rate and n is net nonwage income to make the problem empirically tractable we utilize the stone geary utility function in this paper

the pricing of job characteristics when markets do not clear theory and policy implications this article examines nonsequential search when jobs vary with respect to nonpecuniary characteristics in the presence of frictions in the labor market the equilibrium job distribution need not show evidence of compensating wage differentials the model also generates several pervasive features of labor markets unemployment and vacancies apparent discrimination and market segmentation when workers are homogeneous restrictions on the range of job offers decrease welfare and cannot reduce unemployment however when workers have heterogeneous preferences such restrictions may lower unemployment and can even lead to a pareto improvement in welfare we consider the impact of policies banning discrimination and regulating working conditions

adjustment costs firm responses and micro vs macro labor supply elasticities evidence from danish tax records we show that the effects of taxes on labor supply are shaped by interactions between adjustment costs for workers and hours constraints set by firms we develop a model in which firms post job offers characterized by an hours requirement and workers pay search costs to find jobs we present evidence supporting three predictions of this model by analyzing bunching at kinks using danish tax records first larger kinks generate larger taxable income elasticities second kinks that apply to a larger group of workers generate larger elasticities third the distribution of job offers is tailored to match workers aggregate tax preferences in equilibrium our results suggest that macro elasticities may be substantially larger than the estimates obtained using standard microeconometric methods

is tomorrow another day the labor supply of new york city cabdrivers the labor supply of taxi drivers is consistent with the existence of intertemporal substitution my analysis of the stopping behavior of new york city cabdrivers shows that daily income effects are small and that the decision to stop work at a particular point on a given day is primarily related to cumulative daily hours to that point this is in contrast to the analysis of camerer et al who find that the daily wage elasticity of labor supply of new york city cabdrivers is substantially negative implying large daily income effects this difference in findings is due to important differences in empirical methods and to problems with the conception and measurement of the daily wage rate used by camerer et al

nurses wanted is the job too harsh or is the wage too low when entering the job market nurses choose among different kind of jobs each of these jobs is characterized by wage sector primary care or hospital and shift daytime work or shift this paper estimates a multi sector job type random utility model of labor supply on data for norwegian registered nurses rns in 2000 the empirical model implies that labor supply is rather inelastic 10 increase in the wage rates for all nurses is estimated to yield 3 3 increase in overall labor supply this modest response shadows for much stronger inter job type responses our approach differs from previous studies in two ways first to our knowledge it is the first time that a model of labor supply for nurses is estimated taking explicitly into account the choices that rn s have regarding work place and type of job second it differs from previous studies with respect to the measurement of the compensations for different types of work so far it has been focused on wage differentials but there are more attributes of a job than the wage based on the estimated random utility model we therefore calculate the expected value of compensation that makes a utility maximizing agent indifferent between types of jobs here between shift work and daytime work it turns out that norwegian nurses working shifts may be willing to work shift relative to daytime work for a lower wage than the current one

interregional migration and interindustry labour mobility in canada a simultaneous approach this paper argues that interindustry labour mobility and interregional migration are simultaneously determined processes it estimates a bivariate probit model of migration and mobility using data for canada and concludes that the interindustry mobility of labour is dominated by the availability of employment hours and that wage differentials are a statistically significant but small determinant of interregional migration since interindustry mobility is much larger in magnitude than interregional migration quantity constraints in labour markets are of central importance to the adaptive capacity of the economy summary in fre excerpt

labor supply preferences hours constraints and hours wage tradeoffs in a labor market with tied hours wage packages and wage dispersion for a particular type of job constrained workers may be willing to sacrifice wage gains for better hours when changing jobs likewise workers may accept jobs offering undesirable hours only if the associated wage gains are large we investigate this issue empirically by examining whether overemployment and underemployment on the initial and new job affects the relation between hours changes and wage changes for quitters our results generally support the view that an individual requires compensation to work in a job that given the individual s particular preferences offers unattractive hours

equilibrium search and tax credit reform an empirical equilibrium job search model with wage posting is developed to analyze the labor market impact of uk tax reforms the model allows for a rich characterization of the labor market with hours responses accurate representations of the tax and transfer system and both worker and firm heterogeneity the model is estimated with pre reform longitudinal survey data using a semi parametric estimation technique and the impact of actual tax reform policies is simulated the model predicts that the british working families tax credit and contemporaneous reforms increased employment with equilibrium effects found to play a relatively minor role

interpreting labor supply regressions in a model of full and part time work we construct a family model of labor supply that features adjustment along both the intensive and extensive margin intensive margin adjsutment is restricted to two values full time work and part time work using simulated data from the steady state of the calibrated model we examine whether standard labor supply regressions can uncover the true value of the intertemporal elasticity of labor supply parameter we find positive estimated elasticities that are larger for women and that are highly significant but they bear virtually no relationship to the underlying preference parameters

the labor supply effects of the social security earnings test the social security earnings test taxes away benefits at a 33 50 rate once earnings pass a threshold amount i investigate the response to three past changes in the earnings test rules each applying to some age groups and not others i find that beneficiaries bunch in substantial numbers just below the earnings threshold and the bunching shifts when the earnings test rules change these shifts in the budget constraint are incorporated into an econometric model to identify income and substitution effects the estimation yields significant elasticities that suggest considerable deadweight loss suffered by working beneficiaries

testing whether unemployment represents intertemporal labour supply behaviour in the lucas rapping 1969 model of the labour market fluctuations in unemployment represent individuals optimally adjusting their labour supply behaviour in response to fluctuations in wage rates over the business cycle in this paper i propose and implement a misspecification test of the lucas rapping treatment of unemployment as labour supply behaviour using panel data this test extends previous such work with micro data by simultaneously allowing for intertemporal substitution uncertainty and endogenous unemployment using the standard specification of intertemporal labour supply behaviour i find strong evidence against this interpretation of unemployment there are two possible interpretations of the test results the first is that it is necessary to turn to alternative models of the labour market in which unemployed workers are off a supply function the second is that the test results indicate the necessity of moving to more complex models of intertemporal substitution however given current econometric techniques and data sets these alternative models of intertemporal substitution will be extremely difficult to test

an integrated theory of budgetary politics and some empirical tests the u s national budget 1791 2010 we develop a general theory of budgetary politics and examine its implications on a new data set on u s government expenditures from 1791 to 2010 we draw on three major approaches to budgeting decision making theories primarily incrementalism and serial processing policy process models and path dependency we show that the incrementalist budget model is recursive and that its solution is exponential growth and isolate three periods in which it operates in pure form the equilibrium periods are separated by critical junctures associated with wars or economic collapse we assess policy process dynamics by examining the deviations within equilibrium periods we offer three takeaways 1 exponential incrementalism is fundamental to a theory of budgeting 2 disjoint shifts in the level of exponential incrementalism are caused only by critical moments 3 temporally localized dynamics cause bends in the exponential path longer returns to the path within budgetary eras and annual punctuations in budget changes

testing the predictive value of subjective labour supply data empirical implementation of labour supply theories is usually based on realized labour market behaviour this requires strong assumptions about the impact of labour demand a possibility to avoid these assumptions is to make use of subjective data on desired labour supply in this paper we investigate whether respondents answers to survey questions on the desired number of working hours contain additional information on the preferences of the individuals using panel data for the netherlands we analyze whether deviations between desired hours and actual hours of work help to predict future job changes or changes in hours worked we use parametric and recently developed nonparametric tests the results suggest that subjective information on desired working hours are helpful in explaining female labour supply for males the evidence is mixed

constraints on the choice of work hours agency versus specific capital lifetime contracts imply that at a given time wages and value of marginal product vmp will diverge the contract will specify hours as well as wages since firms will desire to prevent workers from working more when the wage is greater than vmp and from working less when the wage is less than vmp if hours are set efficiently workers will face binding hours constraints the agency model and the firm specific capital models make opposite predictions regarding the relation between work hours constraints and job tenure we test these predictions our results indicate that neither model explains the observed pattern of hours constraints

a general empirical law of public budgets a comparative analysis weexamineregularitiesand differencesinpublicbudgetingincomparativeperspective budgetsquantifycollectivepolitical decisions made in response to incoming information the preferences of decision makers and the institutions that structure how decisions are made we first establish that the distribution of budget changes in many western democracies follows a non gaussian distribution the power function this implies that budget changes are highly incremental yet occasionally are punctuated by large budget changes this pattern holds regardless of the type of political system parliamentary or presidential and for level of government by studying the power function s exponents we find systematic differences for

search for nonwage job characteristics a test of the reservation wage hypothesis previous structural models of job search behavior have been based upon the reservation wage property this article provides estimates of a more general search model that nests models with the reservation wage property the estimates lead to rejection of the reservation wage property the model includes hours of work in the utility function but other nonwage job characteristics can be included as well an experiment based on the estimated parameters indicates that a significant proportion of job offers would be mistakenly predicted to be accepted or rejected under the restrictions implied by the reservation wage property

sectoral labour supply choice restrictions and functional form this is the authors submitted article version which is the pre peer reviewed version of the article the article changed title in the peer reviewing process from analyzing labor supply behavior with latent job opportunity sets and institutional choice constraints later published as discussion paper no 399 http brage bibsys no ssb handle urn nbn no bibsys brage 21006

hourly versus salaried payment and decisions about trading time and money over time using longitudinal data from the british household panel survey the authors examine how individuals employment compensation salaried or hourly affects their decisions to trade time for money res

adjustment cost and incentives to work evidence from a disability insurance program abstract how important is adjustment cost for individuals who face a change in work incentives induced by a policy change i provide the first estimate of adjustment cost in the context of a disability insurance di program by exploiting a policy change that increased work incentives by increasing the exemption threshold i use bunching at the thresholds to estimate adjustment cost and earnings elasticity the estimates of adjustment cost are quite sizeable and heterogeneous the estimates of earnings elasticity from both static and dynamic models are larger than the elasticity estimated with no adjustment cost suggesting that adjustment cost attenuates the responses to work incentives policies designed to increase labor supply will work if the work incentives are large enough to offset the adjustment cost accounting for adjustment cost then might explain the disparate findings on the effects of an increase in work incentives on the labor supply of beneficiaries of di programs