short selling and the price discovery process we show that stock prices are more accurate when short sellers are more active first in a large panel of nyse listed stocks intraday informational efficiency of prices improves with greater shorting flow second at monthly and annual horizons more shorting flow accelerates the incorporation of public information into prices third greater shorting flow reduces post earnings announcement drift for negative earnings surprises fourth short sellers change their trading around extreme return events in a way that aids price discovery and reduces divergence from fundamental values these results are robust to various econometric specifications and their magnitude is economically meaningful the author 2012 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

growth and unemployment this paper analyses the effects of growth on long run unemployment using a search model of equilibrium unemployment where growth arises explicitly from the introduction of new technologies that require labour reallocation for their implementation the analysis uncovers and compares between two competing effects of growth on unemployment the first is a capitalisation effect whereby an increase in growth raises the capitalised returns from creating jobs and consequently reduces the equilibrium rate of unemployment the second is a creative destruction effect whereby an increase in growth reduces the duration of a job match thereby raising the equilibrium level of unemployment both directly by raising the job separation rate and indirectly by discouraging the creation of job vacancies this paper asks the question of how the rate of economic growth affects unemployment in the long run the main consideration that leads us to think that this is an interesting question has to do with the re allocative aspect of growth in the long run faster economic growth must come from a faster increase in knowledge to the extent that the advancement of knowledge is embodied in industrial innovations it is likely to raise the job destruction rate through automation skill obsolescence and the bankruptcy associated with the process of creative destruction in short increased growth is likely to produce an increased rate of job turnover and the search theories of lucas and prescott 1974 and pissarides 1990 imply that an increased rate of job turnover will result in a higher natural rate of unemployment this conclusion is also consistent with the empirical results of davis and haltiwanger 1990 which show that periods of high unemployment tend to be periods of high job turnover at the establishment level it suggests the possibility of a positive longrun tradeoff between growth and unemployment at least over some range there has been relatively little attention paid to our question in the literature on longrun determinants of unemployment for example the recent empirical examination by layard nickell and jackman 1991 of unemployment rates among oecd countries did not even consider the rate of economic growth as a possible explanatory variable this is consistent with the seminal theoretical work of phelps 1968 which implies that the natural rate of unemployment is independent of the rate of productivity growth the only

the beveridge curve and labour market dynamics in turkey this article investigates the dynamics of unemployment and vacancy rates in turkey during the period 1951 to 2008 by means of a beveridge curve bc the time series analysis of unemployment and vacancies as well as two other relevant labour market variables real wages and real labour productivity strongly suggests inefficiency in the turkish labour market a stable long run relationship between unemployment rate and vacancy rate is found for turkey that is the existence of a negatively sloped bc is verified the estimated turkish bc reflects the structural problems and lack of flexibility in the labour market the modified bc with real wages and labour productivity reveals that labour productivity has no significant effect on unemployment rate whereas wages have positive and significant effects on the same variable

on unemployment inflow and outflow in urban china wu z and yao s 2006 on unemployment inflow and outflow in urban china regional studies 40 811 822 as the largest transitional economy in the world china s labour market has a number of characteristics distinctively different from that of the developed economies such as the uk or the usa this paper aims to identify the determinants of unemployment inflow and outflow in urban china with empirical data for 29 provinces over 1989 99 it is found that rural urban migration ownership diversification industrial structural change international trade international competitiveness product wages and age structure are key determinants of unemployment flows the results suggest that due to market imperfections unemployment inflow and outflow are two asymmetric processes with respect to the concerned predetermined variables wu z et yao s 2006 sur l afflux et la fuite du chomage dans la chine urbaine regional studies 40 811 822 en tant que l economie en voie de transition la plus grande du monde

short sales are almost instantaneously bad news evidence from the australian stock exchange this paper investigates the market reaction to short sales on an intraday basis in a market setting where short sales are transparent immediately following execution we find a mean reassessment of stock value following short sales of up to 0 20 percent with adverse information impounded within fifteen minutes or twenty trades short sales executed near the end of the financial year and those related to arbitrage and hedging activities are associated with a smaller price reaction trades near information events precipitate larger price reactions the evidence is generally weaker for short sales executed using limit orders relative to market orders this article analyzes the intraday price behavior surrounding short sales executed using market and limit orders within a transparent setting a number of recent studies have focused on daily or monthly stock price behavior surrounding short selling activity in u s markets e g senchack and starks 1993 figlewski and webb 1993 conrad 1994 hanley and seyhun 1994 asquith and meulbroek 1996 and dechow et al 1997 this research has been motivated by the continued interest of market regulators i n short selling activity and the controversy surrounding the desirability restrictions and disclosure requirements related to short selling see janvey 1992 and ramsay 1993 in particular several studies such as that by figlewski and webb 1993 have examined the relationship between short positions and subsequent abnormal returns without finding a strong relationship asquith and meulbroek 1996 in contrast focus on firms with large short positions and find a strong and consistent relationship dechow et al 1997 find a correlation between short selling strategies and strategies based on fundamental analysis these results are consistent with short sellers being able to identify

spatial variations in the male unemployment inflow rate 1985 spatial variations in the male unemployment inflow rate applied economics vol 17 no 1 pp 41 54

matching models and labour market flows abstract this paper focusses on the matching approach to labour market flows it briefly reviews the facts on gross worker flows for the uk it then considers an alternative to the standard matching model which allows for job search by the employed this significantly affects the nature of aggregate unemployment dynamics over the cycle finally we consider the implications of the model for aggregate labour market dynamics

dynamic investment and financing under personal taxation this paper examines the effects of capital gains taxation on firms investment and financing decisions we develop a real options model in which the timing of investment the decision to default and the firm s capital structure are endogenously and jointly determined our analysis demonstrates that the asymmetric taxation of capital gains and losses fosters investment by eroding the option value of waiting it also shows that firms controlled by taxable investors employ more equity financing the higher the firm s stock price and the worse the firm s historical performance using a large sample of u s industrial firms that are owned by taxable investors between 1970 and 2008 we present new evidence on corporate investment and financing policies which is supportive of the model s predictions

positive feedback in skill aggregation across chinese cities this paper examines whether human capital levels diverged across chinese cities between 1990 and 2010 by employing a series of instruments for the initial human capital share consistent positive

the determinants of equilibrium unemployment in britain a lot of energy is currently being expended in trying to understand what has been happening to unemployment in britain and the rest of the developed world in this paper we look at this question in the british context by trying to confront some possible explanations with the data since the data we use are quarterly over rather a short period we are setting the explanations a very hard test most explanations tend to be rather casual and the theories underpinning them ill developed thus for example the so called real wage argument is based on the idea that real wages affect labour demand and that the equilibrium real wage bears some relatively stable relationship to output per head but how stable is not clear thus whether or not we can expect a well defined stable ceteris paribus dynamic relationship between real product wages as a proportion of output per head and unemployment is equally unclear so if such a relationship does not show up in a quarterly regression model this may not be that serious for the theory nevertheless we must look for the relationship for how else are we ever to discriminate between a plethora of conflicting views the primary emphasis in this paper is on the secular factors affecting unemployment rather than the cyclical variables consequently we shall not be concerned with developing a coherent theory of cyclical fluctuations and in the empirical work we shall control for the cycle simply by making use of those exogenous or predetermined variables which other work in this field suggests are important 2 the remainder of the paper is set out as follows the next section is concerned with specifying a model which generates a definition of equilibrium unemployment the outline of this model is a pair of equations determining the flows into and out of unemployment and these are specified in section ii which looks closely at the possible variables involved section iii then deals with the results and presents some general conclusions

costly arbitrage evidence from closed end funds arbitrage costs lead to large deviations of prices from fundamentals using a sample of closed end funds i find that the market value of a fund is more likely to deviate from the value of its assets 1 for funds with portfolios that are difficult to replicate 2 for funds that pay out smaller dividends 3 for funds with lower market values and 4 when interest rates are high these factors are related to the magnitude of the deviation as opposed to the direction i e whether discount or premium and explain a quarter of cross sectional mispricing variation these findings are consistent with noise trader models of asset pricing

trading and valuing depreciable assets abstract optimal policies for selling a risky depreciable asset with proportional taxes and transaction costs are derived for a representative investor who maximizes the market value of his investment also calculated are the market value of his investment and the competitive price of the depreciable asset depending upon the values of various parameters the investor realizes either capital gains and no losses capital losses and no gains or neither gains nor losses additional properties of the solution are derived numerically

the ins and outs of uk unemployment this study shows that in the uk increases in unemployment in a recession are driven by rises in the separation rate a new decomposition of unemployment dynamics is devised that does not require unemployment to be in steady state at all times this is important because low uk transition rates one quarter the size of the us imply substantial deviation of unemployment from steady state near cyclical turning points in periods of moderation the job finding rate is shown to have most influence on uk unemployment dynamics evidence comes from the first study of monthly data derived from individuals labour market spells recorded in the british household panel survey from 1988 to 2008

the determinants of equilibrium unemployment in britain a comment in a recent paper nickell 1982 has focused on an empirically neglected aspect of unemployment the flows into and out of the stock he estimates that the natural or equilibrium rate doubled from i967 2 56 to 1979 5 82 almost all unemployment is held to be due to equilibrium or secular forces in this comment we make a number of points whose effect is to cast some doubt on these results

examining the role of economic opportunity and amenities in explaining population redistribution abstract this paper develops a model of migration integrating equilibrium and disequilibrium components in which individuals and firms form rational expectations about future opportunities levels of migration are derived as functions of variations in factors influencing migrant labor demand economic opportunity and migrant labor supply residential amenities the model is used to estimate the extent to which migration in the united states over the period 1950 1980 is determined by these two classes of exogenous factors

unemployment dynamics and duration dependence in france the netherlands and the united kingdom this paper analyzes unemployment dynamics in the french dutch and u k labor market it presents a method to distinguish between the effects of duration dependence and unobserved heterogeneity on the exit rate out of unemployment it turns out that for british male unemployed there is strong genuine negative duration dependence for french unemployed there is no strong duration dependence during the first year of unemployment while for dutch unemployed there is nonmonotonic duration dependence for all groups of french and dutch individuals significant unobserved heterogeneity is found for u k male unemployed heterogeneity seems to be empirically unimportant copyright 1994 by royal economic society

job destruction and propagation of shocks this paper considers propagation of aggregate shocks in a dynamic general equilibrium model with labor market matching and endogenous job destruction cyclical fluctuations in the job destruction rate magnify the output effects of shocks as well as making them much more persistent interactions between capital adjustment and the job destruction rate play an important role in generating persistence propagation effects are shown to be quantitatively substantial when the model is calibrated using job flow data incorporating costly capital adjustment leads to significantly greater propagation

is incomes policy the answer to unemployment in western europe unemployment has remained obstinately high ever since 1975 what has prevented governments from reducing it the answer is simple if unemployment were reduced by normal methods inflation would rise it follows that the only way to cut the long run level of unemployment is to find some other way of controlling inflation no such device will be costless but if we could find any method that was less costly than unemployment we ought to adopt it maurice chevalier was asked in later life what he thought of old age it s not so bad he replied when you consider the alternative that was a true economist talking and it is also the spirit in which i shall approach the unhappy choices open to us my argument will proceed roughly as follows first imagine that a costless incomes policy is available then most people would probably agree that if inflation was too high a temporary incomes policy would be a good idea in order to get inflation down but what then when it was down we would still be left with far too high an unemployment rate only a permanent incomes policy can substantially reduce the non inflationary level of unemployment however against these benefits have to be set the costs of an incomes policy a conventional incomes policy which permanently suspended collective bargaining would be out of the question in a free society so we have to have an incomes policy that works by incentive rather than by regulation the best thing would be a tax on wage increases levied on employers and proportional to wage increases above a prescribed norm i shall spend some time discussing this tax using various different models of wage setting to explain how it would have its effect and finally i shall try producing a first draft of the operator s manual

productivity gains from geographic concentration of human capital evidence from the cities abstract based on recent theoretical developments the argument is made that the average level of human capital is a local public good cities with higher average levels of human capital should therefore have higher wages and higher land rents after conditioning on the characteristics of individual workers and dwellings this prediction is supported by data for standard metropolitan statistical areas smsas in the united states where the smsa average levels of formal education and work experience are used as proxies for the average level of human capital the alternative explanations of omitted smsa variables and self selection are evaluated an estimate of the effect of an additional year of average education on total factor productivity is computed

the incidence of nominal and real wage rigidities in great britain 1978 98 this paper analyzes the extent of rigidities in wage setting in great britain over the 1980s and 1990s our estimation strategy which generalizes the work of altonji and devereux 2000 models the notional wage growth distribution the distribution of nominal wage growth that would occur in the absence of rigidities in pay while allowing for the presence of measurement error in the data the model then allows for the possibility that the nominal wage growth of a fraction of the workforce may be subject to a nominal or real downward rigidity our model suggests that real rigidities in wage setting are more prevalent than nominal rigidities although the incidence of these real wage rigidities has fallen gradually over time if firms cannot cut real wages in response to negative demand shocks they may resort to laying off workers our results support this microfoundation of the wage unemployment phillips curve workers who are more likely to be protected from wage cuts are also more likely to lose their jobs

a model of competition between unemployed and employed job searchers an application to the unemployment outflow rate in britain this paper proposes a model to explain the allocation of new jobs to workers the central innovation is the analysis of the competition for jobs between employed and unemployed job searchers it is argued that the endogeneity of the fraction of the employed engaging in search is a crucial determinant of the unemployment outflow rate the model is applied to the unemployment outflow rate in britain the model fits the data well and encompasses its main rival copyright 1993 by royal economic society

the structure and incentive effects of corporate tax liabilities this paper describes situations in which tax liabilities assume the form of a negative position in a call option this structure motivates an examination of the investment decisions of taxed corporations in the presence of risk it is shown that the structure of the tax liability creates an incentive to underinvest in more risky projects and an incentive for conglomerate merger these effects are then evaluated in the presence of conflicts of interest between stockholders and bondholders and under alternative assumptions about the tax code and about the timing of investment and financing decisions this paper makes an observation regarding the functional form assumed by the tax liabilities of corporations with potentially redundant deductions and evaluates its consequences for investment incentives interest and other deductions against taxable income can be taken for the most part only to the extent of that income in a single period model this gives the net tax liability a familiar structure it can be viewed as a call option where the exercise price on the call is the allowable deductions the tax paying entity holds a positive position in the assets which generate the taxable income and a negative position in a call option on those assets the analogy between options and the structure of tax liabilities calls attention to some interesting incentive effects concerning risk using their model of option valuation black and scholes 5 showed that the value of an option is increasing in the variance of the asset it is written on other authors have generalized this result and studied its implications for corporate financing see jagannathan 16 jensen and meckling 17 and green 15 the importance of the risk attributes of the underlying asset in option valuation suggests that taxation may have important incentive consequences for investment decisions involving risk it has been recognized in the public economics literature for some time that asymmetries in the tax schedule can affect risk taking behavior early papers by mossin 20 and stiglitz 25 studied individual portfolio decisions over a riskless and a risky asset our analysis differs from these in a number of respects the most important of these is our use of market valuation rather than expected utility in the decision maker s objective function this is surely a more appropri

the relationship between unemployment and vacancies in australia the paper addresses the existence of an equilibrium unemployment vacancies uv relationship in australia cointegration test results suggest that no bivariate long run uv relationship exists moreover this finding fails to support the basic model of labour job search however a modified beveridge curve is proposed where it is found that a number of trivariate equilibrium relationships exist between unemployment vacancies and one other variable the replacement ratio the proportion of long term unemployed or the real wage the existence of an equilibrium relationship in the multivariate framework is due to the endogenous modelling of the un employment flows which are assumed to be exogenous in the bivariate framework of the beveridge curve

the dynamics of unemployment structural change and unemployment flows in this paper we attempt to explain the inflows onto and the outflows from the unemployment stock in spite of great interest in explaining unemployment very little work has been done using time series data on flows 1 it is useful to think of the labour market as being in a perpetual state of flux with people moving from job to job from jobs to unemployment and from unemployment to jobs an analysis of flows allows us to study the dynamics of the labour market and provides us with useful insights which may be clouded by studying unemployment stocks our model explaining the flows is based on cost minimising firms and individuals searching for jobs 2 we postulate an economy consisting of two types of firms expanding firms that hire and declining firms that fire changes in aggregate demand tastes and technology lead to changes in the distribution of firms and hence to the flows section i considers the empirical specification and discusses the results for great britain for the period 1967 iii to 1980 ii to anticipate our results we find that inadequate aggregate demand is a crucial determinant of the growth of unemployment in britain

the macroeconomics of inflation non neutrality inflation non neutrality can only be properly considered in a complete macro model but most existing treatments use partial equilibrium approaches this paper develops an open economy macro model incorporating labor markets and the government budget constraint as well as the product and domestic asset markets that normally feature in the neutrality literature this model is used to examine stability and long run inflation multipliers with various policy combinations numerical simulations show that the quantitative importance of nonneutralities varies across different policy combinations in some cases nonneutralities are very significant copyright 1989 by royal economic society

modelling the dynamics of regional employment population ratios and their commonality this paper looks at movements over time in regional employment population ratios an important and much neglected determinant of regional performance we utilise data on gross flows into and out of employment and focus on information contained in the transition rates the paper applies an unobserved components econometric model to a panel of australian data to identify and explain the evolution of regional employment population ratios over time the approach identifies a common i e nationwide factor while allowing for region specific effects including region specific impacts of the common factor the contribution of the common factor to changes in regional employment population ratios ranges between 38 and 80 conversely regional elements explain between 20 and 62 of changes the findings highlight the importance of adopting explicit regional employment policies as a complement to national policy

company bankruptcies and births matter this paper constructs a simple supply orientated model of the economy in which company bankruptcies which lead to a loss of capital and births have impacts on macroeconomic variables bankruptcies will reduce output increase unemployment worsen the balance of payments and also impact upon inflation empirical work based on data from both the usa and the uk finds a significant granger causality relationship between bankruptcies and births and these four macroeconomic variables the standard granger causality regression is supplemented by non linear granger causality tests

the causes of unemployment in france a flow approach a flow model is used to identify the causes for rising unemployment in france between 1978 and 1990 two flow equations are estimated as functions of exogenous factors such as aggregate demand factor costs structural shifts and long term factors and then used in simulations for the level of unemployment it is shown that the main reason for high unemployment in france is a slow down in the demand for labour due to high labour and energy costs in the early 1980s and to tight aggregate demand over the whole period change in the labour supply have had an increasing impact in recent years

political parties world demand and unemployment domestic and international sources of economic activity this article replicates and extends earlier work on the politics of macroeconomic policy by considering political effects on unemployment in 14 western industrial nations between 1960 and 1983 changes of party control of government display broadly the expected effects namely that unemployment falls under left wing governments and rises under right wing governments however the principal conclusions of this article are that partisan effects on unemployment in open economies that is economies heavily dependent on trade with other countries can only be satisfactorily estimated relative to the constraint imposed by the level of world economic activity and that in addition to politicians strategic incentives political institutions and economic regime constraints also determine whether partisan effects on unemployment will be sustained transitory or absent with respect to the latter on the whole no effects are found where no such effects were promised by the new government before taking office where one party or dominant partner coalitions form the effect on unemployment is transitory whereas where broad coalitions form it is sustained or absent finally ceteris paribus any partisan effects are more likely where governments secure parliamentary majorities

regional employment subsidies and migration in this paper the traditional efficiency basis for employment subsidies to high unemployment regions is modified to incorporate a description of the transition to employment expectations of employment depend not just on the rate of unemployment but also on job turnover rates thus unemployed in the high unemployment regions are more incline to migrate at an observed migration equilibrium implicit migration costs are higher and expected income lower than they would be in the simple model this means that the shadow price of a job in the high unemployment region is lower than in the simple model and less than the wage rate

the role of worker flows in the dynamics and distribution of uk unemployment unemployment varies substantially over time and across sub groups of the labour market worker flows among labour market states act as key determinants of this variation we examine how the structure of unemployment across groups and its cyclical movements across time are shaped by changes in labour market flows using novel estimates of flow transition rates for the uk over the last 35 years we decompose unemployment variation into parts accounted for by changes in rates of job loss job finding and flows via non participation close to two thirds of the volatility of unemployment in the uk over this period can be traced to rises in rates of job loss that accompany recessions the share of this inflow contribution has been broadly the same in each of the past three recessions decreased job finding rates account for around one quarter of unemployment cyclicality and the remaining variation can be attributed to flows via non participation digging deeper into the structure of unemployment by gender age and education the flow approach is shown to provide a richer understanding of the unemployment experiences across population sub groups

general equilibrium treatment effects a study of tuition policy this paper defines and estimates general equilibrium treatment effects the conventional approach in the literature on treatment effects ignores interactions among individuals induced by the policy interventions being studied focusing on the impact of tuition policy and using estimates from our dynamic overlapping generations general equilibrium model of capital and human capital formation we find that general equilibrium impacts of tuition on college enrollment are an order of magnitude smaller than those reported in the literature on microeconomic treatment effects the assumptions used to justify the late parameter in a partial equilibrium setting do not hold in a general equilibrium setting policy changes induce two way flows we extend the late concept to a general equilibrium setting we present a more comprehensive evaluation to program evaluation by considering both the tax and benefit consequences of the program being evaluated and placing the analysis in a market setting this abstract was borrowed from another version of this item

tax motivated trading by individual investors we study the stock trades of a large number of individual investors to investigate how tax incentives affect the realization of capital gains and losses we compare investors realization behavior in their taxable and tax deferred accounts and thereby identify the effect of taxes on trading decisions we reach four conclusions first we find clear evidence of a lock in effect for capital gains in taxable accounts relative to tax deferred accounts we find evidence of the disposition effect the tendency for investors to hold losses and sell gains in both types of accounts and especially at short holding periods the lock in effect is stronger for large stock transactions than for small ones second we find tax loss selling throughout the calendar year though it is most pronounced in december tax loss trading is more pronounced among investors who have realized capital gains elsewhere in the portfolio during the year third we observe substantial heterogeneity in individual investors propensity to trade controlling for this heterogeneity however does not alter the relation between a stock s past performance and the realization decision finally we find that relatively few investors repurchase stocks that they have sold at a loss even after the 30 day wash sale holding period has expired

payout taxes and the allocation of investment when corporate payout is taxed internal equity retained earnings is cheaper than external equity share issues if there are no perfect substitutes for equity finance payout taxes may therefore have an effect on the investment of firms high taxes will favor investment by firms who can finance internally using an international panel with many changes in payout taxes we show that this prediction holds well payout taxes have a large impact on the dynamics of corporate investment and growth investment is locked in in profitable firms when payout is heavily taxed thus apart from any level effects payout taxes change the allocation of capital

unemployment and the inter regional mobility of labour the relationship between unemployment and interregional labor migration in the united kingdom is explored using data from the labour force survey for 1984 and 1977 the authors conclude that the experience of unemployment increases the likelihood of migration and that households in areas of high unemployment are more likely to move they also find that during periods of higher overall unemployment migration propensities are reduced annotation

unemployment dynamics in britain we examine the inter related dynamics of the unemployment flows and stock our model allows them to be linked through the standard accounting identity but also through behavioural relationships we find that for the uk the bulk of the correlation between duration and the unemployment stock arises from the dependence of duration on unemployment taking careful account of the inter temporal identity outflow shocks have contributed little to the evolution of unemployment since the late 1960s given that the correlation of duration and unemployment arises from the behavioural relationship we show that unemployment dynamics arise mostly from shocks to the inflow unemployment remains one of europe s more pressing economic and social problems as highlighted in the eu s lisbon declaration of 2000 a dynamic approach to unemployment starts from the recognition that unemployment is a stock and changes through shocks to the outflow and inflow the research and policy focus has generally been on the outflow process or equivalently unemployment duration a glance at figure 1 shows why this might be so it reveals a very strong co movement of the unemployment rate and the proportion of the unemployed out of work for a year or more analysts have used data like this to argue that the source of unemployment fluctuations has been changes in the outflow process 1 possibly as a consequence of this most policies directed at reducing unemployment focus on improving the search effectiveness and employability of the currently unemployed the unemployment flows and stock are related in quite complex ways and in this paper we focus on these inter related dynamics the model we use allows them to be linked in two ways first there is the simple accounting relationship whereby shocks to the flows accumulate in the stock second search and matching models suggest behavioural relationships of the flows depending on unemployment the presence of the nonlinear accounting identity in the model makes the analysis of the joint system problematic so we proceed sequentially investigating first one link and then the other we find that for the uk the bulk of the correlation between duration and the unemployment stock displayed in figure 1 arises from the dependence of the former on the latter we find a strong dependence of the outflow rate on unemployment taking careful account of the inter temporal identity on the other hand outflow shocks have contributed little to the evolution of unem

arbitrage and martingales with taxation this paper extends the martingale analysis of no arbitrage pricing to worlds with taxation the absence of arbitrage is shown to imply the existence of different shadow prices for income streams that are subject to differing tax treatments for example no arbitrage implies the existence of different martingale measures for capita l gains and for ordinary income when they are differentially taxed andfor item s such as depreciation expenses that influence only after tax cash flows the analysis is applied to several topics in finance including the debt equity decision tax options and the taxation of dividends and pensions copyright 1987 by university of chicago press

unemployment in britain male unemployment in britain has risen from around 2 per cent in the 1950s to around 17 per cent in 1985 see figure 1 the figures are for male unemployment because there is no consistent series for women 1 even more remarkably unemployment has fallen in only three years out of the last twenty 1973 1978 and 1979 to account for this we need a model that explains both changes in the natural or non accelerating inflation rate of unemployment nairu and deviations from it we use a three equation supply side model centred on the labour market this has two main features the first concerns the determination of employment in the short run the labour demand function that we use cuts through the fruitless debate now raging especially in europe as to whether current unemployment is classical or keynesian according to the classical view employment is too high because real wages are too high according to the keynesian view real wages are not binding and unemployment is high because the product market does not clear with prices too high relative to nominal demand the whole debate is set in the framework of perfect competition yet in perfect competition prices are set by impersonal forces and it is not clear what could possibly stop prices clearing the market it is much more reasonable to think of prices as being set by imperfectly competitive firms existing prices being the best they can think of given the demand they face in this context firms demand for labour will depend on both the real product wage and the level of real aggregate demand this is the demand function we estimate and it conforms both to common sense and to the data however this does not imply that employment can be made to grow without limit by pumping up real demand for in the medium term when price surprises are eliminated our model determines three variables employment real wages and real demand on the basis of three equations an employment equation a price equation and a wage equation thus in the medium term there is a natural level of employment and corresponding to this a natural level of real aggregate demand the second key feature of our model concerns the medium term determination of unemployment in the medium term the planned mark up of wages over prices in wage settlements must be consistent with the mark up of prices over wage costs in employers pricing behaviour for if wage setters try to set real product wages higher than is consistent with employers pricing behaviour this generates ever increasing inflation thus the key to understanding unemployment in the medium term is the behaviour of wage setters if events occur that push them towards too high real wages then unemployment has to rise to offset these influences we shall call these influences wage pressure variables or push factors and they are clearly crucial in understanding unemployment the variables here include the social security system employment protection

structural unempolyment in australia this paper examines whether structural unemployment increased in australia over the last two decades a simple regression model has been considered for testing the hypothesis of increase in unemployment of several segment of the labour force over time six dimensions of the labour force namely age sex region duration of unemployment occupation and industry have been taken into account analysis of the regression results reveals that the structural unemployment problem is substantial with respect to age sex duration of unemployment occupation and industry regarding region the evidence for structural symptom is not very strong

investigation of production sales and inventory relationships using multicointegration and non symmetric error correction models the accumulated sum of a stationary series is called integrated if a linear combination of some of the integrated series is stationary it is said to be cointegrated this paper presents empirical results on inventories to consider the possibility of a deeper form of cointegration called multicointegration which is introduced in granger and lee 1989 a vector integrated series is multicointegrated if the accumulated sum of its stationary cointegrated linear combination is again cointegrated with itself inventory which is the accumulated sum of production minus sales is probably cointegrated with production and sales the empirical results generally support the presence of multicointegration of production and sales in many u s industries and industrial aggregates the results also favour the non symmetric error correction model providing evidence that the strength of attraction is different on both sides of the attractor a modified s s rule for inventory control is investigated in the context of a non symmetric error correction model and the results generally do not support the s s rule sufficient evidence is found to conclude that multicointegration is a useful concept in the area of inventory determination

labor turnover costs and average labor demand labor turnover costs may or may not decrease average employment in a partial equilibrium model of labor demand depending on the form of the revenue function on the rates of discount and of labor attrition and on the relative size of hiring and firing costs if discount and attrition rates are strictly positive firing costs may well increase average employment even when hiring costs reduce it

unemployment rate dynamics and persistent unemployment under rational expectations this paper develops a model of unemployment rate dynamics that provides an explanation of persistent cyclical unemployment that does not involve persistent expectational errors or other nonoptimizing behavior our results are based on the interaction of search dynamics and inventory adjustments an important element in these dynamics appears to be heterogeneity in the labor force which can be characterized as consisting of a relatively small group of high turnover individuals who comprise the bulk of normal unemployment and a larger group of low turnover individuals who dominate movements in cyclical unemployment our empirical results provide support for this theory as we demonstrate that the appropriately measured probability of becoming employed during a recovery falls relative to normal because of the unusually high proportion of low turnover individuals who have lost permanent jobs as aresult recovery is much slower than is indicated by normal relationships although each individual is searching optimally this abstract was borrowed from another version of this item

regional unemployment and employee loyalty evidence from 12 uk regions abstractthis study investigates the relationship between unemployment and employee loyalty across uk regions it is argued that higher regional unemployment depresses wages and increases the cost of a potential job loss thus providing an incentive for employees to be loyal to their employer using data from the work and employment relations survey wers the results confirm the positive association between regional unemployment and employee loyalty a disaggregated analysis by type of business reveals that this association is stronger in the private sector the study adds a spatial dimension to an emergent literature that examines how unemployment affects the employed

the real effects of short selling constraints we use a regulatory experiment regulation sho that relaxes short selling constraints on a random sample of u s stocks to test whether capital market frictions have an effect on stock prices and corporate decisions we find that an increase in short selling activity causes prices to fall and that small firms react to these lower prices by reducing equity issues and investment these results not only provide evidence that short selling constraints affect asset prices but also confirm that short selling activity has a causal impact on financing and investment decisions

the effect of wage restraint on labour market flows the effects are studied of a wage restraint policy on flows in the labour market flows into and out of employment are distinguished and simple models are considered for these flows wage costs in particular are found to affect the flow of employment into unemployment which can be considered as a measure of job destruction but wage costs have no effect on the number of new hires which can be considered as a measure of job creation therefore wage moderation has preserved jobs that would otherwise have been destroyed the inflow of new hires is influenced by investments the generosity of the social benefit system and by structural mismatch apart from wage costs interest costs of firms also play a role in the job destruction process particularly since the beginning of the 1980s

real wages and unemployment in australia this paper estimates a three equation model of the australian labor market for employment real wages and the participation rate it uses the model to study the role of incomes policies in containing real wage growth and the reasons behind the changes in unemployment since 1970 it finds that incomes policies have not been important in controlling real wages the rise in unemployment in the 1970s was due to the rise in tax rates and unemployment benefits and the changes in unemployment in the 1980s were connected with changes in investment and aggregate demand copyright 1991 by the london school of economics and political science

panel data analysis of the beveridge curve is there a macroeconomic relation between the rate of unemployment and the vacancy rate this study investigates whether the beveridge curve the relation between vacancy and unemployment rate is helpful for the quantification of structural unemployment since aggregate time series are too short to test detailed hypotheses about the beveridge curve the author assembles a panel of nine regions in west germany analyses of these data produce little support for a structural macroeconomic interpretation of the beveridge curve the observed shifts of the beveridge curve are too sudden to be explained by structural changes there is evidence for aggregation bias and variables associated with structural unemployment do not substitute for the explanatory power of dummy variables for the observed shifts while cyclical variables do so copyright 1991 by the london school of economics and political science

the happiness of cities florida r mellander c and rentfrow p j the happiness of cities regional studies this research examines the factors that shape the happiness of cities whereas much of the existent literature has focused on the happiness of nations it is argued that in addition to income which has been found to shape national level happiness human capital levels will play an important role in the happiness of cities metropolitan level data from the 2009 gallup healthways survey are used to examine the effects of human capital on city happiness controlling for other factors the findings suggest that human capital plays the central role in the happiness of cities outperforming income and every other variable florida r mellander c and rentfrow p j 2009 gallup healthways florida r melland

estimating unemployment inflows outflows and long term unemployment in britain using the cointegration approach a model is estimated of flows into and out of unemployment using the johansen multivariate cointegration approach and uk data for the period 1974q4 to 1993q3 two long run equilibrium relationships are obtained covering the outflow rate and unemployment duration which include variables such as the replacement ratio structural change and output a unique feature of the model is that it allows the inflow rate to determine the outflow rate and vice versa this is argued to be important given the common european stylized fact that inflows and outflows are both countercyclical and strongly correlated thus if firms and workers are heterogeneous hiring and firing is contemporaneous necessitating the type of model estimated here some interesting results include the finding that output is not important in determining the outflow rate and that the speed of adjustment of the outflow rate to changes in its underlying equilibrium is slow in contrast the proportion of long term unemployed is positively re

short sales constraints and price discovery evidence from the hong kong market short sales practices in the hong kong stock market are unique in that only stocks on a list of designated securities can be sold short by analyzing the price effects following the addition of individual stocks to the list we find that short sales constraints tend to cause stock overvaluation and that the overvaluation effect is more dramatic for individual stocks for which wider dispersion of investor opinions exists these findings are consistent with miller s 1977 intuition and other optimism models we also document higher volatility and less positive skewness of individual stock returns when short sales are allowed the question of how short sales impact capital markets is highly controversial with short sale regulations varying widely across countries and capital markets 1 although short selling has been carried out for years in major financial markets around the world its effects on market efficiency especially on pricing efficiency remain of interest to financial researchers miller 1977 theorizes that in the presence of short sales constraints security prices tend to reflect a more optimistic valuation than the average opinion of potential investors and thus tend to be upward biased this overvaluation argument is based on two conditions 1 a security s short sales are either prohibited or costly and 2 investors have heterogeneous beliefs or information about the security s value the underlying intuition is quite straightforward pessimistic investors are forced to sit out of the market when short sales are not available and thus some negative information is not reflected in prices enabling enthusiastic buyers to bid prices above the level that average investors perceive as fair this argument has significant implications for market efficiency theories since one of the major functions of capital markets is price discovery indeed an efficient market should be a market in which prices always

efficiency and the bear short sales and markets around the world we analyze cross sectional and time series information from 46 equity markets around the world to consider whether short sales restrictions affect the efficiency of the market and the distributional characteristics of returns to individual stocks and market indices we find some evidence that prices incorporate negative information faster in countries where short sales are allowed and practiced a common conjecture by regulators is that short sales restrictions can reduce the relative severity of a market panic we find strong evidence that in markets where short selling is either prohibited or not practiced market returns display significantly less negative skewness

business cycles and compositional variation in u s unemployment in this article we study u s unemployment dynamics using grouped unemployment data from the current population survey over the period 1968 1992 we estimate a model that traces variation in these unemployment data both over time and between demographic groups back to the underlying variation in the inflow and the outflow in turn we model the outflow as a transition process in which we allow the exit probabilities to depend on calendar time duration and demographic group we use the estimation results to provide a decomposition of aggregate u s unemployment dynamics in various incidence and duration components

microeconomic adjustment hazards and aggregate dynamics the basic premise of this paper is that understanding aggregate dynamics requires considering that agents are heterogeneous and that they do not adjust continuously to the shocks they perceive we provide a general characterization of lumpy behavior at the microeconomic level in terms of an adjustment hazard function which relates the probability that a unit adjusts to the deviation of its state variable from its moving target we characterize rich cross sectionally dependent aggregate dynamics generated by nonconstant hazards we present an example based on u s manufacturing employment and job flows and find that increasinghazard models outperform constant hazard partial adjustment models in describing aggregate employment dynamics

hysteresis and instability in the natural rate of unemployment in this paper it is pointed out that the long run phillips curve genus contains upward and downward sloping species as well as the vertical species two models are used in one the rate of inflation helps determine the natural rate of unemployment as proposed by friedman in the other the process of moving from one inflation rate to another helps shape the natural rate according to the hysteresis effect proposed by phelps in both cases the resulting models are unstable implying that a vertical long run phillips curve will not be regained if disturbed

why do firms offer employment protection this paper derives optimal employment contracts when workers are risk averse and there are employment and unemployment risks without income insurance consumption rises during employment and falls during unemployment optimal employment contracts offer severance compensation and sometimes give notice before dismissal severance compensation smooths consumption during employment and dismissal delays insure partially against the unemployment risk because of moral hazard during the delay consumption falls to give incentives to the worker to search for another job no dismissal delays are optimal if exogenous unemployment compensation is sufficiently generous

heterogeneous job matches and the cyclical behavior of labor turnover abstract worker flows to and from unemployment simultaneously occur over the us business cycle and the size of the flows is positively linked to the unemployment rate unemployment flows and the unemployment rate are highly volatile persistent and countercyclical inflows lead the unemployment rate and the unemployment rate leads outflows over the business cycle the one sector stochastic growth model is augmented by matching frictions in the labor market and match specific productivity shocks that introduce ex post heterogeneous job matches matching frictions help generate the lead lag relationship between unemployment flows and the unemployment rate combined with heterogeneous job matches they generate endogenous unemployment flows and an unemployment rate whose dynamic characteristics match observed data

on the timing and efficiency of creative destruction we analyze the timing pace and efficiency of ongoing job reallocation that results from product and process innovation there are strong reasons why an efficient economy ought to concentrate both job creation and destruction during recessions when the opportunity cost of reallocation is lowest incomplete contracting between labor and capital can disrupt this synchronized pattern and decouple creation and destruction transactional difficulties also lead to technological sclerosis characterized by excessively slow renovation government incentives to production may alleviate high unemployment but exacerbate sclerosis in contrast creation incentives increase the pace of reallocation an optimal combination of both policies restores economic efficiency

house prices and job losses why are house prices 80 correlated with job losses over the uk business cycle my paper studies this striking fact together with the strong comovements between house prices and labour market variables in general first a regional panel is estimated to quantify the impact of house prices on the unemployment job finding and job separation rates whereby rejection rates of planning applications are used as instruments to find exogenous variation in house prices second an orthogonalised var is used to estimate the aggregate impact of house price shocks both methods confirm the large impact of house price shocks on labour market variables and credit supply to understand the mechanism a general equilibrium model with collateral constraints endogenous job separation and housing shocks is confronted with macroeconomic data via bayesian methods the results suggest that shocks to house prices i explain about 10 of output fluctuations and about 20 of fluctuations in corporate credit unemployment and job separation rates via the collateral channel over the forecast horizon and ii were a major cause in triggering the 1990 and 2008 recessions in the uk

debt valuation renegotiation and optimal dividend policy the valuation of debt and equity reorganization boundaries and firm s optimal dividend policies are studied in a framework where we model strategic interactions between debt holders and equity holders in a game theoretic setting which can accommodate varying bargaining powers to the two claimants two formulations of reorganization are presented debt equity swaps and strategic debt service resulting from negotiated debt service reductions we study the effects of bond covenants on payout policies and distinguish liquidity induced defaults from strategic defaults we derive optimal equity issuance and payout policies the debt capacity of the firm and the optimal capital structure are characterized

business cycles and labor market search the quantitative implications of labor market search for economic fluctuations are evaluated in the context of a real business cycle model incorporating labor market search into the model is found to improve its empirical performance along several dimensions in particular hours now fluctuate substantially more than wages and the contemporaneous correlation between hours and productivity falls in addition the model replicates the observation that output growth displays positive autocorrelation at short horizons overall the empirical results suggest that the labor market search environment embodies a quantitatively important propagation mechanism copyright 1996 by american economic association

the anatomy of unemployment dynamics abstract this paper examines the relation between individual unemployment durations and incidence inflow size on the one hand and the time varying macroeconomic conditions in the economy on the other we develop a model for the analysis of aggregate unemployment incidence and duration data and estimate this model on quarterly french data over the period 1982 1994 stratified by sex we find upward trends in both incidence and durations the former is relatively important for females the latter for males male incidence and durations are countercyclical with only a minor role for cohort effects on durations in contrast female cohorts entering at the top of the cycle have relatively short unemployment spells and the female incidence is if anything procyclical there is strong seasonal variation in particular in the incidence finally we find relatively small non monotonic individual duration dependence in the first six quarters of unemployment unobserved heterogeneity explains the observed negative duration dependence at these durations we provide some evidence that negative individual duration dependence and not heterogeneity is important at higher durations

worker flows job flows and unemployment in a matching model abstract standard matching models of unemployment generate far too little volatility in unemployment and vacancies relative to the variation in the shock variables shimer 2005 showed that in us data the vacancy to unemployment ratio is about 26 times more volatile than the standard model predicts he identified the flexibility of wages as the key issue and triggered a heated debate on possible improvements of the core model to accommodate these empirical facts in this paper we first document shimer s facts for the uk and find them to be qualitatively similar to us facts we then develop and calibrate a model based on the mortensen and pissarides approach that increases the volatility of the v u ratio 20 fold compared to the standard framework the key features of our model relate to the job creation decision by firms and the search options of workers we allow these to search whilst employed and firms to re advertise jobs that have been quit from this leads us to use a different job creation process whereby potential vacancies or job ideas arise at a finite rate per period over a range of idiosyncratic productivities calibrating the model to uk data we show that it delivers volatility in unemployment and vacancies much closer to though still not as large as that observed for the uk whilst retaining the standard wage determination process

declining us output volatility and its effect on labour flow volatility an mgarch analysis this article analyses flow rates of us workers between employment and unemployment using new quarterly data for the period 1967 to 2002 multivariate garch models are used to investigate links between flow rate volatilities the results suggest that links changed substantially in the mid 1980s coinciding with the documented decline in output volatility these changes in adjustment dynamics are consistent with a move to greater use of hours rather than worker adjustment

the estimation of frictional unemployment a stochastic frontier approach this paper reports an estimate of the frictional unemployment rate in u s manufacturing that is derived from a parametric statistical method for estimating stochastic frontiers the steady state perfect foresight solution to an estimated employment growth frontier provides a locus of technically efficient frictional rates of unemployment the mean frictional unemployment rate during the sample period is estimated to be 3 7 percent of the manufacturing labor force this estimate conforms closely to an estimate of 3 5 percent that is derived from manufacturing sector data presented by david m lilien 1980 for roughly the same time period copyright 1991 by mit press

the determinants of individual unemployment durations in an era of high unemployment this paper presents the results of an econometric analysis of the conditional probability of leaving unemployment for two male inflow cohorts entering unemployment at very different points in time 1978 and 1987 the effect of income while unemployed is found to be much weaker for the i987 cohort an elasticity of o i compared with 0 4 and is only found to be significant for teenagers and in the first three months of a spell demand constraints measured by the local unemployment rate are found to have a stronger negative effect on the exit probability for the i987 cohort than in 1978 the i 980s witnessed continual high levels of unemployment in britain and the movement of unemployment up the economic and political agenda unemployment results in major output and income losses and is the cause of much misery to those involved the nation is poorer because of it for both reasons it is therefore important to understand the process that generates a given level of unemployment this process can be considered in terms of two key probabilities the probability of an individual entering unemployment and the probability of an unemployed individual leaving unemployment to take up a job or for other reasons these probabilities will vary with the characteristics of the individual concerned and over time changes in the aggregate unemployment rate can under certain assumptions be decomposed into changes in the inflow rate into unemployment and changes in the steady

the flow into unemployment in britain this paper examines a largely neglected aspect of unemployment dynamics namely the flow into unemployment a model is set up relating this to the demand for labor and the quit rate the empirical results lend considerable support to the model a fall in planned employment growth or a fall in the quit rate both raise the inflow rate the implications of the results for unemployment vacancy analysis are discussed and the distinction made between symmetric and asymmetric shocks to the matching function copyright 1992 by royal economic society

taxation of corporate capital income tax revenues versus tax distortions this paper shows that when uncertainty is taken into account explicitly taxation of corporate income can leave corporate investment incentives and individual savings incentives basically unaffected in spite of the sizable tax revenues collected in some plausible situations such taxes can increase efficiency the explanation for these surprising results is that the government by taxing capital income absorbs a certain fraction of both the expected return and the uncertainty in the return while investors as a result receive a lower expected return they also bear less risk when they invest and these two effects are largely offsetting

the determinants of equilibrium unemployment in britain a reply in my original paper nickell i982 r analyse a theoretical model concerned with flows into and out of unemployment consequent on this analysis i estimate equations which explain the quarterly inflow and outflow rates i e inflow employment and outflow unemployment in the first section of his comments price i985 price rightly points out that such rates cannot be thought of as quarterly probabilities because of the length of the time interval involved on the other hand if it is thought to be helpful the probability interpretation could be sustained to a high degree of approximation if one thought of the quarterly rates as the average daily probability times the number of days in a quarter however since this issue is of no significance vis a vis the original paper i shall turn to the second section of price s comment which deals with my results his first point is concerned with the degree of serial correlation in the residuals in my paper i report durbin watson and box pierce tests the former being a small sample test the latter an asymptotic test neither test rejects the null in either equation price reports that large sample versions of the lm test reject the null in both equations with the outflow rate equation coming off worst the large sample lm test for nth order autocorrelation is based on the r2 from a regression of the fitted residuals on n lags of itself plus all the regressors in the outflow equation there are i5 regressors and 44 observations in order to include n lags on the residuals n observations must be dropped and the regression used to generate the lm test then includes i5 n variables on the right and uses 44n observations the number of degrees of freedom remaining is thus 292n so even with the test for first order serial correlation we have only 27 degrees of freedom remaining and when we arrive at twelfth order serial correlation we are down to 5 degrees of freedom this might explain why the first order lm test is somewhat at odds with the durbinwatson test which is after all a perfectly reasonable small sample test of serial correlation in this particular equation so i do not find this to be convincing evidence that the model originally reported is misspecified however the fact that price finds evidence of parameter instability across the middle of the sample is a more serious matter this is always a potential problem with short samples and lots of regressors since the equations are more or less bound to be overfitted i am guilty as charged on this count the next section of price s comment is concerned for the most part with the outflow rate equation in essence he objects to my running a regression to explain the log outflow rate log ot ut 0 outflow u unemployment in spite of the fact that it is a natural consequence of the theory to back up his i96

wages and unemployment a general framework these remarks are addressed directly to the question of the relationship between wages and unemployment and provide neither a commentary on nor a critique of the stimulating papers presented by edmond malinvaud and robert gordon they do however bear on a number of the issues raised in those papers professor gordon s contribution takes it as read that the business cycle is the fundamental issue of interest in any discussion of wages and unemployment in spite of his avowed and most welcome intention to avoid looking at the world through u s tinted spectacles this primacy of the business cycle phenomenon is closely related to the american post war experience in britain and to a slightly lesser extent in other european countries the fundamental unemployment problem is the inexorably rising trend upon which the business cycles are superimposed this trend is barely apparent in the united states and consequently causes little concern thus the figures in table i show that in britain male unemployment was more thanfive times higher in the last five years of the seventies than it was in the first five years of the fifties and it seems likely that it will almost double again in the first five years of the eighties the contrast with the united states could hardly be more dramatic another dramatic difference between the united states and britain which emerges strongly in professor gordon s paper is the fact that in the former employment fluctuations at least in manufacturing are strongly related to fluctuations in nominal gnp and this is not true in the latter where it appears that nominal gnp fluctuations are dominated by nominal changes thus it may not be very useful to think of nominal gnp as the exogenous driving force behind fluctuations in the british context where then should we look for an explanation of the growth in unemployment and what is the role of wages many british commentators have noted that along with the rising trend in unemployment there has also been a rising trend in real labour costs relative to output per head thus from i964 to i980 this number has risen in britain by about 35 reflecting a considerable increase in the price of labour relative to what is produced this is the well known argument that unemployment is caused by workers pricing themselves out of a job this is more rational than it sounds because generally speaking it would be employees pricingothers outofa job on the other side of the same coin dr morley in thisjournal in 1979 noted that 88 of the variation in annual british unemployment from 1953 to 1977 could be explained by the pre tax profit share one year lagged thus unemployment appears to be related to the fact that real wages and the real return on capital are simply wrong which relates of course to the extensive analysis provided in m malinvaud s contribution

employment during the thatcher years did they fall or were they pushed the paper examines the argument that real wage push has been responsible for the observed increase in unemployment in the uk over the period 1979 to 1985 it explains why real wage push should have been associated with a decline in real profits and that this decline did not in fact occur the association between real wage push and profit decline is complicated by the presence of intermediate inputs and by compositional effects these are also considered an equation accounting for these complications is derived and estimated the data used are individual company records for around 2 300 of the largest uk public and private corporations with on average about 5 500 employess the hypothesis that real wage push caused recently observed increases in unemployment is rejected by the data

the determinants of equilibrium unemployment the paper takes the search and matching model of the aggregate labor market to the data it tests the model s empirical validity and employs structural estimation to generate a characterization of the optimal behavior of firms and workers the model is applied to israeli data that are uniquely suited for this kind of empirical investigation the structural estimates are used to quantify the frictions embodied in the model including the costs of search the congestion and trading externality effects and the matching process a calibration simulation analysis then studies the effect of several key variables on equilibrium unemployment

asymmetric labour force participation decisions this article finds compelling evidence of asymmetric labour force participation decisions across demographic groups in response to changes in labour market conditions this behaviour is consistent with predictions from the standard labour leisure choice model and suggests that asymmetry in individual behaviour plays some role in the observed asymmetry of the aggregate unemployment rate it is estimated that the weighted average difference in response to a one percentage point change in unemployment rates is sizeable when compared to the average monthly change in the aggregate labour force

unemployment dynamics and duration dependence a major issue in the analysis of unemployment durations concerns distinguishing genuine duration dependence of the exit rate out of unemployment from unobserved heterogeneity we present a method for the nonparametric estimation of both phenomena designed to be applicable to time series data on aggregate outflows from different duration classes the model explicitly takes into account that individual exit rates are affected by the business cycle and by seasonal effects the method is applied to u s data we find diverging duration effects among black and white individuals however except for white males duration dependence is dominated by unobserved heterogeneity

potential pilot problems treatment spillovers in financial regulatory experiments abstract the total effects of a regulatory change consist of direct effects and indirect effects spillovers but the standard difference in difference approach mostly ignores potential indirect effects during the 2007 full repeal of the uptick rule short sellers become much more aggressive across the board even in control stocks where the uptick rule is already suspended this finding is consistent with positive and significant indirect effects on control stocks likely driven by aggressive broad list based shorting in contract the indirect effect coefficients on shorting aggressiveness are negative for the 2005 partial uptick repeal possibly due to substitutions between control and treatment stocks

labour turnover in uk manufacturing a model of quits is constructed and combined with a labour demand function to produce a model of layoffs these are combined to provide an explanation of separations the main feature of this is the explicit incorporation of the interactions between quits and layoffs a linear approximation and a structural form are estimated on uk manufacturing data for 1965 82 it is shown that the most important determinant of separations is the state of demand in the labour market with some structural factors having a minor role to play