the hyperinflation model of money demand revisited in this paper we propose a test of the hyperinflation model of money demand which is valid under any assumption concerning agents expectations subject only to the restriction that forecasting errors are stationary it is also demonstrated that highly efficient parameter estimates can be obtained and restrictions on them tested under the same weak assumption finally it is shown how these first stage estimates can be utilized to test the stronger assumption of rational expectations the arguments are illustrated by analysis of the classic data on european hyperinflations previously analyzed by cagan 1956 barro 1970 and abel dornbusch huizinga and marcus 1979 copyright 1991 by ohio state university press

demand for money in open economies abstract the demand for real cash balances deduced from an underlying portfolio model of the financial market is shown to depend upon domestic variables and foreign monetary developments the model is estimated using quarterly postwar data for canada germany uk and us there is clear evidence that demand for money is affected not only by changes in domestic variables such as permanent income domestic interest rate and price expectations but also by fluctuations in exchange rate expectations and foreign interest rates the conclusion that domestic monetary policy is fairly ineffective and domestic financial markets are highly vulnerable to changes in foreign financial and monetary developments need to be modified in light of the results presented in this paper

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

interjurisdictional spillovers decentralized policymaking and the elasticity of capital supply a key question in the fiscal federalism literature is whether decentralized policymaking in an economy with spillovers among jurisdictions leads to an efficient outcome see e g oates 1972 a striking example where this question is of particular importance is the current debate on global warming the failure of the copenhagen summit in late 2009 has shown impressively that centralized solutions to the climate change problem are hard to realize one might thus want to know whether a decentralized policy approach where each country chooses its own climate policy without coordinating it with the climate policy of other countries gives hope for an efficient policy outcome further important examples of decentralized decision making in the presence of interjurisdictional spillover effects can be found in the decentralized provision of education and infrastructure at first glance it is hardly imaginable that decentralized policymaking can ever be optimal it is not only the very existence of spillovers that causes doubt the policy instruments themselves also create policy externalities despite this presumption against the efficiency of decentralized policymaking the previous literature provides several studies in which decentralization leads to an undistorted policy choice an important example is the paper of oates and schwab 1988 who argue that the choice of capital taxes in an economy with identical jurisdictions mobile capital and local pollution may indeed be efficient in a remarkable recent paper ogawa and wildasin 2009 extend the analysis to account for transboundary pollution spillovers and asymmetric countries and still get the efficiency result in their model emissions and thus the extent of spillovers generated by a jurisdiction is proportional to capital employed in this jurisdiction the choice of capital taxes is then distorted by the jurisdictions incentives for tax competition and by the jurisdictions disregard of spillover effects but the key argument is that both distortions just neutralize each other and thereby lead to efficient capital tax rates our paper contributes to this literature and points to the important role that the elasticity of aggregate capital supply with respect to the net rate of return to capital plays for the efficiency of decentralized policymaking in accordance with the previous literature we show that under a fixed capital supply zero capital supply elasticity the decentralized policy choice is indeed optimal if the capital supply elasticity is strictly positive however capital tax rates are inefficiently low in the decentralized

a natural experiment on sick pay cuts sickness absence and labor costs abstract this study estimates the reform effects of a reduction in statutory sick pay levels on sickness absence behavior and labor costs german federal law reduced the legal obligation of german employers to provide 100 continued wage pay for up to six weeks per sickness episode in 1996 statutory sick pay was decreased to 80 of foregone gross wages within the reform s target group private sector employees this measure increased the proportion of employees having zero days of absence between 6 and 8 quantile regression estimates indicate that employees with up to 5 5 annual absence days reduced their days of absence by about 12 extended analyses suggest that in industries that enforced the cut behavioral effects were about twice as large we show that the direct labor cost savings effect stemming from the cut in replacement levels clearly exceeds the indirect effect due to the decrease in absenteeism our calculations about the total decrease in labor costs are very much in line with official data which suggest that total employer provided sick pay decreased by 6 7 or 1 7 billion per year

economic de growth vs steady state economy in recent years the concept of economic de growth decroissance based on the literature of nicolas georgescu roegen e g 1 3 has found a revival in france italy spain and other countries in the popular as well as in the academic literature therein authors took on board georgescu roegens categorical rejection of a steady state economy sse as proposed by herman daly 4 they argue that economic degrowth is the only viable alternative goal to the growing economy this position is challenged in this article and it is concluded that the two concepts are in fact complements economic de growth is not a goal in itself but the rich north s path towards a globally equitable sse moreover the de growth literature can benefit from the strong economic historic roots of the sse and from daly s macroeconomic concepts while in return being able to give lessons about bottom up approaches this would be particularly important for the population issue where daly proposes limited birth licences unfortunately statements on demography are inconsistent and underdeveloped in the de growth literature further it is concluded that most criticisms of the sse are due to a too narrow and technocratic interpretation of the concept instead the sse should be defined as a quasi steady state resting in a dynamic equilibrium and as an unattainable goal which can and probably should be approximated

does drinking affect long term sickness absence a sample selection approach correcting for employment and accounting for drinking history this article studies the effect of alcohol consumption on the probability of long term sickness related absenteeism for women using swedish matched survey and register data we apply sample selection models to correct for nonrandom sampling into paid employment there are three main findings of the study first diverging from the most prevalent consumption group long term light drinkers is associated with an increased probability of long term sickness ranging from 10 for long term heavy drinkers to 18 for former drinkers second controlling for former consumption errors especially former drinker and former abstainer errors and sample selection into employment are important for unbiased consistent estimations third by predicting the effect of changes in consumption on long term sickness related absence we find that alcohol only explains a small part of the overall picture of long term sickness related absenteeism notwithstanding this fact long term sickness related absenteeism due to alcoho

sick pay provision in experimental labor markets sick pay is a common provision in most labor contracts this paper employs an experimental gift exchange environment to explore two related questions using both managers and undergraduates as subjects first do workers reciprocate sick pay in the same way as they reciprocate wage payments second do firms benefit from offering sick pay firms may benefit in two different ways directly from workers reciprocating higher sick pay with higher efforts and indirectly from self selection of reciprocal workers into contracts with higher sick pay our main finding is that the direct effect is rather weak in terms of effort and negative in terms of profits however when there is competition among firms for workers sick pay can become an important advantage consequently competition leads to a higher provision of sick pay relative to a monopsonistic labor market

modelling inflation in georgia the article explains the behaviour of inflation in georgia in the post stabilization period long run equation linking prices with money and exchange rate as well as short run dynamic equation for inflation are estimated the inflation equation is stable points to a dominant role of exchange rate in the inflation behaviour the equation explains well the behaviour of inflation after the russian crises when inflation increased sharply but was quickly brought under control when the national bank of georgia kept its monetary policy tight and exchange rate stable

this time it s different an inevitable decline in world petroleum production will keep oil product prices high causing military conflicts and shifting wealth and power from democracies to authoritarian regimes abstract there is virtual agreement among geologists that world production of conventional oil will peak at some point in the future oil after all is a finite resource while demand will only grow over time geologists disagree however exactly when the peak will occur using data from the international energy agency the us department of energy the association for the study of peak oil and gas and petroleum industry sources we argue that conventional oil production will reach a worldwide maximum within the next 5 10 years earlier than generally estimated thus leaving a very short time frame within which to plan for conversion to alternative sources of energy unless planning is initiated immediately the united states and other western democracies will see their positions in the global economy undercut as military conflicts over limited energy resources increase and wealth and power are shifted to authoritarian regimes in russia venezuela africa and the middle east

money inflation and output in romania 1992 2000 abstract money inflation and output are tested for stationarity and found to be integrated of order one we apply the johansen procedure for cointegration to test for the rank of the matrix of cointegration relations one to test for the weak exogeneity of output accepted inflation rejected and money rejected we interpret the unique cointegrating relationship as an extended cagan money demand function we then estimate error correction mechanisms which explain the short run movements of real money and inflation the evidence suggests that in the period considered including the sub sample between the liberalization shocks inflation was largely a monetary phenomenon

a comparative analysis of some policy options to reduce rationing in the uk s nhs lessons from a general equilibrium model incorporating positive health effects this paper seeks to determine the macro economic impacts of changes in health care provision the resource allocation issues have been explored in theory by applying the rybczynski theorem and empirically using a computable general equilibrium cge model for the uk with a detailed health component from the theory changes in non health outputs are shown to depend on factor bias and scale effects the net effects generally being indeterminate from the applied model a rise in the national health service nhs budget is shown to yield overall welfare gains which fall by two thirds assuming health care specific factors a nominally equivalent migration policy yields even higher welfare gains

mandatory sick pay provision a labor market experiment the question whether a minimum rate of sick pay should be mandated is much debated we study the effects of this kind of intervention in an experimental labor market that is rich enough to allow for moral hazard adverse selection and crowding out of good intentions to occur we find that higher sick pay is reciprocated by workers through higher effort but only if sick pay is not mandated we also study adverse selection effects when workers have different probabilities of getting sick and can reject the hypothesis that this leads to market breakdown overall we find that mandating sick pay actually leads to a higher voluntary provision of sick pay by firms

assessing the effect of public policy on worker absenteeism we analyze the effect of economic incentives on worker absenteeism using panel data on work absence for 1990 and 1991 with a sample of 1 396 swedish blue collar workers during this period sweden implemented major reforms of both its national income replacement program for short term sickness and income taxes both affected the worker s cost of missing work our econometric model allows for state dependent dynamic behavior and control for unobserved heterogeneity the latter proves to be an important consideration we find that the cost of being absent significantly affects work absence behavior

money demand the cagan model and the inflation tax some latin american evidence this paper examines the demand for money under conditions of very high inflation in argentina bolivia brazil chi le and peru during the 1970s and 1980s the authors test whether the monetary and inflationary experiences of these countries can be adequately characterized by the cagan 1956 model using an econometric procedure that is not reliant on any particular assumpti on concerning expectations formation except that forecasting errors are stationary the authors also examine the importance of foreign asset substitution in domestic portfolios and the hypothesis that monetary policy was tantamount to maximization of the inflation tax revenue before testing the rational expectations hypothesis copyright 1993 by mit press

luck effort and reward in an organizational hierarchy using the personnel records of a large british financial sector employer we investigate how workers respond to remuneration differences and luck in the promotion system the results confirm that workers respond to larger remuneration spreads by working harder increased certainty in the promotion process also has this effect there appears to be no difference between men s and women s reactions to promotion incentives gender differences in the raw data therefore appear not due to incentives we need to look elsewhere for an explanation

fairness spillovers the case of taxation abstract it is standardly assumed that individuals react to perceived unfairness or norm violations in precisely the same area or relationship where the original offense has occurred however grievances over being exposed to injustice may have even broader consequences and also spill over to other contexts causing non compliant behavior there we present evidence that such fairness spillovers can incur large economic costs a belief that there is unfairness in taxation in the sense that the rich do not pay enough taxes is associated with a twenty percent higher level of paid absenteeism from work

self serving bias and tax morale abstract in a real effort laboratory experiment we find that moral evaluation of tax evasion is subject to a self serving bias subjects with the opportunity to evade taxes judge tax evasion as less unethical as opposed to those who cannot evade

imitation contagion or exertion using a tax reform to reveal how colleagues sick leaves influence worker behaviour we analyse the social interaction effects in sick leave behaviour in the workplace using high quality norwegian matched employer employee data with detailed individual information on sick leaves during the 2004 2006 period we find that social interaction effects in sick leave behaviour in the workplace do exist and that the effects are noticeable in size the strong relationship between the sick leave rates among colleagues is not solely the result of contagious diseases nor is it caused by improved informational quality or by the increased workload for the non absent workers evidence supports the existence of reciprocal worker behaviour that is unrelated to joint leisure seeking activities

inequality and happiness when perceived social mobility and economic reality do not match abstract we argue that perceived fairness of the income generation process affects the association between income inequality and subjective well being and that there are systematic differences in this regard between countries that are characterized by a high or respectively low level of actual fairness using a simple model of individual labor market participation under uncertainty we predict that high levels of perceived fairness cause higher levels of individual welfare and lower support for income redistribution income inequality is predicted to have a more favorable impact on subjective well being for individuals with high fairness perceptions this relationship is predicted to be stronger in societies that are characterized by low actual fairness using data on subjective well being and a broad set of fairness measures from a pseudo micro panel from the wvs over the 1990 2008 period we find strong support for the negative positive association between fairness perceptions and the demand for more equal incomes subjective well being we also find strong empirical support for the predicted differences in individual tolerance for income inequality and the predicted influence of actual fairness

an alternative model of pro cyclical absenteeism abstract current economic models of absenteeism derive pro cyclical properties from cyclical variations in the costs and consequences of absence through an extension of the household production model this paper proposes a complementary approach based on variations in forgone earnings associated with work commodity itself

the consequences of child soldiering abstract little is known about the impacts of military service on human capital and labor market outcomes due to an absence of data as well as sample selection recruits are self selected screened and selectively survive we examine the case of uganda where rebel recruitment methods provide exogenous variation in conscription economic and educational impacts are widespread and persistent schooling falls by nearly a year skilled employment halves and earnings drop by a third military service seems to be a poor substitute for schooling psychological distress is evident among those exposed to severe war violence and is not limited to ex combatants

sickness absenteeism during a period of job to job transition we examine a novel pattern of workplace sickness absenteeism for job to job movers covering the periods before and after their job transitions the movers display two opposite changes of absenteeism an upward and a downward spike before and after job change the estimates indicate a behavioural effect related to differences in financial incentives for job movers

stability of the money demand function in asian developing countries previous studies that estimated the money demand function in asian developing countries either employed traditional estimation techniques or recently popularized cointegration technique while the first group suffers from spurious regression problems the second group interpreted their finding of cointegration as a sign of stability of estimated parameters this study after incorporating the cusum and cusumsq tests into cointegration analysis shows that in some asian countries even though real m1 or m2 monetary aggregates are cointegrated with their determinants the estimated parameters are unstable

temporary disability and economic incentives we investigate the impacts of economic incentives on the duration and outcome of temporary disability insurance tdi spells the analysis is based on a large quasi experiment taking place in norway involving a complete overhaul of the tdi benefit system our findings show that the labour supply of tdi claimants does respond to both the benefit level and the level of local labour demand the estimated elasticity of the transition rate to employment with respect to the benefit level is 0 33 we also find that the tdi benefit level significantly affects the transition rate to alternative social insurance programmes

absenteeism and wages abstract we show that for assembly line type production processes a worker s wage is a sharply decreasing function of his probability of being absent absenteeism causes firms to hire redundant workers we also define the marginal product of assembly line workers

does high involvement management improve worker wellbeing employees exposed to high involvement management him practices have higher subjective wellbeing fewer accidents but more short absence spells than like employees not exposed to him these results are robust to extensive work wage and sickness absence history controls we highlight the possibility of higher short term absence in the presence of him because it is more demanding than standard production and because multi skilled him workers cover for one another s short absences thus reducing the cost of replacement labour faced by the employer we find direct empirical support for this in accordance with the theoretical framework we find also that long term absences are independent of exposure to him which is consistent with long term absences entailing replacement labour costs and with short absences having a negative effect on longer absences

absenteeism efficiency wages and shirking we investigate the absence behaviour of workers when there is asymmetric information regarding worker health an individual s health is assumed to be private information to that individual and only observable to a third party at cost our aim is to complement the existing largely empirical studies of absence behaviour which have tended to treat the phenomenon exclusively as a labour supply decision on the part of workers cf allen 1981 barmby and treble 1991 barmby orme and treble 1991 and dunn and youngblood 1986 our approach is to draw out the interactive aspects of the employment relationship we assume that workers are ex ante uncertain as to their state of health and supply labour on the basis of an all or nothing utility maximising decision taken once a realisation of this state has been received utility is a function of income leisure and health and workers value leisure more the sicker they are firms are able to exert some control over individual behaviour by monitoring workers and threatening to fire shirkers that is workers absenting themselves with unacceptable sickness our model highlights an efficiency wage effect through which wages may be used as a method of absence control in particular the optimal response of the firm to an increase in the cost of monitoring is to discourage shirking by raising wages furthermore to the extent that

views on peak oil and its relation to climate change policy abstract definitions of fossil fuel reserves and resources and assessed stock data are reviewed and clarified semantics explain a large stake of conflict between advocate and critical voices on peak oil from a holistic sources sinks perspective limited carrying capacity of atmospheric sinks not absolute scarcity in oil resources will impose tight constraints on oil use eventually observed peaks in oil production in nearby years will result from politically imposed limits on carbon emissions and not be caused by physical lack of oil resources peak oil belief induces passive climate policy attitudes when suggesting carbon dioxide emissions will peak naturally linked to dwindling oil supplies active policies for reducing emissions and use of fossil fuels will also encompass higher energy end use prices revenues obtained from higher levies on oil use can support financing energy efficiency and renewable energy options but when oil producers charge the higher prices they can pump new oil for many decades postponing peak oil to occur while extending carbon lock in

worker absence and productivity evidence from teaching a significant amount of work time is lost each year due to worker absence but evidence on the productivity losses from absenteeism remains scant due to difficulties with identification we use uniquely detailed data on the timing duration and cause of absences among teachers to address many of the potential biases from the endogeneity of worker absence our analysis indicates that worker absences have large negative impacts the expected loss in daily productivity from employing a temporary substitute is on par with replacing a regular worker of average productivity with one at the 10th 20th percentile of productivity

do financial bonuses reduce employee absenteeism evidence from a lottery this paper investigates the effectiveness of a lottery based bonus reward system in reducing employee absenteeism starting in june 2002 a dutch manufacturing firm held a monthly lottery for workers who had taken no sick leave in the previous three months and had not previously won the lottery in a given lottery each of seven contestants whose names were randomly drawn received 75 euros the authors find statistically significant differences in absence patterns across groups of workers with different eligibility statuses depending on their attendance records and whether they had previously won one finding is that absenteeism rose among workers who having won already were ineligible for further participation nevertheless and although the reduction in firm wide absence associated with the lottery drifted from 2 4 percentage points to 1 1 percentage points after seven months the authors conclude that the lot tery was of net benefit to the firm a perennial question is how firms can most effectively use financial incentives to motivate workers and thereby boost pro ductivity in this paper we investigate this issue with respect to workplace absenteeism which is a measure of lost productivity 1 we

moral hazard and sickness insurance abstract we study if the replacement level in the swedish national sickness insurance which replaces foregone earnings due to temporary illnesses affects work absence behavior we use micro data and estimate the effects of a major reform whereby the replacement level during the first 90 days in each absence spell was reduced on work attendance to separate out the effect of the reform from any trend in work absence we distinguish between the implications on the incidence of work absence i e the frequency of spells and the duration of the spells we also use a regression discontinuity approach to estimate the effects on the prevalence of work absence finally we estimate elasticities with respect to the replacement level in the sickness insurance

are recessions good for workplace safety empirical evidence shows that in recessions the rate of workplace accidents goes down this paper presents a theory and an empirical investigation to explain this phenomenon the theory is based on the idea that reporting an accident affects the reputation of a worker and raises the probability that he is fired if the unemployment rate is high a worker faces a big loss when fired and fewer workplace accidents are reported the empirical investigation concerns workplace accidents in 16 oecd countries we conclude that cyclical fluctuations in workplace accident rates have to do with reporting behavior of workers and not with changes in workplace safety

the provision of incentives in firms i ncentives are the essence of economics despite many wide ranging claims about their supposed importance there has been little empirical assessment of incentive provision for workers the purpose of this paper is to critically overview existing work on the provision of incentives since the interests of workers and their employers are not always aligned a large theoretical literature has emphasized how firms design compensation contracts to induce employees to operate in the firm s interest this literature has reached into many areas of compensation and has pointed to a multitude of different mechanisms that can be used to induce workers to act in the interests of their employers these include piece rates options discretionary bonuses promotions profit sharing efficiency wages deferred compensation and so on my objective here is to evaluate this literature in the light of a growing empirical literature on compensation where possible i will address the literature from two perspectives first an underlying assumption of this literature is that individuals respond to contracts that reward performance accordingly i consider whether agents behave in this way and whether these responses are always in the firm s interest second i address whether firms write contracts with these responses in mind in other words do contracts look like the predictions of the theory incentives are provided to workers

tax structure and government expenditures with tax equity concerns abstract we augment a standard tax model by concerns about tax equity people get upset when labour is taxed more heavily than capital even the slightest concern for tax equity invalidates the common tenet that capital remains tax exempt in small open economies this holds for exogenous as well as for endogenous government expenditures and irrespective of whether concerns with tax equity only cause emotional discomfort or also impact on work incentives if concerns with tax equity get more intense the economy may choose higher taxes on labour and move to the downward sloped part of its laffer curve for endogenous government spending stronger concerns with tax equity may lead to a larger size of the public sector

the transactions demand for money in the presence of currency substitution evidence from vietnam currency substitution the use of foreign money to finance transactions between domestic residents is widespread in low income and transition economies traditionally however empirical models of the demand for money tend to concentrate on the portfolio motive for holding foreign currency while maintaining the assumption that the income elasticity of demand for domestic money is invariant to the degree of currency substitution a simple re specification of the demand for money is offered which more accurately reflects the process of currency substitution by allowing for a variable income elasticity of demand for domestic money this specification is estimated for vietnam in the 1990s using a standard cointegration framework evidence is found for currency substitution only in the long run but well defined wealth effects operating in the short run

do new brooms sweep clean when and why dismissing a manager increases the subordinates performance abstract if a manager stays in office for a long time he will have learned much about his subordinates thus competition among them will be weak as the manager has made up his mind who is suited best for which position with a new manager the race for favorable tasks is restarted leading subordinates to exert higher effort but for the firm owner the trade off arises that with a new manager effort is larger but the quality of task allocation is worse since information is lost the optimal dismissal policy will be nonmonotonic in the expected heterogeneity of the subordinates abilities

pay technology and the cost of worker absence i introduction the complexity of patterns of worker absence is well known but is yielding reluctantly to studies that use highly detailed information about individual workers and their work environments to date these studies have focussed on how specific contractual details affect worker absenteeism rates 1 in this paper we instead take an equilibrium perspective where we assume heterogeneous firms and heterogeneous workers participate in a competitive labor market by understanding why firms with different technologies may have different policies toward absenteeism we can begin to explain observed differences in absenteeism rates across workers and firms the empirical framework is based on coles and treble 1996 which considers an equilibrium assignment model with heterogeneous firms and workers the standard assignment framework 2 assumes that each filled job is characterized by one machine of quality q and one employee with skill level s a competitive equilibrium yields a wage schedule w and an assignment rule q where a worker of skill s is hired at wage w w s by a firm holding machine q q s coles and treble 1996 do not assume that workers are differently skilled instead workers have different propensities to go absent also instead of a one worker one machine production process firms utilize different production technologies some use an assembly line technology where output requires that a sufficient number of workers show up for work and others use a linear production technology in which there are constant marginal returns to labor for reasons that will become clear a competitive equilibrium yields a wage schedule and an assignment rule that depend on worker propensities to go absent specifically workers with a lower propensity to go absent earn a higher wage and are employed in firms using assembly line technologies the key insight is that firms who operate assembly line technologies have a different shadow cost of absenteeism from those which operate a linear technology as in weiss 1985 and coles and treble 1993 in the latter technology an absence by one particular worker does not affect the marginal productivity of other workers at the firm this is not true in an assembly line firm or in production functions where labor inputs are strict complements as in kremer 1993 coles and treble 1996 consider a market equilibrium in which workers are also heterogeneous say workers have different family responsibilities in this case a competitive labor market implies equilibrium sorting by firms and workers assembly line firms require a low level of absenteeism and pay a relatively high wage to compensate workers for attending work reliably we refer to this as the shadow cost of absenteeism workers who have a comparative advantage in attending work reliably say those who do not have to look after children when the children are sick take employment in assembly line firms and enjoy the wage premium attached to employment there we refer to this as the shadow price of absenteeism conversely those who appreciate greater flexibility in work attendance take employment in the linear technology firms and in equilibrium earn a lower average wage rate although absenteeism may be costly to firms observed absenteeism rates are not necessarily inefficient the worker who misses a day at work to look after sick children or enjoy a sports event is expressing a trade off between workplace production and home production where home productivity is perhaps subject to idiosyncratic shocks efficient contracting implies that firms and workers agree to an acceptable absenteeism rate and a compensating wage differential efficient sorting implies that those workers who can commit to attending work reliably accept employment in assembly line occupations and so earn a wage premium reflecting the shadow price of absenteeism our goal is to identify and measure this shadow price using a unique data set from france

unwilling or unable to cheat evidence from a tax audit experiment in denmark this paper analyzes a tax enforcement field experiment in denmark in the base year a stratified and representative sample of over 40 000 individual income tax filers was selected for the experiment half of the tax filers were randomly selected to be thoroughly audited while the rest were deliberately not audited the following year threat of audit letters were randomly assigned and sent to tax filers in both groups we present three main empirical findings first using baseline audit data we find that the tax evasion rate is close to zero for income subject to third party reporting but substantial for self reported income since most income is subject to third party reporting the overall evasion rate is modest second using quasi experimental variation created by large kinks in the income tax schedule we find that marginal tax rates have a positive impact on tax evasion for self reported income but that this effect is small in comparison to legal avoidance and behavioral responses third using the randomization of enforcement we find that prior audits and threat of audit letters have significant effects on self reported income but no effect on third party reported income all these empirical results can be explained by extending the standard model of rational tax evasion to allow for the key distinction between self reported and third party reported income

the price of worker reliability abstract worker absenteeism is costly to firms that use assembly line production processes this paper shows why an assembly line firm may prefer to pay higher average wages and reduce sick pay entitlement relative to firms with constant returns

perceived unfairness in ceo compensation and work morale abstract ceo compensation that is perceived to be excessive regularly causes agitation in the population using german data we show that perceiving ceo pay to be unfair has economic repercussions in terms of lower work morale

sensitivity to exogeneity assumptions in program evaluation in many empirical studies of the effect of social programs researchers assume that conditional on a set of observed covariates assignment to the treatment is exogenous or unconfounded aka selection on observables often this assumption is not realistic and researchers are concerned about the robustness of their results to departures from it one approach e g charles manski 1990 is to entirely drop the exogeneity assumption and investigate what can be learned about treatment effects without it with unbounded outcomes and in the absence of alternative identifying assumptions there are no restrictions on the set of possible values for average treatment effects this does not mean however that all evaluations are equally sensitive to departures from the exogeneity assumption in this paper i explore an alternative approach developed by paul rosenbaum and donald rubin 1983 where the assumption of exogeneity is explicitly relaxed by allowing for a limited amount of correlation between treatment and unobserved components of the outcomes the starting point of the sensitivity analysis is the assumption that the exogeneity assumption is satisfied only conditional on an additional unobserved covariate making assumptions about the effect of the unobserved covariate on the outcome and its correlation with the treatment i trace out the set of possible values for the treatment effect of interest by considering a sufficiently large set of possible correlations with outcomes and treatment one can recover the bounds on the treatment effect derived by manski 1990 the approach here in the spirit of rosenbaum and rubin 1983 and rosenbaum 1995 is to allow only a limited amount of correlation and to judge the sensitivity of average treatment effect estimates to such correlations there are two novel features of the proposed analysis first rather than formulate the sensitivity in terms of coefficients on the unobserved covariate the sensitivity results are presented in terms of partial r values which may be easier to interpret second the partial r values of the unobserved covariates are compared to those for the observed covariates in order to facilitate judgments regarding the plausibility of values necessary to substantially change results obtained under exogeneity the proposed sensitivity analysis is conceptually related to the practice of assessing sensitivity of estimates by comparisons with results obtained by discarding one or more observed covariates james heckman and v joseph hotz 1989 rajeev dehejia and sadek wahba 1999 jeffrey smith and petra todd 2001 the attraction of the sensitivity analysis is that it is more directly relevant one is not interested in what would have happened in the absence of covariates actually observed but in biases that are the result from not observing all relevant covariates

missing work is a pain the effect of cox 2 inhibitors on sickness absence and disability pension receipt abstract how does medical innovation affect labor supply we analyze how the availability of cox 2 inhibitors pharmaceuticals used for treating pain and inflammation affected the sickness absence and disability pension receipt of individuals with joint pain we exploit the market entry of the cox 2 inhibitor vioxx and its sudden market withdrawal as exogenous sources of variation in drug use using norwegian administrative data we find vioxx s entry decreased quarterly sickness absence days among individuals with joint pain by 7 12 percent the withdrawal increased sickness days by 12 16 percent and increased the quarterly probability of receiving disability benefits by 6 15 percent

the effect of permanent employment on absenteeism evidence from labor reform in spain restrictive employment protection legislation has been highlighted as a key reason for lower labor productivity in europe compared to the united states evidence in the literature has shown robust effects of employment protection on effort though the effects appear too small to generate marked cross country differences in labor productivity the authors revisit this issue using representative data of private sector workers in spain a range of legislative changes aimed at reducing the incidence of temporary employment are used to estimate the effect of permanent employment on one aspect of effort absenteeism results suggest that being employed on a permanent contract increases the probability of being absent from work due to sickness by approximately 5 3 percentage points and the time absent by approximately 0 30 of a day per week these results suggest that cross country differences in employment protection have the potential to have a substantial impact on labor productivity

social spending and automatic stabilizers in the oecd the macroeconomic literature on automatic stabilization tends to focus on taxes and dismiss the relevance of government expenditure except for unemployment compensation our results go sharply contrary to this view we engage in an empirical analysis of 21 oecd countries from 1982 to 2003 and find that age and health related social expenditure as well as incapacity and sick benefits all react to the cycle in a stabilizing manner while possibly new in the macro literature this conforms to many results in studies in labour economics the policy implications are broad since much previous analysis of discretionary fiscal policy rests on official figures for automatic stabilization there are also major implications for efforts to incorporate automatic fiscal policy in simulation models julia darby and jacques melitz

the medical doctors as gatekeepers in the sickness insurance based on a randomized experiment we estimate effects from notification to medical doctors of tighter monitoring of their medical certificates mcs both the time prescribed by the doctor certificates for sick leave prescribed sick leave and the impact on the length of the actual sickness absence actual sick leave is studied we find no effect on the total number of prescribed sick leave days however we do find an increase in both prescribed and actual sick leave with a 25 work inability we also find that the notification letter causes an increase in actual sick leave i e the number of reimbursed sick days we discuss a number of potential explanations for this rather surprising result

organizational change absenteeism and welfare dependency based on norwegian register data we set up a multivariate mixed proportional hazard model mmph to analyze nurses pattern of work sickness absence nonemployment and social insurance dependency from 1992 to 2000 and how that pattern was affected by workplace characteristics the model is estimated by means of the nonparametric maximum likelihood estimator npmle we find that downsizing processes involve a significant increase in the level of sickness absence among still employed nurses they also cause a significant increase in the probability of entering into more long lasting health related social insurance dependency

the effects on sick leave of changes in the sickness insurance system to get a more complete picture of how labor supply is affected by economic incentives the effects on absenteeism should be taken into account in particular absenteeism due to sick leave can be considerable we examine whether the level of sick leave compensation affects sick leave behavior using long time series data 1955 99 for sweden with numerous changes of the compensation level we generally find strong effects reforms implying more generous compensation for sick leave tend to be associated with permanent increases in sick leave and vice versa these findings are reinforced in a panel study covering the 1983 91 period

health nutrition and economic development the relationship between health and economic development is explored focusing on nutrition based health indicators the spotlight is placed on the inter related feedbacks between the influence of health on productivity on one hand and the influence of income on health status on the other disentangling causality in these relationships has preoccupied much of the literature we evaluate different empirical strategies that have been adopted and assess the results there is now a body of evidence based on careful empirical studies that demonstrates a causal relationship between health and labor productivity there is also evidence that at least among the very poor additional income is spent on improved nutrition there are two issues that have received little attention although we argue they are likely to be very important first measurement of health is discussed in detail evidence is presented on how taking into account differences in the extent of measurement error is critical for interpreting the impact of health on wages the same theme emerges in studies of the effect of income on health specifically calorie intake the key role of non linearities in these relationships is highlighted and we demonstrate that a good deal of the variation in estimates of income elasticities of demand for calories can be ascribed to the role of measurement and functional form authors

the effects of expanding the generosity of the statutory sickness insurance system summary this article evaluates an expansion of employer mandated sick leave from 80 to 100 of forgone gross wages in germany we employ and compare parametric difference in difference did matching did and mixed approaches overall workplace absences increased by at least 10 or 1 day per worker per year we show that taking partial compliance into account increases coefficient estimates further heterogeneity in response behavior was of great importance there is no evidence that the increase in sick leave improved employee health a finding that supports a shirking explanation finally we provide evidence on potential labor market adjustments to the reform copyright 2013 john wiley sons ltd

a stable demand for money despite financial crisis the case of venezuela the demand for broad money in venezuela is investigated over a period of financial crisis and substantial exchange rate fluctuations the analysis shows that there exist a long run relationship between real money real income inflation the exchange rate and an interest rate differential that remains stable over major policy changes and large shocks the long run properties emphasize that both inflation and exchange rate depreciations have negative effects on real money demand whereas a higher interest rate differential has positive effects the long run relationship is finally embedded in a dynamic equilibrium correction model with constant parameters these results have implications for a policy maker in particular they emphasize that with a high degree of currency substitution in venezuela monetary aggregates will be very sensitive to changes in the economic environment

healthy bodies and thick wallets the dual relation between health and economic status there is abundant evidence of a quantitatively large association between many measures of economic status including income and wealth and a variety of health outcomes such as mortality or morbidity however considerable and often heated debate remains especially across disciplines about the direction of causation and about why the association arises although medical scientists are often convinced that the dominant if not exclusive pathway is that variation in socioeconomic status produces health disparities they are increasingly debating among themselves about why low economic status might lead to poor health at least for modern industrial countries 1 the old standby arguments the less well to do have access to less or lower quality medical care or a stronger pattern of deleterious personal behaviors have been rejected as insufficient instead a series of intriguing competing theories have arisen that emphasize long term impacts of early childhood or even inter uterine environmental factors the cumulative effects of prolonged exposures to individual stressful events or reactions to macro societal factors such as rising levels of income inequality a common link is that each theory attempts to document the physiological processes through which low economic status leads to poorer health while these scientific questions are extremely important this research has taken place with little input from economists economists are now making contributions about the alternative pathway the impact poor health may have on economic resources poor health may restrict a family s capacity to earn income or to accumulate assets by limiting work or by raising medical expenses at a minimum this work should provide a caution against exaggerating the magnitude of causation from economic status to health outcomes but the potential contribution runs deeper as people age the evolving variation in individual health outcomes may offer additional statistical information to estimate parameters of household savings and consumption behavior that so far have proven to be somewhat elusive thus incorporating health uncertainty and risk into economic models should eventually enrich our understanding of basic tenets of household behavior the first section of this paper documents the size of the association between health and one prominent economic status measure household wealth section two deals with how health influences economic status by sketching out reasons why health may alter household savings and eventually wealth and then providing estimates of the empirical magnitude of these effects section three shifts attention to the alternative pathway the links between economic status and health and summarizes 2major controversies and evidence surrounding these issues

does raising the school leaving age reduce teacher effort evidence from a policy experiment this paper examines the impact of an increase in the school leaving age on high school teachers absence behaviour we estimate differ ence in difference models of absenteeism using count data approaches employing data from the spanish labour force survey our findings suggest that high school teachers reduced their effort due to the re form that raised the age of compulsory education commencing in the academic year 1998 1999 in spain in particular they take 15 more sickness absence in the posttreatment period this result should be of interest to both policy makers and researchers who rely upon com pulsory school law changes as a source of exogenous variation in edu cational attainment

sick of being unemployed interactions between unemployment and sickness insurance this paper examines the incentive effects of interactions between unemployment insurance ui and sickness insurance si two important components of sweden s social insurance system the main topic is how the sickness report rate among the unemployed is affected by i the limit of 300 workdays for ui benefits and ii the difference in maximum compensation between ui and si benefits results obtained by duration analysis suggest that sick reports increase as the ui benefit expiration date approaches there is also evidence of an incentive effect on the sick report rate because si offers higher compensation than ui

money demand during hyperinflation and stabilization bulgaria 1991 2000 the demand for money in bulgaria is estimated over a ten year period 1991 2000 of high inflation and inflation uncertainty the paper distinguishes between three well defined sub periods high variable but not systematically accelerating inflation from 1991 until april 1996 the near hyperinflation period from may 1996 to february 1997 and the subsequent stabilization after the adoption of a currency board the empirical analysis utilizes a standard methodology of cointegration and error correction the functional determinants of the demand for money change during the different sub periods during the hyperinflation episode cagan s model is employed

social comparison and performance experimental evidence on the fair wage effort hypothesis we investigate the impact of wage comparisons for worker productivity we present three studies which all use three person gift exchange experiments consistent with akerlof and yellen s 1990 fair wage effort hypothesis we find that disadvantageous wage discrimination leads to lower efforts while advantageous wage discrimination does not increase efforts on average two studies allow us to measure wage comparison effects at the individual level we observe strongly heterogeneous wage comparison effects we also find that reactions to wage discrimination can be attributed to the underlying intentions of discrimination rather than to payoff consequences

justifying social discounting the rank discounted utilitarian approach the popular discounted utilitarian criterion for infinite horizon social choice has been criticized on the ground that it treats successive generations unfairly i propose to evaluate intergenerational welfare with a rank discounted utilitarian rdu criterion instead the criterion amounts to discounted utilitarianism on non decreasing paths but it treats all generations impartially discounting becomes the mere expression of intergenerational inequality aversion i show that more inequality averse rdu societies have higher social discount rates when future generations are better off i apply the rdu approach in two benchmark economic growth models and i prove that it promotes sustainable policies maximizing discounted utility

generalizations about using value added measures of teacher quality the extensive investigation of the contribution of teachers to student achievement produces two generally accepted results first there is sub stantial variation in teacher quality as measured by the value added to achievement or future aca demic attainment or earnings second variables often used to determine entry into the profession and salaries including post graduate schooling experience and licensing examination scores appear to explain little of the variation in teacher quality so measured with the exception of early experience together these findings underscore explicitly that observed teacher characteristics do not represent teacher quality

global energy crunch how different parts of the world would react to a peak oil scenario peak oil theory predicts that oil production will soon start a terminal decline most authors imply that no adequate alternate resource and technology will be available to replace oil as the backbone resource of industrial society this article uses historical cases from countries that have gone through a similar experience as the best available analytical strategy to understand what will happen if the predictions of peak oil theorists are right the author is not committed to a particular version of peak oil theory but deems the issue important enough to explore how various parts of the world should be expected to react from the historical record he is able to identify predatory militarism totalitarian retrenchment and socioeconomic adaptation as three possible trajectories

another visit to the cagan model of money demand the latest russian experience abstract this paper investigates empirically the cagan style money demand function for russia during the recent hyperinflation era 1992 1994 using the johansen multivariate cointegration test results indicate that rate of change of exchange rate currency depreciation is required in the demand function for real m2 and real currency in order to obtain a stationary long run relationship error correction model results show that there exists a bidirectional causality between real money balances and determinants of real money demand including currency depreciation exchange rate sensitivity of the demand for money indicates currency substitution

economic impacts of higher oil and gas prices the role of international trade for germany the analysis concentrates on direct and indirect price increases induced shifts in international trade and structural changes in the oil importing economies the paper at hand asks whether a stabilizing effect via international trade and domestic structural change on the gdp of oil importing countries can be observed if a permanent oil price increase occurs at least for germany structural change from consumer goods to investment goods industry and an improvement of international competitiveness limit negative impacts of increased energy prices analysis is based on the extensive and disaggregated global ginfors model and the detailed inforge model for the german economy

are biofuels an efficient technology for generating sustainable development in oil dependent african nations a macroeconomic assessment of the opportunities and impacts in burkina faso this paper discusses the opportunity for substituting fossil fuels with biofuels in a sahelian country burkina faso bearing in mind the strong link between energy and development and given the country s heavy reliance on imported fossil fuels our study showed that the overall economy private and public companies and basic social services and the state budget could be seriously affected if no viable and local alternative is integrated into the national energy strategy in view of local potential it is recommended that adequate energy resources be sought in order to ensure sustainable socio economic development biofuel opportunities are discussed taking into account technical agronomic and land potentials in this country diversification of energy resources with biofuels would substantially reduce fuel imports in the short term improve overall public finances provide a chance to develop agriculture and provide benefits for the locals however if they are to generate development biofuel projects need to be mindful of food security and economic incentives and should be part of national agricultural strategies

optimal unemployment insurance with monitoring and sanctions this article analyses the design of optimal unemployment insurance in a search equilibrium framework where search effort among the unemployed is not perfectly observable we examine to what extent the optimal policy involves monitoring of search effort and benefit sanctions if observed search is deemed insufficient we find that introducing monitoring and sanctions represents a welfare improvement for reasonable estimates of monitoring costs this conclusion holds both relative to a system featuring indefinite payments of benefits and a system with a time limit on unemployment benefit receipt

sickness absence an international comparison this paper shows how internationally and intertemporally consistent information on sickness absence can be constructed from labour force surveys and describes some important features of data that we have generated using the luxembourg employment study we also analyse sickness absence rates by age gender and other socio economic characteristics of workers these relationships prove to be similar across countries with widely differing mean rates of absence in this dataset workers with longer tenure tend to have higher absence rates even when age is controlled for absence is also positively correlated with higher usual hours of work we show how internationally and intertemporally consistent information on sickness absence can be constructed from labour force surveys lfs and describe some important features of data that we have generated using the luxembourg employment study les such data fill an important gap in available information about absence since they have the potential to provide answers to a number of issues that remain unresolved in its study there is now substantial evidence going back to the work of the industrial fatigue research board in the 1920s and 1930s i that sickness absence is not purely a response to a medical condition workers who have access to compensation payments are more likely to be absent than those without buzzard and shaw 1952 the higher the rate of compensation the more absences workers are likely to take buzzard and shaw 1952 furthermore the higher the rate of compensation the longer absences are likely to be barmby et al 1991 the analysis of sickness absence is placed firmly in the agenda of economics by the idea that sickness absence rates are the consequence of choices that can be mediated by financial and other incentives the provision and level of sickpay is typically determined at two levels by negotiation between firms and their workforces and by government regulation interfirm variations in absence and their correlates are not well understood coles and treble 1996 have argued that the marginal cost of an absence is partially in the control of firms and can be usefully seen as driven by the nature of the technology adopted these theoretical arguments remain largely unexplored empirically but the ability to compare similar industries across different countries is likely to be revealing this paper was drafted during a visit to ceps instead in the summer of 1999 the research was funded by a grant of the european commission under the tmr programme access to large scale facilities hosted by iriss c i at ceps instead in differdange luxembourg we are also grateful for support from the leverhulme foundation through a grant to the institute for labour research at the university of essex and to colleagues at the ilr for their constructive comments acknowledgements to les data providers are given at the end of the paper we would also like to thank paul alkemade elena bardasi and pascal garin for their help any remaining errors are our own and the views expressed herein are not necessarily those of ceps instead 1 see for example vernon and bedford 1928

screening disability insurance applications this paper investigates the effects of stricter screening of disability insurance applications a large scale experiment was setup where in two of the 26 dutch regions case workers of the disability insurance administration were instructed to screen applications more stringently the empirical results show that stricter screening reduces long term sickness absenteeism and disability insurance applications we find evidence for direct effects of stricter screening on work resumption during the period of sickness absence and for self screening by potential disability insurance applicants stricter screening seems to improve targeting efficiency without inducing negative spillover effects to the inflow into unemployment insurance the costs of stricter screening are only a small fraction of the monetary benefits

when labour market rigidities are useful for innovation evidence from german iab firm level data abstract supply side economists made numerous pleas for removing labour market rigidities through structural reforms from a schumpeterian viewpoint however one can argue that labour market rigidities create useful incentives for innovation our estimates on german panel data 2007 2015 support the schumpeterian view using the taxonomy of industries by peneder 2010 we find that evidence of the schumpeterian view is particularly strong in r d intensive manufacturing industries as well as in service industries with high degrees of cumulativeness of knowledge evidence of the schumpeterian view is weaker in low technology industries and in start ups when firms rely more on generally available knowledge rather than on firm specific and tacit knowledge accumulated in the past

worker absenteeism in search equilibrium in this paper we introduce a general equilibrium model of search unemployment that incorporates absence from work as a distinct labor force state absenteeism is driven by random shocks to the value of leisure that are private information to the workers firms maximize profits while recognizing that the compensation package may affect the queue of job applicants and the absence rate the analysis provides results concerning the effects of social insurance benefits and other determinants of workers and firms behavior the normative analysis identifies externalities associated with firm provided sick pay and examines the welfare implications of alternative policies

sick pay insurance and sickness absence some european cross country observations and a review of previous research all european countries have some form of compulsory insurance against the loss of income due to temporary disability the insurance schemes vary widely between countries both in terms of measurable

improving incentives in unemployment insurance a review of recent research abstract this paper provides a review of the recent literature on how incentives in unemployment insurance can be improved we are particularly concerned with three instruments i e the duration of benefit payments or more generally the time sequencing of benefits monitoring in conjunction with sanctions and workfare our reading of the theoretical literature is that the case for imposing a penalty on less active job search is fairly solid a growing number of empirical studies including randomized experiments are in line with this conclusion

the effects of hours constraints on labor supply estimates almost all labor supply models are estimated under the assumption that workers are free to choose their hours however theory casual empiricism and survey data suggest that many workers are not free to vary the hours within a job consequently labor supply estimates based on actual hours of work may be biased using canadian data on desired hours of work the authors find that using actual hours causes labor supply estimates to be biased upwards copyright 1991 by mit press