explaining european union citizens trust in the european central bank in normal and crisis times we study the determinants of trust in the european central bank ecb as measured by the european commission s eurobarometer survey in particular during the global financial crisis and the european sovereign debt crisis we find that the fall in trust in the ecb in crisis times can be rather well explained based on the pre crisis determinants we also show that the fall in trust reflected the macroeconomic deterioration a more generalized fall in the trust in european institutions in the wake of the crisis and the severity of the banking sector s problems to which the ecb was associated in the public opinion

would helicopter money be spent new evidence for the netherlands according to some economists central banks should use helicopter money to boost inflation expectations based on a survey among dutch households we examine whether respondents would spend the

learning by doing vs learning about match quality can we tell them apart understanding the accumulation of match specific capital is crucial in shedding light on the reasons for the prevalence of long term employ ment relationships and on the welfare consequences of turnover in the labor market one of the most important source of match specific capital is human capital acquired through match specific learning such learn ing can take on two distinct forms in the first case workers accumulate match specific human capital through learning by doing in the second case a worker and a firm in an employment relationship learn about the quality of the match over time thereby acquiring valuable information i construct a structural model that embeds these two learning explana tions i show that it is possible to distinguish the two explanations given turnover data on employing firms coupled with data on workers such data now exist in the form of matched employer employee data sets i use a matched french data set to estimate the structural model using the efficient method of moments a simulation based estimation method i find that while learning by doing could be present in the first few months of an employment relationship learning about match quality dominates at tenures above half a year this finding has important consequences for economists understanding of the sources of match specific capital and for the desirability of policies that alter the incentives for turnover for workers of different tenure

a tale of two enterprises swaziland s lessons for privatization abstract the generally accepted poor performance of public enterprises is attributed in large part to state ownership public enterprise performance is also judged to be poor by purely financial criteria at aggregate and generalized levels this paper undertakes two enterprise level analyses in the southern african kingdom of swaziland the study found that there are more fundamental factors than ownership which affect public enterprise performance state ownership can be a bane instead of boon and the poor performance of an enterprise may be partly reflective of unsuccessful private entrepreneurship the study also reveals some unique strategies in public enterprise management and significant implications for privatization programs

match quality worker productivity and worker mobility direct evidence from teachers i investigate the importance of the match between teachers and schools for student achievement i show that teacher effectiveness increases after a move to a different school and estimate teacher school match effects match quality explains away a quarter of and has two thirds the explanatory power of teacher quality match quality is negatively correlated with school switching is unrelated to exit and increases with experience this paper provides the first estimates of worker firm match quality using output data as opposed to inferring productivity from wages or employment durations the results suggest that workers seek high quality matches for reasons other than higher pay

politics and monetary policy abstract how and why do politicians preferences about monetary policy differ from the interest rates set by independent central banks looking at the european central bank ecb this paper shows that politicians on average favor significantly lower interest rates three factors explain the different preferences first politicians put relatively less weight on inflation and more on output in their preferred monetary policy reaction function second their preferences are affected by political economy motives third different preferences are also and largely due to different constituencies as politicians primarily focus on national economic objectives rather than the euro area as a whole

return to experience and initial wage level do low wage workers catch up summary this paper estimates the relationship between initial wage and return to experience we use a mincer like wage model to non parametrically estimate this relationship allowing for an unobservable individual permanent effect in wages and unobservable individual return to experience the relationship between return to experience and unobservable individual ability is negative when conditioning on educational attainment while the relationship between return to experience and educational attainment is positive we link our findings to three main theories of wage growth namely search unobserved productivity and learning and human capital we devise several empirical tests in order to separate the theories we find evidence in favor of the unobserved productivity and learning model and mixed evidence regarding the search model we find no evidence in support of the human capital model copyright 2013 john wiley sons ltd

the demand for youth explaining age differences in the volatility of hours over the business cycle young workers experience much greater volatility of hours worked than prime aged workers this can arise from age differences in labor supply or labor demand characteristics to distinguish between these we document that for young workers both the cyclical volatilities of hours and wages are greater than those of the prime aged we argue that a general class of models featuring only age specific labor supply differences cannot reconcile these facts we then show that a simple model featuring labor demand differences can

central bank communication and monetary policy a survey of theory and evidence over the last two decades communication has become an increasingly important aspect of monetary policy these real world developments have spawned a huge new scholarly literature on central bank communication mostly empirical and almost all of it written in this decade we survey this ever growing literature the evidence suggests that communication can be an important and powerful part of the central bank s toolkit since it has the ability to move financial markets to enhance the predictability of monetary policy decisions and potentially to help achieve central banks macroeconomic objectives however the large variation in communication strategies across central banks suggests that a consensus has yet to emerge on what constitutes an optimal communication strategy

job duration seniority and earnings an important stylized fact about labor markets is that workers with longer seniority with their current employer have higher earnings than other workers with the same total labor market experience this study shows that workers in longer jobs earn more throughout than workers in a series of shorter jobs and that the measured positive cross sectional return seniority is largely a statistical artifact due to the correlation of seniority with an omitted variable representing the quality of the worker the job or the worker employer match the implication is tha t earnings do not in fact rise very much with seniority copyright 1987 by american economic association

inflation expectations as a policy tool abstract we assess the prospects for central banks using inflation expectations as a policy tool for stabilization purposes we review recent work on how expectations of agents are formed and how they affect their economic decisions empirical evidence suggests that inflation expectations of households and firms affect their actions but the underlying mechanisms remain unclear especially for firms two additional limitations prevent policy makers from being able to actively manage inflation expectations first available surveys of firms expectations are systematically deficient which can only be addressed through the creation of large nationally representative surveys of firms second neither households nor firms expectations respond much to monetary policy announcements in low inflation environments we provide suggestions for how monetary policy makers could pierce this veil of inattention through new communication strategies as well as the potential pitfalls to trying to do so

wages and job mobility of young workers this paper presents a discrete time version of jovanovic s model of worker firm matching descriptive evidence is presented that supports the notion that unobserved worker firm heterogeneity is an important component in the intertemporal structure of wages for young workers a structural econometric model of wage dynamics under worker firm sorting is developed and estimated finally a formal test of the matching model is carried out and the matching structure on intertemporal covariances of wages is not rejected my results indicate the necessity of jointly considering processes of turnover and wage growth when analyzing the labor market experiences of young workers

transparency and trust the case of the european central bank abstractwe examine how the transparency of the european central bank s monetary policy affects the amount of trust that the citizens of the european union have in this institution we use nearly half a million individual responses from the european commission s eurobarometer survey from 2000 to 2011 and estimate probit regressions with sample selection we find that transparency exerts a non linear effect on trust transparency increases trust but only up to a certain point too much transparency harms trust this result is robust to controlling for a number of macroeconomic conditions financial stability transparency measures and economic and socio demographic characteristics of respondents including examining respondents in european union countries that do not use the euro and addressing clustering issues

identifying the hand of past distinguishing state dependence from heterogeneity a basic problem in social science is to ascertain the importance of initial endowments on subsequent outcomes of a dynamic process interest in this topic centers on two distinct issues a do initial endowments have a temporally persistent effect on outcomes i e is there heterogeneity b are the effects of initial endowments attenuated or accentuated by subsequent experiences of the process being studied or by related processes i e is there state dependence these two questions show up in a variety of contexts 1 the importance of family background on a person s subsequent education and earnings is a hotly debated topic do market or nonmarket mechanisms reinforce or diminish initial endowments 2 the incidence of criminal activity is concentrated among a small population of repeated offenders are certain persons prone to criminality or does crime breed crime 3 are persons who experience unemployment more likely to experience future unemployment due to loss of work experience or market stigma 4 does early entry into an industry confer an advantage of incumbency or does it merely proxy the basic managerial and innovative ability of early entrants many formal models of state dependent processes or processes with persistent effects of initial conditions have been formulated invariance of steady states to initial endowments was viewed as a desirable feature of an economic model in the 1960 s and 1970 s path dependent synergism and nonergodicity are fashionable features of models today is the choice between models with long run dependence on initial conditions and those without solely a matter of intellectual esthetics can data discriminate between these two classes of models how many economically extraneous statistical regularity conditions have to be imposed in order to distinguish between these models how many and what kind of maintained assumptions are required in order to let the data speak on these important questions in this paper i focus on one nonergodic model that receives much attention in the literature the model of duration dependence and heterogeneity discussed by herbert silcock 1954 and also examined by tony lancaster 1979 chris elbers and geert ridder 1982 myself and burton singer 1984 and myself and bo honore 1989

trust in public institutions over the business cycle this paper explores the link between two coincident events the great recession and the current high levels of mistrust the american people have for public institutions we begin by documenting the recent sharp decline in the con fidence the american public has in their govern ment financial and business sectors and to a lesser extent their media and their courts we are motivated by our own casual empiricism which suggests that widespread mistrust has been an important constraint on policymakers attempt ing to pass expansionary macroeconomic poli cies in the wake of the great recession we then assess whether this decline in trust is a standard cyclical response whether it reflects other fac tors or whether it is due to the specific character of the current downturn yet there is little exist ing literature documenting the cyclically of trust and indeed robert z lawrence 1997 p 132 notes that our understanding of the links between economic performance and trust leaves much to be desired our contribution therefore lies in our demonstration of how trust moves with the business cycle using data on the united states and cross country comparisons

wages separations and job tenure on the job specific training or matching a general stochastic model of optimal job separation behavior is developed in the paper the model nests both the job training and the job matching hypotheses of the wage tenure relationship as special cases the purpose of the paper is to compare the implications of the two hypotheses for job turnover that expected wealth maximizing separation strategies are qualitatively identical under the two hypotheses is the principal theoretical result although the empirical implications of the two hypotheses for observations on the distribution of completed job spell lengths are similar as a consequence they are not quite identical

the transfer of human capital abstract most of our productive knowledge was handed down to us by previous generations the transfer of knowledge from the old to the young is therefore a cornerstone of productivity growth we study this process in a model in which the old sell knowledge to the young old agents train the young and charge them for this service we take an information theoretic approach in which training occurs if a young agent watches an old agent perform a task equilibrium is not constrained pareto optimal the old have private information and this gives rise to an adverse selection problem some old agents manage to sell skills that the planner would prefer to extinguish so as to allow more young agents to start new technologies in this sense there is too much resistance to change

do wages rise with job seniority many previous studies have found a strong positive effect of job seniority tenure on wages this paper re examines the evidence using a simple instrumental variables scheme to deal with the fact that tenure is likely to be related to unobserved individual and job characteristics that affect the wage we use the variation of tenure over a given job match as the principal instrumental variable for tenure the variation in tenure over the job is uncorrelated by construction with the fixed individual and job match specific components of the error term of the wage equation our main finding is that the partial effect of tenure on wages is small and that general labour market experience and job shopping account for most wage growth over a career the strong cross section relationship between tenure and wages is due primarily to heterogeneity bias prior researchers see mincer and jovanovic 1981 bartel and borjas 1981 borjas 1981 cline 1979 and mellow 1981 and many others have established that job seniority has a strong positive relationship with wage rates in a cross section or a cross section time series of individuals in this paper we re evaluate the evidence concerning the partial effects on wages of job seniority tenure and total labour market experience the extent to which wages rise with tenure is important for several reasons first and foremost the wage tenure profile is a fundamental question about the structure of earnings over careers second the wage tenure profile is a key determinant of the extent to which the earnings power of individuals is tied to specific jobs and it is important for assessment of the losses suffered by displaced workers hamermesh 1984 third evidence that wages rise with job tenure has been used to explain the decline in quits with tenure since the wage growth on the current job lowers the probability that the worker will locate a superior alternative a growing theoretical literature surveyed in parsons 1984 has taken the evidence of a strong wage tenure profile at face value and sought to provide an explanation for the relationship the most prominent explanation is the theory of specific human capital oi 1962 becker 1962 mincer 1974 parsons 1972 kuratani 1973 and hashimoto 1980 in which the growth of wages with tenure holding experience constant is attributed to the worker s share of investments in firm specific skills more recently lazear 1981 has presented a supervision model of wage growth in which firms defer compensation as a means of inducing workers not to shirk freeman 1977 and harris and holmstrom 1982 provide an explanation for wage growth based on an insurance motive salop and salop 1976 nickell 1976 and guasch and weiss 1982 present adverse selection models of wage growth in which firms use a wage tenure profile as a

the german public and its trust in the ecb the role of knowledge and information search abstract in this paper we analyse the effects of objective and subjective knowledge about monetary policy as well as the information search patterns of german citizens on trust in the ecb we rely on a unique representative public opinion survey of german households conducted in 2011 we find that subjective and factual knowledge as well as the desire to be informed about the ecb foster citizens trust specific knowledge about the ecb is more influential than general monetary policy knowledge objective knowledge is more important than subjective knowledge however an increasing intensity of media usage especially newspaper reading has a significantly negative influence on trust we conclude that the only viable way for the ecb to generate more trust in itself is to spread monetary policy knowledge

macroeconomic expectations of households and professional forecasters economists have long emphasized the importance of expectations in determining macroeconomic outcomes yet there has been almost no recent effort to model actual empirical expectations data instead m acroeconomists usually simply assume that expectations are rational this paper shows that while empirical household expectations are not rational in the usual sense expectational dynamics are well captured by a model in which households views derive from news reports of the views of professional forecasters which in turn may be rational the model s estimates imply that people only occasionally pay attention to news reports this inattention generates stickyness in aggregate expectations with important macroeconomic consequences

labor demand and the structure of adjustment costs this study examines the costs firms face in adjusting labor demand to exogenous shocks evidence on monthly plant level data shows that adjustment proceeds in jumps employment is unchanged in response to small shocks but moves instantaneously to a new equilibrium if the shocks are large results in the large literature that assumes smooth adjustment are due to aggregation of this nonlinear relation the finding has implications for cyclical changes in productivity for severance pay layoff and plant closing restrictions and for all other policies that affect the cost of adjusting employment copyright 1989 by american economic association

divorce and the cognitive achievement of children children of divorced parents exhibit lower test scores and educational attainment have these correlations a causal interpretation parents who divorce may be less likely to invest in their children while together or they may divorce to shield their children from the effects of marital conflict i study the relationship between children s achievement and the marital status of their parents within a dynamic framework in which partners decide on whether to remain married how to interact with or without conflict and child investments i then assess whether a child whose parents divorced would have been better off had divorce not occurred

who supports the ecb evidence from eurobarometer survey data this paper contributes empirically to the long debated issue of the legitimacy of the european central bank ecb with regard to european polities using micro level data from the eurobarometer survey we shed light on the socio demographic determinants of public opinion support for the ecb we find that people with higher level of education and income and centre to right wing political orientation tend to support the ecb as well as people with optimistic expectations on the economic situation by contrast the unemployed tend to distrust the ecb the policy relevance of such results is important for ecb s communication strategy with the general public

trust in the monetary authority abstract trust in policy makers fluctuates significantly over the cycle evaporating during crises and affecting the transmission mechanism despite this it is absent from the literature we build a monetary model where trust emerges endogenously as an equilibrium of a strategic interaction moral hazard with uncertainty on policy actions between betrayal averse agents and policy makers with stochastic incentives to deviate conditioned on past policy outcomes as signals a fall in trust due to shocks or policy actions increases the price that agents attach to future contingencies amplifies fluctuations and steepens the sacrifice ratio we test the transmission of shocks through var analyses where trust is proxied by answers to the eurobarometer surveys

analysing incomplete individual employment histories using indirect inference in this paper we apply the indirect inference method to estimate the parameters of a semi markov transition model when the data are subject to a complex form of censoring there is no explicit expression for the likelihood function and therefore maximum likelihood estimation is computationally burdensome the econometric methodology of indirect inference is first tested on simulated data under various assumptions about the distribution of spell durations and transitions then it is applied to labour market transitions between self employment wage work and unemployment using the 1986 1988 french labour force survey although the analysis is basically a reduced form analysis we motivate our transition model in terms of a structural search model

equilibrium wage tenure contracts in this study we consider a labor market matching model where firms post wage tenure contracts and workers both employed and unemployed search for new job opportunities given workers are risk averse we establish there is a unique equilibrium in the environment considered although firms in the market make different offers in equilibrium all post a wage tenure contract that implies a worker s wage increases smoothly with tenure at the firm as firms make different offers there is job turnover as employed workers move jobs as the opportunity arises this implies the increase in a worker s wage can be due to job to job movements as well as wage tenure effects further there is a nondegenerate equilibrium distribution of initial wage offers that is differentiable on its support except for a mass point at the lowest initial wage we also show that relevant characteristics of the equilibrium can be written as explicit functions of preferences and the other market parameters

the heckman correction for sample selection and its critique this paper gives a short overview of monte carlo studies on the usefulness of heckman s 1976 1979 two step estimator for estimating selection models such models occur frequently in empirical work especially in microeconometrics when estimating wage equations or consumer expenditures it is shown that exploratory work to check for collinearity problems is strongly recommended before deciding on which estimator to apply in the absence of collinearity problems the full information maximum likelihood estimator is preferable to the limited information two step method of heckman although the latter also gives reasonable results if however collinearity problems prevail subsample ols or the two part model is the most robust amongst the simple to calculate estimators

mad about austerity the effect of fiscal consolidation on public opinion we explore the impact of fiscal austerity on three different dimensions of public opinion in 26 european union countries consumer confidence attitude toward national authorities and european institutions on annual data between 1997 and 2017 our main finding is that the independent effect of a tighter fiscal stance on public opinion is not large and when present seems to closely follow the impact of fiscal austerity on economic activity our results therefore are inconsistent with the view that fiscal austerity necessarily implies a negative effect on public opinion and a decline in popularity of national and european institutions

minimum wage shocks employment flows and labor market frictions we provide the first estimates of the effects of minimum wages on employment flows in the u s labor market identifying the impact using policy discontinuities at state borders we find that minimum wages have a sizable negative effect on employment flows but not stocks separations and accessions fall among affected workers we interpret our findings using a job ladder model in which minimum wage increases can reduce job to job transitions we find that a standard calibration of the model generates predicted relative magnitudes of the employment stock and flow elasticities that are very close to our reduced form estimates