policy implications of potential conflicts between short term and long term efficiency in co2 emissions abatement abstract this paper shows that under certain conditions including path dependence and lock in policies and measures leading to a cost effective ghg emissions mitigation in the short term may not allow reaching long term emissions targets at the lowest possible cost that is they might not be cost effective in the long term the reason is that in a situation where currently expensive technologies have a large potential for cost reductions through learning effects and r d investments the implementation of incentive based mitigation policies such as taxes or tradable permits will encourage the adoption and diffusion of currently low cost abatement technologies but might not be enough to make attractive the diffusion of expensive ones which is a necessary condition for these technologies to realise their cost reduction potential through the aforementioned effects a simple model and a numerical simulation are provided to show this possible conflict between static and dynamic efficiency which points out to the need to combine different instruments some aiming at short term cost efficiency such as incentive based environmental policy and others at encouraging dynamic cost reductions such as technology innovation policy

unemployment in south africa the nature of the beast abstract unemployment in south africa is so widespread that it demands an explanation this paper examines a central question about south african unemployment why do the unemployed not enter the informal sector as is common in other developing countries the data do not support the idea that unemployment is largely voluntary the policy implications that government should diminish labor market segmentation and the obstacles to entering the productive informal sector may be relevant also to other developing countries with high unemployment

climate policy with technology transfers and permit trading in this paper we analyze technology transfers tt and tradable emission rights which are core issues of the ongoing climate negotiations subsidizing tt leads to the adoption of better abatement technologies in the south thereby reducing the international permit price this is beneficial for the north as long as it is a permit buyer hence it chooses to subsidize tt by contrast the permit selling south suffers from the lower permit price and its welfare usually deteriorates despite receiving subsidies we also consider how tt affects countries non cooperative choices of permit endowments and find that it tends to reduce overall emissions finally a simple numerical simulation model illustrates the results and explores some further comparative statics

wage aspirations and unemployment persistence abstract we use panel data to examine the empirical determinants of the reservation wage in particular the influence of previous wages and consider what this implies for the evolution of the natural rate of unemployment we find that previous wages have a significant but relatively small effect on reservation wages an elasticity between 0 15 and 0 47 we also find considerable differences across genders with previous wages being more important for men and market wages being more important for women overall our results suggest that the reservation wage will adjust quite quickly to shocks

reservation wages and the cost of unemployment this paper studies direct evidence on reservation wages reported in great britain in 1982 to assess 1 whether such asking prices are high and 2 whether variations in these reservation wages are related to differences in measures of the subjective and objective costs of unemployment a majority overall and for various subgroups reports reservation wages no higher than own past wages adjusted for earnings growth but there is nonetheless considerable dispersion in the ratio of reservation to past wages reservation wages are somewhat related to measures of the differential cost of unemployment most clearly for men although the independent role of benefits is often imprecisely measured however exactly which of these costs matter differs significantly according to whether the separation from last employment was voluntary or involuntary copyright 1989 by the london school of economics and political science

the case for international emission trade in the absence of cooperative climate policy we evaluate the efficacy of international trade in carbon emission permits when countries are guided strictly by their national self interest to do so we construct a calibrated general equilibrium model that jointly describes the world economy and the strategic incentives that guide the design of national abatement policies countries decisions about their participation in a trading system and about their initial permit endowment are made noncooperatively so a priori it is not clear that permit trade will induce participation in international abatement agreements or that participation will result in significant environmental gains despite this we find that emission trade agreements can be effective that smaller groupings pairing developing and developed world partners often perform better than agreements with larger rosters and that general equilibrium responses play an important role in shaping these outcomes

cyclical quality adjustment in the labor market 1 introductionthe u s unemployment rate fell to very low levels during the 1990s even more impressively the unemployment rate for minorities and less educated individuals fell disproportionately convergence of relative unemployment rates in expansions and divergence in recessions has been a feature of the u s economy over the last 30 years there are many possible reasons for this feature for example if the costs of hiring and firing less skilled labor are low one would expect these individuals to have very procyclical employment in this paper i explore an alternative model when there is an excess supply of labor high skilled people take jobs that would normally be occupied by less skilled people in expansions the process reverses with less skilled workers getting access to jobs that they would normally not attain i refer to this process as cyclical quality adjustment reder 1955 p 834 was one of the first to discuss how hiring standards adjust to business cycle conditions quality variations in labor markets arise through upgrading and downgrading of members of the labor force relative to the jobs they are to fill when applicants become scarce employers tend to lower the minimum standards upon which they insist as a condition for hiring a worker to fill a particular job and vice versa when applicants become plentiful since then many papers have developed this idea theoretically and many economic commentators appear to share this view of the labor market for example the economic report of the president states that a strong labor market is particularly important to less advantaged groups in the labor market such as workers with less education younger workers racial and ethnic minorities and immigrants when employers find it hard to fill vacancies they are more willing to hire and train workers whom they might pass over when they have fewer openings and an abundance of applicants council of economic advisors 1999 p 103 likewise the expansion during the 1990s spawned many newspaper articles about the improvement in the types of jobs available to less skilled applicants however there is little systematic empirical work about changes in job assignment in the united states over the business cycle the empirical work in this paper seeks to redress this situation cyclical assignment changes are important for many reasons as mentioned earlier job upgrading is a potential explanation for the greater cyclical variation of employment experienced by less skilled workers it is well known that the unemployment rates of less skilled individuals and minorities are more countercyclical relative to more skilled individuals clark and summers 1981 kydland 1984 keane and prasad 1993 hoynes 1999 the standard explanation for this effect is that low ability workers are more likely to be laid off in downturns because training and hiring costs are lower for these workers no commensurate attention has been paid to the issue of how the decision of who to hire changes over the business cycle however assignment models present a natural explanation for the greater procyclicality of employment of the less skilled both the adjustment cost hypothesis and the upgrading hypothesis imply that less skilled workers will have more procyclical employment empirically they are distinguishable because the upgrading explanation implies that jobs obtained by comparable workers should vary systematically over the cycle the adjustment cost hypothesis relates to the composition of those whose jobs are terminated second these mechanisms suggest a reason why wages are particularly procyclical for job changers recent studies using panel data have indicated that the wages of job starters are much more procyclical than the wages of workers who do not change jobs researchers have suggested various explanations for this result beaudry and dinardo 1991 and macleod and malcomson 1993 present contracting models in which the wages of job starters depend on the state of the labor market when they join the firm

the impact of local unemployment rates on reservation wages and the duration of search for a job evidence about the relationship of local unemployment rates and individuals reservation wages and duration of search for a job if unemployed is sparse and mixed this study uses us data from the panel study of income dynamics psid to test whether relatively high local unemployment rates reduce the reservation wages of area residents or increase the duration of search labour search theory provides the grounding for the sample selection corrected simultaneous equations econometric model in neither ols nor 2sls results is evidence found that local unemployment rates affect either reservation wages or the duration of search these results suggest that policies targeted at alleviating unemployment should focus on increasing the demand for labour rather than hope that such policies will be beneficial if pursued in high unemployment areas because of their effects on labour force characteristics

estimating reservation wages of employed workers using a stochastic frontier according to search theory workers form reservation wages such that employment offers paying wages less than the reservation wage are rejected the first job offer paying a wage higher than the reservation wage is accepted and search is terminated though the reservation wage is clearly a matter of individual taste and unobservable a number of empirical articles have nevertheless appeared on the subject the present paper adds to this literature its novel aspects are that it uses data on employed workers rather than unemployed workers as is usually the case and that it applies a comparatively new econometric technique stochastic frontier estimation to the problem of estimating reservation wages our interests in this paper are twofold first the paper provides estimates of worker reservation wages utilizing the stochastic frontier regression technique second we use these estimates to test various hypotheses regarding the response of reservation wages to factors that search theory suggests are important in the determination of reservation wages the remainder of the paper is organized as follows section ii discusses the previous empirical literature on the reservation wage section iii sketches the theory and estimation techniques we use section iv lays out a framework for assessing the validity of the approach used here finally section v presents the empirical results

reservation wages expected wages and unemployment we model unemployment duration reservation and expected wages simultaneously for individuals not in work where wage expectations are identified via an exogenous policy shock the policy shock increased expected wages which were found to be positively associated with reservation wages

does technological innovation really reduce marginal abatement costs some theory algebraic evidence and policy implications the existing literature models innovation in pollution control as a reduction in marginal abatement costs we show that this assumption is inappropriate for production process innovations such as fuel switching algebraically we examine the effects of different innovation types on marginal abatement cost curves showing that some desirable innovations increase marginal abatement costs empirically we estimate marginal abatement costs for sulfur dioxide by measuring the output distance function for electric power in korea regression results confirm that production process innovations did raise marginal abatement costs in this case one policy implication economic instruments do not always provide stronger innovation incentives than command and control policies

an econometric analysis of reservation wages this paper describes an analysis of survey data on unemployed people who reported their asking wage and the wage they expected to earn we show that if agents behavior is described by the standard optimal job search model one can use these data to deduce structural parameters rather than estimate them and we report our deductions from two surveys 1 of british unemployed people

an empirical analysis of employed and unemployed job search behavior this paper analyzes the job search activities of employed and unemployed job seekers using self reported data from a 1980 survey one novel finding from reduced form equations is that many searchers both employed and unemployed rejected at least one offer before accepting a job the reduced form results are used to estimate reservation wages based on a fairly standard model of job search most of the job searchers accepted a job offer with a wage below the estimated reservation wage suggesting that the model does not fit the data well

strategic investment in climate friendly technologies the impact of global emissions trading our point of departure is that a group of industrialized countries invest in research and development r d of greenhouse gas ghg abatement technologies r d investments influence the future ghg abatement choices of both industrialized and developing countries we distinguish between investments that reduce industrialized countries abatement costs and investments that reduce developing countries abatement costs unlike earlier contributions we include global trading in emission permits this changes the nature of the game with global permit trading industrialized countries should in many cases invest strategically in technologies that only reduce abatement costs at home this comes in addition to investments abroad second we show that r d investments always decrease total emissions finally we find that the developing region receiving investments always benefits

technical change and the marginal cost of abatement abstract we address one aspect of the treatment of technical change in the environmental economics literature how technical change impacts the marginal cost of abatement we review a selection of papers that employ a variety of representations of technical change and show that these representations have quite different and sometimes surprising effects on the marginal costs of pollution reductions we argue that these varied representations in fact correspond to a variety of different technology options we then present results indicating that this representation matters the impacts of technical change on the marginal cost of abatement can crucially impact policy analysis

combining bottom up and top down abstract we motivate the formulation of market equilibrium as a mixed complementarity problem which explicitly represents weak inequalities and complementarity between decision variables and equilibrium conditions the complementarity format permits an energy economy model to combine technological detail of a bottom up energy system with a second best characterization of the over all economy our primary objective is pedagogic we first lay out the complementarity features of economic equilibrium and demonstrate how we can integrate bottom up activity analysis into a top down representation of the broader economy we then provide a stylized numerical example of an integrated model within both static and dynamic settings finally we present illustrative applications to three themes figuring prominently on the energy policy agenda of many industrialized countries nuclear phase out green quotas and environmental tax reforms

combining price and quantity controls to mitigate global climate change abstract uncertainty about compliance costs causes otherwise equivalent price and quantity controls to behave differently and leads to divergent welfare consequences although most of the debate on global climate change policy has focused on quantity controls due to their political appeal this paper argues that price controls are more efficient simulations based on a stochastic computable general equilibrium model indicate that the expected welfare gain from the optimal price policy is five times higher than the expected gain from the optimal quantity policy an alternative hybrid policy combines both the political appeal of quantity controls with the efficiency of prices using an initial distribution of tradeable permits to set a quantitative target but allowing additional permits to be purchased at a fixed trigger price even sub optimal hybrid policies offer dramatic efficiency improvements over otherwise standard quantity controls for example a 50 trigger price per ton of carbon converts the 3 trillion expected loss associated with a simple 1990 emission target to a 150 billion gain these results suggest that a hybrid policy is an attractive alternative to either a pure price or quantity system

job competition and the wage curve longhi s job competition and the wage curve regional studies the wage curve literature consistently finds a negative relationship between regional unemployment rates and regional wages the most widely accepted theoretical explanations interpret the unemployment rate as a measure of job competition this paper proposes new ways of measuring job competition alternative to the unemployment rate and finds that the negative relationship still holds when job competition is measured following the job search literature while for men the wage impact of the theoretically based measures of job competition is rather similar to the wage impact of the unemployment rate for women the difference is substantial longhi s la competition pour l emploi et la courbe des salaires regional studies la documentation sur la courbe des salaires affirme systematiquement que le taux de chomage regional est en correlation faible avec les salaires regionaux les explications theoriques les plus recues considerent le taux de

the next generation of urban maccs reassessing the cost effectiveness of urban mitigation options by integrating a systemic approach and social costs abstract many cities are implementing policies and climate action plans yet local climate policies suffer from a lack of scientific understanding and evaluation methods able to support the definition of efficient mitigation strategies the purpose of this paper is to build on classical approaches in the energy policy field that exist at the national and international level to propose an urban maccs methodology able to fulfill this lack and inform local debates the methodology is an extension of static expert based maccs it combines a land use transport integrated model and an abatement cost methodology that integrates co benefits and takes into account the spatial and systemic dimensions of cities the methodology is implemented for the transportation sector of a mid sized european city grenoble france our results present the cost effectiveness and political feasibility of several proposed measures we find that the inclusion of co benefits can profoundly change the cost benefit assessment of transport mitigation options moreover we underline the key parameters determining the cost effectiveness ranking of mitigation options these urban maccs aim to serve as a bridge between urban planning and mitigation policies and can thus contribute to strengthen and align sustainable and climate change agendas at the local level

international emissions trading with endogenous allowance choices abstract this paper compares endogenous choices of tradable and non tradable emission allowances by non cooperative countries i find that the cost savings of trading do not necessarily lead to less pollution in particular environmentally more concerned countries usually choose less allowances if these are tradable but this may be offset by the choice of more allowances on the side of environmentally less concerned countries moreover if the establishment of a trading system requires the unanimous approval of all countries there may be no agreement on trading even if it were to lead to less pollution overall conversely a trading system may find unanimous approval even if it induces more pollution

marginal abatement costs of greenhouse gas emissions a meta analysis in this paper we carry out a meta analysis of recent studies into the costs of greenhouse gas mitigation policies that aim at the long term stabilisation of these gases in the atmosphere we find the cost estimates of the studies to be sensitive to the stringency of the stabilisation target the assumed emissions baseline the way in which the time profile of emissions is determined in the model the choice of control variable co2 only versus multigas the number of regions and energy sources in the model and to a lesser degree the scientific forum in which the study was developed we find that marginal abatement costs of the stringent long term targets that are currently considered by the european commission are still very uncertain but might exceed the costs that have been suggested by recent policy assessments

marginal abatement costs of co2 emission reductions geographical flexibility and concrete ceilings an assessment using the poles model abstract the kyoto protocol envisage the setting up of flexibility mechanisms allowing annex b countries to fulfil their commitments to reducing greenhouse gases with respect for the principle of economic efficiency the current negotiations relate in particular to the possibility of setting up a system of tradable emissions permits for annex b countries and also of introducing ceilings to trade this paper analyses the stakes and economic potential of adopting this instrument both for those countries that made commitments in kyoto and for developing countries it is based on a formal approach that allows for a consistent framework of analysis the emission permit market is in fact simulated on the basis of a reference scenario and of marginal abatement cost curves and estimated by the poles model after analysing these marginal abatement cost curves and comparing them with those produced by other models we explore two different configurations for a competitive market a market limited to the annex b countries and a world market the results produced by the model show that widening the market to include developing countries is more effective than the annex b market solution it reduces the cost of implementing kyoto for oecd countries and at the same time allows the countries of the south to benefit from selling the permits this research also shows that introducing restrictions on exchanges for annex b countries could have a counter productive redistribution effect with the ethical argument that underlies that particular measure

on the cost effectiveness of national economy wide greenhouse gas emissions abatement measures abstract this paper explores cost effective greenhouse gas abatement options for the european union member state of cyprus for those sectors of the national economy that are not subject to the european emissions trading system the analysis leads to the construction of a baseline and several alternative marginal emission abatement cost curves it addresses all economic sectors and considers all different types of mitigation measures improving energy efficiency switching to low or zero carbon fuels and inducing behavioural change towards public transport modes we apply nationally appropriate data that are mainly derived from local market information and judgement of national experts finally we present results of several sensitivity analyses which address main shortcomings of marginal abatement cost curves that have been identified in the literature and discuss the policy implications of each one of them apart from its relevance for eu member states this assessment is useful for all countries seeking guidance in their decarbonisation strategies

the usefulness of marginal co2 e abatement cost curves in austria energy efficiency measures are manifold in all economic sectors these measures can be pictured by a marginal abatement cost curve macc which is a common way to show co2 e abatement potential and its related costs in various fields in this paper we calculated the marginal co2 e abatement cost curve for austria for the first time to fulfill the need for country specific cost curves one of the strengths of such curves lies in their ability to highlight that energy efficiency measures can even have negative abatement costs the weaknesses consist of neglecting a change in energy prices the rate of diffusion and compatibility with existing technologies by using a static bottom up approach we constructed the macc for four economic sectors household service transport energy and found a national mitigation potential of 45 4 million tons co2 e the results further show that even with the measures with negative abatement costs it is possible to make the necessary co2 e mitigation to fulfill the kyoto protocol the conclusions emphasize that the curve makes a contribution to overcome one of the barriers of implementation by providing enhanced information on energy efficiency measures and its costs

reservation wage analysis of unemployed youths in australia this paper focuses on the analysis and structural estimation of the reservation wage function from a job search model using modified 2sls and maximum likelihood procedures with selectivity bias adj

marginal abatement cost curves for policy recommendation a method for energy system analysis abstract the transport sector is seen as one of the key factors for driving future energy consumption and greenhouse gas ghg emissions in order to rank possible measures marginal abatement cost curves have become a tool to graphically represent the relationship between abatement costs and emission reduction this paper demonstrates how to derive marginal abatement cost curves for well to wheel ghg emissions of the transport sector considering the full energy provision chain and the interlinkages and interdependencies within the energy system presented marginal abatement cost curves visualize substitution effects between measures for different marginal mitigation costs the analysis makes use of an application of the energy system model generator times for south africa times geeco for the example of gauteng province this study exemplary shows that the transport sector is not the first sector to address for cost efficient reduction of ghg emissions however the analysis also demonstrates that several options are available to mitigate transport related ghg emissions at comparable low marginal abatement costs this methodology can be transferred to other economic sectors as well as to other regions in the world to derive cost efficient ghg reduction strategies

the relationship between unemployment spells and reservation wages as a test of search theory the theory of stationary job search predicts that controlling for other factors that affect the probability of leaving unemployment duration and reservation wages are likely to be positively associated the paper tests this prediction for british cross sectional data from 1982 using an estimating equation implied by search theory simultaneity is crucial in the evaluation of this prediction with single equation and instrumental variable estimates differing markedly perhaps surprisingly given the extreme paucity of both job interviews and offers in the sample the main finding is that reservation wages play a significant role in the determination of duration

an analysis of reservation wages for the economically inactive abstract data for the economically inactive are used to calculate elasticity estimates of the reservation wage and exit probability to state benefits and the arrival rate of job offers the inactive react in similar ways to benefit increases as the unemployed

the applicability of marginal abatement cost approach a comprehensive review abstract the marginal abatement cost mac methodology is widely used in climate change policies policy makers rely on mac to assess feasible strategies and related costs to achieve emission reduction goals this paper introduces a variety of mac methodologies aiming at solving diverse problems which utilizes various calculable logic thus producing different results and implications this study applies a mind mapping method to capture differentiation of mac methods and systematically classify mac methodologies the applicability path analysis was proposed based on principles such as stakeholder type decision making objectives cost concept strategy mode and information scope our goal is to assess the applicability of different methodologies to reduce misuse by policy makers and to serve as a guide for subsequent research which might prompt and lead to the derivation of more consequential results in future studies the results of this study suggest that the complex method is not always better than the simplified method because policy makers are required to select the appropriate method according to the type of information needed it may even be suggested that mac could be reliable by ranking relative value of options compared with baseline rather than focusing on the absolute value of individual measures

unemployment benefits and reservation wages key elasticities from a stripped down job search approach this paper exploits survey information on reservation wages and data on actual wages from the european community household panel to deduce in the manner of lancaster and chesher additional parameters of a stylized structural search model specifically reservation wage and transition duration elasticities the informational requirements of this approach are minimal thereby facilitating comparisons between countries further its policy content is immediate in so far as the impact of unemployment benefit rules and measures increasing the arrival rate of job offers are concerned these key elasticities are computed for the united kingdom and 11 other european nations

international emission permit markets with refunding we propose a blueprint for an international emission permit market such as the eu trading scheme each country decides on the amount of permits it wants to offer a fraction of these permits is grandfathered the remainder is auctioned revenues from the auction are collected in a global fund and reimbursed to member countries in fixed proportions we show that international permit markets with refunding lead to outcomes in which all countries tighten the issuance of permits and are better off compared to standard international permit markets if the share of grandfathered permits is sufficiently small we obtain approximately socially optimal emission reductions

the reservation wage curve evidence from the uk we investigate the relationship between an individuals reservation wage and unemployment in the local area district largely unexplored in the literature this adds to the work which has examined the association between employee wages and unemployment the wage curve

sunk capital and negotiated resolutions of environmental conflicts two nations seek a cooperative agreement to control bilateral flows of an industrial pollutant from previous noncooperative production choices the nations hold a certain amount of sunk capital if production requires relatively large investments in sunk capital the nations may find that they cannot negotiate production quotas that improve on their noncooperative choices when the nations find cooperation worthwhile negotiated levels of production will be higher than in the absence of sunk capital furthermore both nations are motivated to attempt to manipulate the terms of the agreement by making strategic investments in sunk capital prior to its completion

unemployment benefit duration and incentives in britain how robust is the evidence abstract recent years have seen considerable advances in the econometric treatment of micro data in models of unemployment duration this paper examines the evidence from such models concerning the effects of unemployment benefits on incentives to work in britain widely accepted results of a small but significant benefit effect are reproduced using a sample of 1 231 unemployed men however these results are only found when benefit receipt is assumed to follow a hypothetical pattern which is shown to be unrealistic and over generous when more realistic calculations of benefits are used no benefit effect is found the paper also argues that search theory is of little help in determining the choice between competing functional forms and explanatory variables results concerning benefits are shown to be sensitive to the latter