can falling supply explain the rising return to college for younger men a cohort based analysis although the college high school wage gap for younger u s men has doubled over the past 30 years the gap for older men has remained nearly constant in the united kingdom and canada the college high school wage gap also increased for younger relative to older men using a model with imperfect substitution between similarly educated workers in different age groups we argue that these shifts reflect changes in the relative supply of highly educated workers across age groups the driving force behind these changes is the slowdown in the rate of growth of educational attainment that began with cohorts born in the early 1950s in all three countries

labor market returns to two and four year college the paper examines labor market returns to a two and four year college education analysis of the 1972 national longitudinal survey of youth observation that the average person who attended a two year college earned about 10 percent more than those without any college education comparison with the wages of those who attended a four year college education

labor unemployment risk and corporate financing decisions this paper examines the impact of labor unemployment risk on corporate financing decisions theory suggests that firms choose conservative financial policies partly as a means of mitigating worker exposure to unemployment risk using changes in state unemployment insurance benefit laws as a source of variation in the costs borne by workers during layoff spells we explore the connection between unemployment risk and the corporate financing decisions of public firms in the united states we find that increases in legally mandated unemployment benefits lead to increases in corporate leverage the impact of reduced unemployment risk on financial policy is especially strong for firms that have greater layoff separation rates labor intensity and financing constraints the estimated premium required to compensate workers for unemployment risk due to financial distress is about 57 basis points of firm value for a bbb rated firm these findings suggest that labor market frictions have a significant impact on corporate financing decisions

linear adjustment costs and seasonal labor demand evidence from retail trade firms standard models of dynamic labor demand rely on the presence of adjustment costs to explain the observed smoothness in employment patterns although the costs are often difficult to quantify the experience rating feature of the u s unemployment insurance ui system provides a measurable linear cost of adjustment using a unique data set with administrative data on over 8000 firms i estimate the effect of a ui induced linear adjustment cost on seasonal labor demand in retail trade i find strong support for the large role of adjustment costs in reducing the employment response of firms to seasonal fluctuations in demand

the effect of immigration along the distribution of wages this paper analyses the effect immigration has on wages of native workers unlike most previous work we estimate wage effects along the distribution of wages we derive a flexible empirical strategy that does not rely on pre allocating immigrants to particular skill groups in our empirical analysis we demonstrate that immigrants downgrade considerably upon arrival as for the effects on native wages we find that immigration depresses wages below the 20th percentile of the wage distribution but leads to slight wage increases in the upper part of the wage distribution the overall wage effect of immigration is slightly positive the positive wage effects we find are although modest too large to be explained by an immigration surplus we suggest alternative explanations based on the idea that immigrants are paid less than the value of what they contribute to production generating therefore a surplus and we assess the magnitude of these effects

the costs of hiring skilled workers the shape of adjustment costs in factor demand has been a matter of controversy for quiet some time while some researchers assume quadratic adjustment costs i e that it becomes increasingly expensive to recruit workers in a given time period others believe that there are economies of scale in recruitment surprisingly there is hardly any evidence so far on the shape of hiring costs based on microeconomic data in this paper we estimate the functional form of hiring costs in the theoretical framework of a generalized model of monopsony using both parametric and nonparametric estimation techniques we find strong evidence in favor of diseconomies of scale in recruiting skilled workers our results indicate that the labor market is monopsonistic

return migration the european experience labour immigration contributed strongly to europe s post war economic development in contrast to migration to north america or australia these movements of labour were always seen as temporary by sending and receiving countries and at least initially also by most migrants although many migrants stayed more permanently return migration is a highly relevant feature in practice its significant role and the underlying behavioural mechanisms are not well understood however it is therefore not too surprising that most policy measures taken in the 1970s and 1980s to encourage return migration failed the paper takes the view that much can be learned from recent european history temporary immigration schemes may be helpful to moderate illegal migration and to foster east west economic relationships given the tight policies in the european union short term migration seems to be the only channel to open the door slightly the paper reviews the european history of return migration and the policy regimes in important european labour migration receiving countries it also provides new empirical evidence on the determinants of return behaviour and successful return return propensities of migrants increase with the age at entry but decrease with the number of years of residence conditional on having decided to return however the remaining years in the country decrease with years of residence and keeping years of residence constant with entry age return incentives may cause dissatisfaction and reintegration problems in the home country the results support the view that economic benefits are the larger the earlier it is clear whether migration is temporary or permanent

immigration and house prices in the uk this article studies the effect of immigration on house prices in the uk it finds that immigration has a negative effect on house prices and presents evidence that this negative effect is due to the mobility response of the native population natives respond to immigration by moving to different areas and those who leave are at the top of the wage distribution this generates a negative income effect on housing demand and pushes down house prices the negative effect of immigration on house prices is driven by local areas where immigrants have lower education

returning to new orleans after hurricane katrina hurricane katrina displaced approximately 650 000 people and destroyed or severely damaged 217 000 homes along the gulf coast damage was especially severe in new orleans and the return of displaced residents to this city has been slow the fraction of households receiving mail which in the absence of reliable population estimates is a good indicator for returns was 49 5 percent in august 2006 and 66 0 percent in june 2007 greater new orleans community data center 2007 low income minority families appear to have been slower than others to return william h frey and audrey singer 2006 in this paper we examine the determinants of returning to new orleans in the 18 months after the hurricane the data come from a study of low income parents mainly african american women who were enrolled in a community college intervention prior to the hurricane although the sample is not representative of the pre katrina population of the city it nonetheless is of great interest the relatively slow return of low income primarily african american residents is a politically charged issue one extreme view is that the redevelopment plans are designed to discourage low income minority residents from returning a quite different view is that members of this group have found better opportunities outside of new orleans and do not want to return because few data sets trace individuals from before to after the hurricane this debate has taken place largely without the benefit of evidence

minimum wage effects on employment and school enrollment we argue in this article that the focus on employment effects in recent studies of minimum wages ignores an important interaction between schooling employment and the minimum wage to study these linkages we estimate a conditional logit model of employment and enrollment outcomes for teenagers using state year observations for the period 1977 to 1989 the results show a negative influence of minimum wages on school enrollment and a positive effect on the proportion of teens neither employed nor in school we further suggest that our results are consistent with substitution by employers of higher for lower skilled teenagers with the displaced teens ending up both out of work and out of school

an empirical analysis of the daily labor supply of stadium venors this paper analyzes the daily labor supply behavior of food and beverage vendors at a single stadium over an entire baseball season this labor market is attractive for the study of labor supply both because ofvendors unilateraly decide whether to participate on each game date and because canges in product demand conditions across days are large and highly predictable generating exogenous game to game variation in the vendor wage i exploit the observable shift in product demand conditions across games to esumate the labor supply participation elasticity of stadium vendors estimates that recognize that demand conditions and vendor labor supply decisions simultancously determine the venofdor wage always find substantial labor supply elasticities typically in the 55 65 range in contract estimates that ignore the endoreneity of the ties these results highlight the imporatance of using demand shift markets

job matching and on the job training conventional analysis predicts that workers pay part of their on the job training costs by accepting a lower starting wage and subsequently realize a return to this investment in the form of greater wage growth missing from the conventional treatment of on the job training is a discussion of the process by which heterogeneous workers are matched to jobs requiring varying amounts of training this matching process constitutes a key feature of the on the job training model presented in this article and tested with a unique data set containing extensive information concerning on the job training employer search wages and wage and productivity growth

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

the impact of the 1962 repatriates from algeria on the french labor market this paper uses census data to examine the impact on the french labor market of the 900 000 people repatriated from algeria in 1962 repatriates settled in regions culturally and climatically simil

labor supply hours constraints and job mobility if hours can be freely varied within jobs the effect on hours of changes in preferences for those who do change jobs should be similar to the effect on hours for those who do not change jobs conversely if employers restrict hours choices then changes in preferences should affect hours more strongly when the job changes than when it does not change for a sample of married women we find that changes in many of the labor supply preference variables produce much larger effects on hours when the job changes

human capital bankruptcy and capital structure we derive a firm s optimal capital structure and managerial compensation contract when employees are averse to bearing their own human capital risk while equity holders can diversify this risk away in the presence of corporate taxes our model delivers optimal debt levels consistent with those observed in practice it also makes a number of predictions for the cross sectional distribution of firm leverage consistent with existing empirical evidence it implies persistent idiosyncratic dierences in leverage across firms an important new empirical prediction of the model is that ceteris paribus firms with more leverage should pay higher wages

partial adjustment without apology econometric partial adjustment models perform relatively well at the aggregate level however many kinds of microeconomic behavior involve discrete and occasional choices analyzing the classic employment adjustment problem we show how a generalized partial adjustment model tractably accommodates both observations by aggregating the actions of heterogeneous producers facing fixed adjustment costs aggregate disturbances cause changes in establishment level target employment and in the measure of establishments actively adjusting to their target whereas aggregate responses exhibit partial adjustment our framework also can be applied in general equilibrium settings with persistent idiosyncratic shocks without forfeiting the convenient use of linear solution methods

the labor market returns to community college degrees diplomas and certificates this article provides one of the first rigorous estimations of the labor market returns to community college certificates and diplomas as well as estimations of the returns to the more commonly studied associate s degrees using administrative data from kentucky we estimate panel data models that control for differences among students in precollege earnings and educational aspirations associate s degrees and diplomas have quarterly earnings returns of nearly 2 400 for women and 1 500 for men compared with much smaller returns for certificates there is substantial heterogeneity in returns across fields of study degrees diplomas and for women certificates correspond with higher levels of employment

employment dynamics and the structure of labor adjustment costs in this article we document the patterns of employment adjustment at the micro level we find clear evidence of lumpy adjustment consistent with the presence of nonconvexities in the adjustment technology inaction is pervasive action spells are short lived and extreme adjustment episodes are responsible for a nontrivial share of employment adjustment we also find that the probability of employment adjustment increases with the duration of inaction the skill structure of the workforce the type of employment contract and the proportion of low tenure workers which we interpret as proxies for the magnitude of adjustment costs all influence the probability of adjustment

labour demand and the source of adjustment costs to examine the importance of the two sources of costs of adjusting labor demand net costs of adjusting employment and gross costs of hiring and firing the author collects new sets of short monthly time series from a medium size hospital and three manufacturing plants models with quadratic costs and with lumpy costs are developed and yield lower bounds on the fraction of adjustment costs that are gross the estimates demonstrate that both types of costs affect dynamic labor demand but that gross adjustment costs especially and the turnover that generates them deserve much more attention copyright 1995 by royal economic society

a genral model of dynamic labor demand this study derives and estimates a dynamic model of factor demand that includes both fixed and quadratic variable costs of adjustment using quarterly data on the employment of mechanics at seven airlines it finds that both types of adjustment costs characterize the dynamic constraints facing employers using monthly data covering production worker employment in seven manufacturing plants it shows that only fixed costs are important the apparent diversity of the underlying costs of adjustment means it is difficult to draw useful inferences from macroeconometric estimates it suggests the importance of examining broader arrays of microeconomic time series describing labor demand this abstract was borrowed from another version of this item

the effect of mass influx on labor markets portuguese 1974 evidence revisited abstract this paper provides a reappraisal of the evidence from the influx that has been unique in the recent european history the flood of half a million returnees from mozambique and angola to portugal in the mid 1970s the objective of this paper is to study the impacts of a large supply shock on aggregate labor productivity wages and unemployment in contrast to the previous evidence the synthetic control analyses find that the influx had a significant adverse effect on labor market outcomes the results suggest that the portuguese labor market responded precisely the same way as the standard textbook model predicts an increase in the number of workers lowered average labor productivity and wages

the impact of immigration on the british labour market using data from the british labour force survey this article provides an empirical investigation of the way immigration affects labour market outcomes of native born workers in britain set beside a theoretical discussion of the underlying economic mechanisms we discuss problems arising in empirical estimation and how to address them we show that the overall skill distribution of immigrants is remarkably similar to that of the native born workforce we find no strong evidence that immigration has overall effects on aggregate employment participation unemployment and wages but some differences according to education

campaign finance reform a public choice perspective the federal election campaign act as passed in 1971 and amended in 1974represented landmark federal legislation it imposed new restrictions oncampaign contributions and contained path breaking provisions for the useof public funds to partially finance the campaigns of qualifyingpresidential candidates the nominal intent of the legislation was torestrain the skyrocketing campaign costs and the feared abuses thatgrowing dependencies on such money engendered three decades later withthe campaign spending arms race still raging congress sought toimpose further constraints on campaign spending with enactment of thebipartisan campaign reform act of 2002 bcra competing theories ofgovernment regulation are reviewed to better understand the intent andlikely consequences of the 2002 legislation in particular and campaignfinance regulation in general a simple model of the campaign spendingprocess highlights the likely causes of the rapid growth in campaignspending data and evidence are presented to test hypotheses concerningthe timing of and underlying motivations for bcra

employment tax credit programs the effects of socioeconomic targeting provisions argentina s proempleo experiment conducted in 1998 2000 was designed to assess whether a wage subsidy and specialized training could assist the transition from workfare to regular work randomly sampled workfare participants in a welfare dependent

industry dynamics and the minimum wage a putty clay approach we document two new findings about the industry level response to minimum wage hikes first restaurant exit and entry both rise following a hike second there is no change in employment among continuing restaurants we develop a model of industry dynamics based on putty clay technology that is consistent with these findings in the model continuing restaurants cannot change employment and thus industry level adjustment occurs gradually through exit of labor intensive restaurants and entry of capital intensive restaurants interestingly the putty clay model matches the small estimated short run disemployment effect of the minimum wage found in other studies but produces a larger long run disemployment effect

whom do high growth firms hire we study employment and new hires among high growth firms hgfs in the swedish knowledge intensive sectors 1999 2002 using matched employer employee data we find that hgfs are more likely to emp

immigrants minorities and labor market competition this paper investigates the extent of labor market competition among immigrants minorities and the native population an analysis of 1980 u s census data reveals that immigrants tend to be substitutes for some labor market groups and complements for others the effects of shifts in immigrant supply on the earnings of native born men are however very small on the other hand increases in the supply of immigrants do have a sizable impact on the earnings of immigrants themselves an increase of 10 percent in the supply of immigrants for example reduces the immigrant wage by about 10 percent

political power and the market for governors the statistically insignificant results for the budget power and veto power variables suggest that for some reason these power characteristics are not particularly salable to consumers of governmental favors it may simply be the case that political competition pushes governors to adopt median voter public policy outcomes despite the existence of discretionary budget and veto powers which permit them to behave otherwise this suggests that discretionary powers may only be of value in those states where political competition is weak or where deviations from the wishes of the median voter are relatively costless in terms of the value of votes lost to the party or candidate in power however attempts to test this hypothesis using an interaction term between measures of inter party competition and the governors budgetary and veto powers proved unsatisfactory perhaps intra party competition in one party states makes candidates just as responsive to the preferences of the median voter as are candidates in states with strong inter party competition

a comment on the economics of labor adjustment mind the gap reply in earlier contributions ricardo j caballero and eduardo m r a engel 1993 hereafter ce and caballero et al 1997 hereafter ceh investigate labor dynamics using a methodology which postulates that employment changes depend on a gap between the actual and target levels of employment both studies find evidence of nonlinearities in aggregate timeseries data employment growth depends on the cross sectional distribution of employment gaps this finding is taken as evidence that nonlinear adjustment at the microeconomic level matters for aggregate time series this is important for business cycle and policy analysis as it implies macroeconomics must take the cross sectional distribution of employment gaps into account this paper questions the methodology and thus the conclusions of these studies we argue that these reported aggregate nonlinearities may be the consequence of mismeasurement of the gap rather than nonlinearities in plant level adjustment both ce and ceh rely upon a hypothesis that employment growth responds to a gap z between the desired and actual number of workers at a plant the advantage to the gap approach is that the choice of employment an inherently difficult dynamic optimization problem is characterized through a nonlinear relationship between and z that is the adjustment rate z is postulated to be a nonlinear function of z however there is no free lunch the desired number of workers and hence the employment gap is unobservable thus in order to confront data this approach needs an auxiliary theory to infer z from observed variables both ce and ceh use observed hours variations to infer the employment gap this inference is one element of our critique of the gap methodology to assess this methodology we simulate data from the solution of a dynamic model of labor adjustment assuming quadratic adjustment cooper department of economics university of texas austin tx 78712 e mail cooper eco utexas edu willis research department federal reserve bank of kansas city kansas city mo 64198 e mail jonathan willis kc frb org we are grateful to seminar participants at boston university emory university the university of british columbia the federal reserve bank of boston the university of haifa the university of iowa the university of michigan the university of pennsylvania the university of texas at austin the 2002 nber ef meeting and the 2000 cmsg conference at mcmaster university for comments and suggestions discussions with eduardo engel john haltiwanger daniel hamermesh peter klenow and christopher ragan were much appreciated the authors thank the nsf for financial support we also appreciate comments from the referees cooper thanks the federal reserve bank of minneapolis for its hospitality during revisions of this manuscript the views expressed herein are solely those of the authors and do not necessarily reflect the views of the federal reserve bank of kansas city the federal reserve bank of minneapolis or the federal reserve system 1 daniel hamermesh 1989 uses a gap methodology as well but does not adopt the approach of estimating a nonlinear hazard function explained below to infer the nature of adjustment costs hence we focus on ce and ceh in this discussion of methodology 2 we do not contest the general view of nonlinear employment adjustment at the plant level this finding is consistent with other evidence that points to inactivity as well as bursts of employment adjustment at the plant level for example hamermesh 1989 provides a revealing discussion of lumpy labor adjustment at a set of manufacturing plants steven davis and john haltiwanger 1992 document large employment changes at the plant level ceh also report evidence of inactivity in plant level employment adjustment there seems little doubt that an explanation of plant level employment dynamics requires a model of adjustment that is richer than the quadratic adjustment cost structure and includes some forms of nondifferentiability and or nonconvexity 3 as the gap approach is used in numerous other applications capital adjustment durable adjustment price adjustment to approximate the solution to dynamic optimization problems our concerns may be relevant for those exercises as well

the costs of wrongful discharge laws we estimate the effects on employment and wages of wrongful discharge protections adopted by u s state courts during the last three decades we find robust evidence that one wrongful discharge doctrine the implied contract exception reduced state employment rates by 0 8 to 1 7 the initial impact is largest for female and less educated workers those who change jobs frequently while the longer term effect is greater for older and more educated workers those most likely to litigate by contrast we find no robust employment or wage effects of two other widely recognized wrongful discharge laws the public policy and good faith exceptions i introduction w hat is the price of protection this paper estimates the social costs in possibly lower employment and wages of common law protections designed to protect american workers from wrongful discharge economic the ory suggests that employment protection is a double edged sword it provides employment security to incumbent work ers but makes employers reluctant to hire leading to a less flexible labor market with potentially lower employment and wages it is frequently argued that the stagnant employment performance of many european economies during the 1980s and 1990s eurosclerosis can be attributed in part to the significant employment protection given european workers see lazear 1990 and blanchard and wolfers 1999 krueger and pischke 1998 provide a contrasting view among the obstacles to testing this hypothesis is the difficulty of making reliable inferences using cross country comparisons in this paper we study the effects of employment protec tion in the united states numerous scholars have examined the effects of american federal employment laws on em ployment and unemployment acemoglu and angrist 2001 deleire 2000 and jolls and prescott 2004 present evidence that the americans with disabilities act ada decreased employment of disabled persons oyer and schaefer 2000 2002 conclude that the federal civil rights act of 1991 increased the frequency of mass layoffs and raised the returns to experience for workers who have a downward sloping age litigation profile hahn todd and van der klaauw 2001 also evaluate the costs of federal antidiscrimination laws a major hurdle for each of these studies is that these federal statutes apply all at once to the entire country this makes it difficult to separate the effects of the statute from all other changes occurring simulta neously cf donohue 1998 donohue and heckman

minimum wage policy and community college enrollment patterns in this article the author studies the effect of the minimum wage on community college enrollment using cross border variation in state minimum wages to address spatial correlation in local labor

the determinants of campaign spending the role of the government jackpot a slave has but one master the ambitious man has as many masters as there are persons whose aid may contribute to the advancement of his fortune jean de labruyere des ouvrages de l esprit i introduction this paper builds a model of elections in which contributors give money to candidates in return for promises of government favors each candidate spends to increase his chances of victory the candidate s probability of winning and the value of government resources that would be his to distribute if he won the jackpot determine the amount he can raise the model suggests a way to measure the influence of the jackpot on spending while controlling for other effects such as the probability of winning the search for this result is interesting because we wish to know what influences the resources devoted to courting politicians is the growth of government truly to blame why if government is for sale do contributors give so little relative to the size of government to control so much and why as abrams and settle 1978 found does campaign spending sometimes not grow even though government grows do official limits on public debt reduce the politician s discretionary control over government resources and hinder his ability to sell favors how does ideology interfere with the candidate s demand for contributions empirical models of contributions that can serve as a guide have been of two sorts abrams 1981 following the work of crain and tollison 1977 crain deaton and tollison 1977 and gifford and santoni 1978 regressed campaign spending on several proxies for the jackpot and found a positive effect a more popular approach to explaining campaign outlays pioneered by jacobson 1978 has been to regress spending or contributions on the candidate s probability of victory and to ignore the role of the jackpot the implicit assumption in such models is that the candidate s net worth to contributors determines spending the candidate cares only about winning and raises as much as he can the greater his chances of winning the more he can raise and the more he will spend i call this the supply side view because spending depends only on the supply of contributions this approach goes some way to explaining contributions but neglects the role of the jackpot and cannot explain why some strong candidates who are sought after by contributors accept little or nothing such as former senator william proxmire of wisconsin the present study takes something from both approaches but argues that candidates may not wish to spend all they can raise because contributions do not come free of charge as baron 1989 pointed out the candidate s demand albeit bounded by potential supply determines contributions candidates probably run for election to control government wealth and must ponder how much of the jackpot to auction for contributions the candidate s demand for contributions can be derived from a utility function that rises with his probability of victory but diminishes with the contributions he accepts how much a candidate demands depends on the size of the bernoulli variance of the outcome which i call closeness and the size of the jackpot the greater the closeness and the larger the jackpot the greater the candidate s demand a close race is defined here not by the number of rivals or the margin of victory but as one in which the outcome is very uncertain the typical candidate does not spend all he is able to raise but the effect of closeness fades if the candidate wishes to win greatly the model describes the simultaneous relationship between spending and closeness and imposes identifying restrictions i carry out tests on samples drawn from the 1978 and 1986 contests for u s state governorships and find that jackpots affect election spending but that closeness is less important in addition i find that in states where the legislature is constitutionally required to balance the budget governors sell less of the jackpot

the unemployment volatility puzzle the role of matching costs revisited recently pissarides 2009 has argued that the standard search model with sunk xed matching costs increases unemployment volatility without introducing an unrealistic wage response in new matches we revise the role of matching costs and show that when these costs are not sunk and therefore can be partially passed on to new hired workers in the form of lower wages the amplication mechanism of xed matching

on the job learning and news driven business cycles this paper proposes a new channel of on the job learning to explain the positive comovement between consumption and employment following good news about future productivity the new recruits can generate an additional stream of output production in all future periods and the firm s labor demand is thus characterized by the forward looking property therefore the firm is motivated to hire more new recruits in advance in response to good news about future productivity once the increase in labor demand is greater than the decrease in labor supply caused by the income effect the coincident rise in consumption and employment can be driven by the news shock when such a channel is paired with investment adjustment costs and the endogenous capacity utilization rate this paper provides a plausible explanation for simultaneous booms in current consumption investment output and employment to match the empirical evidence under the news shock

career technical education and labor market outcomes evidence from california community colleges career technical education cte programs at community colleges are increasingly seen as an attractive alternative to four year colleges yet little systematic evidence exists on the returns to specific certificates and degrees we estimate returns to cte programs using administrative data from the california community college system linked to earnings records we employ estimation approaches including individual fixed effects and individual specific trends and find average returns to cte certificate and degrees that range from 14 to 45 percent the largest returns are for programs in the healthcare sector estimated returns in non health related programs range from 15 to 23 percent end page 986 abstract from author

the effect of migration on wages evidence from a natural experiment the objective of this paper is to employ the hurricane katrina evacuation into houston tx as a natural experiment to estimate the effect of large scale in migration on regional earnings given the characteristics of the evacuees their influx would have caused the supply of applicants for lower skilled jobs to increase proportionately more than for higher skilled jobs we utilize a differences in differences in differences methodology in which we compare differences in average earnings in the low skill non traded goods industries to the corresponding differences in the set of high skill industries in the houston and dallas fort worth msas before and after the katrina induced migration unlike previous studies we include a measure of the post storm increase in demand for local goods and services on the demand for labor we find evidence that the relative average payroll in the low skill non tradable goods industries in houston decreased by 7 when compared to the relative change for the same group of industries in dallas our findings also suggest that failure to account for demand side influences following the migration results in significant under estimation of wage effects due to the shift in labor supply

the impact of mass migration on the israeli labor market mass migration from the former soviet union increased the israeli population by 12 in the first half of the 1990s this exodus was precipitated by the lifting of emigration restrictions in an unstable ussr and by the open immigration policy of israel toward soviet jews who faced more restrictive entry policies elsewhere i use this natural experiment to study the impact of immigration on the labor market outcomes of native israelis ols yields significant reductions in wages and small reductions in employment however ols is biased if the distribution of immigrants across occupations in israel was not exogenous to relative wage and employment conditions i instrument for the entry of russians into an occupation in israel using information on their former occupations in the ussr there is a significant positive correlation between the former presence of the immigrants in an occupation in the ussr and their presence in that occupation in israel but the previous occupational choices of russians abroad were independent of israeli wage and employment growth subsequent to their migration iv estimates indicate that immigration did not have an adverse impact on native israeli labor market outcomes

fringe benefits and the demand for part time workers in the us tax code nondiscrimination rules and other institutional constraints require employers to offer the same fringe benefits to all full time workers but allow them to deny benefits to part time workers as a result firms that offer generous fringe benefits to higher skill workers have an incentive to hire lower skill workers on a part time or contingent basis this paper uses cross section establishment data to investigate the effect of employer provided fringe benefits on the demand for part time workers the results indicate that firms that offer more generous fringe benefits make greater use of low wage part time workers there is no significant relationship between fringe benefits and the proportion of high wage workers employed part time

a generalised model of monopsony this article presents a general but very simple model in which the supply of labour to an individual employer is not infinitely elastic but the employer can also raise employment by increasing expenditure on recruitment using this it is shown how that division between perfect competition and monopsony is whether there are diseconomies of scale in recruitment using a unique british data set containing information on both labour turnover costs and the number of recruits we present estimates that do suggest that there is an increasing marginal cost of recruitment debates about the desirability and consequences of labour market interventions like minimum wages trade unions welfare benefits hours restrictions and firing costs continue to be at the heart of debates about the way in which modern industrialised economies should be run is it best to have a relatively de regulated labour market the us being held up as a model by proponents of this view or can some regulation lead to better labour market outcomes with some northern european countries being held up as a model by this group debate about the merits of intervention is most commonly put in terms of a trade off between efficiency and equality with those economists favouring a more interventionist approach tending to be those who have a welfare function that puts greater weight on equality and or those who believe the efficiency cost of equality is relatively low

asymmetric adjustment costs in non linear labour demand models for the netherlands and u k manufacturing sectors the costs of hiring a worker generally differ in size from the firing costs this article investigates optimal labour demand schedules for production and nonproduction workers of firms that operate under uncertainty and face asymmetric costs of adjusting their workforce in the empirical part generalised methods of moments gmm estimates of the structural parameters of the euler conditions for production and nonproduction workers are presented together with specification and structural stability tests using time series data of the netherlands and uk manufacturing sectors we find that asymmetric adjustment costs play an important role in the explanation of unbalanced labour demand between upward and downward movements of the business cycle moreover hiring costs exceed firing costs of production workers whereas firing costs exceed hiring costs of nonproduction workers

housing booms and busts labor market opportunities and college attendance we study how the recent housing boom and bust affected college enrollment during the 2000s we exploit cross city variation in local housing booms which improved labor market opportunities for young men and women we find that the boom lowered college enrollment with effects concentrated at two year colleges the decline in enrollment during the boom was generally reversed during the bust however attainment remains persistently low for particular cohorts suggesting that reduced educational attainment is an enduring effect of the recent housing cycle the housing boom can account for approximately 25 percent of the recent slowdown in college attainment

the incidence of mandated maternity benefits i consider the labor market effects of mandates which raise the costs of employing a demographically identifiable group the efficiency of these policies will be largely dependent on the extent to which their costs are shifted to group specific wages i study several state and federal mandates which stipulated that childbirth be covered comprehensively in health insurance plans raising the relative cost of insuring women of childbearing age i find substantial shifting of the costs of these mandates to the wages of the targeted group correspondingly i find little effect on total labor input for that group jel 118 j32 h51 in an era of tight fiscal budget constraints mandating employer provision of workplace benefits to employees is an attractive means for a government to finance its policy agenda consequently in recent years there has been a growth of interest in mandated benefits as a tool of social policy for example the centerpiece of president bill clinton s health care proposal is mandated employer provision of health insurance and more than 20 states have man

the employment dynamics of disadvantaged women evidence from the sipp understanding the employment dynamics of disadvantaged families is increasingly important we estimate duration models describing these dynamics for disadvantaged single mothers and use them to conduct a rich set of counterfactual analyses we use a misreporting model to correct for seam bias the problem that too many transitions are reported between reference periods in panel data we find effects of demographics minimum wages unemployment rates and maximum welfare benefits but not policy changes introduced through state welfare waivers on employment dynamics we find that two commonly used ad hoc methods of addressing seam bias perform substantially worse than our approach

the fiscal impact of immigration on the advanced economies this paper is concerned with the advanced economies it begins with a discussion of the demo graphic issues that have played such a large role in the debate on immigration this is followed by a section on the main problems involved in estimating the fiscal impact of immigration and then a summary of the international evidence on this topic mostly from europe and america separate sections on the uk and on low fertility countries follow the main conclusions are as follows highly skilled migrants normally make a large fiscal contribution whereas unskilled migrants are likely to impose a net cost on native taxpayers if they settle in the receiving country however even unskilled migrants may be net contributors if they eventually depart and make few claims on government expenditure while in the country most empirical studies find that the fiscal contribution of the immigrant population as a whole is quite small the positive contribution of some migrants is largely or wholly offset by the negative contribution of others this finding holds across a variety of countries and methodologies estimates of the net fiscal contribution of immigration normally lie within the range 1 per cent of gdp there are a few exceptions but these refer to countries experiencing demographic collapse and they are based on unrealistic assumptions about the inter generational allocation of future taxes and government expenditure with more realistic assumptions the overall fiscal benefit of immigration is quite small even in these countries these findings suggest that in general there is no strong fiscal case for or against sustained large scale immigration the desirability or otherwise of large scale immigration should be decided on other grounds

measuring factor adjustment costs i estimate adjustment costs for labor and capital from the euler equations for factor demand for both factors i find relatively strong evidence against substantial adjustment costs my estimates use annual data from two digit industries my results support the view that rents arising from adjustment costs are relatively small and are not an important part of the explanation of the large movements of the values of corporations in relation to the reproduction costs of their capital i investigate the potential effects of three types of specification error 1 aggregation over time 2 aggregation over firms with heterogeneous demand shocks and 3 estimation of a convex adjustment cost technology in the presence of nonconvex discrete adjustment costs i find that the likely biases from these specification errors are relatively small

employment changes the structure of adjustment costs and plant size abstract in this paper we analyze the pattern of employment adjustment using a rich panel of norwegian plants the data suggest that the frequency of episodes of zero net employment changes is inversely related to plant size we develop and estimate a simple q model of labor demand allowing for the presence of fixed linear and quadratic components of adjustment costs the econometric evidence supports the existence of purely fixed components unrelated to plant size as a result the range of inaction is wider for smaller plants the quadratic component of costs is also always important in most specifications fixed costs are higher for employment contractions the quadratic component is higher during employment contractions compared to expansions for small plants while this is not true for larger plants

wage fairness in a subcontracted labor market abstract labor market subcontracting is a global phenomenon this paper presents a theory of wage fairness in a subcontracted labor market where workers confront multi party employment relationships and deep wage inequities between regular and subcontractor mediated hires we show that subcontracting derives its appeal from a downward revision of workers fair wage demand when producers delegate employment decisions down the supply chain furthermore subcontracting creates a holdup problem resulting in wages that workers deem unfair along with adverse worker morale consequences in equilibrium these insights reveal the efficiency costs of subcontracting as an employer strategy to redress workers demand for fair wages

general and specific training evidence and implications using data from the employer opportunity pilot project eopp survey and the national longitudinal survey of youth nlsy we explicitly document the specificity and generality of employer provided training and we analyze how wage growth and mobility are influenced by our direct measures of specific and general training in spite of the emphasis that labor economists have placed on specific training we find that employers in the eopp and workers in the nlsy indicate that most of the skills learned in training are useful elsewhere our results are consistent with several recent models that predict that employers will often extract some of the returns to the general training they provide

employment inequality why do the low skilled work less now abstract low skilled prime age men are less likely to be employed than high skilled prime age men and the differential has increased since the 1970s i build a search model encompassing three explanations 1 automation and trade reduced the demand for low skilled workers 2 health welfare and recreational gaming computer technology reduced the supply of low skilled workers and 3 factors affecting job search such as online job boards reduced frictions for high skilled workers i find a shift in demand away from low skilled workers was the leading cause a shift in supply had little effect and search frictions actually reduced employment inequality

immigration and wages evidence from construction to identify relative wage impacts of immigration we make use of certification and licensing requirements in the norwegian construction sector that give rise to exogenous variation in immigrant employment shares across trades individual panel data reveal substantially lower wage growth for workers in trades with rising immigrant employment than for other workers selective attrition from the sector masks the causal wage impact unless accounted for by individual fixed effects for low and semi skilled workers effects of new immigration are comparable for natives and older immigrant cohorts consistent with perfect substitutability between native and immigrant labor within trade finally we present evidence that immigration reduces price inflation as price increases over the sample period were significantly lower in activities with growth in the immigrant share than in activities with no or small change in immigrant employment

efficiency and labor market dynamics in a model of labor selection this article characterizes efficient labor market allocations in a labor selection model the model s crucial aspect is cross sectional heterogeneity for new job contacts which leads to an endogenous selection threshold for new hires with cross sectional dispersion calibrated to microeconomic data 40 of empirically relevant fluctuations in the job finding rate arise which contrasts with results in an efficient search and matching economy the efficient selection model s results hold in partial and general equilibrium as well as with sequential search abstract from author

thick market effects and churning in the labor market evidence from u s cities using u s census microdata we show that on average workers change occupation and industry less in more densely populated areas the result is robust to standard demographic controls as well as to including aggregate measures of human capital and sectoral mix analysis of the displaced worker surveys shows that this effect is present in cases of involuntary separation as well on the other hand we actually find the opposite result higher rates of occupational and industrial switching for the subsample of younger workers these results provide evidence in favor of increasing returns to scale matching in labor markets results from a back of the envelope calibration suggest that this mechanism has an important role in raising both wages and returns to experience in denser areas

models of labour services and estimates of total factor productivity this article examines the manner in which labour services are modelled in the aggregate production function concentrating on the relationship between numbers employed and average hours worked it argues that numbers employed and hours worked are not perfect substitutes and that conventional estimates of total factor productivity which by using total hours worked as the measure of labour services assume they are perfect substitutes will be biased when there are marked changes in average hours worked the relevance of the theoretical argument is illustrated using data for the united states and the united kingdom

migration and imperfect labor markets theory and cross country evidence from denmark germany and the uk we investigate the labor market effects of immigration in denmark germany and the uk three countries which are characterized by considerable differences in labor market institutions and welfare states institutions such as collective bargaining minimum wages employment protection and unemployment benefits affect the way in which wages respond to labor supply shocks and hence the labor market effects of immigration we employ a wage setting approach which assumes that wages decline with the unemployment rate albeit imperfectly we find that the wage and employment effects of immigration depend on wage flexibility and the composition of the labor supply shock in germany immigration involves only moderate wage but large unemployment effects since immigrants are concentrated in labor market segments with low wage flexibility the reverse is true for the uk and denmark

why don t eligible firms claim hiring subsidies the role of job duration i introduction for over 30 yr the u s government has encouraged the hiring of disadvantaged workers by allowing firms with qualified workers to claim federal tax credits the work opportunity tax credit wotc and welfare to work tax credit wtw are available to firms that hire certain workers from a number of target groups such as welfare recipients young food stamp recipients young workers from economically depressed areas and ex felons despite substantial labor market participation by these groups only a small percentage of firms claim the subsidies for which they qualify for example wisconsin microdata suggest that employers left an estimated 8 million unclaimed for qualified welfare and food stamp recipients in 2001 in the same year employers claimed less than 2 million for workers in these target groups because wisconsin only accounts for about 2 of the u s population and 2 of all wotc wtw certifications unclaimed benefits nationwide are likely to be worth over 400 million per year moreover low participation in employer subsidy programs is not a new phenomenon but has persisted for decades in a variety of similar programs why do firms leave these subsidies unclaimed possible explanations for this puzzle include lack of information discomfort with involvement in government programs or low benefits from participation relative to administrative costs in this study i examine the merits of the last explanation in particular i investigate the potential role of worker hours requirements which tightly link subsidy rates to the job duration of qualified employees such requirements have been a standard feature of targeted employer tax credit programs since the 1970s in the period i study 1999 2002 a firm qualifies for the wotc only if an eligible worker remains employed for at least 120 h and the subsidy rate increases if the worker exceeds 400 h the wtw credit requires a minimum of 400 h of work however workers in this category can qualify for the wotc if they do not meet this hours requirement a firm must apply for the tax credits at the time it hires a qualified worker even though the firm will only be permitted to claim a subsidy if the worker s hours exceed the threshold this combination of up front costs and uncertain benefits might discourage some firms from participating understanding the potential role of hours requirements in the participation decision may provide needed insight into firms continually low interest in employer subsidies in this article i examine the relationship between a firm s wotc wtw participation and the distribution of its eligible workers job durations which is a key determinant of potential benefits i use a unique set of wisconsin administrative data which links the state s wotc wtw job records containing hourly wage data to their corresponding unemployment insurance records containing total earnings data this allows me to conduct the first examination to my knowledge of the distribution of job durations in hours for subsidy certified workers 1 i then compare this distribution with an estimate of the hours distribution for other wotc wtw eligible workers whose employers did not apply for the credits a reasonable explanation for these firms nonparticipation may be that they would have gained little from the subsidy program if firms form expectations based on their typical hours distribution then i expect to see higher participation among firms with stronger distributions that is with more workers in the higher subsidy brackets i estimate the average fixed cost of firm participation in wotc and then using a probit model in which i control for relevant covariates i analyze the relationship between firms worker hour distributions and their participation in the wotc wtw although this relationship is interesting it does not necessarily imply a causal effect of hours on participation if as theory would predict participating firms maximize wotc wtw benefits by intentionally increasing workers job duration after the participation decision has already been made

lost in transition the costs and consequences of sectoral labour adjustment this paper uses an equilibrium search and matching model to study canada s sectoral labour adjustment in 2002 2006 during an increase in global commodity prices and exchange rate appreciation i estimate economically significant adjustment costs for the aggregate economy in this episode and demonstrate that difficulty in transferring skills between jobs for individual workers can be an important contributor to these aggregate costs the analysis also demonstrates that the level of unemployment benefits impacts the economy s sectoral composition its aggregate productivity and the speed of its adjustment to shocks ce texte utilise un modele d equilibre de la recherche et de l arrimage pour etudier les ajustements sectoriels du travail au canada dans la periode 2002 2006 une periode d appreciation des prix globaux des produits de base et du taux de change j estime que les couts d ajustement sont economiquement significatifs pour l economie agregee au cours de cet episode et que la difficultea transferer les competences entre emplois pour les travailleurs individuels peut etre une source importante de ces couts agreges les analyses montrent aussi que le niveau des prestations d assurance emploi a un impact sur la composition sectorielle de l economie sur la productivite et sur la vitesse des ajustements aux chocs

what can wages and employment tell us about the uk s productivity puzzle as in many european countries labour productivity in the uk has been stagnant since the start of the great recession this article uses individual data on employment and wages to try to understand whether real wage flexibility can help shed light on the uk s productivity puzzle it finds perhaps unsurprisingly that workforce composition cannot explain the reduction in wages and hence productivity that we observe even compared to previous recessions instead real wages have fallen significantly within jobs this time round why one possibility we investigate is that the labour supply in the uk is higher compared to previous recessions

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

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

aggregate employment dynamics building from microeconomic evidence this paper studies quarterly employment flows of approximately 10 000 u s manufacturing establishments the authors use establishments hours week to construct measures of the deviation between desired and actual employment and use these as the establishments main state variables the main findings are 1 microeconomic adjustment functions are nonlinear with plants adjusting disproportionately to large shortages 2 adjustments are often either large or nil suggesting the presence of nonconvexities in the adjustment cost technologies 3 the bulk of average employment fluctuations is accounted for by aggregate rather than reallocation shocks and 4 microeconomic nonlinearities amplify the impact of large aggregate shocks copyright 1997 by american economic association

cash holdings and labor heterogeneity the role of skilled labor firms differ in their dependence on skilled labor and face labor adjustment costs that increase with their workers skill level we show that firms with a higher share of skilled workers and thus less flexibility to adjust their labor demand in response to cash flow shocks hold more precautionary cash the effect of labor skills on cash holdings is more pronounced for financially constrained firms and varies with exogenous differences in firing and hiring costs we address endogeneity concerns by using subsamples of firms with reasonably similar characteristics propensity score matching and a quasi experimental shock to labor markets

the economics of immigration this literature review concerns the impact of immigration on the economy of the host country focusing on the experience of the united states the emphasis is on the period from the 1970s to the 1990s the author shows that research earlier in this period generally concluded that the economic effects of immigration were positive but that more recent research on later migrations have generally concluded that immigration may be having an adverse effect on the earnings of native unskilled workers and be placing an increased burden on welfare programs the importance of such economic analysis for the formulation of appropriate migration policies is stressed

labor protection and leverage this paper exploits inter temporal variations in employment protection across countries and finds that rigidities in labor markets are an important determinant of firms capital structure decisions over the 1985 2007 period we find that reforms increasing employment protection are associated with a 187 basis point reduction in leverage we interpret this finding to suggest that employment protection increases operating leverage crowding out financial leverage this result is robust across measures of employment protection and leverage and does not appear to be due to pre treatment differences between treated and control firms omitted variables unobserved changes in regional economic conditions and reverse causality heterogeneous treatment effects are consistent with our economic intuition we find that the negative effect is more pronounced in firms that are subject to frequent hiring and firing

measuring the labor market impacts of hurricane katrina migration evidence from houston texas hurricane katrina made landfall on the us gulf coast as a category three storm on the morning of august 29 2005 with winds reach ing speeds of 130 miles per hour and storm surges as high as 27 feet katrina caused unprec edented damage along the coasts of alabama mississippi and louisiana unofficial estimates suggest that 100 000 to 150 000 evacuees moved to the houston texas metropolitan area repre senting a 3 to 4 percent increase in the population adrian campo flores 2005 some anecdotal evidence suggests that many evacuees expect to stay in the houston metro area indefinitely 2 katrina disproportionately affected minorities and the disadvantaged thomas gabe et al 2005 find that the evacuees who were most acutely affected by the storm were significantly more likely to be black poor and unemployed and were significantly less educated compared to other evacuees and compared to the nation on average in this paper i examine the effect of the migration of katrina evacuees on the houston metropolitan area labor market using current population survey cps data from september 2000 to august 2006 to quantify the effect of hurricane katrina migration i compare wages and employment before and after the storm among nonevacuees residing in houston or native houstonians and in other metro areas that were not directly or indirectly affected by the storm in addition i allow the effects to vary by gender education and race and ethnicity the existing studies of the effect of immigra tion on the labor market outcomes among native born workers provide a good point of comparison for this analysis see rachel m friedberg and jennifer hunt 1995 and david card 2005 for reviews of this literature in a study similar to this one adriana kugler and mutlu yuksel 2006 find negative employment effects among low educated native workers and positive wage effects among highly educated workers in the us border states after hurricane mitch struck central america in october 1998 more gener ally there are numerous studies that examine the impact of an unexpected increase in the local labor supply due to immigration including papers by card 1990 hunt 1995 william carrington and pedro de lima 1996 and friedberg 2001 collectively these studies find small and insig nificant effects of immigration on local labor market outcomes for native workers other studies estimate the effect of immi gration on local labor markets using varia tion across receiving areas and across time in the immigrant share of the labor force and these studies produce conflicting results card 2001 2005 finds that local labor market out comes for unskilled natives are only marginally affected by immigration while george j borjas 2006 shows that the wage effect of immigra tion increases when the labor market is defined at the national level instead of at the local level since workers are more likely to migrate between localities than between countries in response to increased labor market competition due to immigration however gianmarco i p ottaviano and giovanni perri 2006 argue that by ignoring capital mobility and by assuming that immigrant and native workers are perfect substitutes in the labor market borjas overstates the size of the effect industrial relations section firestone library prince ton university princeton nj 08544 e mail mfifer princeton edu i am grateful to henry f rber elizabeth fussell alan krueger michael rothschild jesse rothstein and cecilia rouse for their guidance and leandro carvalho jason deparle matthew ericson jane fortson and participants at the princeton university graduate labor lunch and public finance working group and at the tulane university disaster and migration conference for helpful comments and suggestions i am responsible for the contents and for all remaining errors 1 jason de parle katrina s tide carries many to hope ful shores new york times april 23 2006 2 susan saulny putting down new roots on more solid ground new york times september 7 2005 simon romero shelters grow empty as apartments open up new york times september 8 2005

the impact of 1970s repatriates from africa on the portuguese labor market this paper examines the labor market effect of the retornados who immigrated to portugal from angola and mozambique in the mid 1970s following portugal s loss of its african colonies the retornados increased the portuguese labor force by roughly 10 in just three years two analyses suggest contrasting conclusions first comparisons of portugal with spain and france indicate that any adverse effect of the retornados was quantitatively swamped by the europe wide downturn in labor market conditions in the 1970s second comparisons between districts within portugal indicate that the retornados may have had a strong adverse effect on portuguese wages suggesting that immigration may be considerably more harmful than previous case studies have concluded the authors however regard the results of the within portugal analysis as less reliable than those of the comparison across countries

are targeted wage subsidies harmful evidence from a wage voucher experiment this paper presents the results of a controlled experiment designed to test the effectiveness of a targeted wage subsidy program such programs are intended to increase the employment of target group workers by offering employers reimbursement for part of those workers wages in the dayton ohio experiment however job seekers given experimental vouchers identifying them to employers as eligible for a generous wage subsidy were significantly less likely to find employment than were job seekers without vouchers the author speculates that the vouchers had a stigmatizing effect and provided a screening device with which employers discriminated against economically disadvantaged workers

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

is the new immigration really so bad this article reviews the recent evidence on us immigration focusing on two key questions 1 does immigration reduce the labour market opportunities of less skilled natives 2 have immigrants who arrived after the 1965 immigration reform act been successfully assimilated overall evidence that immigrants have harmed the opportunities of less educated natives is scant on the question of assimilation the success of the us born children of immigrants is a key yardstick by this metric post 1965 immigrants are doing reasonably well even children of the least educated immigrant origin groups have closed most of the education gap with the children of natives

how do you measure a technological revolution it is hardly news that we are in the midst of rapid economic change the advances in infor mation and communication technology ict in the life and other sciences and their profusion of innovative products from the newest electronic devices to the latest drugs and treatments are ample evidence equally pervasive are new busi ness models in services big box retail online banking on demand media and the explosion in social networking and new business practices ushered in by the internet telework virtual meetings job boards given the magnitude of the changes brought on by these innovations it is useful to step back and ask what does eco nomic analysis have to say about the sources and mechanisms of these shifts and revolutions and what economic metrics are available to measure their overall size and impact the received theory of economic growth is the natural candidate for this job it came of age in the 1950s and 1960s with the neoclassi cal models and emergence of aggregate growth accounting the latter has become the work horse of empirical macroeconomic growth analysis and the basis for official productiv ity statistics put out by the bureau of labor statistics bls since 1983 a technological revolution appears in this framework as an increase in the fruits of innovation as measured by the shift in an aggregate production function termed multifactor productivity or mfp and possibly as an increase in the aggregate saving rate as reflected in an increased rate of capital formation mfp is an exogenous phenomenon

on the interaction of financial frictions and fixed capital adjustment costs evidence from a panel of german firms abstract this paper analyzes the interaction of financial frictions and non convex adjustment costs non convex adjustment costs imply that firm level investment is lumpy firms invest infrequently but each investment is large this allows financial variables to influence investment along two margins they can alter the size of the stock of capital a company wishes to hold in the long run or they can influence the frequency at which investment projects are undertaken the empirical analysis of this paper reveals that finance has nearly no long run influence on the stock of capital in a sample of german companies by contrast the influence of finance on investment decisions is substantial consequently finance primarily affects investment frequencies and financial factors and fundamental capital productivity strongly interact in the determination of investment

labor supply of new york city cabdrivers one day at a time life cycle models of labor supply predict a positive relationship between hours supplied and transitory changes in wages because such changes have virtually no effect on life cycle wealth previous attempts to test this hypothesis empirically with time series data have not been supportive estimated elasticities are typically negative or nonsignificant such analyses however are vulnerable to measurement error and other estimation problems we use data on daily observations of wages and hours for new york city cab drivers to estimate the supply response to transitory fluctuations in wages cab drivers decide daily how many hours to supply and face wages that are positively correlated within days but largely uncorrelated between days using these data our central finding is that wage elasticities are persistently negative from 5 to 1 in three different samples even after correcting for measurement error using instrumental variables these negative wage elasticities challenge the notion that cab drivers trade off labor and leisure at different points in time and question the empirical adequacy of life cycle formulations of labor supply

the labour market impact of immigration in the first part of this paper we present a stylized model of the labour market impact of immigra tion we then discuss mechanisms through which an economy can adjust to immigration changes in factor prices output mix and production technology in the second part we explain the problems of empirically estimating how immigration affects labour market outcomes of the resident population and review some strategies to address these we then summarize some recent empirical studies for the uk and other countries we conclude with an outlook on what we believe are important avenues for future research

labor and the market value of the firm what role does labor play in a firm s market value we explore this question using a production based asset pricing model with frictions in the adjustment of both capital and labor we posit that hiring of labor is akin to investment in capital and that the two interact with the interaction being a crucial determinant of the time series behavior of market value we use aggregate u s corporate sector data to estimate firms optimal hiring and investment decisions and the consequences for firms value the model generates a good fit of the data we decompose the estimated market value thereby quantifying the link between firms value and gross hiring flows employment gross investment flows and physical capital we find that a conventional specification quadratic adjustment costs for capital and no hiring costs performs poorly hiring and investment flows unlike employment and capital stocks are volatile and both are essential to account for market value volatility a key result is that firms value embodies the value of hiring and investment over and above the capital stock