cyclicality and the labor market for economists the 1987 academic market was strong whereas the 1997 market was weak a multimarket theory of optimal search suggests that job seekers will respond to a weakening market by changing their search strategies at the extensive margin which markets to enter and the intensive margin how many applications to submit per market employers respond to the weakening market by raising their hiring standards high quality applicants will obtain an increased share of academic interviews in weak markets while applicants from weaker schools will increasingly secure interviews outside of the academic market empirical results show that in the bust market graduates of elite schools shifted their search strategies to include weaker academic institutions while graduates of lower ranked schools shifted their applications away from academia and toward the business sector in bust conditions academic institu tions increasingly concentrate their interviews on elite school graduates women and u s residents

the mercantile form of value and its place in marx s theory of the commodity this paper reinterprets marx s theory of the form of value in the context of his theory of the commodity building on the unresolved tension between marx s concept of value and the specific character of the labour constituting itself as value in his theory of commodity production it is argued that marx s is actually a theory of the mercantile form of value thus it becomes evident that the process of realisation of material production in commodity production and the process giving rise to money are the same and that they are only the material manifestation of the process of realisation of private and independent work as social labour this characterises commodity production as the unity in difference of a material and a social moment showing that marx s mercantile form of value is the conceptualisation of adam smith s invisible hand the paper also argues that marx s is not the theory of a money commodity copyright 2012 oup

approximate surrogate production functions the cambridge debate showed that an aggregation of capital is not possible in general a recent investigation has found one example for reswitching and several for reverse capital deepening but the paradoxes appear to be infrequent the paper provides a theoretical justification of this result and shows how wage curves of input output matrices with small non dominant eigenvalues become quasi linear with some numeraires large random systems lead to the genesis of such states approximate surrogate production functions then seem possible a family of economic systems with constant capital composition allows construction of a surrogate production function copyright oxford university press

the effects of changes of the job offer arrival rate on the duration of unemployment generally it is acknowledged that changing the job offer arrival rate has two opposite effects on unemployment duration for a basic job search model sufficient conditions on the wage offer distribution have been derived ensuring that one of the effects dominates however these are not satisfied for the popular families of wage offer distributions here i show that the conditions can be weakened at virtually no cost the set of distributions satisfying the new conditions is considerably larger than the set previously established in particular it includes all wage offer distribution families that are popular in structural empirical research

an empirical investigation of paradoxes reswitching and reverse capital deepening in capital theory this paper examines the empirical relevance of the capital controversy the price model of sraffa and the dual models of the price and quantity systems of von neumann become the basis of the investigation in the course of the controversy it proved easy to construct theoretical examples which contradicted the fundamental neoclassical hypothesis of an inverse capital demand function this paper presents empirical examples for the first time thiry two input output tables from the oecd database serve as data as a result one envelope is found which involves reswitching reverse substitution of labour or reverse capital deepening are observed in about 3 65 of tested cases they involve at least two switchpoints copyright 2006 oxford university press

estimating a simultaneous search model the primary goal of this article is to specify and estimate a structural simultaneous search model and then determine the empirical importance of simultaneous search the results indicate that new labor force entrants search simultaneously a secondary goal is to identify and estimate job offer arrival rates and wage offer rejection probabilities separately the results indicate that a significant portion of unemployment spells are caused by slow arrival rates but policies intended to speed arrival rates would increase the average length of unemployment spells

on the application of mathematics to political economy the edgeworth walras bortkievicz controversy 1889 1891 in the period of the first spread and consolidation of mathematical economics there was impotant debate on walras s theory of exchange involving edgeworth walras and bortkievicz directly and marshall indirectly the dispute may be traced back to issues involving the role of abstract reasoning and the use of mathematics in economics the discussion reveals the clash of different methodological requirements on the one hand there is walras s requirement of rigour and simplicity allowed by the reduction of economics to mathematical treatment on the other hand there is edgeworth s requirement of greater realism in the model copyright 2007 oxford university press

optimal consumption and investment strategies with a perishable and an indivisible durable consumption good abstract we study the consumption and investment choice of an agent in a continuous time economy with a riskless asset several risky financial assets and two consumption goods namely a perishable and a durable good with an uncertain price evolution assuming lognormal prices and a multiplicatively separable isoelastic utility function we provide an explicit merton type solution for the optimal strategies for the case where the durable and all other assets can be traded without transaction costs for the case where the durable good is indivisible in the sense that durable trades imply transaction costs proportional to the value of the current durable holdings we show analytically that the optimal durable trading policy is characterized by three constants z z as long as the ratio z of the total current wealth to the value of current durable holdings of the investor is in z z it is optimal not to trade the durable at the boundaries of this interval it is optimal to trade the durable to attain z z the model is used to examine the optimal substitution between perishable and durable consumption and the importance of the durable price uncertainty and the correlation between the price of the durable good and financial asset prices

cohabitation marriage and divorce in a model of match quality the objective of this research is to further our understanding of how and why individuals enter and leave coresidential relationships we develop and estimate an economic model of nonmarital cohabitation marriage and divorce that is consistent with current data on the formation and dissolution of relationships jovanovic s journal of political economy 87 1979 972 90 theoretical matching model is extended to help explain household formation and dissolution behavior implications of the model reveal what factors influence the decision to start a relationship what form this relationship will take and the relative stability of the various types of unions the structural parameters of the model are estimated using longitudinal data from a sample of female high school seniors from the united states new numerical methods are developed to reduce computational costs associated with estimation the empirical results have interesting interpretations given the structural model they show that a significant cause of cohabitation is the need to learn about potential partners and to hedge against future bad shocks the estimated parameters are used to conduct several comparative dynamic experiments for example we show that policy experiments changing the cost of divorce have little effect on relationship choices

computation of reservation prices of options with proportional transaction costs abstract in this paper we consider the problem of computing reservation prices of options in the model proposed in a companion paper by damgaard 2003 journal of economic dynamics and control 27 667 700 for the problem concerning european options we show that the value functions of the associated portfolio maximization problems are unique viscosity solutions of their respective hamilton jacobi bellman equations moreover we suggest a numerical procedure for computing reservation prices and provide convergence proofs of the involved discretization schemes we implement the procedures and present numerical examples that illustrate the convergence pattern along which the discrete time prices convergence to their continuous time limits furthermore we describe how to extend the numerical procedure to handle computation of reservation buy prices of american options also the latter algorithm is implemented and we present an example showing that in an economy with transaction costs premature exercise of an american call option written on a non dividend paying stock maybe optimal

placement service and offer arrival rates abstract determinants of job referrals by the austrian employment exchange are analyzed concentrating on three issues the validity of the poisson assumption allocation strategies of scarce vacancies and the stationarity of offer arrival rates over time

does the public employment service affect search effort and outcomes in this paper we examine the disincentive effects of the public employment service on the search effort of unemployed workers and on their exit rate from unemployment for that purpose we specify a structural search model with fixed and variable costs of search in which unemployed workers select their optimal search intensity given the exogenous arrival rate of job contacts coming from the public employment agency because the theoretical effect of an increase in this exogenous job contact arrival rate on the structural exit rate from unemployment is ambiguous we estimate this model using individual unemployment duration data our results show that the exit rate from unemployment increases with the arrival rate of job contacts obtained by the public employment service especially for low educated and low skilled workers they also show that the search effort is more costly for low educated women and low skilled adult unemployed workers this last result suggests that a public employment agency that matches searchers and employers is beneficial in the sense that it saves searchers in terms of search costs they would otherwise bear

understanding the marxian notion of exploitation a summary of the so called transformation problem between marxian values and competitive prices the ending in the second part of the article the author examines the so called problem of transformation first he analyze certain contradiction faced by marx in the third volume of capital in studying the question of how to transform the cost into the price then he turns to the problem of inverse transformation and argues that marx procedure works only in a single case equal organic composition of capital the third part of the article bibliography provides an overview of the work on the analysis of marx s theory

optimal delta hedging under transactions costs this paper examines the problem of delta hedging portfolios of options under transactions costs by maximising expected utility or minimising a loss function on the replication error we extend the work of hodges and neuberger 1989 to study the optimal strategy under a general cost function with fixed and proportional costs a computational procedure for solving this problem is described and we develop an efficient computational method for the case of proportional transaction costs we examine the nature of the solution close to the expiry date and using simulation we compare the performance of the optimal strategies with other common strategies

the transformation problem solved the so called general transformation problem is introduced and it is shown that any actual economy of multiproduct firms with joint production and technical change is traceable to a corresponding labor theory of value economy of labor values and unrewarded labor as profits conversely the labor theory of value economies are transformable into the economies of prices and profits and profits by means of prices of labor can be distributed at will including the celebrated case of equalized profit rates even negative profits in some or all units all economies are therefore labor theory of value economies distorted by prices the author claims to have solved the transformation problem and that his work validates the labor theory of value in the spirit of david ricardo and karl marx but without marx s tools copyright 1989 by oxford university press

sraffa labor theories of value and the economics of real wage rate determination the labor theory of value and the question of whether or not a real wage rate versus profit rate trade off exists have been topics debated since the times of ricardo and marx more recently these topics have been investigated using sraffa s standard commodity approach it is argued here that such approaches are basically flawed however it also is shown that there are situations consistent with perfect competition for which negatively sloped real wage rate versus profit or interest rate trade offs do exist thus despite perfect competition genuine bargaining situations may arise between workers and owners of the capitalistic means of production

convergence from discrete to continuous time contingent claims prices this article generalizes the cox ross and rubinstein 1979 binomial option pricing model and establishes a convergence from discrete time multivariate multinomial models to continuous time multidimensional diffusion models for contigent claims prices the key to the approach is to approximate the n dimensional diffusion price process by a sequence of n variate n 1 nomial processes it is shown that contingent claims prices and dynamic replicating portfolio strategies derived from the discrete time models converge to their corresponding continuous time limits article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

estimating a structural search model the transition from school to work this paper presents a finite horizon search model that is econometrically implemented using all of the restrictions impli ed by the theory following a sample of male high school graduates fr om the youth cohort of the national longitudinal surveys from graduat ion to employment search parameters are estimated reservation wages and offer probabilities are estimated to be quite low simulations a re performed of the impact of changing the parameters on the expected duration of unemployment copyright 1987 by the econometric society

an empirical examination of the sources of changes over time in the job finding rate using reservation wages and rejected wage offers we consider a structural dynamic job search model where nonstationarity originates from the change over time in the benefit level the job offer arrival rate and the wage offer distribution the model is estimated on the french sample of the echp taking advantage of direct observation of reservation wages rejected job offers and associated rejected wages we find that the offered wages deteriorate rapidly 13 8 over six months 19 2 over one year and 30 over two years and that changes in the wage offer distribution are the unique source of negative duration dependence in the hazard

search and nonwage job characteristics this paper quantifies the importance of nonwage job characteristics to workers by estimating a structural on the job search model the model generalizes the standard search framework by allowing workers to search for jobs based on both wages and job specific nonwage utility flows within the structure of the search model data on accepted wages and wage changes at job transitions identify the importance of nonwage utility through revealed preference the estimates reveal that utility from nonwage job characteristics plays an important role in determining job mobility the value of jobs to workers and the gains from job search

the convergence of neo ricardian and embodied energy theories of value and price abstract the concepts of embodied energy entropy and the like have made limited inroads into orthodox economic thought ecological economists however have been developing a coherent theoretical perspective to be considered with and or against orthodox economics this paper focuses on the classical economic implications of the embodied energy theory of value it is argued that the embodied energy theory of value is very similar to neo ricardian economics after examining the issues separating classical and neoclassical economics the paper makes a beginning theoretical integration between these two theories finally several suggestions for theoretical development of embodied energy theory and for the empirical testing of the theory are made

marx s transformation problem and pasinetti s vertically integrated subsystems pasinetti 1988 constructs a complete generalization of marx s transformation problem in the context of a non uniform growth model by proving that production prices are not proportional to the physical quantities of labour supplied to vertically hyper integrated subsystems pasinetti therefore restricts the labour theory of value to a pre institutional stage of analysis in this paper i demonstrate that the transformation problem dissolves once we consider the vertically integrated subsystems induced by the specific institutional setup of a capitalist economy i prove that production prices both in steady state and non uniform growth models are proportional to the physical quantities of labour supplied to vertically super integrated subsystems in consequence the labour theory of value suitably generalized also applies at the institutional stage of analysis

utility based option evaluation with proportional transaction costs abstract we examine the problem of finding investors reservation prices of european contingent claims in a continuous time finite horizon economy with proportional transaction costs we derive analytically numerous properties of reservation prices reflecting their dependency on the size of the option position the risk aversion and the initial wealth for the special case of hara utility functions we consider the so called marginal reservation prices i e unit reservation prices of infinitesimal positions of the contingent claim and prove that these are independent of the initial wealth and the parameters of the utility function except for the exponent furthermore we present numerical examples suggesting that the marginal reservation prices are for reasonable parameter values insensitive to the drift of the underlying security and the exponent of the hara utility function

between berlin and cambridge classical conceptions of the general economic equilibrium in the late 1920s this paper deals with some contributions to the debate on general economic equilibrium between the two world wars originating in cambridge and berlin they differed from the viennese contributions of the walrasian perspective traditionally considered by the literature they can be defined to represent the classical approach to general equilibrium the authors considered are the italian born economist piero sraffa the german mathematician robert remak and the russian born economist wassily leontief the paper focuses in particular on the intellectual origins of their contributions in the russian german theoretical debate of the period 1890 1910 involving classical economists marx and walras these connections emerge clearly in the contributions of the german russian mathematical school between the end of the nineteenth and the beginning of the twentieth centuries

value price and exploitation the logic of the transformation problem this paper tries to clarify the logical structure of the relationship between labor values and prices from an axiomatic perspective the famous transformation problem is interpreted as an impossibility result for a specific interpretation of value theory based on specific assumptions and definitions a comprehensive review of recent literature is provided which shows that there are various theoretically relevant and logically consistent alternative interpretations based on different assumptions and definitions

the specification and estimation of dynamic stochastic discrete choice models a survey our main goal is to quantify the returns to a career in the united states congress we specify a dynamic model of career decisions of a member of congress and estimate this model using a newly collected dataset given estimates of the structural model we

an empirical stationary equilibrium search model of the housing market this article specifies and estimates a computationally tractable stationary equilibrium model of the housing market the model is rich and incorporates many of its unique features buyers and sellers simultaneous search behavior heterogeneity in their motivation to trade transaction costs a trading mechanism with posting prices and bargaining and the availability of an exogenous advertising technology that induces endogenous matching estimation uses maximum likelihood methods and multiple listing services data the estimated model is used to simulate housing market outcomes when a the amount of information displayed on housing listings increases and b real estate agent s commission rates change

the surrogate wage function and capital theory with measurement technological change induces a structural change in both the values tableau and the prices tableau of an economy the measurable change in the values tableau reveals the labor saving effect and the measurable change in the prices tableau reveals the cost reducing effect a measure preserving transformation between the values tableau and the prices tableau provides the basis for an unambiguous definition of the aggregate capital labor ratio notion as a function of the rate of profit the paper shows that the direction of shifts in the capital functions of an economy depend on the relative strength of the labor saving effect versus the cost reducing effect of technological change if the cost reducing effect of technological change is greater less than the labor saving effect then the capital labor ratio decreases increases and the system generates a rising falling tendency for the rate of profit

search for nonwage job characteristics a test of the reservation wage hypothesis previous structural models of job search behavior have been based upon the reservation wage property this article provides estimates of a more general search model that nests models with the reservation wage property the estimates lead to rejection of the reservation wage property the model includes hours of work in the utility function but other nonwage job characteristics can be included as well an experiment based on the estimated parameters indicates that a significant proportion of job offers would be mistakenly predicted to be accepted or rejected under the restrictions implied by the reservation wage property

job search and academic achievement abstract the paper develops a structural model for the labor market behavior of students entering the labor market we explicitly model the trade off between devoting effort to studying and to job search furthermore we allow for on the job search the model is estimated using a unique data set of individuals who completed undergraduate education in the netherlands between 1995 and 2001 our estimation results show that labor market returns of high grades are low wage increases between jobs are explained by labor market friction rather than returns of early work experience our results indicate that a 1 percentage point decrease in the unemployment rate increases wage offers on average by 3 percent but that the amount of job search effort is not very sensitive to business cycle fluctuations policy simulations show that study effort and hence academic achievement are much more sensitive to financial incentives than job search effort and labor market outcomes

schumpeter s theory of self restoration a casualty of samuelson s whig historiography of science this article argues that samuelson s influential 1987 call for a whig history of economic science rests on a whig historiography of the natural sciences this contrasts with how science actually works samuelson neglects the critical role of controversy in the development of knowledge leading to the misleading idea that scientists pursue discovery at the expense of reflection on the foundation and history of their subject the consequence is institutional delegitimation the exclusion of legitimate contrary hypotheses when economists test their theories invalidating the test samuelson further confuses the history of ideas with the history of texts this expands the scope of institutional delegitimation to a systematic misrepresentation of the actual ideas at stake in the economic controversies erecting a permanent obstacle to the discovery of truth i illustrate this with samuelson s exclusion from consideration of two non ignorable contributions to macroeconomic theory schumpeter s business cycles which he failed to recognise as a theory of endogenous capitalist self restoration and the concept of endogenous decline excluded by his whig reinterpretation of marx s theory of value schumpeter and marx offered opposed but legitimate alternatives to the post war macroeconomic consensus of which samuelson was a major architect in particular both recognised that deep and prolonged crises were a natural product of capitalism not an inexplicable exception to respond to the 2008 downturn economics needs to reopen a wide discussion without excluding a priori any of these opposed theoretical explanations instead seeking to understand clearly what each of them actually says and testing them against the empirical evidence of history

the market and exploitation in marx s economic theory a reinterpretation adopting the view that marx s notion of commodity has a wider reach than is usually supposed and that it is this notion rather than a labour theory of value that is the cornerstone of his economic theory this paper shows that marx s account of capitalist exploitation is one that accords equal priority to the production and market domains central to this demonstration is an unorthodox explanation as to why marx posits two alternative rules of prices in capital copyright 2000 by oxford university press

profits equal surplus value on average and the significance of this result for the marxian theory of accumulation being a new contribution to engels prize essay competition based on random matrices and on manuscripts recently published in the mega for the first time marx s justification of his theory of surplus value in the face of unequal compositions of capital by interpreting total profits as a redistribution of surplus value is not correct in general however it is shown here that the equality holds if the input matrices are random and the labour theory of value holds in a sense to be specified on average manuscripts recently published for the first time confirm that to the end marx trusted his approach to the theory of value in that he continued to use the identity of the aggregates of capital and surplus in value and in price terms his insistence was rooted in his philosophy an attempt is made to clarify his use of a hegelian methodology by comparing hegel s and marx s approaches to the foundation of the infinitesimal calculus the article concludes with marx s late reconsiderations of his theory of the falling rate of profit which also continue to be based on the equality of profit and surplus value

the whiggish foundations of marxian and sraffian economics the first half of the paper discusses what is wrong with whig history and why it is wrong to distort the past the author s views are compared with those of noted historians of economics this discussion provides motivation for the second half of the paper which focuses on whiggish accounts of the scientifically progressive character of mainstream marxian and sraffian economics that rest heavily upon proofs of internal inconsistency in marx s own theories the paper argues that the inconsistencies are actually products of whiggish misinterpretation thus it is not the case that progress has taken place through correction of error mainstream marxian and sraffian theories are not corrections of the original theories but alternatives to them