climate mitigation under an uncertain technology future a tiam world analysis abstract this paper explores the impacts of long term technology and climate uncertainties on the optimal evolution of the world energy system stochastic programming with the tiam world model is used for a parametric analysis of hedging strategies varying the probabilities associated to each of two contrasted technology outlooks the parametric analysis constitutes an original supplement to the computation of hedging strategies by identifying technologies that are robust under a broad range of probabilities of the two technology outlooks natural gas appears to be one of the most appealing robust options in an uncertain technological context especially in china given its relatively low emissions and the low capital cost of associated technologies natural gas and some other options are in fact considered as super hedging actions penetrating more in the hedging solution than in any of the deterministic scenarios nuclear power and ccs use are less robust they depend much more on either the level of the climate target or the probabilities of the technology outlooks the analysis also shows that technological uncertainty has a greater impact under milder climate targets than under more severe ones future research might consider a larger set of possible technology outlooks as well as specific analyses focused on key characteristics of low carbon technologies

unobserved variables and the elusive added worker effect consistent with recent empirical work this study finds no evidence of the added worker effect among married couples in the u s it is hypothesized that unobserved variables may be obscuring this added worker behavior this hypothesis is rejected the labor supply behavior of married women is influenced by the permanent and not the transitory nature of their spouses unemployment wives with frequently unemployed husbands have lower reservation wages yet apart from their measured human capital these same women face persistently lower wage rates and higher unemployment propensities in the labor market as a result married women with unemployed spouses are no more likely to be in the labor force and are actually less likely to be employed than observationally equivalent married women with employed spouses copyright 1991 by the london school of economics and political science

the added worker effect the term added worker effect usually refers to a temporary increase in the labor supply of married women whose husbands have become unemployed this paper presents a new approach to the empirical study of the added worker effect which emphasizes the role of employment uncertainty and credit constraints in generating short run participation and employment patterns the estimates are based on employment transition probabilities rather than static measures of labor supply and are used in a dynamic simulation of changes in the employment and participation rates of wives following an exogenous increase in unemployment among their husbands the results show a small but significant added worker effect at least for white families and suggest that the apparent disagreement among previous studies may stem from different approaches to measuring responses to a transitory event such as an unemployment spell

optimal investment under ambiguous technology shocks abstract this paper analyzes the behavior of a firm facing an ambiguous technology shock and the effects of the attitude toward ambiguity on optimal capital investment using the smooth ambiguity model of klibanoff et al 2005 although it seems intuitive that an increase in ambiguity aversion always reduces the optimal capital investment this is not necessarily true because the shape of the production function plays a key role in determining the effect under some conditions we show that the optimal amount of capital investment increases decreases in ambiguity aversion if the production function is substitute complement and that this result is counterintuitive when the production function is substitute furthermore our main results hold if we assume the maxmin preferences in ghirardato et al 2004

low carbon and clean energy scenarios for india analysis of targets approach abstract low carbon energy technologies are of increasing importance to india for reducing emissions and diversifying its energy supply mix using gcam an integrated assessment model this paper analyzes a targets approach for pushing solar wind and nuclear technologies in the indian electricity generation sector from 2005 to 2095 targets for these technologies have been constructed on the basis of indian government documents policy announcements and expert opinions different targets have been set for the reference scenario and the carbon price scenario in the reference scenario wind and nuclear technologies exceed respective targets in the long run without any subsidy push while solar energy requires subsidy push throughout the century in order to meet its high targets in the short run nuclear energy also requires significant subsidy including a much higher initial subsidy relative to solar power which is a result of its higher targets under a carbon price scenario the carbon price drives the penetration of these technologies still subsidy is required especially in the short run when the carbon price is low we also found that pushing solar wind and nuclear technologies leads to a decrease in share of ccs under the carbon price scenario and biomass under both the reference and carbon price scenarios this is because low carbon technologies compete among themselves and substitute each other thereby enhancing the need for subsidy or carbon price highlighting that proposed targets are not set at efficient levels in light of contemporary debate on external costs of nuclear energy we also assess the sensitivity of the results to nuclear technology cost we find that higher cost significantly decreases the share of nuclear power under both the reference and carbon price scenarios

the optimal research and development portfolio of low carbon energy technologies a study of china to support decision making for an optimal portfolio strategy for low carbon energy technology research and development r d this study proposes a dynamic two stage stochastic programming model taking into account both the uncertainty of technological change and damages of climate change based on china s economic and technology level and expert elicitation an r d investment portfolio strategy looking at three low carbon technologies carbon capture and storage ccs solar photovoltaic pv and nuclear including nine projects is investigated through the proposed model the optimized results show that the optimal r d technology portfolio is robust to different levels of risk in climate damage however the total social costs for the optimal r d technology portfolio is lowest in the medium risk of climate damage scenario under different opportunity costs the composition of the optimal r d portfolio varies however projects for each of the three technologies always constitute the optimal r d portfolio furthermore the implication is that a technology synergistic r d strategy is conducive to enhancing the level of co2 abatement and reducing the total social cost

precautionary principle and the optimal timing of environmental policy under ambiguity i consider a problem in environmental policy design in which i focus on stock pollutants in particular i consider stock pollutants that cause severe damage on the environment and do not depreciate at all once they are released into the atmosphere and the ocean the purposes of this paper are 1 to provide an economic foundation for environmental policies based on the precautionary principle and the 1992 rio declaration on environment and development and 2 to show that this optimal timing rule has a reservation property furthermore i analyze the effect of an increase in ambiguity on the optimal timing of adopting some environmental policy and show that an increase in ambiguity decreases the optimal timing of adopting the environmental policy

public goods game with ambiguous threshold abstract various collective action problems can be described as a discrete public goods game with a threshold in this game players may be reluctant to contribute to the provision of public goods when the threshold value is uncertain we derive equilibria when players face ambiguity i e knightian uncertainty on the threshold value by using choquet expected utility furthermore we show that in a class of neo additive capacities an increase in ambiguity decreases the equilibrium maximal number of contributors irrespective of players ambiguity attitudes this contrasts to what mcbride 2006 shows when the probability distribution is known

irreversible investment and knightian uncertainty when firms make a decision about irreversible investment they may not have complete confidence about their perceived probability measure describing future uncertainty they may think other probability measures perturbed from the original one are also possible such uncertainty characterized by not a single probability measure but a set of probability measures is called knightian uncertainty the effect of knightian uncertainty on the value of irreversible investment opportunity is shown to be drastically different from that of traditional uncertainty in the form of risk specifically an increase in knightian uncertainty decreases the value of investment opportunity while an increase in risk increases it

does unemployment insurance crowd out spousal labor supply previous research on unemployment insurance ui has emphasized the program s effect on individual search behavior this state contingent income may also reduce the labor supply of family members during the unemployment spell we investigate this question within the context of wives labor supply responses to their husbands unemployment spells we find strong crowdout of this form of family self insurance our estimates imply that for each dollar of ui receipt wives earn up to 73 cents less the reduction in spousal hours of work is over 40 as large as previous estimates of the effect of ui on search time of husbands

labour force transitions among low wage married couples a simultaneous probability model interdependence in the labour force transitions of low income married couples is studied it utilizes a simultaneous probability model in which each person s job exit depends in part on the job transitions of their spouse estimates are based on data from the seattle denver income maintenance experiments the evidence appears to indicate that wives emulate the nonwork status of their husbands wives of exit prone husbands are themsleves more exit prone and less likely to enter employment evidence in favour of reverse dependence of husbands status on wives exits appears to be weak and imprecise

when married men lose jobs income replacement within the family using matched file data from the january and march 1986 current population surveys the author estimates a model of earnings reduction and family income replacement in 1985 for a group of married men displaced from full time nonagricultural jobs the displacements which occurred between 1981 and 1984 resulted in substantial earnings losses for a large fraction of the sample husbands with earnings losses had higher levels of spouse earnings and income transfers in 1985 than the control group of non displaced husbands but the fraction of lost earnings replaced was not large on average the author concludes that long term trends in both the nature of the experience of displaced workers and the structure of the family economy call for reconsideration of traditional family adjustment mechanisms

risk ambiguity and the exercise of employee stock options abstract we investigate the importance of ambiguity or knightian uncertainty in executives stock option exercise decisions we develop an empirical estimate of ambiguity and include it in regression models alongside the traditional measure of risk equity volatility we show that each variable has a significant effect on the timing of option exercises with volatility causing executives to hold options longer to preserve option value and ambiguity increasing the tendency for executives to exercise early

optimal pricing and quality choice of a monopolist under knightian uncertainty abstract this paper analyzes a simple vertical product differentiation model with demand uncertainty and derives a risk neutral monopolist s optimal market entry timing her optimal pricing and optimal quality choice by incorporating knightian uncertainty irreversibility and flexibility in quality enhancing investment into a continuous time stochastic model it is shown that an increase in knightian uncertainty induces decreases in the optimal price the optimal quality and the value of undertaking the quality enhancing investment by the monopolist the social optimal entry timing pricing and quality are also analyzed

a dynamic mechanism and surplus extraction under ambiguity we study the question of auction design in an ipv setting characterized by ambiguity we assume that the preferences of agents exhibit ambiguity aversion in particular they are represented by the epsilon contamination model we show that a simple variation of a discrete dutch auction can extract almost all surplus this contrasts with optimal auctions under ipv without ambiguity as well as with optimal static auctions with ambiguity in all of these types other than the lowest participating type obtain a positive surplus an important point of departure is that the modified dutch mechanism is dynamic rather than static establishing that under ambiguity aversion even when the setting is ipv in all other respects a dynamic mechanism can have additional bite over its static counterparts a further general insight is that the standard revelation principle does not automatically extend to environments not characterized by subjective expected utility

human capital risk contract enforcement and the macroeconomy we use data from the survey of consumer finance and survey of income program participation to show that young households with children are under insured against the risk that an adult member of the household dies we develop a tractable macroeconomic model with human capital risk age dependent returns to human capital investment and endogenous borrowing constraints due to the limited pledgeability of human capital limited contract enforcement we show analytically that consistent with the life insurance data in equilibrium young households are borrowing constrained and under insured against human capital risk a calibrated version of the model can quantitatively account for the life cycle variation of life insurance holdings financial wealth earnings and consumption inequality observed in the us data our analysis implies that a reform that makes consumer bankruptcy more costly like the bankruptcy abuse prevention and consumer protection act of 2005 leads to a substantial increase in the volume of both credit and insurance

reexamining the added worker effect i introduction the added worker effect refers to a wife entering the labor force when her employed husband becomes unemployed this labor supply response is a transitory method of intertemporally smoothing family income and consumption and is of interest to labor economists and to macroeconomists concerned with the labor force participation of married women over the business cycle the added worker effect is familiar in terms of the income and substitution framework of the labor supply model when family earnings fall as a result of the husband s unemployment the income effect influences the wife to increase her labor supply similarly the wife s reservation wage for market work falls when the husband s increased nonemployment time provides a substitute for her home production and she is more likely to join the labor force as an added worker the wife s reservation wage is also influenced by the degree of complementarity or substitutability of leisure time between the husband and the wife observing the net result of these three factors the existence and the magnitude of the added worker effect is an empirical question this paper expands on the conventional income and substitution explanations in order to emphasize how employment uncertainty and liquidity constraints influence the added worker effect in the context of a dynamic model of family labor supply an unanticipated unemployment spell by the husband and the resulting shift in the budget constraint will alter expectations of future unemployment probabilities which will cause the wife to revise her life cycle profile of current and future labor supplies the explanation of liquidity constraints as a cause of the added worker effect is discussed in much of the literature see mincer 1962 1966 killingsworth and heckman 1986 and rosen 1992 as stressed by lundberg 1985 anticipated unemployment should not produce an added worker effect unless credit constraints limit access to borrowing against future income explaining how the timing of labor supply could be affected by variations in family income mincer 1962 cites capital market imperfections as a reason why a transitory increase in labor force participation of the wife may well be an alternative to dissaving asset decumulation or increasing debt while the added worker effect is easily explained by theoretical models of family labor supply such as those sketched above or that presented by ashenfelter 1980 empirical work has failed to reach a consensus regarding its magnitude or even whether it exists 1 although heckman and macurdy 1982 and lundberg 1985 have shown that the added worker effect is small yet significant pencavel 1982 does not find an added worker effect once he controls for individual specific fixed effects and maloney 1987 1991 does not find any evidence of an added worker effect it is interesting to note the wide variety of data used in this literature heckman and macurdy use annual panel data lundberg uses monthly panel data constructed from quarterly interviews pencavel uses annual panel data constructed from quarterly interviews and maloney uses annual cross sectional data this paper is motivated both by the conflicting empirical work regarding whether or not the added worker effect exists and by the view that the added worker effect should be analyzed using panel data with a short recall period cross sectional microdata cannot adequately capture the intertemporal decisions of wives joining the labor force when their husbands become unemployed annual measures of labor supply are less than ideal for examining the added worker effect since short spells of unemployment by the husband in the preceding year are often forgotten see horvath 1982 and akerlof and yellen 1985 my purpose is to document the magnitude of the added worker effect using monthly longitudinal microdata from the current population survey cps

risk uncertainty and option exercise many economic decisions can be described as an option exercise or optimal stopping problem under uncertainty motivated by experimental evidence such as the ellsberg paradox we follow knight 1921 and distinguish risk from uncertainty to capture this distinction we adopt the multiple priors utility model we show that the impact of ambiguity on the option exercise decision depends on the relative degrees of ambiguity about continuation payoffs and termination payoffs consequently ambiguity may accelerate or delay option exercise we apply our results to investment and exit problems and show that the myopic npv rule can be optimal for an agent having an extremely high degree of ambiguity aversion

constrained geographical mobility and gendered labor market outcomes under structural adjustment evidence from egypt summary we examine in this paper the evolution of gender gaps in labor market outcomes during structural adjustment and explore the extent to which widening gaps can be attributed to women s more limited geographical mobility using comparable household surveys carried out in 1988 and 1998 we show that gender gaps in access to wage and salary employment and in earnings have widened during this period especially in the nongovernmental sector we attribute these changes at least in part to women s more limited geographical mobility we show that women s commuting rates are not only much lower than those of men but also have remained stagnant in a period where males were having to travel significantly more to obtain jobs outside the government

husband s unemployment and wife s labor supply the added worker effect across europe this article investigates the responsiveness of women s labor supply to their husband s job loss the so called added worker effect the authors contribute to the literature by taking an explicit internationally comparative perspective in analyzing the variation of the added worker effect across welfare regimes using longitudinal data from the european union statistics on income and living conditions eu silc survey covering 28 european countries from 2004 to 2013 they find evidence of an added worker effect which however varies over both the business cycle and the different welfare regimes in europe the latter result might be explained in part by differences in the design of the unemployment benefit system across countries which create different incentives for the labor supply of wives of unemployed men

assessment of copenhagen pledges with long term implications abstract this study first evaluates the pledges under the copenhagen accord using the dne21 model our estimates for the 2020 pledges fall collectively within the range of 46 700 49 100 mt co 2 eq our study also finds the efforts arising from the current 2020 pledges have wide ranging implications in terms of mitigation costs and types of actions based on this analysis we seek to place the copenhagen pledges in a long term context putting focus on costs and feasibility we set up a carbon prices convergence scenario assuming that all countries start from the copenhagen commitments and gradually undertake their own individual efforts in accordance with the convergence of carbon prices toward a uniform price in 2050 despite soaring carbon prices in most countries total costs as share of gdp show modest increase ranging mostly between 0 and 0 4 we also find that there does not seem to be much difference in the degree of burden between developed and major developing countries under this scenario since the challenge of climate change will require significant reductions in ghg emissions in the coming decades we need to make long lasting efforts getting on the right track toward the ultimate goal of stabilizing ghgs

economic analysis of a low carbon path to 2050 a case for china india and japan abstract this article studies the economic implications that different global ghg emission mitigation policies may have in the major asian economies namely china india and japan the analysis covers the period 2010 2050 and is performed by means of a recursive dynamic computable general equilibrium model gem e3 four scenarios are investigated the three standard ame scenarios and a fourth scenario with a ghg emission reduction path compatible with the 2 c target reducing global ghg emissions in 2050 by 50 relative to 2005 the scenarios are compared with the already adopted and announced policies of the respective countries in the context of the copenhagen pledges for 2020 and their long term objectives in 2050 we further discuss the role of energy efficiency measures and zero carbon power technologies in order to reach the long term 2 c target we find that postponing significant emission reductions may not accrue an economic benefit over time whereas it may increase some risks by possibly overstretching the reliance on zero carbon technologies

the entry of the wife into the labor force in response to the husband s unemployment a study of the added worker effect in brazilian metropolitan areas abstract the temporary participation in the labor force of wives whose husbands have become unemployed has been referred to in the literature as the added worker effect awe previous research conducted using data from the united states has found only a small awe a result that accords with life cycle models with perfect capital markets the current article uses panel data obtained using a short recall period to evaluate the awe in the six major brazilian metropolitan areas our results show a positive awe that is much more substantial than those found for the u s economy the finding of an important awe for brazil suggests that liquidity constraints may prevent brazilian households from sufficiently smoothing income and consumption in periods when the male head of the family is unemployed alternatively the significant awe may indicate that the husband s unemployment signals household members that there may be a substantial reduction in future income flow

uncertainty risk neutral measures and security price booms and crashes abstract this paper provides a general analysis of intertemporal utility based on the multiple priors model of aversion to knightian uncertainty then the existence of equilibrium is proven for a representative agent security market model it is shown that uncertainty aversion can invalidate the existence of a risk neutral measure representation for prices in addition an example suggests an intriguing link between uncertainty aversion and the possibility of abrupt changes in security prices the analysis relies heavily on a fubini type theorem for analytic functions due to dellacherie and meyer probabilities and potential c north holland new york 1988 journal of economic literature classification numbers g12 d81 d90

search and knightian uncertainty suppose that uncertainty about labor market conditions has increased does this change induce an unemployed worker to search longer or shorter this paper shows that the answer is drastically different depending on whether an increase in uncertainty is an increase in risk or that in true uncertainty in the sense of frank knight we show in a general framework that while an increase in risk the mean preserving spread of the wage distribution that the worker thinks she faces increases the reservation wage an increase in knightian uncertainty a decrease in her confidence about the wage distribution reduces it

non reservation price equilibrium and search without priors we analyse a model of oligopolistic competition in which consumers search without priors consumers do not have prior beliefs about the distribution of prices charged by firms and thus try to use a robust search procedure we show that the optimal stopping rule is stochastic and that for any distribution of search costs there is a unique market equilibrium which is characterised by price dispersion although listed prices approach the monopoly price as the number of firms increases the effective price paid by consumers does not depend on the number of firms

group learning wage dispersion and non stationary offers can differences in equilibrium beliefs among otherwise identical individuals account for a substantial degree of wage inequality this paper shows that this is possible if two conditions are met first people learn about the distribution of wage offers from the experience of their peers and second people believe that wage offers are stationary even though offers that arrive later tend to have higher wages than offers that arrive earlier peer groups can then end up with different stable beliefs that lead to intergroup wage differences the non stationarity of offers is rationalized in a model where firms can either advertise their job openings or not and where advertised ones have more influence on more inexperienced job searchers a statistic is proposed whose application to existing studies suggests that the non stationarity considered here is present in data

the role of china in mitigating climate change abstract we explore short and long term implications of several energy scenarios of china s role in efforts to mitigate global climate risk the focus is on the impacts on china s energy system and gdp growth and on global climate indicators such as greenhouse gas concentrations radiative forcing and global temperature change we employ the mit integrated global system model igsm framework and its economic component the mit emissions prediction and policy analysis eppa model we demonstrate that china s commitments for 2020 made during the un climate meetings in copenhagen and cancun are reachable at very modest cost alternative actions by china in the next 10 years do not yield any substantial changes in ghg concentrations or temperature due to inertia in the climate system consideration of the longer term climate implications of the copenhagen type of commitments requires an assumption about policies after 2020 and the effects differ drastically depending on the case meeting a 2 c target is problematic unless radical ghg emission reductions are assumed in the short term participation or non participation of china in global climate architecture can lead by 2100 to a 200 280 ppm difference in atmospheric ghg concentration which can result in a 1 1 c to 1 3 c change by the end of the century we conclude that it is essential to engage china in ghg emissions mitigation policies and alternative actions lead to substantial differences in climate energy and economic outcomes potential channels for engaging china can be air pollution control and involvement in sectoral trading with established emissions trading systems in developed countries

household labor supply and the gains from social insurance the marginal gains from social income insurance programs are captured by the gap in the marginal utility of consumption across states of nature to identify this gap in the context of the household this paper offers a new labor supply based approach that leverages household level economic interactions and optimality conditions we demonstrate that in frameworks of efficient household allocations spousal labor supply responses to shocks have direct implications for the gains from more generous government benefits to households we show that this holds for both intensive and extensive margin responses under fairly general conditions our analysis illustrates how labor market data can be used for assessing marginal welfare gains in a general class of social insurance schemes including the large and important programs of disability insurance and survivors benefits hence household labor supply behavior and responses to shocks which are widely studied in theoretical and empirical work hold valuable information for the optimal design of social insurance

baseline projections of energy and emissions in asia this paper analyzes the projected development of energy systems in the asia region in the hypothetical absence of future carbon policies baseline scenarios prepared by participating teams in the asia modeling exercise are used to generate a comprehensive assessment of the key drivers of co2 emissions for the next several decades especially for china and india we find a very wide range of projected emissions paths across the models and identify per capita income and energy intensity as the two major factors responsible for the variation while the range of assumptions for growth in the former is roughly consistent with historical experience in other asian economies models foresee faster reductions in the latter with respect to those observed in neighboring countries at similar stages of economic development on the other hand there is a considerable agreement on the evolution of the energy technology mix which is assumed to continue to be dominated by fossil fuels in the foreseeable future

worker displacement and the added worker effect this article examines the added worker effect which is the labor supply response of wives to their husbands job losses unlike past studies which focused on the husbands current unemployment status this article analyzes wives responses before and after job losses to examine the life cycle labor supply adjustments using panel study of income dynamics data reveals small predisplacement effects and large persistent postdisplacement effects the timing of the responses differs with type of displacement possibly because of differences in the information acquired before job loss long run labor supply increases compensate for over 25 of the husbands lost income

comparing model results to national climate policy goals results from the asia modeling exercise abstract while the world has yet to adopt a single unified policy to limit climate change many countries and regions have adopted energy and climate policies that have implications for global emissions in this paper we discuss a few key policies and how they are included in a set of 23 energy and integrated assessment models that participated in the asia modeling exercise we also compare results from these models for a small set of stylized scenarios to the pledges made as part of the copenhagen accord and the goals stated by the major economies forum we find that the targets outlined by the united states the european union japan and korea require significant policy action in most of the models analyzed for most of the models in the study however the goals outlined by india are met without any climate policy the stringency of climate policy required to meet china s copenhagen pledges varies across models and accounting methodologies

the benefit from reduced energy import bills and the importance of energy prices in ghg reduction scenarios abstract the poles energy model has been used to assess asia s role in combating climate change and the benefits it stands to gain this paper focuses on the role of major asian economies in the global effort to reduce greenhouse gas emissions and the benefits to their economies from reduced energy import bills the costs of reaching ambitious emission reduction targets are offset by significant ancillary benefits such as reduced energy import bills lower energy prices account for a share of the import bill reductions

decomposing the impact of alternative technology sets on future carbon emissions growth abstract what are the drivers of future global carbon dioxide co 2 emissions growth and how would the availability of key energy supply technologies change their relative importance in this paper we apply a novel index number decomposition technique to the results of a multi region multi sector computable general equilibrium model to quantify the influence of five factors on the growth of future carbon emissions 1 growth in global economic activity 2 shifts in the regional composition of gross world product 3 shifts in the sectoral composition of regions gdp 4 changes in sectors energy output ratios and 5 changes in the co 2 intensity of energy sources we elucidate how the relative importance of these factors changes in response to the imposition of a global carbon tax and alternative assumptions about the future availability of key energy supply technologies rising global economic activity and shifts in regional composition put upward pressure on emissions while changes in energy and emission intensity and the sectoral output mix have attenuating effects a global emission tax that increases over time slows economic expansion and shifts the fuel mix with the most pronounced impacts on china india and russia limited availability of carbon capture and storage nuclear and hydroelectric generation all lead to upward shifts in the long run marginal abatement cost curve causing some countries to choose to pay the tax rather than abate

ambiguity made precise a comparative foundation the theory of subjective expected utility has been recently extended to allow ambiguity to matter for choice we propose a notion of absolute ambiguity aversion by building on a notion of comparative ambiguity aversion we characterize it for a preference model which encompasses some of the most popular models in the literature we next build on these ideas to provide a definition of unambiguous act and event and show the characterization of the latter as an illustration we consider the classical ellsberg 3 color urn problem and find that the notions developed in the paper provide intuitive answers journal of economic literature classification number d81

income after job loss the role of the family and the welfare state that displaced workers suffer long lasting earnings losses is a stylized fact raising the question whether these losses are replaced by other means for married men increased labour supply by the wife may be one way another possibility is that the public welfare system offsets the same losses i used a swedish longitudinal data set containing married couples where the husband was either employed or made redundant in 1987 by an establishment closure there was no evidence that husbands job loss positively affected wives annual earnings although husbands utilization of unemployment insurance increased significantly government transfers including also sickness insurance disability insurance and means tested social benefits did not fully replace husbands long run earnings losses hence displaced workers seem to suffer also from long lasting losses in family income which in many respects is a better measure of economic welfare than individual earnings or wages

employment constraints and the labor supply of married women a reexamination of the added worker effect little evidence is found to support the conventional notion of the added worker effect the husband s unemployment has no measurable impact on the wife s actual hours of work however the constraint on his ability to supply hours of work to the labor market and not simply his unemployment influences his wife s labor supply furthermore the observed hours of work of the wife may not accurately reflect her desired hours of work with these considerations the wife s labor supply is found to be positively associated with the unemployment and underemployment of her husband and this added worker effect is estimated to be quite substantial

corrigendum on a life cycle model of female labour supply in the empirical work in our article on the intertemporal substitution of leisure time for married women heckman and macurdy 1980 we inadvertently constrained the estimated intertemporal substitution elasticity to be too high since this parameter plays a prominent role in discussions of equilibrium models of the business cycle and since our empirical work has been cited in discussions on this topic e g hall 1980 we would like to present a corrected set of empirical results for our model the period t utility function adopted in this note is in the notation of our original paper equation 15

estimation of a labour supply model with censoring due to unemployment and underemployment this study proposes and implements a method of labour supply estimation which is appropriate when the sample contains unemployed and underemployed workers the estimation method consists of excluding unemployed and underemployed workers from the sample and then using to avoid selection bias an extension of heckman s approach to the case where two correlated selection rules generate the sample hausman s specification test is then used to determine whether ignoring constrained workers has led to biases in traditional labour supply estimates and the empirical results suggest that previous estimates of several important parameters are biased since the biases go in the direction that would be predicted by the hypothesis that the unemployed and underemployed are constrained the results support this hypothesis