the beveridge curve and labour market dynamics in turkey this article investigates the dynamics of unemployment and vacancy rates in turkey during the period 1951 to 2008 by means of a beveridge curve bc the time series analysis of unemployment and vacancies as well as two other relevant labour market variables real wages and real labour productivity strongly suggests inefficiency in the turkish labour market a stable long run relationship between unemployment rate and vacancy rate is found for turkey that is the existence of a negatively sloped bc is verified the estimated turkish bc reflects the structural problems and lack of flexibility in the labour market the modified bc with real wages and labour productivity reveals that labour productivity has no significant effect on unemployment rate whereas wages have positive and significant effects on the same variable

using employer hiring behavior to test the educational signaling hypothesis this paper presents a test of the educational signaling hypothesis if employers use education as a signal in the hiring process they will rely more on education when less is otherwise known about applicants we nd that employers are more likely to lower educational standards when an informal more informative recruitment channel is used so we conclude that education is used as a signal in the hiring process

self enforcing employment contracts and business cycle fluctuations abstract this paper incorporates risk sharing employment contracts into an economy in which matching frictions characterize the labour market and in which agents cannot commit in equilibrium the terms of ongoing contracts are affected by those being negotiated in the job market because contracts must be self enforcing in this context risk sharing implies that hours worked and wages are negatively related while enforcement considerations imply the converse overall the sign of this relationship is ambiguous therefore the existence of such contracts may explain why movements in hours worked appear weakly related to those in real wages in u s aggregate data

when strong ties are strong networks and youth labour market entry the conditions under which young workers find their first real post graduation jobs are important for their future careers and insufficiently documented given their potential importance for young workers welfare to study these conditions and in particular the role played by social ties we use a swedish population wide linked employer employee data set of graduates from all levels of schooling that includes detailed information on family ties neighbourhoods schools class composition and parents and children s employers over a period covering years with both high and low unemployment together with measures of firm performance we find that strong social ties parents are an important determinant for where young workers find their first job the effects are larger if the graduate s position is weak low education bad grades during high unemployment years and when information on potential openings are likely to be scarce on the hiring side by contrast the effects are larger if the parent s position is strong long tenure high wage and if the parent s plant is more productive the youths appear to benefit from the use of strong social ties through faster access to jobs and by better labour market outcomes as measured a few years after entry in particular workers finding their entry jobs through strong social ties are considerably more likely to remain in this job while experiencing better wage growth than other entrants in the same plant firms also appear to benefit from these wage costs relative to comparable entrants starting at a lower base they also benefit on the parents side parents wage growth drops dramatically exactly at the entry of one of their children in the plant although this is a moment when firm profits tend to be growing indeed the firm side benefits appear large enough for at least small firms to increase job creation at the entry level in years when a child of one of their employees graduates

the skew risk premium in the equity index market we develop a new method for measuring moment risk premiums we find that the skew premium accounts for over 40 of the slope in the implied volatility curve in the s p 500 market skew risk is tightly related to variance risk in the sense that strategies designed to capture the one and hedge out exposure to the other earn an insignificant risk premium this provides a new testable restriction for asset pricing models trying to capture in particular disaster risk premiums we base our results on a general trading strategy by replicating contracts that swap implied for realized conditional asset moments

returns to scale in a matching model evidence from disaggregated panel data the returns to scale in the matching function play an important role in models with endogenous search effort due to positive externalities increasing returns to scale in matching can support high or low activity equilibrium in the labour market in this study we examine this issue using panel data from finnish employment offices the study finds that the results from the cobb douglas and translog specification are qualitatively different the cd specification of the matching function exhibits constant returns to scale the translog specification in turn exhibits increasing returns to scale the elasticity estimate for returns using the preferred specification and minimum and maximum sample values for job seekers and vacancies fall in the range of 1 1 to 1 6

improved estimates of higher order comoments and implications for portfolio selection in the presence of nonnormally distributed asset returns optimal portfolio selection techniques require estimates for variance covariance parameters along with estimates for higher order moments and comoments of the return distribution this is a formidable challenge that severely exacerbates the dimensionality problem already present with mean variance analysis this article extends the existing literature which has mostly focused on the covariance matrix by introducing improved estimators for the coskewness and cokurtosis parameters we find that the use of these enhanced estimates generates a significant improvement in investors welfare we also find that it is only when improved estimators are used that portfolio selection with higher order moments dominates mean variance analysis from an out of sample perspective the author 2009 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please email journals permissions oxfordjournals org oxford university press

social networks and the dynamics of labour market outcomes evidence from refugees resettled in the u s recent theoretical work suggests that social networks may play an important role in the dynamics of employment and wages across groups of individuals this paper provides empirical evidence of job information flows within social networks and the non linear relationship between social network size and labor market outcomes an extended version of the model developed by calvo armengol and jackson 2004 shows that competition can exist between network members for job referrals and investigates the dynamics between the size of a social network the tenure of network members and labor market outcomes the predictions of the model are tested empirically using a unique data set of refugees resettled in the u s from 2001 2005 the empirical strategy exploits the special institutional environment of refugee resettlement i find that a one standard deviation increase in the number of network members who have arrived in the u s one year ago lowers the probability of employment by 4 9 and the average hourly wage by 70 conversely as predicted by the model more tenured network members improve labor market outcomes for recently arrived refugees

non uniformity of job matching in a transition economy a nonparametric analysis for the czech republic this study explores the properties and development of the matching technology in the czech republic during the transition to a market economy nonparametric additive modelling allows us to assess flexible functional forms which comprise for instance ces and trans log specifications this enables us to evaluate the matching process locally for each combination of unemployment and vacancies rather than being restricted to global coefficients special interest is devoted to analysis and economic determinants of regional variation in the returns to scale of the matching function non linearities are found in the partial adjustment process of unemployment outflows and a negative coefficient on vacancies in some years moreover increasing returns to scale in job matching are found locally returns to scale are found to be negatively correlated to the share in employment in services and to outmigration positively correlated to the employment share in industry the unemployment rate and various measures of ac

the rationale of the mean standard deviation analysis skewness preference and the demand for money publisher summary this chapter discusses the rationale of the mean standard deviation analysis skewness preference and the demand for money in january 1969 issue of the review of economic studies karl borch and martin feldstein separately criticized the widely used mean variance analysis of portfolio selection borch contended that any system of upward sloping mean standard deviation e s indifference curves can be shown to be inconsistent with the basic axiom of choice under uncertainty he pointed out that one can always pick any two points on an upward sloping indifference curve to represent two bernoulli distributions with probability 1 p of gaining the same amount x in both the cases and probability p of gaining y1 in the case of one distribution and y2 in the case of the second distribution with y2 y1 if the second distribution represents the point to the northeast of the other point then by the dominance axiom the second distribution must be preferred to the first which contradicts the basic meaning of indifference curves feldstein by using a log utility function and a lognormal distribution for investment outcome showed that e s indifference curves for a risk averter need not be convex downwards though upward sloping they would change from convex to concave once the standard deviation of the outcome exceeds the mean multiplied by on the face of it this seems to suggest that risk aversion might decrease as risk is increased beyond a certain extent

who gets the job referral evidence from a social networks experiment we use recruitment into a laboratory experiment in kolkata india to analyze how job networks select individuals for employment opportunities we present evidence that individuals face a tradeoff between choosing the most qualified individual for the job and the individual who is ideal from the perspective of their social network the experiment allows randomly selected subjects to refer members of their social networks to subsequent rounds of the experiment and varies the incentive schemes offered to these participants we find that when faced with performance pay individuals are more likely to refer co workers and less likely to refer family members high ability participants who are offered performance pay recruit referrals who perform significantly better on a cognitive ability task and also prove to be more reliable as evidenced by their choices in the trust game and performance on an effort task

scale effects in markets with search estimates of aggregate matching functions may miss important scale effects in frictional labour markets because of the reactions of job seekers to scale we estimate a semi structural model of search and matching on a british sample of unemployed people testing for scale effects on the probability of receiving an offer and on the distribution of wage offers we find them only in wage offers but we also find that reservation wages rise to deliver higher post unemployment wages but not faster matches so aggregate matching functions should be unaffected by scale but wage equations should be showing them

search intensity job advertising and efficiency this paper demonstrates that if both firms and workers search the other side of the market for job matches the equilibrium rate of unemployment is likely to be too high both sides ignore a positive externality of their search when they establish a job match they remove from the market a job searcher so they save society his search costs i show that there is no feasible wage rate that can internalize this externality under fairly weak restrictions on the technology of search

pride and prejudice using ethnic sounding names and inter ethnic marriages to identify labour market discrimination labour markets discriminate against workers with particular ethnic sounding names we use non random sorting into interethnic marriage and salient differences between sephardic and ashkenazi surnames to evaluate the causal impact of sephardic affiliation on wages using the 1995 israeli census we estimate the effect of a sephardic sounding surname on wages we first compare the wages of israeli jewish males born to sephardic fathers and ashkenazi mothers sa who are more likely to carry a sephardic surname with the wages of israeli jewish males born to ashkenazi fathers and sephardic mothers as we find that israeli labor markets discriminate based on perceived ethnicity sa workers earn significantly less than their as counterparts we then exploit the custom of women to adopt their husbands surnames to disentangle actual ethnicity from the ethnicity perceived by the market consistent with ethnic discrimination based on surnames we find that it is father in law s ethnicity rather than father s ethnicity that shapes female wage rates finally we find that labor markets discriminate based on surname only when those names provide additional information about ethnicity when ethnicity can be discerned from skin tone surnames do not provide additional explanatory power with respect to wages

economic implications of using a mean var model for portfolio selection a comparison with mean variance analysis abstract we relate value at risk var to mean variance analysis and examine the economic implications of using a mean var model for portfolio selection when comparing two mean variance efficient portfolios the higher variance portfolio might have less var consequently an efficient portfolio that globally minimizes var may not exist surprisingly we show that it is plausible for certain risk averse agents to end up selecting portfolios with larger standard deviations if they switch from using variance to var as a measure of risk therefore regulators should be aware that var is not an unqualified improvement over variance as a measure of risk

the economic value of controlling for large losses in portfolio selection abstract research on asset pricing has shown that investor preferences include asymmetry and tail heaviness which affects the composition of optimal portfolios this article investigates the out of sample economic value of introducing the risk of very large losses in portfolio selection we combine mean variance analysis with conditional value at risk using the subadditivity property of conditional value at risk and we introduce a two stage method that preserves diversification while controlling for large losses we find that strategies that account both for variance and the probability of large losses outperform efficient mean variance portfolios during and after the global financial crisis

unemployment and market size without strong empirical support labour market matching models typically assume constant returns to scale in matching we construct a tractable equilibrium random matching model with a general matching technology introducing market size effects the job finding rate varies with unemployment stable steady states may occur in regions of increasing or decreasing returns and multiple equilibria are welfare ranked by market size while the standard model relies on high frequency shocks to the steady state to explain the co movement of unemployment and job finding locally decreasing returns in matching generate plausible adjustment dynamics and slower convergence lastly an extension of the hosios condition internalises search externalities

the relationship between unemployment and vacancies in australia the paper addresses the existence of an equilibrium unemployment vacancies uv relationship in australia cointegration test results suggest that no bivariate long run uv relationship exists moreover this finding fails to support the basic model of labour job search however a modified beveridge curve is proposed where it is found that a number of trivariate equilibrium relationships exist between unemployment vacancies and one other variable the replacement ratio the proportion of long term unemployed or the real wage the existence of an equilibrium relationship in the multivariate framework is due to the endogenous modelling of the un employment flows which are assumed to be exogenous in the bivariate framework of the beveridge curve

economies of scale in the australian tourism industry the measurement of economies of scale in the tourism industry has not been done to this point as tourism is not a specific industry according to international statistical standards among many industries related to tourism four sectors accommodation transport retail trade and recreational services across six states and two territories from 1997 to 2007 are studied as they contribute nearly 70 of tourism output in australia by comparing regression results from the cobb douglas c d production function and the translog production function we find that there is evidence of increasing returns in transport retail trade and recreational services at the industry level however accommodation is characterized by constant returns to scale at the industry level as accommodation is responsible for the biggest share of tourism output this suggests that overall the tourism sector is not characterized by increasing returns we also find that the degrees of returns to scale from the c d and translog product

density social networks and job search methods theory and application to egypt we first develop a theoretical model in which individuals are embedded within a network of social relationships we show that conditional on being employed the probability to find a job through social networks relative to other search methods increases and is concave with the size of the network the effects are stronger for the uneducated there is however a critical size of the network above which this probability decreases we then test empirically these theoretical findings for egypt using the 1998 labor market survey the empirical evidence supports the predictions of our theoretical model

measuring technical progress in matching models of the labour market technical progress in matching models of the labour market has not received serious attention this article examines the impact on the results of these models when an attempt is made to allow time to enter in a realistic fashion and finds that recently published results on the possibility of multiple equilibria are overturned also different parametric representations of the matching technology are compared with problems of more general forms not satisfying regularity conditions being identified while the possibility of pareto improving government intervention due to multiple equilibria arising out of increasing returns to scale cannot be supported the results suggest a role for government intervention in the labour market

peer effects and social networks in education this paper studies whether structural properties of friendship networks affect individual outcomes in education we first develop a model that shows that at the nash equilibrium the outcome of each individual embedded in a network is proportional to her katz bonacich centrality measure this measure takes into account both direct and indirect friends of each individual but puts less weight to her distant friends we then bring the model to the data by using a very detailed dataset of adolescent friendship networks we show that after controlling for observable individual characteristics and unobservable network specific factors the individual s position in a network as measured by her katz bonacich centrality is a key determinant of her level of activity a standard deviation increase in the katz bonacich centrality increases the pupil school performance by more than 7 percent of one standard deviation

is there compelling evidence against increasing returns to matching in the labour market matching models of the labour market have been of particular interest in macroeconomics where the notion of thick market externalities can lead to multiple equilibria this has led to some recent interest in constructing empirical estimates of labor market matching functions this paper argues that existing estimates do not provide compelling evidence against the hypothesis of increasing returns in matching the assumption made in several studies that the relevant pool of job searchers is proportional to the stock of unemployment is a potentially important source of downward bias in returns to scale estimates we show the source of this bias theoretically and illustrate its magnitude by estimating canadian aggregate and regional labour market matching functions over the period 1978 88 this evidence suggests significant increasing returns to labor market matching

social contacts and occupational choice social contacts help workers to find jobs but those jobs need not be in the occupations where workers are most productive hence social contacts can generate mismatch between a worker s occupational choice and his comparative productive advantage thus economies with dense social networks can exhibit apparently low labor force quality and as a result low returns to firms investment and depressed aggregate productivity we employ us and european data for the 1990 s to test the key prediction that social contacts distort workers occupational choices in a direction that reduces their apparent productivity we find that the use of social contacts helps find jobs one to two months sooner but leads to individual wage discounts of 5 to 7 and produces negative externalities on aggregate productivity

bank business models regulation and the role of financial market participants in the global financial crisis the recent financial crisis shone a spotlight on several key issues bank regulation bank models and the relationship between traditional banking the interbank markets and the markets for complex financial derivatives indeed the role that derivatives such as credit default swaps and collateralised debt obligations played in the credit bubble and the subsequent credit crunch may appear to have made this financial crisis unique however the fundamental cause of this crisis which led directly to the worst global recession since the 1930s is all too familiar ultimately too much money was lent to too many people who could not afford to pay it back it was a classic bank crisis of over lending but this time on a global scale

marketplaces and matching this paper models equilibrium trading patterns when marketplaces exist and goods are differentiated when first visiting the market a buyer samples a stock of goods if fortunate the buyer matches with and purchases one of these goods and then exits the market if an initial match does not exist the buyer can now only match with the flow of new goods for sale the previous stock has been sampled and rejected in a steady state the current stock of unmatched traders on one side of the market is trying to match with the flow of new traders on the other side it is shown that this market behaviour describes matching patterns between unemployed job seekers and vacancies in uk job centres

job information networks neighborhood effects and inequality this paper explores the theoretical and empirical literature to examine the use by different social groups of informal sources of information provided by friends relatives and acquaintances during job search and its consequences for the job market it also addresses the role of network structure and size the resource endowments of contacts and nature of the links between contacts to explain differences in the effects of job information networks in doing so the paper also turns to the sociology literature on job information networks and provides an economic perspective on such sociological concepts as strong versus weak ties inbreeding distance from structural holes etc the paper distinguishes between models of exogenous job information networks that is where individuals obtain job related information through a given social structure and endogenous job information networks which are social networks that result from individuals uncoordinated actions the paper pays special attention to such issues as physical and social proximity and sharing of information and discusses them in the context of the recent social interactions and neighborhood effects literature finally the paper outlines a model that integrates job information networks where interactions occur in business cycle frequencies with the dynamics of human capital formation which include the joint effects of parental community and neighborhood human capital and are set in life cycle frequencies for the purpose of organizing suggestions for future research and examining earned income inequality

do friends and relatives really help in getting a good job informal contacts are extensively used by both firms and workers to find jobs and fill vacancies the common wisdom in the economic literature is that jobs created through this channel are of better quality and pay higher wages than jobs created through formal methods this paper explores the empirical evidence for european countries using the european community household panel echp and discovers a large cross country as well as cross industry variation in the wage differentials between jobs found through informal and formal methods across countries and industries wage premiums and wage penalties to finding jobs through personal contacts are equally frequent this paper argues that such variation can be explained by looking at firms recruitment strategies in labour markets where employers invest largely in formal recruitment activities matches created through this channel are likely to be of average better quality than those created through informal networks a simple theoretical model is used to show that employers invest more in recruitment for high productivity jobs and for positions that require considerable training the empirical predictions of the theory are successfully tested using industry level data on recruitment costs

with a little help from my friends quality of social networks job finding and job match quality this paper studies the effect of network quality on job finding and job match quality using longitudinal data and a direct measure of network quality which is based on the employment of friendship ties various identification strategies provide robust evidence that a higher number of employed contacts increases the job finding rate network quality also increases wages for high skilled workers forming networks with non familial contacts instead for low skilled workers more employed familial contacts lead to a negative but not significant effect on wages these findings reconcile previous mixed evidence of network effects on wages indicating heterogeneity by skill level and relationship type

people i know job search and social networks we assess the strength of information spillovers relating unemployment duration of workers displaced by firm closures to their former colleagues current employment status displaced specific networks are recovered from a 20 year panel of matched employer employee data spillovers are identified by comparing performances of codisplaced workers a one standard deviation increase in the network employment rate reduces unemployment duration by about 8 the effect is magnified if contacts recently searched for a job and if their current employer is spatially and technologically closer to the displaced worker stronger ties and lower competition for information favor reemployment several indirect tests exclude other interaction mechanisms

why are similar workers paid differently the role of social networks abstract we provide a matching model where identical workers are embedded in ex ante identical social networks job arrival rate is endogenous and wages are bargained we study the evolution of networks over time and characterize the equilibrium distribution of unemployment rates across networks within our framework wage dispersion arises endogenously as the consequence of the dynamics of networks firms strategies and wage bargaining we show that networks induce new search externalities which shape the dynamics of the labor market our endogenous framework allows us to quantify these effects

migration remittances and capital accumulation evidence from rural mexico this paper studies the link between migration remittances and productive assets accumulation for a panel of poor rural households in mexico over the period 19972006 in a context of nancial markets imperfections migration may act as a substitute for imperfect credit and insurance provision through remittances from migrants and thus exert a positive eect on investment however it may well be the case that remittances are channelled towards increasing consumption and leisure goods exploiting within family variation and an instrumental variable strategy we show that migration indeed accelerates productive assets accumulation moreover when we look at the eect of migration on consumption of non productive assets durable goods we nd instead a negative eect our results then suggest that

do neighborhoods affect hours worked evidence from longitudinal data using a confidential version of the nlsy79 we estimate large effects of neighborhood social characteristics and job proximity on labor market activity a variety of neighborhood social characteristics are associated with less market work social characteristics have nonlinear effects with the greatest impact in the worst neighborhoods social characteristics are also more important for less educated workers exploiting the panel aspects of our data we find that estimates that do not account for neighborhood selection on the basis of time invariant and time varying unobserved individual characteristics substantially overstate the social effects of neighborhoods but understate the effects of job access

costly search and recruiting a labor market model with costly search and recruiting is constructed it incorporates many features found in other models and provides new insights into the effects of externalities and transaction costs the model possesses a continuum of equilibria some of which may be pareto ranked with different rates of unemployment despite the multiplicity of equilibria comparative statics results are obtained copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

principles of network development and evolution an experimental study this paper reports on an experimental investigation of the evolution of networks and the individual decision making processes that guide it inasmuch as there is no history of experimental work on network formation part of the paper is devoted to the formulation of problems that can be examined experimentally the results are that networks composed of decentralized decision makers are capable of overcoming complex coordination and learning problems and converge to stationary when it does not occur significant and persistent inefficiencies can result the models of equilibration based on the principle of nash equilibrium are more reliable than models based on the alternative principles of efficiency seeking or focalness of the network configuration however individual decision making within networks is not in accordance with the simple decision rules of nash best response instead we observed complicated strategies that appear to trade short term profits in order to signal to and teach other agents the strategies required for long term profit maximization

labor heterogeneity in an urban labor market abstract we construct a model of agglomeration economies in a labor market with friction and heterogeneity of both workers and firms with friction matches between workers and firms are random we show that with random matches an increase in the number of workers brings improvements in worker firm match quality and agglomeration economies emerge if and only if the technology of search exhibits increasing returns to scale we then discuss how to find out empirically whether this condition is satisfied furthermore we investigate properties of the agglomeration economies here and the relation between the city size and states of a labor market

unemployment labour markets and structural change in eastern europe labour markets in eastern europe michael burda unemployment is a major concern in the transforming economies of central and eastern europe the modern flow approach to labour markets suggests both that unemployment is an important component of the transformation process and that the labour market institutions adopted will influence the rate of unemployment in the long run to date eastern european countries exhibit considerable divergences in several of these institutions especially in unemployment benefit systems collective bargaining structures and active labour market policies an aggregate matching function is successfully estimated for data from czech and slovak employment offices emerging labour markets in the east function not so differently from those in the west the implied dynamics make both big bang and benign neglect unattractive strategies for transformation a mixed bang is more appropriate quantitative evidence about the effects on unemployment of different labour market institutions in oecd countries is used to make long term projections of equilibrium rates of unemployment in central and eastern europe given the labour market institutions now in place there with the possible exception of the czech republic high unemployment is likely to be pervasive and persistent

do parental networks pay off linking children s labor market outcomes to their parents friends this paper examines whether children are better off if their parents have stronger social networks using data on high school friendships of parents we analyze whether the number and characteristics of friends affect the labor market outcomes of children while parental friendships formed in high school appear long lasting we find no significant impact on their children s occupational choices and earnings prospects these results do not change when we account for network endogeneity network persistency and network measurement error only when children enter the labor market we find that friends of parents have a marginally significant but small influence on the occupational choice of children

endogenous job contact networks we use the uk quarterly labour force survey to document the presence of two phenomena first a positive correlation between unemployment rate and the proportion of job seekers who use social networks to nd jobs network use second a non monotone relation between unemployment rate and the proportion of recently employed workers who found their job through friends or relatives network productivity this second relation is positive for low levels of unemployment rate while it becomes negative for high levels of unemployment rate existing models of social networks and labor market generally assume that social networks are exogenous this assumption implies a negative correlation between unemployment rate and network productivity we develop a model where social networks are used to collect job oers but workers decide strategically how much to invest in their network we show that equilibrium job contact networks are dense and more productive in transmitting information when labor market turnover is moderate while they are less productive and segmented into clusters for either high or low turnover the equilibrium response of job contact networks to changes in labor market conditions is sucient to generate

returns to scale in a matching model of the labor market abstract this paper presents evidence on the degree of returns to scale in the labor market using a transcendental logarithmic model of the labor market matching technology the empirical results imply locally increasing returns to scale and are consistent with multiple equilibria thereby suggesting a potentially welfare enhancing role for macroeconomic policy intervention

ethnic enclaves and the economic success of immigrants evidence from a natural experiment recent immigrants tend to locate in ethnic enclaves within metropolitan areas the economic consequence of living in such enclaves is still an unresolved issue we use an immigrant policy initiative in sweden when government authorities distributed refugee immigrants across locales in a way that may be considered exogenous this policy initiative provides a unique natural experiment which allows us to estimate the causal effect on labor market outcomes of living in enclaves we find substantive evidence of sorting across locations when sorting is taken into account living in enclaves improves labor market outcomes for instance the earnings gain associated with a standard deviation increase in ethnic concentration is in the order of four to five percent

social network structure segregation and equality in a labor market with referral hiring abstract we examine the effects of social network structure on inequality in a model of referral hiring that focuses on groups rather than individuals more random social networks yield higher employment rates than less random ones if the population is integrated or job vacancy information flows are random however less random social networks allow for better containment of job information inside a group in a segregated population with non random job information flows resulting in higher employment rates we report on the robustness of these findings with respect to the size of minority and majority groups and the amount of social segregation

job contact networks abstract many workers hear about or obtain their jobs through friends and relatives the aim of this paper is twofold first we relate both individual and aggregate labor market outcomes to the network structure of personal contacts second we study strategic network formation to this purpose we develop a model specifying at the individual level both the decision to form contacts with other agents and the process by which information about jobs is obtained and transmitted we show that equilibrium networks always exist and that only moderate levels of network asymmetry can be sustained at equilibrium also we establish a general non monotonicity result on information flow and unemployment with respect to network size in symmetric networks

hiring through referrals abstract an equilibrium search model of the labor market is combined with a social network the key features are that the workers network transmits information about jobs and that wages and firm entry are determined endogenously empirically the inter industry variation in aggregate matching efficiency is attributed to variation in referral use the model predicts that the efficiency of the aggregate matching function is pro cyclical which is consistent with empirical evidence

bayesian learning in social networks we study the perfect bayesian equilibrium of a sequential learning model over a general social network each individual receives a signal about the underlying state of the world observes the past actions of a stochastically generated neighbourhood of individuals and chooses one of two possible actions the stochastic process generating the neighbourhoods defines the network topology we characterize pure strategy equilibria for arbitrary stochastic and deterministic social networks and characterize the conditions under which there will be asymptotic learning convergence in probability to the right action as the social network becomes large we show that when private beliefs are unbounded meaning that the implied likelihood ratios are unbounded there will be asymptotic learning as long as there is some minimal amount of expansion in observations we also characterize conditions under which there will be asymptotic learning when private beliefs are bounded

toward an integrated approach to industry dynamics and labor mobility industrial dynamics and labour mobility are two fields of economic research that have developed fast in recent years but along what are essentially separate lines this paper shows that the processes those two fields deal with can be highly interdependent and demonstrates the usefulness of and the opportunity for an integrated approach to the dynamics of industries and labour mobility it concludes with a list of questions that inform a research agenda dedicated to such approach

explaining u shape of the referral hiring pattern in a search model with heterogeneous workers this paper presents a search model with heterogeneous workers social networks and endogenous search intensity there are three job search channels costly formal applications and two costless informal channels through family and professional networks our model explains a u shape referral hiring pattern observed in empirical studies and a strong selection of workers on productivity across the three channels moreover combining family and professional referrals into one informal channel may generate a spurious result of wage premiums penalties if high low productivity workers are dominating in the empirical data and their productivity is not fully observable to the econometrician

wages and employment in a random social network with arbitrary degree distribution this discussion paper resulted in an article in the american economic review 2006 volume 96 issue 2 pages 270 274 empirical studies of labor markets show that social contacts are an important source of job related information ioannides and loury 2004 at the same time wage differences among workers may be explained only in part by differences in individual background characteristics such findings motivate our model in which differences in social connectedness among otherwise identical workers result in wage inequality and differences in unemployment rates the paper is related to theoretical contributions by calvo armengol and jackson 2004 and calvo armengol and zenou 2005 and builds on the pissarides 2000 model workers may hear about job openings directly from employers or through their social contacts we go further by introducing heterogeneity in the number of contacts each worker has with others i e in the workers degree we utilize results from the technical literature on random graphs with arbitrary degree distributions newman 2003a to account for a consequence of workers receiving information about job openings from their social contacts they compete with their social contacts other contacts for social networks with arbitrary degree distributions we show that people who are better connected receive a higher wage on average and face a lower unemployment rate numerical computations for the specific case in which connections follow a poisson distribution show that variability in connections can result in substantial variation in the above labor market outcomes this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item

frontier estimation and firm specific inefficiency measures in the presence of heteroscedasticity the purpose of this article is to illustrate a straightforward and useful method for addressing the problem of heteroscedasticity in the estimation of frontiers a heteroscedastic cost frontier model is developed and estimated using bank cost data similar to that used by ferrier and lovell our results show dramatic changes in the estimated cost frontier and in the inefficiency measures when accounting for heteroscedasticity in the estimation process we find that the rankings of firms by their inefficiency measures is affected markedly by the correction for heteroscedasticity but not by alternative distributional assumptions about the one sided error term

rational expectations business cycles in search equilibrium we examine the rational expectations equilibrium paths of the model of search and barter in diamond s aggregate demand management in search equilibrium for some initial positions there are two equilibrium paths converging to different steady states with the high activity path pareto dominating the low activity path with some parameters there is also a continuum of equilibrium paths converging to another steady state moreover there can be cycles that are equilibrium paths even though the environment is stationary

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

the effects of social networks on employment and inequality we develop a model where agents obtain information about job opportunities through an explicitly modeled network of social contacts we show that employment is positively correlated across time and agents moreover unemployment exhibits duration dependence the probability of obtaining a job decreases in the length of time that an agent has been unemployed finally we examine inequality between two groups if staying in the labor market is costly and one group starts with a worse employment status then that group s drop out rate will be higher and their employment prospects will be persistently below that of the other group

referral based job search networks this article derives novel testable implications of referral based job search networks in which employees provide employers with information about potential new hires that they otherwise would not have using comprehensive matched employer employee data covering the entire workforce in one large metropolitan labour market combined with unique survey data linked to administrative records we provide evidence that workers earn higher wages and are less inclined to leave their firms if they have obtained their job through a referral these effects are particularly strong at the beginning of the employment relationship and decline with tenure in the firm suggesting that firms and workers learn about workers productivity over time overall our findings imply that job search networks help to reduce informational deficiencies in the labour market and lead to productivity gains for workers and firms

search method use by unemployed youth this article presents a search model which shows that search method choices should be related to their costs and expected productivities as well as to nonwage income and wage offer distributions the empirical evidence then shows that the most frequently used search methods i e friends and relatives and direct applications without referral are also the most productive in generating offers and acceptances the number of methods used is affected by factors that presumably reflect opportunities as well as income sources and needs specific methods are chosen in a manner that generates positive average effects on outcomes for those using them

measuring information in the market an application to physician services ever since stigler s 47 seminal piece on the economics of information there has been a great deal of research investigating equilibrium in markets with imperfect information while most of this research has been concerned with theoretically establishing the conditions under which there exists a distribution of prices in equilibrium the field now contains a small but growing body of empirical research this work has followed the suggestion of stigler and utilized the dispersion of prices usually the variance as a measure of incomplete information about price such as stigler 47 stigler and kindahl 49 pratt wise and zeckhauser 44 carlson and pescatrice 12 marvel 34 mathewson 35 cox deserpa and canby 13 dahlby and west 14 van hoomissen 51 and lach and tsiddon 29 there are two disadvantages to using the variance or another measure of dispersion such as the range of prices as a measure of incomplete information about price the first disadvantage recognized by stigler and others is that price can vary for many reasons other than incomplete information thus dispersion is not a pure measure of incomplete information about prices the second disadvantage which has not been commonly recognized in the empirical literature is that price dispersion encompasses incomplete information both on the part of buyers and sellers as indicated by rothschild 45 axell 4 butters 9 and telser 50 and hence fails to distinguish between these two components in this paper we propose a method for measuring incomplete information about price which

the estimation of frictional unemployment a stochastic frontier approach this paper reports an estimate of the frictional unemployment rate in u s manufacturing that is derived from a parametric statistical method for estimating stochastic frontiers the steady state perfect foresight solution to an estimated employment growth frontier provides a locus of technically efficient frictional rates of unemployment the mean frictional unemployment rate during the sample period is estimated to be 3 7 percent of the manufacturing labor force this estimate conforms closely to an estimate of 3 5 percent that is derived from manufacturing sector data presented by david m lilien 1980 for roughly the same time period copyright 1991 by mit press

old boy networks as screening mechanisms this paper studies a fulfilled expectations equilibrium in situations in which intermediaries provide personal opinions on the likelihood of success of personnel projects or investments each referee must recommend some candidates from a group of people about whom he has private information the employer uses the recommendations to choose the workers using his expectations about the quality of the recommended and the nonrecommended applicants although the referees use their information strategically the competition among them produces optimal use of the information in the sense that employers make the same choices in equilibrium as they would if they had the same information as the referees

job search and network composition implications of the strength of weak ties hypothesis workers find jobs through personal contacts weak and strong ties and formal sources alternative formulations of the strength of weak ties hypothesis suggest 1 weak ties relay job offers more frequently than strong ties or 2 weak tie offers are drawn from a better distribution a formal model shows that both formulations imply a correlation between network composition and a job seeker s minimum acceptable wage however the use of a weak tie is never associated with higher expected wages under the firstformulation and is only sometimes associated with higher expected wages under the secondformulation these results suggest that researchers shouldfocus on job seekers network structures

conditional value at risk spectral risk measures and non diversification in portfolio selection problems a comparison with mean variance analysis abstract we study portfolio selection under conditional value at risk and as its natural extension spectral risk measures and compare it with traditional mean variance analysis unlike the previous literature that considers an investor s mean spectral risk preferences for the choice of optimal portfolios only implicitly we explicitly model these preferences in the form of a so called spectral utility function within this more general framework spectral risk measures tend towards corner solutions if a risk free asset exists diversification is never optimal similarly without a risk free asset only limited diversification is obtained the reason is that spectral risk measures are based on a regulatory concept of diversification that differs fundamentally from the reward risk tradeoff underlying the mean variance framework

the long term effects of youth unemployment using nlsy data we examine the long term effects of youth unemployment on later labor market outcomes involuntary unemployment may yield suboptimal investments in human capital in the short run a theoretical model of dynamic human capital investment predicts a rational catch up response using semiparametric techniques to control for the endogeneity of prior behavior our estimates provide strong evidence of this response we also find evidence of persistence in unemployment combining our semiparametric estimates with a dynamic approximation to the lifecycle we find that unemployment experienced as long ago as ten years continues to affect earnings adversely despite the catch up response

employment wages and alcohol consumption in russia 1 introductionconcerns regarding the relationship between alcohol consumption and labor market productivity are well grounded if problem drinking or alcoholism is considered a disease then it may have depressant effects on labor market productivity causing reductions in employment earnings and other labor market outcomes mullahy and sindelar 1993 1996 kenkel and ribar 1994 however there is a medical literature that documents a u shaped relationship between alcohol consumption and the risk of cardiovascular disease according to this literature moderate drinkers have a lower risk of cardiovascular disease than do either abstainers or heavy drinkers beaglehole and jackson 1992 doll et al 1994 consistent with this evidence several economists have found a positive association between moderate drinking and earnings berger and leigh 1988 french and zarkin 1995 heien 1996 hamilton and hamilton 1997 zarkin et al 1998 macdonald and shields 2001 this article investigates the impact of alcohol consumption on employment and wages in russia the primary contributions of the article are twofold first it enhances the economic literature on the relationship between alcohol consumption and labor market behavior by using data from a longitudinal survey the use of a longitudinal data set enables the estimation of a fixed effects model which helps avoid the potential bias caused by unobserved individual factors not captured in cross sectional models the use of a fixed effects model is an important extension to the literature because the data sets used in previous studies are cross sectional and usually lack adequate variables that could serve as identifying instruments to control for the endogeneity of alcohol consumption 1 furthermore the richness of the data set used in this article allows for the application of three alternative measures of alcohol consumption in the empirical analysis this is important because the relationship between alcohol consumption and labor market outcomes may be sensitive to the alcohol measure that is used the second notable contribution of this article is that it provides the first empirical evidence on the association between alcohol consumption and labor market outcomes in russia excessive alcohol consumption is a widespread problem in russia where per capita alcohol consumption is around 14 liters per year the world health organization who considers 8 liters to be a sign that a country has a critical consumption level for health problems quinn judge 1997 furthermore the dramatic fluctuations in mortality rates experienced in russia over the past 15 years have generated considerable attention to the potential effect of alcohol consumption on the overall health of the russian population it is important to investigate how labor market outcomes would be affected by alcohol consumption in a country which demonstrates such dramatic fluctuations in alcohol consumption and mortality consistent with the previous studies cross sectional results generally support the hypothesis of an inverse u shaped relationship between alcohol consumption and wages and employment results from the fixed effect models are found to be quite different from those of cross sectional models the positive effect of alcohol consumption on employment disappears for both males and females once the individual fixed effects are controlled for the results of the wage model lend support to a small and linear return to alcohol consumption but the effects are significant only at the 10 level the fixed effects estimates are smaller in magnitude and estimated with less precision compared with cross sectional estimates section 2 reviews the previous literature section 3 discusses the conceptual issues and empirical strategy section 4 introduces the data set section 5 provides a discussion of the results and sensitivity analyses section 6 concludes the article

personal networks and nonagricultural employment the case of a farming village in the philippines abstract this article based on an intensive village survey in the philippines analyzes the effects of personal networks on rural villagers access to nonagricultural occupations and the terms of employment given to them a key finding is that personal networks are selectively used to reduce transaction costs and their impacts on employment conditions vary by size and by location of enterprises we find that when villagers are employed in unskilled work at small enterprises those who use family relative networks receive wage premiums however if we limit our sample to small enterprises located near our study village the family relative network premiums become insignificant presumably because of the overriding influence of the community wide network within a narrow local community contrary to the case of small enterprises unskilled workers wages at large enterprises are not much affected by personal networks but are largely determined by years of schooling and work experience the recent developmen

networks in the modern economy mexican migrants in the u s labor market this paper attempts to identify job networks among mexican migrants in the u s labor market the empirical analysis uses data on migration patterns and labor market outcomes based on a sample of individuals belonging to multiple origin communities in mexico over a long period of time each community s network is measured by the proportion of the sampled individuals who are located at the destination the united states in any year we verify that the same individual is more likely to be employed and to hold a higher paying nonagricultural job when his network is exogenously larger by including individual fixed effects in the employment and occupation regressions and by using rainfall in the origin community as an instrument for the size of the network at the destination

the determinants of equilibrium unemployment the paper takes the search and matching model of the aggregate labor market to the data it tests the model s empirical validity and employs structural estimation to generate a characterization of the optimal behavior of firms and workers the model is applied to israeli data that are uniquely suited for this kind of empirical investigation the structural estimates are used to quantify the frictions embodied in the model including the costs of search the congestion and trading externality effects and the matching process a calibration simulation analysis then studies the effect of several key variables on equilibrium unemployment

matching finding a partner for life or otherwise how do job worker and husband wife relationships form and why do some matched pairs subsequently separate economists and game theorists are in the process of developing and applying an equilibrium explanation of match formation and separation based on the principle of voluntary pairing under competitive conditions the purpose of this paper is to assess the current state of these developments the general existence of patnership structures with the property that no one has an incentive to separate has been established these equilibrium structures maximize aggregate value over the set of all feasible match structures in the transferable utility case according to this pure theory of matching competition for partners can be expected to yield equilibrium match structures that are both stable and socially efficient at least under conditions of frictionless certainty search theoretic models that take account of meeting costs and initial uncertainty about match values have been developed to explain sepa

some contacts are more equal than others informal networks job tenure and wages the explanation typically given for longer tenure among workers who use informal contacts to find jobs is that relatives and friends reduce uncertainty about the quality of the match between worker and employer an alternative explanation is that workers rely on informal information sources as a last resort such workers remain at their current jobs mainly because they have few alternative choices rather than because of better match quality this article shows that the two different explanations are simultaneously valid for different types of contacts and can account for differences in the wage effects of job contacts

business cycles with costly search and recruiting a business cycle model is developed in which output is traded on lucas phelps islands and labor services on each island are exchanged through costly search and recruiting with transactions externalities the model exhibits persistent involuntary unemployment and inefficient equilibria even though there are no nominal rigidities and no unexploited privately attainable gains from trade it also exhibits employment fluctuations without any real wage fluctuations it yields a lucas aggregate supply curve to a linear approximation it also implies that the natural rate of unemployment depends positively upon the variability and persistence of relative price shocks

asset market linkages in crisis periods we characterize asset return linkages during periods of stress by an extremal dependence measure contrary to correlation analysis this nonparametric measure is not predisposed toward the normal distribution and can allow for nonlinear relationships our estimates for the g 5 countries suggest that simultaneous crashes between stock markets are much more likely than between bond markets however for the assessment of financial system stability the widely disregarded cross asset perspective is particularly important for example our data show that stock bond contagion is approximately as frequent as flight to quality from stocks into bonds extreme cross border linkages are surprisingly similar to national linkages illustrating a potential downside to international financial integration

regional dependencies in job creation an efficiency analysis for western germany this paper investigates the efficiency of the matching process between job seekers and vacancy posting firms in west germany using variation across labour market regions and across time the results of a stochastic frontier analysis shed new light on the extent of and regional differences in search frictions on potential determinants of frictional inefficiencies and on the consequences of german reunification for the matching process the paper also presents novel evidence on the complex interactions between spatial contingencies among regional labour markets matching efficiency decreases with spatial autocorrelation in hiring implying indirect evidence for crowding externalities

matchmaker matchmaker the effect of old boy networks on job match quality earnings and tenure firms often view job applicant referrals from current employees as more informative than direct applications or referrals through formal labor market intermediaries such as placement firms we argue that old boy networks reduce employers uncertainty about worker productivity using jovanovic s job matching model we show that workers hired through the old boy network should 1 earn higher initial salaries 2 experience lower subsequent wage growth on the job and 3 stay on the job longer than otherwise comparable workers hired from outside the network we find considerable support for this theory using data from the 1972 survey of natural and social scientists and engineers