choice under uncertainty a model of applications for the social security disability insurance program abstract not all people with health problems are disabled some individuals with severe physical or mental impairments such as blindness or limb amputation continue to hold jobs and generally function satisfactorily they constitute however a group of potentially disabled individuals who might apply and qualify for disability insurance or other disability related benifits if they were to lose their jobs or to decide that employment offered an inadequate financial or non pecuniary reward thus disability or a health related inability to work is more than a medical problem but involves motivational and attitudinal factors we specify a model of the application process which we model as choice under uncertainty about approval of an application for disability insurance we specify the possible outcomes to the choice process of an individual in which the probability of acceptance for disability insurance is a key consideration we then estimate a joint model of labor supply and application to the disability insurance program based on the 1972 survey we then compare our results to the observed time series applications process since 1976 lastly we estimate the sensitivity of the application process to the probability of acceptance and the level of benifits

weak ties information and influence how workers find jobs in a local russian labor market in 1973 granovetter formulated the strength of weak ties hypothesis swt which became the foundation of a vast sociological literature on social networks in labor markets until now swt has neve

the decline in male labor force participation comment in an article in thisjournal parsons 1980a analyzes the doubling in the rate of nonparticipation in the labor force of older men since 1946 using cross sectional data from the national longitudinal survey parnes et al 1970 in an index function model of the labor force participation decision he tests the assertion that the withdrawal of older males is attributable to the rapid expansion of alternatives to work provided by the social security disability insurance ssdi program he reports an elasticity of nonparticipation with respect to the replacement rate of ssdi benefits of 631 and concludes that the recent decline in labor force participation can be largely explained by the increased generosity of social welfare transfers particularly social security disability payments p 130 the magnitude of parsons s estimate and its impact on the public debate over disability transfer policy require careful scrutiny of its basis in section i we describe parsons s econometric model and construction of variables in section ii we provide a critique in section iii we test the robustness of parsons s elasticity estimate by presenting alternative estimates based on corrections and extensions of his basic model section iv concludes

social security disability insurance applications awards and lifetime income flows this article provides new evidence about the impact of social security disability insurance on male labor force participation decisions based on estimates from a structural model of applications awards and state contingent lifetime income flows the lifetime framework makes it possible to consider long term opportunity costs associated with early labor force withdrawal and the disincentive to applications resulting from the statutory waiting period before benefits may be received estimation techniques account for the self selected nature of the pool of applicants when predicting the individual specific probability of acceptance and the opportunity costs of applying

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

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

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

crime and social interactions the high variance of crime rates across time and space is one of the oldest puzzles in the social sciences this variance appears too high to be explained by changes in the exogenous costs and benefits of crime we present a model where social interactions create enough covariance across individuals to explain the high cross city variance of crime rates this model provides an index of social interactions which suggests that the amount of social interactions is highest in petty crimes moderate in more serious crimes and almost negligible in murder and rape

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

the retirement health nexus a new measure of an old puzzle traditional empirical models of retirement which use a self assessed health measure have often found that the wage rate has a surprisingly small effect on retirement using both a self reported health measure and one not based on self report subsequent mortality experience in a more general reduced form joint demand framework we test the importance of the interaction effects of health and retirement our findings are consistent with a joint determination of health and retirement the wage elasticity using either health measure is about equal to that found in a single equation model when a mortality measure is used but all three elasticities are five times greater than one found using self reported health in a traditional single equation model

the economic consequences of social network structure we survey the literature on the economic consequences of the structure of social networks we develop a taxonomy of macro and micro characteristics of social interaction networks and discuss both the theoretical and empirical findings concerning the role of those characteristics in determining learning diffusion decisions and resulting behaviors we also discuss the challenges of accounting for the endogeneity of networks in assessing the relationship between the patterns of interactions and behaviors

the economic implications of public disability insurance in the united states a review of previous analyses of labor supply effects of social security disability insurance di concludes that estimates of labor supply effects and net social costs are upward biased because they ignore interactions between di and other insurances a model of optimal insurance postinjury accommodations and labor supply shows that reduction in labor supply and increase in consumption when disabled do not necessarily imply moral hazard optimal postinjury accommodations vary inversely with firm size the americans with disabilities act will reduce wages and labor supply of healthy workers particularly in small firms effects on labor supply of the disabled are ambiguous

involuntary unemployment and non compensating wage differentials in an experimental labour market in this paper the authors report the results of a series of efficiency wage experiments some of the key predictions of the efficiency wage hypothesis are qualitatively confirmed by the data higher wages caused a reduction in shirking firms offered contracts which exhibited positive job rents firms offered systematically different wages and job rents which gave rise to noncompensating income differentials and endogenous involuntary unemployment occurred copyright 1996 by royal economic society

informal hiring and income in the labor market this note explores the generalizability of the conventional belief that jobs found through weak social ties and through work related social ties provide higher incomes than jobs found through other means data are analyzed from a sample which is representative of a complete cross section of a large metropolitan labor market the results show that zero order relationships generalize in most instances to broadly defined populations however the effectiveness of weakly tied and work related informal contacts becomes greatly diminished when controls are added for measures of worker productivity characteristics

measuring the effect of disability on labor force participation this paper estimates the effect of disability on labor force participation by using symptoms or diseases as instruments in a simultaneous equations model of endogenous reported disability and labor force participation the results show that each measure of disability explains a significant amount of variation in labor force participation though the two are not perfect substitutes there is only weak evidence of endogeneity of the disability variables for cases where there is evidence of endogeneity the bias it causes has the opposite effect of that hypothesized in the literatute i e stress causes health to deteriorate with labor force participation furthermore it has only insignificant effects on the coefficients for other variables

informal job search and black youth unemployment in this paper i analyze how young black and white unemployed jobseekers use various methods of search and the employment outcomes which result from their use the focus is on distinguishing informal search methods i e friends and relatives or direct application without referral from more formal ones in analyzing racial differences the results show that the two informal methods of search account for about 90 of the difference in employment probabilities between white and black youth this also accounts for 57 71 of the difference in unemployment rates between the two furthermore most of these results reflect differences in the ability of these methods to generate job offers as opposed to differences in search effort or job acceptance rates however our ability to explain these differences through personal family and household characteristics was generally quite limited this abstract was borrowed from another version of this item

disability earnings income and consumption using longitudinal data for the period 1968 2005 for a sample of male household heads we determine the prevalence of disability during the working years and examine how the extent of disability affects a range of outcomes including earnings income and consumption we have seven main findings first disability rates are high we divide the disabled along two dimensions based on the persistence and severity of their work limiting condition we estimate that a person reaching age 56 has a 53 percent chance of having been disabled at least once during his working years and a 19 percent chance that he has begun a chronic and severe disability second the economic consequences of disability are frequently profound ten years after disability onset a person with a chronic and severe disability on average experiences a 68 percent decline in earnings a 32 percent decline in after tax income a 22 percent decline in food and housing consumption and a 21 percent decline in food consumption third the various economic consequences differ sharply across disability groups the outcome declines for those with a chronic and severe disability are often more than twice as large as those for the average disabled fourth our findings show the partial and incomplete roles that individual savings family support and social insurance play in reducing the consumption drop that follows disability only about half of this most disabled group reports receiving social security disability insurance or supplemental security income fifth we find a noticeable fall in earnings and income prior to the onset of a reported disability consumption also falls somewhat suggesting that future disability is partially but incompletely predictable in the short run sixth time use and detailed consumption data further indicate that disability is associated with a decline in well being seventh the quantities we have estimated combined with elasticities from the literature allow us to examine the optimality of current compensation for the disabled we find that the current compensation for our most disabled group appears to be lower than is optimal

disability insurance rejection rates and the labor supply of older workers abstract we investigate the effects of trying to mitigate moral hazard in the disability insurance di program by raising the stringency of the screening process for applicants we do so by studying a dramatic increase in rejection rates for the di program in the late 1970s which varied substantially across the us states we find that each 10 rise in denial rates led to a statistically significant 2 8 fall in labor force non participation among 45 64 year old males we also find that the denial rate increases effectively targeted their incentive effects to more able individuals according to an anthropometric measure of disability

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

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

intergenerational correlation and social interactions in education we propose a dynastic model where individuals are born into an educated or uneducated environment that they inherit from their parents we study the impact of social interactions on the correlation in parent child educational status independently of any parent child interaction when the level of social interactions is decided by a social planner we show that the correlation in education status between generations decreases very fast as social interactions increase in turn when the level of social interactions is decided by the individuals themselves we show that the intergenerational correlation still decreases although less rapidly than with exogenous social interactions

does disability insurance receipt discourage work using examiner assignment to estimate causal effects of ssdi receipt abstract we present the first causal estimates of the effect of social security disability insurance benefit receipt on labor supply using all program applicants we use administrative data to matc

strong and weak ties in employment and crime this paper analyzes the interplay between social structure and information exchange in two competing activities crime and labor we consider a dynamic model in which individuals belong to mutually exclusive two person groups referred to as dyads there are multiple equilibria if jobs are badly paid and or crime is profitable unemployment benefits have to be low enough to prevent workers for staying too long in the unemployment status because they are vulnerable to crime activities if instead jobs are well paid and or crime is not profitable unemployment benefits have to be high enough to induce workers to stay unemployed rather to commit crime because they are less vulnerable to crime activities also in segregated neighborhoods characterized by high interactions between peers a policy only based on punishment and arrest will not be efficient in reducing crime it has to be accompanied by other types of policies that take into account social interactions

the economic implications of disability insurance in canada the article empirically estimates the effects of disability pensions provided under the canada quebec pension plans on the labor force participation rates of males aged 45 64 years two data sets are used one consists of pooled cross section annual time series data by province for the years 1975 83 the other consists of observations as of 1985 on 651 males in the specified age group naive estimation results from both sets of data suggest a large negative effect of pension income in the case of the micro data this effect becomes small and statistically nonsignificant when more sophisticated estimation methods are used

networks in labor markets wage and employment dynamics and inequality we present a model of labor markets that accounts for the social network through which agents hear about jobs we show that both wages and employment are positively associated a strong form of correlation across time and agents we also analyze the decisions of agents regarding staying in the labor market or dropping out if there are costs to staying in the labor market then networks of agents that start with a worse wage status will have higher drop out rates and there will be a persistent differences in wages between groups according to the starting states of their networks

the importance of the measure of health in empirical estimates of the labor supply of older men abstract when a more objective measure of health is used economic variables previously masked by self reported health measures are found to significantly affect work effort of older men this may explain differences in results of previous studies even when the same empirical specifications are used

the unemployment volatility puzzle is wage stickiness the answer i discuss the failure of the canonical search and matching model to match the cyclical volatility in the job finding rate i show that job creation in the model is influenced by wages in new matches i summarize microeconometric evidence and find that wages in new matches are volatile and consistent with the model s key predictions therefore explanations of the unemployment volatility puzzle have to preserve the cyclical volatility of wages i discuss a modification of the model based on fixed matching costs that can increase cyclical unemployment volatility and is consistent with wage flexibility in new matches

work and health after retirement a competing risks model with semiparametric unobserved heterogeneity competing risks models recognize that there may be more than one exit from a given state but they make the strong assumption that there is no correlation between unobserved heterogeneity components in each state here a competing risks model that uses a semiparametric method of estimation and controls for the correlation between unobserved heterogeneity components in each state is compared with a traditional competing risks model of exit from retirement the unobservable heterogeneity components of the competing risks are insignificantly positively correlated and the effects of policy relevant variables are changed somewhat copyright 1989 by mit press

how urbanization affect employment and social interactions we develop a model where the unemployed workers in the city can find a job either directly or through weak or strong ties we show that in denser areas individuals choose to interact with more people and meet more random encounters weak ties than in sparsely populated areas we also demonstrate that for a low urbanization level there is a unique steady state equilibrium where workers do not interact with weak ties while for a high level of urbanization there is a unique steady state equilibrium with full social interactions we show that these equilibria are usually not socially efficient when the urban population has an intermediate size because there are too few social interactions compared to the social optimum finally even when social interactions are optimal we show that there is over urbanization in equilibrium

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

spatial versus social mismatch the aim of this paper is to provide a new mechanism based on social interactions explaining why distance to jobs can have a negative impact on workers labor market outcomes especially ethnic minorities building on granovetter s idea that weak ties are superior to strong ties for providing support in getting a job we develop a model in which workers who live far away from jobs choose to have less connections to weak ties because of the lack of good public transportation in the us it is costly both in terms of time and money to commute to business centers to meet other types of people who can provide other source of information about jobs if distant minority workers mainly rely on their strong ties who are more likely to be unemployed there is then little chance for them of escaping unemployment it is therefore the separation in both the social and physical space that prevents ethnic minorities from finding a job

a dynamic model of weak and strong ties in the labor market the study develops a simple model where workers can obtain a job through either their strong or weak ties it shows that increasing the time spent with weak ties raises the employment rate of workers it also shows that when the job destruction rate or the job information rate increases workers choose to rely more on their weak ties to find a job the model is extended so unemployed workers can also learn of a vacancy directly from an employer results show that equilibrium employment and time spent with weak ties are sometimes but not in all cases positively related

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

motives behind purchasing consortia abstract although purchasing cooperation between independent companies has been practiced for a long time the phenomenon is not extensively researched especially purchasing consortiums formed by industrial companies have received relatively little attention in literature of the discipline in this paper the key results of the larger study concerning industrial consortium purchasing are presented the study was recently conducted and tested in finnish machine manufacturing industry the objective of this paper is to find out the motives behind purchasing consortia as foundations for the empirical study three theories explaining why companies form purchasing consortia are presented the results of the study indicate that two main reasons for the companies to cooperate on purchasing are the expected cost savings and the collection of information on supply markets

the impact of economic conditions on participation in disability programs evidence from the coal boom and bust abstract we examine the impact of the coal boom of the 1970 s and the coal bust of the 1980 s on disability program participation these shocks provide clear evidence that as the value of labor market participation increases disability program participation falls for the disability insurance program the elasticity of payments with respect to local earnings is between 0 3 and 0 4 and for supplemental security income the elasticity is between 0 4 and 0 7 consistent with a model where qualifying for disability programs is costly the relationship between economic conditions and program participation is much stronger for permanent than for transitory economic shocks

mobility costs frictional unemployment and efficiency with imperfect job information flows it is plausible that the distribution of job offerings becomes more attractive when there are more vacancies and more unemployed with word of mouth communication this condition is derived given this condition steady state equilibrium is not efficient with welfare increased by the introduction of unemployment compensation even though all agents are risk neutral in this way workers become more selective in the jobs they accept

impacts of social networks on floating population wages under different marketization levels empirical analysis of china s 2016 national floating population dynamic monitoring data this paper establishes a measurement model to examine the impacts of social network heterogeneity on the wages of the floating population and the different impacts under different levels of market

labor market behavior of older men abstract a three way qualitative choice model is employed to evaluate the response of men aged 62 64 to changes in expected income flows in alternative work and public transfer program options in the united states workers in this age group have three available options working accepting public early retirement benefits and private pensions or seeking and accepting public disability benefits we estimate the change in response to two income flows expected nontransfer largely labor market income and expected transfer income using the estimated responses we simulate the pattern of altered choices from two changes in the public transfer system a 20 percent decrease in benefits for early retirement and an earnings related income supplement while the reduction in early retirement benefits results in a small percentage decrease in the number of retirees the earnings supplement has a substantial positive effect on the number of older men choosing to continue working and results in both a rise in government expenditures and in family income