employment misclassification in survey and administrative reports abstract this paper analyses measurement error in the classification of employment using matched survey and administrative data from new zealand we show that the true employment rate and time invariant error rates can be identified given access to two measures of employment with independent errors empirical identification requires data with time varying employment rates over at least two periods we find that both measures have error with the administrative data being substantially more accurate than the survey data and false positives are much more likely than false negatives in both sources allowing for errors substantially affects estimated employment rates

the ins and outs of uk unemployment this study shows that in the uk increases in unemployment in a recession are driven by rises in the separation rate a new decomposition of unemployment dynamics is devised that does not require unemployment to be in steady state at all times this is important because low uk transition rates one quarter the size of the us imply substantial deviation of unemployment from steady state near cyclical turning points in periods of moderation the job finding rate is shown to have most influence on uk unemployment dynamics evidence comes from the first study of monthly data derived from individuals labour market spells recorded in the british household panel survey from 1988 to 2008

on the importance of the participation margin for labor market fluctuations abstract conventional analyses of labor market fluctuations ascribe a minor role to labor force participation we show by contrast that flows based analyses imply that the participation margin accounts for around one third of unemployment fluctuations a novel stock flow apparatus establishes these facts delivering three further contributions first the role of the participation margin appears robust to adjustments for spurious transitions induced by reporting error second conventional stocks based analyses are subject to a stock flow fallacy neglecting offsetting forces of worker flows on the participation rate third increases in labor force attachment among the unemployed during recessions are a leading explanation for the role of the participation margin

autonomy and procedural justice a framework for evaluating subsidiary strategy using the well supported dimensions of autonomy and procedural justice a four quadrant model of subsidiary strategy is proposed and a four part typology hypothesized partner collaborator militant and vassal subsidiaries a clustering process is used to develop a four group taxonomy that corresponds with the induced model the four groups of subsidiaries are analysed across seven alternative strategic dimensions integration responsiveness coordination configuration market scope product scope and value added scope the external and internal validity of the framework is confirmed and its utility discussed in terms of subsidiary s movement from one strategy state to another

misclassification errors and the underestimation of the us unemployment rate using recent results in the measurement error literature we show that the official u s unemployment rates substantially underestimate the true levels of unemployment due to misclassification errors in labor force status in current population surveys our closed form identification of the misclassification probabilities relies on the key assumptions that the misreporting behaviors only depend on the true values and that the true labor force status dynamics satisfy a markov type property during the period of 1996 to 2009 the corrected monthly unemployment rates are 1 to 4 6 percentage points 25 to 45 higher than the official rates and are more sensitive to changes in business cycles labor force participation rates however are not affected by this correction we also provide results for various subgroups of the u s population defined by gender race and age

the cyclicality of separation and job finding rates this paper uses cps gross flow data to analyze the business cycle dynamics of separation and job finding rates and to quantify their contributions to overall unemployment variability cyclical changes in the separation rate are negatively correlated with changes in productivity and move contemporaneously with them while the job finding rate is positively correlated with and tends to lag productivity contemporaneous fluctuations in the separation rate explain between 40 and 50 percent of fluctuations in unemployment depending on how the data are detrended this figure becomes larger when dynamic interactions between the separation and job finding rates are considered

productivity gains from unemployment insurance this paper argues that unemployment insurance increases labor productivity by encouraging workers to seek higher productivity jobs and by encouraging rms to create those jobs we use a quantitative model to investigate whether this eect is comparable in magnitude to the standard moral hazard eects of unemployment insurance our model economy captures the behavior of the u s labor market for high school graduates quite well with unemployment insurance more generous than the current u s level unemployment would increase by a magnitude similar to the micro estimates but because the composition of jobs also changes total output and welfare would increase as well

the probability of finding a job recent research has reaffirmed that the prob ability of an unemployed worker finding a job varies substantially over the business cycle robert e hall 2005 101 concludes from his examination of a variety of data sources that unemployment is high in a recession because jobs are hard to find not because more job seek ers have been dumped into the labor market by elevated separation rates shimer 2007 shows that movements in the job finding probability account for three quarters of the fluctuations in the unemployment rate in the united states during the postwar period while movements in the exit rate from employment to unemployment account for the other quarter michael w elsby ryan michaels and gary solon 2007 argue that movements in the job finding probability accounted for about 65 percent of unemploy ment fluctuations prior to the last two reces sions and more in 1990 1991 and 2001 shigeru fujita and gary ramey 2007 claim a more substantial role for the exit rate to unemploy ment but still find that the job finding probabil ity accounts for at least half of the fluctuations in unemployment while it is theoretically convenient to discuss a single job finding probability for all workers economists have long recognized that the job finding probability falls with unemployment duration hyman b kaitz 1970 this paper reexamines duration dependence and the cycli cally of duration dependence in the job finding probability both empirically and theoretically to start i develop a simple model with a single parameter that determines both how the job finding probability varies with unemployment duration and how it varies with aggregate eco nomic conditions the model s main departure from most existing research is to think of unemployed workers as waiting for labor mar ket conditions to improve rather than searching for job opportunities boyan jovanovic 1987 fernando alvarez and shimer 2007 they continuously compare their lifetime utility in the best available job with their lifetime utility if they remain unemployed individual works if this difference 8 t is positive at time t and not if it is negative if s is persistent this leads to duration dependence in the hazard rate of exiting unemployment since a newly unem ployed worker is more likely to be near the threshold for taking a job than someone who is long term unemployed the extent of dura tion dependence is governed by the stochastic process for s which also determines how the average job finding probability varies with eco nomic conditions

determinants of patent rights a cross national study abstract this paper presents an index of patent rights for 110 countries for the period 1960 1990 the index is used to examine what factors or characteristics of economies determine how strongly patent rights will be protected the evidence does indicate that more developed economies tend to provide stronger protection but the underlying factors which influence patent protection levels are the country s level of research and development r d activity market environment and international integration which are correlated with its level of development the results qualify however that r d activity influences patent protection levels after a nation s research sector reaches a critical size an implication of this is that to raise patent protection levels in weakly protecting countries it is important to foster a significant research base in those countries and thereby create incentives for protecting patent rights

r d policy productivity growth and distance to frontier using data from 20 us manufacturing industries we find strong evidence that a more generous tax treatment of r d positively impacts on the growth rate of total factor productivity and that this effect is stronger for industries farther from the technological frontier the estimates also suggest that the productivity growth effect of r d tax policy is comparable in size to that induced by technology transfers

a three state model of worker flows in general equilibrium abstract we develop a simple model featuring search frictions and a nondegenerate labor supply decision along the extensive margin the model is a standard version of the neoclassical growth model with indivisible labor and idiosyncratic productivity shocks and frictions characterized by employment loss and employment opportunity arrival shocks we argue that it is able to account for the key features of observed labor market flows for reasonable parameter values persistent idiosyncratic productivity shocks play a key role in allowing the model to match the persistence of the employment and out of the labor force states found in individual labor market histories

unemployment and interindustry labour mobility in canada in the 1980s the determinants of interindustry mobility of labour and its relationship to the unemployment rate is examined using micro data on canadian workers from 1980 81 1982 83 and 1985 86 it contrasts the implications of the dynamic reallocation model lilien 1982 in which rising aggregate unemployment is due to in creased dispersion in the net hiring rates of firms implying positive covariance of interindustry mobility and unemployment rates with the older keynesian perspective that high unemployment chills labour market mobility implying a neative relationship qualified support is obtained for the chilling model as well as standard results on the role of job tenure hours worked etc the general moral is the cyclical sensitivity of labour market behaviour i e individuals appear to react to the aggregate unemployment rate

unemployment rate dynamics and persistent unemployment under rational expectations this paper develops a model of unemployment rate dynamics that provides an explanation of persistent cyclical unemployment that does not involve persistent expectational errors or other nonoptimizing behavior our results are based on the interaction of search dynamics and inventory adjustments an important element in these dynamics appears to be heterogeneity in the labor force which can be characterized as consisting of a relatively small group of high turnover individuals who comprise the bulk of normal unemployment and a larger group of low turnover individuals who dominate movements in cyclical unemployment our empirical results provide support for this theory as we demonstrate that the appropriately measured probability of becoming employed during a recovery falls relative to normal because of the unusually high proportion of low turnover individuals who have lost permanent jobs as aresult recovery is much slower than is indicated by normal relationships although each individual is searching optimally this abstract was borrowed from another version of this item

earnings losses and labor mobility over the life cycle an extensive empirical literature has documented that workers with high tenure suffer large and persistent earnings losses when they get displaced we study the reasons behind these losses in a tractable search model with a life cycle dimension endogenous job mobility worker and match heterogeneity the model reconciles key characteristics of the u s labor market large average transition rates a large share of stable jobs and the earnings losses from displacement we decompose the earnings losses and find that only 50 result from skill losses endogenous reactions and selection account for the remainder our findings have important implications for the welfare costs of displacement and labor market policy

do labor statistics depend on how and to whom the questions are asked results from a survey experiment in tanzania labor market statistics are critical for assessing and understanding economic development however widespread variation exists in how labor statistics are collected in household surveys this paper analyzes the effects of alternative survey design on employment statistics by implementing a randomized survey experiment in tanzania two features of the survey design are assessed the level of detail of the employment questions and the type of respondent it turns out that both features have relevant and statistically significant effects on employment statistics using a short labor module without screening questions induces many individuals to adopt a broad definition of employment incorrectly including domestic duties but after reclassifying those in domestic work as not working in order to obtain the correct international labor organization ilo classification the short module turns out to generate lower female employment rates higher working hours for both men and women who are employed and lower rates of wage employment than the detailed module response by proxy rather than self report has no effect on female labor statistics but yields substantially lower male employment rates mostly due to underreporting of agricultural activity the large impacts of proxy responses on male employment rates are attenuated when proxy informants are spouses and individuals with some schooling

search frictions and labor market participation abstract cross country differences in labor market participation are often larger than differences in unemployment rates the same holds true across demographic groups within a given economy we argue that the interaction between labor force participation decisions and labor market frictions can help us understand these patterns this interaction highlights dynamic aspects of the participation decision in contrast to standard textbook treatments that emphasize static costs and benefits of participation we extend the standard labor market search problem to allow for a third state non participation and assumes that stochastic participation costs precipitate flows into and out of non participation we fully characterize the worker s decision problem and use numerical simulations to demonstrate how participation patterns vary with individual characteristics and with labor market conditions

capital accumulation and growth a new look at the empirical evidence using annual data for 75 countries in the period 1960 2000 we present evidence of a positive relationship between investment as a share of gross domestic product gdp and the long run growth rate of gdp per worker this result is robust for our full sample and for the subsample of non oecd countries but not for the subsample of oecd countries our analysis controls for time invariant country specific heterogeneity in growth rates and for a range of time varying control variables we also address endogeneity issues and allow for heterogeneity across countries in model parameters and for cross section dependence

gross worker flows over the business cycle we build a hybrid model of the aggregate labor market that features both standard labor supply forces and frictions in order to study the cyclical properties of gross worker flows across the three labor market states employment unemployment and nonparticipation our goal is to assess the relative importance of frictions and labor supply in accounting for fluctuations in labor market outcomes our parsimonious model is able to capture the key features of the cyclical movements in gross worker flows and indicates an important role for both frictions and labor supply

multinational corporations control systems and delegation issues the paper has 2 major objectives first to identify control and delegation issues confronting multinational corporation managers second to develop a conceptual model to assist multinational corporation managers in selecting appropriate control systems and determining the extent of delegation to be provided to subsidiary managers finally the paper suggests directions for future research

classification error models and labor market dynamics measurement error is often a severe problem in longitudinal data such as labor market flows two correction methods have been used for labor market flows but the methods tend to adjust the data in opposite directions one method shows a rigid labor market with long unemployment spells whereas the other shows the opposite because the methods appear theoretically similar one might interpret the differing results as an indictment of both procedures this article documents and explains the differences between the two methods more important it argues that the differences result from the reliance of one method on assumptions that are theoretically implausible and rejected by the data

u s labor market dynamics revisited the picture of u s labor market dynamics is opaque empirical studies have yielded contradictory findings and debates have emerged regarding their implications this paper aims at clarifying the picture which is important for the understanding of the operation of the labor market for the study of business cycles for the explanation of wage behavior and for the formulation of policy the paper determines what facts can be established what are their implications and what remains to be further investigated the main contributions made here are i listing of data facts that can be agreed upon these indicate that there is considerable cyclicality and volatility of both accessions to employment and separations from it hence both are important for the understanding of the business cycle ii presenting the business cycle facts of key series iii pointing to specific gaps in the data picture disparities in the measurement of the sizeable flows between employment and the pool of workers out of the labor force disagreements about the relative volatility of job finding and separation rates across data sets and the fact that the fit of the gross flows data with net employment growth data differs across studies and is not high the definite characterization of labor market dynamics depends upon the closing of these data gaps

do the effects of r d tax credits vary across industries a meta regression analysis this paper presents a survey of the micro econometric literature on the effects of r d tax credits on firms innovation activities we focus on one specific aspect that has not received sufficient attention in previous research the sectoral dimension our meta regression analysis mra sets up a new database collecting a large number of firm level studies on the effects of r d tax credits and investigates the factors that may explain differences in the estimated effects that are reported in the literature the main result of the mra analysis is indeed that sectors matter specifically the additionality effect of r d tax credits is on average stronger for smes firms in the service sectors and firms in low tech sectors in countries with an incremental scheme the paper proposes a simple framework to investigate why the innovation and economic effects of r d tax credits vary across sectors and points out new directions and hypotheses for future research

the effectiveness of r d tax credits in order to measure the effect of tax credits on private r d investment researchers confront the difficult problem of finding an exogenous measure of tax policy that exhibits sufficient variation

do extended unemployment benefits lengthen unemployment spells evidence from recent cycles in the u s labor market in response to the recession of 2007 2009 the maximum duration of u s unemployment insurance ui benefits was extended to an unprecedented 99 weeks we exploit variation in the timing and size of the ui benefit extensions across states to estimate their overall impact on unemployment exits comparing the most recent and prior extension episodes we find a small but statistically significant increase in labor force attachment due to extended ui in both periods with little or no impact on job finding despite these small estimates extended benefits can account for a substantial share of the increase in long term unemployment

the cyclicality of the separation and job finding rates in france abstract in this paper we shed light on the relative contribution of the separation and job finding rates to french unemployment at business cycle frequencies by using administrative data on registered unemployment and labor force surveys we first investigate the fluctuations in steady state unemployment and then in current unemployment in order to take into account the unemployment deviations from equilibrium both data sets lead to quite similar results both rates contributed to unemployment fluctuations during the nineties 50 50 split while in the last decade the job finding rate was more significant and explained around 65 of the french unemployment fluctuations in particular the last business cycle episode including the last recession exacerbated the role of the job finding rate we then show that the predominant role of the job finding rate in the last decade holds when the economy is hit by aggregate business cycle shocks moving unemployment and vacancies along the beveridge curve

declining us output volatility and its effect on labour flow volatility an mgarch analysis this article analyses flow rates of us workers between employment and unemployment using new quarterly data for the period 1967 to 2002 multivariate garch models are used to investigate links between flow rate volatilities the results suggest that links changed substantially in the mid 1980s coinciding with the documented decline in output volatility these changes in adjustment dynamics are consistent with a move to greater use of hours rather than worker adjustment

classification error in dynamic discrete choice models implications for female labor supply behavior two key issues in the literature on female labor supply are i whether persistence in employment status is due to unobserved heterogeneity or state dependence and ii whether fertility is exogenous to labor supply until recently the consensus was that unobserved heterogeneity is very important and fertility is endogenous hyslop 1999 challenged this using a dynamic panel probit model of female labor supply including heterogeneity and state dependence he found that adding autoregressive errors led to a substantial diminution in the importance of heterogeneity this in turn meant he could not reject that fertility is exogenous here we extend hyslop 1999 to allow classification error in employment status using an estimation procedure developed by keane and wolpin 2001 and keane and sauer 2005 we find that a fairly small amount of classification error is enough to overturn hyslop s conclusions leading to overwhelming rejection of the hypothesis of exogenous fertility

the measurement of unemployment an empirical approach although the unemployment rate is one of the most widely cited and closely monitored economic statistics the definition and measurement of unemployment remain controversial an important issue is whether non employed persons who display a marginal attachment to the labor force for example those who are available for and desire work but are not searching for work should be classified as unemployed or non participants although this issue has been extensively debated it has never been tested empirically this paper carries out empirical tests of this and related hypotheses using a unique longitudinal data set from canada we find within the marginally attached a waiting group whose behavior indicates that they would be more appropriately classified as unemployed rather than out of the labor force the remainder of the marginally attached exhibit behavior between that of the unemployed and the balance of non participants suggesting that the desire for work among non searchers conveys substantial information about labor force attachment and future employment status our methods also apply to heterogeneity within the unemployed and we investigate behavioral variation linked to differences in job search methods and reasons for entry into unemployment although those using passive job search do exhibit behavior somewhat distinct from active searchers our results reject the practice of classifying passive job searchers as out of the labor force overall our results indicate that the non employed are very heterogeneous so that any single division into unemployment and out of the labor force is unlikely to fully capture the variety of degrees of labor force attachment this abstract was borrowed from another version of this item

on the demographic adjustment of unemployment the unemployment rate is one of the most important business cycle indicators but its interpretation can be difficult because slow changes in the demographic composition of the labor force affect the level of unemployment and make comparisons across business cycles difficult to purge the unemployment rate from demographic factors labor force shares are routinely used to control for compositional changes this paper shows that this approach is ill defined because the labor force share of a demographic group is mechanically linked to that group s unemployment rate as both variables are driven by the same underlying worker flows we propose a new demographic adjustment procedure that uses a dynamic factor model for the worker flows to separate aggregate labor market forces and demographic specific trends using the u s labor market as an illustration our demographic adjusted unemployment rate indicates that the 2008 2009 recession was much more severe and generated substantially more slack than the early 1980s recession

labor search and matching in macroeconomics abstract the labor search and matching model plays a growing role in macroeconomic analysis this paper provides a critical selective survey of the literature four fundamental questions are explored how are unemployment job vacancies and employment determined as equilibrium phenomena what determines worker flows and transition rates from one labor market state to another how are wages determined what role do labor market dynamics play in explaining business cycles and growth the survey describes the basic model reviews its theoretical extensions and discusses its empirical applications in macroeconomics the model has been developed against the background of difficulties with the use of the neo classical frictionless model of the labor market in macroeconomics its success includes the modelling of labor market outcomes as equilibrium phenomena the reasonable fit of the data and when inserted into business cycle models improved performance of more general macroeconomic models at the same time there is evidence against the nash solution used for wage setting and an active debate as to the ability of the model to account for some of the cyclical facts

beggar thy neighbor the in state out of state and aggregate effects of r d tax credits abstract the proliferation of r d tax incentives among u s states in recent decades raises two questions i are these tax incentives effective in increasing in state r d ii how much of any increase is due to r d being drawn away from other states this paper answers i yes and ii nearly all the paper estimates an augmented r d factor demand model using state panel data from 1981 to 2004 i estimate that the long run elasticity of in state r d with respect to the in state user cost is about 2 5 while its elasticity with respect to out of state user costs is about 2 5 suggesting a zero sum game among states

r d tax incentives in eu countries does the impact vary with firm size this paper studies the effect of r d tax incentives on the research activity of manufacturing firms based in france italy spain and the uk over the period 2007 2009 using a matching procedure we show that in all the examined countries but spain r d tax incentives induced a statistically significant increase in the intensity of r d expenses over sales however this effect is driven only by the behaviour of small firms by assessing the benefit cost ratio of r d tax policies we find evidence of substantial additional effects in italy and the uk

reassessing cyclical changes in workers labor market status gross flows and the types of workers who determine them this analysis using current population survey data yields statistically compelling evidence that cyclical variations in gross flows of u s workers that is variations by business cycle phase in the number of workers transitioning from one labor market state to another each month were substantially smaller in 1986 2005 than in 1968 86 the authors identify six types of workers who would be expected to contribute to cyclical variations in these flows counter intuitively one such group consists of individuals whose decisions to enter or exit the labor force are independent of labor market conditions estimates suggest that these noncyclical movers are an empirically important component of gross flows into the labor force the authors contend that the presence of noncyclical movers precludes accurate measurement of the contributions of workers whose entry and exit decisions are consciously influenced by labor market conditions

entry and structures of interest groups in assignment games abstract this paper presents several comparative statics results concerning the entry problem in assignment games the results compare sets of equilibria and hence do not require the usual assumption of a unique equilibrium by the device of a competing group generator the set of players is decomposed into three interest groups for which three forms of entry effects are identified for the group with the strongest entry effect it is found that generically 1 the benefit functions form a complete ordering and 2 the turnover effect dominates the unemployment effect the implications of these results to bargaining immigrations and matching problems are discussed

the beveridge curve a survey important progress has been made in economists understanding of the beveridge curve from its measurement to its expression in canonical labor market models yet enduring puzzles remain chief among these are the empirical role of vacancies in the recruitment process the amplitude comovement and persistence of cyclical unemployment vacancy dynamics and the sources of lateral shifts in the beveridge curve the synthesis of these themes identifies several priorities for ongoing research including the role of entry costs into vacancy creation in shaping beveridge dynamics the cyclicality of search intensity both off and on the job and its relation to participation and job to job transitions the theory and measurement of mismatch and the sources of hysteresis in unemployment flows