an empirical model of job to job transition with self selectivity the statistical relationship between accepted job duration and the job to job transition strategy chosen by job quitters is analyzed using parametric duration methods because job quitters can sort themselves between unemployed and employed search the labor market state occupied before acceptance of a new job must contain information about the search preferred strategy the results show that jobs preceded by unemployment tend to be shorter but also reveal a substantial amount of heterogeneity when the sample is split between those having comparative advantages in unemployed search and those with comparative advantages in employed search however even for those who have comparative advantages in unemployed search choosing unemployment does not seem to raise subsequent job duration

detecting policy effects with wage rigidity and instability evidence on the taiwan labour market with stagnant wages and growing productivity a widening gap is becoming prevalent in global labour markets the relationship between wages and productivity has become indeterminate especially aft

quality competition with motivated providers and sluggish demand we study incentives for quality provision in markets where providers are motivated semi altruistic prices are regulated and firms are funded by a combination of block grants and unit prices competition is based on quality and demand adjusts sluggishly health or education are sectors in which the mentioned features are the rule we show that the presence of motivated providers makes dynamic competition tougher resulting in higher steady state levels of quality in the closed loop solution than in the benchmark open loop solution if the price is sufficiently high however this result is reversed if the price is sufficiently low and below unit costs sufficiently low prices also imply that a reduction in demand sluggishness will lead to lower steady state quality prices below unit costs will nevertheless be welfare optimal if the providers are sufficiently motivated

search unemployment and the production of jobs the authors investigate the performance of the economy when search is required to find employment and when the duration of unemployment varies across sectors they assume that in one sector factor markets are frictionless while in the other se ctor idle factors of production must actively search each other out i n order to produce they focus on how well the economy allocates work ers across sectors and the conditions under which the factor mix with in a sector is correct the authors demonstrate that in equilibrium t he search sector is too small and its factor intensity is too asymmet ric copyright 1987 by royal economic society

experience tenure and wage growth of young black and white men this paper studies the source of differences in wage growth between young black and white workers focusing on terminal high school graduates from the national longitudinal survey of youth we estimate the returns to on the job tenure and general labor market experience using ordinary least squares altonji and shakotko and topel estimators results from all three estimators indicate that returns to general experience for black workers trail those for white workers but that black workers earn equal if not higher returns to tenure than do white workers

labor market flows in the cross section and over time many theoretical models of labor market search imply a tight link between worker flows hires and separations and job gains and losses at the employer level we use rich establishment level data to assess several theoretical models and to study the relationship between worker flows and jobs flows hires quits and layoffs exhibit strong highly nonlinear relationships to employer growth rates in the cross section simple statistical models of these relationships greatly improve our ability to account for fluctuations in aggregate worker flows and enable us to construct synthetic measures of hires separations quits and layoffs back to 1990

efficiency and sharing of investment in specific human capital under risk aversion abstract this paper analyses the investment behavior of a risk averse worker who searches for other jobs in a two period model it will be shown that given an appropriate investment technology the worker will invest in specific human capital efficiently if his investment costs and return can be shared with some parties the presence of sharing allows the worker to invest efficiently without being affected by his risk aversion since he can adjust his share of the investment in a way compatible with his attitude towards risk

wage determination for career and non career workers in the uk is there labour market segmentation this study proposes that the earnings of career employees are influenced by a different set of parameters from the earnings of non career employees the above proposition is tested by using a matched employer employee sample within the econometric framework of a bivariate sample selection model where the career status is modelled as endogenous and is subject to choice decisions

equilibrium loan pricing under the bank client relationship abstract we determine the loan interest rate policy of a lender who is better informed about a client than other potential lenders the informational advantage possessed by the informed lender derives from the durability of information acquired as a result of an extant relationship given heterogeneous potential loan rate offers to the client by competitive lenders and client search costs the incumbent lender s policy of loan interest rate offers is examined we show that the optimal loan rate will exceed the incumbent lender s cost of funds and will exceed the average offer of competing lenders the potential lenders will offer loan rates that are exceeded by their cost of funds implying immediate losses in order to attract the client and to thereby earn expected profits in the future finally we show that the expected remaining duration of a lender client relationship is decreasing in the existing length of the relationship thus clients that have been with a particular lender longer will be more likely to leave and establish a relationship with another lender

social and spatial networks in labour markets social connections and referrals are ubiquitous in the labour market both on the job seeker side and on the employer side this article reviews recent developments in the study of referrals highlighting what we have learned regarding the use and impact of referrals on various labour market outcomes and pointing out the increasingly nuanced picture we are gaining on the effects of referrals it then discusses directions for future research emphasizing the importance of using newly available data and combinations of datasets and of making tighter connections with the burgeoning macro labour research that is based on a search and matching framework finally it evaluates the role of referrals from the point of view of policy makers discussing their social welfare implications and ways in which they could be explicitly incorporated into various labour market policies the importance of tighter collaboration between policy makers researchers employers and practitioners is stressed to conduct more rigorous experimentation and evaluation of potential referral based policies and programmes

are unemployment and out of the labor force behaviorally distinct labor force states this paper tests the hypothesis that the classifications unemployed and out of the labor force are behaviorally meaningless distinctions this hypothesis is rejected distinct behavioral equations govern transitions from out of the labor force to employment and from unemployment to employment the evidence reported in this paper is broadly consistent with versions of search theory in which unemployment is a state that facilitates the job search process in an appendix we demonstrate that log concavity of the wage offer distribution implies that the exit rate from unemployment is an increasing function of the rate of arrival of job offers

capital markets the separation property and hedging abstract we consider a risk averse firm facing exchange rate and interest rate uncertainty when international capital markets are accessible the separation property holds however these hedging instruments are not equivalent to creating missing interest rate futures markets

relative wages wage growth and quit behavior using italian social security records for male workers from a sample of firms in turin from 1981 to 1983 we show that conditional on the worker s own wage the average wage in the establishment for similar workers is negatively related to quits we also find that this variable predicts future wage growth this is consistent with an economic model in which workers compare the longrun value of employment opportunities when making quit decisions

introducing new futures contracts reinforcement versus cannibalism abstract in order to assure survival futures exchanges around the world are in constant search of new futures contracts that will generate a profitable level of trading volume introducing new futures contracts may increase or decrease the volume for those contracts already listed using a multi product hedging model in which the perspective has been shifted from portfolio to exchange management we study these effects using data from two exchanges that differ regarding assets traded and market liquidity amsterdam exchanges versus chicago board of trade we show the usefulness of the proposed method the method may also be used to evaluate the benefits for exchanges that plan to internationalize their activities by merging with another exchange or by cross listing other exchanges futures contracts

managerial turnover in a changing world we develop a dynamic theory of managerial turnover in a world in which the quality of the match between a firm and its managers changes stochastically over time shocks to managerial productivity are anticipated at the time of contracting but privately observed by the managers our key positive result shows that the firm s optimal retention decisions become more permissive with time our key normative result shows that compared to what is efficient the firm s contract induces either excessive retention at all tenure levels or excessive firing at the early stages of the relationship followed by excessive retention after sufficiently long tenure

hiring molecules not atoms comobility and wages what role do social connections play in the labor market a vast influential literature has detailed the ways in which ties facilitate the flow of information about job opportunities to workers as well as endorsements or referrals of workers to firms we propose that this role is not constrained to an informational one alone rather relationships between workers can enable a collective job matching process that facilitates the transfer of shared human capital from one organization to another yet comobility has been studied only occasionally and among elite workers in particular industries this study delivers both fieldwork as well as large sample analysis among all nongovernmental workers in denmark finding a 5 5 wage premium for those who move jointly instead of independently both in the full sample as well as when applying strict matching or fixed effects for workers or firms co movers whose skills are related but not identical capture a higher premium and the wage gains associated with comob

optimal hedging by firms with multiple sources of risky revenues abstract we study the hedging behavior of competitive risk averse firms producing under price uncertainty and owning other sources of risky income as well we show that the well known separation property holds when a futures market for the commodity produced is available however unbiased futures market does not imply full hedging by which the firm avoids price risk altogether

mind the gap please the changing nature of entry jobs in britain we examine wages in jobs taken by those out of work entry jobs and the characteristics of the individuals who fill them there are large entry wage gaps relative to other jobs more importantly real entry wages have fallen by around 20 log points relative to all other jobs since 1979 one quarter of this decline is accounted for by differences in individual and job characteristics and around 40 from an unexplained fall in the position of entry jobs in the wage distribution that entry wages differ from the stock of all wages should be incorporated into labour supply modelling

sustainability of agricultural basin development under uncertain future climate and economic conditions a socio hydrological analysis abstract a socio hydrological model is used to forecast future conditions in a river basin arising from changes in climate and the economy in order to learn about macroeconomic conditions that would yield pathways for sustainable development and how they may be affected by changes in climate and the economy the study uses a system dynamics model with endogenous social values and preferences and exogenous climate and economic drivers basin scale sustainability is defined as a function of economic growth provision of environmental services and equality within the basin the analysis reveals that a diversified basin economy is important to achieve sustainable development under current climate conditions a higher level of diversification in the basin s economy increases sustainability higher current capital growth rates e g 2 of the current rate would also lead to more sustainable development of a kind that is less affected by the availability of water and robust to vagaries of climate change the results suggest that policy makers and resource managers should focus on measures to diversify the economy when it is thriving but also consider the capacity of society to adapt to unpredictable shocks to the system

turnover costs and the wage fringe mix this paper examines how firms choose their compensation package to influence employee turnover a firm will attempt to maintain a steady state of trunover consistent with its training and hiring costs we develop a model of this relationship when the firm s ability to offer a differentiated compensation package both the theoretical and empirical findings of our study emphasize the importance of the link between turnover costs and the compensation mix that is quits are negatively realted to both the share of pensions in the total compensation package and the level of wages the influence of pensions in attracting stable workers however is diminishing an important implication is that the policies which attempt to standardize worker compensation will hinder the market determination of turnover and hence will generate inefficiencies in the labour market

hedging with price and output uncertainty abstract this paper extends mckinnon s analysis of hedging with price and output uncertainty to the general case where preferences are not necessarily quadratic and probability distribution not necessarily normal

employer search training and vacancy duration we develop a model of optimal employer search strategy when information about match quality is endogenous the model is tested using four data sets two of which have not previously been used as theory predicts we find that when filling positions requiring more training employers search more intensively and extensively employers also search more extensively when hiring workers with more education and with prior experience these findings provide strong evidence of systematic variation in search strategies based on the characteristics of the positions and job applicants factors that influence employer search also affect the duration of a vacancy

firm specific training layoffs and unreliable workers firm specific training layoffs and unreliable workers 1 introduction early work in implicit contract theory argues that a long term relationship between a worker and a firm evolves due to the risk sharing nature of the implicit contract between a risk averse worker and a risk neutral firm some authors have criticized this initial argument see for example haltiwanger 1983 feeling that a long term relationship between a worker and a firm and the terms of an implicit contract between the two in large parts is explained via hiring costs training costs and the like this is the approach taken in the early work of becker 1975 oi 1962 and the most recent work of jovanovic 1979a these latter explanations are also appealing because long term relations between a worker and a firm are typically characterized by quits that decline with tenure and wages that increase with tenure as discussed in mortensen 1988 explanations of these phenomena fall into two categories job search theories or job training theories job search theories stress that there is a match specific component to the productivity of any worker firm match that a good match will result in a long term relationship explains why wages are positively correlated with tenure to explain a rising wage profile within a given match requires that the firm and the worker learn about the quality of their match over time a good match will be a long term one and the wage will rise over time as the match is discovered to be a good one jovanovic 1979b and barron and loewenstein 1985 model such a learning process job training theories maintain that long term relationships with rising wages exist because of firm specific training that increases with tenure again see jovanovic 1979a as an example this paper integrates these two theories in this paper firm specific training evolves as an increasing function of a worker s tenure with a firm this is so because there is a positive probability that a worker is unreliable in that he will be searching for another employer the firm being unable to identify in advance which workers are unreliable will update its prior belief as to a worker s reliability as a function of the worker s tenure the total level of training at any point in time will be an increasing function of this updated belief thus learning about the quality of a match an aspect of the job search theories plays an important role in explaining the level of firm specific training this learning process can also play a role in determining optimal layoffs if an unreliable worker is more likely to receive an acceptable outside offer when the worker is laid off than when he is employed the firm can use layoffs to elicit information about the worker s reliabiliy based upon this fact layoffs may occur even when the worker s marginal product exceeds his value of leisure before discussing the model in detail one crucial assumption deserves comment unlike previous work such a salop and salop 1976 enforceable self revealing contracts are ruled out by assumption thus the firm here cannot commit itself to a wage contract promising low wages initially in exchange for high wages as job tenure increases which contract would attract only reliable workers this assumption is of course a polar extreme but as such is consistent with more recent work in contract theory which investigates the terms of self enforcing contracts see for example holmstrom 1983 the idea is to provide a comparison with contracts in an idealized economy with no enforcement problems this assumption is justified if the cost of writing a legally enforceable contract is prohibitive or if as suggested in charmichael 1984 reputational forces are insufficient to deter a firm from cheating although workers here are risk neutral the model could be amended to include risk averse agents

unemployment dynamics across oecd countries abstract the european community and the us have experienced vastly different unemployment dynamics over the last two decades this paper investigates whether these differences are due to exposure to different shocks or reacting differently to the same shocks with the premise of a search theoretic framework and a structural var methodology the paper robustly identifies aggregate versus reallocative shocks with the exception of spain where most of the dynamics seem to be driven by reallocation it is found that most differences in unemployment dynamics arise because of differences in responses to shocks in particular the us labour market is quicker to adjust than the european community this implies that eec economies might be dynamically sclerotic even if the size of the steady state labour market flows give the impression that european labour markets are quite active various identifying assumptions additional labour supply shocks and different variables are used yet the results appear robust

wage growth due to human capital accumulation and job search a comparison between the united states and germany this paper compares the sources of wage growth of young male workers in two countries with very different labor market institutions the united states and germany the author first develops a simple method for decomposing wage growth into components due to general human capital accumulation firm specific human capital accumulation and job search the empirical analysis uses data from administrative records germany and the national longitudinal survey of youth united states for cohorts entering the labor market in the late 1970s and early 1980s although the two countries differed substantially in mobility rates they were similar in the sources of wage growth with general human capital accumulation being the most important single source and job search accounting for an additional 25 or more of total wage growth there is no evidence that returns to firm specific human capital accumulation were higher for german apprentices than for u s high school dropouts or graduates

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

job matching and the wage distribution this paper brings together the microeconomic labor and the macroeconomic equilibrium views of matching in labor markets we nest a job matching model a la jovanovic 1984 into a mortensen and pissarides 1994 type equilibrium search environment the resulting framework preserves the implications of job matching theory for worker turnover and wage dynamics and it also allows for aggregation and general equilibrium analysis we obtain two new equilibrium implications of job matching and search frictions for wage inequality first learning about match quality and worker turnover map gaussian output noise into an ergodic wage distribution of empirically accurate shape unimodal skewed with a paretian right tail second high idiosyncratic productivity risk hinders learning and sorting and reduces wage inequality the equilibrium solutions for the wage distribution and for the aggregate worker flows quits to unemployment and to other jobs displacements hires provide the likelihood function of the model in closed form

rationing by waiting lists an empirical investigation abstract many social systems rely on a waiting list rather than price as a rationing device we present a model of the waiting list for elective surgery in the british national health service waiting time is allowed to influence both supply of and demand for surgery the resulting models of supply and demand are estimated empirically using over 4000 observations the results indicate low elasticity of demand with respect to waiting time suggesting that increased resources may reduce waiting times without greatly stimulating utilization the policy implications are important for the british national government when choosing the level of public expenditure to be devoted to health care

job match tenure and wages paid by firms using a new data set consisting of a matched sample of workers and firms and including explicit measures of match quality the authors estimate a structural model and find new evidence of a strong positive relation between wages and tenure inclusion of firm fixed effects does not significantly reduce the estimated returns to tenure the results also shed light on the relative importance of human capital and job matching theories

economic inequality and the value of nature abstract understanding what influences the value of nature is crucial for informing environmental policy from a sustainability perspective economic valuation should not only seek to determine a society s willingness to pay for environmental goods to devise an efficient allocation of scarce resources but should also account for distributional effects to ensure justice yet how economic inequality affects the value of non market environmental goods remains understudied combining recently developed theoretical results with empirical evidence this commentary shows that more equal societies have a higher valuation for environmental public goods and that non market benefits of environmental policy accrue over proportionally to poorer households on this ground we discuss implications for environmental valuation management and policy making and identify a number of fruitful areas for future research we conclude that environmental valuation should explicitly account for economic inequality and that encompassing assessments of the distributional effects of environmental policies must consider the distribution of non market environmental benefits

job mobility in market equilibrium this paper develops a simple stochastic job matching model and uses it to derive a set of testable restrictions on the conditional probability with which a worker will be observed to change jobs over time the restrictions describe the manner in which this probability varies with observable characteristics current wage labour market experience tenure on current job and past mobility econometric methods are also discussed and some illustrative calculations provided

life cycle labor search with stochastic match quality in the united states unemployment job finding and separation rates decline as worker age increases to explain these facts we build a search and matching model of the labor market that incorporates a life cycle structure and features random match quality as well as human capital accumulation the calibrated model successfully reproduces the empirical patterns of unemployment and job transition rates over the life cycle and generates plausible wage implications we then explore the efficiency implications of the model and find that the differences between the market and planner allocations are more important for older workers

learning your comparative advantages we introduce an equilibrium labor market model where workers gradually learn about their unobserved production abilities while engaged in a productive activity occupation workers observe their output and extract information that allows them to make inferences about their unobserved aptitudes because workers are learning about themselves their output informs them not only about their productivity in their current occupation but about their likely productivity in other occupations as well as workers acquire more information they self select into the occupations in which they expect to perform best and their wages increase returns to experience here capture improved job selection by workers as they sort through occupations and learn

asymmetric labor market reforms effects on wage growth and conversion probability of fixed term contracts the authors investigate the impact of a change in employment protection laws in portugal that increased the maximum legal duration of fixed term contracts they find that this reform led to a reduction in the probability that a worker on a fixed term contract would be converted to a permanent contract in addition those workers who had their contracts converted experienced a significantly higher hourly wage growth at the time of conversion and faced a lower reduction in wage growth during the years in which the changed legislation was in force consequently the implementation of this law led to a 27 increase in the wage growth differential between the two contracts the findings are based on an endogenous regime switching model using rich administrative linked employer employee data

optimal self enforcement and termination abstract we study a principal agent problem where the agent receives a stochastic outside opportunity offer each period and he cannot commit to the ongoing contractual relationship termination which is costly allows the principal to go back to an external market to hire a new agent the principal responds strategically to the agent s outside offers choosing optimally between retaining the agent which must be self enforced and terminating him which then ends the current contract the model generates both voluntary and involuntary terminations and dynamics and stationarity outcomes that are of interest especially for understanding employment relationships with on the job search

sorting through search and matching models in economics toward understanding assortative matching this is a self contained introduction to research on search and matching we first explore the nontransferable and perfectly transferable utility matching paradigms and then a unifying imperfectly transferable utility matching model motivated by some unrealistic predictions of frictionless matching we flesh out the foundational economics of search theory we then revisit the original matching paradigms with search frictions we finally allow informational frictions that often arise such as in college student sorting

incentives and targets in hospital care evidence from a natural experiment performance targets are commonly used in the public sector despite their well known problems when organisations have multiple objectives and performance is difficult to measure it is possible that such targets may work where there is considerable consensus that performance needs to be improved we investigate this possibility by examining the response of the english national health service to high profile waiting time targets we exploit a natural policy experiment between two countries of the uk england and scotland to establish the global effectiveness of the targets we then use a within england hospital analysis to confirm that responses vary by treatment intensity and to control for differences in resources which may accompany targets we find that targets met their goals of reducing waiting times without diverting activity from other less well monitored aspects of health care and without decreasing patient health on exit from hospital

job mobility wage determination and market segmentation in the presence of sample selection bias this paper tests the hypothesis that mobility between jobs is an important determinant of individual wages and that econometric estimates of wage determination should correct for sample selectivity bias in job mobility we also test the hypothesis that different patterns of job mobility produce different appropriate corrections for sample selectivity bias in different segments of the labour market we conclude that labour market segments do differ and in particular that one can identify a marginal or low wage sector with mobility patterns and pay packages which differ from the pattern one can discern in the labour market as a whole mobilite entre emplois determination des salaires et segmentation du marche quand il y a biais de selection dans l ehantillonnage ce memoire verifie l hypothese que la mobilite entre emplois est un element determinant des salaires des individus et la proposition que les calibrations econometriques du processus de determination des salaires doivent etre corrigees pour tenir compte d un biais de selection dans l echantillonnage de mouvements entre emplois les auteurs verifient aussi l hypothese que differents patterns de mobilite entre emplois commandent des corrections appropriees differentes dans differents segments du marche du travail les auteurs en arrivent a la conclusion que les divers segments du marche du travail sont differents et qu en particulier on peut reperer un secteur marginal ou de bas salaires ofu les patterns de mobilite entre emplois et les remunerations different remarquablement de ce qui se passe dans le marche du travail dans son ensemble

international trade with forward futures markets under exchange rate and price uncertainty abstract the paper examines a risk averse firm s decisions on the level of trade when the exchange rate and the commodity price are uncertain and the extent of forward exchange and commodity futures commitments first we verify the separation theorem and the full double hedging theorem second we investigate the implications of the existence of both forward foreign exchange and commodity futures markets in comparison to the case where only one or no market is available to the firm the second exercise enables us to focus on conditions under which establishing forward futures arrangements promotes international trade

information externalities in the labour market and the duration of unemployment a matching model is analysed in which firms imperfectly test workers prior to hiring them if some firms hire only workers who pass the test there is an informational externality unemployment duration is a signal of productivity in equilibrium if it is profitable for a firm to test it is also profitable for it to condition its hiring decision on duration hiring those whose duration is less than a critical value this testing equilibrium is inefficient with too much testing and too low a critical duration value sensitivity analysis of the latter suggests explanations for the dependence of re employment probabilities on duration and the instability of the u v curve

on the job search mismatch and efficiency this paper characterizes the equilibrium for a large class of search models with two sided heterogeneity and on the job search besides the well known congestion externalities we show that on the job search in combination with monopsonistic wage setting without commitment creates a business stealing externality in the absence of congestion effects this leads to excessive vacancy creation under wage setting with commitment this externality is absent because when posting a wage firms take into account the expected productivity of future workers in their current jobs if firms are able to make and respond to counteroffers then they will not have to pay no quit premia and this also leads to excessive vacancy creation

exporting firm and forward markets the multiperiod case abstract we consider a model with a competitive risk averse exporting firm who faces uncertain exchanges rates in a multiperiod analysis the capital stock or fixed input has to be determined at the outset while the variable input labor is chosen optimally at the beginning of each period but before the realization of the exchange rate we show that introducing unbiased currency forward markets decreases the capital labor ratio in all periods we also show that such a firm tends to overhedge compared to the one period cases in some cases the introduction of unbiased forward markets results in higher investments and production in all dates

efficient learning and job turnover in the labor market this article nests a continuous time learning model a la jovanovic journal of political economy 92 1984 108 22 into a directed on the job search framework we prove that the socially efficient allocation is separable that is the workers value functions and optimal controls are independent of both the distribution of workers across their current match qualities and the unemployment rate we characterize the dynamics of job transitions in the efficient allocation furthermore when the matching technology is linear our numerical results show that increasing the vacancy creation cost and the speed of learning have ambiguous effects on the unemployment rate and aggregate job transition

does hospital competition save lives evidence from the english nhs patient choice reforms recent substantive reforms to the english national health service expanded patient choice and encouraged hospitals to compete within a market with fixed prices this study investigates whether these reforms led to improvements in hospital quality we use a difference in difference style estimator to test whether hospital quality measured using mortality from acute myocardial infarction improved more quickly in more competitive markets after these reforms came into force in 2006 we find that after the reforms were implemented mortality fell i e quality improved for patients living in more competitive markets our results suggest that hospital competition can lead to improvements in hospital quality

competition and waiting times in hospital markets this paper studies the impact of hospital competition on waiting times we use a salop type model with hospitals that differ in geographical locationand potentially waitingtime andtwotypesofpatients high benefitpatientswhochoosebetweenneighbouring hospitals competitive segment and low benefit patients who decide whether or not to demand treatment from the closest hospital monopoly segment compared with a benchmark case of monopoly we find that hospital competition leads to longer waiting times in equilibrium if the competitive segment is sufficiently large given a policy regime of hospital competition the effect of increased competition depends on the parameter of measurement lower travelling costs increase waiting times higher hospital density reduces waiting times while the effect of a larger competitive segment is ambiguous we also show that if the competitive segment is large hospital competition is socially preferable to monopoly only if the regulated treatment price is sufficiently high 2008 elsevier b v all rights reserved

on the existence and uniqueness of value functions in models of labor market dynamics abstract this note provides blackwell like sufficient conditions which can be used to prove the existence and uniqueness of value functions in recently developed models of labor market dynamics

matching turnover and unemployment this paper develops the view that workers move into and out of the labor market because of changes in the perceived value of their market opportunities a search model is combined with a matching model to yield movement of workers from job to job and into and out of employment

allocating environmental water and impact on basin unemployment role of a diversified economy abstract water diversion for environmental purposes threatens many agricultural communities this paper focuses on the water agriculture environment nexus in the murrumbidgee river basin australia and attempts to explain how reduced water allocation to agriculture aimed at protecting the environment in turn impacted the wider economy and the community predictably reduced water allocation saw declines in agriculture production and employment despite this paradoxically the basin unemployment rate declined and basin median household income increased to understand and interpret this we first analyze available labour economic and hydrology data and then develop a simple dynamic model to interpret the observed pattern of basin employment and unemployment data analysis revealed the likely causes behind the paradox as a out migration of people from the basin and b absorption of the labour force in the fast growing non agricultural sectors of the diversified basin economy the model simulations reinforced this interpretation further model simulations under alternative realities of out migration and sectoral transformation indicated that basins embedded in faster growing national economies and are more diversified to begin with are likely to be more conducive to agriculture sector reform e g reduced water allocation and environmental regeneration this is a sobering message for other regions experiencing environmental degradation due to extensive agricultural development

imperfect hedging and export production firms engaged in international operations are highly interested in developing ways to protect themselves from exchange rate risk the incentive for risk management comes from the enormous volatility of the floating foreign exchange rates our study shows that an exporting firm can benefit from hedging exchange rate risks even when no perfect hedge is possible since in reality not every currency is traded in a futures market 7 chap 15 the exporting firm uses futures contracts with other underlying assets whose spot prices are highly correlated with the foreign exchange spot rate in the real world hedging must often be accomplished by using futures contracts on different deliverable instruments such hedging may result in imperfect hedging as shown by anderson and danthine 1 eaker and grant 11 dellas and zilberfarb 9 broll wahl and zilcha 6 it has been shown in recent publications 12 8 15 13 23 16 2 14 5 18 22 that an international firm facing exchange rate risk can eliminate this risk altogether if it can use a currency forward market another financial asset or a portfolio of assets which is perfectly correlated to the exchange rate in the absence of such markets the firm can reduce its income risk by engaging in a hedging activity of assets correlated to the foreign exchange recent studies of firm behavior under exchange rate uncertainty examine the influence of futures markets on the export and hedging decision these papers derive two major theorems one is the separation theorem which states that when futures markets exist the firm s export production decision is determined solely by technology and input output prices including the futures prices this result holds if the gain from the futures contract is perfectly correlated with export revenue the other theorem is the full hedging theorem which asserts that with unbiased futures markets the firm completely avoids exchange rate risk by entering into optimum futures contracts

the implications of job matching for retirement health insurance and leave benefits this paper focuses on potential reasons for variations in benefit packages in particular variations in the availability of retirement health insurance and leave an important feature of our analysis is that we do not start with heterogeneity in workforces to explain fringe benefit differences across employers it would be straightforward to say that differences across employers in fringe benefit packages simply represent differences in the preferences of their workforces rather we focus on heterogeneity across employers as an important source of differences in fringe benefit packages preliminary evidence is found supportive of the predicted differences in the likelihood of such fringe benefits as retirement health insurance and leave based upon two variables the extent of on the job training offered by the employer and the size of the employers we also examine the implied links between these fringe benefits and such variables as average tenture and the proportion of the workforce that is female

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

export and hedging decisions under revenue and exchange rate risk a note abstract this note analyzes optimal export and hedging decisions taken by a risk averse exporting firm which simultaneously faces hedgeable exchange rate risk and non hedgeable revenue risk abroad the separation property does not hold exports depend on preferences and expectations revenue uncertainty causes the firm to export less the optimal currency forward position can be divided into three components an expected revenue component a speculative component and a revenue uncertainty component

dynamic hospital competition under rationing by waiting times abstract we develop a dynamic model of hospital competition where i waiting times increase if demand exceeds supply ii patients choose a hospital based in part on waiting times and iii hospitals incur waiting time penalties we show that whereas policies based on penalties will lead to lower waiting times policies that promote patient choice will instead lead to higher waiting times these results are robust to different game theoretic solution concepts designs of the hospital penalty structure and patient utility specifications furthermore waiting time penalties are likely to be more effective in reducing waiting times if they are designed with a linear penalty structure but the counterproductive effect of patient choice policies is smaller when penalties are convex these conclusions are partly derived by calibration of our model based on waiting times and elasticities observed in the english nhs for a common treatment cataract surgery

general equilibrium with real time search in labor and product markets the paper is concerned with economies in which agents find sellers and employers in a time consuming search process while they simultaneously trade with their current partners a symmetric steady state equilibrium does not exist but asymmetric steady state equilibria exist and are such that larger firms offer higher wages and charge lower prices than smaller firms but still make more profits these profits can be seen as rents from a superior market position

competition and quality in health care markets a differential game approach we investigate the effect of competition on quality in health care markets with regulated prices taking a differential game approach in which quality is a stock variable using a hotelling framework we derive the open loop solution health care providers set the optimal investment plan at the initial period and the feedback closed loop solution providers move investments in response to the dynamics of the states under the closed loop solution competition is more intense in the sense that providers observe quality in each period and base their investment on this information if the marginal provision cost is constant the open loop and closed loop solutions coincide and the results are similar to the ones obtained by static models if the marginal provision cost is increasing investment and quality are lower in the closed loop solution when competition is more intense in this case static models tend to exaggerate the positive effect of competition on quality

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

young workers and quit behaviour a model is set up to explain the quit behaviour of new entrants to the labour market it uses an incentive opportunity approach to integrate existing relevant arguments from search and information theory and human capital analysis it also provides for impetuous quits the model is tested by an examination of a disaggregated data set concerning a single cohort of 16 year old school leavers in the first year after gaining full time work the theory received strong support for example in the main model seven out of the ten coefficients were highly significant interestingly even in a time of deepening recession the existence of the job shopper seemed to be apparent

unemployment risk and wage differentials workers in less secure jobs are often paid less than identical looking workers in more secure jobs we show that this lack of compensating differentials for unemployment risk can arise in equilibrium when all workers are identical and firms differ only in job security i e the probability that the worker is not sent into unemployment in a setting where workers search for new positions both on and off the job the worker s marginal willingness to pay for job security is endogenous increasing with the rent received by a worker in his job and depending on the behavior of all firms in the labor market we solve for the labor market equilibrium and find that wages increase with job security for at least all firms in the risky tail of the distribution of firm level unemployment risk unemployment becomes persistent for low wage and unemployed workers a seeming pattern of unemployment scarring created entirely by firm heterogeneity higher in the wage distribution workers can take wage cuts to move to more stable employment

a dynamic model of supply of elective surgery in the presence of waiting times and waiting lists this paper analyses hospitals decisions regarding the supply of elective surgery in a dynamic model in the presence of waiting times and waiting lists we show that periods of increasing decreasing supply and increasing decreasing waiting list may be optimal paths towards the steady state we also analyse the hospitals response to exogenous shocks on the demand and the supply for example an increase in the marginal tariff for the provider generates overshooting in the supply supply jumps upwards when the shock is introduced and then slowly reduces towards the steady state value

sectoral shifts labor market sorting and aggregate fluctuations a model of sectoral reallocation is constructed where intersectoral friction is not caused by search or mobility costs instead a sectoral disturbance has a negative effect on production possibilities because it reduces the value of previous sorting in the labor market in equilibrium a measure of sectoral dispersion is positively correlated with the unemployment rate an increase in the incidence of sectoral disturbances increases unemployment at cyclical peaks and at cyclical troughs copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

ramsey waits allocating public health service resources when there is rationing by waiting the optimal allocation of a public health care budget across treatments must take account of the way in which care is rationed within treatments since this will affect their marginal value we investigate the optimal allocation rules for public health care systems where user charges are fixed and care is rationed by waiting the optimal waiting time is higher for treatments with demands more elastic to waiting time higher costs lower charges smaller marginal welfare loss from waiting by treated patients and smaller marginal welfare losses from under consumption of care the results hold for a wide range of welfarist and non welfarist objective functions and for systems in which there is also a private health care sector they imply that allocation rules based purely on cost effectiveness ratios are suboptimal because they assume that there is no rationing within treatments

adverse selection and employment cycles this article examines a dynamic adverse selection model that generates equilibrium employment cycles in the model firms hire workers from unemployment observe workers productivity through time and following the profit maximizing rule eventually fire unproductive workers if hiring costs are low the dynamical system converges to a steady state in which the unemployment pool contains mostly low ability workers however if hiring costs are sufficiently large this lemons effect would make firms unwilling to hire workers in this case the system converges to a cyclical equilibrium in which firms alternate between hiring and not hiring