migration age and earnings the special case of employee transfers the regional relocation of workers within firms is examined this aspect of migration has received little attention in spite of the routine occurance of employee transfers the existence of such transfers suggests that a portion of each worker s human capital is employer specific and readily transferrable across locations thus a different age profile for transfers than that for conventional migrants may be expected specially a model of employee relocation and the consequences of relocation on post transfer earnings is examined

a review of the recent empirical literature on displaced workers this article reviews the empirical literature on job displacement job displacement is widespread and strongly countercyclical tending to peak during economic downturns but concentrated in indus

development fertility and childbearing age a unified growth theory during the last two centuries fertility has exhibited in industrialized economies two distinct trends the cohort total fertility rate follows a decreasing pattern while the cohort average age at motherhood exhibits a u shaped pattern this paper proposes a unified growth theory aimed at rationalizing those two demographic stylized facts we develop a three period olg model with two periods of fertility and show how a traditional economy where individuals do not invest in higher education and where income rises push towards advancing births can progressively converge towards a modern economy where individuals invest in higher education and where income rises encourage postponing births our findings are illustrated numerically by replicating the dynamics of the quantum and the tempo of births for swedish cohorts born between 1876 and 1966

what happens to wages after displacement faced with limited resources policymakers need to know when and where to target support for displaced workers the academic literature offers little support presenting wide ranging results with no consistent explanation for the observed differences in wages after workers are displaced in this paper we demonstrate that the heterogeneity found in the literature is consistent with varying market conditions the results suggest that support for displaced workers can be more efficiently allocated by considering the timing and location of displacement

post layoff earnings among semiconductor workers this study uses administrative data from california s unemployment insurance program to analyze the post layoff earnings of displaced and recalled workers in silicon valley s semiconductor industry

technology is changing lending implications for research abstract costello down and mehta 2020 trace their slider intervention to deviations from the credit line amount recommended by a credit scoring model the deviations are followed by larger delinquency declines and bigger sales orders and costello et al interpret these results using discretion based theories however incremental deviations are concentrated on newer clients rather than those the lender has accumulated soft information about deviations also appear larger for public than private borrowers my discussion evaluates whether these results align with discretion based theories and explores alternative interpretations based on salience and unique aspects of the trade credit setting differences in interpretation aside the evidence is informative about technological advances in commercial lending i conclude with an overview of several recent advances and discuss the implications for lending research

alfred marshall lecture social capital as good culture to explain the extremely long term persistence more than 500 years of positive historical experiences of cooperation putnam 1993 we model the intergenerational transmission of priors about the trustworthiness of others we show that this transmission tends to be biased toward excessively conservative priors as a result societies can be trapped in a low trust equilibrium in this context a temporary shock to the return to trusting can have a permanent effect on the level of trust we validate the model by testing its predictions on the world values survey data and the german socio economic panel we also present some anecdotal evidence that these priors are reflected in novels that originate in different parts of the country jel 04 016 043 p16

the effect of advance notification of plant closings on unemployment using data from the 1984 displaced worker survey the authors model the determinants of time without work following job displacement for a large sample of workers laid off because of plant shutdowns between 1979 and 1984 the major focus of the paper is on the role of advance notification in mitigating unemployment the estimating procedure accommodates right censored observations stemming from continuing or open ended spells of unemployment advance notification is found to have significantly reduced the duration of unemployment of those notified workers who did not draw unemployment insurance benefits and in particular of those who left the plant prior to termination advance notice had much less effect on the time without work of notified workers whose spell length of unemployment was long enough for them to collect unemployment insurance benefits

the impact of advance notice of plant closings on earnings and the probability of unemployment the authors analyze data from the 1988 cps displaced workers survey to assess the effects of written advance notice of plant closings on post displacement employment and earnings the results sugge

innovation and inequality in a small world we present a multicountry theory of economic growth and r d driven technological progress in which countries are connected by a network of knowledge exchange technological progress in any country depends on the state of technology in the countries it exchanges knowledge with the diffusion of knowledge throughout the world explains a period of increasing world inequality followed by decreasing relative inequality knowledge diffusion through a small world network produces an extraordinary diversity of country growth performances including the overtaking of individual countries and the replacement of the technologically leading country in the course of world development

wage losses for displaced workers many studies have shown that displaced workers experience substantial wage reductions that are strongly related to their predisplacement job tenure and experience this paper is an assessment of whether firm closures or downturns in more broadly defined labor markets drive the extreme wage losses of high tenure high experience displaced workers i show that the relatively high wage losses of high experience displaced workers are primarily due to their heightened sensitivity to downturns in their state industry and occupation however the large wage losses of high tenure displaced workers are not explained by their sensitivity to these local downturns one interpretation of these facts is that firm specialization is linked primarily to firm specific experience but not to general labor market experience

a tale of employment decline in two cities how bad was the worst of times this paper describes the communitywide effects on employment earnings and labor mobility of the severe employment declines that occurred in major industries in the buffalo new york and providence rhode island smsas in the period 1960 70 the author analyzes the work histories drawn from longitudinal social security administration data files of about 20 000 men with job experience in those years and smsas a major finding is that voluntary separations exceeded employment reductions in nearly all industries indicating that contrary to popular belief relatively few workers in those cities were forced out of their jobs in addition the workers studied were very mobile about one third of job changers migrated out of their original smsa and many changers moved into different industries some workers who lost their jobs suffered severe earnings loss but the total earnings loss was not particularly large the author discusses the policy implications of those findings

public information and coordination evidence from a credit registry expansion this paper provides evidence that lenders to a firm close to distress have incentives to coordinate lower financing by one lender reduces firm creditworthiness and causes other lenders to reduce financing to isolate the coordination channel from lenders joint reaction to new information we exploit a natural experiment that forced lenders to share negative private assessments about their borrowers we show that lenders while learning nothing new about the firm reduce credit in anticipation of other lenders reaction to the negative news about the firm the results show that public information exacerbates lender coordination and increases the incidence of firm financial distress

agency problems auditing and the theory of the firm some evidence agency problems auditing and the theory of the firm some evidenceauthor s ross l watts and jerold l zimmermansource journal of law and economics vol 26 no 3 oct 1983 pp 613 633published by the university of chicago pressstable url http www jstor org stable 725039accessed 29 06 2008 23 14

labor market conditions and the reemployment of displaced workers the authors of this study use data from the january 1984 current population survey to examine the impact of local labor market conditions on the financial losses of displaced manufacturing workers they find that strong overall growth in the local economy reduced the economic losses of white collar workers whose industry of displacement was declining but not of blue collar workers in the same situation most older poorly educated blue collar workers with long tenure at their pre layoff job suffered large financial losses even when displaced in a growing local economy all workers including those who were young and well educated suffered large financial losses when located in a depressed local economy

discrimination and the unemployment durations of white and black males in this study we develop a model to decompose the longer unemployment duration of blacks into discriminatory and non discriminatory components by extending becker s theory of discrimination to job search theory the discriminatory component is seen to be the result of two separate effects first a white treatment advantage shortens the unemployment duration of whites because they receive more frequent and higher wage offers than would prevail in the absence of discrimination for working alongside blacks second a black treatment disadvantage lengthens the jobless spell of blacks because blacks receive lower wage offers than would prevail without discrimination as discriminating employers extract quasi rents from their labour we estimate our model using date from the cps displaced workers survey the results show that 3 81 of the 4 58 weeks longer unemployment spell for blacks is due to discrimination with 3 11 weeks resulting from the white treatment advantage and 0 7 weeks emanating from the black

the economic consequences of labor mobility unlike most previous research on the relative changes in earnings of job stayers and job changers this study examines the variance in earnings changes rather than simply average changes men and women rather than only men and the five year period following job change rather than only the first year or two the author finds great variability in earnings changes both within and across race and gender groups notably men gained more from quits and except in the case of low wage workers lost less from layoffs than women also men suffered a much smaller penalty than women for repeated job changes for all groups the percentage difference between earnings before and after leaving a job generally persisted for several years

learning by doing and learning from others human capital and technical change in agriculture household level panel data from a nationally representative sample of rural indian households describing the adoption and profitability of high yielding seed varieties hyvs associated with the green revolution are used to test the implications of a model incorporating learning by doing and learning spillovers the estimates indicate that i imperfect knowledge about the management of the new seeds was a significant barrier to adoption ii this barrier diminished as farmer experience with the new technologies increased iii own experience and neighbors experience with hyvs significantly increased hyv profitability and iv farmers do not fully incorporate the village returns to learning in making adoption decisions

interindustry variation in the costs of job displacement job displacement entails a substantial wage reduction for most displaced workers we show that the mean reduction the tenure profile of reductions and the experience profile of reductions all vary substantially across industries we then link this interindustry variation to analogous variation in firm size unionization wage levels and the incidence of employer provided training while these industry characteristics explain some of the interindustry variation in mean wage reductions they do not explain variation in the tenure or experience profiles of wage reductions

informational frictions and the credit crunch in this paper i estimate the magnitude of an informational friction limiting credit reallocation to firms during the 2007 to 2009 financial crisis because lenders rely on private information when deciding which relationship to end borrowers looking for a new lender are adversely selected i show how to separately identify private information from information common to all lenders but unobservable to the econometrician by using bank shocks within a discrete choice model of relationships quantitatively these informational frictions appear to be too small to explain the credit crunch in the u s syndicated corporate loan market

from tradition to modernity economic growth in a small world this paper introduces the small world model watts and strogatz nature 1998 into the theory of economic growth and investigates how increasing economic inte gration aects rm size and eciency norm enforcement and aggregate economic perfor mance when economic integration is low and local connectivity is high informal norms control entrepreneurial behavior and more integration mainly improves search for ecient investment opportunities at a higher level of economic integration neighborhood enforce ment deteriorates and formal institutions are needed to keep entrepreneurs in check a gradual take o to perpetual growth is explained by a feedback eect

kinship and financial networks formal financial access and risk reduction kinship networks are beneficial for smoothing consumption and investment but the channels are not well understood we study the financing devices used for consumption and investment by thai households households that are connected to banks achieve significantly better consumption smoothing than unconnected households indirect connections via inter household borrowing are as effective as direct borrowing investment appears to be facilitated by kinship households with kin in the village display reduced sensitivity of investment to income while connections to banks do not significantly reduce sensitivity kin may act as implicit collateral permitting borrowing that would violate repayment constraints in its absence

screening peers softly inferring the quality of small borrowers this paper examines the performance of new online lending markets that rely on nonexpert individuals to screen their peers creditworthiness we find that these peer lenders predict an individual s likelihood of defaulting on a loan with 45 greater accuracy than the borrower s exact credit score unobserved by the lenders who only see a credit category moreover peer lenders achieve 87 of the predictive power of an econometrician who observes all standard financial information about borrowers screening through soft or nonstandard information is relatively more important when evaluating lower quality borrowers our results highlight how aggregating over the views of peers and leveraging nonstandard information can enhance lending efficiency this paper was accepted by amit seru finance

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

trust social capital and economic development many argue that elements of a society s norms culture or social capital are central to understanding its development however these notions have been difficult to capture in economic models here we explore ap ossible role for trustworthiness as corresponding to social capital individuals are trustworthy when they perform in accordance with promises even if this does not maximize their payoffs the usual focus on incentive structures in motivating behaviour plays no role here instead we emphasize more deep seated modes of behaviour and consider trustworthy agents being socialized to act as they do to model this socialization we borrow from a process of preference evolution pioneered by bisin and verdier 2001 the model developed endogenously accounts for social capital and explores its role in the process of economic development it captures in a simple formal way the interaction between social capital and the economy s productive processes the results obtained caution against rapid reform and provide an explanation for why late developing countries may not easily be able to transplant the modes of production that have proved useful in the west

social capital and growth we define and characterize social capital in a simple growth model we capture social capital in a model where individuals in a community maximize their lifetime gains to trade each trade between two members of a community has the structure of the prisoners dilemma trades are repeated indefinitely but not necessarily each period social capital is defined as the social structure which facilitates cooperative trade as an equilibrium the trading model is incorporated into a growth model to explore the connections between growth labor mobility and social capital the key assumption is that technological innovation which drives growth involves a reallocation of labor that affects social capital modifying the responsiveness of labor to a technological shock has implications for both labor efficiency and social capital

trust in large organizations several authors suggest that trust is an important determinant of cooperation between strangers in a society and therefore of performance of social institutions we argue that trust should be particularly important for the performance of large organizations in a cross section of countries evidence on government performance participation in civic and professional societies importance of large firms and the performance of social institutions more generally supports this hypothesis moreover trust is lower in countries with dominant hierarchical religions which may have deterred networks of cooperation trust hold up remarkably well on a cross section of countries this abstract was borrowed from another version of this item

advance notice job search and postdisplacement earnings three to 5 years after job displacements workers receiving the advance notice mandated by current law earn approximately 10 more than their nonnotified counterparts this differential is not the result of firms systematically notifying persons with favorable reemployment prospects early warnings are disproportionately obtained by individuals expected to earn relatively low wages in subsequent employment it is not clear however whether prenotification has a causal effect the notification differential may occur because the advance notice is frequently provided by employers offering other kinds of adjustment assistance such as job counseling skill retraining supple mental unemployment benefits or outplacement assistance

trust and inter firm relations in developing and transition economies the role of trust in facilitating economic growth has been highlighted in previous contributions to this journal in order to take this debate forward this article argues 1 that more attention needs to be given to the relationship between sanctions and trust and 2 that it is worth distinguishing between the minimal trust for making markets effective and the extended trust required for deeper kinds of inter firm co operation to work the article goes on to ask why minimal trust is lacking and so hard to construct in the republics of the former soviet union it then examines how extended trust grows or can be made to grow in industrial supply chains and clusters in developing countries

trust and social collateral this paper builds a theory of trust based on informal contract enforcement in social networks in our model network connections between individuals can be used as social collateral to secure informal borrowing we define network based trust as the largest amount one agent can borrow from another agent and derive a reduced form expression for this quantity which we then use in three applications 1 we predict that dense networks generate bonding social capital that allows transacting valuable assets whereas loose networks create bridging social capital that improves access to cheap favors such as information 2 for job recommendation networks we show that strong ties between employers and trusted recommenders reduce asymmetric information about the quality of job candidates 3 using data from peru we show empirically that network based trust predicts informal borrowing and we structurally estimate and test our model

nobody s business but my own self employment and small enterprise in economic development abstract in most poor countries small firms and self employment are the dominant forms of business enterprise even in the manufacturing sector for rich countries in contrast self employed people account for very small shares of manufacturing employment and output this paper builds on lucas 1978 on the size distribution of business firms bell journal of economics 9 2 508 523 to ask whether structural changes of this kind are driven by productivity differences a model calibrated to japanese time series data is shown to mimic key features of cross country and time series data the results support the idea that changes in aggregate productivity account for much of the cross country variation in establishment size and self employment rates

the employment effects of credit market disruptions firm level evidence from the 2008 9 financial crisis this article investigates the effect of bank lending frictions on employment outcomes i construct a new data set that combines information on banking relationships and employment at 2 000 nonfinancial firms during the 2008 9 crisis the article first verifies empirically the importance of banking relationships which imply a cost to borrowers who switch lenders i then use the dispersion in lender health following the lehman crisis as a source of exogenous variation in the availability of credit to borrowers i find that credit matters firms that had precrisis relationships with less healthy lenders had a lower likelihood of obtaining a loan following the lehman bankruptcy paid a higher interest rate if they did borrow and reduced employment by more compared to precrisis clients of healthier lenders consistent with frictions deriving from asymmetric information the effects vary by firm type lender health has an economically and statistically significant effect on employment at small and medium firms but the data cannot reject the hypothesis of no effect at the largest or most transparent firms abstracting from general equilibrium effects i find that the withdrawal of credit accounts for between one third and one half of the employment decline at small and medium firms in the sample in the year

the race between man and machine implications of technology for growth factor shares and employment we examine the concerns that new technologies will render labor redundant in a framework in which tasks previously performed by labor can be automated and new versions of existing tasks in which labor has a comparative advantage can be created in a static version where capital is fixed and technology is exogenous automation reduces employment and the labor share and may even reduce wages while the creation of new tasks has the opposite effects our full model endogenizes capital accumulation and the direction of research towards automation and the creation of new tasks if the long run rental rate of capital relative to the wage is sufficiently low the long run equilibrium involves automation of all tasks otherwise there exists a stable balanced growth path in which the two types of innovations go hand in hand stability is a consequence of the fact that automation reduces the cost of producing using labor and thus discourages further automation and encourages the creation of new tasks in an extension with heterogeneous skills we show that inequality increases during transitions driven both by faster automation and introduction of new tasks and characterize the conditions under which inequality is increasing or stable in the long run

differences in metropolitan and nonmetropolitan u s family income inequality a cross county comparison abstract u s family income inequality is examined using 1990 cenus of population data for the 3109 counties and independent cities in the 48 contiguous states use of counties as the unit of analysis extends previous research on u s income inequality that relied on national state or metropolitan level data in addition including both metropolitan and nonmetropolitan counties allows us to determine whether income inequality differs between them after controlling for a variety of labor market demographic and regional characteristics as another innovation we also consider whether counties that experienced recent structural changes in industry composition have higher income inequality

population technology and growth from malthusian stagnation to the demographic transition and beyond this paper develops a unied growth model that captures the historical evolution of population technology and output it encompasses theendogenous transitionbetween three regimes that have characterized economic development the economy evolves from amalthusianregime wheretechnologicalprogressis slow andpopulationgrowthprevents anysustainedriseinincomepercapita intoapost malthusianregime wheretechnological progress rises and population growth absorbs only part of output growth ultimately a demographic transition reverses the positive relationship between income and population growth andtheeconomyentersamoderngrowthregimewithreducedpopulationgrowth

should continued family firms face lower taxes than other estates abstract taxes on estates and inheritances may induce heirs to discontinue family firms because firm dissolution incurs transaction costs a preferential tax treatment of transferred family businesses seems to be desirable from a macroeconomic viewpoint the support of dynastic succession however entails also a cost on the economy if firm continuation by less able heirs prevents entry into entrepreneurship here we investigate analytically and quantitatively the trade off between transaction costs saved and creative destruction prevented we find that a unique general equilibrium exists at which depending on the institutional setup low ability heirs either abandon type 1 or continue type 2 a family business a calibration of the model with german data suggests that preferential tax treatment of family firms has severe negative consequences on macroeconomic performance if it causes a threshold crossing from type 1 to type 2 equilibrium it also reveals that the descendants of less able entrepreneurs who were caused by continuation friendly tax policy to keep a family business always lose relative to their status in an economy without such a policy

the benefits of lending relationships evidence from small business data this paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm we analyze data collected in a survey of small firms by the small business administration the primary benefit of building close ties with an institutional creditor is that the availability of financing increases we find smaller effects on the price of credit attempts to widen the circle of relationships by borrowing from multiple lenders increases the price and reduces the availability of credit in sum relationships are valuable and appear to operate more through quantities rather than prices

social capital inclusive networks and economic performance abstract empirical studies show that the relationship between social capital and economic performance is ambiguous the paper points to the potential trade off between the sustainability of self enforcement and the magnitude of gains from trade in social networks as an explanation based on an infinitely repeated multi player prisoners dilemma it is shown how self enforcement of cooperation within a network is influenced by its inclusiveness its communication capacity and the complexity of the exchange setting the paper shows that inclusive social capital can combine both low enforcement costs and high gains from trade even in a complex exchange setting

the failure of models that predict failure distance incentives and defaults statistical default models widely used to assess default risk fail to account for a change in the relations between different variables resulting from an underlying change in agent behavior we demonstrate this phenomenon using data on securitized subprime mortgages issued in the period 1997 2006 as the level of securitization increases lenders have an incentive to originate loans that rate high based on characteristics that are reported to investors even if other unreported variables imply a lower borrower quality consistent with this behavior we find that over time lenders set interest rates only on the basis of variables that are reported to investors ignoring other credit relevant information as a result among borrowers with similar reported characteristics over time the set that receives loans becomes worse along the unreported information dimension this change in lender behavior alters the data generating process by transforming the mapping from observables to loan defaults to illustrate this effect we show that the interest rate on a loan becomes a worse predictor of default as securitization increases moreover a statistical default model estimated in a low securitization period breaks down in a high securitization period in a systematic manner it underpredicts defaults among borrowers for whom soft information is more valuable regulations that rely on such models to assess default risk could therefore be undermined by the actions of market participants