the structure of unemployment we test for a unit root in postwar unemployment rates for sixteen oecd countries when a one time structural break is incorporated the unit root hypothesis can be rejected for most of the countries and the measured persistence of unemployment falls dramatically we then test for multiple structural changes and find evidence of one or two breaks for those countries for which the unit root hypothesis could be rejected almost all of the breaks are positive reflecting the sustained rise in european unemployment the major exception is the united states where long term unemployment rose in the 1970s and fell in the 1980s

on unemployment inflow and outflow in urban china wu z and yao s 2006 on unemployment inflow and outflow in urban china regional studies 40 811 822 as the largest transitional economy in the world china s labour market has a number of characteristics distinctively different from that of the developed economies such as the uk or the usa this paper aims to identify the determinants of unemployment inflow and outflow in urban china with empirical data for 29 provinces over 1989 99 it is found that rural urban migration ownership diversification industrial structural change international trade international competitiveness product wages and age structure are key determinants of unemployment flows the results suggest that due to market imperfections unemployment inflow and outflow are two asymmetric processes with respect to the concerned predetermined variables wu z et yao s 2006 sur l afflux et la fuite du chomage dans la chine urbaine regional studies 40 811 822 en tant que l economie en voie de transition la plus grande du monde

the output composition puzzle a difference in the monetary transmission mechanism in the euro area and u s we revisit recent evidence on how monetary policy affects output and prices in the u s and in the euro area the response patterns to a shift in monetary policy are similar in most respects but differ noticeably as to the composition of output changes in the euro area investment is the predominant driver of output changes while in the u s consumption shifts are significantly more important we dub this difference the output composition puzzle and explore its implications and several potential explanations for it while the evidence seems to point at differences in consumption responses rather than investment as the proximate cause for this fact the source of the consumption difference remains a puzzle

a re evaluation of the relation between wages and unemployment in the united kingdom this paper examines the long run or equilibrium relationship between wages prices and the unemployment rate in the united kingdom using annual data covering the period 1860 1999 using johansen s maximum likelihood method of testing for cointegration two long run relations are found in a small system of four variables the first relation depicts the co movement of the level of real wages adjusted for productivity together with the unemployment rate and the rate of inflation the second relation shows the co movement between the rate of inflation and deviations of productivity from its trend growth

welfare reform and unemployment in new zealand in the early 1990s new zealand cut benefits and tightened eligibility criteria under its main social welfare programmes these benefit changes varied substantially across both time and demographic groups synthetic panel data are used econometrically to isolate the effects of these reforms on several dimensions of unemployment behaviour a simple theoretical model suggests that cutting benefits could either increase or decrease excess labour supply our results indicate that these reforms increased the official unemployment rate by nearly one quarter of a percentage point but significantly reduced broader measures of economic inactivity or the under utilization of labour in the new zealand economy

employer search and employment subsidies in this paper insights into the literature on employment subsidy evaluation and that on employer search are merged to explore uncharted territory the firm and job characteristics leading to deadweight loss in employment subsidy schemes a model is developed which integrates various arguments found in the existing employer search literature using a survey of dutch firms for 1999 the model predictions are confirmed the richness of the data set enables one to construct some measures of deadweight loss which are new to the existing literature it turns out that firms which experience low screening costs large firms firms that forego substantial production due to unfilled jobs vacancies for full time jobs and firms operating in slack labour market conditions cause significantly more deadweight loss

price and quantity adjustments in the austrian labour market austria is among the very few countries in the european union which have managed to maintain comparatively low unemployment rates and high employment rates this study looks at the price and quantity adjustment mechanisms in the austrian labour market which may have contributed to this favourable outcome after reviewing briefly the basic theoretical reasoning an empirical investigation is began into gross flow dynamics in the labour market and the cyclical volatility of employment and unemployment in austria in international comparison austrian unemployment is very stable over the business cycle this is due mainly to the high sensitivity of the labour force on cyclical conditions and partly also on the relatively weak responsiveness of employment to cyclical fluctuations in output the latter being possibly attributable to the high degree of real wage flexibility in austria the study proceeds to show that the long run elasticity of wages with respect to unemployment is indeed quite high in austria

asymmetric time series and temporal aggregation the detection of nonlinearities could depend on the sampling frequency asymmetric monthly series may become symmetric when aggregated to quarterly or annual frequencies we test against nonlinearity using the nonlinear autoregressive asymmetric moving average arasma model which nests the linear arma model as a special case using monthly quarterly and annual swedish unemployment series we find support for symmetry linearity in the annual series but not in the monthly and quarterly series

do regions benefit from active labour market policies a macroeconometric evaluation using spatial panel methods dauth w hujer r and wolf k do regions benefit from active labour market policies a macroeconometric evaluation using spatial panel methods regional studies the effect of active labour market policies on all job seekers in a region is assessed using the variation in the participation in these programmes across regions over time the starting point is an augmented regional matching function which is extended by allowing for a heterogeneous search effectiveness parameter for current participants and job seekers who finished a measure recently a spatial dynamic panel data model is estimated by using a quasi ml estimation procedure it is found that job schemes in the non profit sector wage subsidies and advancement of apprenticeships significantly increase the regional number of matches

a note on unemployment and capital tax competition abstract we introduce a labor market imperfection into the capital tax competition literature to study the equilibrium tax formulae and their efficiency in the presence of unemployment since we allow for labor market imperfection the standard conclusions of the tax competition literature would be generalized in the case of non full employment our first result shows that even when head taxes on immobile residents are available the optimal capital tax rate for jurisdictional governments is not zero our second finding is that decentralized equilibrium might be characterized by the overprovision of local public goods when the labor market is imperfect

punitive sanctions and the transition rate from welfare to work in the netherlands the average exit rate out of welfare is dramatically low most welfare recipients have to comply with guidelines on job search effort that are imposed by the welfare agency if they do not then a sanction in the form of a temporary benefit reduction can be imposed this article investigates the effect of such sanctions on the transition rate from welfare to work using a unique set of rich register data on welfare recipients we find that the imposition of sanctions substantially increases the individual transition rate from welfare to work

mismatch between unemployment and vacancies in the dutch labour market we analyse the importance of educational mismatch between vacancies and unemployment in the dutch labour market using unemployment and vacancy data by educational level we estimate a matching function which incorporates the effect of educational mismatch on the aggregate flow of filled vacancies using the estimated parameters we calculate how much of total unemployment can be attributed to educational mismatch the results indicate that educational mismatch is not an important determinant of unemployment in the netherlands moreover it shows a remarkable trend contrary to common belief the relative importance of mismatch appears to have strongly decreased since the end of the 1960s

a small linear model of wage and price inflation in the norwegian economy summary this paper presents a model of inflation in a small open economy which features both wage wage linkages and a wage price spiral hence we have a simultaneous structure which contains the conventional scandinavian model of inflation as a special case full system estimation results are reported great emphasis is placed on data coherency and on parameter stability one interesting finding is that both wage growth and the wage level in the exposed e sector are strongly influenced by the outside wage this contradicts the predictions of the scandinavian model which defines the wage leading role of the e sector by the absence of outside wage effects in e sector wage formation another result is that the speed of adjustment to exogenous shocks is greater for prices than for wages this finding may be important in explaining real wage flexibility which is often seen as the hallmark of low unemployment economies such as the norwegian

panel tests of okun s law for ten industrial countries donald g freeman i introduction okun s law describes an empirical regularity between unemployment and real output growth each extra percentage point in the unemployment rate above four percent i e full employment has been associated with about a three percent decrement in real gnp okun 1962 9 1 okun s law has proved to be one of the more durable relationships in modern macroeconomics and is now often presented as an element of core beliefs as in textbooks by hall and taylor 1993 77 and in policy discussions by blinder 1997 durability and simplicity being relatively scarce commodities in macroeconomics okun s law is appealing as a shorthand guide to policy outcomes whether okun s law travels well is another question cross country comparisons of the relationship between unemployment and output have been estimated for other countries by knoester 1986 paldam 1987 and moosa 1997 among others but magnitudes vary depending on country and time period estimates in these papers of the increase in output growth associated with unemployment reduction of one percent range from a low of around two percent in the u s and canada to three to five percent in europe to more than 10 percent in japan with estimates for europe tending to be higher for more recent time periods because of the way that okun s law is framed tests of its proposition involve two imposing empirical problems first as usually stated the law refers to the relationship between departures of real gdp 2 and unemployment from their long run or equilibrium trends often referred to as potential gdp and the natural rate of unemployment respectively these equilibrium trends must be estimated either by time series methods as in moosa 1997 or by construction using a modified production function approach in which potential output is estimated using fully employed inputs as in gordon 1984 or adams and coe 1989 either of these fapproaches invites considerable criticism of assumptions and methods see for example the comments of clark 1984 and of baily 1984 on gordon 1984 second in formulating his law okun seems clearly not to be referring to a ceteris paribus relationship between changes in the unemployment rate and changes in real gdp writing later okun posited that other factors and inputs would be changing pari passu with employment the 3 percent result from a reduction of one percent in the unemployment rate implies that considerable output gains in a period of rising utilization rates stem from some or all of the following induced increases in the size of the labor force longer average weekly hours and greater productivity okun 1970 p 140 thus a complete specification of the effect of changing unemployment rates on output would include factors such as capital inputs labor hours and participation rates all measured as deviations from long run trends this article addresses these two obstacles by using a recent trend cycle decomposition developed by baxter and king 1999 to measure gaps in output unemployment capital stock and the labor force the baxter king bandpass filter extracts the trend component of economic time series by eliminating both high frequency those less than two years and low frequency more than eight years components it is both flexible and easy to implement by using the bandpass filter to filter all the time series using the same methodology this paper departs from previous research of prachowny 1993 and attfield and silverstone 1997 incorporating capital and labor to augment estimates of okun s law additionally using the bandpass filter allows the estimates in this article to incorporate more timely data reflecting the shift to lower levels of unemployment in the u s and higher levels of unemployment in europe and japan during the 1990s the latest year of observation for the constructed data sets of gordon and of adams and coe used for example by prachowny 1993 and attfield and silverstone 1997 is 1988

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

labor market adjustment in transition economies with on the job search this paper examines the impact of on the job search by workers in the state sector on the level and duration of unemployment in transition economies we derive the optimal speed of state sector closure when workers engage in on the job search 2000 elsevier science s a all rights reserved

what drives unemployment disparities in european regions a dynamic spatial panel approach abstractwhat drives unemployment disparities in european regions a dynamic spatial panel approach regional studies this study analyzes unemployment differentials in european regions during the period 2000 11 to that end a theoretical model with substantive spatial interactions among regions is developed the solution implies a dynamic spatial durbin model specification including regional and institutional level factors as explanatory variables in conjunction with dynamic spatial panel estimates relative importance metrics are used to quantify the effect of regional disequilibrium equilibrium and national level factors relative importance analysis suggests that during the pre crisis period unemployment disparities were mainly driven by regional level equilibrium factors nevertheless labour market institutions are of major importance to explain increasing disparities during 2009 11

a phillips curve interpretation of error correction models of the wage and price dynamics this paper presents a model of employment distribution and inflation in which a modern error correction specification of the nominal wage and price dynamics referring to claims on income by workers and firms occupies a prominent role it is brought out explicitly how this rather typical error correction setting which actually seems to capture the wage and price dynamics of many large scale econometric models quite well is fully compatible with the notion of an old fashioned phillips curve with finite slope it is shown how the steady state impact of various shocks to the model can be profitably conceived of and interpreted in terms of and to some extent even calculated by means of this long run phillips curve copyright the author 2008 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

emu and labour market reform needs incentives and realisations despite improving labour market conditions in recent years a number of emu countries still suffer from high and persistent unemployment it could therefore be expected that labour market reform would be given a prominent position on the political agenda the new constraints associated with the common monetary policy only increase the pressure for reform relying on the introduction of the single currency as a trigger for labour market reform may be a risky strategy emu generates a complex set of re optimising strategies of the players on the labour market which makes it difficult to get a clear idea what impact it will have on labour market reform evaluation of recent reform measures does not make one confident either the empirical analysis confirms to some extent the idea that countries with higher unemployment rates have carried out more labour market reform this finding holds however only for countries that do not belong to emu emu countries have on average carried out no more reform than countries outside emu and any link between the initial unemployment level and the labour market reform indicators seems to lack it may become apparent that more reform is needed once the macroeconomic environment becomes more unfavourable

a model of competition between unemployed and employed job searchers an application to the unemployment outflow rate in britain this paper proposes a model to explain the allocation of new jobs to workers the central innovation is the analysis of the competition for jobs between employed and unemployed job searchers it is argued that the endogeneity of the fraction of the employed engaging in search is a crucial determinant of the unemployment outflow rate the model is applied to the unemployment outflow rate in britain the model fits the data well and encompasses its main rival copyright 1993 by royal economic society

estimating the natural rate of unemployment and testing the natural rate hypothesis how should one measure the natural rate of unemployment this paper proposes a systems procedure as an alternative to nairu the natural rate is treated as an unobserved state variable in a system that includes measurement equations for the unemployment rate the rate of wage growth and the rate of inflation the model is derived from a version of the wage bargaining model of blanchard and embodies a version of the natural rate hypothesis the model is estimated by embedding the kalman filter within the full information maximum likelihood procedure for us data the estimated model implies substantial post war variation in the natural rate and a negative but weak effect of inflation surprises on unemployment copyright 1999 john wiley sons ltd

enforcement leverage when penalties are restricted a reconsideration under asymmetric information abstract harrington harrington w 1988 enforcement leverage when penalties are restricted journal of public economics 37 29 53 offers an explanation for how relatively high compliance rates might co exist with low expected fines his results are highly dependent on the assumptions that all firms are identical and their compliance costs are known this paper shows that harrington s results are not necessarily robust in a more general model where asymmetric information and uncertainty are present

unemployment equilibria and input prices theory and evidence from the united states the paper develops an efficiency wage model where input prices affect the equlibrium rate of unemployment we show that a simple framework based on only two prices the real price of oil and the real rate of interest is able to explain the main post war movements in the rate of u s joblessnss the equations do well in forecasting unemployment many out of sample and provide evidence that the oil price spike associated with iraq s invasion of kuweit appears to be a component of the mystery recession which followed

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

complex business cycles and recurrent unemployment in a non walrasian macroeconomic model abstract in a dynamic non t tonnement macroeconomic model trades take place in each period even when prices are not walrasian prices are adjusted between trading periods according to the intensity of disequilibrium a reliable measure of which is obtained by means of stochastic rationing the degree of downward nominal wage stickiness as well as government policy parameters are decisive for the dynamics that emerge in particular it is possible for the economy to converge to quasi stationary states involving permanent unemployment and decreasing nominal wages or to produce complex business cycles with structural features recurrent over time but varying and unpredictable shape and size

an integration of trade union models in a sequential bargaining framework this paper aims to embed two popular models of trade union behavior the monopoly model and the efficient bargaining model in a more general framework it does this by analyzing sequential bargaining models where wages are determined before employment and the power of the union in the two stages of the bargain differs as well as finding that the monopoly and efficient bargain models are special cases of this model a new class of models is also discovered this framework is used to analyze the relationship between union pow er and efficiency the empirical analysis of trade unions and the effects of trade union legislation copyright 1987 by royal economic society

work sharing employment and wages the paper analyzes the effects of a reduction in working time on wages and employment with a monopoly union in general it is not clear in which directions these variables move but if employment and working time are perfect substitutes the effects are related to how working time has been determined initially the wage increases if initial working time is smaller than or equal to the trade union optimum whereas the result is unclear when it is larger in this case it is never optimal for a trade union to reduce both the wage and working time in response to a recessionary supply shock the analysis may help to explain varying attitudes towards work sharing in different countries

a reconsideration of enforcement leverage when penalties are restricted abstract harrington s 1988 model of state dependent enforcement of pollution standards indicates the potential for significant reductions in monitoring cost however this approach results in firms with identical pollution cost functions polluting at different levels and thereby failing to minimize control cost for a given total pollution reduction derivations indicate that a state independent approach with a modified standard will often yield a lower sum of pollution control and monitoring cost for a given level of pollution control

the political economy of the neoliberal transformation of french industrial relations the author advances the literature on the role of the state in the decentralization of industrial relations in france by providing a political economic analysis of right and left backed governments in recent decades while both have pursued reforms to reduce regulation and to increase labor market flexibility they have used the state apparatus in different ways to achieve these goals the right has reformed labor law by obtaining partial support from employers associations and unions the social partners the left by contrast has relied on decentralized bargaining with the social partners because its political base would not have accepted flexibility increasing legal reforms the author examines critical episodes of reform in collective bargaining unemployment insurance and employment protection laws to show how the state has intervened in different ways depending on the political identity of the governing coalition

prices productivity and wage bargaining in open economies according to the standard union bargaining model unemployment benefits should have big effects on wages but product market prices and productivity should play no role in the wage bargain we formulate an alternative strategic bargaining model where labour and product market conditions together determine wages a wage equation is derived and estimated on aggregate data for four nordic countries wages are found to depend not only on unemployment and the replacement ratio but also on productivity international prices and exchange rates there is evidence of considerable nominal wage rigidity exchange rate changes have large and persistent effects on competitiveness

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

enforcement leverage when penalties are restricted in the united states empirical studies of the enforcement of continuous compliance with environmental regulations especially air and water pollution regulations have repeatedly demonstrated the following i for most sources the frequency of surveillance is quite low ii even when violations are discovered fines or other penalties are rarely assessed in most states iii sources are nonetheless thought to be in compliance a large part of the time the evidence for the apparently low level of enforcement activity is found in a number of case studies of state and local enforcement of air and water quality regulations conducted jointly by the environmental protection agency epa and council on environmental quality ceg together with periodic surveys of implementation of air and water quality legislation conducted by the general accounting office gao these surveys show

state dependent enforcement to foster the adoption of new technologies harrington j public econ 37 29 53 1988 shows that a suitable strategy for regulators to make enforcement more efficient is to target surveillance resources according to past compliance records such scheme generates enforcement leverage as non compliance triggers greater future scrutiny increasing the expected costs of non compliance beyond the avoidance of immediate fines in this paper we propose an improved transition structure for the audit framework in which targeting is based not only on firms past compliance record but also on adoption of environmentally superior technologies we show that this transition structure would not only foster the adoption of new technology but also increase deterrence by changing the composition of firms in the industry toward an increased fraction of cleaner firms that pollute and violate less

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

unemployment dynamics in britain we examine the inter related dynamics of the unemployment flows and stock our model allows them to be linked through the standard accounting identity but also through behavioural relationships we find that for the uk the bulk of the correlation between duration and the unemployment stock arises from the dependence of duration on unemployment taking careful account of the inter temporal identity outflow shocks have contributed little to the evolution of unemployment since the late 1960s given that the correlation of duration and unemployment arises from the behavioural relationship we show that unemployment dynamics arise mostly from shocks to the inflow unemployment remains one of europe s more pressing economic and social problems as highlighted in the eu s lisbon declaration of 2000 a dynamic approach to unemployment starts from the recognition that unemployment is a stock and changes through shocks to the outflow and inflow the research and policy focus has generally been on the outflow process or equivalently unemployment duration a glance at figure 1 shows why this might be so it reveals a very strong co movement of the unemployment rate and the proportion of the unemployed out of work for a year or more analysts have used data like this to argue that the source of unemployment fluctuations has been changes in the outflow process 1 possibly as a consequence of this most policies directed at reducing unemployment focus on improving the search effectiveness and employability of the currently unemployed the unemployment flows and stock are related in quite complex ways and in this paper we focus on these inter related dynamics the model we use allows them to be linked in two ways first there is the simple accounting relationship whereby shocks to the flows accumulate in the stock second search and matching models suggest behavioural relationships of the flows depending on unemployment the presence of the nonlinear accounting identity in the model makes the analysis of the joint system problematic so we proceed sequentially investigating first one link and then the other we find that for the uk the bulk of the correlation between duration and the unemployment stock displayed in figure 1 arises from the dependence of the former on the latter we find a strong dependence of the outflow rate on unemployment taking careful account of the inter temporal identity on the other hand outflow shocks have contributed little to the evolution of unem

wage formation in norwegian manufacturing an empirical application of a theoretical bargaining model abstract this paper is concerned with the modelling of quarterly wage inflation in norway we develop a bargaining model which we believe is a sound theoretical base for econometric work in this field among other things the model does not lend support to the practice of imposing phillips curve restrictions on the data without further test a parsimonious model is estimated and is made subject to misspecification tests there is no natural rate of unemployment or nairu in our model any constant unemployment rate is compatible with a constant rate of inflation and a real wage growth equal to the productivity growth however the level of the real wage path will be higher the lower is the rate of unemployment

the swedish unemployment experience by international standards unemployment in sweden remained remarkably low throughout the 1970s and the 1980s in the early 1990s however the unemployment rate increased sharply and hit double digit levels the paper argues that the steep rise in unemployment was mainly the result of a series of adverse macroeconomic shocks partly self inflicted by bad policies and partly caused by unfavourable international developments the extremely contractionary monetary policy in 1992 appears to have had strong and long lasting effects on unemployment institutional factors do not appear as convincing explanations of the steep rise in unemployment in the early 1990s

small system modelling of real wages inflation unemployment and output per capita in italy 1970 1994 the relationships between real wages output per capita inflation and unemployment in italy between 1970 and 1994 are modelled using a cointegrated vector autoregression there is evidence of a change in the underlying equilibria and in the dynamic evolution of the variables probably associated with the substantial changes in many sectors of the italian economy after 1979 alternative ways to model structural change in the italian labour market are considered in adopting a split sample approach the results favour an hysteresis interpretation of unemployment

emissions variability in tradable permit markets with imperfect enforcement and banking abstract in this laboratory experiment on emissions trading subjects face exogenous random emissions shocks after making production and emission control plans in some sessions subjects can bank their unused permits for future use after a reconciliation trading period following the shock realization subjects report their emissions to the regulatory authority and are placed in different inspection groups depending on their compliance history we identify important interactions between banking compliance and enforcement banking smoothes out the price variability arising from imperfect emissions control price stability comes at a cost however since noncompliance and emissions are significantly greater when banking is allowed

real wage determination and labour market policies the swedish experience it is a common view that labor market programs reduce unemployment and restrain wages by increasing the competition for jobs the swedish case is often advanced as a blueprint to follow this article questions the conventional wisdom on the swedish labor market policies it finds empirical evidence in favor of the hypothesis that job creation and training programs weaken the incentives for wage restraint as a consequence it appears likely that labor market programs have strong crowding out effects on regular employment copyright 1991 by royal economic society

using competition to stimulate regulatory compliance a tournament based dynamic targeting mechanism abstract this article develops a tournament based dynamic targeting mechanism for achieving regulatory enforcement leverage in contrast to existing models which rely on a representative agent we model a game among a regulated group of agents possibly heterogeneous in their levels of a regulated activity that compete through their compliance decisions to avoid being targeted for future audits the empirical properties of the dynamic tournament are established using economics experiments in particular we test comparative statics highlight the importance of inducing competition through comparisons with a non competitive standards based targeting mechanism and demonstrate enforcement leverage through comparisons with simple random audits the experiments suggest that the dynamic tournament induces incentives consistent with theory and overall we find that introducing competition in the regulatory enforcement arena may have important advantages

raiding opportunities and unemployment this article studies the impact of raiding opportunities in a labor market in which worker abilities differ recruiting firms can either raid an elsewhere employed worker of known ability by bidding up his wage or go through costly search to find a good worker among the unemployed in equilibrium all types of workers experience unemployment high ability workers involuntarily the raiding opportunities give rise to involuntary unemployment without changing the basic properties of the competitive model and thus suggest new implications of various institutional parameters on unemployment in particular unemployment compensation minimum wages wage taxation and search requirements

testing steady state implications for the nairu estimates of the nairu are usually derived either from a phillips curve or from a wage curve this paper investigates the correspondence between the operational nairu concepts and the steady state of a dynamic wage price model we derive the parameter restrictions that secure that correspondence the full set of restrictions can be tested by econometric analysis of the wage price system and this method is demonstrated for norwegian data a set of necessary conditions can be tested from estimated wage curves alone existing international evidence from empirical wage equations are reinterpreted in light of these conditions

in search of economic well being worker power and the effects of productivity inflation unemployment and global trade on wages in ten wealthy countries theory the theory addresses the forces that determine the real wages which workers receive it is proposed that in the free market system worker power plays a crucial mediating role between economic considerations involving labor supply and productivity and the real wages available to workers in the economy hypotheses in moderate and weak worker power countries real wages will vary inversely with the labor supply in terms of domestic unemployment and international trade in strong worker power countries real wages will vary with changes in productivity and inflation methods separate regression analyses are developed for 10 countries varying in their level of worker power over a 30 year time frame results in moderate and weak worker power countries changes in real wages were best predicted by levels of unemployment and changes in global trading in strong worker power countries changes in real wages were best predicted by changes in productivity and inflation although in one case of a strong worker power country a significant positive association occurred between global trading and real wages

intertemporal labour supply with search frictions starting in the 1970 s wage inequality and the number of hours worked by employed u s prime age male workers have both increased we argue that these two facts are related we use a labour market model with on the job search where by working longer hours individuals acquire greater skills since job candidates are ranked by productivity greater skills not only increase worker s productivity in the current job but also help the worker to obtain better jobs when job offers become more dispersed wage inequality increases and workers work longer hours to obtain better jobs as a result average hours per worker in the economy increase this mechanism accounts for around two thirds of the increase in hours observed in data part of the increase is inefficient since workers obtain better jobs at the expense of other workers competing for the same jobs copyright oxford university press

the effect of wage restraint on labour market flows the effects are studied of a wage restraint policy on flows in the labour market flows into and out of employment are distinguished and simple models are considered for these flows wage costs in particular are found to affect the flow of employment into unemployment which can be considered as a measure of job destruction but wage costs have no effect on the number of new hires which can be considered as a measure of job creation therefore wage moderation has preserved jobs that would otherwise have been destroyed the inflow of new hires is influenced by investments the generosity of the social benefit system and by structural mismatch apart from wage costs interest costs of firms also play a role in the job destruction process particularly since the beginning of the 1980s

job competition and the wage curve longhi s job competition and the wage curve regional studies the wage curve literature consistently finds a negative relationship between regional unemployment rates and regional wages the most widely accepted theoretical explanations interpret the unemployment rate as a measure of job competition this paper proposes new ways of measuring job competition alternative to the unemployment rate and finds that the negative relationship still holds when job competition is measured following the job search literature while for men the wage impact of the theoretically based measures of job competition is rather similar to the wage impact of the unemployment rate for women the difference is substantial longhi s la competition pour l emploi et la courbe des salaires regional studies la documentation sur la courbe des salaires affirme systematiquement que le taux de chomage regional est en correlation faible avec les salaires regionaux les explications theoriques les plus recues considerent le taux de

unemployment insurance and the business cycle an equilibrium model is developed to study the interaction of the business cycle unemployment insurance and the labor market for young men in canada the model combines optimal job oer layo and recall decisions within a numerically solved and restricted bayesian nash equilibrium we consider the long run implications of changes made to unemployment insurance in canada during the 1990s the changes lead to equilibrium increases in average rates of unemployment layos and recalls eliminating ui lowers the equilibrium unemployment

general equilibrium macroeconomic models of unemployment can they explain the unemployment path in the oecd several theories which seek to explain the high and apparently persistent unemployment in the oecd countries over the past two decades have arisen within the framework of imperfections in the goods and labour markets probably the most prominent theories within this class of models are the general equilibrium models of phelps 1994 layard and nickell 1986 and layard et al 1991 labelled structuralist theories of unemployment by phelps 1994 common to the structuralist theories is that the low frequency movements in unemployment or the nairu are determined by structural variables such as unemployment benefits taxes real interest rates etc however the high frequency movements in unemployment are determined by wage and price surprises and in the layard and nickell 1986 model also by cyclical mark ups employment is entirely determined by the firms willingness to supply and the firms are never sales constrained by contrast the general equilibrium model of sarantis 1993 which is in post keynesian spirit suggests that unemployment on all frequencies is mainly an outcome of demand side factors in this model imperfections in the goods and labour markets are less important determinants of unemployment in this paper i estimate the extent to which the models of phelps 1994 layard and nickell 1986 henceforth l n and sarantis 1993 are able to explain the unemployment path of the oecd countries using annual data over the period 1960 to 1993 the theoretical set up of the models is presented in section 1 and the empirical estimates are set out in section 2

credit market imperfections and persistent unemployment abstract this paper develops the thesis that credit market frictions may be an important contributor to high unemployment in europe when a change in the technological regime necessitates the creation of new firms this can happen relatively rapidly in the u s where credit markets function efficiently in contrast in europe job creation is constrained by credit market imperfections so unemployment rises and remains high for an extended period the data show that there has not been slower growth in the most credit dependent industries in europe relative to the u s but the share of employment in these industries is lower than in the u s this suggests that although credit market imperfections are unlikely to have been the major cause of the increase in european unemployment they may have played some role in limiting european employment growth

job search in thick markets abstract i analyze empirically the effects of urban and industrial agglomeration on both search behavior and the efficiency of matching the analysis is based on a unique panel data set from the italian labor force survey micro data covering 520 randomly drawn local labor market areas 66 of the total over the four quarters of 2002 i compute transition probabilities from non employment to employment by jointly estimating the probability of searching and the probability of finding a job conditional on having searched i then test whether these are affected by market size industrial variety and or industry specialization the main results indicate that market size and industry specialization raise job seekers chances of finding employment conditional on having searched while industrial variety is not significantly different from zero finally the effect of agglomeration on non employed individuals search behavior cannot be significantly distinguished from zero

hysteresis in unemployment unemployment has risen sharply in a number of countries and it appears to be becoming more persistent the experience of the 1970s and 1980s showed that adverse unemployment shocks could have long lasting effects with very serious economic and social consequences a key mechanism producing these adverse consequences was hysteresis in unemployment whereby temporary rises in unemployment generated by supply and or demand shocks had permanent or at least very persistent effects clearly it is important to understand how hysteresis mechanisms might operate in order to avoid such adverse outcomes on the other hand experience during the subsequent two decades showed that under more favourable macroeconomic conditions it is possible to observe good hysteresis effects now is a very appropriate time to re visit the issue of hysteresis in unemployment in order to avoid the errors of the 1970s and 1980s and if possible to get hysteresis effects working in a positive direction copyright 2011 oxford university press

estimating unemployment inflows outflows and long term unemployment in britain using the cointegration approach a model is estimated of flows into and out of unemployment using the johansen multivariate cointegration approach and uk data for the period 1974q4 to 1993q3 two long run equilibrium relationships are obtained covering the outflow rate and unemployment duration which include variables such as the replacement ratio structural change and output a unique feature of the model is that it allows the inflow rate to determine the outflow rate and vice versa this is argued to be important given the common european stylized fact that inflows and outflows are both countercyclical and strongly correlated thus if firms and workers are heterogeneous hiring and firing is contemporaneous necessitating the type of model estimated here some interesting results include the finding that output is not important in determining the outflow rate and that the speed of adjustment of the outflow rate to changes in its underlying equilibrium is slow in contrast the proportion of long term unemployed is positively re

exploring the political economy of labour market institutions labour markets how reforms took place many economists argue that the european unemployment problem relates to large labour market rigidities this paper argues that many of those inflexibilities and the underlying institutional regulations can be understood as the outcome of political influence by incumbent employees this is because many policies that increase unemployment actually benefit these insiders an empirical investigation of the determinants of labour market institutions demonstrates that the observations are consistent with this view the findings imply 1 higher exposure of the employed to unemployment facilitates a reduction in the level of employment protection 2 unemployment benefits are lower the more employment reacts to wages 3 a higher level of unemployment and the existence of a right wing government slow down the growth rate of the minimum wage giles saint paul

effects of institutional history and leniency on collusive corruption and tax evasion we investigate the effects of an institutional mechanism that incentivizes taxpayers to blow the whistle on collusive corruption and tax compliance we explore this through a formal leniency program in our experiment we nest collusive corruption within a tax evasion framework we not only study the effect of the presence of such a mechanism on behavior but also the dynamic effect caused by the introduction and the removal of leniency we find that in the presence of a leniency mechanism subjects collude and accept bribes less often while paying more taxes but there is no increase in bribe offers our results show that the introduction of the opportunity to blow the whistle decreases the collusion and bribe acceptance rate and increases the collected tax yield it also does not encourage bribe offers in contrast the removal of the institutional mechanism does not induce negative effects suggesting a positive spillover effect of leniency that persists even after the mechanism has been removed

firms compliance to environmental regulation is there really a paradox it has often been claimed that firms compliance to environmental regulations is higher than predicted by standard theory a result labeled the harrington paradox in the literature enforcement data from norway presented here appears at first glance to confirm this stylized fact firms are inspected less than once a year detected violators are seldom fined but still serious violations seem relatively rare however at a closer look the pattern seems less paradoxical enforcement of minor violations is lax but such violations do flourish serious violations on the other hand are subject to credible threats of harsh punishment and such violations are more uncommon this seems quite consistent with predictions from standard theory we argue that the empirical existence of the harrington paradox is not well documented in the international literature the claim that firms compliance with environmental regulations is generally higher than predicted by standard theory should thus be regarded as a hypothesis rather than an established fact

theory ahead of language in the economics of unemployment this paper discusses from the perspective of modern theories of unemployment several unemployment concepts that have been used over the years it argues that many of these concepts are of limited value and are dominated by a few simple concepts that are basic in the analysis of stochastic general equilibrium models

competition between employed and unemployed job applicants swedish evidence we use the swedish applicant database to investigate empirically whether being unemployed per se reduces the probability of getting contacted by a firm all searchers looking for a new job are invited to submit their personal details to this database over the internet since we have access to exactly the same information as the firms we can minimize the problems associated with unobserved heterogeneity our results show that an unemployed applicant faces a lower contact probability than an otherwise identical employed applicant thus supporting the notion that firms view employment status as a signal of productivity

measuring structural unemployment nawru estimates in the nordic countries the non accelerating wage rate of unemployment nawru indicator used by the oecd as a measure of structural unemployment has risen for the four nordic countries denmark finland norway and sweden in this paper we present stable empirical wage equations for the same countries over the period 1964 1994 in sharp contrast to the increased nawru estimates the instability of the nawru estimates is an artefact of a misspecified underlying wage equation and not due to instability in wage setting itself

empirical matching functions searchers vacancies and un biased elasticities this paper shows that conventional empirical estimates of matching functions are systematically biased because unobservable and endogenous search behaviour such as on the job search by workers or the use of different search channels by firms is neglected i propose an approach for recovering unbiased elasticities under different scenarios of competition for workers and jobs without the need for constructing proxies for unobserved stocks of searchers and vacancies using german administrative data i estimate the biases affecting conventional studies and derive bias corrected estimates of the matching elasticities under different scenarios

filling vacancies an empirical analysis of the cost and benefit of search in the labour market this paper investigates empirically the factors that affect the cost benefit ratio of employers search the empirical analysis is based on a small dutch data set containing individual information on filled vacancies it is found that firms that use advertisements during recruitment are sensitive to labour market conditions their search cost per applicant rises drops in tight slack labour markets because of the diminished ability of advertisements to generate applicants in tight labour markets furthermore it is found that the high search cost incurred by posting identical vacancies is more than compensated for by the benefits from having a larger flow of applicants

truth or consequences enforcing pollution standards with self reporting abstract evidence suggests that a surprisingly large fraction of firms comply with pollution emission standards even though expected penalties for noncompliance are low we offer an explanation of this puzzle by extending the standard model of enforcement to include a self reporting requirement and enforcement power these extensions are enough to challenge the conventional result that higher fines lead to higher compliance rates we find that under plausible conditions higher compliance rates are achieved with lower fines for noncompliance and the cost of enforcing a given level of aggregate pollution is minimized by setting the fine for noncompliance equal to zero

optimal pollution standards and non compliance in a dynamic framework in this paper we present a stackelberg differential game to study the dynamic interaction between a polluting firm and a regulator who sets pollution limits overtime at each time the firm settles emissions taking into account the fine for non compliance with the pollution limit and balances current costs of investments in a capital stock which allows for future emission reductions we derive two main results first we show that the optimal pollution limit decreases as the capital stock increases while both emissions and the level of non compliance decrease second we find that offering fine discounts in exchange for firm s capital investment is socially desirable we numerically obtain the optimal value of such discount which crucially depends on the severity of the fine in the limiting scenario with a very large severity of the fine the optimal discount implies that no penalties are levied since the firm shows adequate adaptation progress through capital investment

wages and the length of the working day an empirical test based on norwegian quarterly manufacturing data a simple framework is specified which is suitable for testing the relationship between the length of the working day and wages per hour the relationship is tested on norwegian manufacturing data using both dynamic modeling and cointegration techniques both methods provide empirical support for a hypothesis of long run independence of real wages and hours conditional on constant productivity and unemployment the results from dynamic modeling confirm that there are significant short run effects of changes in normal hours corresponding to the income compensation schemes usually introduced along with reduction in the length of the working day

worker flows job flows and unemployment in a matching model abstract standard matching models of unemployment generate far too little volatility in unemployment and vacancies relative to the variation in the shock variables shimer 2005 showed that in us data the vacancy to unemployment ratio is about 26 times more volatile than the standard model predicts he identified the flexibility of wages as the key issue and triggered a heated debate on possible improvements of the core model to accommodate these empirical facts in this paper we first document shimer s facts for the uk and find them to be qualitatively similar to us facts we then develop and calibrate a model based on the mortensen and pissarides approach that increases the volatility of the v u ratio 20 fold compared to the standard framework the key features of our model relate to the job creation decision by firms and the search options of workers we allow these to search whilst employed and firms to re advertise jobs that have been quit from this leads us to use a different job creation process whereby potential vacancies or job ideas arise at a finite rate per period over a range of idiosyncratic productivities calibrating the model to uk data we show that it delivers volatility in unemployment and vacancies much closer to though still not as large as that observed for the uk whilst retaining the standard wage determination process

capital accumulation and unemployment a tale of two continents in contrast to much recent work regarding the causes of european unemployment in this paper we emphasize the importance of capital accumulation but unlike the few previous studies which have examined the relationship between capital accumulation and unemployment we argue that what matters for the evolution of employment and the unemployment rate is not the absolute growth rate of a country s capital stock but its evolution relative to other countries capital stock the empirical validity of the above statement is demonstrated for almost all oecd countries using quarterly time series data for the period 1961 1995 more detailed evidence is also presented for germany japan and the united kingdom

incentive generating state dependent penalty system the case of income tax evasion abstract penalty systems can very often be looked upon as corrective measures established in order to eliminate or reduce costly externalities generated by optimizing economic agents hence penalties can be viewed as regulatory measures and their efficient structure should be of interest to economists we propose a dynamic incentive generating penalty system which if instituted may reduce at a given cost the generation of undesirable externalities the special case to which we refer is income tax evasion although our scheme should be applicable to any kind of externalities such as pollution of the environment violation of antirust laws and others which are created by repititive actions of economic agents

the role of selective job search in uk unemployment selective search where unemployed job losers confine their job seeking efforts to matches in the pre separation sector has attracted consid erable attention as a possible source of high and persistent unemployment however this idea is questionable those opting for selection may do so because this strategy is more effective at gener ating an acceptable offer using uk microdata i find evidence in support of the latter view selective searchers cannot account for the persistence of high unemployment since the early 1980s

avoiding tax avoidance a repeated game theoretic approach abstract we propose an optimal auditing scheme for the tax authorities who face a given tax and penalty functions and a given budget constraint under our proposed strategy individuals can be classified into one of three groups each group is characterized by two parameters i the probability of being audited in that group and ii into which group will an individual move if ii a he reported truthfully ii b he cheated it is then shown that there is a choice of these parameters so that in equilibrium i e when every individual maximizes his payoff given the auditing strategy the percentage of individuals that cheat is arbitrarily small

sectoral shifts and unemployment persistence this paper deals with possible explanations of unemployment persistence within a sectoral approach to the austrian labour market first the concept of unemployment persistence is specified in terms of the time series properties of the unemployment rate sectoral job gains and job losses form the labour market flows in this approach the standard matching model is replaced then by a model of the competition between the unemployed and new entrants in the labour market for new jobs as an adding up demand system of the aids type the estimations of different system specifications indicate that the sectoral structure of job gains plays a role in the competition mechanism between unemployed workers and new entrants

unemployment in regional labor markets using structural theories to understand local jobless rates in west virginia the author uses a range of structural labor market models to understand differing regional jobless rates in a state affected by pockets of structural unemployment four theories of regional structural unemployment are presented and their hypotheses are statistically evaluated using west virginia county panel data the author then presents case study evidence to compare these statistical results with the realities of the county labor markets both types of empirical evidence suggest that a segmented non market clearing model in which structural unemployment stems from queuing for above market clearing wages in both a high wage primary sector and a lower wage secondary sector can shed the most light on regional unemployment rates in west virginia

sectoral shifts employment specialization and the efficiency of matching an analysis using uk regional data robson m 2006 sectoral shifts employment specialization and the efficiency of matching an analysis using uk regional data regional studies 40 743 754 over the past 30 years the industry composition of unemployment in the uk has been subject to considerable structural change the degree of which has varied significantly across regions this paper uses lilien s index of sectoral shifts to document the incidence of structural change across regions and in addition follows the work of wren and taylor 1999 by computing measures of the degree of specialization in regional employment it then uses these data to examine the effect of sectoral shifts and employment specialization on the efficiency of the process with which unemployed workers are matched to available job vacancies in regional labour markets robson m 2006 l evolution sectorielle la specialisation de l emploi et l adequation du travail une analyse de donnees regionales du royaume uni regional studies 40 743 754 pendant les trente

an empirical note on employed and unemployed job search abstract the results of the analysis in this paper suggest that competition between employed and unemployed job seekers is introduced by employers who use different recruitment channels for the same vacancy

matching with phantoms searching for partners involves informational persistence that reduces future traders matching probability in this article traders who are no longer available but who left tracks on the market are called phantoms we examine a dynamic matching market in which phantoms are a by product of search activity no coordination frictions are assumed and non phantom traders may lose time trying to match with phantoms the resulting aggregate matching technology features increasing returns to scale in the short run but has constant returns to scale in the long run we embed a generalized version of this matching function in the canonical continuous time equilibrium search unemployment model long run constant returns to scale imply there is a unique steady state whereas short run increasing returns generate excess volatility in the short run and endogenous fluctuations based on self fulfilling prophecies

simple monetary policymaking without the output gap several research contributions have argued that information about the output gap is essential for a good monetary policy rule however as pointed out by orphanides 2001 there is considerable real time uncertainty about the size of the output gap the paper argues that simple monetary policy rules that rely exclusively on survey based information about future and past inflation rates may be more efficient than optimized taylor rules once realtime output gap uncertainty is accounted for even when only information about historical inflation rates is available a very simple policy rule may be constructed that improves on the taylor rule