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

growth and unemployment this paper analyses the effects of growth on long run unemployment using a search model of equilibrium unemployment where growth arises explicitly from the introduction of new technologies that require labour reallocation for their implementation the analysis uncovers and compares between two competing effects of growth on unemployment the first is a capitalisation effect whereby an increase in growth raises the capitalised returns from creating jobs and consequently reduces the equilibrium rate of unemployment the second is a creative destruction effect whereby an increase in growth reduces the duration of a job match thereby raising the equilibrium level of unemployment both directly by raising the job separation rate and indirectly by discouraging the creation of job vacancies this paper asks the question of how the rate of economic growth affects unemployment in the long run the main consideration that leads us to think that this is an interesting question has to do with the re allocative aspect of growth in the long run faster economic growth must come from a faster increase in knowledge to the extent that the advancement of knowledge is embodied in industrial innovations it is likely to raise the job destruction rate through automation skill obsolescence and the bankruptcy associated with the process of creative destruction in short increased growth is likely to produce an increased rate of job turnover and the search theories of lucas and prescott 1974 and pissarides 1990 imply that an increased rate of job turnover will result in a higher natural rate of unemployment this conclusion is also consistent with the empirical results of davis and haltiwanger 1990 which show that periods of high unemployment tend to be periods of high job turnover at the establishment level it suggests the possibility of a positive longrun tradeoff between growth and unemployment at least over some range there has been relatively little attention paid to our question in the literature on longrun determinants of unemployment for example the recent empirical examination by layard nickell and jackman 1991 of unemployment rates among oecd countries did not even consider the rate of economic growth as a possible explanatory variable this is consistent with the seminal theoretical work of phelps 1968 which implies that the natural rate of unemployment is independent of the rate of productivity growth the only

spatial variations in the male unemployment inflow rate 1985 spatial variations in the male unemployment inflow rate applied economics vol 17 no 1 pp 41 54

matching models and labour market flows abstract this paper focusses on the matching approach to labour market flows it briefly reviews the facts on gross worker flows for the uk it then considers an alternative to the standard matching model which allows for job search by the employed this significantly affects the nature of aggregate unemployment dynamics over the cycle finally we consider the implications of the model for aggregate labour market dynamics

the determinants of equilibrium unemployment in britain a lot of energy is currently being expended in trying to understand what has been happening to unemployment in britain and the rest of the developed world in this paper we look at this question in the british context by trying to confront some possible explanations with the data since the data we use are quarterly over rather a short period we are setting the explanations a very hard test most explanations tend to be rather casual and the theories underpinning them ill developed thus for example the so called real wage argument is based on the idea that real wages affect labour demand and that the equilibrium real wage bears some relatively stable relationship to output per head but how stable is not clear thus whether or not we can expect a well defined stable ceteris paribus dynamic relationship between real product wages as a proportion of output per head and unemployment is equally unclear so if such a relationship does not show up in a quarterly regression model this may not be that serious for the theory nevertheless we must look for the relationship for how else are we ever to discriminate between a plethora of conflicting views the primary emphasis in this paper is on the secular factors affecting unemployment rather than the cyclical variables consequently we shall not be concerned with developing a coherent theory of cyclical fluctuations and in the empirical work we shall control for the cycle simply by making use of those exogenous or predetermined variables which other work in this field suggests are important 2 the remainder of the paper is set out as follows the next section is concerned with specifying a model which generates a definition of equilibrium unemployment the outline of this model is a pair of equations determining the flows into and out of unemployment and these are specified in section ii which looks closely at the possible variables involved section iii then deals with the results and presents some general conclusions

the determinants of equilibrium unemployment in britain a comment in a recent paper nickell 1982 has focused on an empirically neglected aspect of unemployment the flows into and out of the stock he estimates that the natural or equilibrium rate doubled from i967 2 56 to 1979 5 82 almost all unemployment is held to be due to equilibrium or secular forces in this comment we make a number of points whose effect is to cast some doubt on these results

causes consequences and cures of myopic loss aversion an experimental investigation we examine in an experiment the causes consequences and possible cures of myopic loss aversion mla for investment behaviour under risk we find that both investment horizons and feedback frequency contribute almost equally to the effects of mla longer investment horizons and less frequent feedback lead to higher investments however when given the choice subjects prefer on average shorter investment horizons and more frequent feedback exploiting the status quo bias by setting a long investment horizon or low feedback frequency as a default turns out to be a successful behavioural intervention that increases investment levels

unemployment dynamics and duration dependence in france the netherlands and the united kingdom this paper analyzes unemployment dynamics in the french dutch and u k labor market it presents a method to distinguish between the effects of duration dependence and unobserved heterogeneity on the exit rate out of unemployment it turns out that for british male unemployed there is strong genuine negative duration dependence for french unemployed there is no strong duration dependence during the first year of unemployment while for dutch unemployed there is nonmonotonic duration dependence for all groups of french and dutch individuals significant unobserved heterogeneity is found for u k male unemployed heterogeneity seems to be empirically unimportant copyright 1994 by royal economic society

do professional traders exhibit myopic loss aversion an experimental analysis two behavioral concepts loss aversion and mental accounting have been combined to provide a theoretical explanation of the equity premium puzzle recent experimental evidence supports the theory as students behavior has been found to be consistent with myopic loss aversion mla yet much like certain anomalies in the realm of riskless decision making these behavioral tendencies may be attenuated among professionals using traders recruited from the cbot we do indeed find behavioral differences between professionals and students but rather than discovering that the anomaly is muted we find that traders exhibit behavior consistent with mla to a greater extent than students

is incomes policy the answer to unemployment in western europe unemployment has remained obstinately high ever since 1975 what has prevented governments from reducing it the answer is simple if unemployment were reduced by normal methods inflation would rise it follows that the only way to cut the long run level of unemployment is to find some other way of controlling inflation no such device will be costless but if we could find any method that was less costly than unemployment we ought to adopt it maurice chevalier was asked in later life what he thought of old age it s not so bad he replied when you consider the alternative that was a true economist talking and it is also the spirit in which i shall approach the unhappy choices open to us my argument will proceed roughly as follows first imagine that a costless incomes policy is available then most people would probably agree that if inflation was too high a temporary incomes policy would be a good idea in order to get inflation down but what then when it was down we would still be left with far too high an unemployment rate only a permanent incomes policy can substantially reduce the non inflationary level of unemployment however against these benefits have to be set the costs of an incomes policy a conventional incomes policy which permanently suspended collective bargaining would be out of the question in a free society so we have to have an incomes policy that works by incentive rather than by regulation the best thing would be a tax on wage increases levied on employers and proportional to wage increases above a prescribed norm i shall spend some time discussing this tax using various different models of wage setting to explain how it would have its effect and finally i shall try producing a first draft of the operator s manual

anomalies in intertemporal choice evidence and an interpretation research on decision making under uncertainly has been strongly influenced by the documentation of numerous expected utility eu anomalies behaviors that violate the expected utility axioms the relative lack of progress on the closely related topic of intertemporal choice is partly due to the absence of an analogous set of discounted utility du anomalies we enumerate a set of du anomalies analogous to the eu anomalies and propose a model that accounts for the anomalies as well as other intertemporal choice phenomena incompatible with du we discuss implications for savings behavior estimation of discount rates and choice framing effects

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

simple solutions to the initial conditions problem in dynamic nonlinear panel data models with unobserved heterogeneity i study a simple widely applicable approach to handling the initial conditions problem in dynamic nonlinear unobserved effects models rather than attempting to obtain the joint distribution of all outcomes of the endogenous variables i propose finding the distribution conditional on the initial value and the observed history of strictly exogenous explanatory variables the approach is flexible and results in simple estimation strategies for at least three leading dynamic nonlinear models probit tobit and poisson regression i treat the general problem of estimating average partial effects and show that simple estimators exist for important special cases copyright 2005 john wiley sons ltd

the dynamics of unemployment structural change and unemployment flows in this paper we attempt to explain the inflows onto and the outflows from the unemployment stock in spite of great interest in explaining unemployment very little work has been done using time series data on flows 1 it is useful to think of the labour market as being in a perpetual state of flux with people moving from job to job from jobs to unemployment and from unemployment to jobs an analysis of flows allows us to study the dynamics of the labour market and provides us with useful insights which may be clouded by studying unemployment stocks our model explaining the flows is based on cost minimising firms and individuals searching for jobs 2 we postulate an economy consisting of two types of firms expanding firms that hire and declining firms that fire changes in aggregate demand tastes and technology lead to changes in the distribution of firms and hence to the flows section i considers the empirical specification and discusses the results for great britain for the period 1967 iii to 1980 ii to anticipate our results we find that inadequate aggregate demand is a crucial determinant of the growth of unemployment in britain

a theory of disappointment aversion an axiomatic model of preferences over lotteries is developed it is shown that this model is consistent with the allais paradox includes expected utility theory as a special case and is only one parameter beta richer than the expected utility model allais paradox type behavior is identified with positive values of beta preferences with positive beta are said to be disappointment averse it is shown that risk aversion implies disappointment aversion and that the arrow pratt measures of risk aversion can be generalized in a straight forward manner to the current framework copyright 1991 by the econometric society

company bankruptcies and births matter this paper constructs a simple supply orientated model of the economy in which company bankruptcies which lead to a loss of capital and births have impacts on macroeconomic variables bankruptcies will reduce output increase unemployment worsen the balance of payments and also impact upon inflation empirical work based on data from both the usa and the uk finds a significant granger causality relationship between bankruptcies and births and these four macroeconomic variables the standard granger causality regression is supplemented by non linear granger causality tests

the causes of unemployment in france a flow approach a flow model is used to identify the causes for rising unemployment in france between 1978 and 1990 two flow equations are estimated as functions of exogenous factors such as aggregate demand factor costs structural shifts and long term factors and then used in simulations for the level of unemployment it is shown that the main reason for high unemployment in france is a slow down in the demand for labour due to high labour and energy costs in the early 1980s and to tight aggregate demand over the whole period change in the labour supply have had an increasing impact in recent years

the effect of protest votes on the estimates of wtp for use values of recreational sites contingent valuation studies are often characterized by a considerable number of protest responses which may cause selectivity bias on the final estimates for wtp sample selection models can detect and if necessary correct selectivity bias in economic applications where the relevant dependent variable is continuous sample selection models are generally estimated using heckman s 2 step method rather than the fiml estimator either method has its own drawback computational complexity for the fiml method susceptibility to collinearity problems for the 2 step method using data on valuation of forest resources for recreational use we analyse the performance of the two estimators in this application given the presence of some collinearity the fiml is preferred to the 2 step method a procedure is outlined to deal with selectivity problems in similar settings

the macroeconomics of inflation non neutrality inflation non neutrality can only be properly considered in a complete macro model but most existing treatments use partial equilibrium approaches this paper develops an open economy macro model incorporating labor markets and the government budget constraint as well as the product and domestic asset markets that normally feature in the neutrality literature this model is used to examine stability and long run inflation multipliers with various policy combinations numerical simulations show that the quantitative importance of nonneutralities varies across different policy combinations in some cases nonneutralities are very significant copyright 1989 by royal economic society

the effect of myopia and loss aversion on risk taking an experimental test myopic loss aversion is the combination of a greater sensitivity to losses than to gains and a tendency to evaluate outcomes frequently two implications of myopic loss aversion are tested experimentally 1 investors who display myopic loss aversion will be more willing to accept risks if they evaluate their investments less often 2 if all payoffs are increased enough to eliminate losses investors will accept more risk in a task in which investors learn from experience both predictions are supported the investors who got the most frequent feedback and thus the most information took the least risk and earned the least money language en

default correlation at the sovereign level evidence from some latin american markets using the eruption of argentina debt crisis in 2001 as a natural experiment we investigated the correlated default at the sovereign level for some latin american countries daily closing market quotes for sovereign credit default swaps cds of argentina brazil mexico and venezuela were obtained from credittrade database using copula approach we observed increased dependences among sovereign cds markets during the crisis period their dependence structures were found to be asymmetric moreover the degree of credit contagion was related to the creditworthiness of the country this study also discussed the implications of these findings for policymakers

political parties world demand and unemployment domestic and international sources of economic activity this article replicates and extends earlier work on the politics of macroeconomic policy by considering political effects on unemployment in 14 western industrial nations between 1960 and 1983 changes of party control of government display broadly the expected effects namely that unemployment falls under left wing governments and rises under right wing governments however the principal conclusions of this article are that partisan effects on unemployment in open economies that is economies heavily dependent on trade with other countries can only be satisfactorily estimated relative to the constraint imposed by the level of world economic activity and that in addition to politicians strategic incentives political institutions and economic regime constraints also determine whether partisan effects on unemployment will be sustained transitory or absent with respect to the latter on the whole no effects are found where no such effects were promised by the new government before taking office where one party or dominant partner coalitions form the effect on unemployment is transitory whereas where broad coalitions form it is sustained or absent finally ceteris paribus any partisan effects are more likely where governments secure parliamentary majorities

regional employment subsidies and migration in this paper the traditional efficiency basis for employment subsidies to high unemployment regions is modified to incorporate a description of the transition to employment expectations of employment depend not just on the rate of unemployment but also on job turnover rates thus unemployed in the high unemployment regions are more incline to migrate at an observed migration equilibrium implicit migration costs are higher and expected income lower than they would be in the simple model this means that the shadow price of a job in the high unemployment region is lower than in the simple model and less than the wage rate

myopic loss aversion and stock investments an empirical study of private investors abstract myopic loss aversion was suggested by benartzi and thaler 1995 as an explanation for the equity premium puzzle its main prediction is that loss averse investors who evaluate their investment performance too frequently and therefore often observe small losses on their stock portfolios would invest too little in equity we investigate the link between myopic loss aversion and actual investment decisions of individual investors using survey data our results are consistent with the predictions of benartzi and thaler higher myopic loss aversion is associated with lower stock investment as a share of total assets investors tend to evaluate their stock portfolio performance too often which contributes to the prevalence of myopic loss aversion the effect of myopia is most apparent when investors both evaluate their portfolios frequently and trade stocks regularly

unemployment in britain male unemployment in britain has risen from around 2 per cent in the 1950s to around 17 per cent in 1985 see figure 1 the figures are for male unemployment because there is no consistent series for women 1 even more remarkably unemployment has fallen in only three years out of the last twenty 1973 1978 and 1979 to account for this we need a model that explains both changes in the natural or non accelerating inflation rate of unemployment nairu and deviations from it we use a three equation supply side model centred on the labour market this has two main features the first concerns the determination of employment in the short run the labour demand function that we use cuts through the fruitless debate now raging especially in europe as to whether current unemployment is classical or keynesian according to the classical view employment is too high because real wages are too high according to the keynesian view real wages are not binding and unemployment is high because the product market does not clear with prices too high relative to nominal demand the whole debate is set in the framework of perfect competition yet in perfect competition prices are set by impersonal forces and it is not clear what could possibly stop prices clearing the market it is much more reasonable to think of prices as being set by imperfectly competitive firms existing prices being the best they can think of given the demand they face in this context firms demand for labour will depend on both the real product wage and the level of real aggregate demand this is the demand function we estimate and it conforms both to common sense and to the data however this does not imply that employment can be made to grow without limit by pumping up real demand for in the medium term when price surprises are eliminated our model determines three variables employment real wages and real demand on the basis of three equations an employment equation a price equation and a wage equation thus in the medium term there is a natural level of employment and corresponding to this a natural level of real aggregate demand the second key feature of our model concerns the medium term determination of unemployment in the medium term the planned mark up of wages over prices in wage settlements must be consistent with the mark up of prices over wage costs in employers pricing behaviour for if wage setters try to set real product wages higher than is consistent with employers pricing behaviour this generates ever increasing inflation thus the key to understanding unemployment in the medium term is the behaviour of wage setters if events occur that push them towards too high real wages then unemployment has to rise to offset these influences we shall call these influences wage pressure variables or push factors and they are clearly crucial in understanding unemployment the variables here include the social security system employment protection

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

frames of mind in intertemporal choice recent research has demonstrated that choices between gambles are systematically influenced by the way they are expressed kahneman and tversky s prospect theory kahneman d a tversky 1979 prospect theory an analysis of decision under risk econometrica472 363 391 explains many of these framing effects as shifts in the point of reference from which prospects are evaluated this paper demonstrates the applicability of the reference point concept to intertemporal choice three experiments demonstrate that when people choose between immediate and delayed consumption the reference point used to evaluate alternatives can significantly influence choice the first study elicited relative preference for immediate and delayed consumption using three methods each of which differently framed choices between alternatives offering identical end state consumption the conventional discounted utility model predicts that the three methods of elicitation should yield similar estimates of time preference but preferences were found to differ in accordance with a reference point model the second and third studies extend and replicate the results from the first the third using real rather than hypothetical choices

unemployment and the inter regional mobility of labour the relationship between unemployment and interregional labor migration in the united kingdom is explored using data from the labour force survey for 1984 and 1977 the authors conclude that the experience of unemployment increases the likelihood of migration and that households in areas of high unemployment are more likely to move they also find that during periods of higher overall unemployment migration propensities are reduced annotation

an experiment on risk taking and evaluation periods does the period over which individuals evaluate outcomes influence their investment in risky assets results from this study show that the more frequently returns are evaluated the more risk averse investors will be the results are in line with the behavioral hypothesis of myopic loss aversion which assumes that people are myopic in evaluating outcomes over time and are more sensitive to losses than to gains the results have relevance for the equity premium puzzle and also for the marketing strategies of fund managers

structural unempolyment in australia this paper examines whether structural unemployment increased in australia over the last two decades a simple regression model has been considered for testing the hypothesis of increase in unemployment of several segment of the labour force over time six dimensions of the labour force namely age sex region duration of unemployment occupation and industry have been taken into account analysis of the regression results reveals that the structural unemployment problem is substantial with respect to age sex duration of unemployment occupation and industry regarding region the evidence for structural symptom is not very strong

investigation of production sales and inventory relationships using multicointegration and non symmetric error correction models the accumulated sum of a stationary series is called integrated if a linear combination of some of the integrated series is stationary it is said to be cointegrated this paper presents empirical results on inventories to consider the possibility of a deeper form of cointegration called multicointegration which is introduced in granger and lee 1989 a vector integrated series is multicointegrated if the accumulated sum of its stationary cointegrated linear combination is again cointegrated with itself inventory which is the accumulated sum of production minus sales is probably cointegrated with production and sales the empirical results generally support the presence of multicointegration of production and sales in many u s industries and industrial aggregates the results also favour the non symmetric error correction model providing evidence that the strength of attraction is different on both sides of the attractor a modified s s rule for inventory control is investigated in the context of a non symmetric error correction model and the results generally do not support the s s rule sufficient evidence is found to conclude that multicointegration is a useful concept in the area of inventory determination

evaluation periods and asset prices myopic loss aversion at the financial marketplace abstract examining myopic loss aversion mla benartzi s thaler r 1995 myopic loss aversion and the equity premium puzzle quarterly journal of economics 110 73 92 in real financial markets has several merits in repeated situations investors may learn from each other aggregate market prices may eliminate individual violations of expected utility and individuals may decide differently in real situations than in laboratories we utilize a special feature at the tel aviv stock exchange tase occasional shifts of securities from daily to weekly trading if investors decisions are influenced by trading frequency manipulation then returns should be predictably affected mla results in a negative relation between risk aversion and the length of the evaluation period thus the longer the evaluation period is the lower the expected return is this intuition also suggests reduced sensitivity to economic events in longer evaluation periods we find strong support for mla in the marketplace when testing expected return as well as return sensitivity

portfolio choice and trading in a large 401 k plan we study nearly 7 000 retirement accounts during the april 1994 august 1998 period several interesting patterns emerge most asset allocations are extreme either 100 percent or zero percent in equities and there is inertia in asset allocations equity allocations are higher for males married investors and for investors with higher earnings and more seniority on the job equity allocations are lower for older investors there is very limited portfolio reshuffling in sharp contrast to discount brokerage accounts daily changes in equity allocations correlate only weakly with same day equity returns and do not correlate with future equity returns

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

parametric and semiparametric estimation of sample selection models an empirical application to the female labour force in portugal this paper applies both parametric and semiparametric methods to the estimation of wage and participation equations for married women in portugal the semiparametric estimators considered are the two stage estimators proposed by newey 1991 and andrews and schafgans 1998 the selection equation results are compared using the specification tests proposed by horowitz 1993 horowitz and hardle 1994 and the wage equation results are compared using a hausman test significant differences between the two approaches indicate the inappropriateness of the standard parametric methods to the estimation of the model and for the purpose of policy simulations the greater departure seems to occur in the range of the low values of the index corresponding to a specific group of women copyright 2001 john wiley sons ltd

the planting real option in cash rent valuation after entering into a farmland cash rent contract in the fall a tenant farmer has flexibility over the spring crop choice and the input application level failure to account for these options will bias estimates of what farmers should pay to rent land applying monte carlo simulation methods this study investigates the option values for these choices a multivariate gaussian copula mgc is employed to account for dependence among yields and prices results show that the average cash rent valuation for the real option approach is 33 6 higher than that for the conventional net present value npv method in which the input intensity option is 0 9 crop planting sequence is shown to impact the real option value

limited dependent variables in willingness to pay studies applications in health care the appropriate technique for econometric analysis of wtp willingness to pay data is an issue which has not been addressed in many studies of wtp for health and health care this paper argues that whether an open ended question or a payment scale approach is adopted the way in which wtp is recorded means that limited dependent variable models are more appropriate than standard regression analysis data from an open ended question on wtp for maternity care contain a large proportion of zeros and the evidence suggests that a two part specification performs better than ols or a standard tobit model if the payment scale method is adopted our argument suggests that grouped data regression is an appropriate econometric technique in practice with data from a study in northern norway the results from ols and grouped data regression are broadly similar

does commitment or feedback influence myopic loss aversion an experimental analysis empirical research has shown that a lower feedback frequency combined with a longer bind ing period decreases myopia and thereby increases the willingness to invest into a risky asset in an experimental study we disentangle the intertwined manipulation of feedback frequency and binding period to analyze how both variables alone contribute to the change in myopia and how they interact we find a strong effect for the length of commitment a much less pro nounced effect for the feedback frequency and a strong interaction between both variables the results have important implications for real world intertemporal decision making

portfolio inertia and stock market fluctuations this paper uses population wide data from the panel study of income dynamics and the survey of consumer finances to resolve the conflict between overtrading and inactivity shown in administrative data on brokerage and retirement accounts respectively considerable inertia is found and linked to characteristics e g limited education or resources but less to index movements the downswing has encouraged staying out rather than getting out of the market the small minority with brokerage accounts exhibits important differences in trading patterns relative to the population and invests small fractions of wealth in brokerage accounts results strengthen the case for default options in retirement accounts and built in trading provisions in mutual funds

semiparametric estimation of the intercept of a sample selection model this paper provides a consistent and asymptotically normal estimator for the intercept of a semiparametrically estimated sample selection model the estimator uses a decreasingly small fraction of all observations as the sample size goes to infinity as in heckman 1990 in the semiparametrics literature estimation of the intercept has typically been subsumed in the nonparametric sample selection bias correction term the estimation of the intercept however is important from an economic perspective for instance it permits one to determine the wage gap between unionized and nonunionized workers decompose the wage differential between different socioeconomic groups e g male female and black white and evaluate the net benefits of a social programme

hysteresis and instability in the natural rate of unemployment in this paper it is pointed out that the long run phillips curve genus contains upward and downward sloping species as well as the vertical species two models are used in one the rate of inflation helps determine the natural rate of unemployment as proposed by friedman in the other the process of moving from one inflation rate to another helps shape the natural rate according to the hysteresis effect proposed by phelps in both cases the resulting models are unstable implying that a vertical long run phillips curve will not be regained if disturbed

why do firms offer employment protection this paper derives optimal employment contracts when workers are risk averse and there are employment and unemployment risks without income insurance consumption rises during employment and falls during unemployment optimal employment contracts offer severance compensation and sometimes give notice before dismissal severance compensation smooths consumption during employment and dismissal delays insure partially against the unemployment risk because of moral hazard during the delay consumption falls to give incentives to the worker to search for another job no dismissal delays are optimal if exogenous unemployment compensation is sufficiently generous

heterogeneous job matches and the cyclical behavior of labor turnover abstract worker flows to and from unemployment simultaneously occur over the us business cycle and the size of the flows is positively linked to the unemployment rate unemployment flows and the unemployment rate are highly volatile persistent and countercyclical inflows lead the unemployment rate and the unemployment rate leads outflows over the business cycle the one sector stochastic growth model is augmented by matching frictions in the labor market and match specific productivity shocks that introduce ex post heterogeneous job matches matching frictions help generate the lead lag relationship between unemployment flows and the unemployment rate combined with heterogeneous job matches they generate endogenous unemployment flows and an unemployment rate whose dynamic characteristics match observed data

on the timing and efficiency of creative destruction we analyze the timing pace and efficiency of ongoing job reallocation that results from product and process innovation there are strong reasons why an efficient economy ought to concentrate both job creation and destruction during recessions when the opportunity cost of reallocation is lowest incomplete contracting between labor and capital can disrupt this synchronized pattern and decouple creation and destruction transactional difficulties also lead to technological sclerosis characterized by excessively slow renovation government incentives to production may alleviate high unemployment but exacerbate sclerosis in contrast creation incentives increase the pace of reallocation an optimal combination of both policies restores economic efficiency

why do so few hold stocks the authors investigate why 75 percent of u s households do not hold stocks despite the equity premium and predictions of expected utility models the question is relevant for privatization asset pricing and tax progressivity issues they show that risk aversion per se heterogeneity of beliefs habit persistence time nonseparability and quantity constraints on borrowing do not account for the phenomenon a wedge between borrowing and lending rates and minimum investment requirements are plausible but empirically weak factors more promising explanations are inertia and departures from expected utility maximization there is also qualified support for nondiversifiable income risk as a contributing factor copyright 1995 by royal economic society

business cycles and labor market search the quantitative implications of labor market search for economic fluctuations are evaluated in the context of a real business cycle model incorporating labor market search into the model is found to improve its empirical performance along several dimensions in particular hours now fluctuate substantially more than wages and the contemporaneous correlation between hours and productivity falls in addition the model replicates the observation that output growth displays positive autocorrelation at short horizons overall the empirical results suggest that the labor market search environment embodies a quantitatively important propagation mechanism copyright 1996 by american economic association

applying the copula approach to sample selection modelling the limited availability of tractable multivariate distributions undermines the validity of the standard parametric approach to sample selection modelling copula distributions can be very useful in situations where the applied researcher has a prior on the distributional form of the margins since the modelling of the latter is separated from that of the dependence structure the present article first presents an application to female work data afterwards the approach is analysed in an application to contingent valuation data on recreational values of forests it is shown that the copula approach is especially beneficial in case of strong departures from the hypothesis of normality

the flow into unemployment in britain this paper examines a largely neglected aspect of unemployment dynamics namely the flow into unemployment a model is set up relating this to the demand for labor and the quit rate the empirical results lend considerable support to the model a fall in planned employment growth or a fall in the quit rate both raise the inflow rate the implications of the results for unemployment vacancy analysis are discussed and the distinction made between symmetric and asymmetric shocks to the matching function copyright 1992 by royal economic society

employment during the thatcher years did they fall or were they pushed the paper examines the argument that real wage push has been responsible for the observed increase in unemployment in the uk over the period 1979 to 1985 it explains why real wage push should have been associated with a decline in real profits and that this decline did not in fact occur the association between real wage push and profit decline is complicated by the presence of intermediate inputs and by compositional effects these are also considered an equation accounting for these complications is derived and estimated the data used are individual company records for around 2 300 of the largest uk public and private corporations with on average about 5 500 employess the hypothesis that real wage push caused recently observed increases in unemployment is rejected by the data

wages and unemployment a general framework these remarks are addressed directly to the question of the relationship between wages and unemployment and provide neither a commentary on nor a critique of the stimulating papers presented by edmond malinvaud and robert gordon they do however bear on a number of the issues raised in those papers professor gordon s contribution takes it as read that the business cycle is the fundamental issue of interest in any discussion of wages and unemployment in spite of his avowed and most welcome intention to avoid looking at the world through u s tinted spectacles this primacy of the business cycle phenomenon is closely related to the american post war experience in britain and to a slightly lesser extent in other european countries the fundamental unemployment problem is the inexorably rising trend upon which the business cycles are superimposed this trend is barely apparent in the united states and consequently causes little concern thus the figures in table i show that in britain male unemployment was more thanfive times higher in the last five years of the seventies than it was in the first five years of the fifties and it seems likely that it will almost double again in the first five years of the eighties the contrast with the united states could hardly be more dramatic another dramatic difference between the united states and britain which emerges strongly in professor gordon s paper is the fact that in the former employment fluctuations at least in manufacturing are strongly related to fluctuations in nominal gnp and this is not true in the latter where it appears that nominal gnp fluctuations are dominated by nominal changes thus it may not be very useful to think of nominal gnp as the exogenous driving force behind fluctuations in the british context where then should we look for an explanation of the growth in unemployment and what is the role of wages many british commentators have noted that along with the rising trend in unemployment there has also been a rising trend in real labour costs relative to output per head thus from i964 to i980 this number has risen in britain by about 35 reflecting a considerable increase in the price of labour relative to what is produced this is the well known argument that unemployment is caused by workers pricing themselves out of a job this is more rational than it sounds because generally speaking it would be employees pricingothers outofa job on the other side of the same coin dr morley in thisjournal in 1979 noted that 88 of the variation in annual british unemployment from 1953 to 1977 could be explained by the pre tax profit share one year lagged thus unemployment appears to be related to the fact that real wages and the real return on capital are simply wrong which relates of course to the extensive analysis provided in m malinvaud s contribution

myopic loss aversion information feedback vs investment flexibility we experimentally disentangle the effect of information feedback from the effect of investment flexibility on the investment behavior of a myopically loss averse investor our findings show that varying the information condition alone suffices to induce behavior that is in line with the hypothesis of myopic loss aversion

the determinants of equilibrium unemployment the paper takes the search and matching model of the aggregate labor market to the data it tests the model s empirical validity and employs structural estimation to generate a characterization of the optimal behavior of firms and workers the model is applied to israeli data that are uniquely suited for this kind of empirical investigation the structural estimates are used to quantify the frictions embodied in the model including the costs of search the congestion and trading externality effects and the matching process a calibration simulation analysis then studies the effect of several key variables on equilibrium unemployment

modelling zero values and protest responses in contingent valuation surveys in contingent valuation surveys the category of zero bidders refers to individuals that are not willing to pay anything for the programme under analysis specific questions can help to identify true zero values coming from people that are indifferent to the programme separately from protest responses the latter are generally excluded from the analysis this paper introduces a mixture sample selection model that takes into account both zero values and protest responses in the estimates the model is applied to the valuation of a traffic calming scheme aimed at reducing risks for residents in three villages in the north east of england

evaluation periods and asset prices in a market experiment we test whether the frequency of feedback information about the performance of an investment portfolio and the flexibility with which the investor can change it influence her risk attitude in markets in line with the prediction of myopic loss aversion benartzi and thaler 1995 we find that more information and more flexibility result in less risk taking market prices of risky assets are significantly higher if feedback frequency and decision flexibility are reduced this result supports the findings from individual decision making and shows that markets do not eliminate such behavior

unemployment dynamics and duration dependence a major issue in the analysis of unemployment durations concerns distinguishing genuine duration dependence of the exit rate out of unemployment from unobserved heterogeneity we present a method for the nonparametric estimation of both phenomena designed to be applicable to time series data on aggregate outflows from different duration classes the model explicitly takes into account that individual exit rates are affected by the business cycle and by seasonal effects the method is applied to u s data we find diverging duration effects among black and white individuals however except for white males duration dependence is dominated by unobserved heterogeneity

ownership of stocks and mutual funds a panel data analysis this paper analyzes the ownership dynamics of stocks and mutual funds using representative household panel data the dutch center savings survey 1993 1998 a bivariate dynamic binary choice model is introduced allowing for interactions between the two types of assets we find that unobserved heterogeneity and state dependence play a large role for both types of assets the positive relation between ownership of one type in one period and the other type in the next period is explained by correlated unobserved heterogeneity a negative state dependence effect of lagged ownership of stocks on ownership of mutual funds is found which can be explained by the costs of shifting funds across the two forms of stockholding

the determinants of equilibrium unemployment in britain a reply in my original paper nickell i982 r analyse a theoretical model concerned with flows into and out of unemployment consequent on this analysis i estimate equations which explain the quarterly inflow and outflow rates i e inflow employment and outflow unemployment in the first section of his comments price i985 price rightly points out that such rates cannot be thought of as quarterly probabilities because of the length of the time interval involved on the other hand if it is thought to be helpful the probability interpretation could be sustained to a high degree of approximation if one thought of the quarterly rates as the average daily probability times the number of days in a quarter however since this issue is of no significance vis a vis the original paper i shall turn to the second section of price s comment which deals with my results his first point is concerned with the degree of serial correlation in the residuals in my paper i report durbin watson and box pierce tests the former being a small sample test the latter an asymptotic test neither test rejects the null in either equation price reports that large sample versions of the lm test reject the null in both equations with the outflow rate equation coming off worst the large sample lm test for nth order autocorrelation is based on the r2 from a regression of the fitted residuals on n lags of itself plus all the regressors in the outflow equation there are i5 regressors and 44 observations in order to include n lags on the residuals n observations must be dropped and the regression used to generate the lm test then includes i5 n variables on the right and uses 44n observations the number of degrees of freedom remaining is thus 292n so even with the test for first order serial correlation we have only 27 degrees of freedom remaining and when we arrive at twelfth order serial correlation we are down to 5 degrees of freedom this might explain why the first order lm test is somewhat at odds with the durbinwatson test which is after all a perfectly reasonable small sample test of serial correlation in this particular equation so i do not find this to be convincing evidence that the model originally reported is misspecified however the fact that price finds evidence of parameter instability across the middle of the sample is a more serious matter this is always a potential problem with short samples and lots of regressors since the equations are more or less bound to be overfitted i am guilty as charged on this count the next section of price s comment is concerned for the most part with the outflow rate equation in essence he objects to my running a regression to explain the log outflow rate log ot ut 0 outflow u unemployment in spite of the fact that it is a natural consequence of the theory to back up his i96