unemployment growth and taxation in industrial countries unemployeement and taxes do taxes affect the rate of umemployeement to the layman the upward trend in european unemployment is related to the slowdown of economic growth we argue that the layman s view is correct the increase in european unemployment and the slowdown in economic growth are related because they stem from a common cause an excessively rapid growth in the cost of labour in europe labour costs have gone up for many reasons but one is particularly easy to identify higher taxes on labour if wages are set by strong and decentralized trade unions an increase in labour taxes is shifted onto higher real wages this has two effects first it reduces labour demand and thus creates unemployment secondly as firms substitute capital for labour the marginal product of capital falls over long periods of time this in turn diminishes the incentive to invest and to grow the data strongly support this view according to our estimates the observed rise of 14 percentage points in labour tax rates between 1965 and 1995 in the eu could account for a rise in eu unemployment of roughly 4 percentage points a reduction of the investment share of output of about 3 percentage points and a growth slowdown of about 0 4 percentage points a year francesco daveri and guido tabellini

opening the black box of agglomeration economies for measuring cities competitiveness through international firm networks the ability of cities to operate in global networks is usually measured according to their central position within multinational firm linkages these measures are often used at the interurban level and neglect the intraurban processes of multiplier effects the present study demonstrates that this affects the measurement of city centrality in business networks intraurban capabilities of interaction are considered in the measurement of interurban indices the study is based on hypothetical networks at a micro level between long range links and it mobilises processes as agglomeration economies social capital developments and transaction costs these processes at the intraurban level strengthen the efficiency of interurban linkages it is suggested that the indices used to measure city centrality should include these local effects applied to a small sample of six firm networks the methodology shows advantages for emerging large metropolises but insufficient local effects for specialised clusters the mu

product introduction with network externalities the authors study the introduction of a new product in a market with network externalities there is a common presumption that such markets exhibit excess inertia i e that they are biased toward existing products in contrast the authors provide conditions under which equilibrium involves insufficient friction i e a tendency to rush into new incompatible technologies they also analyze the firms incentives to make their products compatible and they show that the firm introducing the new technology is biased against compatibility copyright 1992 by blackwell publishing ltd

endogenous timing with incomplete information and with observable delay abstract this paper analyzes endogenous timing in a duopoly model with incomplete information firms announce the period in which they will move before choosing an action and are then committed to their choices endogenous stackelberg equilibria with either the informed or the uninformed firm as the stackelberg leader may emerge for most parameters the cournot equilibrium in the first production period results endogenously journal of economic literature classification numbers c72 c73 d82 l10

installed base and compatibility innovation product preannouncements and predation a good is often more valuable to any user the more others use compatible goods the authors show that this effect may inhibit innovation if an installed base exists and transition to a new standard must be gradual early adopters bear a disproportionate share of transient incompatibility costs this can produce excess inertia the installed base however is stranded if the new standard is adopted this may create excess momentum these dynamic effects have strategic implications temporary price cutting can permanently prevent entry and product preannouncements can be critical in innovation these strategic actions have ambiguous welfare effects

job destruction and propagation of shocks this paper considers propagation of aggregate shocks in a dynamic general equilibrium model with labor market matching and endogenous job destruction cyclical fluctuations in the job destruction rate magnify the output effects of shocks as well as making them much more persistent interactions between capital adjustment and the job destruction rate play an important role in generating persistence propagation effects are shown to be quantitatively substantial when the model is calibrated using job flow data incorporating costly capital adjustment leads to significantly greater propagation

do polycentric urban regions promote functional spillovers and economic performance evidence from china although the literature often suggests that the economic prowess of polycentric urban regions partly results from the ability of their constituent cities to promote functional spillovers through

structural transformation and the deterioration of european labor market outcomes this paper examines hours worked in continental europe and the united states from 1956 to 2003 the empirical work establishes two results first hours worked in europe decline by almost 45 percent compared to the united states over this period second this decline is almost entirely accounted for by the fact that europe develops a much smaller market service sector than the united states a simple model of time allocation is used to understand these patterns i find that relative increases in taxes and technological catch up can account for most of the differences between the european and american time allocations over this period

asymmetric enforcement of cooperation in a social dilemma we use a public good experiment to analyze behavior in a decentralized asymmetric punishment institution the institution is asymmetric in the sense that players differ in the effectiveness of their punishment at the aggregate level we observe remarkable similarities between outcomes in asymmetric and symmetric punishment institutions controlling for the average punishment effectiveness of the institutions we find that asymmetric punishment institutions are as effective in fostering cooperation and are as efficient as symmetric institutions at the individual level we find that players with higher punishment effectiveness contribute similar amounts to the public account but have higher earnings and punish more than their weak counterparts

global networks cities and economic performance observations from an analysis of cities in europe and the usa the network paradigm has been highly influential in spatial analysis in the globalisation era as economies across the world have become increasingly integrated so called global cities have come to play a growing role as central nodes in the networked global economy the idea that a city s position in global networks benefits its economic performance has resulted in a competitive policy focus on promoting the economic growth of cities by improving their network connectivity however in spite of the attention being given to boosting city connectivity little is known about whether this directly translates to improved city economic performance and if so how well connected a city needs to be in order to benefit from this in this paper we test the relationship between network connectivity and economic performance between 2000 and 2008 for cities with over 500 000 inhabitants in europe and the usa to inform european policy

stretching the concept of borrowed size borrowed size is an emerging policy concept in several european countries presenting theoretical potential to explain contemporary urban dynamics unaddressed through conventional urban growth theories that emphasise the role of agglomeration economies in its original conceptualisation by alonso the concept describes and explains the situation that especially smaller cities that are located in a larger megapolitan complex do perform better because they have access to agglomeration benefits of larger neighbouring cities this paper scrutinises the concept of borrowed size thereby focusing on its conceptualisation and reviewing its empirical justification thus far our empirical analyses show that the concept must be stretched in terms of scale and scope to enhance its policy value borrowed size occurs when a city possesses urban functions and or performance levels normally associated with larger cities this is enabled through interactions in networks of cities across multiple spatial scales these networks serve as a substitute for the benefits of agglomeration theoretically the borrowed size concept demands a recasting of the geographical foundations of agglomeration theory

the time varying nairu and its implications for economic policy the nairu the unemployment rate consistent with a constant rate of inflation is estimated in this paper as a parameter allowed to vary over time value is determined in an econometric model where the inflation rate depends on its past values demand and supply shocks the nairu estimated for the gdp deflator varies over the past forty years within 5 4 to 6 5 percent its estimated value for the most recent quarter 1996 q2 is 5 6 percent the nairu has declined in recent years in response to global competition immigration other factors weakening labor s bargaining position and the rapidly declining prices of computers and other electronics

clusters dispersion and the spaces in between for an economic geography of the banal while the geographical clustering of economic activities remains an enduring feature of the industrial landscape and a perennial source of theoretical and empirical interest the geographical scale at which external economies and agglomerative effects are now claimed to operate is on the increase such changes in the spatial form and potential causes of agglomeration over time pose important questions how should we analyse changes in the spatial extent of external economies and agglomerative effects ought we to pay more attention to the sorts of banal economic spaces thrown up as part of increasingly diffuse forms of agglomeration to answer the first of these questions it is noted how economists and geographers have explained agglomerations often in the rather singular and invariant categories of pecuniary and marshallian externalities respectively this paper considers the relevance of neo marshallian analysis and the concept of borrowed size as variations on these classical principles to an analysis of the mobility and fixity of external economies and contemporary diffuse forms of agglomeration whilst reflecting important changes in the spatial extent of industrial agglomerations they are insufficiently sensitive to the interaction of different types of external economies with different scale dependencies in answering the second question it is noted that part of the value of analysing the economic basis of largely overlooked banal intermediate places lies in what they may reveal about the functioning of diffuse forms of agglomeration

do reputation feedback systems really improve trust among anonymous traders an experimental study feedback systems are claimed to be a crucial component of the success of electronic marketplaces like ebay or amazon marketplace this article aims to compare the effects of various feedback systems on trust between anonymous traders through a set of experiments based on the trust game our results indicate that trust is significantly improved by the introduction of a reputation feedback system however such mechanisms are far from being perfect and are vulnerable to strategic ratings and reciprocation our findings indicate that some changes in rating rules may significantly improve the efficiency of feedback systems by avoiding strategic rating or reciprocation and hence stimulate trust and trustworthiness among traders in particular a system in which individuals are not informed of their partner s rating decision before making their own decision provides better results both in terms of trust and earnings

cross country differences in unemployment fiscal policy unions and household preferences in general equilibrium we develop a five period overlapping generations model with individuals who differ by ability and with an imperfect labour market union wage setting for the individuals of lower ability the model explains human capital formation hours worked and unemployment within one coherent framework its predictions match the differences in the unemployment rate across 12 oecd countries remarkably well a shapley decomposition of these differences reveals an almost equal role for fiscal policy variables and union preferences as to fiscal policy differences in unemployment benefits play a much more important role than tax differences differences in households taste for leisure are unimportant

exploring the significance of domestic investment for foreign direct investment in china a city network approach this article uses a network approach and a negative binomial regression model nbrm to shed light on the association between domestic investment di and foreign direct investment fdi in interli

on the economic foundation of the urban network paradigm spatial integration functional integration and economic complementarities within the dutch randstad conceptually the degrees of spatial and functional integration and urban complementarities in economic network relations are hypothesised to be important in this paper data on interfirm relations in the dutch randstad are used to test conditions for integration and the existence of economic complementarities a clear hierarchy is observed in the different types of spatial interdependencies in the randstad in which the central place model prevails furthermore no evidence is found for the functional integration of municipalities in the randstad it is concluded that at this moment the randstad does not function as a spatially and functionally integrated region and that spatial economic policy can better focus on smaller regions within the randstad this also calls into question the applicability of the urban network concept in general as the dutch randstad is usually seen as a prime example of an economically successful polycentric urban system

the role of shocks and institutions in the rise of european unemployment the aggregate evidence two key facts about european unemployment must be explained the rise in unemployment since the 1960s and the heterogeneity of individual country experiences while adverse shocks can potentially explain much of the rise in unemployment there is insufficient heterogeneity in these shocks to explain cross country differences alternatively while explanations focusing on labour market institutions explain current heterogeneity well many of these institutions pre date the rise in unemployment based on a panel of institutions and shocks for 20 oecd nations since 1960 we find that the interaction between shocks and institutions is crucial to explaining both stylised facts

engines of liberation electricity was born at the dawn of the last century households were inundated with a flood of new consumer durables what was the impact of this consumer durable goods revolution it is argued here that the consumer goods revolution was conducive to liberating women from the home to analyse this hypothesis a beckerian model of household production is developed households must decide whether or not to adopt the new technologies and whether a married woman should work can such a model help to explain the rise in married female labour force participation that occurred in the last century yes the housewife of the future will be neither a slave to servants nor herself a drudge she will give less attention to the home because the home will need less she will be rather a domestic engineer than a domestic labourer with the greatest of all handmaidens electricity at her service this and other mechanical forces will so revolutionize the woman s world that a large portion of the aggregate of woman s energy will be conserved for use in broader more constructive fields thomas alva edison as interviewed in good housekeeping magazine lv no 4 october 1912 p 436

spatial structure and labour productivity evidence from prefectures in china this paper examines the effect of spatial structure as measured on the monocentricity polycentricity dimension on labour productivity at the prefectural level in china using pooled cross section

the division of markets is limited by the extent of liquidity spatial competition with externalities liquidity considerations will limit the number of markets in a competitive economy welfare implications are ambigious since liquidity is a positive externality there may be too little liquidity per market at a noncooperative equilibrium and too many markets compared to the surplus maximizing market structure but liquidity is also self reinforcing given an existing equilibrium new markets may not open because nobody wants to use a new market with low liquidity there may be too few markets to achieve efficiency a nondiscriminating monopolist will operate smaller and more numerous markets compared to optimality as well as to the equilibrium of independent auctioneers copyright 1988 by american economic association

do non strategic sanctions obey the law of demand the demand for punishment in the voluntary contribution mechanism abstract the prospect of receiving a monetary sanction for free riding has been shown to increase contributions to public goods we ask whether the impulse to punish is unresponsive to the cost to the punisher or whether like other preferences it interacts with prices to generate a conventional demand curve in a series of experiments we randomly vary the cost of reducing the earnings of other group members following voluntary contribution decisions in our design new groups are formed after each interaction and no subject faces any other more than once so there is no strategic reason to punish we nonetheless find significant levels of punishment and we learn that both price and the extent to which the recipient s contribution is below the group mean are significant determinants of the quantity of punishment demanded moreover punishment is mainly directed at free riders even when it costs nothing to the punisher

conditional cooperation and voluntary contributions to public goods we compare a partners condition where the same small group of subjects plays a repeated publi c good game to a strangers condition where subjects play this game in changing group formations subjects in the partners conditi on contribute from t he first period on significantly more to the publi c good than subjects in the strangers conditi on in the strangers conditi on contributions show a continual decay whil e in the partners conditi on contributions fluctuate on a high level until t hey decrease in the final periods we interpret subjects behavior in terms of conditional cooperation which is characterized by both future oriented and reactive behavior

technology adoption in the presence of network externalities we analyze technology adoption in industries where network externalities are significant the pattern of adoption depends on whether technologies are sponsored a sponsor is an entity that has property rights to the technology and hence is willing to make investments to promote it key findings include the following 1 compatibility tends to be undersupplied by the market but excessive standardization can occur 2 in the absence of sponsors the technology superior today has a strategic advantage and is likely to dominate the market 3 when one of two rival technologies is sponsored that technology has a strategic advantage and may be adopted even if it is inferior 4 when two competing technologies both are sponsored the technology that will be superior tomorrow has a strategic advantage

structural change in a multisector model of growth we study a multi sector model of growth with differences in tfp growth rates across sectors and derive sufficient conditions for the coexistence of structural change characterized by sectoral labour reallocation and constant aggregate growth path the conditions are weak restrictions on the utility and production functions commonly applied by macroeconomists we present evidence from us two digit industries that is consistent with our predictions about structural change and successfully calibrate the historical shift from agriculture to manufacturing and services we show quantitatively that reasonable deviations from our conditions do not have a big impact on the properties of the model

the dynamics of seller reputation evidence from ebay we construct a panel of ebay seller histories and examine the importance of ebay s reputation mechanism we find that when a seller first receives negative feedback his weekly sales rate drops from a positive 7 to a negative 7 subsequent negative feedback ratings arrive 25 more rapidly than the first one and don t have nearly as much impact as the first one we also find that a seller is more likely to exit the lower his reputation is and that just before exiting sellers receive more negative feedback than their lifetime average we consider a series of theoretical models and measure them against these empirical results regardless of which theoretical model best explains the data an important conclusion of our paper is that ebay s reputation system gives way to noticeable strategic responses from both buyers and sellers

unemployment and hours of work the north atlantic divide revisited i examine the dynamic evolutions of unemployment hours of work and the service share since the war in the united states and europe the theoretical model brings together all three and emphasizes technological growth computations show that the very low unemployment in europe in the 1960s was due to the high productivity growth associated with technological catch up productivity also played a role in the dynamics of hours but a full explanation for the fast rise of service employment and the big fall in aggregate hours needs further research taxation has played a role but results are mixed

too much investment a problem of endogenous outside options this paper shows that when agents on both sides of the market are heterogeneous varying in their costs of investment ex ante investments by firms and workers or buyers and sellers more generally may be too high when followed by stochastic matching and bargaining over quasi rents the overinvestment is caused by the fact that low cost agents by investing more can increase the value of their outside option and thus shift rent away from high cost investors numerical simulations show that overinvestment can occur given parameter values calibrated to oecd labour markets

the city network paradigm measuring urban network externalities in recent years network behaviour has been analysed extensively as the emerging model for economic growth by network behaviour a metaphor for co operative behaviour among individuals corporate

the relevance of equal splits in ultimatum games abstract in this note we present a slightly altered version of the mini ultimatum game of g e bolton and r zwick 1995 games econ behav 10 95 121 more specifically we replaced exactly equal splits by nearly equal splits either slightly favoring the proposer or the responder such a minor change should not matter if behavior was robust we find however a significant change in behavior fair offers occur less often when equal splits are replaced by nearly equal splits journal of economic literature classification numbers c72 c78 c92

the impact of tfp growth on steady state unemployment theoretical predictions of the impact of total factor productivity tfp growth on unemployment are ambiguous and depend on the extent to which new technology is embodied in new jobs we evaluate a model with embodied and disembodied technology capitalization and creative destruction effects in econometric estimates with a panel of industrial countries we find a large negative impact of tfp growth on unemployment which implies that embodied technology and creative destruction play no role in the steady state dynamics of unemployment capitalization effects explain some of the estimated impact but a part remains unexplained

induced adoption and externalities in the regional diffusion of information technology antonelli c 1990 induced adoption and externalities in the regional diffusion of information technology reg studies 24 31 40 information technology can be considered as a set of complex radical innovations which continues to evolve and has a major impact both within the plant and the office in such a context its regional diffusion is likely to be determined by relevant externalities together with the effects of a wage induced process of localized technological change and adoption data on the territorial distribution of fax machines and modems show that the levels of diffusion of information technology in italy is highly uneven favouring central regions endowed with higher levels of fixed and human capital and consequently income the econometric analysis confirms that diffusion levels of both fax and modems across provinces are significantly associated with the level of wages as is to be expected from the induced adoption hypothesis and from the existence of external factors such as the presence

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

unemployment insurance and unemployment spells this paper tests the effects of the level and length of unemployment insurance benefits on unemployment durations the paper particularly studies individual behavior during the weeks just prior to when benefits lapse higher unemployment insurance benefits are found to have a strong negative effect on the probability of leaving unemployment however the probability of leaving unemployment rises dramatically just prior to when benefits lapse individual data are used with accurate information of spell durations and the level and length of benefits the semiparametric estimation techniques used in the paper yield more plausible estimates than conventional approaches and provide useful diagnostics copyright 1990 by the econometric society

bargaining frictions labor income taxation and economic performance abstract this paper is an attempt to explain differences in economic performance between a subset of oecd countries we classify countries in terms of their degree of rigidity in the labor market and use a matching model with labor leisure choice bargaining frictions and labor income taxation to capture these rigidity differences added flexibility improves economic performance in different ways depending on whether income taxation is high or low feeding income taxation rates estimated from the countries at hand we find that the model is able to replicate the observed rigidity levels the model is also shown to reproduce well cross country differences in non employment population ratios and the share of part time jobs in the absence of rigidity differences taxation shows little promise to replicate cross country differences as it has insufficient quantitative effects on production and productivity however the interaction of rigidity and income taxation is crucial in explaining the empirical patterns of the non employment rate and of the share of part time jobs

regional spatial structure and retail amenities in the netherlands burger m j meijers e j and van oort f g regional spatial structure and retail amenities in the netherlands regional studies this paper examines how the presence of retail amenities in dutch regions is dependent on their spatial structure retail amenities in particular those specialized retail functions that require a large urban support base are less found in more polycentric and more dispersed regions this can be explained by the observation that in polycentric and dispersed regions the degree of market fragmentation is higher as a result of more intense regional competition and spacing between retail centres evidence is found for ways to overcome the lack of agglomeration benefits in more polycentric and more dispersed regions both concentration of retail and more complementarities between cities retail amenities may make up for the disadvantages of regions being polycentric or dispersed these findings provide a rationale to coordinate regionally specialized retailing in polycentric and

structural change in advanced nations a new set of stylised facts we provide new evidence on patterns of structural change in advanced economies reconsidering the stylised facts put forward by kaldor 1963 kuznets 1971 and maddison 1980 since 1980 the services sector has overwhelmingly predominated in the economic activity of the european union japan and the us but there is substantial heterogeneity among services personal finance and business services have low productivity growth and increasing shares in employment and gdp by contrast shares of distribution services are constant and productivity growth is rapid we find that the labour share in value added is declining while the use of ict capital and skilled labour is increasing in all sectors and regions

unemployment insurance and cultural transmission theory and application to european unemployment this paper emphasizes the two way causality between the provision of unemployment insurance and the cultural transmission of work ethic values affect the size of the moral hazard problem and hence the policy to be implemented conversely when parents rationally choose how much effort to exert to raise their children to work hard they form expectations on the policy that will be implemented by the next generation in this context we show that the different cultural traits are complementary and that there is some cultural heterogeneity in all steady state equilibria the model could generate a lag between the introduction of unemployment insurance and a deterioration of the work ethic relying on a calibration we argue that it can account for a substantial fraction of the history of european unemployment since world war ii as our explanation is compatible with the co existence of generous unemployment insurance and low unemployment in the 1950s and 1960s it could be seen as an alternative to the dominant story that relies on the occurrence of large shocks since the 1970s supportive empirical evidence is provided

i paid a bribe an experiment on information sharing and extortionary corruption abstract theoretical and empirical research on corruption has flourished in the last three decades however identifying successful anti corruption policies remains a challenge in this paper we ask whether bottom up institutions that rely on voluntary and anonymous reports of bribe demands such as the i paid a bribe website first launched in india in 2010 could act as effective anti corruption tools and if this is the case whether and how their effectiveness could be improved we overcome measurement and identification problems by addressing our research questions in the laboratory our results show that the presence of a reporting platform like the i paid a bribe website may be insufficient to systematically lower bribery a more effective platform is one where posts disclose specific information about the size of the bribes and the location of their requestors i e a platform that could serve as a search engine for the least corrupt officials especially if posting is restricted to service recipients our results also show that while citizens rarely post false information lying by officials when allowed to post on the platform is widespread