an empirical analysis of post merger organizational integration we study post merger organizational integration using linked employer employee data integration is implemented by reassigning a small number of high skilled workers especially in r d and management workforce mixing is concentrated to establishments set up after merger rather than to previously existing establishments worker turnover is high after merger but new hiring yields stable total employment target employees have higher turnover and reassignment particularly if the target firm is small relative to the acquiring firm these findings might suggest that integration is costly but can be achieved by focusing on key employees alternatively the reassignment of a few key employees is sufficient for achieving integration

equilibrium search models and the transition from school to work this paper applies the burdett mortensen 1998 equilibrium search model to study the school to work transitions of u s high school graduates we consider the case of discrete firm heterogeneity and provide a computational method to obtain the mle our results show that unemployed blacks receive fewer offers than whites and employed blacks are more likely to lose their jobs importantly employed blacks and whites receive job offers at the same rate assigning the whites search parameters to the blacks and re solving reveals that 75 percent of the observed wage differential is explained by the job destruction rate differences

inefficient credit booms this paper studies the welfare properties of competitive equilibria in an economy with financial frictions hit by aggregate shocks in particular it shows that competitive financial contracts can result in excessive borrowing ex ante and excessive volatility ex post even though from a first best perspective the equilibrium always displays under borrowing from a second best point of view excessive borrowing can arise the inefficiency is due to the combination of limited commitment in financial contracts and the fact that asset prices are determined in a spot market this generates a pecuniary externality that is not internalized in private contracts the model provides a framework to evaluate preventive policies which can be used during a credit boom to reduce the expected costs of a financial crisis copyright 2008 wiley blackwell

are fast responses more random testing the effect of response time on scale in an online choice experiment scepticism over stated preference surveys conducted online revolves around the concerns over professional respondents who might rush through the questionnaire without sufficiently considering the information provided to gain insight on the validity of this phenomenon and test the effect of response time on choice randomness this study makes use of a recently conducted choice experiment survey on ecological and amenity effects of an offshore windfarm in the uk the positive relationship between self rated and inferred attribute attendance and response time is taken as evidence for a link between response time and cognitive effort subsequently the generalised multinomial logit model is employed to test the effect of response time on scale which indicates the weight of the deterministic relative to the error component in the random utility model results show that longer response time increases scale i e decreases choice randomness this positive scale effect of response time is further found to be non linear and wear off at some point beyond which extreme response time decreases scale while response time does not systematically affect welfare estimates higher response time increases the precision of such estimates these effects persist when self reported choice certainty is controlled for implications of the results for online stated preference surveys and further research are discussed

job mobility and earnings instability there is still no consensus on the causes of the increase in the variance of transitory earnings earnings instability in the united states it is difficult to attribute the rise in instability to job mobility because there is no evidence of a concurrent increase in job turnover or separations using an error component model of the covariance structure of earnings on panel survey of income dynamics and survey of income and program participation data this study shows that job mobility and the increase in the variance of wage changes upon job change accounts for a substantial part of the increase in earnings instability the empirical evidence is consistent with the simulations of a search and matching model where an increase in the variance of productivity shocks increases on the job search and earnings instability among job changers while leaving job turnover approximately constant jel j21 j31

does search boost efficiency poaching externality arising from job to job turnovers implies that a planner should allocate fewer resources to costly job creations however these search efforts increase competition among employers and this could in turn internalize the externality whereas the congestion externality requires a unit elastic matching function

a quantitative evaluation of payroll tax subsidies for low wage workers an equilibrium search approach abstract phelps phelps e 1994 low wage employment subsidies versus the welfare state american economic review 84 54 58 presented the case for a low wage subsidy policy since the mid 1990s france has experimented with this strategy this paper evaluates the effect of this policy on employment and also on output and welfare we construct an equilibrium search model incorporating wage posting and specific human capital investment where unemployment and the distribution of both wages and productivity are endogenous we estimate this model using french data numerical simulations show that the prevailing minimum wage allows a high production level to be reached by increasing training investment even though the optimal minimum wage is lower we show that payroll tax subsidies enhance welfare more than a reduction in the minimum wage when they are spread over a large range of wages in order to avoid specialization in low productivity jobs

self fulfilling currency crises the role of interest rates abstract we develop a stylized currency crises model with heterogeneous information among investors andendogenous determination of interest rates in a noisy rational expectations equilibrium our modelcaptures three key features of interest rates the opportunity cost of attacking the currency respondsto the investors behavior the domestic interest rate may influence the central bank s preferences fora fixed exchange rate and the domestic interest rate serves as a public signal which aggregatesprivate information about fundamentals we explore the payoff and informational channels throughwhich interest rates determine devaluation outcomes and examine the implications for equilibriumselection by global games methods our main conclusion is that multiplicity is not an artifact ofcommon knowledge in particular we show that multiplicity emerges robustly either when adevaluation is triggered by the cost of high domestic interest rates as in obstfeld 1996 or when adevaluation is triggered by the central bank s loss of foreign reserves as in obstfeld 1986 providedthat the domestic asset supply is sufficiently elastic in the interest rate and shocks to the domesticbond supply are sufficiently small christian helliwigdepartment of economicsuniversity of california los angelesbox 951477los angeles ca 90095 1477arijit mukherjiuniversity of minnesotaaleh tsyvinskidepartment of economicsharvard universitylittauer centercambridge ma 02138 3001

the distribution of earnings in an equilibrium search model with state dependent offers and counteroffers we construct an equilibrium job search model with on the job search in which firms implement optimal wage strategies under full information in the sense that they leave no rent to their employees and counter the offers received by their employees from competing firms productivity dispersion across firms results in wage mobility both within and across firms workers may accept wage cuts to move to firms offering higher future wage prospects equilibrium productivity dispersion across ex ante homogeneous firms can be endogenously generated productivity dispersion then generates a nontrivial wage distribution which is generically thin tailed as typically observed in the data

does no mean no a protest methodology in this paper we propose a method of identifying and truncating protesters in contingent valuation surveys we propose using a system of willingness to pay wtp questions that value multiple goods and that use both discrete choice and open ended questions coupled with multiple questions about protest beliefs administered to the entire sample protesters can then be identified because they reject all bids declare zero on all open ended questions and hold protest beliefs the proposed procedure has been empirically tested on an air pollution data set from poland where 27 of the sample was identified as protesters the adjustment for protesters increased the estimated wtp values by a factor of more than 3

financial contagion through capital connections a model of the origin and spread of bank panics financial contagion is modeled as an equilibrium phenomenon in a dynamic setting with incomplete information and multiple banks the equilibrium probability of bank failure is uniquely determined we explore how the cross holding of deposits motivated by imperfectly correlated regional liquidity shocks can lead to contagious eects conditional on the failure of a financial institution we show that contagion is possible in the unique equilibrium of the economy and characterize exactly when it may exist at the same time we identify a direction of flow for contagious eects which provides a rationale for localized financial panics simulations identify the optimal level of interbank deposit holdings in the presence of contagion risk our results suggest that when the probability of bank failure is low maximal levels of interbank holdings are optimal when cross holding of deposits is complete we demonstrate that the intensity of contagion is increasing in the size of regionally aggregate liquidity shocks

willingness to pay for land preservation across states and jurisdictional scale implications for benefit transfer in stated preference valuation of farmland preservation respondents are often told that preservation will occur within various jurisdictional scales that is community or state but are not told the specific location of parcels the resultant availability of welfare estimates for different scales and regions provides numerous avenues for benefit transfer this paper provides a systematic assessment of transfer error contrasting different methods for the transfer of farmland preservation values across states and jurisdictional scales results drawn from multistate choice experiments suggest that the choice of across scale versus across state transfer method can have significant implications for transfer validity

inferred and stated attribute non attendance in food choice experiments we review the current literature on attribute non attendance in stated choice and use data from beef and chicken choice experiments using both inference and the respondents own statements inference is based on panel data analysis by mixed logit models of choice with both discrete and continuous mixtures of coefficients and is conditional on the observed pattern of choice information from respondent statements on non attendance is directly embedded in the specification of the indirect utility function results show no clear winner between the inferential approaches but the inference based on constrained latent class panel models better matches the observed data

collective moral hazard maturity mismatch and systemic bailouts the paper elicits a mechanism by which private leverage choices exhibit strategic complementarities through the reaction of monetary policy when everyone engages in maturity transformation authorities haver little choice but facilitating refinancing in turn refusing to adopt a risky balance sheet lowers the return on equity the key ingredient is that monetary policy is non targeted the ex post benefits from a monetary bailout accrue in proportion to the number amount of leverage while the distortion costs are to a large extent fixed this insight has important consequences first banks choose to correlate their risk exposures second private borrowers may deliberately choose to increase their interest rate sensitivity following bad news about future needs for liquidity third optimal monetary policy is time inconsistent fourth macro prudential supervision is called for we characterize the optimal regulation which takes the form of a minimum liquidity requirement coupled with monitoring of the quality of liquid assets we establish the robustness of our insights when the set of

knowing what others know coordination motives in information acquisition we explore how optimal information choices change the predictions of strategic models when a large number of agents play a game with strategic complementarity information choices exhibit complementarity as well if an agent wants to do what others do they want to know what others know this makes heterogeneous beliefs di cult to sustain and may generate multiple equilibria in models with substitutability agents prefer to difierentiate their information choices we use these theoretical results to examine the role of information choice in recent price setting models and to propose modeling techniques that ensure equilibrium uniqueness

incorporating discontinuous preferences into the analysis of discrete choice experiments data from a discrete choice experiment on improvements of rural landscape attributes are used to investigate the implications of discontinuous preferences on willingness to pay estimates using a multinomial error component logit model we explore differences in scale and unexplained variance between respondents with discontinuous and continuous preferences and condition taste intensities on whether or not each attribute was considered by the respondent during the evaluation of alternatives results suggest that significant improvements in model performance can be achieved when discontinuous preferences are accommodated in the econometric specification and that the magnitude and robustness of the willingness to pay estimates are sensitive to discontinuous preferences

wage dispersion and decentralization of wage bargaining this article studies how decentralization of wage bargaining from sector to firm level influences wage levels and wage dispersion we use detailed panel data covering a period of decentralization in the danish labor market the decentralization process provides variation in the individual worker s wage setting system that facilitates identification of the effects of decentralization we find a wage premium associated with firm level bargaining relative to sector level bargaining and that the return to skills is higher under the more decentralized wage setting systems using quantile regression we also find that wages are more dispersed under firm level bargaining compared to more centralized wage setting systems

characterizing the effects of valuation methodology in function based benefits transfer abstract meta analyses have demonstrated that willingness to pay wtp estimates vary systematically according to methodological factors the benefits transfer literature provides little guidance with regard to the treatment of such effects transfers are typically conducted by ignoring such effects using ad hoc adjustments or otherwise suppressing information regarding the sensitivity of wtp to methodological attributes this paper illustrates a means to characterize methodological effects within benefits transfer based on an application of the common bootstrap drawing from meta analysis the approach characterizes the sampling distribution of wtp with respect to patterns of methodological variation present in underlying studies results provide a means to characterize the extent of variation associated with predefined groups of methodological attributes providing transparent information on the sensitivity of wtp not typically available in benefits transfer

on the job search and the wage distribution the article structually estimates an on the job search model of job separations given each employer pays observably equivalent workers the same but wages are dispersed across employers an employer s separation flow is the sum of an exogenous outflow unrelated to the wage and a job to job flow that decreases with the employer s wage using data from the danish integrated database for labour market research the empirical results imply as predicted by theory that search effort declines with the wage furthermore the estimates explain the employment effect defined as the horizontal difference between the distribution of wages earned and the wage offer distribution

information management in banking crises a regulator resolving a bank faces two audiences depositors who may run if they believe the regulator will not provide capital and banks which may take excess risk if they believe the regulator will provide capital when the regulator s cost of injecting capital is private information it manages expectations by using costly signals i a regulator with a low cost of injecting capital may forbear on bad banks to signal toughness and reduce risk taking and ii a regulator with a high cost of injecting capital may bail out bad banks to increase confidence and prevent runs regulators perform more informative stress tests when the market is pessimistic

testing choice experiment for benefit transfer with preference heterogeneity benefit transfer is a cost effective method for estimating the value of environmental goods that relies on information obtained in previous studies the multiattribute approach of choice experiments should provide advantages in terms of benefit transfer allowing differences in environmental improvements between sites as well as differences in socioeconomic and attitude characteristics between respondent populations this article investigates the capability of choice experiment method to be used in environmental benefit transfer when a random parameters approach is used to allow for preference heterogeneity we find that the inclusion of respondents taste heterogeneity reduces the magnitude of the transfer error

equilibrium search with continuous productivity dispersion theory and nonparametric estimation in this article we develop an equilibrium search model with a continuous distribution of firm productivity types within a given labor market we characterize equilibrium derive expressions for the endogenous equilibrium wage distributions and characterize the set of wage distributions that can be generated by the model we develop a structural nonparametric estimation method for the productivity distribution we estimate the model using french longitudinal survey data on labor supply and we compare the results with those from a french panel data set of firms the results are informative on the degree to which firms exploit search frictions

frictional wage dispersion in search models a quantitative assessment we propose a new measure of frictional wage dispersion the mean min wage ratio for a large class of search models we show that this measure is independent of the wage offer distribution but depends on statistics of labor market turnover and on preferences under plausible preference parameterizations observed magnitudes for worker flows imply that in the basic search model and in most of its extensions frictional wage dispersion is very small notable exceptions are some of the most recent models of on the job search our new measure allows us to rationalize the diverse empirical findings in the large literature estimating structural search models

taxation and the long run allocation of labor theory and danish evidence abstract inspired by hayek 1945 we study the distortionary effects of taxation on labor mobility and the long run allocation of labor across different profitable opportunities these effects are not well detected by the methods applied in the large public finance literature estimating the elasticity of taxable income and quantifying the efficiency loss from taxation our analysis builds on a standard search theoretic framework where workers are continually seeking better paid jobs but are also fired from time to time because of economic development and productivity shocks we incorporate non linear taxation into this setting and estimate the structural parameters of the model using employer employee register based data for the full danish population of workers and workplaces for the years 2004 2006 our results indicate that along the intensive margin the danish taxation generates an overall efficiency loss corresponding to a 12 reduction in total income it is possible to reap 4 5 of this potential efficiency gain by going from a high tax scandinavian system to a level of taxation in line with low tax oecd countries such as the united states the tax responsiveness of labor mobility and allocation corresponds to an elasticity of taxable income with respect to the net of tax rate in the range 0 15 0 35

a model of a systemic bank run abstract this paper provides a model of the view that the 2008 financial crisis is reminiscent of a bank run focussing on six stylized key features in particular core financial institutions have invested their funds in asset backed securities rather than committed to long term projects in distress these can potentially be sold to a large pool of outside investors at steep discounts i consider two different motives for outside investors and their interaction with banks trading asset backed securities uncertainty aversion versus adverse selection i shall argue that the version with uncertainty averse investors is more consistent with the stylized facts than the adverse selection perspective in the former the crisis deepens the larger the market share of distressed core banks while a run becomes less likely instead as a result in the adverse selection version therefore the outright purchase of troubled assets by the government at prices above current market prices may both alleviate the financial crises as well as provide tax payers with returns above those for safe securities

crises and prices information aggregation multiplicity and volatility crises are volatile times when endogenous sources of information are closely monitored we study the role of information in crises by introducing a financial market in a coordination game with imperfect information the asset price aggregates dispersed private information acting as a public noisy signal in contrast to the case with exogenous information our main result is that uniqueness may not obtain as a perturbation from perfect information multiplicity is ensured with small noise in addition we show that a multiplicity may emerge in the financial price itself b less noise may contribute toward nonfundamental volatility even when the equilibrium is unique and c similar results obtain for a model where individuals observe one another s actions highlighting the importance of endogenous information more generally

meta analysis and benefit transfer for resource valuation addressing classical challenges with bayesian modeling abstract the use of meta regression models based on existing studies to estimate the value of resources at a new policy site has become a popular alternative to collecting original data in recent years there are two prevalent dilemmas associated with classical meta regression models the difference in the available set of regressors across source studies and the treatment of methodological explanatory variables in the construction of benefit transfer functions in this study we illustrate how these issues can be addressed efficiently within a bayesian meta regression framework we find that the bayesian model in contrast to its classical counterpart can estimate a relatively large set of parameters including indicators of unobserved study heterogeneity with reasonable accuracy even when the underlying meta sample is small the incorporation of information from regressor deficient source data in the specification of bayesian priors leads to a better model fit and tighter welfare estimates for benefit transfer in our application of freshwater angling

testing different types of benefit transfer in valuation of ecosystem services new zealand winegrowing case studies abstract most ecosystem services es are neither priced nor marketed resource managers may fail to take into account degradation of unpriced services in their resource management decisions being able to estimate values for es is fundamental to designing policies to induce resource users to provide or improve es at levels that are acceptable to society conducting ecosystem valuation via non market methods is costly and time consuming benefit transfer bt using choice experiment ce is a potentially cost effective method for valuing es by transferring information from existing valuation studies and study sites to a target area of interest policy sites the prime objective of this paper is to examine the validity of bt and hence whether it is feasible to conduct the transfer process and assist policy making the paper focuses on the environmental impact of winegrowing practices in two new zealand winegrowing regions the two sites hawke s bay and marlborough have similar environmental issues and attributes but are geographically separated the study estimates willingness to pay wtp and compensating surplus cs for es applying ce and subsequently given the preferences of respondents across sites and populations tests the transferability of unadjusted value transfer wtp and benefits function cs assessing four different types of bt

utility in willingness to pay space a tool to address confounding random scale effects in destination choice to the alps we compare two approaches for estimating the distribution of consumers willingness to pay wtp in discrete choice models the usual procedure is to estimate the distribution of the utility coefficients and then derive the distribution of wtp which is the ratio of coefficients the alternative is to estimate the distribution of wtp directly we apply both approaches to data on site choice in the alps we find that the alternative approach fits the data better reduces the incidence of exceedingly large estimated wtp values and provides the analyst with greater control in specifying and testing the distribution of wtp copyright 2008 oxford university press

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

on the job search and wage dispersion new evidence from time use data this paper provides new evidence on time devoted to job search by the employed in the u s i find that search effort decreases with the current wage with an elasticity between 0 7 and 1 3

choice modeling and tests of benefit transfer choice modelling cm is a stated preference technique that is increasingly being used to generate estimates of non market values in cm applications respondents to a survey are presented with several sets of options which contain common attributes but at varying levels and are asked to select their preferred alternative from each set the information provided by respondents choices is used to estimate marginal rates of substitution and hence estimates of value in this paper the results from three separate cm applications are presented estimates are made of the value of improving the quality of wetlands the first two applications focused on the gwydir wetlands in new south wales australia one survey was conducted in sydney a major urban centre and the second was conducted in moree a rural centre close to the gwydir wetlands the third survey which was also conducted in sydney focused on the macquarie marshes another wetland in new south wales an objective of the study was to test the suitability of using cm derived estimates for benefit transfer both across different populations and across different wetlands cm is potentially suited to benefit transfer because it is possible to allow for differences in environmental improvements between sites as well as differences in socio economic characteristics between respondent populations several tests aimed at determining the validity of transfers using cm across sites and populations are presented these include tests of the equality of models implicit prices and estimates of compensating surplus

the pervasive absence of compensating differentials we study the relation between individual preferences for job amenities e g type of work job security and compensating wage differentials in cross section to this end we estimate a partial equilibrium job search model on panel data from eight european countries there are five non wage job characteristics and two sources of job to job mobility on the job search and reallocation shocks we also allow for two types of unobserved heterogeneity we find strong preferences for amenities especially job security yet these preferences do not translate into significant wage differentials in cross section counterfactual experiments show that one would need extremely low levels of search frictions for compensating differentials to arise lastly a similar exercise on the distribution of job change outcomes reveals the role of constrained job to job mobility in the absence of compensating wage differentials copyright 2009 john wiley sons ltd

job duration seniority and earnings an important stylized fact about labor markets is that workers with longer seniority with their current employer have higher earnings than other workers with the same total labor market experience this study shows that workers in longer jobs earn more throughout than workers in a series of shorter jobs and that the measured positive cross sectional return seniority is largely a statistical artifact due to the correlation of seniority with an omitted variable representing the quality of the worker the job or the worker employer match the implication is tha t earnings do not in fact rise very much with seniority copyright 1987 by american economic association

rollover risk liquidity and macroprudential regulation i study rollover risk in wholesale funding markets when intermediaries hold liquidity ex ante and fire sales may occur ex post multiple equilibria exist in a global rollover game intermediate liquidity holdings support equilibria with both positive and zero expected liquidation a simple uniqueness refinement pins down the private liquidity choice which balances the forgone expected return on investment with reduced fragility and costly liquidation due to fire sales liquidity holdings are strategic substitutes intermediaries free ride on the holdings of other intermediaries causing excessive liquidation to internalize the systemic nature of liquidity a macroprudential authority imposes liquidity buffers

the role of demandable debt in structuring optimal banking arrangements demandable debt finance by banks warrants explanation because it entails costs of bank suspension liquidation and idle reserve holdings an explanation is developed in which demandable debt provides incentive compatible intermediation where the banker has comparative advantage in allocating investment funds but may act against the interests of uninformed depositors demandable debt attracts funds by giving depositors an option to force liquidation its usefulness in transacting follows from information sharing between monitors and nonmonitors copyright 1991 by american economic association

illiquidity component of credit risk we describe and contrast three dierent measures of an institu tion s credit risk insolvency risk is the conditional probability of default due to deterioration of asset quality if there is no run by short term creditors total credit risk is the unconditional probability of default either because of a short term creditor run or long run asset insolvency illiquidity risk is the dierence between the two i e the probability of a default due to a run when the institution would otherwise have been solvent we discuss how the three kinds of risk vary with balance sheet composition we provide a formula for illiquidity risk and show that it is i decreasing in the liquidity ratio the ratio of realizable cash on the balance sheet to short term liabilities ii increasing in the outside option ratio a measure of the opportunity cost of the funds used to roll over short term liabil ities and iii increasing in the fundamental risk ratio a measure of ex post variance of the asset portfolio

unemployment fluctuations over the life cycle abstract in this paper we show that i the volatility of worker flows increases with age in us cps data and ii a search and matching model with life cycle features endogenous separation and search effort is well suited to explain this fact with a shorter horizon on the labor market older workers outside options become less responsive to new employment opportunities thereby making their wages less sensitive to the business cycle their job finding and separation rates are then more volatile along the business cycle the horizon effect cannot explain the significant differences between prime age and young workers as both age groups are far away from retirement a lower bargaining power on the youth labor market brings the model closer to the data

do wages rise with job seniority many previous studies have found a strong positive effect of job seniority tenure on wages this paper re examines the evidence using a simple instrumental variables scheme to deal with the fact that tenure is likely to be related to unobserved individual and job characteristics that affect the wage we use the variation of tenure over a given job match as the principal instrumental variable for tenure the variation in tenure over the job is uncorrelated by construction with the fixed individual and job match specific components of the error term of the wage equation our main finding is that the partial effect of tenure on wages is small and that general labour market experience and job shopping account for most wage growth over a career the strong cross section relationship between tenure and wages is due primarily to heterogeneity bias prior researchers see mincer and jovanovic 1981 bartel and borjas 1981 borjas 1981 cline 1979 and mellow 1981 and many others have established that job seniority has a strong positive relationship with wage rates in a cross section or a cross section time series of individuals in this paper we re evaluate the evidence concerning the partial effects on wages of job seniority tenure and total labour market experience the extent to which wages rise with tenure is important for several reasons first and foremost the wage tenure profile is a fundamental question about the structure of earnings over careers second the wage tenure profile is a key determinant of the extent to which the earnings power of individuals is tied to specific jobs and it is important for assessment of the losses suffered by displaced workers hamermesh 1984 third evidence that wages rise with job tenure has been used to explain the decline in quits with tenure since the wage growth on the current job lowers the probability that the worker will locate a superior alternative a growing theoretical literature surveyed in parsons 1984 has taken the evidence of a strong wage tenure profile at face value and sought to provide an explanation for the relationship the most prominent explanation is the theory of specific human capital oi 1962 becker 1962 mincer 1974 parsons 1972 kuratani 1973 and hashimoto 1980 in which the growth of wages with tenure holding experience constant is attributed to the worker s share of investments in firm specific skills more recently lazear 1981 has presented a supervision model of wage growth in which firms defer compensation as a means of inducing workers not to shirk freeman 1977 and harris and holmstrom 1982 provide an explanation for wage growth based on an insurance motive salop and salop 1976 nickell 1976 and guasch and weiss 1982 present adverse selection models of wage growth in which firms use a wage tenure profile as a

the composition of wage differentials between migrants and natives we consider the role of unobservables such as differences in search frictions reservation wages and productivities for the explanation of wage differentials between migrants and natives we disentangle these by estimating an empirical general equilibrium search model with on the job search due to bontemps et al 1999 on segments of the labour market defined by occupation age and nationality using a large scale german administrative dataset the native migrant wage differential is then decomposed into several parts and we focus especially on the component that we label migrant effect being the difference in wage offers between natives and migrants in the same occupation age segment in firms of the same productivity counterfactual decompositions of wage differentials allow us to identify and quantify their drivers thus explaining within a common framework what is often labelled the unexplained wage gap

does unmeasured ability explain inter industry wage differentials this paper provides empirical assessments of the two leading explanations of measured inter industry wage differentials 1 true wage differentials exist across industries and 2 the measured differentials simply reflect unmeasured differences in workers productive abilities first we summarize the existing evidence on the unmeasured ability explanation second we construct a simple model which shows that if matching is important then endogenous job change decisions can create important self selection biases even in first differenced estimates of industry wage differentials third we analyze a sample that approximates the experiment of exogenous job loss we find that i the wage change experienced by a typical industry switcher closely resembles the difference in the relevant industry differentials estimated in a cross section and ii pre displacement industry affiliation plays an important role in post displacement wage determination

signaling in a global game coordination and policy traps this paper introduces signaling in a global game so as to examine the informational role of policy in coordination environments such as currency crises and bank runs while exogenous asymmetric information has been shown to select a unique equilibrium we show that the endogenous information generated by policy interventions leads to multiple equilibria the policy maker is thus trapped into a position in which self fulfilling expectations dictate not only the coordination outcome but also the optimal policy this result does not rely on the freedom to choose out of equilibrium beliefs nor on the policy being a public signal it may obtain even if the policy is observed with idiosyncratic noise

attending to the reasons for attribute non attendance in choice experiments this paper focuses on behavioural reasons underlying stated attribute non attendance in choice experiments in order to identify and incorporate procedures for dealing with heterogeneous attribute processing strategies we ask respondents follow up questions regarding their reasons for ignoring attributes based on these statements we conclude that the standard way of assigning a zero impact of ignored attributes on the likelihood is inappropriate we find that some respondents act in accordance with the passive bounded rationality assumption since they ignore an attribute simply because it does not affect their utility excluding these genuine zero preferences as the standard approach essentially does might bias results other respondents claim to have ignored attributes to simplify choices however we find that these respondents have actually not completely ignored attributes we argue along the rationally adaptive behavioural model that valid preference information may indeed be elicited in these cases and we illustrate how recoding of non attendance statements conditional on stated reasons may be a more appropriate solution than the current standard way of taking stated non attendance into account

the contributions of search and human capital to earnings growth over the life cycle abstract this paper presents and estimates a unified model where both human capital investment and job search are endogenized this unification enables us to quantify the relative contributions of each mechanism to life cycle earnings growth while investigating potential interactions between human capital investment and job search within the unified framework the expectation of rising rental rates of human capital through job search gives workers more incentive to invest in human capital in addition unemployed workers reduce their reservation rental rates and increase their search effort to leave unemployment quickly to take advantage of human capital accumulation on the job the results show both forces are important for earnings growth and the interactions are substantial human capital accumulation accounts for 50 of total earnings growth job search accounts for 20 and the remaining 30 is due to the interactions of the two

on the job search and cyclical unemployment crowding out vs vacancy effects incorporating on the job search otjs into a real business cycle model has been shown to increase the cyclical volatility of unemployment using a particularly simple model of otjs we show that the increased search of employed workers during expansions induces firms to open more vacancies but also crowds out unemployed workers in the job search resulting in an ambiguous overall effect on unemployment volatility we show analytically and numerically that the difference between the employer s share of the match surplus with an employed versus an unemployed job seeker determines the degree to which otjs increases unemployment volatility we use this result to re consider some related papers of otjs and explain the amplification of volatility they obtain finally we show that a plausible calibration of the otjs model allows us to reproduce most significant features of the us labor data

forced sales and house prices the market for housing differs in several important ways from the textbook model of a liquid asset market with exogenous fundamentals this implies that the price at which a house is sold can be influenced not only by general supply and demand conditions but also by idiosyncratic factors including the urgency of the sale and the effects of the ownership transfer on the physical quality of the house first houses are productive only when people are living in them owning an empty house is equivalent to throwing away the dividend on a financial asset second houses are fragile assets that need maintenance and are vulnerable to van dalism unoccupied houses are particularly vulnerable and expensive to protect third short term rental contracts involve high transactions costs resulting from the moving costs of renters and the need of homeowners to protect their property against damage fourth houses are expensive indivisible and heterogeneous assets each house has certain unique characteristics which are likely to appeal to certain poten tial buyers and not to others so selling a house requires matching it with an appro priate buyer because of the high costs of intermediation in housing this task is normally undertaken by a real estate broker rather than a dealer fifth most home owners must finance their purchases using mortgages collateralized debt contracts that transfer home ownership to the mortgage lender through a foreclosure process if the homeowner defaults the expansion of mortgage credit in the early 2000s and the recent decline in house prices have led to an unprecedented increase in foreclosures since 2006 foreclosures transfer houses to financial institutions which must maintain and pro tect them until they can be sold foreclosed houses are likely to sell at low prices both because they may have been physically damaged during the foreclosure pro cess and because financial institutions have an incentive to sell them quickly in a liquid market an asset can be sold rapidly with a minimal impact on its price but

wage dispersion over the business cycle abstract in this paper i provide robust evidence that fluctuations in wage dispersion are independent of the business cycle while residual wage dispersion i e dispersion of wages within narrowly defined demographic and skill groups of workers increases during booms and lessens during recessions moreover i show that the procyclical fluctuations in residual wage dispersion are mainly generated by cyclical changes in the upper half of the residual wage distribution

valuing environmental goods and services using benefit transfer the state of the art and science abstract the purpose of this special issue of ecological economics is to elucidate the state of the art and science of environmental benefit transfer and to assist in the design and reporting of future benefit estimation research compiling the insights of thirty two international experts from seven countries the special issue reviews the latest developments in transfer techniques as well as ongoing efforts to standardize and validate them taken together the papers in this special issue provide fresh answers to some long standing questions offer original research insights on state of the art issues and identify fruitful areas for future research this introductory paper provides background and context for the issues addressed by the contributing authors its purpose is to place the interdisciplinary thinking contained here in a comparative context highlighting the need for integration and collaboration to maintain the momentum that has propelled environmental benefit transfer into a widely used approach for estimating the economic value of environmental goods and services worldwide

limited attention interaction and the gradual adjustment of a firm s decisions a person cannot make many decisions at a time but an organization needs millions of interrelated decisions we incorporate this idea into a standard theory of production two assumptions are emphasized an agent cannot optimize more than one input at a time and there is interaction among inputs when a firm alternates its attention the demand for inputs gradually adjusts to the static optimal level when a firm optimally allocates its attention this adjustment may not occur we investigate the conditions under which the adjustment takes place the results are applied to a standard investment theory the derived investment capital ratio is independent of firm size and imperfectly correlated with tobin s q

on the job search in a matching model with heterogeneous jobs and workers this paper considers a matching model with heterogenous jobs unskilled and skilled and workers low and high educated which allows for on the job search by mismatched workers the latter are high educated workers who transitorily accept unskilled jobs and continue to search for skilled jobs our findings show that on the job search introduces an additional source of between and within group wage inequality furthermore the higher quit rate of mismatched workers exerts a negative externality on unskilled jobs and weakens the labour market position of low educated workers this last feature changes the effects of skill biased technological change and it alters the response of the labour market to shifts in the skill distribution this paper has been written for presentation as an invited lecture at the annual conference of the european association of labour economics eale 2003 seville 18 21 september 2003 we are very grateful to maite blazquez for excellent research assistance we also wish to thank barbara petrongolo participants in seminars at uc3m core essex and lse for helpful comments and especially j albrecht for his insightful discussion on a preliminary draft of this paper the usual disclaimer applies

job search and academic achievement abstract the paper develops a structural model for the labor market behavior of students entering the labor market we explicitly model the trade off between devoting effort to studying and to job search furthermore we allow for on the job search the model is estimated using a unique data set of individuals who completed undergraduate education in the netherlands between 1995 and 2001 our estimation results show that labor market returns of high grades are low wage increases between jobs are explained by labor market friction rather than returns of early work experience our results indicate that a 1 percentage point decrease in the unemployment rate increases wage offers on average by 3 percent but that the amount of job search effort is not very sensitive to business cycle fluctuations policy simulations show that study effort and hence academic achievement are much more sensitive to financial incentives than job search effort and labor market outcomes

productivity growth on the job search and unemployment abstract the impact of long run productivity growth on unemployment is studied we incorporate disembodied technological progress and on the job search into the endogenous job separation model of mortensen and pissarides 1994 because we include on the job search faster growth reduces unemployment by decreasing job separation and inducing job creation the incorporation of on the job search substantially improves the ability of the mortensen and pissarides model to explain the effect of growth on labor market variables specifically our model generates not only an empirically consistent sign of the effect but also a larger impact of growth on unemployment than the standard matching model

coordination failures and the lender of last resort was bagehot right after all the classical doctrine of the lender of last resort lolr elaborated by bagehot 1873 asserts that the central bank should lend to illiquid but solvent banks under certain conditions several authors have argued that this view is now obsolete in modern interbank markets a solvent bank cannot be illiquid this paper provides a possible theoretical foundation for rescuing bagehot s view our theory does not rely on the multiplicity of equilibria that arises in classical models of bank runs we built a model of banks liquidity crises that possesses a unique bayesian equilibrium in this equilibrium there is a positive probability that a solvent bank cannot find liquidity assistance in the market we derive policy implications about banking regulation solvency and liquidity ratios and interventions of the lender of last resort furthermore we find that public bailout and private bail in involvement are complementary in implementing the incentive efficient solution and that bagehot s lender of last resort facility must work together with institutions providing prompt corrective action and orderly failure resolution finally we derive similar implications for an international lender of last resort ilolr jel g21 g28

strategic complementarities and the twin crises the economic literature has emphasized the role of strategic complementarities in generating banking crises and currency crises motivated by evidence from recent financial crises we study a model where strategic complementarities exist not only within a group of creditors or within a group of currency speculators but also between the two groups the additional type of strategic complementarities generates a vicious cycle between banking crises and currency crises this vicious cycle magnifies the correlation between the two crises and destabilizes the economy we discuss some empirical implications and policy implications and in particular show that due to the interaction between the banking sector and the currency market a lender of last resort might not be able to prevent bank runs

the empirical content of the job search model labor mobility and wage distributions in europe and the us abstract job search models of the labor market hypothesize a very tight correspondence between the determinants of labor turnover and individual wage dynamics on one hand and the determinants of wage dispersion on the other this paper offers a systematic examination of whether this correspondence is present in the data by estimating a rudimentary partial equilibrium job search model on a three year panel of individual worker data covering 10 european countries and the u s we find that our basic job search model fits the data surprisingly well this also allows us to point at a number of interesting empirical regularities about wage distributions our results suggest that cross sectional data on individual wages contain the basic information needed to obtain a reliable measure of the magnitude of labor market frictions as measured by a parameter of the canonical job search model finally we use our results in a cross country comparison of the intensity and nature of job to job turnover we arrange countries into two different groups according to their turnover intensity we further show that the nature of job to job turnover is very different between those two groups turnover is predominantly voluntary in low turnover countries whereas it is to a large extent involuntary in high turnover countries

equilibrium search and tax credit reform an empirical equilibrium job search model with wage posting is developed to analyze the labor market impact of uk tax reforms the model allows for a rich characterization of the labor market with hours responses accurate representations of the tax and transfer system and both worker and firm heterogeneity the model is estimated with pre reform longitudinal survey data using a semi parametric estimation technique and the impact of actual tax reform policies is simulated the model predicts that the british working families tax credit and contemporaneous reforms increased employment with equilibrium effects found to play a relatively minor role

identification of search models using record statistics this paper shows how record value theory a branch of statistics that deals with the timing and magnitude of extreme values in sequences of random variables can be used to recover features of the wage offer distribution in conventional search models using national longitudinal survey of youth nlsy wage data i show that the data are not compatible with specifications for the offer distribution characterized by extreme negative skewness in addition i show that my approach can be used to construct a bound on the returns to job seniority my results suggest that job seniority plays only a minor role in the wage growth of the workers surveyed in the nlsy copyright 2008 wiley blackwell

worker search effort as an amplification mechanism abstract it is well known that the diamond mortensen pissarides model exhibits a strong trade off between cyclical unemployment fluctuations and the size of rents to employment introducing endogenous job search effort reduces the strength of the trade off while bringing the model closer to the data ignoring worker search effort leads to a large upward bias in the elasticity of matches with respect to vacancies merging the american time use survey and the current population survey new evidence in support of procyclical search effort is presented average search effort of the unemployed is subject to cyclical composition biases

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

the role of workfare in striking a balance between incentives and insurance in the labour market unemployment insurance tends to distort incentives in the labour market affecting job search and wage formation adversely we show in a search matching model that this moral hazard problem can be reduced by attaching a workfare requirement to the eligibility conditions for claiming unemployment benefits even when workfare has no effects on human capital or productivity it is possible to improve labour market performance to create more jobs and lower unemployment by the introduction of workfare and also to improve welfare hence the incentive structure in the labour market can be improved by workfare policies rather than benefit reductions

monitoring choice task attribute attendance in nonmarket valuation of multiple park management services does it matter land management in alpine parks provides multifunctional services to separate groups of users choice experiments can be used to derive estimates of value for different management attri butes however little research has been conducted on how frequently respondents ignore attributes used to describe policy management scenarios we fill this gap using an approach that identifies and compares both serial and choice task attribute nonattendance addressing five different visitor types our results indicate that accounting for choice task nonatten dance significantly improves model fit and yield estimates of marginal willingness to pay with a more plausible pattern of signs and greater efficiency jel q24 q51 i introduction the effects of park management policies on outdoor recreation are increasingly coming under public scrutiny alpine park land is among the most valuable land in terms of outdoor recreation park manage ment decisions are often controversial be cause of differences between objectives pursued by conservationists and the tourist industry parkland management agencies find it increasingly difficult to fund all the services needed to facilitate the ever broad ening variety of outdoor recreation activi ties this is further exacerbated by the increasing expectations for high quality recreational experiences by a population of recreationists with a heightened sensitivity to environmental and conservation issues such a situation widens the scope for multiattribute nonmarket valuation meth ods especially for those methods capable of capturing and modeling the preferences of heterogeneous visitors who seek to pursue a variety of activities in the land under study our research reports the results of a study designed to address attribute nonattendance henceforth abbreviated as an a which despite being quite a common decision heuristic has only recently begun to be explored by analysts with this decision heuristic respondents ignore some of the described attributes in their evaluation of alternatives within a given choice task they hence act as if a zero weight were assigned to the ignored attributes in the utility of the respective alternatives we study this issue by using a well known statistical model of discrete choice the multinomial logit mnl model this random utility model is often used for the purpose of multi attribute nonmarket valuation but the effects of accounting for an a are still rela tively unexplored information on an a is commonly collected by questioning each respondent at the end of the sequence of choice tasks respondents are asked to list those attributes that they feel they have

sorting by search intensity abstract in this paper i characterize matching in an on the job search model with endogenous search intensity heterogeneous workers and firms and match surplus is shared between workers and firms through bargaining i provide proof of existence and uniqueness of steady state equilibrium given equally efficient matched and unmatched search the worker skill conditional distribution of firm productivity over matches is stochastically increasing decreasing in worker skill if the production function is supermodular submodular i also show that this strong notion of sorting does not obtain everywhere for the firm productivity conditional match distribution

rollover risk as market discipline a two sided inefficiency abstract why does the market discipline that financial intermediaries face seem too weak during booms and too strong during crises this paper shows in a general equilibrium setting that rollover risk as a disciplining device is effective only if all intermediaries face purely idiosyncratic risk however if assets are correlated a two sided inefficiency arises good aggregate states have intermediaries taking excessive risks while bad aggregate states suffer from costly fire sales the driving force behind this inefficiency is an amplifying feedback loop between asset values and market discipline in equilibrium financial intermediaries inefficiently amplify both positive and negative aggregate shocks

unemployment fluctuations match quality and the wage cyclicality of new hires we revisit the issue of the high cyclicality of wages of new hires we show that after controlling for composition effects likely involving procyclical upgrading of job match quality the wages of new hires are no more cyclical than those of existing workers the key implication is that the sluggish behaviour of wages for existing workers is a better guide to the cyclicality of the marginal cost of labour than is the high measured cyclicality of new hires wages unadjusted for composition effects key to our identification is distinguishing between new hires from unemployment versus those who are job changers we argue that to a reasonable approximation the wages of the former provide a composition free estimate of the wage flexibility while the same is not true for the latter we then develop a quantitative general equilibrium model with sticky wages via staggered contracting on the job search and heterogeneous match quality and show that it can account for both the panel data evidence and aggregate evidence on labour market volatility

inferring attribute non attendance from discrete choice experiments implications for benefit transfer typical convergent validity tests of benefit transfer based on stated preference data assume that willingness to pay wtp estimates have been accurately measured and that differences in wtp arise from differences in observable and unobservable characteristics between the study and the policy sites in this paper we conduct a convergent validity test assuming equality of underlying preferences but allow for the possibility that transfer errors arise from differences in the way that respondents process information in the preference elicitation tasks using data from an identical survey instrument applied to the population of two river basins in spain we obtain marginal and total wtp estimates for ecological improvements of water bodies and the corresponding transfer errors across sites results of equality constrained latent class eclc models that infer attribute non attendance an a are compared to results from mixed logit mxl models in wtp space we find large absolute and relative differences in marginal and total wtp between sites for the mxl models and significantly reduced transfer errors for the eclc models this paper therefore provides further evidence that an a can significantly affect environmental values derived from attribute based stated preference methods and is the first to investigate the implications for benefit transfer

an empirical model of wage dispersion with sorting we estimate an equilibrium on the job search model with endogenous search intensity workers differ by skill firms by productivity workers respond to mismatch by intensive search and sorting may result from complementarities in the match level production function the model is estimated on danish matched employer employee data firms are ranked through revealed preference by the fraction of hires that is poached from other firms the poaching rank identification is obtained by firm rank conditional mobility and wage patterns wage variation is decomposed into four sources sorting 40 worker heterogeneity 32 firm heterogeneity 18 and frictional competition 10 a social planner can improve output net of search cost by 1 5 relative to the decentralized solution