nonstationarity in job search theory generally structural job search models are taken to be stationary in this paper models are examined in which every exogenous variable can cause nonstationarity for instance because its value is dependent on unemployment duration a general differential equation that describes the evolution of the reservation wage over time is derived as an empirical illustration a nonstationary structural model is estimated that focuses on the consequences of a downward shift in the level of benefits it appears that the elasticity of duration with respect to the level of benefits after the shift is much larger than the elasticity with respect to the level before the shift this paper examines the movement of a job seeking individual s reservation wage over time in a general nonstationary job search model also results concerning comparative dynamics of the reservation wage and the distribution of the duration of unemployment are derived as an empirical illustration a nonstationary structural model is estimated the nonstationarity originates from the decrease in the level of benefits when unemployment duration equals two years from the results some detailed policy recommendations can be deduced as one is able to distinguish the effect of a change in the level of benefits in the first two years of unemployment from the effect of a change in the level after that period recently the use of job search models for the analysis of unemployment duration has become widespread the reduced form approach in empirical studies see e g lancaster 1979 in which only the hazard of the duration distribution is estimated is gradually being replaced by a more structural approach the latter way of modelling is characterized by the explicit use in empirical analysis of the reservation wage equation as stated by the theory e g yoon 1981 lancaster and chesher 1983 lynch 1983 narendranathan and nickell 1985 and van den berg 1988 use the complete theoretical framework of job search theory to make inferences about search behaviour however the structural models used in these studies are stationary this implies that variables like unemployment benefits or the rate of arrival of job offers are assumed to be constant over the spell of unemployment which is often at variance with reality what is more various reduced form empirical studies indicate a significant durationdependence of the re employment probability which is generally interpreted as evidence in favour of the presence of nonstationarity see e g blau and robins 1986 kooreman and ridder 1983 lancaster 1979 and narendranathan nickell and stern 1985 consequently there is a need to model reservation wage movements over time based on a nonstationary theoretical framework

lessons from the u s unemployment insurance experiments recent social experiments have evaluated two reforms of the unemployment insurance ui system reemployment bonuses and job search programs the bonus experiments show that economic incentives affect the length of ui receipt and provide weak evidence that an earlier return to work does not decrease earnings the experiments do not show the favorability of a permanent bonus program as they ignore its effect on the number of the claimants the job search experiments test several more promising reforms nearly all of the combinations of services and increased enforcement reduce ui receipt and have favorable cost benefit analyses earnings often increase though the estimates are imprecise

the effects of changes of the job offer arrival rate on the duration of unemployment generally it is acknowledged that changing the job offer arrival rate has two opposite effects on unemployment duration for a basic job search model sufficient conditions on the wage offer distribution have been derived ensuring that one of the effects dominates however these are not satisfied for the popular families of wage offer distributions here i show that the conditions can be weakened at virtually no cost the set of distributions satisfying the new conditions is considerably larger than the set previously established in particular it includes all wage offer distribution families that are popular in structural empirical research

are unemployment and out of the labor force behaviorally distinct labor force states this paper tests the hypothesis that the classifications unemployed and out of the labor force are behaviorally meaningless distinctions this hypothesis is rejected distinct behavioral equations govern transitions from out of the labor force to employment and from unemployment to employment the evidence reported in this paper is broadly consistent with versions of search theory in which unemployment is a state that facilitates the job search process in an appendix we demonstrate that log concavity of the wage offer distribution implies that the exit rate from unemployment is an increasing function of the rate of arrival of job offers

estimating a simultaneous search model the primary goal of this article is to specify and estimate a structural simultaneous search model and then determine the empirical importance of simultaneous search the results indicate that new labor force entrants search simultaneously a secondary goal is to identify and estimate job offer arrival rates and wage offer rejection probabilities separately the results indicate that a significant portion of unemployment spells are caused by slow arrival rates but policies intended to speed arrival rates would increase the average length of unemployment spells

the welfare effects of illegal immigration abstract this paper extends the work of ethier on illegal immigration by examining the optimal level of enforcement for the labor importing country in a two country model and by considering the effects of allowing capital mobility we derive a formula for the optimal level of enforcement against firms that hire illegal workers and show that the presence of enforcement costs makes the policy less efficient than a wage tax with capital mobility foreign workers gain from an increase in enforcement in the home country because capital is driven out of the home country

does the public employment service affect search effort and outcomes in this paper we examine the disincentive effects of the public employment service on the search effort of unemployed workers and on their exit rate from unemployment for that purpose we specify a structural search model with fixed and variable costs of search in which unemployed workers select their optimal search intensity given the exogenous arrival rate of job contacts coming from the public employment agency because the theoretical effect of an increase in this exogenous job contact arrival rate on the structural exit rate from unemployment is ambiguous we estimate this model using individual unemployment duration data our results show that the exit rate from unemployment increases with the arrival rate of job contacts obtained by the public employment service especially for low educated and low skilled workers they also show that the search effort is more costly for low educated women and low skilled adult unemployed workers this last result suggests that a public employment agency that matches searchers and employers is beneficial in the sense that it saves searchers in terms of search costs they would otherwise bear

the determinants of black white differences in early employment careers search layoffs quits and endogenous wage growth this paper studies the transition from school to full time employment and subsequent labor mobility during the first five postschooling years for several recent cohorts of black and white male terminal high school graduates using unique data from the 1979 youth cohort of the national longitudinal surveys of labor market experience a constrained optimization model of labor force dynamics is implemented empirically integrating features of models previously described in the literature the estimates of the model provide quantitative evidence on underlying structural differences in labor market constraints faced by blacks and whites for example while blacks have overall a substantially smaller wage return to work experience and face a less disperse wage offer distribution blacks face a higher probability of receiving job offers

how changes in labor demand affect unemployed workers this study analyzes the manner in which certain favorable shifts in labor demand affect job search although all shifts increase reservation wages they do not necessarily decrease expected unemployment spell durations and increase expected post unemployment wages so that upward sloping short run phillips curves may occur a result due to chamberlain is used to demonstrate that if the wage offer distribution is restricted to be logconcave two of the shifts guarantee downward sloping phillips curves for one of these two shifts previous research by flinn and heckman used logconcavity in a different manner to achieve properly shaped phillips curves

estimating a structural search model the transition from school to work this paper presents a finite horizon search model that is econometrically implemented using all of the restrictions impli ed by the theory following a sample of male high school graduates fr om the youth cohort of the national longitudinal surveys from graduat ion to employment search parameters are estimated reservation wages and offer probabilities are estimated to be quite low simulations a re performed of the impact of changing the parameters on the expected duration of unemployment copyright 1987 by the econometric society

the employment effect of reforming a public employment agency by how much does an increase in operating effectiveness of a public employment agency pea and a reduction of unemployment benefits reduce unemployment using a recent labour market reform in germany as background we find that an enhanced effectiveness of the pea explains about 20 of the observed post reform unemployment decline the role of unemployment benefit reduction explains just about 5 of the observed decline due to disincentive effects resulting from the reform the reform of the pea could have had an even higher impact on unemployment reduction if there had been less focus on long term unemployed workers

fishing in different pools job search strategies and job finding success in canada in the early 1980s this article examines the job search methods of jobless workers and emphasizes sample selectivity in choice of job search strategies especially use of public employment agencies longitudinal data from the labour force survey of canada for 1981 1983 and 1986 indicate that job search methods change with the business cycle and that many people find jobs without any reported search the determinants of job search success also vary substantially over the business cycle implying a substantial social return to public employment agencies at the 1983 trough of the recession but no noticeable benefits when aggregate unemployment is relatively low

experimental evidence on the effects of early meetings and activation we analyze the effects of four randomized social experiments involving early and intensive active labour market policy conducted in denmark in 2008 the experiments entailed different combinations of early and intensive treatment in terms of meetings and active labour market programmes we find that frequent meetings between newly unemployed workers and case workers can increase employment rates over the next two years by up to 10 weeks the effects continue to grow over the whole 4 year horizon studied for men we find evidence of a threat effect of having to participate in early active labour market programmes while no such effect is found for women we conduct a cost benefit analysis of each ofthe four experiments and find that meetings yield the largest net benefits

a general equilibrium model of guest worker migration the source country perspective abstract this paper examines the problem of guest worker migration from an economy populated by identical utility maximizing individuals with finite working lives the decision to migrate the rate of saving while abroad as well as the length of a migrant s stay in the foreign country are all viewed as part of a solution to an intertemporal optimization problem in addition to studying the microeconomic aspects of temporary migration the paper analyses the determinants of the equilibrium flow of migrants the corresponding domestic wage and the level of welfare enjoyed by a typical worker effects of an emigration tax are also investigated

skills and the pattern of migration the role of qualitative and quantitative restrictions on international labor mobility this paper develops a two country model of international migration in an attempt to study the role of both qualitative and quantitative restrictions on international labor mobility individuals are distinguished in terms of their ability and age enabling the model to examine factors which influence the age and skill profile of those who migrate as well as the equilibrium flow of migrants and the pattern of factor rewards in the two economies effects of changes in certain parameters of the model are related to the nature of the immigration policy enforced by the host country the role of emigration restrictions is also considered excerpt

more evidence on the undercounting of small firm r d abstract drawing from the seo national survey on r d and innovation in the netherlands we argue that there must be an underrecording of small scale r d by orders of magnitude in the r d survey by the dutch central statistical office such underrecording holds for manufacturing and even more so for service firms this finding is confirmed by estimates based on records of firms receiving r d subsidies which we use as a third independent source in order to allow for international comparability of r d data the survey methods of the dutch central statistical office are similar to those in other oecd countries therefore our findings in the dutch manufacturing and service industries are likely to have an impact for the measurement of r d in other oecd countries the results have implications for our judgement about the famous schumpeterian hypotheses concerning the influence of firm size and market structure on r d

search behaviour transitions to non participation and the duration of unemployment using longitudinal micro data on unemployed individuals for 1983 85 a structural job search model is estimated the model allows for transitions from unemployment to nonparticipation an extended version of the model deals with the influence of on the job search and prospective wage increases on search behavior of the unemployed the empirical results show that the probability of accepting a job offer is almost one for most unemployed individuals a large portion of unemployment spells ends in a transition out of the labor force the effects of changes in benefits on duration appear to be extremely small copyright 1990 by royal economic society

return migration human capital accumulation and the brain drain in this paper we present a model that explains migrations as decisions that respond to where human capital can be acquired more efficiently and where the return to human capital is highest the basic framework is a dynamic roy model in which a worker possesses two distinct skills that can be augmented by learning by doing there are different implicit price in different countries and different rates of skill accumulation our analysis contributes to the literature on the selection of immigrants and return migrants by offering a richer framework that may help to accommodate selections of emigrants and return migrants that are not immediately compatible with the one dimensional skill model our analysis has also implications for the debate on brain drain and brain gain in the two skills model presented here return migration can lead to a mitigation of the brain drain or even the creation of a brain gain where those who return bring the home country augmented local skills

estimating equilibrium effects of job search assistance identifying policy relevant treatment effects from randomized experiments requires the absence of spillovers between participants and nonparticipants sutva or variation in observed treatment levels we find that sutva is violated for a danish activation program for unemployed workers using a difference in differences model we show that nonparticipants in the experiment regions find jobs more slowly after the introduction of the program than workers

illegal aliens unemployment and immigration policy abstract this paper develops a simple two country model of illegal immigration in an attempt to examine the interaction among variables such as the stock of migrant labor the unemployment rates of the two economies and the rate of spending by the host country on the enforcement of its immigration restrictions the focus of the analysis is on the dynamics of immigration policy and on its role in determining the nature of the mechanism by which disturbances to the labor market of one country are transmitted to that of the other in the short run and in the long run

job search by employed and unemployed youth analysis of data from the new youth cohort of the national longitudinal survey yields evidence that young unemployed job seekers chose higher levels of search effort as measured by number of methods used and time spent per method and lower reservation wages relative to offered wages than did comparable employed job seekers in 1981 these differences in search choices at least partly explain differences in search outcomes between the two groups unemployed searchers apparently were more likely than employed searchers to gain new employment and the wages they obtained were slightly lower the author argues that the greater search effort by unemployed job seekers is due to the higher costs of search they bear because of foregone earnings

youth employment policies in france abstract in this paper we present a summary of recent microeconometric results on the evaluation of the effects of active labor market policies on youth employment in france we focus our discussion on three types of policies 1 youth employment schemes for out of employment and low skilled young adults 2 on the job training schemes 3 payroll tax subsidies for minimum wage workers training programs for unemployed young workers have in general no effects on post training wages or employment probabilities except if they have a large training content in contrast the reduction of labor costs have significant effects on employment probabilities of low wage workers however their effects appear to be stronger for workers between 25 and 30

evaluating the impact of french employment policies on individual labour market histories this paper deals with the evaluation of some public employment policies set up in france during the 1980 s to improve the labour market prospects of unskilled young workers the evaluation implemented in this paper is restricted to the impact of such public measures on durations and outcomes of subsequent spells of unemployment and employment the econometric study is conducted with non experimental longitudinal microdata recording individual labour nlarket histories a particular attention is paid to the differential effects of various types of measures according to the educational level of recipients programmes involving a higher level of on thejob training such as alternating work training programmes in private firms are principally beneficial to the less educated young workers in contrast for more educated young workers work fare programmes in the public sector decrease the intensity of transition from the subsequent unemployment spell to regular jobs for that subgroup work fare programmes may act as a signal of low employment performance

the economics of the to and fro migrant some welfare theoretical considerations the effects of international to and fro migration on the economic welfare of the migrants and the nonmigrants in the host and home countries are examined a to and fro migrant is defined as a worker who changes residence from origin to destination without any systematic tendency to remain in any of the two permanently the study is based on the theoretical framework developed by krauss the results indicate that to and fro emigration from a source country to a recipient country increases the economic welfare of the migrants and the nonmigrants residing in the host country but it tends to decrease the welfare of the nonmigrants residing in the source country in general the migration also tends to be pareto optimal from a world point of view excerpt

an assessment of the human capital content of international migrants an application to us immigration mcdowell j m and singell l d jr 1993 an assessment of the human capital content of international migrants an application to us immigration reg studies 27 351 363 numerous studies have examined the flow of international migrants generally these studies measure the extent or magnitude of international migration by use of a simple numerical count this paper extends this analysis by providing a methodology for adding an economic dimension to the measure of the magnitude of international migration an earnings equation approach is used to attach an economic value to immigration applying our methodology to us immigration we find considerable variation across source regions in the value of immigrants moreover we find that simply comparing initial earnings without controlling for differences in the characteristics and migration patterns of immigrants from the various source regions can misrepresent the relative earnings potential or value of migrants mcdowell j m et singell l d jr 1993 un

international trade and labor migration a theory of the relationship between international trade and labor mobility is developed that takes into account five characteristics of such migration including its temporary nature differences between migrant and native labor the acceptance of unpredictable conditions of employment by migrant labor the ready availability of further labor resources and international capital mobility particular attention is paid to the role of international labor migration in helping to insulate native populations from the rigors of industrial fluctuations and in helping to preserve import competing industries that would have succumbed without the availability of cheap imported labor

search method use by unemployed youth this article presents a search model which shows that search method choices should be related to their costs and expected productivities as well as to nonwage income and wage offer distributions the empirical evidence then shows that the most frequently used search methods i e friends and relatives and direct applications without referral are also the most productive in generating offers and acceptances the number of methods used is affected by factors that presumably reflect opportunities as well as income sources and needs specific methods are chosen in a manner that generates positive average effects on outcomes for those using them

reference dependent job search evidence from hungary we propose a model of job search with reference dependent preferences with loss aversion relative to recent income the reference point in this model newly unemployed individuals search hard since consumption is below their reference point over time though they get used to lower income and thus reduce their search effort in anticipation of a benefit cut their search effort rises again then declines once they get accustomed to the lower postcut benefit level the model fits the typical pattern of exit from unemployment even with no unobserved heterogeneity to distinguish between this and other models we use a unique reform in the unemployment insurance ui benefit path in 2005 hungary switched from a single step ui system to a two step system with overall generosity unchanged the system generated increased hazard rates in anticipation of and especially following benefit cuts in ways the standard model has a hard time explaining we estimate a model with optimal consumption endogenous search effort and unobserved heterogeneity the reference dependent model fits the hazard rates substantially better than plausible versions of the standard model including habit formation our estimates indicate a slow adjusting reference point and substantial impatience likely reflecting present bias jel codes d03 j64 j65

an economic model of the brain drain asymmetric information in the labor market is discussed as a major cause of the exodus of foreign trained students from developing countries the authors suggest that employers in the country in which the students have been trained have a more accurate judgment of the true productivity of students than have employers in the students native country an illustrative numerical model is developed and its implications are analyzed annotation

tax policy in the presence of emigration recent policy and theoretical discussions of the effects of highly skilled migration from the underdeveloped countries the so called brain drain have focused on a proposal bhagwati 1972 to levy a supplementary income tax on those who migrate the proceeds of such a tax to be transmitted to the developing country of origin or to developing countries en bloc for developmental spending the welfare implications of such a tax were analyzed in an earlier paper of ours bhagwati and hamada 1974 in the context of a model of the country of emigration characterized by sticky wages and harrisstodaro 1971 type of unemployment in subsequent papers the tax has been analyzed also in the context of modified models still incorporating the unemployment phenomena by rodriguez 1975 and mcculloch yellen 1975 2 essentially these models analyze the impact of the income tax on emigrants incomes as arising primarily through the reduced differential

structural empirical evaluation of job search monitoring to evaluate search effort monitoring of unemployed workers it is important to take account of post unemployment wages and job to job mobility we structurally estimate a model with search channels using a controlled trial in which monitoring is randomized the data include registers and survey data on search behavior we find that the opportunity to move to better paid jobs in employment reduces the extent to which monitoring induces substitution toward formal search channels in unemployment job mobility compensates for adverse long run effects of monitoring on wages we examine counterfactual policies against moral hazard like reemployment bonuses and changes of the benefits path