equilibrium in the labor market with search frictions christopher a pissarides delivered his prize lecture on 8 december 2010 at aula magna stockholm university this abstract was borrowed from another version of this item

the ins and outs of european unemployment in this paper we study the contribution of inflows and outflows to the dynamics of unemployment in three european countries the united kingdom france and spain all countries are interesting in their own right and in the comparison with each other britain s labour markets were strictly regulated up to the mid 1980s but they have been liberalized since then france is still a regulated economy compared with britain with unemployment averaging about 8 spain has had the biggest rise in unemployment in europe reaching 24 in the mid 1990s but policy reforms and fast growth since then brought it down to a level below france s we compare performance in these three countries making use of both administrative and labor force survey data we find that the impact of the 1980s reforms in britain is evident in the contributions of the inflow and outflow rates the inflow rate became a bigger contributor after the mid 1980s although its significance subsided again in the late 1990s and 2000s in france the dynamics of unemployment are driven by the outflow rate virtually entirely which is consistent with a regime with strict employment protection legislation in spain however both rates contribute significantly to the dynamics perhaps as a consequence of the prominence of fixed term contracts since the late 1980s

does forced voting result in political polarization this paper estimates the effects of the compulsory voting legislation on individuals political orientations though a regression discontinuity framework the identification comes from brazil s dual voting system voluntary and compulsory whose exposure is determined based on citizen s date of birth using self collected data we find that compulsory voting legislation has sizable effects on individuals political preferences making them more likely to identify with a political party and to become extreme oriented

welfare cost of fluctuations when labor market search interacts with financial frictions we provide a quantitative assessment of welfare costs of fluctuations in a search model with financial frictions the matching process in the labor market leads positive shocks to reduce unemployment less than negative shocks increase it we show that the magnitude of this non linearity is magnified frictions this asymmetric effect of the business cycle leads to sizable welfare costs the model also accounts for the responsiveness of the job finding rate to the business cycle as financial frictions endogenously generate counter cyclical opportunity costs of opening a vacancy and wage sluggishness

social incentives and voter turnout evidence from the swiss mail ballot system this paper uses a natural experiment to document the impact of social pressure on voting behavior the main hypothesis is that social pressure creates incentives to vote for the purpose of being seen at the voting act this incentive is particularly high in small and close knit communities empirically i analyze the effect of postal voting on voter participation in switzerland optional postal voting decreased the voting costs but simultaneously removed the social pressure to vote in spite of the large reduction in voting costs the effect on aggregate turnout was small however voter participation was more negatively affected in the smaller communities this lends support to the view that social incentives played a role for certain people s voting decisions jel h0 z13

the econometrics of damage control why specification matters the contribution of damage control agents to production differs fundamentally from that of standard inputs lands labor capital this paper develops an econometric model based on the key characteristics of damage control agents and examines its properties it demonstrates that standard production function specifications overestimate damage control agent productivity and have erroneous implications for the evolution of damage control agent productivity and use in response to changing environments e g the spread of pest resistance it also proposes several alternative specifications and discusses methods for estimating them

wage rigidity and job creation recent research in macroeconomics emphasizes the role of wage rigidity in accounting for the volatility of unemployment fluctuations we use worker level data from the cps to measure the sensitivity of wages of newly hired workers to changes in aggregate labor market conditions the wage of new hires unlike the aggregate wage is volatile and responds almost one to one to changes in labor productivity we conclude that there is little evidence for wage rigidity in the data

household debt and fiscal multipliers we study the size of government spending multipliers in a general equilibrium model with search and matching frictions in which we allow for different levels of household indebtedness the main results are a the presence of impatient households and private debt helps to generate government spending multipliers greater than 1 b as financial conditions worsen the size of the government spending multiplier falls c conversely employment vacancies and unemployment multipliers are larger in a credit crunch d the model explains the observed pattern of responses of labour market variables housing prices and private debt to a fiscal shock reasonably well

estimating the stock flow matching model using micro data we estimate the stock flow matching model using micro level data from a well defined labor market using a dataset of complete labor market histories for both sides of the market we estimate hazard functions for job seekers and vacancies we find that the stock of new vacancies has a significant positive impact on the job seeker hazard over and above that of the total stock of vacancies there is an even stronger robust result for vacancy hazards thus we find evidence in favor of stock flow matching even when controlling for unobserved search heterogeneity and stratifying into submarkets defined by location and occupation

the cyclicality of separation and job finding rates this paper uses cps gross flow data to analyze the business cycle dynamics of separation and job finding rates and to quantify their contributions to overall unemployment variability cyclical changes in the separation rate are negatively correlated with changes in productivity and move contemporaneously with them while the job finding rate is positively correlated with and tends to lag productivity contemporaneous fluctuations in the separation rate explain between 40 and 50 percent of fluctuations in unemployment depending on how the data are detrended this figure becomes larger when dynamic interactions between the separation and job finding rates are considered

search intensity job advertising and efficiency this paper demonstrates that if both firms and workers search the other side of the market for job matches the equilibrium rate of unemployment is likely to be too high both sides ignore a positive externality of their search when they establish a job match they remove from the market a job searcher so they save society his search costs i show that there is no feasible wage rate that can internalize this externality under fairly weak restrictions on the technology of search

sectoral shifts and cyclical unemployment a substantial fraction of cyclical unemployment is better characterized as fluctuations of the frictional or natural rate than as deviations from some relatively stable natural rate shifts of employment demand between sectors of the economy necessitate continuous labor reallocation since it takes time for workers to find new jobs some unemployment is unavoidable this paper presents evidence that most of the unemployment fluctuations of the seventies unlike those in the sixties were induced by unusual structural shifts within the u s economy simple time series models of layoffs and unemployment are constructed that include a measure of structural shifts within the labor market these models are estimated and a derived natural rate series is constructed

explaining voter turnout patterns an information theory voting research is rich in empirical regularities yet a parsimonious theory of voter turnout that can match the facts has proven to be elusive this paper argues that voter turnout patterns can be explained by extending the traditional rational voter model to include limited information a model is presented in which utility maximizing consumers receive higher payoffs from voting the more confident they are of their vote choice the model provides an explanation for the most important cross sectional voter turnout patterns in addition it suggests a novel explanation for the post 1960 decline in u s participation

inflation and unemployment the world economy today is vastly different from the 1930s when seymour harris the chairman of this meeting infected me with his boundless enthusiasm for economics and his steadfast confidence in its capacity for good works economics is very different too both the science and its subject have changed and for the better since world war ii but there are some notable constants unemployment and inflation still preoccupy and perplex economists statesmen journalists housewives and everyone else the connection between them is the principal domestic economic burden of presidents and prime ministers and the major area of controversy and ignorance in macroeconomics i have chosen to review economic thought on this topic on this occasion partly because of its inevitable timeliness partly because of a personal interest reaching back to my first published work in 1941

policy positions information acquisition and turnout this paper explores the relationship between policy positions information acquisition and turnout in particular information acquisition and turnout choices are characterized as a function of citizens policy positions it is found that middle of the road citizens are the most likely to both acquire political information and abstain comparative statics analysis of the information technology indicates that an increase in the effectiveness of information has a higher positive impact on information and turnout than a comparable decrease in the cost of information furthermore following a polarization information and abstention are found to increase

simple econometrics of pesticide productivity this paper develops a multioutput generalization of the lichtenberg zilberman damage control technology the dual representation of the technology is shown to be conditionally additive in the price of abatement activities and other prices an econometric procedure for estimating the dual technology is developed and applied to an aggregate u s agricultural data set the conditionally additive nature of the model allows estimation of pest damage from the dual technology our estimates of aggregate u s pest damage are much lower than previous estimates

a group rule utilitarian approach to voter turnout theory and evidence this paper explores a group rule utilitarian approach to understanding voter turnout inspired by the theoretical work of john c harsanyi 1980 and timothy j feddersen and alvaro sandroni 2002 it develops a model based on this approach and studies its performance in explaining turnout in texas liquor referenda the results are encouraging the comparative static predictions of the model are broadly consistent with the data and a structurally estimated version of the model yields reasonable coefficient estimates and fits the data well the structurally estimated model also outperforms a simple expressive voting model

damage control and increasing returns the indirect action of damage control inputs means the marginal productivity of these inputs depends on their effectiveness in controlling the level and size of production loss caused by the damage agent increasing returns to damage control inputs can occur even when control and damage functions are concave the result implies more attention needs to be paid to the functional form selection for damage and control functions in empirical work on pest control and other types of damage control inputs in addition the possibility of increasing returns may undermine the general use of taxes to reduce pesticide use

is mandatory voting better than voluntary voting we investigate the welfare effects of policies that increase voter turnout in costly voting models in a generalized costly voting model we show that if the electorate is sufficiently large then increasing voter turnout is generically efficient increasing turnout in small elections is only inefficient if the electorate is evenly divided or if there is already almost complete voter participation finally we argue that the effects underlying our results are robust in a large class of endogenous participation models

another look at pesticide productivity and pest damage using the lichtenberg zilberman fox weersink damage specification we develop a short run supply response framework based on rational producer behavior in the presence of damage agents we show how representation can be used to measure and decompose the economic damage associated with the presence of pests how to measure the shadow prices of damage control agents how to measure the manner in which pesticide application biases variable input use and how pesticide application affects the relative returns to quasi fixed factors of production an econometric version of the model is estimated using a panel data set on greek olive producers both our theoretical and our empirical results suggest that the most traditional measure of pest damage understates actual economic losses and revenue losses due to pests

estimating substitution and expansion effects using a profit function framework this study reports a first attempt to derive all the relevant information with respect to the structure of production of an industry using knowledge of only a profit function using estimates of a profit function for canadian agriculture a procedure to separate substitution and expansion effects for both inputs and outputs was implemented information concerning net input and output substitution and complementarity possibilities were obtained the most important empirical results suggest that the hypothesis of nonjoint production of crop and animal outputs in canadian agriculture cannot be rejected and that hired and operator labor are complements rather than substitutes

the tragedy of bird scaring abstract this paper examines crop raids by birds in semi arid kenya highlighting the importance of bird scaring as a barrier to the greater adoption of drought resilient high value traditional crops hvtcs in the region using survey data from tharaka nithi county we find 100 of millet and sorghum farmers in the study area scare birds from their plot devoting 43 66 of all labour time to this activity when these crops are grown in monocrop plots and 24 47 of labour time in plots where millet and sorghum are grown in combination with other crops this labour allocation is in stark contrast to farmers of all other crops who dedicate almost no time to bird scaring individually scaring birds from their plot farmers achieve a momentary pareto optimal perpetuating a ripple effect whereby the negative cost of birds are continuously shifted from one farmer to the next we systematically examine this cost shifting behaviour as an externality theoretically applying environmental and resource economics ere policy prescriptions for externality internalisation ere however with its focus on self interest rational actors and technological interventions falls short to present effective solutions to this so called externality farmers in the region can address crop raids by birds through collective coordinated action at this scale the negative cost of pests is deliberately distributed across all receptors leading to long term community wide social wellbeing improvements

damage control productivity why econometrics matters cet article consiste d une part en une critique de l approche de lichtenberg et zilberman 1986 pour l explication de la surestimation habituelle de la productivite marginale des pesticides les auteurs montrent que l argument selon lequel les fonctions de production standard cobb douglas translog ne seraient pas adequates pour la modelisation de l action des pesticides sur les rendements agricoles n est vraisemblablement valide que dans des cas tres particuliers d autre part on propose une autre explication potentielle de cette surestimation de la productivite marginale des pesticides l existence de biais d heterogeneite tels qu ils ont ete mis en evidence par mundlak 1961 ces discussions theoriques sont illustrees a l aide d estimations et de tests realises dans le cadre de la methode des moments generalisee a partir d un panel issu du rica de 496 agriculteurs suivis de 1987 a 1990

the economics and econometrics of damage control concern for the potentially harmful side effects of agricultural chemical inputs especially pesticides highlights the need to accurately determine the economic levels of their use we consider three model specification issues interaction of direct production inputs with damage control inputs in damage abatement justification for a priori exclusion of production inputs from the abatement function and the motivations and consequences of alternative stochastic specifications empirical analysis using farm level data shows that misspecification of the stochastic element in the production function can overestimate the marginal physical productivity of pesticides and grossly underestimate the responsiveness of demand to increases in pesticide prices

the unemployment volatility puzzle is wage stickiness the answer i discuss the failure of the canonical search and matching model to match the cyclical volatility in the job finding rate i show that job creation in the model is influenced by wages in new matches i summarize microeconometric evidence and find that wages in new matches are volatile and consistent with the model s key predictions therefore explanations of the unemployment volatility puzzle have to preserve the cyclical volatility of wages i discuss a modification of the model based on fixed matching costs that can increase cyclical unemployment volatility and is consistent with wage flexibility in new matches

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

the virtues of hesitation optimal timing in a non stationary world in many economic political and social situations circumstances change at random points in time reacting is costly and reactions appropriate to present circumstances may become inappropriate upon future changes requiring further costly reaction waiting is informative if arrival of the next change has non constant hazard rate we identify two classes of situations in the first delayed reaction is optimal only when the hazard rate of further changes is decreasing in the second it is optimal only when the hazard rate of further changes is increasing these results in semi markovian decision theory provide motivations for building delay into decision systems jel c61 d72 d82 d83 k10 m11

estimating the electoral effects of voter turnout there are two undercurrents to much of the literature on voter turnout a normative belief that high rates of voter participation are desirable and an empirical expectation that variation in voter turnout will have electoral consequences to some extent these undercurrents flow together although one might argue that high turnout is preferable for purely expressive reasons the typical normative claim asserts that increased levels of voter participation improve the quality of representation by reducing any bias that might result from dissimilarities between voters and nonvoters assumed differences between those who vote and those who do not are also at the heart of the commonly hypothesized empirical relationship between aggregate turnout and partisan vote share as argued originally by the authors of the american voter campbell et al 1960 96 115 if nonvoters and occasional voters hold preferences that differ from those of habitual or core voters then variation in turnout is likely to have meaningful electoral implications higher turnout might advantage one party over another might advantage incumbents or perhaps

the production effects of agricultural income support policies under uncertainty this analysis decomposes the production impacts of income support programs into wealth insurance and coupling effects under the usual assumptions about preferences the wealth and insurance effects of many support programs increase optimal input levels even for supposedly decoupled programs if the program is coupled in the usual sense then all three effects often act in the same direction it is concluded that studies of trade and domestic policy reform in stochastic environments should consider insurance and wealth effects the derivative conditions required to obtain results are also subjected to scrutiny simulations for an iowa corn producer confirm the comparative statics

unemployment in the great recession this paper studies the responses of unemployment in germany the united states and britain to the great recession of 2008 09 by making use of beveridge curve analysis and in the entire oecd with other techniques it is shown that britain suffered from recession but no structural problems the united states suffered from structural unemployment during the recovery germany exhibited a much better performance both during and after the recession the rise in oecd unemployment is broken down into parts due to aggregate activity the construction sector and a residual attributed to policies and institutions which is used to reach conclusions about policy

panel data estimation techniques and farm level data models econometric models wishing to estimate relevant parameters for agricultural policy analysis are increasingly relying on unbalanced panels of farm level data since in the agricultural economics literature such models have often been estimated through simplified approaches in this paper we try to verify whether the adoption of more sophisticated panel data techniques may impact the estimation results for this reason the policy model by moro and sckokai 1999 has been re estimated using techniques recently developed in the econometric literature the preliminary results show a strong impact on the estimations this seems to suggest that the adoption of proper panel data techniques is likely to be very important in order to obtain reliable estimates of some key policy parameters

unequal participation democracy s unresolved dilemma presidential address american political science association 1996 low voter turnout is a serious democratic problem for five reasons 1 it means unequal turnout that is systematically biased against less well to do citizens 2 unequal turnout spells unequal political influence 3 u s voter turnout is especially low but measured as percent of voting age population it is also relatively low in most other countries 4 turnout in midterm regional local and supranational elections less salient but by no means unimportant elections tends to be especially poor 5 turnout appears to be declining everywhere the problem of inequality can be solved by institutional mechanisms that maximize turnout one option is the combination of voter friendly registration rules proportional representation infrequent elections weekend voting and holding less salient elections concurrently with the most important national elections the other option which can maximize turnout by itself is compulsory voting its advantages far outweigh the normative and practical objections to it

an economic analysis of technology in the meat products industry the meat products industry underwent significant structural change during the last two decades the relocation and expansion of commercial cattle feeding stimulated development of new single species slaughtering facilities to replace older multi species plants an essentially new processing industry arose specializing in breaking and packaging carcasses this forward integration has significantly changed distribution methods of slaughtering and fabricating firms increased emphasis on coordination of inputs led to interest in backward integration from packing into cattle feeding the steer and heifer slaughtering sector which was decentralized and competitive in the 1950s has turned toward centralization and concentration although the largest firm accounted for only 13 of total u s steer and heifer slaughter in 1977 it had more than doubled its share since 1970 in 1978 this firm slaughtered more than twice as many steers and heifers as its nearest competitor in addi

damage control econometrics functional specification and pesticide productivity empirical studies of pesticide productivity have often concluded that the value of marginal product of pesticide exceeds marginal factor cost despite anecdotal and other evidence to the contrary this article presents estimates of pesticide productivity derived from alternative functional specifications of pesticide involvement in production results suggest that explanation of the magnitude of pesticide productivity estimates obtained in empirical studies may lie somewhere other than with functional specification