a re evaluation of the relation between wages and unemployment in the united kingdom this paper examines the long run or equilibrium relationship between wages prices and the unemployment rate in the united kingdom using annual data covering the period 1860 1999 using johansen s maximum likelihood method of testing for cointegration two long run relations are found in a small system of four variables the first relation depicts the co movement of the level of real wages adjusted for productivity together with the unemployment rate and the rate of inflation the second relation shows the co movement between the rate of inflation and deviations of productivity from its trend growth

wider share ownership and economic performance in the uk today almost one in every five adults directly own shares on the stock market compared with a figure of 5 as recently as 1983 this has been a remarkable change engineered by the conservative administration the government have argued that the policy is aimed at creating an enterprise culture nothing less than a fundamental change in attitudes to wealth creation in the economy while we would not disagree with this laudible objective it is clearly difficult to assess both in terms of attainment and consequences one would be happier if the justification for the policy could be grounded in more direct economic terms and the purpose of this paper is to attempt to provide an analysis of some economic aspects of wider share ownership as a policy objective we will attempt to provide a general theoretical analysis although this will inevitably be biased towards aspects of relevance to the uk experience

welfare reform and unemployment in new zealand in the early 1990s new zealand cut benefits and tightened eligibility criteria under its main social welfare programmes these benefit changes varied substantially across both time and demographic groups synthetic panel data are used econometrically to isolate the effects of these reforms on several dimensions of unemployment behaviour a simple theoretical model suggests that cutting benefits could either increase or decrease excess labour supply our results indicate that these reforms increased the official unemployment rate by nearly one quarter of a percentage point but significantly reduced broader measures of economic inactivity or the under utilization of labour in the new zealand economy

imperfect competition multiple equilibria and unemployment policy this paper takes a simple imperfectly competitive macro model with increasing returns and shows how it can lead to nonexistence or multiplicity of equilibria the consequences for government policy toward unemployment are explored and shown to be very different from the traditional model it is argued that a multiple equilibrium model is an attractive possible explanation of the behavior of u k unemployment in the 1980s copyright 1990 by royal economic society

relative earnings and individual union membership in the united kingdom considerable attention has been focused in recent years on the empirical analysis of the effect of trade unions on the structure of earnings such empirical investigation usually entails measurement of the union non union differential in wages or earnings at the level of the individual this involves comparison of the earnings of union members with estimates of what their earnings would be were they not union members or equivalently examination of differences in earnings between individuals comparable with regard to all other relevant characteristics who differ in their union membership alone in the united kingdom all previous attempts at estimation of this differential have used aggregate data at either the industry or occupation level 1 the conventional methodology involves regression of the logarithm of the average wage on either the proportion of workers who are union members or the proportion covered by a collective agreement together with a vector of industry characteristics that are deemed to determine the non union wage however several problems are immediately apparent with this methodology first the model ignores the possibility of variation in the differential across industries which has potentially serious consequences second the vector of other characteristics customarily used is somewhat limited and raises doubts concerning the adequacy of the standardization for what might loosely be termed labour quality third only a sub sample of industries is ever used owing to lack of data those industries excluded are generally smaller in terms of employment that those included if the differential varies with the size of the industry a further bias will be induced all of these problems are either removed or lessened by the use of individual level data for an analysis of their impact at the industry level see geroski and stewart 1981 2 as a result it is now widely accepted that the appropriate way to measure such differentials is to use micro data sets at the level of the individual worker until recently suitable data have not been available for the united kingdom and hence such analysis was not possible this paper presents the first estimates for the united kingdom based on individual level data if the value of the union non union differential were the same for all workers in the unionized sector analysis at the industry level and the individual level would produce similar results however the marshallian laws of derived demand suggest that this will not be the case despite this clear prediction of variation in the differential there has been little systematic investigation of the variation this paper also presents such an analysis since variation in the differential across industries results in aggregation bias in industry level studies such an analysis is of considerable relevance to the evaluation of the evidence from such studies as well as being of interest in its own right the paper is laid out as follows section i presents a method of estimating the union non union differential at the individual level while section ii

state lotteries and consumer behavior abstract this paper investigates two central issues regarding state lotteries first analyses of multiple sources of micro level data demonstrate that household lottery spending is financed primarily by a reduction in non gambling expenditures not by a reduction in expenditures on other forms of gambling the introduction of a state lottery is associated with an average decline of 46 per month or 2 4 percent in household non gambling expenditures low income households reduce non gambling household expenditures by 2 5 percent on average 3 1 percent when the state lottery includes instant games these households experience statistically significant declines in expenditures on food and on rent mortgage and other bills second consumer demand for lottery products responds positively to the expected value of the gamble controlling for other statistical moments and product characteristics including the nominal top prize amount this finding is consistent with informed choice among consumers of lottery products although other forms of irrational or misinformed choice cannot be ruled out

the north south divide questions of existence and stability this paper investigates the relationship between regional earnings and unemployment by use of information primarily from the general household surveys of 1975 and 1982 conventional earnings functions are augmented to capture the effects of the level and duration of unemployment and of regional differences in living costs in common with previous studies the authors find personal characteristics and the occupation or industry of employment to be important in earnings determination in this paper however they generally find that although higher unemployment is associated with reduced regional earnings ceteris paribus long term unemployment has little influence in regional earnings determination copyright 1990 by royal economic society

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

are effort bargaining models consistent with the facts an assessment of the early 1980s recent research has attempted to explain the impact of changes in union bargaining of the uk productivity miracle of the 1980s a central part of these explaniations is the concept of effort or working conditions as an observable component of negotiations after reviewing the evidence this paper shiows that in models where effort and wages are jointly negotiated in an environmenit of weakenitig union power a positive effort wage association as observed in the early 1980s in the uk emerges only unider quite special assumptions we show that the stylized facts are better explained by a model where effort and wages are bargained over sequentially

local pay determination theoretical models of local pay are reviewed ranging from neoclassical perspectives unemployment wage trade off models and segmented labor market approaches the empirical work on u s north south differentials is discussed for the u k studies of the extent of and trends in geographical pay differentials are considered as well as behavioral explanations focusing on the role of excess demand the issue of adjustment processes is then discussed both in theory and in relation to empirical work for the u s and u k this discussion focuses largely on geographical spillover effects in terms of origins evidence and issues of identification finally the impact of certain impediments in the adjustment process are considered specifically in relation to the u k these concern the role and influence of national wage bargaining as well as factors inhibiting labor migration stemming from the housing market and the climate of the national labor market copyright 1992 by blackwell publishers ltd

are green hopes too rosy employment and welfare impacts of renewable energy promotion in view of pressing unemployment problems policy makers across all parties jump on the prospects of renewable energy promotion as a job creation engine which can boost economic well being our analytical model shows that initial labor market rigidities in theory provide some scope for such a double dividend however the practical outcome of renewable energy promotion might be sobering our computable general equilibrium analysis of subsidized electricity production from renewable energy sources res e in germany suggests that the prospects for employment and welfare gains are quite limited and hinge crucially on the level of the subsidy rate and the financing mechanism if res e subsidies are financed by labor taxes welfare and employment effects are strictly negative for a broad range of subsidy rates the use of an electricity tax to fund res e subsidies generates minor benefits for small subsidy rates but these benefits quickly turn into significant losses as the subsidy rate exceeds some threshold value

wage inflation and unemployment in europe the regional dimension johnes g and hyclak t j 1989 wage inflation and unemployment in europe the regional dimension reg studies 23 19 26 in this paper a bargaining model of wage and unemployment determination is used to estimate regional phillips curves for britain italy and the federal republic of germany estimates of region specific non accelerating inflation rates of unemployment nairu are provided movements of these over time are examined the impact of inter regional differences in wage rigidity on unemployment change is analysed in the final section johnes g et hyclak t j 1989 l inflation par les salaires et le chomage en europe l optique regional reg studies 23 19 26 cet article se sert d un modele de la determination des salaires et de l emploi afin d estimer des courbes de phillips pour la grande bretagne l italie et la republique federale allemande on fournit des estimations des taux de chomage regionaux etant donne une inflation stable et on examine les mouvements de ces taux sur le temp

labour quality and aggregate real wage dynamics the real wage plays an important role in many aggregate econometrics studies of the labour market however average wages like any other average quantity can change for two reasons either through an underlying movement in the earnings potential of a unit of labour of given quality or alternatively through compositional changes which alter the relative proportions of different types of labour within the employed labour force using data from the general household survey to estimate earnings functions the paper seeks to examine the contribution of these two factors for britain from 1979 to 1989 it is shown that in periods of rising unemployment compositional changes can have a bigger effect on real earnings growth than any underlying change in reward to labour of give quality this raises the question of what economists actually are measuring when considering the behaviour of the aggregate real wage

unions oligopoly and the natural range of employment a simple two sector general equilibrium macromodel is presented wi th oligopolistic price determination in the product market and a unionized labor market in the first stage unions set the nominal wage and in the second stage firms choose outputs given wages by altering the balance of fiscal policy between the two sectors the government can achieve a continuum of aggregate employment levels the natural range of employment a unique natural rate will occur only i f one requires fiscal policy to be the same in both sectors this indicates that the natural rate property of some single or representative sect or macromodels is a special case

returns to schooling for urban and migrant workers in china a detailed investigation abstractwe use a new data set the 2009 rural urban migration in china rumic to estimate returns to schooling in china using instrumental variable iv estimation after identifying a set of instruments we conduct comprehensive validity and relevance testing of different combinations of instruments as well as robustness analysis of our estimates for rural to urban migrants and urban residents in china we find that our point estimates are in the 6 9 range for urban workers compared to 7 8 for migrant workers returns for men at 8 9 are slightly higher than for women at 6 7 thus private returns to education in urban china in 2009 were not as high as other transition and developing countries but substantial and have increased over time comparing ols and iv estimates we also find that the attenuation bias due to measurement error is generally large and more important in the migrant sample compared to the urban sample

union wage setting and unemployment in the netherlands 1965 1987 this paper presents an empirical model of union wage setting and employment the stackelberg equilibrium unemployment rate is shown to be a function of taxes the replacement ratio the gap between consumer and producer prices productivity effects and the rate of long term unemployment the model is estimated with aggregate data from the private sector in the netherlands 1965 1987 the results suggest that the equilibrium unemployment rate is pushed upwards by taxes the replacement ratio and by the gap between consumer and producer prices and is reduced by productivity effects insider outsider effects appear insignificant

reconciling the wage curve and the phillips curve the wage curve is the negative relationship that links wage levels to the unemployment rate it fits accurately with modern non competitive labour market models but goes against a phillips curve modelling because the latter ties wage growth to the unemployment rate in this article we present a comprehensive review of these non competitive models highlighting recent contributions that try to eliminate the possible gap that exists between the concepts of the wage curve on the one hand and the phillips curve on the other copyright blackwell publishers ltd 2005

the real costs of credit access evidence from the payday lending market using geographic differences in the availability of payday loans i estimate the real effects of credit access among low income households payday loans are small high interest rate loans that constitute the marginal source of credit for many high risk borrowers i find no evidence that payday loans alleviate economic hardship to the contrary loan access leads to increased difficulty paying mortgage rent and utilities bills the empirical design isolates variation in loan access that is uninfluenced by lenders location decisions and state regulatory decisions two factors that might otherwise correlate with economic hardship measures further analysis of differences in loan availability over time and across income groups rules out a number of alternative explanations for the estimated effects counter to the view that improving credit access facilitates important expenditures the results suggest that for some low income households the debt service burden imposed by borrowing inhibits their ability to pay important bills copyright 2011 oxford university press

an introduction to the wage curve en conomists and policymakers are interested in understanding the forces that determine the level of unemployment and the level of wages this paper describes an empirical discovery made with the help of international microeconometric evidence covering more than a dozen nations about a link between these two variables the connection can be portrayed on a graph with the level of unemployment on the horizontal axis and the level of wages on the vertical axis then the wage curve as shown in figure 1 is a downwardsloping locus this relationship tells us that holding others things constant if a region has a rise in unemployment in a particular year those who live there will have a fall in their wages in that year what does this curve mean how in a field where fully controlled experiments are almost impossible could there be any convincing scientific basis for this wage curve what is the relationship between the wage curve and a phillips curve other than that the curve of figure 1 looks like a phillips curve with the vertical axis mislabeled how does the wage curve fit into existing economic knowledge and is the empirical finding consistent with competitive theory this paper sketches answers to these kinds of questions the discussion draws on our book the wage curve blanchflower and oswald 1994 where the points raised here are investigated more fully it also rests upon work done by other economists whose work is listed in the paper and the bibliography

customer markets credit market imperfections and real price rigidity according to standard theory an increase in demand should raise prices of goods given factor prices empirically however prices appear to be unaffected by short run variations in demand this paper suggests an explanation of this observation if customers react slowly to price changes and credit markets are imperfect prices may be unchanged or even fall when demand increases the reason is that when demand is high profits are high and firms can compete more intensely for customers without increasing their borrowing copyright 1991 by the london school of economics and political science

mind the gap please the changing nature of entry jobs in britain we examine wages in jobs taken by those out of work entry jobs and the characteristics of the individuals who fill them there are large entry wage gaps relative to other jobs more importantly real entry wages have fallen by around 20 log points relative to all other jobs since 1979 one quarter of this decline is accounted for by differences in individual and job characteristics and around 40 from an unexplained fall in the position of entry jobs in the wage distribution that entry wages differ from the stock of all wages should be incorporated into labour supply modelling

education s role in china s structural transformation abstract we explore education s role in improving the allocation of labor between china s agricultural and nonagricultural sectors and measure the portion of china s recent growth attributable to this channel using detailed micro level data and an empirical model that allows for the endogenous selection of education and sector of employment we estimate the relationship between an individual s educational attainment sector and income we find that about 11 of aggregate growth in output per worker from 1978 to 2004 is accounted for by increased education with 9 coming through the labor reallocation channel and 2 attributable to increased within sector human capital

markets and income inequality in rural china political advantage in an expanding economy when market reform generates rapid growth in an agrarian subsistence economy changes in inequality may be due to economic growth and structural change rather than to the intrinsic features of markets the case of post mao china is examined using nationally representative survey data gathered in 1996 to address unresolved questions about findings from 1980s surveys well into reform s second decade political officeholding has a large net impact on household income comparable to that of operating a private enterprise contrary to findings based on earlier surveys and expectations about the impact of growth cadre household advantages are stable across levels and forms of economic expansion returns to entrepreneurship however decline sharply with the spread of wage employment future declines in relative returns to political position are therefore unlikely to occur due to the further spread of private household entrepreneurship and theories of change based on this mechanism appear untenable

returns to education a further international update and implications this paper updates evidence on the returns to investment in education by adding estimates for new countries and refining existing estimates to bring the total number of country cases to over 60 the new cross country evidence confirms and reinforces earlier patterns namely that returns are highest for primary education the general curricula the education of women and countries with the lowest per capita income the findings have important implications for directing future investment in education which for efficiency and equity purposes should concentrate on these priority areas

inflation and the uk labour market inflation is endemic in britain aside from the odd year inflation in britain has been higher than the average of the oecd countries for the last forty years this is as true for the anti inflationary 1980s as for the inflationary 1970s and the libertarian 1960s in the light of this fact we look at the problem of inflation both in general terms and in the british context furthermore we shall consider inflation from a particular point of view namely that of the labour market although it would perhaps be more apt to describe the viewpoint as the supply side

returns to education in china a meta analysis within labour economics returns to education is an area of focused research moreover amongst studies looking at emerging economies china is the most widely studied economy while there is a gen

the economics of animal farm this paper uses george orwell s fictional story animal farm to make a comparison between orwell s predictions and the chinese experience with communism an analogy is made between two characters from his novel napoleon the boar who attains power and boxer the horse who does not these are analogous to members and nonmembers of the communist party respectively readily available data by griffen and renwei 1988 are then used to compare the economic conditions of approximately 22 000 individuals the empirical results strongly support many of orwell s predictions a theoretical predatory growth model that potentially explains the results is also introduced

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

unemployment dynamics in britain we examine the inter related dynamics of the unemployment flows and stock our model allows them to be linked through the standard accounting identity but also through behavioural relationships we find that for the uk the bulk of the correlation between duration and the unemployment stock arises from the dependence of duration on unemployment taking careful account of the inter temporal identity outflow shocks have contributed little to the evolution of unemployment since the late 1960s given that the correlation of duration and unemployment arises from the behavioural relationship we show that unemployment dynamics arise mostly from shocks to the inflow unemployment remains one of europe s more pressing economic and social problems as highlighted in the eu s lisbon declaration of 2000 a dynamic approach to unemployment starts from the recognition that unemployment is a stock and changes through shocks to the outflow and inflow the research and policy focus has generally been on the outflow process or equivalently unemployment duration a glance at figure 1 shows why this might be so it reveals a very strong co movement of the unemployment rate and the proportion of the unemployed out of work for a year or more analysts have used data like this to argue that the source of unemployment fluctuations has been changes in the outflow process 1 possibly as a consequence of this most policies directed at reducing unemployment focus on improving the search effectiveness and employability of the currently unemployed the unemployment flows and stock are related in quite complex ways and in this paper we focus on these inter related dynamics the model we use allows them to be linked in two ways first there is the simple accounting relationship whereby shocks to the flows accumulate in the stock second search and matching models suggest behavioural relationships of the flows depending on unemployment the presence of the nonlinear accounting identity in the model makes the analysis of the joint system problematic so we proceed sequentially investigating first one link and then the other we find that for the uk the bulk of the correlation between duration and the unemployment stock displayed in figure 1 arises from the dependence of the former on the latter we find a strong dependence of the outflow rate on unemployment taking careful account of the inter temporal identity on the other hand outflow shocks have contributed little to the evolution of unem

health human capital height and wages in china abstract we estimate the returns to height using data from 12 chinese cities we present both ordinary least squares ols and two stage least squares tsls estimates in the latter height is instrumented using proxies for health human capital accumulated in childhood and adolescence which influence adult height the tsls estimates are much higher reflecting the fact that the ols estimates are determined by the random genetic factors influencing height while the tsls estimates also take into account returns from investment in health human capital during childhood and adolescence these results imply considerable returns to investment in health human capital

selected works of michael wallerstein centralized bargaining and wage restraint the literature on corporatism has presented much evidence associating highly centralized systems of collective bargaining with wage restraint and relatively successful macroeconomic performance in addition centralized bargaining is associated with relatively small wage differentials this paper presents a model of the impact of centralized wage setting on both real wages and relative wages the central assumption is that the centralization of wage setting at the national level unites unions who are complements in production since a wage increase for one group of workers negatively affects the welfare of other workers who are complements in production centralized wage setters choose wages below the equilibrium of decentralized wage setting it is also shown that if the union confederation maximizes a utilitarian welfare function with equal weights centralized wage setting decreases wage dispersion while low paid workers clearly gain from centralized bargaining high paid workers may prefer that bargaining be decentralized

hysteresis and the earnings function hysteresis in wages is modelled and a tractable earnings function is derived estimation using a recent cross section of uk data provides support for this function which also outperforms rival specifications on the basis of goodness of fit

testing steady state implications for the nairu estimates of the nairu are usually derived either from a phillips curve or from a wage curve this paper investigates the correspondence between the operational nairu concepts and the steady state of a dynamic wage price model we derive the parameter restrictions that secure that correspondence the full set of restrictions can be tested by econometric analysis of the wage price system and this method is demonstrated for norwegian data a set of necessary conditions can be tested from estimated wage curves alone existing international evidence from empirical wage equations are reinterpreted in light of these conditions

another look on earnings functions abstract in this paper we examine three different specifications of earnings functions based on human capital thurow s version of a segmented labor market and assignment theory using french data and considering education as an endogeneous variable contrary to hartog 1985 the human capital and assignment approaches are rejected in favor of the thurow s version of a segmented labor market

employment in the british coal industry a test of the labour demand model the authors test the conventional model of labor demand against the alternative that bargaining takes place over both wages and employme nt for a time series cross section data set covering the british coal industry they note the difficulty of identifying the contract curve under the alternative hypothesis and suggest the use of variables affecting the union and management status quo points as instruments for the endogenous wage they find that outside variables such as benefits and manufacturing wages are important in determining the level of employment thus rejecting the labor demand model copyright 1988 by royal economic society

earnings functions testing for the demand side abstract to analyze labor market phenomena one may simultaneously grade workers by education and jobs by level of difficulty and complexity human capital theory predicts earnings based on only worker quality thurow s version of a segmented labor market theory predicts that only the job level is relevant and the assignment theory predicts that both variables are relevant using three different data sets for the netherlands testing demonstrates convincingly the superiority of the assignment theory

estimates of the economic returns to schooling from a new sample of twins this paper uses a new survey to contrast the wages of genetically identical twins with different schooling levels multiple measurements of schooling levels were also collected to assess the effect of reporting error on the estimated economic returns to schooling the data indicate that omitted ability variables do not bias the estimated return to schooling upward but that measurement error does bias it downward adjustment for measurement error indicates that an additional year of schooling increases wages by 12 to 16 percent a higher estimate of the economic returns to schooling than has been previously found copyright 1994 by american economic association

uk regional policy an evaluation introduct ion ities in unemployment during the recession of the early 1990s which bit deeply in the southern regions however the convergence of regional unemployment rates uk regional policy has existed at varying levels of intensity for nearly seven decades throughout its conceals persistent spatial disparities in unemployment at a higher level of disaggregation fig 2 shows that existence the overriding objective has been to provide economic help to the country s most heavily depressed those travel to work areas experiencing the highest unemployment rates in 1985 tend to be the same areas or least well ov areas a wide variety of policy measures have been used to create employment and thereby some 10 years later further table 1 shows that the spatial pattern of unemployment at county level has reduce unemployment in the areas with persistently high unemployment this paper has two primary aims remained remarkably stable broad regional aggregates conceal immense spatial disparities in unemployment rstly to identify the major bene ts of regional policy and secondly to investigate ways in which uk regional within regions and these spatial disparities are persistent over time it is this high unemployment persistence that policy can be made more evective and hence more eycient ultimately justi es spatially discriminating policies such as regional policy as a rst step it needs to be established that the uk actually has a regional problem it is easy to demonstrate the paper is organized as follows the next section identi es the major economic and social bene ts of that spatial disparities in unemployment at a broad level have virtually disappeared during the 1990s the regional policy followed by a review of recent government views on the case for regional policy the fourth north south divide that was so evident in the 1980s has been eroded by a substantial convergence in unsection compares two diverent approaches to solving regional problems the rst is a market based approach employment rates this is vividly illustrated in fig 1 which shows the dramatic narrowing of regional disparwhich aims to make local labour markets more exible

hysteresis in unemployment unemployment has risen sharply in a number of countries and it appears to be becoming more persistent the experience of the 1970s and 1980s showed that adverse unemployment shocks could have long lasting effects with very serious economic and social consequences a key mechanism producing these adverse consequences was hysteresis in unemployment whereby temporary rises in unemployment generated by supply and or demand shocks had permanent or at least very persistent effects clearly it is important to understand how hysteresis mechanisms might operate in order to avoid such adverse outcomes on the other hand experience during the subsequent two decades showed that under more favourable macroeconomic conditions it is possible to observe good hysteresis effects now is a very appropriate time to re visit the issue of hysteresis in unemployment in order to avoid the errors of the 1970s and 1980s and if possible to get hysteresis effects working in a positive direction copyright 2011 oxford university press

the external returns to education evidence from chinese cities abstract following rauch s seminal study there has been a growing interest among economists in estimating human capital externalities at the individual level j rauch productivity gains from geographic concentration of human capital evidence from the cities journal of urban economics 34 1993 380 400 in this paper we provide a first set of estimates of the external returns to education in chinese cities we find that the external returns are at least as high as the private returns to education ols estimates of the external returns range from a low of 4 9 to a high of 6 7 two stage least squares estimates indicate that a one year increase in city average education could increase individual earnings by between 11 and 13 we also examine the impact of economic reforms on the external returns to education and find suggestive evidence that economic reforms have raised the external returns to education in chinese cities

unions and interindustry wage differentials abstract we investigate the importance of trade unions in collective bargaining in the context of a developing country manufacturing labor market the methodology we adopt to estimate wage differentials follows the method proposed by haisken denew j p and schmidt c m 1997 review of economics and statistics 79 516 521 since it improves on the standard procedure popularized by krueger a b and summers l h 1988 econometrica 56 193 259 our findings indicate that wage dispersion is far greater in the unionized sector of brazilian manufacturing in contrast to evidence from other countries

relative prices and the demand for labour in british manufacturing the existence of an aggregate demand for labour schedule derived from profit maximization of the individual firm and giving a negative relationship between the labour capital ratio and the real wage is central to most traditional theoretical macroeconomics even though such a relationship is typically not embodied in macroeconomic models but beginning with the work of dunlop 1938 and tarshis 1939 the negative relationship could not be found in the data a more modern reference is bodkin 1969 this evidence led naturally to disequilibrium analysis notably that of barro and grossman 1971 more recently sargent 1978 has attempted with some success to rehabilitate the demand for labour schedule by showing that costly adjustment of the workforce obscures the current relationship between the wage and labour demand while leaving it essentially intact that paper and the related one by neftci 1978 was criticized by geary and kennan 1979 because it had used retail prices to represent output prices and they showed that for a number of countries employment could not be explained satisfactorily by the real product wage however geary and kennan failed to allow for the simultaneous effect of the real prices of raw materials and capital services in this paper we shall see that allowing for the effects of other relative prices notably the price of inputs relative to output and the real interest rate the real wage has a powerful but slow acting negative effect on the demand for labour the long run elasticity is about 2 and the mean lag is over 18 months we also find that the price of inputs has a long run elasticity of about 2 and that high values of the real interest rate have a powerful depressant effect on the level of employment in manufacturing the most striking implication for policy of our analysis is that measures of demand output money government spending do not have a significant influence on manufacturing employment controlling for the effects of relative prices thus government macroeconomic policy can affect the level of employment in manufacturing if and only if it can affect relative prices

empirical age earnings profiles the human capital earnings function in which earnings are expressed as a quadratic in potential experience is probably the most widely accepted empirical specification in economics in spite of its widespread acceptance the human capital earnings function provides a very poor approximation of the true empirical relationship between earnings and experience the standard formulation understates early career earnings growth by about 30 50 and overstates midcareer growth by 20 50 however simple alternative specifications that fit the data are available

costs prices and profitablity in uk manufacturing the 1984 input output tables make it possible to estimate directly the cost structure of any industrial sector the results of this calculation are presented for the non food manufacturing sector for the period 1970 87 this cost estimate is found to be part of a co integrating set with output prices in contrast to the specification implied by a cobb douglas production function the other elements of the equilibrium vector are an index of capacity utilization positively related to the mark up and the variance of inflation proxying inflation uncertainty which is negatively related import prices have an indirect effect on the mark up via demand

monetary compensations in climate policy through the lens of a general equilibrium assessment the case of oil exporting countries this paper investigates the compensations that major oil producers have claimed for since the kyoto protocol in order to alleviate the adverse impacts of climate policy on their economies the amount of these adverse impacts is assessed through a general equilibrium model which endogenizes both the reduction of oil exportation revenues under international climate policy and the macroeconomic effect of carbon pricing on middle east s economy we show that compensating the drop of exportation revenues does not offset gdp and welfare losses because of the time profile of the general equilibrium effects when considering instead compensation based on gdp losses the effectiveness of monetary transfers proves to be drastically limited by general equilibrium effects in opened economies the main channels of this efficiency gap are investigated and its magnitude proves to be conditional upon strategic and policy choices of the middle east this leads us to suggest that other means than direct monetary compensating transfers should be discussed to engage the middle east in climate policies

employment adjustment in uk manufacturing this analysis differs from previous studies of labor demand in its explicit inclusion of the costs to the firm of adju sting its workforce these costs include institutional factors such a s employment protection legislation and unions and market factors su ch as the degree of slack in the labor market two questions are addr essed what is the quantitative impact of these forces and does their inclusion improve the fit of a labor demand function the results sh owed these factors to have a strong influence on the rate of hiring f iring and to improve significantly on conventional labor demand funct ions copyright 1988 by royal economic society

migration and imperfect labor markets theory and cross country evidence from denmark germany and the uk we investigate the labor market effects of immigration in denmark germany and the uk three countries which are characterized by considerable differences in labor market institutions and welfare states institutions such as collective bargaining minimum wages employment protection and unemployment benefits affect the way in which wages respond to labor supply shocks and hence the labor market effects of immigration we employ a wage setting approach which assumes that wages decline with the unemployment rate albeit imperfectly we find that the wage and employment effects of immigration depend on wage flexibility and the composition of the labor supply shock in germany immigration involves only moderate wage but large unemployment effects since immigrants are concentrated in labor market segments with low wage flexibility the reverse is true for the uk and denmark

individual heterogeneity in returns to education in urban china during 1995 2002 abstract this paper analyzes the individual level differences in returns to education in urban china from 1995 to 2002 we have uncovered substantial heterogeneity in schooling coefficients and we find that the extent of heterogeneity diminishes over time

unemployment and growth some empirical evidence from structural time series models this study investigates the empirical relationship between unemployment and growth in a number of oecd economies a structural time series model is used for labour productivity growth to demonstrate that in most economies there seems to be a negative correlation between unemployment and labour productivity growth the results provide little support for the theory that recessions may stimulate productivity growth the use of a structural time series approach allows an attempt to model the underlying dynamics of productivity growth jointly with the effect of unemployment

economic reforms and gender inequality in urban china abstractthis study jointly examines the gender earnings gap and employment rate in urban china using a longitudinal data set that covers the period of 1989 2004 consistent with previous studies we find that gender earnings gap increased by 5 percentage points between 1989 and 1997 since then its changes have become much more moderate actually after controlling for observed characteristics the size of the earnings gap in 2004 is almost the same as it was in 1997 the widening earnings gap in the 1989 1997 period was accompanied by a rising employment gap between men and women particularly among those aged 45 and older the stability in the gender earnings gap in the later years co occurred with a decline in the employment of less educated women

on efficient estimation with panel data an empirical comparison of instrumental variables estimators summary this paper attempts a replication of the cornwell and rupert 1988 study hereafter cr the cr study investigated the efficiency gains in a returns to schooling example by applying alternative sets of instrumental variables estimators for panel data regressions proposed by hausman and taylor 1981 amemiya and macurdy 1986 and breusch mizon and schmidt 1989 corrections on the cr data set lead to changes in the legitimate set of instruments when the time dummies are excluded from the regression and to much lower empirical gains in efficiency than those reported in cr if the time dummies are retained in the wage equation the experience coefficient is not estimable by the within regression and the empirical gains in efficiency from using the iv procedures are not limited to the timeinvariant education coefficient

permanent income current income and consumption evidence from two panel data sets in this article i estimate euler equations that is the first order conditions of the consumers maximization problem using data from two data sets consumption data are taken from the consumer expenditure survey income data are taken from the panel study of income dynamics because the data for the estimation come from two samples i use a generalization of the instrumental variables estimator the two sample instrumental variables estimator i find evidence that consumption is excessively sensitive to predictable income growth the estimates of the coefficient of excess sensitivity for three consumption measures range from 2 to 5

how payday credit access affects overdrafts and other outcomes despite a dozen studies the welfare effects of payday credit are still debatable we contribute new evidence to the debate by studying how payday credit access affects bank overdrafts such as returned checks bankruptcy and household complaints against lenders and debt collectors we find some evidence that chapter 13 bankruptcy rates decrease after payday credit bans but where we find that we also find that complaints against lenders and debt collectors increase the welfare implications of these offsetting movements are unclear our most robust finding is that returned check numbers and overdraft fee income at banks increase after payday credit bans bouncing a check may cost more than a payday loan so this finding suggests that payday credit access helps households avoid costlier alternatives while our findings obviously do not settle the welfare debate over payday lending we hope they resolve it to some extent it by illuminating how households rearrange their financial affairs when payday loan supply changes

accounting for unemployment a labour market perspective i examine whether prolonged high unemployment in canada can be attributed to various structural causes rather than to demand deficiency as found by macro econometric models the answer is largely negative neither the dispersion of sectoral growth rates nor excessive and rigid real wages can convincingly account for most unemployment contentions to the contrary are based upon inappropriately partial analyses enduring shifts in industrial structure have if anything been declining labour mobility is high much unemployment lasts too long to be frictional fuller quantitative understanding of the nature of unemployment can be achieved only in a more general framework

a bargaining model of farrell inefficiency abstract an enormous number of empirical papers have estimated technical efficiency the distance of firms inside a frontier following the model of farrell farrell 1957 the measurement of productive efficiency journal of the royal statistical society series a 120 3 253 290 we propose a theory that explains the distance these empirical papers seek to measure the theory is based on the idea that workers can bargain low effort high crew sizes etc if they and the firm have some monopoly power we provide simple theoretical expressions for the empirical measures of technical and allocative efficiency and compare them to those in the statistical literature we also consider the relation between competition and efficiency

wage rigidity and unemployment in oecd countries real wage rigidity is often blamed for causing unemployment in the wake of adverse real shocks like changes in productivity or the terms of trade likewise nominal wage rigidity is blamed for causing unemployment in the wake of adverse nominal shocks like falls in nominal demand 1 however there has been relatively little systematic discussion of how these concepts should be defined some authors e g sachs 1979 have defined real wage rigidity as the opposite of nominal wage rigidity with the us nominally rigid and europe really rigid 2 the rigidity of european real wages has then been used to explain why europe has experienced a greater increase in unemployment since 1973 than the us but in this discussion real wage rigidity has not been measured in a way which would in fact predict how much unemployment would result from a given real shock the discussion has focused on the degree of nominal inertia in the system but the unemployment cost of real shocks does not depend primarily on the degree of nominal inertia but rather on the effect of unemployment in the phillips curve

mathematical modeling of china s state owned enterprises contract system abstract the chinese government has adopted a policy to separate the management and ownership of the state owned enterprises as a key step to move them towards modern type enterprises state owned enterprises contract system secs is a major enterprise management system in china today in this paper mathematical models are employed to examine some macro aspects of secs first the behavior of secs is analyzed through introducing two measurement indices second two incentive models of secs are developed using audit as a tool for acquiring information for decision making third from a mathematical analysis a general rule which determines optimal incentive strategy under perfect information is presented

capital accumulation and unemployment a tale of two continents in contrast to much recent work regarding the causes of european unemployment in this paper we emphasize the importance of capital accumulation but unlike the few previous studies which have examined the relationship between capital accumulation and unemployment we argue that what matters for the evolution of employment and the unemployment rate is not the absolute growth rate of a country s capital stock but its evolution relative to other countries capital stock the empirical validity of the above statement is demonstrated for almost all oecd countries using quarterly time series data for the period 1961 1995 more detailed evidence is also presented for germany japan and the united kingdom

margins concentration unions and the business cycle theory and evidence for britain abstract a number of recent studies have examined the cyclical relationship between price cost margins concentration and unions u s data has concluded that unions reduce margins margins vary over the cycle and concentration unionisation and the cycle interact in their effect on margins however there is almost no theory to account for these results we propose a simple theory that assumes only that there is overhead labour present at the firm this produces theoretical predictions that can explain these results and discriminate between existing theories we present results of our own using u k panel data and show similar findings to the u s

the causes of unemployment in finland 1970 82 some further empirical evidence this study presents an aggregate labour market model of the finnish economy the model is consistent with the finnish institutional features wage determination by collective negotiations and the division of the economy into a supply oriented open sector and a demand oriented closed sector estimated labour market model suggests that the rise in the steady state unemployment rate can be accounted for by the following factors the rise in employer s tax rate the rise in the availability of benefits while out of work increased union strength increased labour force participation and import price shocks

earnings unemployment and housing in britain this paper models regional earnings and unemployment in the ten regions of great britain between 1972 and 1995 paying particular attention to their interaction and to the important influence of the housing market in contrast to blanchard and katz 1992 1997 for the united states we find less persistence in british regional earnings differentials but greater persistence in regional unemployment rates we find no evidence of a negative effect of the overall unemployment rate on the earnings of men in non manual or women in full time employment however for manual men we find a significant elasticity of around 0 07 comparable with blanchflower and oswald 1994 copyright 2001 john wiley sons ltd

the effect of interest rate caps on bankruptcy synthetic control evidence from recent payday lending bans abstract citing consumer protection concerns several states have recently enacted interest rate caps on small loans after cataloguing the history of such legislation we test whether these laws caused a decrease in the number of payday lending establishments and subsequently prompted variation on incidence of bankruptcy filings to motivate a causal interpretation of our estimates we create a synthetic control that serves as a counterfactual from which we estimate the aggregate treatment effect of these interest rate ceilings importantly we estimate the treatment effect for each period after the imposition of the cap yielding novel insights about the dynamic heterogeneity in the relationship between payday loan access and bankruptcy our results show payday lending establishments drop by approximately 100 a banishment of the industry we find no short run or long run effects of these bans on bankruptcy the range of our estimates allows us to rule out magnitudes that were documented in several previous studies

hysteresis and the earnings of immigrants in the united states labour market the paper analyses the role of hysteresis in explaining the slow wage convergence between certain immigrant groups and native workers using the 1990 integrated public use microdata samples ipums the analysis reveals that past earnings history in the country of origin has a relatively smaller effect on post migration earnings when compared to past earnings history in the us in addition the paper suggests that the earnings history in the country of origin is more productive in the us labour market for immigrants from advanced economies as compared to those from less developed countries in particular we find that us labour market does not value the past earnings history of mexican immigrants as high as that of other ethnic groups with similar socioeconomic characteristics across successive cohorts

gender segmentation at work in china s privatized rural industry some evidence from shandong and jiangsu abstract in this paper we argue that labor segmentation exists along gender lines in the newly privatized township and village enterprises in rural china the results based upon surveys of workers enterprise managers and local officials indicate that women are segregated into production type jobs in certain industries have less control over their work do not receive a return to experience and are adversely affected by wage discrimination there is a clear gender bias in favor of men in share holding a new and important form of workplace benefit that confers wealth and affects control within the workplace and thus privatization has contributed to gender segmentation the results support the general argument that the process of economic transition is not gender neutral

the determination of contract wages in west germany the determination of contract wages in west germany is studied within a bargaining framework taking into account some institutional features of the bargaining system as well as the influence of economic forecasts and wage concepts cointegration regressions suggest that in the long run nominal contract wages are linked to prices productivity each with a unit elasticity and unemployment in addition to these factors expectational errors concerning the inflation rate during the contract period and changes in the tax wedge affect real wage growth in the short run but these effects seem to be temporary rather than permanent

exploiting naivete about self control in the credit market we develop a model of the credit market where competitive lenders oer long term contracts specifying a non linear schedule of possible repayment schedules to borrowers who may dier both in their taste for immediate gratication and their prior beliefs about that taste the equilibrium contract to a borrower with given beliefs is discontinuous it features an advantageous option involving fast repayment and a penalty for deviating and repaying later these predictions seem to resemble some salient features of many credit card and mortgage contracts for fully sophisticated borrowers the discontinuity acts as a commitment device and yields fast repayment but all other borrowers even those with an arbitrarily small amount of naivete end up delaying repayment despite the penalty and receive little benet from commitment furthermore because they believe they will repay early they underestimate the cost of credit and hence borrow too much non sophisticated borrowers cross subsidize sophisticated borrowers while sophisticated borrowers discipline rms by preventing very exploitative contracts we identify natural conditions under which the above results obtain even if

estimation of optimal human capital accumulation parameters for the netherlands abstract using the theory of optimal investments in human capital in general and rosen s 1975 1976 version of it in particular we tried to model and explain aggregate life cycle income profiles for the netherlands in 1965 1972 and 1979 the model allowed us to estimate and impute human capital accumulation parameters and paths changes in rates of return depreciation rates the value of the human capital stock and of lifetime human wealth could be identified and compared for the sample years it was found that in terms of some of these parameters public sector employees gained compared with private sector employees and employees with higher vocational training gained ground over university trained employees

the efficient estimation of econometric models with rational expectations the efficient estimation of econometric models with rational expectations by the substitution method usually entails the use of a non linear simultaneous equations estimator and hence is not very attractive computationally it is shown that for a wide class of problems efficient estimates can also be obtained with standard estimation methods if instead an errors in variables approach is used for many other problems although not providing fully efficient estimates because rationality is not imposed the errors in variables method will still have a strong appeal because otherwise it uses all of the structural information in the model unlike the substitution method when an incomplete information set is used it guarantees consistent estimates and it is easy to compute

wage setting and the tax system theory and evidence for the united kingdom abstract this paper analyses the effects of a non linear tax system on wage bargaining the main conclusions are an increase in the marginal income or payroll tax rate reduces the pre tax wage in the isoelastic case an increase in the average tax rate increases the pre tax wage by more than the tax increase and a measure of the progressivity of the tax system residual income progression is a sufficient measure of the effect of the tax system on wage pressure empirical evidence is presented to support these propositions and the predictions of the model regarding the effect of recent changes to the u k tax system on the distribution of earnings discussed

an investigation into the power of insiders in wage determination abstract this paper is concerned with the role of insider forces in wage determination various union and non union models of wage behaviour are considered and they imply that wages are a convex combination of internal and external factors certain union models also imply a degree of hysteresis data on fourteen british production industries reveal that i insider forces are important ii their importance is directly related to both union power and the degree of monopoly in the product market iii the state of the aggregate labour market is also important and iv hysteresis effects arising from insider power are only significant in a small minority of sectors

high cost credit and consumption smoothing in this paper i show that high cost credit helps households smooth consumption following periods of temporary financial distress after experiencing distress that is extreme weather events i find that access to high cost payday lending mitigates declines in overall spending and nondurable goods spending generally the results are particularly concentrated among households with a higher propensity to use payday credit or that have limited alternatives lower income households households with less than a college degree and households with low levels of saving these results highlight the consumption smoothing role that high cost credit plays for households with limited access to other types of credit