a review of the recent empirical literature on displaced workers this article reviews the empirical literature on job displacement job displacement is widespread and strongly countercyclical tending to peak during economic downturns but concentrated in indus

occupational downgrading and upgrading in britain the willingness of workers to move down an occupational hierarchy is a potentially important source of flexibility in the labour market but relatively little is known about the scale or pattern of occupational up and downgrading this paper examines who downgrades and the cyclical structure of up and downgrading we find that occupational downgrading is surprisingly large relative to flows into unemployment individuals who have a high payoff to skilled work such as educated workers are less likely to downgrade contrary to expectations the rate of downgrading is found to be greater in the boom while upgrading follows the more conventional expectation of also being procyclical this finding is interpreted as evidence consistent with the rationing of jobs in the downgrading process contrary to the assumptions of simple dual labour market models

job displacement from agriculture unlike manufacturing employers small agricultural employers are generally not required to participate in the unemployment insurance system which leaves many farm workers ineligible for unemployment benefits theory implies that displaced workers who are ineligible for benefits experience shorter jobless spells and a lower reemployment wage with data from the displaced workers survey we show that displaced agricultural workers spend 4 6 fewer weeks unemployed and upon reemployment earn 9 less than displaced manufacturing workers not surprisingly in states where small agricultural employers are required to participate in the unemployment insurance program postdisplacement outcomes for agricultural and manufacturing workers are similar copyright 2010 oxford university press

jobless spells and re employment wages many studies of job loss attribute the earnings losses associated with layoffs to the loss of job occupation and industry specific human capital this paper estimates the effect of jobless spells on post layoff wages using data from the 1984 panel of survey on income participation for a sample of adult white male workers who were permanently laid off between 1974 and 1984 the estimated impact of jobless spells on starting wages and survey date wages several years after re employment are controlled for separations layoffs and quits and for individual and job characteristics the estimates show that jobless spell durations reduce starting wages wage growth in the new job is lower for workers who experience long spell durations a result that suggests acceptance of jobs which are poor matches compared to other workers who spend less time out of work following a layoff the findings support labour force policies which minimize the amount of time a person is out of work

industry specific human capital occupation and firm size evidence from taiwan this paper investigates the importance of various types of human capital and highlights the role played by industry tenure in determining wages in taiwan it also aims to offer possible explanations as to why industry specific human capital is much less significant than it is in the united states empirically it is found that other things being equal accumulating industry tenure decreases earnings for both the least skilled workers and those employed in mid sized firms industry specific skills are not yet deeply implemented in most occupations and firms of all sizes this might also account for the remarkable level of labor reallocation among industries that is observed in taiwan furthermore the capital stock accumulated through education is found to be the most crucial in determining wages in all estimations and a factor considered the engine of growth during the miraculous development of taiwan s economy however the importance of other types of human capital on earnings namely general labor market experience and firm specific human capital varies substantially across groups

intergenerational succession in small family businesses borrowing constraints and optimal timing of succession small family businesses differ from non family businesses in that their functioning is not independent of the life cycle of the owner operator and in that other family considerations sometimes lead to sub optimal managerial decisions from the point of view of the business this is why a smooth intergenerational succession is essential to the profitability of the business and to the welfare of the family as a whole succession within the family involves first of all the choice of a successor the choice is affected by birth order age differentials and qualifications of potential successors choosing a successor means reaching an agreement about the timing of succession and income distribution before and after succession this paper focuses on the decision of the business operating family when to bring in the designated successor a utility maximizing time is shown to differ from the income maximizing time only in the presence of binding borrowing constraints such constraints are likely to enhance an earlier succession in order to use the successor s accumulated off business assets to ease the constraints and to increase future business income due to earlier accumulation of business specific human capital by the successor an additional model shows that the successor will not be willing to wait indefinitely for the formal ownership transfer of the business because of the risk of being disinherited in some future period the consequences of possible strategic behaviors of both the owner and potential successors on the results of these models is discussed informally

job displacement relative wage changes and duration of unemployment using special cps data on displaced workers this article investigates the wage consequences of job displacement in a framework that emphasizes the effects of past job duration s and unemployment duration s on postdisplacement wages our model also attempts to take account of the simultaneity between unemployment duration and the postdisplacement wage it is found that duration strongly reduces subsequent earnings and that considerable overstatement of the loss in firm specific training investments is implied by conventional routes to measuring wage losses

do wages rise with job seniority a reassessment the authors provide new estimates of the return to job seniority using a dataset similar to that employed in joseph altonji and robert shakotko do wages rise with job seniority review of economic studies 1987 and robert topel specific capital mobility and wages journal of political economy 1991 they consider the strengths and weaknesses of these studies treatment of economy wide trends their dating conventions for tenure and wages their handling of wage observations that might span multiple jobs and their estimation approaches re estimation points to an effect often years of tenure on the log wage equal to 11 which is above the preferred estimate of altonji and shakotko but far below that of topel changes in earnings distributions and in the employment relationship motivate the examination of more recent data perhaps surprisingly the return to tenure has probably increased over time

hedging financing and investment decisions theory and empirical tests abstract in this paper we theoretically and empirically examine the interaction between hedging financing and investment decisions a simple equilibrium model with costly financial distress suggests that as firms become more efficient at risky investments vis a vis low risk investments they will borrow less invest more in risky assets and hedge more the model also predicts a positive relationship between hedging and leverage a result consistent with debt capacity arguments we test the model empirically using a simultaneous equations framework to investigate the determinants of firm level hedging financing and investing decisions the results strongly support the hypothesis that the hedging financing and investment decisions are jointly determined in addition we find strong support for the central hypothesis that firms more efficient investing in risky technologies more aggressively hedge and use less debt financing in order to maximize their comparative advantage

how do unemployment insurance and recall expectations affect on the job search among workers who receive advance notice of layoff this paper explores how advance notice of layoffs recall rehiring expectations and unemployment insurance ui benefits affected on the job search among a random sample of arizona ui recipients in 1975 76 the analysis which includes extensive controls for the characteristics of workers and their jobs indicates that pre unemployment search increased with length of notice and decreased with expected recall also among workers not expecting recall pre unemployment search decreased with the level of ui benefits available after layoff the authors argue that improved experience rating would encourage firms to give employees advance notice when layoffs are imminent and re employment bonuses for workers with zero or short unemployment spells would encourage early search

the distribution of economic losses among displaced workers a replication this paper estimates the impact of unemployment on earnings following re employment for a large and representative sample of british men 1984 94 unemployment incidence is found to have only a temporary effect an average earnings setback of 10 on

the link between ability and specialization an explanation for observed correlations between wages and mobility rates wage levels and turnover rates are negatively correlated across types of employment and this fact is often interpreted as evidence that high wage jobs are rationed a simple training model illustrates however that this correlation may arise because able workers have an incentive to choose highly specialized jobs in any job the most able workers possess the most valuable stocks of specific skills and therefore face the highest mobility costs thus able workers may have a comparative advantage in specialized employments data from the national longitudinal survey of youth provide an opportunity to evaluate the merits of the training model developed here data on worker training and mobility provide support for several implications of the model the model also provides new ways to interpret existing results in the literature on interindustry wage differentials

the durability of human capital some new evidence this paper analyzes the effect of chronological aging experience job search change of job and or employer and formal training on the wage growth of a sample of young men following the human capital literature wage growth directly corresponds to human capital and the analysis allows for the assessment of the durability or rate of depreciation of human capital if further investments are not made the findings suggest that human capital is not very durable contrary to some previous estimates given in the literature

the costs of worker displacement this study identifies part of the social loss attendant upon displacement as the remaining value of the assets specific to the severed employment relationship a bargaining model is used to link wage tenure profiles to the amount of information firms and workers possess about the duration of that relationship if information is good the profile will flatten as displacement approaches using psid data for workers separated between 1977 and 1981 wage tenure profiles are found not to change this suggests that either workers or both firms and workers are surprised by the displacement the present value of that part of the social loss attributable to the worker s share of firm specific capital is around 7 000 1980 dollars

overeducation undereducation and the theory of career mobility the theory of career mobility sicherman and galor journal of political economy 98 1 169 92 1990 claims that wage penalties for overeducated workers are compensated by better promotion prospects sicherman journal of labour economics 9 2 101 22 1991 was able to confirm this theory in an empirical study using panel data however the only retest using panel data so far robst eastern economic journal 21 539 50 1995 produced rather ambiguous results in the present paper random effects models to analyse relative wage growth are estimated using data from the german socio economic panel it is found that overeducated workers in germany have markedly lower relative wage growth rates than adequately educated workers the results cast serious doubt on whether the career mobility model is able to explain overeducation in germany the plausibility of the results is supported by the finding that overeducated workers have less access to formal and informal on the job training which is usually foun

wage growth due to human capital accumulation and job search a comparison between the united states and germany this paper compares the sources of wage growth of young male workers in two countries with very different labor market institutions the united states and germany the author first develops a simple method for decomposing wage growth into components due to general human capital accumulation firm specific human capital accumulation and job search the empirical analysis uses data from administrative records germany and the national longitudinal survey of youth united states for cohorts entering the labor market in the late 1970s and early 1980s although the two countries differed substantially in mobility rates they were similar in the sources of wage growth with general human capital accumulation being the most important single source and job search accounting for an additional 25 or more of total wage growth there is no evidence that returns to firm specific human capital accumulation were higher for german apprentices than for u s high school dropouts or graduates

differential human capital investments and the choice of successor in family farms economic development typically is characterized by occupational migration away from agriculture migrants commonly are more educated than average on the other hand the remaining farmers are expected to master more sophisticated production techniques hence the pace of development depends on human capital accumulation of the population as a whole and of farmers in particular for this reason it is important to understand the way human capital investment decisions are made in the rural sector human capital levels are determined to a large extent within the family i e through investments of parents in their children becker chap 6 investments in children are motivated by altruism becker pp 362 79 by concern about family succession chu and by expectations of receiving benefits from descendants in the future bernheim schleifer and summers parents care for migrating children as well as for succeeding children they can also influence the decisions of succession versus migration both directly through their authority and indirectly through differential investments in sector specific human capital intergenerational succession is common in the farm sector as the value of the farm within the family is higher than its market value kimhi 1994b farms in developed economies generally are not large enough to permit division among several successors hence this discussion will focus on the case of a single successor one of the difficult decisions facing the farm family is the choice of a suitable successor birth order and age differentials of children affect this decision since the choice is not independent of the timing of farm transfer kimhi 1994a the emphasis in this paper is on differential ability if one child has an absolute advantage in farming and the other in off farm jobs the choice is easy it is more difficult when one child is more able to run the farm and can also do better off the farm on the one

vulnerable seniors unions tenure and wages following permanent job loss in contrast to nonunion workers reemployment wages of workers displaced from unionized jobs decline with tenure on the lost job this finding cannot easily be explained by firm or industry specific human capital accumulation deferred pay policies standard matching models or a correlation between tenure and reentry rates into unionized jobs possible explanations include negative selection of senior union workers and a negative causal effect of unionism on workers alternative skills despite a much flatter predisplacement tenure wage profile displaced union workers wage losses increase with tenure at a rate comparable to or higher than those of nonunion workers

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

wages and job mobility of young workers this paper presents a discrete time version of jovanovic s model of worker firm matching descriptive evidence is presented that supports the notion that unobserved worker firm heterogeneity is an important component in the intertemporal structure of wages for young workers a structural econometric model of wage dynamics under worker firm sorting is developed and estimated finally a formal test of the matching model is carried out and the matching structure on intertemporal covariances of wages is not rejected my results indicate the necessity of jointly considering processes of turnover and wage growth when analyzing the labor market experiences of young workers

optimal unemployment insurance with human capital depreciation and duration dependence this paper studies the effect of human capital depreciation and duration dependence on the design of an optimal unemployment insurance ui scheme our results partially confirm those obtained in most previous studies benefits should decrease with unemployment duration the optimal program also generates two main novel features which are not present in stationary models first if human capital depreciates rapidly enough during unemployment ui transfers are bounded below by a minimal assistance level that arises endogenously in the efficient program second we study the optimality of imposing a history contingent wage tax after reemployment our numerical simulations based on the spanish and us economies show that the wage tax should decrease with the length of worker s previous unemployment spell and become a wage subsidy for long term unemployed workers as a by product of our study we develop a systematic approach suitable for studying recursively a wide range of dynamic moral hazard problems and other models with similar characteristics

family farm dynamics in canada and israel the case of farm exits abstract canada is one of the few countries for which data exist on individual family farms over time using these data researchers have been able to show that much of the microdynamics of family farms in canada e g changes in size distribution can be attributed to farmer entry and exit however the behavioral aspects of the exit decision received little attention in the literature a comparison of canadian and israeli data could help us understand these behavioral aspects because of the vast institutional differences between the farm sectors in the two countries and the possible effect of the institutional setup on exit decisions comparison of exit patterns may enable us to identify the dependence of farmers mobility on the institutional setup this may also have policy relevance in both canada and israel exit probability decreases with the extent of off farm work we conclude that off farm work is complementary rather than a substitute for farm work perhaps due to its less volatile nature both canadian and israeli farmers over a certain age are more likely to exit as they become older which is a natural result but exit probability in canada rises much faster with age than in israel the major difference between canadian and israeli farm exit patterns lies in the farm size farm size decreases exit probability in canada but increases it in israel perhaps this is because israeli farm exits are less planned in advance than canadian exits institutional constraints on land transactions in israel may also play a role

moral hazard optimal unemployment insurance and experience rating abstract this paper is concerned with evaluating alternative unemployment insurance ui schemes in a dynamic economy with moral hazard we consider changes in the size and duration of ui benefits and the effects of experience rating and use a dynamic contracting approach to determine a benchmark optimal allocation radical changes in the current ui system increase welfare but not by much a move to full experience rating has distributional effects but the aggregate effects are negligible

family composition and off farm participation decisions in israeli farm households this article studies the relationship between the off farm participation behavior of farm operators and their spouses and the demographic composition of the household we focus on farm families without parents siblings or partners and examine the effects of the existence of elderly children of the farm couple we find that both the father and the mother tend to reduce their participation in off farm work as the number of elderly children rises this result holds even after controlling for observed characteristics we also find that the effect of elderly children stems from considerations related to both farm production and household production

work histories and lifetime unemployment a long standing question in economics is how important unobserved differences across workers are for explaining unemployment i revisit this topic using variation in lifetime unemployment across workers in u s data a comparison of workers often unemployed with the rest shows that although differences in job finding rates increase over the course of a career differences in job separation rates are large right from the start i develop a directed search model with symmetric unobserved heterogeneity in which agents learn workers types from their labor market histories to rationalize these findings the model cannot match the data if unobserved heterogeneity is neglected

the role of effort for self insurance and its consequences for the wealth distribution i explore the effect of effort as a mechanism to alleviate the idiosyncratic risk faced by individuals in the presence of incomplete markets i construct a dsge model where costly effort determines the probability of being employed the next period and a riskless asset can be used to smooth consumption i first show how effort and assets are inverse related and that a unique stationary equilibrium exists then in a calibrated version of the model to the us economy i show that in the stationary equilibrium a positively skewed wealth distribution arises which is closer to the observed data and has not been obtained by models without ex ante heterogeneity i then use the model to evaluate the effect of unemployment insurance on the wealth distribution

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

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

job changing after displacement a contribution to the advance notice debate considerable research effort has been devoted to modeling the effects of advance notice on postdisplacement outcomes within the framework set by the biennial displaced worker surveys yet the mechanisms through which advance notice achieves the benefits attributed to it have been little explored in the literature the standard argument that notice facilitates job finding by bringing forward search is of course consistent with the empirical conclusion from first generation studies that broadly defined notice reduced postdisplacement joblessness but had no discernible impact on postdisplacement wages but as an explanation it fails to address the empirical suggestion of time varying effects 1 8 while glossing over the sensitivity of the unemployment result to sample construction and model specification the picture has become more clouded with the publication of results from second generation studies using more recent data that are virtually the reverse of those first reported that is to say analyses of the 1988 and 1990 displaced worker surveys report that that extended intervals of notice appear at best to be associated with minor reductions in joblessness but to lead to substantive earnings improvement 5 7 10 11 12 there is then a pressing need to inquire into mechanisms the present paper is offered as a contribution to this line of investigation focusing as it does on job changing in the aftermath of the displacement event we investigate the correlates of job changing in the wake of displacement and the relationship between number of postdisplacement jobs and end of survey earnings advance notice being a determinant of both turnover and earnings to anticipate our results we find evidence to suggest that formally notified workers though they do not experience lower unemployment than their non notified counterparts or have better overall reemployment prospects do appear to make better job matches and thereby enjoy higher

supply response of thailand s rice to the price of biofuel crops 3 4 abstract the increasing cost of rice production and the increasing price of energy crops in thailand both abetted by the energy crisis in the last 4 years made the rice farmers decide to switch to energy crops in the long term this could reduce thai rice production this paper mainly examines the supply of rice production in response to the changes in biofuel crops price and other related factors the study forecasts a negative response in rice supply to the change in biofuel crops price as well as in the cost of chemical fertilizers in contrast the price of rice irrigated area public rice research budget and mechanization are positive significant factors affecting rice supply the price policy would distort the market mechanism which would reduce the competitiveness of thai rice in the world market the findings suggest that the government should apply non price policies in order to increase rice supply and reduce its cost of production further development of the irrigation system and increasing support to research and development on rice genetic improvement are recommended keywords supply response rice production biofuel crops

further evidence on the job search theory abstract the prediction of the job search theory that there is a negative correlation between reservation wage and the re employment probability is tested it is found that the unemployed who find a job are a self selecting group of individuals with a relatively low reservation wage

human capital vs signalling explanations of wages increases wages by directly increasing the worker s productivity this learning explanation is usually associated with human capital theory however it seems unlikely that learning explains all the wage differences associated with schooling and work history better educated workers are not a random sample of workers they have lower propensities to quit or to be absent are less likely to smoke drink or use illicit drugs and are generally healthier it is unlikely that employers make full use of differences in propensities to quit or to be absent or sick when hiring workers these characteristics are often not directly observed and the americans with disabilities act precludes firms from using either poor health or the likelihood of future sickness as a hiring criterion unless it is directly related to job performance however if low levels of education are associated with these unfavorable employee characteristics and employers are allowed to take education into account when hiring workers we would expect employers to favor better educated workers as a means of reducing their costs of sickness and job turnover in turn students will take these hiring criteria into account when deciding how long to stay in school students will choose a length of schooling to signal their ability to employers and employers will demand a minimum level of schooling

skill accumulation in the market and at home abstract an evolving outside option is introduced into a stochastic directed search model with skill loss during non employment using multi spell data from the sipp i show that average reemployment wages are only mildly sensitive to unemployment duration while the job finding probability is highly sensitive to duration with evidence of true duration dependence in both variables though untargeted the model produces a quantitatively accurate decline in the job finding probability and starting wage improving over a model with a fixed outside option the addition of aggregate shocks leads to an nonlinear response of the unemployment and participation rates during and after recessions with more severe recessions resulting in stronger hysteresis

the income losses of displaced workers abstract we use a new matched worker firm dataset for the united kingdom to estimate the income loss resulting from firm closure and mass layoffs we track workers for up to nine years after the displacement event and the availability of predisplacement characteristics allows us to implement difference in differences estimators using propensity score matching methods income losses during the first five years after the displacement event are in the range 18 35 percent per year for workers whose firm closes down and 14 25 percent for workers who exit a firm which suffers a mass layoff these losses are largely due to periods of nonemployment which is consistent with previous work from europe but contrasts with that from the united states

unemployment and subsequent earnings estimating scarring among british men 1984 94 this paper estimates the impact of unemployment on earnings following re employment for a large and representative sample of british men 1984 94 unemployment incidence is found to have only a temporary effect an average earnings setback of 10 on initial re engagement largely eroding over two years the effect of unemployment duration by contrast is permanent a one year spell adding a further penalty of 10 percentage points these wage penalties are least for young men and the low paid those most at risk of unemployment and greatest for prime age and highly paid men

an equilibrium theory of learning search and wages we propose an equilibrium theory of learning from search in the labor market which addresses the search behavior of workers the creation of jobs and the determination of wages as functions of labor market histories in the model each worker has incomplete information about his job finding ability and learns about it from his search outcomes the theory formalizes a notion akin to discouragement over each uninterrupted unemployment spell unemployed workers update their beliefs about their job finding abilities downward and reduce their desired wages one contribution of the paper is to integrate learning from search into an equilibrium framework by inducing endogenous heterogeneity in workers beliefs learning from search provides a novel explanation for a set of related empirical observations about the labor market including unemployment duration dependence and wage dispersion another contribution is to apply lattice theoretic techniques to analyze learning from experience which is useful because learning generates convex value functions and in principle multiple solutions to a worker s optimization problem

unemployment history and frictional wage dispersion abstract recent evidence shows that baseline search models struggle to match the observed levels of wage dispersion this paper studies a random matching search model with human capital losses during unemployment wage dispersion increases as workers accept lower wages to avoid long unemployment spells the model explains between a third and half of the observed residual wage dispersion when adding on the job search the model accounts for all of the residual wage dispersion and generates substantial dispersion even for high values of non market time the paper thus addresses the trade off between explaining frictional wage dispersion and the cyclical behavior of unemployment