labour supply effects of unemployment insurance benefits data from the 1976 wave of the panel study of income dynamics are employed to study the effect of unemployment insurance ui benefits on weeks worked ols regressions to model labour supply behaviour are estimated for both recipients and nonrecipients of ui benefits we find some inteesting differences between the labour supply behaviour of ui recipients and nonrecipients

reservation wages and the cost of unemployment this paper studies direct evidence on reservation wages reported in great britain in 1982 to assess 1 whether such asking prices are high and 2 whether variations in these reservation wages are related to differences in measures of the subjective and objective costs of unemployment a majority overall and for various subgroups reports reservation wages no higher than own past wages adjusted for earnings growth but there is nonetheless considerable dispersion in the ratio of reservation to past wages reservation wages are somewhat related to measures of the differential cost of unemployment most clearly for men although the independent role of benefits is often imprecisely measured however exactly which of these costs matter differs significantly according to whether the separation from last employment was voluntary or involuntary copyright 1989 by the london school of economics and political science

migration theories and evidence an assessment abstract this paper presents a critical survey of theories of migration their welfare and policy implications and their empirical relevance we also develop some extensions to the theory beginning with the harris and todaro ht model in particular the ht model is extended to examine risk averse behaviour within families where the migration of members of families serves to diversify risk the welfare implications of the individual migration decision and government intervention in the form of employment subsidies are examined recent evidence on international migration is presented it is shown that migration does not flow automatically in response to wage differentials characteristics of migrants and the process of self selection are found to be important determinants of the rate of migration

the impact of the potential duration of unemployment benefits on the duration of unemployment abstract this paper examines the impact of the potential duration of unemployment insurance ui benefits on unemployment in the united states first we use a large sample of household heads to examine differences in the unemployment spell distributions of ui recipients and nonrecipients sharp increases in the escape rate from unemployment both through recalls and new job acceptances are apparent for ui recipients around the time of benefits exhaustion such increases are not apparent at similar points of spell duration for nonrecipients second our analysis of accurate administrative data from 12 states indicates that a one week increase in potential benefit duration increases the average duration of the unemployment spells of ui recipients by 0 16 to 0 20 weeks

do benefit cuts boost job finding swedish evidence from the 1990s in june 1995 the swedish parliament decided to cut the replacement rate in unemployment insurance from 80 percent to 75 percent a change that took effect on january 1 1996 this paper examines h

an equilibrium model of search unemployment this paper develops a simple general equilibrium model with sequential search in which a nondegenerate wage offer distribution is endogenously determined we use this model to analyze the comparati

licence contracts future exchange clauses and technological competition abstract in an incumbent challenger innovation model this paper examines to what extent licence contracts can internalize the business stealing and common pool externalities occurring in technological competition due to these negative externalities private r d investments are higher than the socially optimal ones licensing of current technology creates a replacement effect for the challenger and thus induces lower research rates special exchange clauses concerning future improvements which are often used in licensing practice partially take care of the common pool externality although the externalities are not internalized completely a grant back clause requiring the licensee to license back improvements to the original licensor can achieve a welfare improvement by reducing the r d investments in some cases below optimal levels if there are no restrictions in setting the ex post licence fee for the improvement socially optimal r d investments can be induced a mutual exchange clause stating that the original licensor must license an improvement to the licensee and vice versa induces social underinvestment in r d

tournament rewards and heavy tails abstract heavy tailed fluctuations are common in many environments such as sales of creative and innovative products or the financial sector we study how the presence of heavy tails in the distribution of shocks affects the optimal allocation of prizes in rank order tournaments a la lazear and rosen 1981 while a winner take all prize schedule maximizes aggregate effort for light tailed shocks prize sharing becomes optimal when shocks acquire heavy tails increasingly so following a skewness order extreme prize sharing rewarding all ranks but the very last is optimal when shocks have a decreasing failure rate such as power laws hence under heavy tailed uncertainty typically associated with strong inequality in the distribution of gains providing incentives and reducing inequality go hand in hand

how income transfer programs affect work savings and the income distribution a critical review for helpful comments on earlier drafts we thank without implicating moses abramovitz yves balcer john bishop alan blinder richard burkhauser michael darby irwin garfinkel alan gustman daniel hamermesh martin holmer george jakubson robert lampman paul menchik robert moffitt michael murray joseph quinn timothy smeeding eugene smolensky barbara wolfe and two anonymous referees

organizational attractiveness is in the eye of the beholder the interaction of demographic characteristics with foreignness our analysis of 4605 individual evaluations of the 60 companies in the reputation quotient annual 2000 study suggests that foreign headquartered companies are less attractive employers whereas more international companies are more attractive moreover we find that gender race respondent age and educational level significantly interact with our foreignness variables in predicting company attractiveness

ranking income distributions a large variety of policy questions involve choices between social states and a consequent ordering of the feasible alternatives when these social states are related to the levels of welfare experienced by individuals or households two central issues stand out in determining the relative desirability of different social outcomes one of these is the essentially positive exercise of achieving comparability between households with different characteristics such as composition or preferences operating in different environments for example facing different price structures the other concerns the normative judgments implicit in the evaluation of alternative allocations of resourcesthe emphasis placed on inequality between households and the extent to which greater inequality can be compensated by higher average living standards this paper focuses on the second of these issues and in doing so we abstract from the problem of household comparability by considering a population of n households identical in all respects except for their incomes the question of ordering social states then becomes one of ranking income distributions over a group of anonymous households or individuals borrowing the usual assumptions imposed on consumer preferences we may suppose that a social ordering of income distributions can be represented by a welfare function 2

ethically robust comparisons of bidimensional distributions with an ordinal attribute abstract we provide foundations for robust normative evaluation of distributions of two attributes one of which is cardinally measurable and transferable between individuals and the other is ordinal and non transferable the result that we establish takes the form of an analogue to the standard hardy littlewood polya theorem for distributions of one cardinal attribute more specifically we identify the transformations of the distributions which guarantee that social welfare increases according to utilitarian unanimity provided that the utility function is concave in the cardinal attribute and that its marginal utility with respect to the same attribute is non increasing in the ordinal attribute we establish that this unanimity ranking of the distributions is equivalent to the ordered poverty gap quasi ordering introduced by bourguignon 12 finally we show that if one distribution dominates another according to the ordered poverty gap criterion then the former can be derived from the latter by means of an appropriate and finite sequence of such transformations

an econometric analysis of reservation wages this paper describes an analysis of survey data on unemployed people who reported their asking wage and the wage they expected to earn we show that if agents behavior is described by the standard optimal job search model one can use these data to deduce structural parameters rather than estimate them and we report our deductions from two surveys 1 of british unemployed people

comparisons of utility inequality and income inequality abstract a simple theoretical model is developed and analyzed to investigate the possible relationships between income inequality and utility inequality measuring utility inequality and income inequality with gini coefficients it is argued that there need not be any relation whatsoever between the realized levels of inequality in these two distinct outcomes that is a high level of income inequality could result when there is either equally high or absolutely no utility inequality and a low level of income inequality could result when there is either no utility inequality or a relatively high degree of utility inequality consequently if what we are actually concerned with is inequality in utility or well being observations on income inequality might be meaningless

macroeconomic adjustment and poverty in selected industrial countries the business cycle affects the incidence of poverty as shown by evidence from australia sweden the united kingdom and the united states many of the poor in these countries are outside the labor markets and transfers are a major source of income for many others but the unemployment and wage reductions that occur in recession increase the incidence of poverty major causes of poverty are unemployment in australia and the united kingdom and low wages in the united states similar cyclical effects are observed in sweden but a vast transfer program virtually eliminates poverty there are several policy options for combating poverty caused by recession a combination of unemployment insurance for a limited period followed by a job guarantee is the most effective policy toward unemployment whereas poverty caused by low earnings can be remedied by redistribution through the tax system

on earnings related unemployment benefits and their relation to earnings an aspect of unemployment in britain that has been much discussed in recent years is the possible disincentive effects of unemployment benefits paradoxically the actual pattern of receipt of those benefits is hardly considered at all one reason for this is the popular belief that actual receipt follows a well defined hypothetical pattern this belief is encouraged by the government s representation of the benefit system for instance the department of health and social security dhss regularly publish hypothetical calculations of benefit receipt e g social security statistics i982 table 46 i4 and government answers to parliamentary questions are typically based on these figures economists frequently take these hypothetical calculations at face value when trying to model the effect of unemployment benefits on labour supply in a time series framework or in the case of micro analysis make similar calculations for each individual in the data set calculations are based on a limited set of stylised rules which are considered to capture the essence of the workings of the benefit system however estimates of the disincentive effects of benefits do not appear to be robust to the method of calculation atkinson et al i984 this emphasises the need for more precise modelling of the determinants of benefit receipt this paper is concerned with modelling the receipt of the benefit that has been at the heart of the incentives debate earnings related supplement ers was the element of national insurance unemployment benefit in the united kingdom that was linked to some measure of past earnings several commentators in the mid1 970s purported to show that its introduction in i 966 led to a marked rise in unemployment in the late i96os e g maki and spindler i975 and its abolition under the i980 social security no 2 act was certainly due in part to the belief that it discouraged work in investigating the receipt of this benefit the paper provides a case study of the difficulties in modelling the incomes of the unemployed and a cautionary tale to any investigator who does not have all the information necessary for precise calculation of budget constraints the typical assumption that has been made when simulating ers in micro data sets of unemployed individuals is that the relevant earnings that generate an ers payment may be successfully proxied by normal weekly earnings immediately prior to unemployment we may call this proxy the hypothetical model of ers receipt and the focus of the analysis is a test of this model using data on

the effects of unemployment compensation in general equilibrium with search unemployment it is shown that when the effects of an increase in unemployment subsidies are studied in a general equilibrium framework unemployment increases far less than in a partial partial model in fact the result may very well be a decrease in unemployment if the general equilibrium forces are strong enough in the model used in this paper an increase in unemployment compensation unambiguously decreases the rate of unemployment copyright 1990 by the editors of the scandinavian journal of economics

search time unemployment and the migration decision unemployed people in distressed areas of the us have been reluctant to migrate to other areas in search of employment a negative correlation exists between weeks of job search and probability of migration and between local unemployment rates and out migration rates schwartzs model of migration behavior relates job search time to age and education widening the area searched reduces job search time job density is a function of worker age and education the feasibility of switching occupations declines with increasing age or education a worker with a given age and education can choose between greater search time and greater search area minimizing search time increases the likeliness of migration the study hypothesizes a negative relationship between length of job search and probability of migration and a positive relationship between length of job search and workers age and education data analyzed are from the us panel study of income dynamics which followed 6000 adults from 1968 80 for the unemployed data show that search time is an important migration determinant likeliness of migration decreases over time therefore areas with longterm unemployment will have lower rates of out migration

inflation tax rules and investment some econometric evidence this paper presents econometric evidence on the effect of tax incentives on business investment in the united states in the period from 1953 through1978 the analysis emphasizes that the interaction of inflation and existing tax rules has contributed substantially to the decline of business investment since the late 1960 s because the investment process is far too complex for any simple econometric model to be convincing i have estimated three quite different models of investment behavior the strength of the empirical evidence rests on the fact that all three specifications support the same conclusion more generally the analysis and evidence show that theoretical models of macroeconomic equilibrium should specify explicitly the role of distortionary taxes especially taxes on capital income the failure to include such tax rules can have dramatic and misleading effects on the qualitative as well as the quantitative properties of macroeconomic theories this paper was presented as the fisher shultz lecture at the fourth world congress of the econometric society 29 august 1980 in aix en province this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this abstract was borrowed from another version of this item

the optimal allocation of prizes in contests we study a contest with multiple not necessarily equal prizes contestants have private information about an ability parameter that affects their costs of bidding the contestant with the highest bid wins the first prize the contestant with the second highest bid wins the second prize and so on until all the prizes are allocated all contestants incur their respective costs of bidding the contest s designer maximizes the expected sum of bids our main results are 1 we display bidding equlibria for any number of contestants having linear convex or concave cost functions and for any distribution of abilities 2 if the cost functions are linear or concave then no matter what the distribution of abilities is it is optimal for the designer to allocate the entire prize sum to a single first prize 3 we give a necessary and sufficient conditions ensuring that several prizes are optimal if contestants have a convex cost function

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

how does the benefit effect vary as unemployment spells lengthen summary this paper investigates how the effect of income while unemployed on the probability of an individual leaving unemployment varies with the length of time that the individual has been unemployed we examine this question in the context of a variety of alternative econometric models we extend the proportional hazards model with unrestricted baseline hazard to one in which there are unrestricted effects of a subset of the explanatory variables and also consider models that can be estimated as series of binary response models the proportional hazard restrictions are rejected for the sample of british unemployed men analysed and in the binary sequence framework logit and probit models based on symmetric distributions dominate in likelihood terms the extreme value form model implied by extension of the proportional hazards formulation logit models with a flexible form for the duration dependence which also incorporate unobserved heterogeneity in a flexible way are estimated the results for all formulations indicate a rapidly declining effect of unemployment income as a spell lengthens with no significant effect for the long term unemployed the preferred specifications which allow for omitted heterogeneity indicate no significant effect after about 5 months and this result is robust to the inclusion or exclusion of previous labour market experience variables and to the choice of mixing distribution

the incentive effect of coarsening the competition structure in a tournament the incentive effect of coarsening the competition structure in a tournament is studied by coarsening the competition structure we mean that coarser performance measure is used while finer information is available examples include letter grades or grade classes when finer numeric grades are available coarsening the competition structure has two countervailing incentive effects while it reduces the likelihood that marginal effort changes the result the reward change will be bigger once the result is changed we provide a sufficient condition on the performance distribution for the reduction of work incentive by coarsening log concavity of the density

searching for a will o the wisp an empirical study of the nairu in canada abstract this paper demonstrates the uncertainty surrounding estimates of the non accelerating inflation rate of unemployment nairu a reduced form phillips curve is used to develop a generic model of the nairu which nests competing hypotheses about the specific form of the inflation unemployment relationship empirical results for the canadian economy show that the range of prime age male nairu s generated by statistically satisfactory and economically reasonable estimating equations covers almost the entire range of canadian post war prime age male unemployment experience estimates of the nairu depend heavily on the form of the estimating equation the operational definition of key variables and the data sample period

comparisons of heterogeneous distributions and dominance criteria abstract we are interested in the comparisons of standard of living across societies when observations of both income and household structure are available we generalise the approach of a b atkinson and f bourguignon 1987 3 to the case where the marginal distributions of needs can vary across the household populations under comparison we assume that a sympathetic observer uses a utilitarian social welfare function in order to rank heterogeneous income distributions insofar as any individual can play the role of the observer we take the unanimity point of view according to which the planner s judgements have to comply with a certain number of basic normative principles we impose increasingly restrictive conditions on the household s utility function and we investigate their effects on the resulting rankings of the distributions this leads us to propose four dominance criteria that can be used for providing an unambiguous ranking of income distributions for heterogeneous populations

replacement income duration of unemployment and the migration of unemployed prime age males the relationship between the interstate migration of unemployed males of prime working age i e 25 44 years of age the level of unemployment replacement income and the duration of unemployment spells is addressed through the use of a relatively untapped data source the us census s survey of income and program participation sipp the rich set of details that are provided in this database allows a more precise empirical analysis of the above relationships than has been possible with psid cps and other previously used databases by restricting the sample to a relatively homogeneous segment of the work force its is possible to isolate better the effects of unemployment replacement income and job search duration on the migration decision of unemployed workers without the confounding effects of the variety of demographic factors that previous studies have shown to influence labour force migration the results suggest that for unemployed prime working age males the probability of migration is negativel

does banning affirmative action lower college student quality banning affirmative action from college admissions cannot prevent an admissions office that cares about diversity from achieving it in ways other than explicitly considering race we model college admissions where candidates from two groups with different average quali cations compete for a xed number of seats under affirmative action an admissions office that cares both about quality and diversity admits the best quali ed candidates from each group under a ban it may promote diversity by partially ignoring candidates quali cations and therefore not admitting the best quali ed candidates from either group a ban always reduces diversity and may also lower quality jel j71 j 15 i28

household equivalence scales and the measurement of inequality transfers from the poor to the rich could decrease inequality abstract the use of equivalence scales when measuring income inequality can lead to the paradoxical result that transferring money from poor to wealthy households may reduce measured inequality this paper explains this result and restates the pigou dalton transfer axiom in a way that gets around this counterintuitive outcome

the comparison of multi dimensioned distributions of economic status the literature on inequality measurement has been largely concerned with single dimensioned indicators this paper explores some of the issues which arise when there are several dimensions to inequality and these are not readily reduced to a single index concentrating particularly on the two dimensioned case we make use of results on multi variate stochastic dominance in portfolio theory extending these and applying them to the measurement of inequality the use of the dominance conditions is illustrated by an application to the international distribution of income and life expectancy

search models and applied labor economics individual effects in a nonlinear model explicit treatment of heterogeneity in the empirical job search model this paper extends the empirical version of a job search model to permit heterogeneity in the location of wage offer distributions population variance in wage offers is decomposed into variance due to heterogeneity and variance facing each individual heterogeneity is found to be an important source of offer variance in the population the amount of pure wage offer dispersion facing individuals is found to contribute little to population variance

unemployment insurance meets the classical labor supply model abstract through making average income dependent on the breakdown of non employment into frequency and duration the classical labor supply model with unemployment insurance has important implications for labor force participation the duration of employment and unemployment and modes of worker behavior that are by and large consistent with empirical knowledge

household unemployment and the labour supply of married women a recent reform to the uk unemployment insurance ui system has reduced the duration of entitlement from 12 to six months the ui and welfare systems interact in the uk in such a way that exhaustion of ut for married individuals has potentially large disincentive effects on the labour supply of spouses a model of labour supply is estimated for married women allowing for endogenous unemployment durations of husbands and wives we distinguish between transfer programme induced incentive effects correlation between labour supply and wages within couples complementarity between the leisure times of spouses and a discouraged worker effect

measuring effort incentives in a tournament with many participants theory and application i introduction a tournament competition in which rewards are determined by the relative rank rather than the absolute performance typically arises when there is competition for limited spaces this kind of competition is ubiquitous there is competition for promotion to a limited space in any kind of hierarchical organization including firms grants or scholarships have a limited amount of funds to be distributed and universities have a limited number of enrollment slots and as such students have to compete to obtain a space it is of great interest how effort incentives change in response to a change in a tournament structure the designer of a tournament is free for one reason or another to choose the size of prizes or the proportion of winners for example given a total amount of prizes rewards may be concentrated at the top ranking or spread out down to middle rankings we can give the top prizes to a very limited portion of participants or spread throughout among a relatively larger portion these changes will generally affect the participants effort incentives and it would be useful to know the effects although theories can provide some evaluations the predictions are not generally definite incentive effects of a tournament have been quite widely studied green and stokey 1983 lazear and rosen 1981 o keefe viscusi and zeckhauser 1984 among others there also have been some theoretical endeavors to design the optimal contest structure to induce maximal possible efforts from the participants moldovanu and sela 2001 2006 however the evaluation quite often depends on parameter values which can vary in different environments and empirical judgment is still warranted this article is an attempt to empirically evaluate incentive effects of an arbitrary change in a tournament structure based on a theoretical modeling we model a tournament competition with many participants possibly with different abilities we obtain an empirically measurable term from participants optimization conditions of effort choices and show that effort incentives under various competition structures can be ranked by comparing the values of these measurable terms the term employed is related to the empirical densities of the performance distribution at cutoffs when an empirical performance distribution emerges we can find cutoff performances that are borderlines between adjacent prizes for a random participant a density is an ex ante probability that his or her performance will be at this borderline for a participant whose performance is near a cutoff a bit more effort will tip his or her performance into a higher prize area the effort incentive is dependent on these densities along with reward differences therefore the empirical performance distribution contains all the necessary information for the effort incentive as it emerges as a mixture of the ability distribution and the noise of performances we can compare effort incentives with any two arbitrary competition structures as long as they are competitions with many participants as the competition structure changes the performance distribution and the relevant cutoffs will change however they are still observable with information on rewards which can also be changed we can calculate and compare the terms we need the method of this article is different from that of the existing empirical literature in that the current article provides a measure of effort incentives directly from the theoretical model existing literature attempts to measure a change in effort incentives either by directly observing effort levels in an experimental setting or by comparing performances indirectly representing effort levels for example harbring and irlenbusch 2003 report directly observed efforts in different experimental settings to demonstrate the incentive effects of different tournament designs

endogenous unemployment insurance in a monopoly union model when job search matters abstract the aim of the paper is to derive an optimal unemployment insurance policy for a utilitarian trade union when job search matters it is shown that the well known result from the theory of insurance concerning the optimal risk sharing between risk averse agents changes essentially if the search behavior is allowed to affect the performance of the labor market we assume that labor market mismatch decreases with search effort which in turn decreases with the benefit the resulting equilibrium benefit is shown to be a decreasing function of the trade union s share of the costs of the insurance fund the model is also extended to the case where the benefit is made conditional on monitored search effort

unemployment benefit duration and incentives in britain how robust is the evidence abstract recent years have seen considerable advances in the econometric treatment of micro data in models of unemployment duration this paper examines the evidence from such models concerning the effects of unemployment benefits on incentives to work in britain widely accepted results of a small but significant benefit effect are reproduced using a sample of 1 231 unemployed men however these results are only found when benefit receipt is assumed to follow a hypothetical pattern which is shown to be unrealistic and over generous when more realistic calculations of benefits are used no benefit effect is found the paper also argues that search theory is of little help in determining the choice between competing functional forms and explanatory variables results concerning benefits are shown to be sensitive to the latter