linear quadratic approximation external habit and targeting rules abstract we examine the linear quadratic approximation of nonlinear dynamic stochastic optimization problems a discrete time version of magill 1977a a local analysis of n sector capital accumulation under uncertainty journal of economic theory 15 2 211 219 is generalized to models with forward looking variables paying special attention to second order conditions this is the large distortions case in the literature we apply the approach to monetary policy in a dsge model with external habit in consumption we then develop a condition for target implementability a concept related to targeting rules finally we extend the approach to a comparison between cooperative and non cooperative equilibria in a two country model and show that the small distortions approximation is inappropriate for this exercise

the effect of taxes on labor supply in the underground economy this paper uses micro data from a randomized survey carried out in the metropolitan area of quebec city canada to analyze the decision to evade taxes and work in the underground economy the results indicate that taxes distort labor market activities away from the regular sector to the underground sector but the distortion is small for the average worker the distortion is large however for particular groups of the population such as welfare claimants copyright 1994 by american economic association

asymmetric interest rate smoothing the fed approach abstract the central bank could have asymmetric preferences for interest rate smoothing depending on the direction of the monetary policy s stance an empirical analysis for the volcker greenspan period strongly supports this possibility for the federal reserve

monetary and fiscal policy interactions in a new keynesian model with capital accumulation and non ricardian consumers the paper examines simple monetary and fiscal policy rules consistent with determinate equilibrium dynamics in the absence of ricardian equivalence under this assumption government debt turns into a relevant state variable which needs to be accounted for in the analysis of equilibrium dynamics the key analytical finding is that without explicit reference to the level of government debt it is not possible to infer how strongly the monetary and fiscal instruments should be used to ensure determinate equilibrium dynamics specifically we identify bifurcations associated with threshold values of steady state debt leading to qualitative changes in the local determinacy requirements

interactions between monetary and fiscal policy rules the fiscal stability pact for emu implies that constraints on fiscal policy facilitate inflation control in this paper we identify two stable policy regimes when monetary policy seeks to raise real interest rates in response to excess inflation a self stabilising fiscal policy is required to ensure model stability a fiscal policy which does not by itself ensure fiscal solvency constrains monetary policy to be relatively passive however in simulations we conclude that the central bank does not need to seek on this account the degree of debt stabilisation that appears to be implied by the fiscal stability pact

deep habits in the new keynesian phillips curve we derive and estimate a new keynesian phillips curve nkpc in a model where consumers are assumed to have deep habits habits are deep in the sense that they apply to individual consumption goods instead of aggregate consumption this alters the nkpc in a fundamental manner as it introduces expected and contemporaneous consumption growth as well as the expected marginal value of future demand as additional driving forces for inflation dynamics we construct the driving process in the deep habits nkpc by using the model s optimality conditions to impute time series for unobservable variables the resulting series is considerably more volatile than unit labor cost general methods of moments gmm estimation of the nkpc shows an improved fit and a much lower degree of indexation than in the standard nkpc our analysis also reveals that the crucial parameters for the performance of the deep habit nkpc are the habit parameter and the substitution elasticity between differentiated products the results are broadly robust to alternative specifications

tax policy and aggregate demand management under catching up with the joneses this paper examines the role for tax policies in productivity shock driven economies with catching up with the joneses utility functions the optimal tax policy is shown to affect the economy countercyclically via procyclical taxes i e cooling down the economy with higher taxes when it is overheating in booms and stimulating the economy with lower taxes in recessions to keep consumption up thus models with catching up with the joneses utility functions call for traditional keynesian demand management policies but for rather unorthodox reasons

are monetary policy reaction functions asymmetric the role of nonlinearity in the phillips curve abstract this paper investigates the implications of a nonlinear phillips curve for the derivation of optimal monetary policy rules combined with a quadratic loss function the optimal policy is also nonlinear with the policy maker increasing interest rates by a larger amount when inflation or output are above target than the amount it will reduce them when they are below target specifically the main prediction of our model is that such a source of nonlinearity leads to the inclusion of the interaction between expected inflation and the output gap in an otherwise linear taylor rule we find empirical support for this type of asymmetries in the interest rate setting behaviour of four european central banks but none for the us fed

intra firm bargaining under non binding contracts we present a new methodology for studying the problem of intra firm bargaining based on the notion that contracts cannot commit the firm and its agents to wages and employment we develop and analyse a general non cooperative multilateral bargaining framework between the firm and its employees and consider outcomes which are immune to renegotiations by any party equilibrium firm profits are characterizable as both a weighted average of a neo classical non bargaining firm s profits and a generalization of shapley value for a corresponding cooperative game furthermore the resulting payoffs induce economically significant distortions in the firm s input and organizational design decisions

search theoretic models of the labor market a survey we survey the literature on search theoretic models of the labor market we show how this approach addresses many issues including the following why do workers sometimes choose to remain unemployed what determines the lengths of employment and unemployment spells how can there simultaneously exist unemployed workers and unfilled vacancies what determines aggregate unemployment and vacancies how can homogeneous workers earn different wages what are the tradeoffs firms face from different wages how do wages and turnover interact what determines efficient turnover we discuss various modeling choices concerning wage determination and the meeting process including recent models of directed search

regional taxing and spending the search for balance the financial settlement has been described as the key to devolution public spending above tax in scotland and wales has been criticized public spending is above tax in seven uk regions including four english regions if we treat equal citizens equally public spending will be above tax in poorer regions there is nothing extraordinary about spending above tax but there are important questions with regard to regional levels of expenditure in four regions london south east scotland and northern ireland public expenditure is well above the level expected for their degree of prosperity this article provides possible explanations

habit formation and the persistence of monetary shocks this paper studies the persistent e ects of monetary shocks on output previous empirical literature documents this persistence but standard general equilibrium models with sticky prices fail to generate output responses beyond the duration of nominal contracts this paper constructs and estimates a general equilibrium model with price rigidities habit formation and costly capital adjustment the model is estimated via maximum likelihood using u s data on output real money balances and the nominal interest rate econometric results suggest that habit formation and adjustment costs to capital play an important role in explaining the output e ects of monetary policy in particular impulse response analysis shows that the model generates persistent hump shaped output responses to monetary shocks

job search and mobility in developing countries theory and policy implications abstract a labor market model is developed in which the formal sector is characterized by search frictions whereas the informal sector is competitive we show that there exists a unique steady state equilibrium in this dual economy we then consider different policies financed by a tax on firms profits we find that reducing the unemployment benefit or the firms entry cost in the formal sector induces higher job creation and formal employment reduces the size of the informal sector but has an ambiguous effect on wages we also find that an employment wage subsidy policy and a hiring subsidy policy have different implications in particular the former increases the size of the informal sector while the latter decreases it

informal self employment and macroeconomic fluctuations article i nfo article history informal self employment is a major source of employment in developing countries its cyclical behavior is important to our understanding of the functioning of ldc labor markets but turns out to be surprisingly complex we develop a flexible model with two sectors a formal salaried tradable sector that may be affected by wage rigidities and an informal non tradable self employment sector faced with liquidity constraints to entry this labor market is then embedded in a standard small economy macro model we show that different types of shocks interact with different institutional contexts to produce distinct patterns of comovement between key variables of the model relative salaried self employed incomes relative salaried self employed sector sizes and the real exchange rate model predictions are then tested empirically for argentina brazil colombia and mexico we confirm episodes where the expansion of informal self employment is consistent with the traditional segmentation views of informality however we also identify episodes where informal self employment behaves pro cyclically here informality is driven by relative demand or productivity shocks to the non tradable sector

interest rate policy debt and indeterminacy with distortionary taxation abstract the interest rate setting policy of the central bank influences the amount of funds the government must raise to pay the interest on its existing debt with distortionary taxation fiscal adjustments feed back on the model s endogenous variables the conditions under which interest rate and tax policies are compatible with a uniquely determined stable equilibrium are derived for an optimizing sticky price model if the fiscal government continuously balances its budget active interest rate policy easily leads to indeterminacy if there is a positive steady state stock of public debt when short run deficits are allowed active interest rate policy and determinacy are compatible unless the tax rate is too strongly increasing in response to changes in debt the real interest rate or output

cross sectional efficiency and labour hoarding in a matching model of unemployment we study positive and normative aspects of steady state equilibrium in a market where firms of endogenous size experience idiosyncratic shocks and undergo a costly search process to hire their workers the stylized model we propose highlights interactions between job security provisions and sectoral shocks in determining the natural rate of unemployment the allocation of labour and the extent of labour hoarding and rationalizes cross sectional asymmetries of gross employment flows at the firm level in our model where productivity and search costs are dynamically heterogeneous across firms decentralized wage bargains imply important cross sectional inefficiencies which overshadow the static search inefficiencies on which simpler models focus

consumption government spending and the real exchange rate using panel structural var analysis and quarterly data from four industrialized countries we document that an increase in government purchases raises output and private consumption deteriorates the trade balance and depreciates the real exchange rate this pattern of comovement poses a puzzle for both neoclassical and keynesian models an explanation based on the deep habit mechanism is proposed an estimated two country model with deep habits is shown to replicate well the observed responses of output consumption and the trade balance and the initial response of the real exchange rate to an estimated government spending shock

fiscal sustainability in a new keynesian model recent work on optimal monetary and fiscal policy in new keynesian models suggests that it is optimal to allow steady state debt to follow a random walk in this paper we consider the nature of the time inconsistency involved in such a policy and its implication for discretionary policymaking we show that governments are tempted given inflationary expectations to utilize their monetary and fiscal instruments in the initial period to change the ultimate debt burden they need to service we demonstrate that this temptation is only eliminated if following shocks the new steady state debt is equal to the original efficient debt level even though there is no explicit debt target in the government s objective function analytically and in a series of numerical simulations we show which instrument is used to stabilize the debt depends crucially on the degree of nominal inertia and the size of the debt stock we also show that the welfare consequences of introducing debt are negligible for precommitment policies but can be significant for discretionary policy finally we assess the credibility of commitment policy by considering a quasi commitment policy which allows for different probabilities of reneging on past promises

nonseparable preferences fiscal policy puzzles and inferior goods nonseparable preferences over consumption and leisure can generate an increase in private consumption in response to government spending as found in the data in a frictionless business cycle model however the conditions on preferences required for these result to obtain hold if and only if the consumption good is inferior similarly positive co movement of consumption and hours worked occurs if and only if either consumption or leisure is inferior

technology shocks in the new keynesian model in the new keynesian model preference cost push and monetary shocks all compete with the real business cycle model s technology shock in driving aggregate fluctuations a version of this model estimated via maximum likelihood points to these other shocks as being more important for explaining the behavior of output inflation and interest rates in the postwar u s data these results weaken the links between the current generation of new keynesian models and the real business cycle models from which they were originally derived they also suggest that federal reserve officials have often faced difficult trade offs in conducting monetary policy

informality over the life cycle abstract in developing countries informality is mainly concentrated among younger and older workers and low skilled workers in this study we propose a dual labor market theory that highlights how frictions and taxation in the formal sector and educational choices interact to shape the informality rate over the life cycle we develop a life cycle model with search frictions skill heterogeneities and endogenous educational choices we carry out a numerical analysis and show that our model reproduces remarkably well the life cycle patterns of informality non employment and formal employment in argentina we analyze several public policies and show that an educational grant reduces both informality and non employment and may be fully financed by the extra tax revenues generated by the increase in formal employment and wages lowering taxes may achieve similar results but is detrimental to the government budget despite increasing the base on which they are levied

a theory of wages and labor demand with intra firm bargaining and matching frictions this article provides a model of labor market equilibrium with search and within firm strategic bargaining we yield explicit closed form solutions with heterogeneous labor inputs and capital the solution exhibits overemployment we show that higher relative bargaining power for some groups of workers may lead to overemployment relative to other groups with such other groups being underemployed instead if they have a lower relative bargaining power similarly the hold up problem between capitalists and employees does not necessarily lead to underinvestment in physical capital beyond the neo classical analysis firms are the field of several strategic interactions between capital owners and labor between marginal employees and incumbents and more generally between different groups with various bargaining positions within the firm it is usually considered that the bargaining power of workers entails an employment level that is lower than in a competitive labor market and any increase in the bargaining power of workers raises unemployment these results are true for a wide class of models and notably in the now standard framework to analyze unemployment namely search and matching models of pissarides 2000 however stole and zwiebel 1996a 1996b show that the above results are totally changed in the intra firm bargaining model where employees engage in individual wage negotiation with the firm in fact under the assumption that contract incompleteness does not enable either party to commit to future wages and employment decisions they show that intra firm bargaining yields no rent for employees and gives rise to overemployment compared to a competitive labor market the basic idea of stole and zwiebel is that a firm with a diminishing marginal productivity of labor can decrease the bargained wage which increases in the marginal productivity of labor by raising employment in stole and zwiebel s setting firms overemploy strategically up to the point where workers get their reservation wage

rule of thumb consumers meet sticky wages it has been argued that rule of thumb consumers substantially alter the determinacy properties of simple interest rate rules and the dynamics of an otherwise standard new keynesian model in this paper we show that nominal wage stickiness helps re establishing standard results key findings are that wage stickiness i affects the shape of determinacy regions in the parameters space restoring the relevance of the taylor principle for the conduct of monetary policy ii implies that a rise in consumption in response to an innovation in government spending is not a robust feature of the model

shadow economies size causes and consequences using various methods the size of the shadow economy in 76 developing transition and oecd countries is estimated average size varies from 12 percent of gdp for oecd countries to 23 percent for transition countries and 39 percent for developing countries increasing taxation and social security contributions combined with rising state regulations are driving forces for the increase of the shadow economy especially in oecd countries according to some findings corruption has a positive impact on the size of the shadow economy and a growing shadow economy has a negative effect on official gdp growth

government spending and the real exchange rate i study the effect of government spending on the real exchange rate in an open economy version of the sidrauski model with a time varying rate of time preference that introduces complementarity between consumption at different points in time i show that a balanced budget fiscal expansion causes a real depreciation and a current account surplus if the expansion falls on traded goods if the increase falls instead on nontraded goods both the stylized results of a real appreciation and a current account deficit and the perverse result of an appreciation and a surplus can occur

macroeconomic effects of regulation and deregulation in goods and labor markets product and labor market deregulation reduce and redistribute rents leading economic players to adjust to this new distribution it typically comes with distribution and dynamic effects to study these effects we build a macroeconomic model on two central assumptions monopolistic competition in the goods market which determines the size of rents and bargaining in the labor market which determines the distribution of rents product market regulation determines entry costs and the degree of competition labor market regulation determines the bargaining power of workers we show the effects of deregulation we then use our results to discuss the political economy of deregulation and recent macroeconomic evolutions in europe

labor market institutions taxation and the underground economy abstract the paper aims at qualifying the links between labor market institutions taxation tax monitoring and underground economic activity the proposed model is a continuous time matching model with one commodity roduced either overground or underground underground economic activity arises because of partial compliance with regulations and tax contributions imposed by the government vacancies and workers search are directed at a specific labor market workers are heterogenous in the subjective cost they face when operating in the irregular sector analytical and numerical investigations suggest that interactions between regular and irregular activities can affect standard results of policy interventions in that respect the paper supports the view that policies aiming at increasing individuals benefits of participating in the regular sector are more desirable than a deterrence policy

modelling the informal sector formally abstract the theoretical characterization of formal informal sector dualism by labor market dualism is integrated with its empirical characterization by size dualism by supposing that the minimum formal sector wage is only enforced for firms greater than a certain size a firm s size varies directly with the talent of its enterpreneur manager and the choice between formal and informal sector entrepreneurship is determined endogenously it is then shown that the size gap between the smallest formal sector firm and largest informal sector firm varies directly with the formal informal sector wage differential which in turn is shown as expected to increase the further is the minimum wage above the market clearing wage the comparative statics of changes in the size of the firm above which the minimum wage is enforced are also examined

contractual dualism market power and informality we develop a search theoretic model of contractual dualism in formal and informal labour markets the model i provides the micro underpinnings for endogenous determination of employer market power in the formal and informal sectors ii offers a unified and coherent set up whereby a host of salient features of developing country labour markets can be explained together and iii places for the first time the stiglerian prescription of the optimal unemployment minimising minimum wage in the broader context of labour markets where formal job creation is costly where employer market power is endogenous and where formal employment informal employment and unemployment coexist

optimal simple and implementable monetary and fiscal rules welfare maximizing monetary and fiscal policy rules are studied in a model with sticky prices money and distortionary taxation the ramsey optimal policy is used as a point of comparison the main findings are the size of the inflation coefficient in the interest rate rule plays a minor role for welfare it matters only insofar as it affects the determinacy of equilibrium optimal monetary policy features a muted response to output interest rate rules that feature a positive response to output can lead to significant welfare losses the welfare gains from interest rate smoothing are negligible optimal fiscal policy is passive the optimal monetary and fiscal rule combination attains virtually the same level of welfare as the ramsey optimal policy

mobility in the urban labor market a panel data analysis for mexico abstract we analyze mobility in urban mexico between three labor market states working in the formal sector working in the informal sector and not working a dynamic multinomial logit panel data model with random effects is used explaining the labor market state of each individual during each time period the data are drawn from mexico s urban employment survey a quarterly household survey for urban mexico while some of the descriptive statistics suggest that informal sector jobs are inferior to formal sector jobs formal tests cannot reject the null hypothesis of equal transition rates between formal and informal sector jobs for homogeneous groups of workers looking at entry and exit into and out of nonemployment we find that transitions from formal sector jobs to nonemployment were less likely than transitions from informal sector jobs to nonemployment in 1992 but not in 1999 suggesting that employment protection in the formal sector has been reduced

should central banks target consumer prices or the exchange rate in this article we consider two arguments suggesting that monetary authorities in an open economy should target output price inflation and not consumer price inflation the first suggests that output price inflation corresponds to the distortions caused by price rigidity the second shows how policy rules involving consumer price inflation can induce instability because of the feedback from interest rates to consumer price inflation via the exchange rate we examine both arguments in the context of an open economy which is subject to a range of shocks we show that both arguments remain robust but that there is a case for including a terms of trade or real exchange rate gap term in the authorities welfare function alongside the output gap and output price inflation

on fiscal multipliers estimates from a medium scale dsge model this paper contributes to the debate on fiscal multipliers in the context of a structural model i estimate a micro founded dynamic stochastic general equilibrium model that features a rich fiscal policy block and a transmission mechanism for government spending shocks using bayesian techniques for us data

monetary and fiscal policy under deep habits allowing habits to be formed at the level of individual goods deep habits can radically alter the fiscal policy transmission mechanism as the counter cyclicality of mark ups this implies can result in government spending crowding in rather than crowding out private consumption in the short run we explore the robustness of this mechanism to the existence of price discrimination in the supply of goods to the public and private sectors we then describe optimal monetary and fiscal policy in our new keynesian economy subject to the additional externality of deep habits and explore the ability of simple policy rules to mimic fully optimal policy we find that the presence of deep habits at empirically estimated levels can imply large externalities that significantly affect the conduct of monetary and tax policy however despite the rise in government spending multipliers implied by deep habits government spending is barely used as a stabilisation tool under the optimal policy

the formal sector wage premium and firm size abstract we show theoretically that when larger firms pay higher wages and are more likely to be caught defaulting on labor taxes then large high wage firms will be in the formal and small low wage firms will be in the informal sector the formal sector wage premium is thus just a firm size wage differential using data from ecuador we illustrate that firm size is indeed the key variable determining whether a formal sector premium exists

fiscal policy in general equilibrium this paper studies four classic fiscal policy experiments within a quantitatively restricted neoclassical model the authors main findings are as follows 1 permanent changes in government purchases can lead to short run and long run output multipliers that exceed one 2 permanent changes in government purchases induce larger effects than temporary changes 3 the financing decision is quantitatively more important than the resource cost of changes in government purchases and 4 public investment has dramatic effects on private output and investment these findings stem from important dynamic interactions of capital and labor absent in earlier equilibrium analyses of fiscal policy copyright 1993 by american economic association

the effects of labour market policies in an economy with an informal sector in this article we build an equilibrium search and matching model of an economy with an informal sector our model extends mortensen and pissarides 1994 by allowing for ex ante worker heterogeneity with respect to formal sector productivity we use the model to analyse the effects of labour market policy on informal sector and formal sector output on the division of the workforce into unemployment informal sector employment and formal sector employment and on wages finally we examine the distributional implications of labour market policy specifically we analyse how labour market policy affects the distributions of wages and productivities across formal sector matches in this article we construct a search and matching model that we use to analyse the effects of labour market policies in an economy with a significant informal sector what we mean by an informal sector is a sector that is unregulated and hence not directly affected by labour market policies such as severance or payroll taxes we find that labour market policies that apply only to the formal sector nonetheless affect the size and the composition of employment in the informal sector this is important since there is substantial economic activity in the informal sector in many economies particularly in developing countries estimates for some latin american countries put the informal sector at more than 50 of the urban work force 1 the informal sector is also important in many transition countries as well as in some developed economies 2 although much of the literature treats the informal sector as a disadvantaged sector in a segmented labour market framework this interpretation is not consistent with recent empirical evidence from latin america under a segmented or dual labour market interpretation one would expect jobs to be rationed in the primary sector and workers to be in the secondary or informal sector involuntarily and to be queuing for formal sector jobs maloney 2004 presents evidence for several latin american countries that challenges this view and instead interprets the informal sector as an unregulated micro entrepreneurial sector similarly using data from the argentinian household survey pratap and quintin 2006 reject the notion that labour markets are segmented in the greater buenos aires area concluding that there is no evidence of a formal sector wage premium after controlling for individual and establishment we thank mauricio santamaria for stimulating conversations that inspired our interest in this topic we also thank bob hussey and fabien postel vinay as well as our editor steve pischke and two anonymous

migration unemployment and development a dynamic two sector analysis abstract a time minimizing problem of attaining a full employment state is solved in a dual economy model with harris todaro migration mechanism and with a positive level of urban unemployment in the starting period it appears that the optimum solution lies in the specialization of investment in the urban sector at least in the initial stage of development if the per capita capital stock in the urban sector is very small in the starting period

regulation of entry labor market institutions and the informal sector abstract this paper develops a two sector matching model that incorporates the main features of latin american labor markets it has an innovation in its matching structure that makes it more consistent with some key stylized facts of the informal sector in these countries the model is numerically solved using brazilian data and several policy simulations are performed reducing formal sector s entry cost significantly reduces the size of the informal sector and improves overall labor market performance increasing enforcement significantly reduces informality but has strong adverse effects on unemployment and welfare thus the results indicate that the tradeoff between lower informal employment and higher unemployment rates is not present when one looks at policies that aim at reducing the costs of being formal as opposed to policies that simply increase the costs of being informal

optimal fiscal and monetary policy under sticky prices this paper studies optimal fiscal and monetary policy under sticky product prices the theoretical framework is a stochastic production economy without capital the government finances an exogenous stream of purchases by levying distortionary income taxes printing money and issuing one period nominally risk free bonds the main findings of the paper are first for a miniscule degree of price stickiness i e many times below available empirical estimates the optimal volatility of inflation is near zero this result stands in stark contrast with the high volatility of inflation implied by the ramsey allocation when prices are flexible the finding is in line with a recent body of work on optimal monetary policy under nominal rigidities that ignores the role of optimal fiscal policy second even small deviations from full price flexibility induce near random walk behavior in government debt and tax rates third sluggish price adjustment raises the average nominal interest rate above the one called for by the friedman rule finally an interest rate feedback rule whereby the nominal interest rate depends on inflation and output fits well the data emanating from the ramsey economy however the fitted rule is not of the taylor type for the implied inflation coefficient is less than one and close to zero and the output coefficient is negative jel classification e52 e61 e63

informality in developing economies regulation and fiscal policies abstract this paper proposes a unified theoretical framework where formal and informal firms coexist and face the same type of product and labor market imperfections they have monopoly power in the goods market they are subject to matching frictions in the labor market and wages are determined by bargaining between large firms and their workers through either individual or collective bargaining our model matches the main stylized facts on informality for developing countries and appears to be a good candidate for policy analysis in this framework we study the impact on informality wages and unemployment of policies that may be used to reduce informality we consider changes in product market regulation pmr and in two types of fiscal policies labor taxes and formality enforcement we find that lessening pmr decreases informality and unemployment simultaneously indicating that there is not necessarily a tradeoff between informality and unemployment the tradeoff appears when fiscal policies are used though moreover the impacts of pmr on unemployment and on wages are larger under collective than individual bargaining with respect to wage inequality lessening pmr reduces it while lower taxes tend to increase the formal sector wage premium

a multisectorial matching model of unions abstract we develop an equilibrium matching model where unions have an important institutional presence monopolistic competition characterizes the goods market where only some sectors are unionized thus the model can vary the coverage of collective bargaining it can vary the degree of coordination between unions and alternatively consider national and sectorial unions calibration to the union premium implies a workers rent extraction parameter much lower than assumed in the matching literature we introduce unemployment insurance to study the interactions of policies with unions and find that unions only push for more generous benefits if this does not entail higher payroll taxes

is environmental innovation embedded within high performance organisational changes the role of human resource management and complementarity in green business strategies abstract this paper investigates whether firms joint implementation of organisational innovation and training may foster their adoption of environmental innovation ei and if this correlation falls within porter hypothesis ph framework we study the relationship of complementarity between strategies of high performance work practices hpwp and human resource management hrm when ei adoption is the firms objective using an original dataset on 555 italian industrial firms regarding ei hpwp and hrm coherent with the last cis2006 2008 survey results show that sector specificity matter the only case in which strict complementarity is observed in organisational change concerns co 2 abatement a relatively complex type of ei but this is true only when the sample is restricted to more polluting and regulated sectors this evidence is coherent with the porter hypothesis complementarity related adoption of ei is an element of organisational change in firms that are subject to more stringent environmental regulations nevertheless the fact that strict complementarity is not a diffuse factor behind the adoption of all environmental innovation indeed does not come as a surprise at this stage in the development of green strategies the share of eco firms is still limited even in advanced countries that are seeking tools for a new competitiveness the full integration of eis within the internal capabilities and firm s own assets is far from being reached even in advanced and competitive industrial settings

wage differentials employer size and unemployment the unique equilibrium solution to a game in which a continuum of individual employers choose permanent wage offers and a continuum of workers search by sequentially sampling from the set of offers is characterized wage dispersion is a robust outcome provided that workers search while employed as well as when unemployed the unique nondegenerate equilibrium distribution of wage offers is constructed for three cases 1 identical workers and employers 2 identical employers and an atomless distribution of worker supply prices and 3 identical workers and an atomless distribution of job productivities copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

labor turnover and labor legislation in brazil one of the main characteristics of the brazilian labor market is its impressively high job and worker turnover rates although labor legislation in brazil is very restrictive dismissal costs are not high when compared with other latin american countries moreover many authors argue that the design of some job security programs creates perverse incentives that generate labor turnover the objective of this paper is twofold first we describe brazilian labor legislation with emphasis on job security provisions and their incentives on workers reallocation then after reviewing the most recent evidence on labor turnover in brazil we investigate the effects of changes in job termination costs implemented in the 1988 constitution and in a labor law of september 2001 on employment duration both legislation changes increased firing costs and should have therefore reduced turnover for formal workers affected by them a simple differences in differences methodology is applied to monthly individual data from pesquisa mensal de emprego pme ibge which has information on previous employment spells for those currently unemployed the results establish that both changes reduced turnover for formal workers affected by the legislation a significant increase in average employment duration of affected workers relative to not affected workers was observed after both legislation changes we also provided evidence that the 1988 constitutional change reduced the probability of fake layoffs although there are still a high number of such agreements being made between workers and their employers