aggregate employment and intertemporal substitution in the uk in this paper the author sets up estimates and tests an explicit model of aggregate labor supply based on the intertemporal substitution hypothesis the model is derived as the optimal decision rule of an infinitely living household maximizing an intertemporal ces utility function over consumption and leisure the evidence suggests that for aggregate employee hours the model is rejected but that for the total number of employees in employment the estimates are broadly consistent with the theory the assumed constant elasticity of substitution is estimated at around 0 2 and this estimate implies a short run real wage and real interest rate elasticity of labor supply of the same order copyright 1987 by royal economic society

unions employment and the inflation tax the main purpose of this paper is to analyse the possible effects of an inflation tax or tax based incomes policy on the employment level in an economy in which trade unions play a central role in wage setting a tax based incomes policy tip has long been advocated in the united states as a means of curbing inflation without disastrous short run consequences for employment advocates of tip see it as an additional force working by incentive rather than regulation which helps to keep down inflationary wage bargains this increases the scope of demand management for maintaining high levels of employment in a relatively non inflationary way however it was not envisaged that tip could have any permanent effect on the long run equilibrium level of employment implicit in this view is the assumption that long run equilibrium employment is determined by a competitive market in the usual walrasian manner furthermore since in such a long run equilibrium the rate of inflation is uniquely determined by the rate of monetary expansion tip has no long run value in curbing inflation either thus the only role possible for tip is as a temporary measure which eases the transition from a short run temporary equilibrium characterised by too much inflation and too little employment to the long run equilibrium characterised by full employment and moderate inflation more recently in britain it has been argued that the scope of an instrument which taxes excessive wage increases is greater than was originally conceived in a series of papers professor layard has put forward the original and provocative idea that british policy makers adopt a form of tip on a permanent basis as this will have a permanent effect on long run employment according to this view even if a temporary incomes policy succeeded in reducing inflation to a constant and moderate level without unemployment being too far above its long run value the amount of unemployment in the long run would be unacceptably high furthermore a permanent tip in some form is the only way to reduce this high long run equilibrium unemployment as layard i982 puts it only a permanent incomes policy can substantially reduce the non inflationary level of unemployment 2 the idea of a permanent tip may seem a somewhat startling and radical proposal to some economists the claim that such a policy can actually increase long run employment even though it obviously adds to employers costs may seem

the impact of the london olympics announcement on property prices this study estimates the impact of the london 2012 olympics announcement on property prices using a self constructed dataset of a sample of property transactions it is estimated that properties in host boroughs are sold between 2 1 and 3 3 per cent higher depending on the definition of the impact area a similar investigation based on radius rings suggests that properties up to three miles away from the main olympic stadium sell for 5 per cent higher it is estimated that the overall impact on the price of properties in host boroughs amounts to 1 4 billion having substantial social and financial implications for existing residents

theoretical approaches to monetary disinflation abstract during the 1980s many countries adopted tight monetary policies to reduce high inflation rates which were the legacy of the 1970s as inflation threatens to rise at the beginning of this decade this paper provides a survey of the 1980s literature which sought to provide theoretical understandings of how monetary disinflation is achieved four models are presented monetarist neo keynesian new classical and post keynesian each model s explanation of the recession which accompanies the monetary disinflation is outlined as well as possible policy measures to reduce the extent of the recession and to hasten the return to full employment

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

has work sharing worked in germany industry by industry basis in an attempt to raise employment whether this work sharing works is theoretically ambiguous i exploit the cross industry variation in standard hours reductions to examine their impact on actual hours worked wages and employment analysis of industry level data suggests that work sharing may have reduced employment in the period 1984 1994 using individual data from the german socio economic panel i substantiate the union claim of full wage compensation the hourly wage rose enough to offset the decline in actual hours worked

why is inflation low when productivity growth is high i introduction in the united states since world war ii inflation has been low when productivity growth has been high for example the 1950s and 1960s were a period of low inflation and high productivity growth whereas the 1970s and 1980s were a period of high inflation and low productivity growth the negative correlation between inflation and productivity growth over the years 1949 2000 is much stronger than the correlation between inflation and unemployment i e phillips curve type correlations or the correlation between inflation and growth in monetary aggregates i e quantity theory correlations little research has explored the comovement between inflation and productivity growth the evidence developed herein suggests that the negative correlation reflects the behavior of the federal reserve over the postwar period the federal reserve has not adjusted nominal income growth through changes in the growth of the money supply to changes in trend productivity growth as will be documented such a policy induces a negative correlation between trend productivity growth and inflation as an acceleration in trend productivity growth in the face of constant nominal income growth leads to a deceleration in inflation this focus on monetary policy as the key factor behind medium to long run correlations between inflation and productivity seems more plausible than a focus on peculiarities of phillips curve reduced form relationships because such relationships are plausibly more appropriate guides to the short run dynamics of inflation as a case in point consider the recent shift to inflation targeting monetary policy strategies in the united kingdom and sweden which emphasize the key role that monetary policy plays in the inflation outlook over several years the role of monetary policy in generating the strong correlation between productivity growth and inflation in the medium run is developed in a textbook model based on an expectations augmented phillips curve the model s main empirical predictions are confirmed 1 inflation especially expected inflation should fall when trend productivity growth rises and 2 nominal income and nominal wage growth should not change when trend productivity growth changes the model also implies that productivity growth enters a reduced form phillips curve relationship as a proxy for inflation expectations this implies that traditional estimates of the nonaccelerating inflation rates of unemployment nairu should fall when productivity growth accelerates an empirical regularity that has received a great deal of academic and policy attention in recent years and is typically explained via some type of irrationality perhaps surprisingly these empirically regularities do not rely on the great inflation of 1965 79 when inflation accelerated and productivity growth decelerated recent discussions of phillips curve reduced form relationships have placed a strong emphasis on structural explanations that may explain a link between productivity growth the nairu and hence inflation staiger et al 2001 present evidence that the time series techniques they employ to estimate trend productivity growth and the nairu yield a strong correlation between the nairu and trend productivity growth ball and moffitt 2001 and ball and mankiw 2002 provide a structural interpretation labor market institutions for some reason perhaps irrationality make the real wage aspirations of workers respond very sluggishly with a lag of perhaps 10 years or more to productivity growth and hence an acceleration in productivity growth leads to a prolonged period of downward pressure on labor costs and hence inflation similar reasoning has been used in policy circles for years at the council of economic advisors 1997 2000 and the federal reserve board meyer 2000 reflecting the reasoning in grub b et al 1982 and braun 1984 the focus herein the behavior of policy is consistent with the evidence on inflation productivity growth and empirical estimates of the nairu

estimating local welfare generated by an nfl team under credible threat of relocation this study offers the opportunity to examine the welfare contribution of the minnesota vikings to minnesota households in the context of a credible threat of team relocation we find the credibility of the threat of relocation is essential to providing unbiased estimates of welfare this study utilizes contingent valuation methodology cvm and a random utility model rum to analyze minnesotans decision making mechanisms for supporting a new stadium initiative while previous studies have attempted to measure the welfare associated with a sports franchise we develop and discuss bias that may be imparted to estimates when the researcher fails to calculate a choke price further we develop an unbiased approach to identify welfare when respondents perceive a risk of losing the franchise the range of welfare contribution by the vikings to households in minnesota is 445 3 million to 1 571 3 million according to a 95 confidence interval based on our study

sport and gambling we review the relationships between gambling and sport british sports and sports infrastructure have benefited considerably from funding through the national lottery we argue that there is an implicit sports tax on lottery products and that this policy may be neither efficient nor equitable we suggest that further research employing contingent valuation methodology would be required before any firm conclusion could be made over whether the spending facilitated by the tax represents an efficient allocation of resources betting on events and outcomes in sport especially team sports has become a high growth sector we explore the potential for sports to capture some of this bettor spending and discuss associated public policy issues while sport may extract revenue from betting there are also costs we focus especially on betting corruption in sports developing an expected utility framework to show where the risk of corruption is most likely to arise and what regulatory options are open to sports governing bodies and government copyright 2003 oxford university press

working time reduction and employment experiences in europe and economic policy recommendations the paper seeks to evaluate the evidence on the employment effects of the collective working time reductions in europe over the past 20 years while theoretical analyses produce contradictory assessments most empirical studies show positive employment effects but take insufficient account of the conditions under which the reductions in working time were implemented these conditions for the success of collective working time reductions include an active training policy designed to minimise skill shortages in the labour market the modernisation of work organisation wage increases in conjunction with productivity gains and a more equal income distribution

is incomes policy the answer to unemployment in western europe unemployment has remained obstinately high ever since 1975 what has prevented governments from reducing it the answer is simple if unemployment were reduced by normal methods inflation would rise it follows that the only way to cut the long run level of unemployment is to find some other way of controlling inflation no such device will be costless but if we could find any method that was less costly than unemployment we ought to adopt it maurice chevalier was asked in later life what he thought of old age it s not so bad he replied when you consider the alternative that was a true economist talking and it is also the spirit in which i shall approach the unhappy choices open to us my argument will proceed roughly as follows first imagine that a costless incomes policy is available then most people would probably agree that if inflation was too high a temporary incomes policy would be a good idea in order to get inflation down but what then when it was down we would still be left with far too high an unemployment rate only a permanent incomes policy can substantially reduce the non inflationary level of unemployment however against these benefits have to be set the costs of an incomes policy a conventional incomes policy which permanently suspended collective bargaining would be out of the question in a free society so we have to have an incomes policy that works by incentive rather than by regulation the best thing would be a tax on wage increases levied on employers and proportional to wage increases above a prescribed norm i shall spend some time discussing this tax using various different models of wage setting to explain how it would have its effect and finally i shall try producing a first draft of the operator s manual

the economic consequences of professional sports strikes and lockouts post evaluation of the effects of the lockout an examination of the impact of past work stoppages in professional football and basketball can shed some light on the potential impact of the nba lockout as well as the viability of professional sports as engines of economic growth in cities the parameter estimates from a reduced form empirical model of the determination of real per capita income in 37 standard metropolitan statistical areas smsas over the period 1969 1996 suggest that prior work stoppages in professional football and baseball had no impact on the economies of cities with franchises further the departure of professional basketball from cities had no impact on their economies in the following years these results refute the idea that attracting professional sports franchises represents a viable economic development strategy

evaluation of an informal rule for the allocation of sports capital funding significant empirical research has highlighted the existence of pork barrel politics this is where public expenditure is targeted at particular regions based on the logic of collective action political entrepreneurs maximize their chances of re election by searching for and implementing programs or projects characterized by concentrated benefits for key constituents and broadly dispersed costs using data on capital grants to irish sports teams for 1998 2015 this paper analyzes the extent to which an informal rule can correct this bias the case of allocating sports capital grants is particularly interesting since academic research media commentary and ministerial statements all seem to confirm the existence of political bias with such allocations in ireland specifically the geographical distribution of the grants are clearly linked to the minister for sport that minister s constituent county receives significantly higher per capita grant allocation than any other county the grants were suspended in 2009 because of a fiscal crisis arising from the recession when the grants were restored in 2012 a new informal rule for allocations was introduced that informal rule was introduced to reduce the extent of pork barrel politics by ensuring that no county received less than 75 or more than 150 of the national average of the per capita grant allocations the present study evaluated the effectiveness of that informal rule in reducing pork barrel politics in irish sports capital grant allocations

worktime regulations and spousal labor supply we study interdependencies in spousal labor supply by exploiting the design of the french workweek reduction which introduced exogenous variation in one s spouse s labor supply at constant earnings treated employees work on average two hours less per week husbands of treated women respond by reducing their labor supply by about half an hour consistent with substantial leisure complementarity and specifically cut the non usual component of their workweek leaving usual hours unchanged women s response to their husband s treatment is instead weak and rarely statistically significant possibly due to heavier constraints in the organization of their workweek

classical unemployment accommodation policies and the adjustment of real wages a model of wage formation and stabilization policy in economies with strong trade unions is developed the analysis provides a theoretical underpinning for the assertion that accommodation policies may cause wage inflation and ultimately reduce employment various methods of accomplishing a real wage adjustment are discussed i a policy of complete nonaccommodation 2 continued accommodation policies but with lower employment targets 3 social contracts and 4 tax based incomes policies tip

work sharing employment and wages the paper analyzes the effects of a reduction in working time on wages and employment with a monopoly union in general it is not clear in which directions these variables move but if employment and working time are perfect substitutes the effects are related to how working time has been determined initially the wage increases if initial working time is smaller than or equal to the trade union optimum whereas the result is unclear when it is larger in this case it is never optimal for a trade union to reduce both the wage and working time in response to a recessionary supply shock the analysis may help to explain varying attitudes towards work sharing in different countries

the assessment productivity and competitiveness in british manufacturing this issue of the oxford review examines productivity and competitiveness in british manufac turing the simplest and most widely used measure of productivity is output per head from this definition sprout at once the horns of a dilemma for an economy facing unemployment on the present scale for a given rate of expansion of output the higher the rate of productivity growth the greater the decline in employment or at least the smaller its growth on the other hand in an economy open to international competition a high rate of productivity growth relative to that of other countries is the long term key to achieving the favourable international competitive po sition necessary to sustain growth and a low level of unemployment

a direct test of the homevoter hypothesis abstract we propose a methodology that facilitates a direct test of the homevoter hypothesis which posits that homeowners vote in favor of public projects they perceive increase residential property values and against those that do not first we estimate how pre referendum events that signal a higher probability that the public project will be undertaken impact local residential property values before the referendum is held these pre referendum impacts are considered noisy signals to homeowners about the market s assessment of the net marginal benefits of the project second we aggregate these market signals to the precinct level and relate them to precinct level voting results concerning the proposed project we apply this two step approach to the 2004 referendum in arlington texas for a publicly subsidized stadium for the nfl dallas cowboys the analysis supports the homevoter hypothesis and establishes a possible methodology for future evaluations in this small but growing empirical literature

energy prices and productivity growth the sharp decline in economic growth since 1973 presents a problem comparable in scientific interest and social importance to the problem of unemployment in the great depression of the 1930s conventional methods of economic analysis have been tried and have been found to be inadequate this paper outlines a new framework for understanding the slowdown in economic growth we find that the fall in u s economic growth since 1973 has been due to the dramatic decline in productivity growth within the new framework we identify higher energy prices as an important determinant of the productivity slowdown

selling the game estimating the economic impact of professional sports through taxable sales sports leagues franchises and civic boosters tout the economic benefits of professional sports as an incentive for host cities to construct new stadiums or arenas at considerable public expense past league sponsored studies have estimated that new stadiums franchises and mega events such as the super bowl increase economic activity by potentially hundreds of millions of dollars in host cities a detailed regression analysis of taxable sales in florida over the period extending from 1980 to 2005 fails to support these claims new stadiums arenas and franchises as well as mega events appear to be as likely to reduce taxable sales as increase them similarly strikes and lockouts in professional sports have not systematically lead to reductions in local taxable sales

the nairu in theory and practice airu stands for the nonaccelerating ine ation rate of unemployment it is beyond dispute that this acronym is an ugly addition to the english language there are however two issues that fail to command consensus among economists which we address in this essay the e rst issue is whether the concept of the nairu is a useful piece of business cycle theory we believe it is and we begin this paper by attempting to explain why in our view the nairu is approximately a synonym for the natural rate of unemployment this concept follows naturally from any theory that says that changes in monetary policy and aggregate demand more generally push ine ation and unemployment in opposite directions in the short run once this short run tradeoff is admitted there must be some level of unemployment consistent with stable ine ation the second issue is why the nairu changes over time and in particular why it fell in the second half of the 1990s this question is more dife cult and the answer is open to debate most likely various factors are at work including demographics and government policies yet one hypothesis stands out as particularly promising e uctuations in the nairu appear related to e uctuations in productivity in the 1970s the nairu rose when productivity growth slowed in the 1990s the nairu fell when productivity growth sped up developing and testing models that explain the links among ine ation unemployment and productivity remains a challenge for students of business cycle theory

compensating differentials and the social benefits of the nfl a comment abstract in a recent article in this journal carlino and coulson g carlino n e coulson compensating differentials and the social benefits of the nfl journal of urban economics 56 1 2004 25 50 report evidence that the presence of an nfl franchise in a city raises rents in the central part of the city by about 8 we re estimate their model using several reasonable alternative specifications and find that their results are not robust to these changes the presence of an nfl franchise does not appear to increase rents for center city apartments because their results are not robust to alternative model specifications they should not be used to justify public spending for professional sports facilities

the role of shocks and institutions in the rise of european unemployment the aggregate evidence two key facts about european unemployment must be explained the rise in unemployment since the 1960s and the heterogeneity of individual country experiences while adverse shocks can potentially explain much of the rise in unemployment there is insufficient heterogeneity in these shocks to explain cross country differences alternatively while explanations focusing on labour market institutions explain current heterogeneity well many of these institutions pre date the rise in unemployment based on a panel of institutions and shocks for 20 oecd nations since 1960 we find that the interaction between shocks and institutions is crucial to explaining both stylised facts

is the markup a useful real time predictor of inflation abstract unlike their revised counterparts real time markup data fail to improve the performance of a simple phillips curve inflation forecasting equation and have little predictive power beyond that of survey measures of inflation expectations

real wage determination and labour market policies the swedish experience it is a common view that labor market programs reduce unemployment and restrain wages by increasing the competition for jobs the swedish case is often advanced as a blueprint to follow this article questions the conventional wisdom on the swedish labor market policies it finds empirical evidence in favor of the hypothesis that job creation and training programs weaken the incentives for wage restraint as a consequence it appears likely that labor market programs have strong crowding out effects on regular employment copyright 1991 by royal economic society

how natural is canada s high unemployment rate abstract a reduced form price equation for canada 1956 1984 yields a stable estimate of 4 9 percent for the natural unemployment rate of men aged 25 and over with strong evidence against hysteresis once structural influences are accounted for the resulting profile for the aggregate natural unemployment rate rises smoothly from 5 5 percent in 1961 to a maximum of 8 0 percent in 1977 1978 and then declines rapidly to 6 4 percent in 1985 calculations based on an estimated production structure for the aggregate non energy sector of canada provide additional evidence against the excess real wage hypothesis and for the view that the recent fluctuations in canada s unemployment rate are mostly of the keynesian variety

topics in the oecd phillips curve how strongly have wages and unemployment been related in oecd countries during the postwar period a simple answer is that on average a one percentage point higher rate of unemployment has been associated with a fall of about one percentage point in the rate of nominal wage increase in the current year compared with the rate of increase a year earlier but such a figure needs interpretation and the aim here is to describe wage behaviour in more detail

changes in the cyclical pattern of real wages evidence from nine countries 1955 80 monetary policy in the united kingdom the monetarist vice has gripped the economy even longer and similar deflationary policies have been in effect in other western economies interestingly enough these policies were instituted in the context of a prolonged period of economic decline annual average rates of growth of gross domestic product for nine oecd countries fell from 6 8 to 5 o to 2 6 over the periods i955 66 i966 73 and i973 79 2 similarly unemployment has risen dramatically in the last io years the causes of slow growth and high unemployment are undoubtedly various however it is clear that restrictive macroeconomic policy has played an important role that is the recent situation is at least in part attributable to a deliberate effort to induce an economic slump the task of systematically examining the origins and motivations of this policy still awaits us however this paper presents an account of a general development in the pattern of real wages over the business cycle which is a plausible determinant of current policy the evidence indicates that short run cyclical movements in output no longer exert a determinate influence on real wage growth a development which may have been the impetus for long term deflation this account is based on an econometric study of nine countries over the period i955 80 the study has three noteworthy econometric features the first is that data from the nine countries are combined in a pooled model with homogeneous coefficients the use of a cross national sample ensures against the attribution of general theoretical status to particular empirical findings from a single country 3 second the units of observation are business cycle turning

wage inflation in the united kingdom in britain there is little agreement on what determines the growth of wages or indeed on whether a stable wage equation exists in this paper i try to clarify matters in two ways first i aim to represent the data generation process as faithfully and accurately as possible while using with a few modifications the criteria for model selection advanced in davidson et al 1978 second i use five different measures of the pressure of demand rather than just picking on one particular measure 2 it may be helpful at this stage to summarize very crudely the argument and results in section ii having first set out the framework for the rest of the analysis which relates to the period 1961 i 1980 iv i modify the standard real wage model by proxying the desired level of real wages by a moving average of the past level of real wages it is found that the coefficient on the prevailing real wage is equal but of opposite sign to that on the desired wage thus in the long run inflation is independent of the level of real wages the pressure of demand and incomes policy dummies are both found to be significant one would have expected that in the long run the rate of growth of earnings at given price inflation and pressure of demand would respond to differences in the rate of growth of productivity but over the sample period there was no evidence of this once we allowed for incomes policy which implies considerable rigidity in the target rate of growth of wages the analysis so far includes no specifically expectational variables in section iii i use some survey data on wage expectations which have the advantage of being based on quantitative responses one rationale for having wage expectations in a wage equation might be that in a world of staggered contracts where workers care about relative wages they will take into account what they expect to happen to the wages of other workers when settling now a two equation model for wages and wage expectations is presented in the subsequent section and in most respects the results confirm our conclusions from the previous sections however the preferred specification obtained here which encompasses much of the earlier work and probably constitutes progress is one that we have some doubts about and will it is hoped form the basis for future research in this area

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

the economic design of sporting contests what is the optimal number of entrants in a race or the optimal number of teams in a baseball league what is the optimal structure of prizes for a golf tournament or degree of revenue sharing for a football championship how evenly balanced should the competing teams be in the nascar or formula one championships what is the maximum number of entrants per nation to the olympic games that should be permitted what quota of qualifying teams to the soccer world cup should be allocated to the developing nations

the impact of employment tax cuts on unemployment and wages the role of unemployment benefits and tax structure abstract i model and simulate the effects of employment tax cuts on unemployment and wages in four equilibrium models competitive union bargaining search and efficiency wages i find that if the ratio of unemployment compensation to wages is fixed the effect of the tax cut is mainly on wages but if income out of work is fixed in real terms there are substantial employment effects when wages are determined by bargaining revenueneutral reforms that make the tax more progressive also reduce unemployment thus policy towards unemployment compensation and tax structure are key influences on the effect of taxes on unemployment

minimum wages and the demand for labor i formulate measures of the effective minimum wage based on broad definitions of the labor costs that face employers and use these measures in reestimating some simple equations relating the relative employment of youths and adults to the u s minimum wage using aggregate data for 1954 78 i then ground the model more closely in the theory of factor demand first by adding the relative wages of youths and adults to the equation describing their relative employment and then by specifying a complete system of demand equations for these two types of labor teen employment responds quite robustly to changes in the effective minimum in these specifications with an elasticity of 0 1 a translog cost function defined over young workers adults and capital shows that the effective minimum wage reduces employers ability to substitute other factors for young workers using both sets of results i find that a subminimum wage for youths would have increased their employment with at most a small loss of jobs among adults this abstract was borrowed from another version of this item

work sharing and overtime this paper deals with the employment effects of reduced working time when firms endogenous response of overtime is considered the analysis distinguishes between fixed and profit maximizing levels of output as well as between interior and corner solutions it is shown that under plausible assumptions a reduction in working time is quite likely to be counterproductive as an employment promoting measure i introduction a reduction in working time has been proposed as a method of increasing employment through work sharing such proposals however often seem to build on an oversimplified view of the world where little consideration is given to various possible repercussions most economists therefore seem rather sceptical towards such proposals for more or less critical discussions see e g hart sloane 1979 charpin 1984 brunstad holm 1984 calmfors 1985 hoel 1986 1987 hoel vale 1986 and dreze 1987 none of these papers however takes into account that actual working time will differ from normal working time to the extent that there is overtime work the aim of this paper is to analyse how endogenous responses of overtime may affect the outcome with respect to employment of reducing the normal working time although overtime work currently accounts for only a minor proportion of total working time around three per cent in sweden we believe this to be an important channel since a major reduction in working time will represent a nonmarginal change which is likely to produce significant changes in established practices our results add to the doubts that a reduction in working time increases employment there has been some recent work on the relationship between normal working time and overtime cf hart 1984 fitzroy hart 1985

labour surplus as a signal for real wage adjustment austria 1968 1984 unemployment figures for austria have been running well below the oecd average since the late 1960s in fact before 1981 there was hardly any unemployment problem in austria in 1982 and 1983 unemployment rates doubled since then the upward movement has slowed down but there are no indications that austrian unemployment could drop substantially below the 5 per cent level during the second half of the 1980s see figure 1

is the optimal labor income tax progressive in a unionized economy this paper concerns optimal nonlinear labor income taxation in an economy with union wage setting and endogenous hours of work the purpose is to study the determinants of tax progression we show that the optimal degree of progression of the labor income tax depends on the extent to which the government can influence the wage rate via tax policy as well as on its ability to redistribute income across individuals in addition the argument for progressive labor income taxation depends on whether hours of work are chosen by the employed themselves or the union

are we willing to pay enough to back the bid valuing the intangible impacts of london s bid to host the 2012 summer olympic games using a contingent valuation survey this paper provides the first empirical test of the proposition that intangible impacts might justify hosting major sporting events on cost benefit grounds respondents drawn from london manchester and glasgow were asked for their willingness to pay wtp to host the 2012 olympic games in london on the basis of the intangible impacts that this event might provide annual mean wtp is 22 12 and 11 per year for 10 years in these 3 uk cities respectively an illustrative total uk wtp for intangible impacts is in the region of 2 billion statistical analysis of wtp determinants reveals a range of plausible explanatory factors such as respondents degree of support for the bid

using alsace moselle local laws to build a difference in differences estimation strategy of the employment effects of the 35 hour workweek regulation in france france s 1998 implementation of the 35 hour workweek has been one of the greatest regulatory shocks on labor markets few studies evaluate the impact of this regulation because of a lack of identification strategies for historical reasons due to the way alsace moselle was returned to france in 1918 the implementation of france s 35 hour workweek was less stringent in that region than in the rest of the country which is confirmed by double and triple differences yet it shows no significant difference in employment with the rest of france which casts doubt on the effectiveness of this regulation

input price shocks and the slowdown in economic growth the case of u k manufacturing this paper provides a theoretical and empirical analysis of the effects of input price shocks on economic growth with a focus on united kingdom manufacturing in the 1970s the theoretical model predicts a discrete decline in output and productivity after an input price rise and a longer run slowdown in productivity growth real wage growth and capital accumulation these features characterize the united kingdom and most other oecd economies after 1973 the empirical results confirm the important role of input prices in recent u k adjustment but also point to an important role for other supply and demand factors two types of explanations have been offered for the sharp deterioration in u k economic performance in the past decade focusing respectively on demand and supply factors a standard keynesian view holds that macroeconomic demand management has been either too expansionary or too contractionary and that rising unemployment and falling output reflect the burden of anti inflationary policies an alternative view holds that various supply shocks are the main source of the poor output performance in this interpretation higher raw material prices particularly oil competition from the newly industrializing countries nics and perhaps an independent decline in productivity growth all have lowered output growth and raised unemployment

taxes subsidies and equilibrium unemployment this paper considers the effects of wage taxes employment subsidies and unemployment benefits in a simple model of equilibrium search unemployment is determined by the equality of job matchings and job separations job vacancies are determined by a zero profit condition and wages by a nash bargain between the meeting firm and worker i show that marginal wage taxes influence the firm s and worker s equilibrium sharing rule whereas employment subsidies and unemployment benefits influence only the surplus shared hence tax financed subsidies reduce wages and raise employment and vacancies whereas tax financed unemployment benefits raise wages and reduce employment and vacancies in this paper we consider the effects of wage taxes employment subsidies and unemployment benefits on equilibrium search unemployment in a model where wages are determined competitively by the meeting firm and worker discussions about the desirability of taxes and subsidies and their effect on employment and wages abound in the labour economics literature yet the only tax or subsidy that has been systematically discussed in a competitive search framework is a lump sum unemployment benefit the reason for this might be that the structure of the model is such that it is ideally suited to the study of unemployment benefits whereas traditional supply and demand analysis could arguably cope with other kinds of taxes this might be true in some cases but if it is at all appropriate to think of equilibrium unemployment as coming out of an essentially competitive framework when the process which brings together jobs and workers is characterized by frictions traditional supply and demand analysis may not be rich enough to give us all the answers we need 1 the model of this paper is a simple equilibrium model with endogenous unemployment supply of jobs i e demand for labour and real wages unemployment exists because unemployed workers and unfilled jobs cannot find each other instantaneously in the interval of time required to match all workers and jobs some existing job worker pairs break up providing a new flow into unemployment thus unemployment can never be eliminated in equilibrium flows into and flows out of unemployment are equal wages are set endogenously by generalized nash bargains between the individual firm and worker the equilibrium wage rate is shown to depend on all the parameters of the model and to be determined simultaneously with equilibrium unemployment the driving force in the model which provides the link between wages and unemployment is the rate of job vacancies the total number of jobs is determined by zero profit conditions because of constant returns to scale the number of jobs taken up each period depends positively on the number of job vacancies because a typical unemployed worker will have a better chance of locating a job when there are more vacancies if the real wage rate falls the expected profits from a job rise firms open up more vacancies to take advantage of this and so more jobs are taken up but as vacancies rise and

good jobs bad jobs and redistribution we analyse the question of optimal taxation in a dual economy when the policy maker is concerned about the distribution of labour income income inequality is caused by the presence of sunk capital investments which creates a good jobs sector due to the capture of quasi rents by trade unions with strong unions and high planner preference for income equality the optimal policy is a combination of investment subsidies and progressive income taxation if unions are weaker the policy maker may instead choose to tax investment

the determination of wages employment and work hours in an economy with centralised wage setting sweden 1950 83 a key component of recent explanations for the growth in unemployme nt in western europe is a negative relation between wage rates and employment this paper examines the evidence for such a relationship for swedish manufacturing industry and also investigates the corresponding movements of hours of work the findings form the ingredients of a structural model of the labor market which is estimated using time series observations from 1951 t o 1983 the greater volatility of employment relative to earnings is measured by a specific parameter which in this model relates to the objectives of trade unions copyright 1988 by royal economic society

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

growth wealth and the natural rate is europe s jobs crisis a growth crisis abstract the effect of faster technical progress is studied in our labour turnover model of the natual rate of unemployment in its closed economy version the model implies that in the limit as the steady growth rate is approached the increase in the rate of progress is neutral for the natural unemployment rate its effects are completely offset by the equal increase in the rate of interest it induces however of two small open economies having the same technology level at some date the one where technical progress has always been and always will be faster will have the lower wealth relative to its wage and a lower wage rate relative to future wage rates both effects operate to reduce the natural rate of unemployment whether this theory based hypothesis will be confirmed empirically is a question needing extensive study but a quick comparison of the g7 countries confirms that the proportionate increase of the unemployment rate in recent decades tended to be greater the more pronounced the productivity slowdown

the olympic effect why should countries offer to host costly mega events such as the olympic games we show that hosting a mega event increases exports this effect is statistically robust permanent and large trade is over 20 higher for host countries interestingly unsuccessful bids to host the olympics have a similar impact on exports we conclude that the olympic effect on trade is attributable to the signal a country sends when bidding to host the games rather than the act of actually holding a mega event we develop an appropriate formal model and derive conditions under which liberalising countries will signal through a mega event bid

causes of the current stagflation since 1975 labour slack has been unusually high in the oecd countries and yet inflation has not diminished the less favourable mix of unemployment and rate of change of inflation which we call stagflation is explained by a fall in the feasible rate of growth of real wages unmatched by a reduction in the constant term in phillips curve to investigate this mechanism conventional wage and price equations are estimated for 19 countries and then used for simulation stagflation has been caused in roughly equal amounts by rising relative import prices and by the fall in the rate of productivity growth in the basic model the phillips curve is assumed not to adapt to falls in feasible real wage growth but in a final section an adaptive wage equation is estimated which confirms that the process of adaptation is slow

the effect of professional sports on the earnings of individuals evidence from microeconomic data this article examines the impact of professional sports franchises in labour markets using data from the march supplement to the current population survey cps for workers employed in specific occupational groups in all large us cities from 1983 to 2002 results from a standard wage model suggest that professional football franchises increase average hourly and weekly earnings of males employed in these occupations but professional baseball franchises reduce them these results support growing evidence that professional sports affect labour markets however the mixed nature of the association between sport and earnings provides little economic justification for government subsidies for professional sport

local labor markets and natural resources a synthesis of the literature a primary way that natural resources affect a locality is through the demand for labor with greater extraction requiring more workers shifts in labor demand can be measured through changes in employment and earnings the main labor market outcomes or through changes in the population and income more generally these changes may spillover into the nonresource economy leading to greater overall effects or possibly crowd out be spread unequally across the population thereby altering the distribution of income and the poverty rate or influence educational attainment as people choose between additional schooling and work in this review the literature linking natural resources to local labor markets is synthesized by organizing existing studies according to their resource measurement and the outcomes that they consider this synthesis provides an accessible guide to a literature that has boomed in recent years it also identifies promising avenues for future research and lays a foundation to further generalize the evidence through an eventual meta analysis

does decreasing working time reduce environmental pressures new evidence based on dynamic panel approach abstract there is a growing interest in the correlation between working time and environmental pressures but prior empirical studies were mostly focused on static methods within limited country groups to fill the gap this study aims to stimulate the discussion by distinguishing between different time periods for developed and developing country groups respectively in particular we contribute to a further understanding of the environmental effects of working time reduction policies by comparing the differences under the dynamic framework of system generalized method of moments we applied this dynamic panel regression approach for 55 countries worldwide over the period 1980 2010 and employing carbon emissions per capita as the environmental indicator in general results confirmed the significant relationship between hours of work and environmental impacts in developed economies although this is not the case for the developing counterparts interestingly the significant correlations for the developed country group turned from positive during the first sub period 1980 2000 to negative during the second sub period 2001 2010 connecting these results with previous literature we proposed the reasons of rebound energy use derived from certain leisure activities which were more energy intensive if excessive non working time provided

raw materials profits and the productivity slowdown a factor price frontier framework is used to clarify the analogy of an increase decrease in raw material prices with autonomous technological regress progress factor price profiles are estimated for the manufacturing sector of the united states the united kingdom germany and japan the production model in conjunction with estimates obtained from the factor price frontier attributes much of the slowdown in manufacturing productivity to the rise in relative raw material prices part of the apparent productivity riddle may have to do with the use of double deflated national accounting measures of value added which have an inherent measurement bias

a model of imperfect competition with keynesian features the recent literature on the reappraisal of keynes has viewed keynesian equilibria as arising when prices are fixed and effective demands and supplies are equilibrated through the adjustment of quantities one problem with this approach is that it lacks a theory of price determination in particular of why prices are fixed in the present paper we show that a number of keynesian features arise in a model in which prices are fully flexible but where agents have some monopoly power one advantage of this approach is that it provides a theory of the determination of both prices and quantities

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

wage gaps factor shares and real wages the relationships which link real wages capital intensity and factor shares are tested as a prelude to tests of the relationship between wage rigidities and labour market institutions evidence from seven countries indicates that the evolution of factor shares is well explained by changes in capital intensity which is itself well explained by product wages and technical progress a key implication is that changes in full employment capital labour ratios have been the dominant reason for the longer run decline of profit shares in europe and japan relative to the united states it follows that changes in cyclically adjusted factor shares provide little or no information regarding the gap between the actual real wage and its full employment value

wages and unemployment a general framework these remarks are addressed directly to the question of the relationship between wages and unemployment and provide neither a commentary on nor a critique of the stimulating papers presented by edmond malinvaud and robert gordon they do however bear on a number of the issues raised in those papers professor gordon s contribution takes it as read that the business cycle is the fundamental issue of interest in any discussion of wages and unemployment in spite of his avowed and most welcome intention to avoid looking at the world through u s tinted spectacles this primacy of the business cycle phenomenon is closely related to the american post war experience in britain and to a slightly lesser extent in other european countries the fundamental unemployment problem is the inexorably rising trend upon which the business cycles are superimposed this trend is barely apparent in the united states and consequently causes little concern thus the figures in table i show that in britain male unemployment was more thanfive times higher in the last five years of the seventies than it was in the first five years of the fifties and it seems likely that it will almost double again in the first five years of the eighties the contrast with the united states could hardly be more dramatic another dramatic difference between the united states and britain which emerges strongly in professor gordon s paper is the fact that in the former employment fluctuations at least in manufacturing are strongly related to fluctuations in nominal gnp and this is not true in the latter where it appears that nominal gnp fluctuations are dominated by nominal changes thus it may not be very useful to think of nominal gnp as the exogenous driving force behind fluctuations in the british context where then should we look for an explanation of the growth in unemployment and what is the role of wages many british commentators have noted that along with the rising trend in unemployment there has also been a rising trend in real labour costs relative to output per head thus from i964 to i980 this number has risen in britain by about 35 reflecting a considerable increase in the price of labour relative to what is produced this is the well known argument that unemployment is caused by workers pricing themselves out of a job this is more rational than it sounds because generally speaking it would be employees pricingothers outofa job on the other side of the same coin dr morley in thisjournal in 1979 noted that 88 of the variation in annual british unemployment from 1953 to 1977 could be explained by the pre tax profit share one year lagged thus unemployment appears to be related to the fact that real wages and the real return on capital are simply wrong which relates of course to the extensive analysis provided in m malinvaud s contribution

hosting mega events a guide to the evaluation of development effects in integrated metropolitan regions each time a city or region seeks to host a mega event such as the olympic games boosters proclaim vast benefits related to increased tourism and wealth flowing into the area while benefits can exist in some form or another the net gain for a region seeking to bolster its economic standing is often overstated this is especially true for highly integrated regions when a center city is the sole entity making the event investment much of this results from a collection of erroneous assumptions and a failure to account for the integration of economic activity within a region we address common issues with these reports and provide a guide for evaluating the net benefit of hosting an event more specifically we argue with detailed examples that industry share and commute shed analysis are indispensable tools when evaluating capture rates of new spending within the boundaries of the investment area

three theorems on inflation taxes and marginal employment subsidies most western nations are now experiencing high levels of unemployment traditional economic policies have apparently either helped to produce this or have not been able to eliminate the problem thus some economists have tried to suggest new ways in which governments might intervene in the labour market to raise the equilibrium level of employment two of the most widely known schemes are i taxes on inflation and ii marginal employment subsidies this paper examines the microeconomic effects of these policies one of the most fundamental points in the paper is that of the formal similarity between an inflation tax and a subsidy on marginal employment both work to raise the long run level of employment by changing the cost of adjusting from one short run equilibrium to another an inflation tax imposes a fine on firms or workers when wage rates rise too fast its aim is to reduce wages and so raise employment a marginal employment subsidy is designed to reward firms or workers when employment rises quickly its purpose too is to increase the level at which employment will be in equilibrium technically then these are both examples of the same sort of analytical problem each one requires that the relevant decision maker bear in mind that his life time utility depends on how quickly he alters his present behaviour each in other words is a problem in the calculus of variations not one in simple calculus there is now quite a large literature on the case for an inflation tax although it dates back at least twenty years the idea has become topical because of the work of richard jackman and richard layard most notably in layard

unionized contracts with fixed wage rates and state contingent employment levels a union sets a state independent wage the firm sets employment along the state contingent demand for labor curve the union s maximand is the welfare of its cu rrent members however it sets a wage at which outsiders are recruit ed in good states so as to protect insiders employment prospects in bad states if these newly recruited workers join the union there m ay exist an equilibrium membership comparative statics results are o btained for government policy measures copyright 1988 by the london school of economics and political science

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

working time regulation in france from 1996 to 2012 france which is often seen as an unusual country with a rigid 35 hour working week has experienced massive changes in its regulation of working time in recent decades including a progressive removal of 35 hour working week laws these changes have affected and continue to affect workplace organisation working conditions job creation productivity and wages the 35 hour working week policy represents a reduction in working time as well as a complex package that restructured french labour law and that opened up a great deal of space for social bargaining this paper provides a comprehensive analysis of the evolution of working time regulation and its political roots it discusses the studies evaluating the 35 hour working week and examines some of the basic consequences of reversing this policy since 2002 it also highlights unexplored lines of research on this topic

do new major league ballparks pay for themselves in recent decades local governments have allocated billions of dollars to subsidizing construction of facilities for major league baseball we use panel data that cover all major league baseball teams from 1989 2001 to estimate the impact of ballpark construction on team revenue our estimates imply that a typical new ballpark generates additional revenue sufficient to cover most or all of its capital cost it follows that any external benefits of ballpark construction are likely to be inframarginal and that continuance of large public subsidies cannot be justified on economic grounds

the economics of sports facilities and their communities since the 1950s taxpayers have been the primary investors in stadia built for the use of privately owned professional sports teams team owners have argued that sports facilities boost local economic activity however economic reasoning and empirical evidence suggest the opposite public support for stadia is also driven by demand for community image and owners of sports teams supply a scarce input into image enhancement participation in the major league for which they have been able to extract monopoly rents from dispersed taxpayers we suggest reforms to dissipate the monopoly sports leagues exercise when negotiating with host communities for their teams