benefit entitlement and unemployment duration the role of policy endogeneity abstract the potential duration of benefits is generally viewed as an important determinant of unemployment duration this paper evaluates a unique policy change that prolonged entitlement to regular unemployment benefits from 30 weeks to a maximum of 209 weeks for elderly individuals in certain regions of austria in the evaluation we explicitly account for the fact that the program was an endogenous policy response to deteriorating labor market conditions for older workers in certain regions and sectors the main results are i rebp reduced the transition rate to jobs by 17 ii accounting for endogenous policy adoption is important and quantitatively significant

extended benefits and the duration of ui spells evidence from the new jersey extended benefit program abstract this paper examines the impact on the duration of unemployment insurance receipt of a politically motivated program that offered 13 weeks of extended benefits for 6 months in 1996 using state level data and individual administrative records from before during and after the program we find that it raised the fraction of claimants who exhausted their regular benefits by 1 3 percentage points had the program run long enough to affect claimants from the first day of their spell the fraction exhausting would have risen by 7 percentage points and the average recipient would have collected regular benefits for one extra week

nonstationarity in job search theory generally structural job search models are taken to be stationary in this paper models are examined in which every exogenous variable can cause nonstationarity for instance because its value is dependent on unemployment duration a general differential equation that describes the evolution of the reservation wage over time is derived as an empirical illustration a nonstationary structural model is estimated that focuses on the consequences of a downward shift in the level of benefits it appears that the elasticity of duration with respect to the level of benefits after the shift is much larger than the elasticity with respect to the level before the shift this paper examines the movement of a job seeking individual s reservation wage over time in a general nonstationary job search model also results concerning comparative dynamics of the reservation wage and the distribution of the duration of unemployment are derived as an empirical illustration a nonstationary structural model is estimated the nonstationarity originates from the decrease in the level of benefits when unemployment duration equals two years from the results some detailed policy recommendations can be deduced as one is able to distinguish the effect of a change in the level of benefits in the first two years of unemployment from the effect of a change in the level after that period recently the use of job search models for the analysis of unemployment duration has become widespread the reduced form approach in empirical studies see e g lancaster 1979 in which only the hazard of the duration distribution is estimated is gradually being replaced by a more structural approach the latter way of modelling is characterized by the explicit use in empirical analysis of the reservation wage equation as stated by the theory e g yoon 1981 lancaster and chesher 1983 lynch 1983 narendranathan and nickell 1985 and van den berg 1988 use the complete theoretical framework of job search theory to make inferences about search behaviour however the structural models used in these studies are stationary this implies that variables like unemployment benefits or the rate of arrival of job offers are assumed to be constant over the spell of unemployment which is often at variance with reality what is more various reduced form empirical studies indicate a significant durationdependence of the re employment probability which is generally interpreted as evidence in favour of the presence of nonstationarity see e g blau and robins 1986 kooreman and ridder 1983 lancaster 1979 and narendranathan nickell and stern 1985 consequently there is a need to model reservation wage movements over time based on a nonstationary theoretical framework

punitive sanctions and the transition rate from welfare to work in the netherlands the average exit rate out of welfare is dramatically low most welfare recipients have to comply with guidelines on job search effort that are imposed by the welfare agency if they do not then a sanction in the form of a temporary benefit reduction can be imposed this article investigates the effect of such sanctions on the transition rate from welfare to work using a unique set of rich register data on welfare recipients we find that the imposition of sanctions substantially increases the individual transition rate from welfare to work

the effects of changes of the job offer arrival rate on the duration of unemployment generally it is acknowledged that changing the job offer arrival rate has two opposite effects on unemployment duration for a basic job search model sufficient conditions on the wage offer distribution have been derived ensuring that one of the effects dominates however these are not satisfied for the popular families of wage offer distributions here i show that the conditions can be weakened at virtually no cost the set of distributions satisfying the new conditions is considerably larger than the set previously established in particular it includes all wage offer distribution families that are popular in structural empirical research

the effects of firm optimizing behaviour in matching models this paper considers a matching model of which the search behaviour of jovanovic 1979 and albrecht and jovanovic 1984 are special cases the nature of the generality is that each unemployed worker has more information than firms about his average productivity this results in wage offers falling over the length of an unemployment spell because a long spell is a signal of lower than average productivity the results of the paper are similar to the scarring effect of heckman and borjas 1980 and greenwald 1986 and the discouraged worker effect of schweitzer and smith 1974

estimating a simultaneous search model the primary goal of this article is to specify and estimate a structural simultaneous search model and then determine the empirical importance of simultaneous search the results indicate that new labor force entrants search simultaneously a secondary goal is to identify and estimate job offer arrival rates and wage offer rejection probabilities separately the results indicate that a significant portion of unemployment spells are caused by slow arrival rates but policies intended to speed arrival rates would increase the average length of unemployment spells

optimal unemployment insurance in a matching equilibrium this article considers optimal unemployment insurance ui in an equilibrium matching framework where wages are determined by strategic bargaining it compares the outcome with the standard nash bargaining approach which can be interpreted as union wage bargaining with an insider outsider distortion it also shows that a coordinated policy approach one that chooses job creation subsidies and ui optimally generates a much greater welfare gain than a policy that simply varies ui payments by duration

the effect of unemployment insurance sanctions on the transition rate from unemployment to employment sanctions or punitive benefits reductions are increasingly used as a tool to enforce compliance of unemployment insurance claimants with search requirements this article analyses sanctions using a unique administrative data set of individuals who started collecting unemployment insurance in the netherlands in 1992 after correction for selectivity in the imposition of sanctions we find that sanctions substantially raise individual re employment rates

distinguishing trust from risk an anatomy of the investment game the role of trust in promoting economic activity and societal development has received considerable academic attention by social scientists a popular way to measure trust at the individual level is the so called investment game berg dickhaut and mccabe 1995 it has been widely noted however that risk attitudes can also affect decisions in this game and thus in principle confound inferences about trust we provide novel evidence shedding light on the role of risk attitudes for trusting decisions to the best of our knowledge our data are the first rigorous evidence that i aggregate investment distributions differ significantly between trust and risk environments and ii risk attitudes predict individual investment decisions in risk games but not in the corresponding trust games our results are convergent evidence that trust decisions are not tightly connected to a person s risk attitudes and they lend support to the trust interpretation of decisions in investment games

risk aversion and credit constraints in farmers decision making a reinterpretation in 1976 the agricultural development council sponsored a conference on risk uncertainty and agricultural development which has been summarised in a volume edited by james roumasset jean marc boussard and inderjit singh 1979 the volume provides an excellent review of the state of the art at that time however as discussed in the summary chapters of that volume there were few theoretical empirical or policy issues on which clear conclusions could be reached on the basis of knowledge then available in the intervening years progress has been made on a number of issues as a result of both empirical investigations and theoretical advances this paper concentrates on advances which have relevance to the controversy about the relative roles of risk aversion and credit constraints in limiting farmers investment levels especially for purchased inputs such as seeds or fertilizers in particular we review recent experimental studies on the extent of risk aversion among farmer populations in developing

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

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

correlated equilibrium as an expression of bayesian rationality if it is common knowledge that the players in a game are bayesian utility maximizers who treat uncertainty about other players actions like any other uncertainty then the outcome is necessarily a correlated equilibrium random strategies appear as an expression of each player s uncertainty about what the others will do not as the result of willful randomization use is made of the common prior assumption according to which differences in probability assessments by different individuals are due to the different information that they have where information may be interpreted broadly to include experience upbringing and genetic makeup copyright 1987 by the econometric society

estimating a structural search model the transition from school to work this paper presents a finite horizon search model that is econometrically implemented using all of the restrictions impli ed by the theory following a sample of male high school graduates fr om the youth cohort of the national longitudinal surveys from graduat ion to employment search parameters are estimated reservation wages and offer probabilities are estimated to be quite low simulations a re performed of the impact of changing the parameters on the expected duration of unemployment copyright 1987 by the econometric society

an empirical examination of the sources of changes over time in the job finding rate using reservation wages and rejected wage offers we consider a structural dynamic job search model where nonstationarity originates from the change over time in the benefit level the job offer arrival rate and the wage offer distribution the model is estimated on the french sample of the echp taking advantage of direct observation of reservation wages rejected job offers and associated rejected wages we find that the offered wages deteriorate rapidly 13 8 over six months 19 2 over one year and 30 over two years and that changes in the wage offer distribution are the unique source of negative duration dependence in the hazard

supply and demand for livestock credit in sub saharan africa lessons for designing new credit schemes abstract based on analysis of credit supply in ethiopia kenya uganda and nigeria it is shown that public credit institutions do not have sufficient funds to meet the demand for livestock credit and cannot mobilize savings from their clients or other commercial sources for one reason or another in addition available credit does not reach those who need it the most and with whom it could have the greatest impact due to the application of inappropriate screening procedures and criteria to determine creditworthiness the analysis of demand based on borrowing and nonborrowing sample households using improved dairy technology it is shown that not all borrowers borrowed due to liquidity constraint while some borrowers and some nonborrowers had liquidity constraint but did not have access to adequate credit logistic regression analysis show that sex and education of the household head training in dairy prevalence of outstanding loan and the number of improved cattle on the farm had significant influence on both borrowing and liquidity status of a household though the degree and direction of influence were not always the same in each study country based on the findings it is suggested that combining public and commercial finance could solve the problem of inadequate credit supply while inventory finance to community level input suppliers and service providers might help in getting credit to worthy and needy smallholders at lower cost than providing credit to smallholders directly

economics of erosion control and seed fertilizer technologies for hillside farming in honduras abstract with population growth still at very high rates and large scale commercial farmers and cattle ranchers owning much of the more fertile valley land small scale farmers are concentrated on increasingly marginal steeply sloping hillsides in central america the continuing soil erosion and land degradation in these low input staple crop production hillside farming systems lead many to be pessimistic about increasing the agricultural incomes of these farmers however this study shows that the appropriate combination of improved technologies and agricultural policy or alternative production diversification strategies can improve the incomes of small scale hillside farmers in southern honduras by over 50 the technology components considered are stone walls and ditches combined with living tree barriers to prevent erosion of the hillsides and a package of improved sorghum seed seed treatment and modest doses of nitrogenous fertilizer a whole farm mathematical programming framework is used to determine the potential farm level income effects of the soil conservation and seed fertilizer technologies the main conclusion is that erosion control devices and yield increasing crop varieties and fertilizer are an effective technology introduction strategy for the erosion prone hillside landholdings found in many areas of central america if policy actions or diversification strategies for disposal of surplus grain are found which are effective in reducing the risk of low income from cereal price reductions in high production years adoption of the improved technologies is shown to be profitable for small scale farmers another benefit not explicitly considered would be to slow the very rapid growth of urban poverty in these countries sensitivity analysis results indicated that neither risk aversion nor the increased availability of crop land or initial cash have any substantial effects on the predicted adoption level of the improved technologies or on their income impacts for these farmers

optimal unemployment insurance in search equilibrium should unemployment benefits be paid indefinitely at a fixed rate or should the rate decline or increase over a worker s unemployment spell we examine these issues using an equilibrium model of search unemployment the model features worker firm bargaining over wages free entry of new jobs and endogenous search effort among the unemployed the main result is that an optimal insurance program implies a declining benefit sequence over the spell of unemployment numerical calibrations of the model suggest that there may be nontrivial welfare gains associated with switching from an optimal uniform benefit structure to an optimally differentiated system

should unemployment benefits decrease with the unemployment spell abstract in this paper we investigate whether unemployment benefits should decrease with the unemployment spell in a model where both job search intensity and wages are endogenous wages are set by collective agreements bargained by insiders it is shown that a more declining time sequence of unemployment benefits leads to wage increases when the tax rate is given such an effect may imply an increase in unemployment and counteracts the response of job search intensity that can be found in standard job search models with a given wage distribution calibration exercises suggest that it costs twice as much in terms of welfare loss for the long term unemployed workers to reduce the unemployment rate by 1 when wages are endogenous than in the standard job search model

a search model applied to the transition from education to work this paper presents the specification and estimation of a search model applied to the transition from education to work the theoretical search model includes the possibility of variable search intensity the empirical model with a reservation wage relation is estimated using maximum likelihood methods a data set containing information on new law graduates is used for the estimation finally the model is estimated for two separate subperiods to investigate the effects of market changes

the conundrum of successful credit projects in floundering rural financial markets many governments use credit projects to foster agricultural development and donors spend billions of dollars supporting these activities in low income countries lics most of these activities are justified by the purported impact that loans have on ultimate borrowers for example credit demands filled additional crops produced changes in modern inputs used and borrowers incomes increased most project evaluations report favorable impacts that in turn stimulate donors and governments to spend more money on agricultural credit these favorable evaluations have prompted policymakers to conclude that rural financial markets are strengthened by most credit projects at the same time other researchers have evaluated rural financial markets in countries with successful credit projects and have found mounting problems they report on markets that lose substantial portions of the purchasing power of their loan portfolios to ravages of default or inflation concentrations of cheap loans in the hands of the wealthy political meddling in lending systems that offer few savings opportunities large transaction costs for lenders and borrowers lenders who are addicted to outside funds for their sustenance and credit institutions that sporadically implode or self destruct these reports of healthy parts but infirm wholes present a conundrum how can the major parts of the rural financial system involved in donor and government projects be doing well while the system as a whole is doing poorly are these projects islands of tranquility in otherwise stormy seas or is one of these two approaches to evaluation giving an erroneous picture unfortunately few credit project evaluations are published in journals or books although a large number of these studies have been done typically evaluation results are buried in unpublished reports or in graduate student theses while millions of dollars have been spent

information externalities in the labour market and the duration of unemployment a matching model is analysed in which firms imperfectly test workers prior to hiring them if some firms hire only workers who pass the test there is an informational externality unemployment duration is a signal of productivity in equilibrium if it is profitable for a firm to test it is also profitable for it to condition its hiring decision on duration hiring those whose duration is less than a critical value this testing equilibrium is inefficient with too much testing and too low a critical duration value sensitivity analysis of the latter suggests explanations for the dependence of re employment probabilities on duration and the instability of the u v curve

group learning wage dispersion and non stationary offers can differences in equilibrium beliefs among otherwise identical individuals account for a substantial degree of wage inequality this paper shows that this is possible if two conditions are met first people learn about the distribution of wage offers from the experience of their peers and second people believe that wage offers are stationary even though offers that arrive later tend to have higher wages than offers that arrive earlier peer groups can then end up with different stable beliefs that lead to intergroup wage differences the non stationarity of offers is rationalized in a model where firms can either advertise their job openings or not and where advertised ones have more influence on more inexperienced job searchers a statistic is proposed whose application to existing studies suggests that the non stationarity considered here is present in data

unemployment durations and extended unemployment benefits in local labor markets many empirical studies have confirmed the theoretical prediction that longer term unemployment insurance ui entitlement leads to longer unemployment duration most of those studies have examined

risk sharing versus low cost credit systems for international development low cost credit programs in developing countries have failed to achieve agricultural technology adoption goals this research attributes the failure to the inabiiity of poor farmers to bear the combined business and financial risks p sed ly adopting new technologies and develops proposals for the design of credit programs that reduce these risks agronomic and socioeconomic data are combined through simulation and mathematical programming to analyze problems of decision making under risk for developing countries the results will assist iii the design of new rural financial institutions conducive to the adoption of new production technologies by subsistence

optimal unemployment insurance this paper considers the design of an optimal unemployment insurance system the problem is modeled as a repeated principalagent problem involving a risk averse agent the unemployed worker and a risk neutral principal which cannot monitor the agent s search effort the optimal long term contract subject to the associated incentive constraints is characterized this contract involves a replacement ratio that decreases throughout the unemployment spell and a wage tax after reemployment that under some mild regularity conditions increases with the lenght of the unemployment spell some numerical results are presented that suggest that the gains from switching to this optimal unemployment insurance scheme could be quite large the performance of this optimal contract is also compared to alternative liquidity provision mechanisms

unemployment insurance and unemployment spells this paper tests the effects of the level and length of unemployment insurance benefits on unemployment durations the paper particularly studies individual behavior during the weeks just prior to when benefits lapse higher unemployment insurance benefits are found to have a strong negative effect on the probability of leaving unemployment however the probability of leaving unemployment rises dramatically just prior to when benefits lapse individual data are used with accurate information of spell durations and the level and length of benefits the semiparametric estimation techniques used in the paper yield more plausible estimates than conventional approaches and provide useful diagnostics copyright 1990 by the econometric society

duration to first job and the return to schooling estimates from a search matching model this paper investigates the properties of the joint distribution of the duration to the first post schooling full time job and of the accepted wage for that job within a search matchingbargaining theoretic model the model provides an interpretation of the observations on duration to first job and accepted wages that differentiates between behavioural influences and market fundamentals in determining the accepted wage schooling relationship the return to schooling is appropriately measured by differences in the wage offer distribution which depends only on market fundamentals we use data from the 1979 youth cohort of the national longitudinal surveys of labor market experience to follow several school leaving cohorts of young males a model which allows for five types of heterogeneous workers within schooling race groups fits the duration and wage data well for all such groups offer probabilities for all groups are estimated to be close to one mean offered wages are about 1000 less than mean accepted wages and the internal annual rate of return for attending college relative to graduating from high school is 32 for blacks and 17 for whites this paper investigates the properties of the joint distribution of the duration to the first post schooling full time job and of the accepted wage for that job within a search matching bargaining model it is a well established empirical regularity that hazard rates are decreasing with the duration of search unemployment it is also true for the data we use that the sample mean of the accepted wage associated with the first job is not increasing with duration these findings hold for both black and white male youth at all levels of schooling conditional on schooling however the time between leaving school and working at the first full time job is longer for blacks and their accepted mean wage is lower conditional on race the time between leaving school and working at the first full time job is shorter for those with higher levels of schooling and their accepted mean wage is higher interestingly blacks display a similar pattern of duration and accepted wages to whites who are one level of schooling below e g black high school graduates and white high school dropouts

ranking unemployment duration and wages it explores the implication of one central assumption when firms receive multiple acceptable applications they hire the worker who has been unemployed for the least amount of time this assumption ranking is contrasted with the assumption of random hiring no ranking by embodying this assumption in a model of the labour market with job creation destruction and matching the joint behaviour of unemployment the distribution of unemployment durations and wages are characterized the implication that the re employment prospects of employed workers were they to become unemployed are better than those of the currently unemployed appears to have been an important feature of european unemployment experience in the 1980 s this paper examines the effects of the composition of unemployment on wage determination it explores one central assumption when firms receive multiple acceptable applications they hire the worker who has been unemployed for the least amount of time we refer to this assumption as ranking and contrast it throughout to the assumption of random hiring or no ranking by embodying this assumption in a model of the labour market with job creation destruction and matching we characterize the joint behaviour of unemployment the distribution of unemployment durations and wages ranking has a number of important implications first in addition to the obvious result that the exit rate from unemployment is a decreasing function of duration we show that the effect of duration is stronger the higher the rate of unemployment second with the wage depending on the distributions of prospective unemployment durations the presence of long term unemployed per se has little effect on wages third looking at the relation between the wage and the aggregate level of unemployment and comparing ranking to the case of no ranking the wage moves less with the level of unemployment but more with the change in unemployment put simply ranking and no ranking models show exactly the same aggregate unemployment slightly different long run responses of wages to unemployment and sharply different wage dynamics the paper is organized as follows section i characterizes the matching process and derives a matching function based on an urn ball process with vacancies as urns and applications by unemployed workers as balls thus the distribution of applications per vacancy depends on aggregate unemployment and vacancies vacancies with at least one acceptable application are filled when a vacancy receives more than one acceptable application firms use a rule to choose among applicants thus the rule determines who is hired but does not affect the number of hires section ii uses this matching function in a model of the labour market with continual job creation and destruction and characterizes the equilibrium values of unemployment vacancies and hires

behavioural and material determinants of production relations in agriculture in this essay we develop a framework for analysing the major institutions governing the production and exchange of output and the primary factors of production in rural areas the analysis incorporates general considerations of risk and information constraints jointly with the principal material attributes of agriculture and of agricultural production factors the framework is used to analyse barriers to the existence of the major intertemporal and factor markets it is applied specifically to land scarce environments for which it provides an internally consistent explanation for many of the well documented institutional features of such settings in addition the analysis provides new implications for among other phenomena the inter relationships among ownership holdings operational scale family size and factor productivity for the scarcity of animal rental markets and use of animals as collateral for the renting out of land by small landowners and for the existence of plantations for certain crops

job separation in a non stationary search model a structural estimation to evaluate alternative unemployment insurance systems this paper considers a job search model in which the environment is not constant throughout the unemployment spell and where jobs do not last for ever in this situation reservation wages can be lower than they would be in a model without consideration of such separations but they can initially be higher precisely because of the non constant environment the model is estimated structurally by using spanish data for the period 1985 1996 the main finding is that after controlling for unobserved heterogeneity the unemployment hazard rate is almost flat during the first six months however after this duration the highly decreasing job offer arrival rate comes to be the only significant factor given that acceptance probabilities become equal to one the estimated parameters are used to evaluate different unemployment insurance designs we conclude that a non monotonic pattern in unemployment benefits joint with a tax paid by workers and based on unemployment duration makes this duration 13 2 lower than it currently is in spain copyright 2006 john wiley sons ltd

optimal unemployment insurance abstract we investigate the design of an optimal unemployment insurance program using an equilibrium search model calibrated using data from the reemployment bonus experiments there are three main conclusions first insurance considerations suggest that the potential duration of ul benefits would be unlimited under an optimal program second if the potential duration to benefits were unlimited current replacement rates in the u s about 0 5 would probably be about right third the optimal replacement rate rises as the potential duration of benefits is increasingly limited reaching 1 when the potential duration of benefits is limited to 32 weeks