do employees sickness absences react to a change in costs for firms evidence from a natural experiment we analyse the impact of a social security reform that changed the costs incurred by firms due to sickness absences the reform abolished a compulsory insurance for firms which insured them against the wages paid to sick blue collar workers during the first year after its introduction we estimate that the reform resulted in about 6 3 percent fewer sickness absences and in about 8 6 percent fewer absence days we do not find evidence for changes in hiring or firing and we find only limited workforce composition changes we do not find spillover effects on the absences of white collar workers robustness checks confirm these results

payment schemes and gender in germany the authors estimate the determinants of five types of variable payment schemes using panel data on german establishments in 1994 and 1996 women were disproportionately included in schemes based on individual productivity and on profit sharing but not in those based on work group productivity this pattern seems inconsistent with the claim that women are sorted due to their shorter expected tenure instead the authors argue the critical issue may be that women have a greater need for flexibility between work and home than men do collective bargaining coverage and other industrial relations variables are shown to be influential determinants interacting with gender

peer pressure and partnerships partnerships and profit sharing are often claimed to motivate workers by giving them a share of the pie but in organizations of any significant size the free rider effects would seem to choke off

information and the division of labour implications for the firm s choice of organisation this paper provides a partial analysis of the organizational problem that arises from decentralized information within the firm firm members possessing different decision relevant information can communicate in different ways leading to a taxonomy of organizational structures with different effectiveness and costs it is shown that with usual assumptions about the form of the payoff function and the stochastic nature of information the decision functions and the expected profit for different organizations have a simple linear form comprising a small number of information value parameters copyright 1995 by royal economic society

absenteeism as a mechanism for approaching an optimal labor market equilibrium an empirical study this research examines absence as a response to a non optimal labor market equilibrium its basic premise is that workers may be using absenteeism to move themselves closer to an optimal equilibrium in situations where due to greater than desiredwork hours the workers marginal rate of substitution of income for leisure mrs is less than the wage rate for the last hour worked this notion is tested for a sample of workers using tobit analysis with individual data from company records on absence and wages and an empirical measure of each worker s mrs the results indicate a significant positive relationship between absence and the difference between a worker s mrs and wage

debt dilution and sovereign default risk we measure the effects of debt dilution on sovereign default risk and study debt covenants that could mitigate these effects we calibrate a baseline model with endogenous debt duration and default risk in which debt can be diluted using data from spain we find that debt dilution accounts for 78 percent of the default risk in the baseline economy and that eliminating dilution increases the optimal duration of sovereign debt by almost 2 years eliminating dilution also increases consumption volatility but still produces welfare gains the debt covenants we study could help enforcing fiscal rules

market based price support program an alternative approach to large scale food procurement and distribution system abstract in most developing countries of the world large scale public food procurement and distribution systems pfds have become too expensive for the country governments to support from their own resources despite high financial and administrative costs of the programs the degree of seasonal price stabilization and price support achieved through the activities remain quite low using the bangladesh pfds as a case study this research indicates that considerable improvements in price support can be achieved by providing credit to the farmers immediately after the harvest if the government procurement is reduced by 50 per cent in bangladesh and providing 150 per cent of the cost of running pfds as credit bangladesh can improve the farmers income and achieve better stability of cereal prices at a cost less than one third of the current costs of the pfds

price dynamics in the bangladesh rice market implications for public intervention in this paper the price dynamics of a rice market are examined using dynamic programming techniques the model is parameterised to the case of bangladesh and thus represents the situation of a very poor country which has characteristically high price elasticity due to income effects and high storage and interest costs the incentives for private sector storage and its impact on price stability are examined various options for public intervention in the storage sector are also explored including price ceiling schemes and subsidisation of storage costs results show that interventions that remove private disincentives such as storage subsidies are much cheaper than direct intervention by government but the impact on the probability distribution of prices is quite different the effect of trade on the probability distribution of prices is also examined

absenteeism and wages abstract we show that for assembly line type production processes a worker s wage is a sharply decreasing function of his probability of being absent absenteeism causes firms to hire redundant workers we also define the marginal product of assembly line workers

does high involvement management improve worker wellbeing employees exposed to high involvement management him practices have higher subjective wellbeing fewer accidents but more short absence spells than like employees not exposed to him these results are robust to extensive work wage and sickness absence history controls we highlight the possibility of higher short term absence in the presence of him because it is more demanding than standard production and because multi skilled him workers cover for one another s short absences thus reducing the cost of replacement labour faced by the employer we find direct empirical support for this in accordance with the theoretical framework we find also that long term absences are independent of exposure to him which is consistent with long term absences entailing replacement labour costs and with short absences having a negative effect on longer absences

absenteeism efficiency wages and shirking we investigate the absence behaviour of workers when there is asymmetric information regarding worker health an individual s health is assumed to be private information to that individual and only observable to a third party at cost our aim is to complement the existing largely empirical studies of absence behaviour which have tended to treat the phenomenon exclusively as a labour supply decision on the part of workers cf allen 1981 barmby and treble 1991 barmby orme and treble 1991 and dunn and youngblood 1986 our approach is to draw out the interactive aspects of the employment relationship we assume that workers are ex ante uncertain as to their state of health and supply labour on the basis of an all or nothing utility maximising decision taken once a realisation of this state has been received utility is a function of income leisure and health and workers value leisure more the sicker they are firms are able to exert some control over individual behaviour by monitoring workers and threatening to fire shirkers that is workers absenting themselves with unacceptable sickness our model highlights an efficiency wage effect through which wages may be used as a method of absence control in particular the optimal response of the firm to an increase in the cost of monitoring is to discourage shirking by raising wages furthermore to the extent that

labor market distortions under sovereign debt default crises risk of sovereign debt default has frequently affected emerging market and developed economies such financial crisis are often accompanied with severe declines of employment that are hard to justify using a standard dynamic stochastic model in this paper i document that a labor wedge deteriorates substantially around swift reversals of current accounts or default episodes i propose and evaluate two different explanations for these movements by linking the wedges to changes in labor taxes and in the cost of working capital with these two features included a dynamic model of equilibrium default is able to replicate the behavior of the labor wedge observed in the data around financial crisis in the model higher interest rates are propagated into larger costs of hiring labor through the presence of working capital as an economy is hit with a stream of bad productivity shocks the incentives to default become stronger thus increasing the cost of debt this reduces firm demand for labor and generates a labor wedge a similar effect is obtained with a counter cyclical tax rate policy the model is used to shed light on the recent events of the euro area debt crisis and in particular of the greek default event

dissecting the cycle a methodological investigation following burns and mitchell we define the cycle as a pattern in the level of aggregate economic activity an algorithm to locate turning points is developed as is a new measure of pro cyclicality a link between turning points and the moments of the series is established thereby providing the statistical foundation that burns and mitchell s work lacked using these tools we are able to dissect cycles in terms of the contributions made by trend growth volatility serial correlation and non linear effects we dissect several models and find little evidence that certain non linear effects are important to the nature of business cycles

optimal fiscal and monetary policy in an economy without capital abstract this paper is concerned with the structure and time consistency of optimal fiscal and monetary policy in an economy without capital in a dynamic context optimal taxation means distributing tax distortions over time in a welfare maximizing way for a barter economy our main finding is that with debt commitments of sufficiently rich maturity structure an optimal policy if one exists is time consistent in a monetary economy the idea of optimal taxation must be broadened to include an inflation tax and we find that time consistency does not carry over an optimal inflation tax requires commitment by rules in a sense that has no counterpart in the dynamic theory of ordinary excise taxes the reason time consistency fails in a monetary economy is that nominal assets should from a welfare maximizing point of view always be taxed away via an immediate inflation in a kind of capital levy this emerges as a new possibility when money is introduced into an economy without capital

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

how effective are sovereign bond backed securities as a spillover prevention device abstract brunnermeier et al 2017 propose the introduction of sovereign bond backed securities sbbs in the euro area it and other papers address how the securitisation would insulate senior security holders from actual default related losses this article generalises the assessment by using the var based diebold yilmaz 2012 spillover index methodology to assess potential attenuation of the spillover of shocks in holding period returns across asset markets from the introduction of sbbs this is made possible by employing sbbs yields estimated from historical euro area member state sovereign bond yields using monte carlo methods as described in schonbucher 2003 the econometric results show that i sbbs tranching protects senior sbbs holders by reducing the spillover of shocks from the higher risk peripheral member states to it ii spillovers from high risk sovereigns to a weighted portfolio are much higher than those to the senior sbbs iii a smaller junior sbbs tranche reduces spillover from it to the senior sbbs and iv rolling window analysis indicates that the spillover of shocks from the junior tranche to the senior tranche declines during a period of financial stress

pay technology and the cost of worker absence i introduction the complexity of patterns of worker absence is well known but is yielding reluctantly to studies that use highly detailed information about individual workers and their work environments to date these studies have focussed on how specific contractual details affect worker absenteeism rates 1 in this paper we instead take an equilibrium perspective where we assume heterogeneous firms and heterogeneous workers participate in a competitive labor market by understanding why firms with different technologies may have different policies toward absenteeism we can begin to explain observed differences in absenteeism rates across workers and firms the empirical framework is based on coles and treble 1996 which considers an equilibrium assignment model with heterogeneous firms and workers the standard assignment framework 2 assumes that each filled job is characterized by one machine of quality q and one employee with skill level s a competitive equilibrium yields a wage schedule w and an assignment rule q where a worker of skill s is hired at wage w w s by a firm holding machine q q s coles and treble 1996 do not assume that workers are differently skilled instead workers have different propensities to go absent also instead of a one worker one machine production process firms utilize different production technologies some use an assembly line technology where output requires that a sufficient number of workers show up for work and others use a linear production technology in which there are constant marginal returns to labor for reasons that will become clear a competitive equilibrium yields a wage schedule and an assignment rule that depend on worker propensities to go absent specifically workers with a lower propensity to go absent earn a higher wage and are employed in firms using assembly line technologies the key insight is that firms who operate assembly line technologies have a different shadow cost of absenteeism from those which operate a linear technology as in weiss 1985 and coles and treble 1993 in the latter technology an absence by one particular worker does not affect the marginal productivity of other workers at the firm this is not true in an assembly line firm or in production functions where labor inputs are strict complements as in kremer 1993 coles and treble 1996 consider a market equilibrium in which workers are also heterogeneous say workers have different family responsibilities in this case a competitive labor market implies equilibrium sorting by firms and workers assembly line firms require a low level of absenteeism and pay a relatively high wage to compensate workers for attending work reliably we refer to this as the shadow cost of absenteeism workers who have a comparative advantage in attending work reliably say those who do not have to look after children when the children are sick take employment in assembly line firms and enjoy the wage premium attached to employment there we refer to this as the shadow price of absenteeism conversely those who appreciate greater flexibility in work attendance take employment in the linear technology firms and in equilibrium earn a lower average wage rate although absenteeism may be costly to firms observed absenteeism rates are not necessarily inefficient the worker who misses a day at work to look after sick children or enjoy a sports event is expressing a trade off between workplace production and home production where home productivity is perhaps subject to idiosyncratic shocks efficient contracting implies that firms and workers agree to an acceptable absenteeism rate and a compensating wage differential efficient sorting implies that those workers who can commit to attending work reliably accept employment in assembly line occupations and so earn a wage premium reflecting the shadow price of absenteeism our goal is to identify and measure this shadow price using a unique data set from france

corporate downsizing to rebuild team spirit how costly voting can foster cooperation we propose a new mechanism to achieve coordination through voting for which we discuss a number of real life applications among them the mechanism provides for a new theory for downsizing in organizations a crisis may lead to a decrease in the willingness to cooperate in an organization and therefore to a bad equilibrium a consensual downsizing episode may signal credibly that survivors are willing to cooperate and thus it may be optimal and efficiency enhancing for the individuals remaining in the organization as the empirical evidence suggests a variation of the same mechanism leads to efficient upsizing jel c70 d70 m50

decentralized borrowing and centralized default abstract in the past foreign borrowing by developing countries was comprised almost entirely of government borrowing however private firms and individuals in developing countries now borrow substantially from foreign lenders it is often asserted that this surge in private sector borrowing generates excessive borrowing and frequent sovereign defaults in developing countries this paper analyzes the impact of decentralized borrowing using a quantitative model in which private agents decide how much to borrow and the government decides whether to default relative to a model in which the government determines both the level of borrowing and whether to default decentralized borrowing drives up aggregate credit costs and sovereign default risk and reduces aggregate welfare interestingly decentralized borrowing may lead to either too much or too little debt in equilibrium depending on the severity of default penalties

absenteeism predictors least squares rank regression and model selection results this paper examines the determinants of absenteeism using ols rank based re gressions and a model selection procedure the results show that personal attributes are the most important determinants of long term absences for total working days lost the penalty factors are the most significant predictors the results also show that absenteeism tends to be lower among firms with more part time workers unionization on the other hand increases the total days lost due to absenteeism

domestic banks as lightning rods home bias and information during the eurozone crisis european banks have been criticized for holding excessive domestic government debt during the recent eurozone crisis which may have intensified the diabolic loop between sovereign and bank credit risks by using a novel bank level data set covering the entire timeline of the eurozone crisis i first reconfirm that the crisis led to the reallocation of sovereign debt from foreign to domestic banks in contrast to the recent literature focusing only on sovereign debt i show that the banks private sector exposures were at least equally affected by the rise in home bias consistent with this pattern i propose a new debt reallocation channel based on informational frictions and show that the informationally closer foreign banks increase their relative exposures when the sovereign risk rises the effect of informational closeness is economically meaningful and robust to the use of different information measures and controls for alternative channels of sovereign debt reallocation

social preferences and strategic uncertainty an experiment on markets and contracts this paper reports experimental evidence on a stylized labor market the experiment is designed as a sequence of three phases in the first two phases p1 and p2 agents face simple games which we use to estimate subjects social and reciprocity concerns together with their beliefs in the last phase p3 four principals who face four teams of two agents compete by offering agents a contract from a fixed menu then each agent selects one of the available contracts i e he chooses to work for a principal production is determined by the outcome of a simple effort game induced by the chosen contract we find that heterogeneous social preferences are significant determinants of choices in all phases of the experiment since the available contracts display a trade off between fairness and strategic uncertainty we observe that the latter is a much stronger determinant of choices for both principals and agents finally we also see that social preferences explain to a large extent matching between principals and agents since agents display a marked propensity to work for principals with similar social preferences

modeling spatial price transmission in the grain markets of ethiopia with an application of ardl approach to white teff following the agricultural market liberalization policy there is an emerging grain market structure in ethiopia in which the central wholesale market exhibits concentration of power and spatial integration with the local markets due to this it is hypothesized that the central wholesale market influences the long run price movements in the local markets the relationship can be modeled as spatial price equilibrium with the aim to guide subsequent policy decisions with regard to public intervention in the post liberalization period in this study we modeled the spatial equilibrium relationship between the producer and the wholesale prices of white teff a major staple in ethiopia using the autoregressive distributed lag modeling approach to cointegration analysis first the existence of a nonspurious long run relationship in levels between the producer prices in the local market and the wholesale prices in the central market is confirmed second the long run relationship and the error correction model for the producer price are estimated the results reveal that the wholesale price of white teff in the central consumer market is a major short and long run determinant of the producer price in the local supply markets therefore the institutional role of the government with the aim of improving producers marketing margin and the overall performance of the grain markets in the post liberalization period can be influenced through targeted interventions at the central wholesale market

public debt structure and liquidity provision abstract this study examines the optimal public debt structure when governments can issue multiple assets the state s fiscal capacity is uncertain public debt has a liquidity purpose for domestic investors and public debt markets are open to foreign investors the optimal policy is to tranch the risky fiscal capacity and then to issue state contingent assets that pay only when the need for aggregate liquidity in the economy is high in this way governments can minimize wasted liquidity of public assets unused returns on public assets not required by domestic investors this minimizes the cost of liquidity hoarding for the domestic private sector which increases investment and welfare in the economy this study also provides a framework to analyze relevant comparative statics regarding the ownership of state contingent public assets in particular the model assesses the effects of changes in the domestic liquidity needs the state s fiscal capacity and the foreign willingness to pay for public debt on the ownership of state contingent public assets

esbies safety in the tranches it is well known that rational bubbles can be sustained in balanced growth path of a deterministic economy when the return to capital r is equal to the growth rate g when there is a lack of stores of value bubbles can implement an e cient allocation this paper considers a world where r auctuates over time due to shocks to the marginal productivity of capital then bubbles further e ciency though they cannot implement orst best while bubbles can only be sustained when r g in a deterministic economy r g on average in a stochastic economy fiscal policy improves welfare by adding an extra asset where only the elderly contribute to shifting resources between investment and consumption in a bubbly economy oscal policy allows part of that burden to be shifted to the young contrary to common wisdom trade in bubbly assets implements intergenerational transfers while oscal policy implements intragenerational transfers hence while bubbles and oscal policy are perfect substitutes in the deterministic economy oscal policy dominates bubbles in a stochastic economy for plausible parameter values a higher degree of dynamic ine ciency should lead to a higher sovereign debt

the twin ds optimal default and devaluation a salient characteristic of sovereign defaults is that they are typically accompanied by large devaluations this paper presents new evidence of this empirical regularity known as the twin ds and proposes a model that rationalizes it as an optimal policy outcome the model combines limited enforcement of debt contracts and downward nominal wage rigidity under optimal policy default is shown to occur during con tractions the role of default is to free up resources for domestic absorption and the role of exchange rate devaluation is to lower the real value of wages thereby reducing involuntary unemployment

heterogeneous borrowers in quantitative models of sovereign default we extend the model used in recent quantitative studies of sovereign default allowing policymakers of different types to stochastically alternate in power we show that a default episode may be triggered by a change in the type of policymaker in office and that such a default is likely to occur only if there is enough political stability and if policymakers encounter poor economic conditions under high political stability political turnover enables the model to generate a weaker correlation between economic conditions and default decisions a higher and more volatile spread and lower borrowing levels after a default episode

internal debt crises and sovereign defaults internal and sovereign debt crises occur together and happen more frequently in economies with weak bankruptcy institutions this paper provides a novel explanation internal crises arise because of the inability to liquidate private debtors when many default in an optimal contract a successful entrepreneur repays yet an unsuccessful one defaults and liquidates his assets the bounds on liquidation generate however a second equilibrium where domestic borrowers default because others are also defaulting during these coordinated defaults tax collections fall which increases sovereign default risk in the model joint debt crises are an optimal response to informational problems in private sector lending

teams teamwork and absence we argue that firms with interdependent worker productivity team production have a higher cost of absence and as a consequence spend additional resources on monitoring absence as a result firms with team production should have lower absence rates we estimate the determinants of absence for blue collar workers using a sample of german manufacturing establishments workplace teams are used as a proxy for team production the estimates reveal that firms with teams have lower absence rates as do smaller establishments the size effect however is unique to establishments with teams which fits prior theoretical work that has not been previously tested

looking after number two competition cooperation and workplace interaction abstract we look for cooperation in a real world setting in which optometrists absent less frequently in two chair than one chair offices because of the externality such behavior imposes on their co worker we motivate our empirical analysis by developing a model of worker interdependence in which two workers can either compete or cooperate we show that relative to a single worker working in isolation competition unequivocally increases absence whilst cooperation may increase or decrease absence our empirical analysis of a unique data set finds explicit support for cooperative behavior

the sovereign bank diabolic loop and esbies we propose a simple model of the sovereign bank diabolic loop and establish four results first the diabolic loop can be avoided by restricting banks domestic sovereign exposures relative to their equity second equity requirements can be lowered if banks only hold senior domestic sovereign debt third such requirements shrink even further if banks only hold the senior tranche of an internationally diversified sovereign portfolio known as esbies in the euro area context finally esbies generate more safe assets than domestic debt tranching alone and insofar as the diabolic loop is defused the junior tranche generated by the securitization is itself risk free

negative monetary policy rates and systemic banks risk taking evidence from the euro area securities register we show that negative monetary policy rates induce systemic banks to reach for yield for identification we exploit the introduction of negative deposit rates by the european central bank in june 2014 and a novel securities register for the 26 largest euro area banking groups banks with more customer deposits are negatively affected by negative rates as they do not pass negative rates to retail customers in turn investing more in securities especially in those yielding higher returns effects are stronger for less capitalized banks private sector financial and nonfinancial securities and dollar denominated securities affected banks also take higher risk in loans