a theoretical analysis connecting conservative accounting to the cost of capital abstract we connect conservative accounting to the cost of capital by developing an accounting model within an asset pricing framework the model has three distinctive features 1 transaction cycle conformity where the book value equals the value of cash at the beginning and the end of a cash to cash transaction cycle 2 a revenue recognition principle where uncertainty affects the amount of revenues recognized 3 a matching principle where expenses are matched with revenue with a conservative bias due to uncertainty we demonstrate how the growth rate of expected earnings the accruals to cash ratio and the expected earnings yield relate to the expected stock return

a natural rate model of frictional and long term unemployment a simple labor market with spatial separation and markov production shocks is presented in the stationary equilibrium some workers are frictionally unemployed and others are long term unemployed the amounts of frictional and long term unemployment at each location depend on its recent history of productivity shocks producing a local hysteresis effect changes in the parameters affect the equilibrium aggregate amounts of frictional and long term unemployment differently in particular economies with larger moving costs will have more long term and total unemployment but less frictional unemployment this finding is broadly consistent with recently reported stylized facts

long term attachments and long run firm rates of return long term attachments between workers and firms are common numerous studies have examined worker returns to tenure but little is known of firm returns to firm worker matches yet these attachments represent a human capital asset quasi held by the firm which is not captured by traditional accounting measures of firm assets firms with large quasi holdings of human capital will have higher measured return on assets other things equal analysis of data on 250 large manufacturing firms supports the view that firms profit from long term attachments with their workers consequently unmeasured human capital assets contribute to the explanation of persistence in measured long run excess profits across firms

capital ideas from the past to the future modern finance theory modern portfolio theory neoclassical economics the ideas bestowed on us in 1952 1973 by the giants in our field are alive and well challenges to the efficient market theory the capital asset pricing model and mean variance efficiency have been raised but while recognizing that the assumptions of the theories do not hold up empirically we still lean on the ideas and develop them in new directions to say that this body of work is obsolete is to say that aristotle and euclid are obsolete

resolving the equity duration paradox the traditional dividend discount model ddm computes a theoretical price by blending the dividends from current and prospective businesses because these dividends are treated as an infinitely growing stream offixed payments the ddm leads to a high sensitivity to changes in the discount rate that is a long duration value for equities this ddm duration usually ranges from 20 to 50 years in sharp contrast with the rather short two to six year statistical durations actually observed

monetary conditions and international investing we examine the relationship between monetary conditions and global stock returns previous studies established that u s stock returns during expansive u s monetary periods are significantly higher than returns during restrictive periods we found that this pattern prevails in non u s markets furthermore the pattern exists relative to both local and u s monetary conditions by examining several investment strategies we show that investors could have improved portfolio performance in the period studied by using both u s and local monetary conditions to guide their portfolio allocations using monetary conditions to determine portfolio composition would have been consistently beneficial throughout the past 30 years

competitive advantage and collusive optima cost differences may often be important in real oligopolies if side payments are impossible the standard cartel objective total industry profits lacks plausibility when costs differ this essay considers plausible alternatives four different technologies for effecting collusion which are essentially identical when costs are equal define sets of possible profits axiomatic bargaining models are used to select unconstrained optima from among these possibilities simple functional forms are employed low cost firms with large shares in cournot equilibrium may have little to gain from collusion if collusion is effective low cost firms will have relatively low estimated conjectural variations

the distribution of unemployment spells canada 1978 82 this paper empirically examines entire distributions of unemployment spells according to a novel duration share approach based on decile shares and lorenz curves of unemployment the approach is applied to a canadian micro data source akin to the work experience surveys for the united states the major empirical findings are that long term unemployment accounts for a very substantial proportion of total weeks of unemployment despite the short duration of the average spell of unemployment the structure of unemployment spell distribution differs significantly by gender age education and region and significant cyclical effects on the distribution of unemployment spells are associated with the severe recession in 1982

the measurement of labor force dynamics with longitudinal data the labour market activity survey filter this article explores the measurement of labor force dynamics using longitudinal data focusing in particular on the canadian labour market activity survey lmas which represents a potential advance in longitudinal data collection because it measures aspects of dynamics not available in existing panel data such as the panel study of income dynamics and the national longitudinal survey we examine the implications of the lmas questionnaire structure the lmas filter for the study of labor market dynamics and undertake simulations to provide a quantitative assessment of the importance of this filter for labor force spells and transitions between labor force states

modelling price competition across many markets an application to the spanish loans market abstract the purpose of this work is the structural modelling of price competition in a product differentiated industry in which many firms of varying size compete across many independent small markets with the target of identifying price behaviour we apply it to model competition among the more than 79 banks that were active in the spanish loans market during the period 1983 1991 using micropanel data a model in which national banks as opposed to regional and local banks fully internalize their cross rate effects in pricing is selected as the model that best fits the data our framework allows us to estimate the dead weight loss due to market power and to decompose it assessing the part attributable to price coordination

an empirical oligopoly model of a regulated market abstract we model a three firm oligopoly the spanish fertilizer industry from 1976 to 1988 which was subject to price regulation in the form of price ceilings a theoretical and econometric model is developed in order to identify simultaneously the behaviour of the firms and the degree to which regulation constrained the price the collusive market sharing arrangements involving asymmetric firms and the less collusive outcomes of cournot and stackelberg together with their constrained counterparts are considered as particular behavioural hypotheses the estimation of an aggregated and a disaggregated version of the model by general method of moments techniques leads us to identify the regulation constrained stackelberg equilibrium as the most likely outcome given the observed data

the source of the new canadian job stability patterns this paper explores the causes of the recent change in the canadian job stability patterns using the labour force survey master files 1977 2008 i find that what was previously seen as a cyclical increase in job stability is actually a secular change results indicate that the ageing of the workforce the increased educational attainment and the increased labour force attachment of women play important roles in explaining the aggregate job stability patterns that emerge for education the declining importance of low educated workers is the key and not the rising importance of workers with university degrees with respect to gender the evidence points towards a cohortbased explanation surprisingly the changing industry structure has little explanatory powers finally only the rising educational attainment matters for newer jobs leaving a large part of the increase still unexplained

job matching and women s wage tenure profile recently researchers have challenged the validity of the dominant theories of wage growth claiming that the observed positive relation between wages and tenture is an artefact of omitted job match quality in sharp contrast to the human capital theory job match theory implies that women s wages are not directly affected by their discontinuous labour force participation using samples of women workers from three data sets the authors estimate structural models of the wage tenure relation which control directly for job match quality and find evidence of a strong positive relation between wages and tenture

the dynamics of job separation the case of federal employees summary in this paper we develop a model of workers quit decisions using panel data on a sample of us federal government employees we use maximum likelihood techniques to determine how much of the observed decline in quits with job tenure is a result of declining individual quit propensities state dependence rather than dynamic sample self selection heterogeneity the latter is found to be much more important than the former the effects of relative federal government wages and other variables on quits are also estimated the results are useful for analysing federal compensation policies

worker effort decisions and efficient gender specific wage tenure profiles i introduction during the past thirty years women have increased their labor force participation female labor market intermittency has decreased and women s total labor market experience and years of tenure with the current employer have increased what these trends imply about the evolution of the gender gap in wages depends in part on gender differences in returns to tenure it is therefore surprising that economists have all but ignored the empirical finding that women have higher returns to tenure than do men over a significant portion of their working lives one reason why this finding has been ignored or treated as an anomaly may be the lack of theoretical constructs which predict an inverse gender gap in returns to tenure several labor market models predict that women should have lower returns to tenure than men human capital theory offers the most frequently cited explanation of flatter earnings profiles for female workers according to human capital theory gains from specialization and exchange lead to one household member specializing in home production and the other in market work since only women bear children historically the outcome of the exchange has been that women have specialized in home production indeed all surveys of time use indicate that women spend on average two to three times as long on housework as men as a consequence of this allocation women anticipate intermittent labor force participation and fewer years overall in the labor force than men this pattern too is borne out in national surveys which invariably find shorter average tenure and fewer total years of labor market experience for women than for men women typically have shorter completed job spells as well hall 1982 table 5 presents evidence that the gender gap in completed job duration is quite large he estimates that 63 8 percent of men but only 49 6 percent of women hold jobs with eventual tenure of at least five years with 37 3 and 15 1 percent of men and women respectively holding jobs with eventual tenure of at least twenty years because of the greater intermittency and shorter anticipated work history for women than men women will find it optimal to acquire less human capital than men 1 lesser quantities of general human capital tends to flatten both the observed earnings experience profile and the observed earnings tenure profile two factors contribute to this pattern first skills deteriorate during periods out of the labor market as in mincer and polachek 1974 which flattens the earnings experience profile for women relative to men second women anticipating discontinuous work histories select into occupations with flatter earnings profiles to minimize the penalty to labor force withdrawals as in polachek 1981 the effects of firm specific human capital on gender differences in wage tenure profiles vary across models for example kuhn 1993 constructs an elegant game theoretic model of gender differences in training and wages if women have a higher exogenous exit rate than men in equilibrium they will be placed in jobs with lower levels of firm specific training with a positive relation between training and productivity and a common share rate of the costs and benefits of specific training for men and women the wage tenure profiles of men will be steeper than those for women in contrast becker and lindsay 1994 argue that firm specific human capital leads to higher returns to tenure for women than men becker and lindsay assume that men and women have the same level of firm specific training however women have greater variance in their opportunity cost of remaining with a firm and so are more likely than men to separate inefficiently by giving women a greater share of both the costs and benefits of firm specific human capital through a steeper wage tenure profile firms reduce undesirable turnover although human capital arguments dominate the literature on gender differences in the labor market other models of wage growth predict flatter wage tenure profiles for women

a note on the measurement of equity duration and convexity the appropriate measure of equity duration and by extension convexity is a controversial matter in 1986 leibowitz presented empirical duration measures that are considerably shorter than those derived from a traditional dividend discount model a class of dividend discount models developed by hurley and johnson is used to try to reconcile the difference the values derived for equity duration are intermediate between the leibowitz and traditional measures these models overcome the standard criticism of dividend discount models by allowing for realistic patterns of future dividend growth corresponding models of equity convexity developed by johnson are used to derive equity convexity

stock interest rate risk and inflation shocks abstract in this paper we proceed to estimate a measure of the flow through capability of the firms listed on the spanish stock exchange the flow through capability is defined as the ability of firms to transmit inflation shocks to the prices of the products and services sold by the company according to a strand of the literature this flow through capability can to some extent explain the so called stock duration paradox which is the difference between the theoretical stock duration derived from the ddm model and its empirical estimates the line of reasoning suggests that if a company can pass on inflation shocks to the prices of its own outputs and then to profits and dividends nominal interest rate changes due to variations in the expected inflation will have a limited impact on stock prices so in this paper we first estimate the flow through capability for different industries and find great differences among them then we analyse the link between flow through capability and stock duration and find a significant negative relationship between them as claimed by part of the literature

a dynamic analysis of educational attainment occupational choices and job search this article examines career choices using a dynamic structural model that nests a job search model within a human capital model of occupational and educational choices wage growth occurs in the model because workers move between firms and occupations as they search for suitable job matches and because workers endogenously accumulate firm and occupation specific human capital simulations performed using the estimated model reveal that both self selection in occupational choices and mobility between firms account for a much larger share of total earnings and utility than the combined effects of firm and occupation specific human capital

on reputation a microfoundation of contract enforcement and price rigidity we study the impact of reputational incentives in markets characterised by moral hazard problems social preferences have been shown to enhance contract enforcement in these markets while at the same time generating considerable wage and price rigidity reputation powerfully amplifies the positive effects of social preferences on contract enforcement by increasing contract efficiency substantially this effect is however associated with a considerable bilateralisation of market interactions suggesting that it may aggravate price rigidities surprisingly reputation in fact weakens the wage and price rigidities arising from social preferences thus in markets characterised by moral hazard reputational incentives unambiguously increase mutually beneficial exchanges reduce rents and render markets more responsive to supply and demand shocks

a total differential approach to equity duration most of the risk associated with fixed income price movements is accounted for by their duration that is their sensitivity to changes in the discount rate thus for bonds duration and interest rate sensitivity are virtually synonymous for equities however duration is only one of several factors describing risk a major source of confusion in evaluating equity duration is the definition of duration itself measured as a function of the sensitivity of stock price to the discount rate ignoring all links between the discount rate and the growth rate the traditional dividend discount model ddm duration is long 20 years or more but this measure of duration fails to take into account the offsetting effects of inflation induced rate increases on corporate profits a measure of the total sensitivity of stock prices to interest rate movements recognizes that the two components of nominal interest rates inflation and the real rate affect both the equity discount rate and the equity earnings growth rate but not necessarily in the same direction the stock market as a whole is less sensitive to changes in inflation expectations than to changes in real rates because most companies can raise prices hence nominal growth rates in times of inflation thus a measure of stock price total sensitivity to interest rates will generally be substantially shorter than the duration measure derived from the traditional ddm

the importance of lifetime jobs differences between union and nonunion workers the authors use cps micro data to derive estimates of retention rates and eventual lifetime tenure probabilities for union and nonunion workers although both groups enjoy a considerable degree of

spread driven dividend discount models a key determinant of shareholder value is the franchise spread the company s incremental return on new investments over the cost of capital explicitly incorporating this spread into the valuation process paves the way for a more compact two parameter formulation of the standard three parameter dividend discount model this transformation leads to a number of interesting implications in particular the spread driven representation of the ddm 1 clarifies the role of growth driven roes versus the role of spread driven roes 2 facilitates the development of two phase models that reflect a typical company s earnings pattern 3 shows how earnings growth and franchise spreads can underpin a wide range of p e levels 4 addresses the problem of artificially high p es being forced by low estimates for the risk premium and or the inflation rate 5 provides a useful expression for the growth rate of shareholder value and 6 under certain stability conditions leads to a pro forma equity duration that i

total portfolio duration a new perspective on asset allocation the concept of duration has proved to be a valuable tool for gauging the sensitivity of a bond portfolio to movements in interest rates by balancing the duration of a fixed income portfolio against the duration of the stream of liabilities it is funding one creates a portfolio that is immunized against interest rate changes but what if the portfolio contains stocks as well as bonds the interest rate risk of an equity portfolio can be estimated from a measure of the correlation between stock and bonds by using variance parameters routinely used in conventional asset allocation procedures the correlation is used in conjunction with a measure of bond market duration to derive an estimate of the duration of the stock market these durations together with a portfolio s allocations to stocks and bonds and the beta of the stock component may be used to obtain a measure of total portfolio duration what the duration measure tells us in general is that a total portfolio s sensitivity to interest rate mo

multimarket contact and collusive behavior traditional analyses of industrial behavior typically link the exercise of market power in an industry to internalfeatures such as demand conditions concentration and barriers to entry nevertheless some economists have remained concerned that external factors such as contact across markets may also play a significant role in determining the level of competitiveness in any particular industry in this article we examine the effect of multimarket contact on the degree of cooperation that firms can sustain in settings of repeated competition we isolate conditions under which multimarket contact facilitates collusion and show that these collusive gains are achieved through modes of behavior that have been identified in previous empirical studies of multimarketfirms

the aggregate effects of sectoral reallocations abstract can a one time permanent change in the fundamentals behind the sectoral composition of the economy prompt an aggregate downturn can this downturn be non negligible even if one uses us data to determine the relative size of gross vs net job flows and the importance of job creation costs can one consider the military build down of the 1990s as a plausible cause for the 1990 1991 recession do sectoral reallocations generate responses that are qualitatively similar to productivity shocks we use a variant of the mortensen pissarides 1994 review of economic studies 61 397 415 job creation destruction model calibrate it to us labor market data and run experiments that suggest one can answer yes to all these questions

more on monetary policy and stock price returns recent research suggests a persistent empirical relation between u s monetary policy and stock returns since the mid 1980s the findings seem questionable and incomplete however for at least three reasons first the results are sensitive to sample selection second this research does not distinguish between anticipated and unanticipated monetary policy decisions third such analysis does not satisfactorily consider that returns and policy are probably determined simultaneously because prices contain information about market expectations for the economy and in turn policy together these issues suggest that investors are unlikely to profit from strategies based on past or anticipated federal reserve decisions

is job stability declining in germany evidence from count data models the macro evidence of increased adjustment pressure since the early 1970s suggests that job mobility should have increased hence retrospective and spell data from the german socio economic panel are combined in order to test the hypothesis that job stability for german workers declined between 1974 and 1994 using count data regression models in which we control for labour market experience various demographic factors and occupation we find that job stability did not decrease but if anything increased between 1974 and 1994 our finding suggests that labour market inflexibility is an important factor in explaining the european unemployment problem

p es and pension funding ratios some evidence supports the intriguing conjecture that p es in the u s market may decline in times of both significantly lower as well as significantly higher real interest rates the p e response pattern would then resemble a tent that angles downward at both ends for pension liabilities defined in real terms very low real rates would then lead to a clifflike falloff in the funding ratio from the decline in equity valuations combined with surging liability costs this article explores the risk implications of such a low rate scenario and the equity valuations that could give rise to such a tent pattern

alpha hunters and beta grazers the search for incremental returns alphas in current parlance has become the holy grail of active investment this article begins by drawing a distinction between two broad classes of alphas 1 allocation alphas that are broadly available on a non zero sum basis by moving the strategic portfolio toward a more balanced return risk structure and 2 truly active skill based return enhancements derived from opportunistic inefficiencies inefficiencies can be hard to discern and even harder to exploit which may help explain both why some investors are able to consistently produce positive alpha and also why they are so few in number

dual factor price equalization elements of a theory abstract the article hypothesizes that despite wide differences in wages and incomes between the developed and the developing countries world wide factor price equalization is taking place once the factors of production are correctly identified in particular the developed country s counterparts to the informal sector workers in a developing country are its low skilled service sector workers and unemployed factor price equalization is largely taking place by the creation of dual economies in the developed countries rather than by their eradication in the developing countries while institutional forces are slowing down this equilibrating process strong economic and political forces such as so called thatcherism and reaganomics are threatening these same institutions some preliminary evidence is given in favor of the theory

regulation and industrial organization this paper examines the effects on firm behavior and industry structure of industry wide price regulation by the state such regulation wherein regulators set prices with regard to an industry wide aggregate performance measure has been and still is widely used and is shown to induce inefficiencies in firm operation in general such regulation can result in setting prices high enough to maintain inefficient firms and it encourages to inefficient firm operation due to incentives to inflate costs and averch johnson effects

the importance of lifetime jobs in the u s economy though the u s labor market is justly notorious for high turnover and consequent high unemployment it also provides stable near lifetime employment to an important fraction of the labor force this paper investigates patterns of job duration by age race and sex with the following major conclusions 1 the typical worker today is holding a job which has lasted or will last about eight years over a quarter of all workers are holding jobs which will last twenty years or more sixty percent hold jobs which will last five years or more 2 the jobs held by middle aged workers with more than ten years of tenure are extremely stable over the span of a decade only twenty to thirty percent come to an end 3 among workers aged thirty and above about forty percent are currently working in jobs which eventually will last twenty years or more three quarters are in jobs which will last five years or more 4 the duration of employment among blacks is just as long as among whites even though the jobs held by blacks are worse in almost every other dimension they are no more unstable than those held by whites 5 women s jobs are substantially shorter than men s on the average only about a quarter of all women over the age of thirty are employed in jobs which will last over twenty years whereas over half of men over thirty are holding these near lifetime jobs this abstract was borrowed from another version of this item

incentive compatible long term contracts and job rationing this article presents a model in which markets for long term contractual employment coexist with spot markets for labor assuming the absence of third party enforcement wage contracts are required to be incentive compatible as a consequence contract wages yield higher expected utility to the worker than spot market wages so that in equilibrium contractual long term jobs are rationed

employer size and labor turnover the role of pensions the well documented lower labor turnover in large firms than in smaller firms has been cited as evidence that large firms pay workers above their opportunity wage this study investigates whether t

accounting for unemployment a labour market perspective i examine whether prolonged high unemployment in canada can be attributed to various structural causes rather than to demand deficiency as found by macro econometric models the answer is largely negative neither the dispersion of sectoral growth rates nor excessive and rigid real wages can convincingly account for most unemployment contentions to the contrary are based upon inappropriately partial analyses enduring shifts in industrial structure have if anything been declining labour mobility is high much unemployment lasts too long to be frictional fuller quantitative understanding of the nature of unemployment can be achieved only in a more general framework

sex segregation and sectors an analysis of gender differences in returns from employer changes sweet james 1973 women in the labor force new york seminar press vanek joann 1974 time spent in housework scientific american 231 116 20 1980 household work wage work and sexual equality pp 275 91 in sarah f berk ed women and household labor beverly hills ca sage walker k and m woods 1976 time use a measure of household production of family goods and services washington d c american home economics association

the evolution of job stability in canada trends and comparisons with u s results using data from the 1976 2001 canadian labour force survey we examine the stability of currently held jobs and find no period long drop in job stability however job stability declined across the 1980s and rose across the 1990s for workers with less than one year of tenure when 1987 and 1995 are compared it can be seen that job stability was steady in canada but fell slightly in the united states with the difference concentrated among medium tenured workers we suggest that this difference was due to a slower recovery in canada in the 1990s which caused canadian workers to be less mobile jel classification j63 l evolution de la stabilite des emplois au canada tendances et comparaisons avec les resultats aux etats unis en utilisant les donnees de l enquete sur la population active pour la periode de 1976 a 2001 l auteur examine la stabilite des emplois detenus pour le moment et trouve qu il n y a pas eu de chute de la stabilite des emplois en longue periode cependant la stabilite des emplois a chute dans les annees 1980 et cru dans les annees 1990 pour les travailleurs qui detenaient leur emploi depuis moins d un an si l on compare 1987 et 1995 la stabilite des emplois se maintient au canada mais chute un peu aux etats unis la difference est concentree dans le groupe de travailleurs qui ne detenaient leur emploi que depuis une periode moyennement longue on suggere que les differences entre les deux pays sont attribuables a une reprise economique plus lente au canada dans les annees 1990 qui aurait rendu les travailleurs canadiens moins mobiles

duration and concentration of unemployment this paper examines labour market turnover as a determinant of unemployment in canada the distribution of completed spells of unemployment is generated from gross flow data by using hazard functions unemployment is found to be more concentrated in long spells than can be expected under markov processes difficulties in access to jobs are also revealed in a high proportion of unemployment spells not ending in jobs but in withdrawals from the labour force the incidence of multiple spells of unemployment is also high on balance the characterization of unemployment and the policy conclusions differ markedly from those emphasized by the turnover literature duree et concentration du ch6mage ce memoire examine le roulement sur le marche du travail comme une force determinante du ch6mage au canada la distribution de la longueur des periodes de ch6mage est etablie a partir des donnees brutes par le moyen de fonctions de risque on trouve que le chomage a tendance a se concentrer bien davantage en periodes plus longues que ne le suggererait un modele markovien le serieux des difficultes que les travailleurs ont a se donner acces a un emploi est revele par la proportion des periodes de ch6mage qui se termine non pas par un emploi mais par un retrait de la main d oeuvre active l incidence de plusieurs periodes de chomage est tres forte d un facon generale les diagnostics et les politiques recommendees par la litterature specialisee qui met l accent sur le roulement sur le marche du travail comme force determinante ne semblent pas etre supportes par les resultats des auteurs

employment tenure job expectancy and earnings profile in japan the purpose of this study is to examine the relationships between employment tenure and earnings profile in japan since the japanese labour market has recently experienced substantial changes it is natural for the japanese employment and compensation system to be influenced by such changes in this study the changes that have happened to the japanese employment and compensation system in recent years have been considered empirically by focusing on the relationships between employment tenure and earnings profiles to do this a forward looking variable called expected job tenure or job expectancy is introduced and the effects of it on earnings profile

is fed policy still relevant for investors thirty eight years of u s data indicate that u s monetary policy continues to have a strong relationship with security returns u s stock returns are consistently higher and less volatile when the federal reserve is following an expansive monetary policy furthermore the monetary policy related return patterns of companies considered to be most sensitive to changes in monetary conditions are much more pronounced than average patterns finally the influence of u s monetary policy is global international indexes have return patterns similar to those for the u s market overall the evidence suggests that investment professionals should continue to consider monetary conditions when performing fundamental analysis of u s and international securities

job tenure and job mobility in britain using work history data from the british household panel survey the authors examine job mobility and job tenure over the period 1915 90 british men and women held an average of five jobs over the course of their work lives and half of all lifetime job changes occurred in the first ten years separation hazards were higher for more recent cohorts implying an increase in job instability as jobs accumulated average tenure lengthened but the proportion of involuntary separations increased for both men and women the rise in job instability was particularly marked in the lowest occupational classification in general job insecurity was greater for men than women

the cost of business cycles and the stabilization value of unemployment insurance this paper o ers a new perspective on why labor market policies aimed at reducing the cost of business cycles may be warranted and how such policies can be designed in order to improve welfare to this end we develop a quantitative dynamic equilibrium model to illustrate how the contractual structure of the labor market may hide signi cant undiversi ed wage risk induced by aggregate uctuations the environment analyzed is such that the only imperfectly diversi ed risk workers bear is the risk of losing their job when the market for new contracts is depressed when we t the model to replicate the amount of wage variation estimated from micro data we obtain estimates of the potential value of stabilization policies that are substantially larger than those found in the literature we use this framework to examine several policy issues and in particular to show why state contingent unemployment insurance may dominate non contingent unemployment insurance schemes 2001 elsevier science b v all rights reserved jel classixcation e32 j41

pensions bonding and lifetime jobs a well known if underappreciated finding in the mobility literature is that turnover is much lower in jobs covered by pensions than in other jobs this could result from capital losses for job changes created by most benefit formulas the tendency of turnover prone individuals to avoid jobs covered by pensions or higher overall compensation levels in such jobs a switching bivariate probit model of pension coverage and turnover is developed to estimate the effect of each of these factors the results show that capital losses are the main factor responsible for lower turnover in jobs covered by pensions but self selection and compensation levels also play an important role this is the first direct evidence that bonding is important for understanding long term employment relationships

long term wage fluctuations with industry specific human capital exploiting long term interindustry demand shifts this article provides evidence that 1 industry level wages do not respond to industry demand conditions 2 at the industry level the employment of young workers responds more to demand shifts than does the employment of experienced workers and 3 the postdisplacement wages of displaced workers are strongly affected by demand in their predisplacement industries these findings are consistent with a model in which worker s investments in industry specific skills pose a barrier to interindustry labor mobility and wages do not respond to spot labor market conditions

testing for short termism in the uk stock market a comment in the november i 993 issue of thisjournal david miles estimates and tests for the presence of short termism in the united kingdom using data from i980 to i988 based on a sample of 477 non financial firms he modestly declines to claim that he has detected the presence of shorttermism but concludes that those who believe it does not exist do need to explain something about the operation of security markets which makes longerterm cash flow appear to be discounted at much higher rates than shorter term flows the purpose of this note is to provide a model which gives such an explanation we shall also show that such a model is consistent with the empirical realities of the early i980s j we believe that the miles paper has two serious defects the first is the assumption that the risk premia per unit time varies across firms but is constant through time over under discounting is then detected relative to this base to quote miles

unemployment dynamics and labour market tightness an empirical evaluation of matching function models the implications of matching function models for the relationship between labour market tightness and the transition probability into employment are summarized these implications are then tested using monthly data for three canadian provinces british columbia ontario and quebec testing methods use flexible regression techniques so as to reduce the effect of any extraneous restrictions the results show rough concordance between theoretical assumptions and empirical facts evidence of non linearity in the estimated relationships favours a search theoretic model of labour markets over one based on queues and some quantitative results offer guidance to those using calibrated search models in theoretical analysis

the role of off the job vs on the job training for the mobility of women workers the transition from school to work is typically a period in which many young workers experience a wide range of different jobs and experience some of their most rapid wage growth over their working life robert hall 1982 has estimated that the first 10 years of an individual s working career will include approximately two thirds of all lifetime job changes robert topel and michael ward 1988 found that over half of young male new entrants held six or more jobs over the first 10 years of their work experience only one young male worker in twenty held a single job for 10 years in their sample all of this suggests that young workers early years in the labor market involve several employment transitions the purpose of this paper is to examine for young workers in their first years of work the determinants of leaving an employer in particular this paper focuses on the role of different types of training on the probability of leaving an employer in previous work 1990 i have examined the impact of private sector training on the determination of wages and wage growth of young workers and reached the following conclusions first formal company provided onthe job training on jt appears to be highly firm specific in the united states and therefore is not portable from employer to employer company provided training raises wages in the current job but has no effect on the wages earned in subsequent employment second formal off the job training off jt received from for profit proprietary institutions has little effect on the wages earned on the current job but it does raise the expected wage in subsequent employment finally there are important differences by race gender and education level in the probability of receiving different types of formal training and in the impact this training has on wages and wage growth these findings have several implications for the impact of training on mobility one implication is that if company provided training is primarily firm specific then the probability of leaving an employer should decline if a young worker has experienced some on jt an additional implication is that if a worker participates in an off jt program it appears that the worker should be more likely to leave the current employer in this case off jt allows a young worker to change career paths and find a better match using data from the national longitudinal survey youth nlsy cohort this paper examines in detail the factors that influence the probability of new entrants leaving their first job including the differential effects of company provided training apprenticeships and training from for profit proprietary institutions

the impact of the threat of bankruptcy on the structure of compensation this article builds and tests a model of the impact of a firm s bank ruptcy probability on its propensity to offer deferred compensation schemes using 1983 current population survey data we find that ceteris paribus lower failure rates raise the incidence of pensions for nonunion workers outside manufacturing further we find some evidence that among those workers with a pension a higher industry failure rate steepens tenure earnings profiles jointly controlling for union nonunion and pension no pension selectivity such a result suggests that workers discount implicit promises of future earnings increases by the likelihood that the firm will not survive