employment adjustment versus hours adjustment is job security desirable firms can adjust to shocks by laying off and hiring workers or by adjusting the hours worked by each worker adjustment of hours provides job security for employed workers adjustment of employment generates higher labor market turnover and thus better job prospects for the unemployed since high turnover lowers the expected cost of being laid off by reducing the expected duration of unemployment there is a strategic complementarity between firms in the provision of job security this gives the possibility of multiple equilibria with different amounts of turnover copyright 1995 by the london school of economics and political science

involuntary unemployment in economies with efficient risk sharing abstract we study economies where employment lotteries determine random layoffs and incomes for employed and unemployed agents allocate risk efficiently we ask for which specifications are unemployed agents worse off a situation we call involuntary unemployment we show unemployed agents are worse off iff an exogenous increase in wealth decreases aggregate unemployment in a monetary economy we show that in equilibrium the unemployed are worse off iff high inflation implies high unemployment our model also generates nominal wage stickiness as an equilibrium phenomenon but neither involuntary unemployment nor nominal stickiness implies these economies are operating inefficiently or are out of equilibrium

underemployment and normal leisure abstract a combined worksharing layoff wage severance pay contract is shown to imply inter alia that normal leisure and underemployment do coexist provided the elasticity of substitution between employment and hours is sufficiently low as defined rigorously in the text

aspects of labor market adjustments in japan this article discusses some aspects of labor market adjustments in japan that may be relevant to the low unemployment rate there japanese statistics treat kyugyosha persons not at work as being employed but some of these workers would be counted as unemployed in the united states the kyugyosha group appears to increase in size during downturns and decreases during upturns suggesting that temporarily laid off persons are an important part of this group japanese employers evidently rely less on employment adjustments and more on adjustments in hours of work and inventory while employers in the united states rely more on employment adjustments to deal with cyclical changes in product demand japanese manufacturing employment became less sensitive and hours of work more sensitive to demand shocks after the introduction of the employment insurance law in 1975

an investigation of the determinants of manufacturing employment in the united kingdom in this paper we present and estimate an adjustment cost model of industry employment which takes explicit account of both expectations and aggregation over different labour types the resulting model is subject to a large number of tests and is a highly robust representation of the data finally forecasts are produced for manufacturing employment up to 1990

valuing school quality using boundary discontinuities abstract existing research shows that house prices respond to local school quality as measured by average test scores however higher test scores could signal higher academic value added or higher ability more sought after intakes in our research we show that both school value added and student prior achievement linked to the background of children in schools affect households demand for education in order to identify these effects we improve the boundary discontinuity regression methodology by matching identical properties across admissions authority boundaries by allowing for boundary effects and spatial trends by re weighting our data towards transactions that are closest to district boundaries by eliminating boundaries that coincide with major geographical features and by submitting our estimates to a number of novel falsification tests our results survive this battery of tests and show that a one standard deviation change in either school average value added or prior achievement raises prices by around 3

purchasing power parity a quantitative reassessment of the 1920s experience abstract the purpose of this paper is to test the hypothesis of purchasing power parity the basic methodology is to start by estimating a general distributed lag equation relating the excchangr rate to its own past and to current and past relative price levels successively more restricted version are then proposed and tested against the general model two interesting facts come out of this one is that the proportionality restrictin is not supported by the data and the other is that all the models estimated by frenkel 1978 are rejected in favor of less restricted models

the effect of discrimination and of industry segmentation on japanese wage differentials in relation to education abstract the paper investigates japanese wage differentials based on the concept of industrial division the labor market is examined for two sectors separately namely competitive sectors and non competitive sectors the effects of female male difference of human capital and of occupation also are examined and the cost of discrimination is estimated by applying several quantitative methods it was found that worker characteristics such as education length of service and age were treated differently by sector sex and occupation also wage differentials by sex were mostly rooted in differential treatment of worker characteristics while wage differentials by sector were explained largely by firm size component the above general results however are greatly modified by workers occupations and industrial divisions

enterprise unionism the japanese system at work trade unions japanese unions at work the japanese labour market has worked quite well over recent decades whereas the european economies have produced more and more unemployment a popular hypothesis is that this difference can be attributed to unions while in europe unions are strong and centralized and do not care about the individual firm the japanese unions are enterprise unions which deal directly with and understand the heal management employers in japan in turn consult unions and employees on all relevant management decisions this corporatism finally ensures that workers are more motivated and have a higher productivity it is the central conjecture of this paper that the presence of unions increases the voice of the employees significantly by using innovative new firm data it is shown that this is actually the case hence japanese enterprise unions are not harmful but foster information sharing and contribute to the performance of the enterprise toshiaki tachibanaki and tomohiko noda

why u s wage and employment behavior differs from that in britain and japan if a poll were to be conducted among american academic economists to select the most mystifying economic phenomenon of our time surely the sticky nominal wage rate would emerge at or near the top of the list the slow and partial response of the nominal wage rate to changes in aggregate nominal spending has been a central postulate of macroeconomic theory for the past 45 years from keynes general theory down to the standard postwar textbook keynesian paradigm to the more modern fixed wage price models of robert barro and herschel grossman i976 and edmond malinvaud i977 unwilling passively to accept nominal wage rigidity as an unexplained assumption many labour market theorists have followed the lead of costas azariadis i975 and martin baily i974 in building models to explain rigid wages and layoff unemployment as the rational outcome of a profit maximising calculus as i pointed out in an early critique of the azariadis baily model i976a their assumptions cannot explain cycles in employment but rather why workers would want fixed incomes i e a fixed wage rate and fixed employment soon thereafter barro i977 went one step further and argued that contract theory is a facade which cannot explain why workers would choose a rigid wage and variable employment in preference to the classical equilibrium quantity of employment that equates the marginal product of labour with the marginal value of time now an examination of the evidence has led me to the realisation that rigid wages cannot provide the underpinnings for a universally valid theory of the business cycle simply because wages are not universally rigid i document below with postwar quarterly data that the share of fluctuations in the manufacturing wage bill taking the form of nominal wage changes as compared to changes in hours worked is five to ten times greater in britain and japan than in

structural adjustment and the japanese textile industry a production theory approach the production theory approach for modelling trade in intermediate goods is applied to dervie export supply and import demand functions for the japanese textile industry the estimated elasticities provide insight into the process of internal adjustment and structural change reflected in the declining international competitiveness of the japanese textile sector estimation issues related to endogeneity tests and the concavity restictions implied by economic theory are highlighted in the econometric results estimated trade balance adjustments are derived from the parameter estimates of the export supply and import demand functionf for the japanese textile sector

trends in unemployment wages and productivity the case of japan along with the high savings ratio the functioning of the labour market is one of the most important factors behind the macroeconomic performance of the postwar japan which foreign observers have christened the miracle of the rising sun in the first place the nature of the japanese labour market is important for the long run trend of japanese economic growth because labour and its quality are crucial factors for economic development the high quality of a well disciplined workforce as well as the migration of labour from rural to urban areas has contributed much to the rapid growth of the japanese economy second the nature of the labour market has influenced the pattern of japanese business cycles by buffering demand fluctuations the slow response of firms demand for labour combined with the fast response of the labour force participation ratio has prevented a sharp increase in the unemployment rate during recessions relatively flexible nominal and real wages have also enabled the japanese economy to adjust quite smoothly to supply shocks notably after the second oil crisis in this paper we shall review trends in unemployment wages and productivity in the postwar japanese economy and relate them to its macroeconomic performance we shall also summarize the current literature concerning features of the labour market evaluate quantitative estimates of trends in labour statistics and explore future prospects

the development of the neoclassical tradition in labor economics this essay on labor economics examines neoclassical theory s rise to ascendancy following the second world war with a secondary focus on the relative decline but continued influence of institutionalist economic theory the authors describe the evolution of institutional and neoclassical theory from the late nineteenth to mid twentieth centuries examine some early intellectual debates between the two camps briefly describe the work of neoclassical labor economics pioneers and look at major developments over the past 30 years they argue that neoclassical economists increasing intellectual breadth and influence in public policy have led them to pay closer attention to issues that have long been of concern to institutionalists and neoinstitutionalists

a quantitative reassessment of the purchasing power parity hypothesis evidence from norway and the united kingdom summary annual data from norway and the united kingdom from 1874 to 1971 are used to reassess the empirical performance of the purchasing power parity ppp doctrine the simple version of the ppp relationship is supported by the data only if different short run dynamics during a floating rate period 1914 1928 is allowed for two sets of factors were found to be important in amending the simple ppp model these were short run cyclical variables affecting the adjustment towards the ppp equilibrium relationship and long run structural factors such as productivity and terms of trade within this expanded model the proportionality between the exchange rate and relative price levels could not be rejected

assessing the impact of local taxation on property prices a spatial matching contribution this paper provides empirical evidence on the impact of local taxation on property prices controlling for the local public spending using data on property taxation and real estate transactions over the period 1994 2004 our empirical methodology pairs transactions in the same spatial environments spatial differencing and instrumental variables methodology allow us to compare sales across municipality boundaries and to control for the potential endogeneity of local taxation and public spending our results suggest that the local property tax rate has no impact on property prices while the amount of taxes paid appears to have a negative effect on property price

unemployment insurance and redistributive taxation abstract this paper studies the simultaneous determination of the socially optimal levels of unemployment insurance income taxation and experience rating it argues that there is a normative justification for state unemployment insurance when the government wishes to use redistributive taxes but cannot enforce lump sum transfers it is not socially optimal for there to be full experience rating of unemployment insurance schemes one distortion should be used to off set another the state must then intervene in the provision of insurance for those without jobs

an analysis of trends in female labor force participation in japan until recently the aggregate female labor force participation rate in japan has shown a secular declining trend throughout the postwar period of economic development participation of paid female employees alone exhibits a steadily rising trend more or less comparable to that in the united states and european countries although the fertility rate dropped drastically shortly after world war ii in the subsequent period increases in female education and a relative improvement of female wages appear to have promoted a substantial increase in paid female employment labor supply equations for paid employees estimated from time series data provide negative income and positive wage elasticities cross sectional analysis gives reasonable results particularly for middle age wives absolute values of estimated wage elasticity notably have almost always been smaller than income elasticity unlike many research findings in the united states

indivisible labor and the business cycle abstract a growth model with shocks to technology is studied labor is indivisible so all variability in hours worked is due to fluctuations in the number employed we find that unlike previous equilibrium models of the business cycle this economy displays large fluctuations in hours worked and relatively small fluctuations in productivity this finding is independent of individuals willingness to substitute leisure across time this and other findings are the result of studying and comparing summary statistics describing this economy an economy with divisible labor and post war u s time series

purchasing power parity in the long run a test of the dollar pound exchange rate 1890 1978 this paper tests the purchasing power parity ppp hypothesis by analyzing t he long run tendency of the dollar pound exchange rate using data sin ce 1890 two different models are considered 1 a na ive model and 2 a modified monetary model the conditions of propor tionality and symmetry cannot be rejected when using the naive model the final results using the monetary model however indicate that t he existence of permanent deviations from ppp cannot be ruled out copyright 1987 by ohio state university press

unemployment insurance and short time compensation the effects on layoffs hours per worker and wages we analyze two unemployment insurance systems in one unemployed workers receive benefits while those on reduced hours do not as in north america at least until recently in the other short time compensation is paid to workers on reduced hours as in europe the first system causes inefficient temporary layoffs for some parameters the latter does not but implies inefficient hours per worker some evidence is presented regarding these effects despite policymakers recent enthusiasm for short time compensation the clear implication of this project is that changes should come on the tax not benefit side of the system

optimal firm size taxes and unemployment abstract we analyze a model similar to the standard implicit contracting framework but assume that the size of the firm the number of workers under contract is endogenous some well known predictions from contract theory with firm size fixed exogenously are reversed in particular a result obtained by feldstein concerning unemployment insurance does not hold when firm size is chosen optimally he concludes an increase in experience rating the extent to which firms pay for unemployment benefits through their taxes reduces unemployment while we show that it increases unemployment under reasonable conditions

the role of unemployment insurance in an economy with liquidity constraints and moral hazard the potential welfare benefits of unemployment insurance along with the optimal replacement ratio are studied using a quantitative dynamic general equilibrium model to provide a role for unemployment insurance agents in our economy face exogenous idiosyncratic employment shocks and are unable to borrow or insure themselves through private markets in the absence of moral hazard replacement ratios as high as 65 are optimal and the welfare benefits of unemployment insurance are quite large however if there is moral hazard and the replacement ratio is not set optimally but is instead set to an empirically plausible value the economy can be much worse off than it would be without unemployment insurance

output work hours and employment in the short run of a labour managed firm in its pure form the organisation of a labour managed firm lmf differs radically from that of a profit maximising firm pmf lmfs are found not only in yugoslavia many forms of producers cooperatives and employee owned firms appear in capitalist economies e g jones and svejnar i982 the theory of the lmf is also relevant to the economics of trade unions profit sharing codetermination and internal labour markets this is because where worker participation exists elements of the economic forces prevalent in an lmf can influence management policies on wages employment and investment it follows that by studying the lmf in relation to the pmf we may be better able to grasp the workings of more realistic firm organisations in which both labour and management vie over the division of firm specific rents from this perspective on the theory of the firm we examine the short run behaviour of the competitive lmf and in particular the tendency for output supply employment demand and work hours to differ from the neoclassical norm traditionally the short run analysis of the lmf has focused on its employment response to output price changes the theorem due to ward i958 and vanek i970 holds that an increase in output price causes paradoxically a reduction in employment and output if the lmf maximises per capita remuneration more recent work in which the lmf maximises the member s expected utility over layoff probabilities and remuneration demonstrates that the lmf s response to a higher output price is essentially to increase both output and employment e g steinherr and thisse i979 bonin i98i and miyazaki and neary i983a the key to this result is that these authors distinguish actual workforce which is variable in the short run from lmf membership size which is variable in the long run but fixed in the short run the precise features of this lmf short run behaviour also depend on the nature of the lmf s bankruptcy constraint which is largely determined by the lmf s access to capital markets in this line of analysis however authors have effectively assumed that work hours are institutionally fixed but variability in work hours or effort intensity can also be an important factor in the lmf s response to output price changes because a change in the lmf s output price immediately affects the member worker s per capita some of the basic results of this paper were originally reported in sections 7 8 of our july 1979 mimeographed paper which was read at the second international conference on the economics of worker s self management istanbul june i980 and also in seminars at berkeley british columbia bell labs cornell hitotsubashi kyoto osaka tokyo and toronto in i979 i980 we thank j bonin and the participants of the above conference and seminars for comments on earlier versions in writing the present version we especially benefited from the comments of anonymous referees p evans and t macurdy we are responsible for any remaining errors omissions and ambiguities a detailed computational appendix for our theorems and examples is available on request

unemployment compensation finance and labor market rigidity abstract the systematic use of experience rating is an original feature of the u s unemployment benefits system at first glance experience rating does not appear to be a desirable choice for a lot of european labor markets which are characterized by high firing costs we provide a simple matching model of a rigid labor market that includes firing costs temporary jobs and a minimum wage in order to analyze this issue our analysis leads us to argue that experience rating is likely to reduce unemployment and improve the welfare of low skilled workers in france and more generally for low skilled workers in a typical rigid continental european labor market

local authority fiscal stance and the pattern of residential migration in the north west of england the degree of fiscal mobility present in household migration flows between local authority areas in northwestern england is assessed following an introduction the paper is divided into three sections the first reviews the methodologies of previous attempts to assess the extent of fiscally induced migration noting the dominance of american studies and outlines a choice theoretic structure within which it is possible to model human migration patterns section iii considers the problems inherent in modelling migration flows and section iv presents results for a compound poisson analysis of migration between local authority areas within the four counties of the north west region of england as well as an assessment of the prevalence of fiscal mobility excerpt

labour supply and unemployment in japan abstract the paper investigated the relationship between labour supply and unemployment employment in japan the paper focused on the discouraged worker effect which specifies that a large number of workers in particular female labour forces retire from the labour market in a recession this lowers the rate of the published unemployment the paper estimated the labour supply function and presented the estimated figures of the modified or adjusted rate of unemployment finally the okun s coefficient was re estimated by using this modified rate of unemployment

optimum income taxation and layoff taxes this paper analyzes optimum income taxation in a model with endogenous job destruction that gives rise to unemployment it is shown that optimal tax schemes comprise both payroll and layoff taxes when the state provides public unemployment insurance and aims at redistributing income the optimal layoff tax is equal to the social cost of job destruction which amounts to the sum of unemployment benefits that the state pays to unemployed workers and payroll taxes that the state does not get when workers are unemployed

relative prices and the demand for labour in british manufacturing the existence of an aggregate demand for labour schedule derived from profit maximization of the individual firm and giving a negative relationship between the labour capital ratio and the real wage is central to most traditional theoretical macroeconomics even though such a relationship is typically not embodied in macroeconomic models but beginning with the work of dunlop 1938 and tarshis 1939 the negative relationship could not be found in the data a more modern reference is bodkin 1969 this evidence led naturally to disequilibrium analysis notably that of barro and grossman 1971 more recently sargent 1978 has attempted with some success to rehabilitate the demand for labour schedule by showing that costly adjustment of the workforce obscures the current relationship between the wage and labour demand while leaving it essentially intact that paper and the related one by neftci 1978 was criticized by geary and kennan 1979 because it had used retail prices to represent output prices and they showed that for a number of countries employment could not be explained satisfactorily by the real product wage however geary and kennan failed to allow for the simultaneous effect of the real prices of raw materials and capital services in this paper we shall see that allowing for the effects of other relative prices notably the price of inputs relative to output and the real interest rate the real wage has a powerful but slow acting negative effect on the demand for labour the long run elasticity is about 2 and the mean lag is over 18 months we also find that the price of inputs has a long run elasticity of about 2 and that high values of the real interest rate have a powerful depressant effect on the level of employment in manufacturing the most striking implication for policy of our analysis is that measures of demand output money government spending do not have a significant influence on manufacturing employment controlling for the effects of relative prices thus government macroeconomic policy can affect the level of employment in manufacturing if and only if it can affect relative prices

labor management bargaining contract curves and slutsky equations consider a firm in which labor and management bargain over division of the firm s organizational rent and negotiate the firm s policy i emphasize the relationship between the bargainer s contract curve and the firm s slutsky equations i can describe a bargaining firm as a hybrid of a neoclassical profit maximizing firm and a pure labor managed firm i apply the methodology to models of employment contracts and identify three separate circumstances in which labor s bargaining power affects the firm s comparative static behavior first there is inefficiency in contractual bargaining second income effects in the worker s utility function interact with the firm s capital cost burden third labor s interest in long term utility maximization need not coincide with management s interest in profit maximization this last case arises from the incompleteness of the market for property rights in the firm

the relationship between production and unemployment in japan okun s law in comparative perspective abstract this paper studies the question whether the celebrated okun s law a relation between excess capacity and unemployment applies to the postwar japanese economy though the fitness of estimation is weak the coefficient that measures the responsiveness of the output gap to the unemployment rate is very large reaching 28 this large coefficient can be attributed to the elastic response in the female participation ratio to flexible working hours to the slow adjustment in employment and to changes in industrial structures the results are compared with those in the united states

neoclassical demand for labour functions for six major economies can real factor prices and in particular the real wage explain the level of employment over the business cycle the question is of fundamental importance for macroeconomic policy and is of course the subject of longstanding controversy dunlop i938 failed to find the expected negative relationship between employment and the wage in the data and the subsequent debate is summarised in bodkin i969 crudely the data seemed to refute the competitive model of the labour market for if product markets are competitive and firms operate on their demand curves employment should be explained by real factor prices relative to product prices the capital stock and the state of technology to explain the lack of relationship barro and grossman i97i suggested that at times mutuality reinforcing quantity constraints could emerge in labour and output markets so that firms employed fewer workers than one would predict from the level of real wages and other relative prices however recently sargent i978 has attempted with some success to rehabilitate the demand for labour function by showing that costly adjustment of the workforce obscures the current relationship between the wage and labour demand while leaving it essentially intact in his account firms adjust slowly towards an employment level which is influenced by future expected real wages which might themselves reflect the past history of real wages his paper and the related one by neftci i978 was criticised by geary and kennan i979 for using retail prices to represent output prices and they showed for a number of countries that employment could not be satisfactorily explained by the real product wage taken on its own however geary and kennan failed to allow for the simultaneous effect of the real price of raw materials in symons i 982 one of us showed that allowing for this effect the real wage has a powerful elasticity about 2 but slow acting two year mean lag negative effect of the demand for labour in british manufacturing this was strong evidence but it was not completely conclusive the model fitted well only over subperiods and whereas the various breakdowns of the model could be ascribed to firms discounting certain transient shifts in the real wage there still seemed to be scope for reasonable doubt about the results however recently andrews and nickell i 982 a b working with annual rather than quarterly data and for the british economy as a whole have developed a demand for labour function with similar dynamics and with signifi

capitalization of interjurisdictional fiscal differentials an alternative approach abstract in virtually every study concerning capitalization of fiscal differentials into property values the unit of observation has been a local jurisdiction or an individual house sale within a jurisdiction urban economic theory suggests that capitalization of fiscal differentials should be most obvious at the border of two jurisdictions housing price differentials between adjacent blocks at the border of two jurisdictions will be used to study capitalization such an approach reduces problems associated with measurement of dis amenities and public services and with the use of a distance variable in urban areas with multiple employment or recreation centers

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

school quality and residential property values evidence from vancouver rezoning abstract this study utilizes changes in the catchment areas of public schools in vancouver british columbia to measure the residential price capitalization of school quality specifications that employ repeat sales methods to control for time invariant neighborhood effects and disaggregated price indexes to capture time varying neighborhood price appreciation reveal significant effects of secondary school performance on residential prices however when we add controls for long run price trends in rezoned areas only prices of residences likely to be purchased by high income families appear to have been affected by changes in school quality induced by rezoning

excess labour and the business cycle a comparative study of japan germany the united kingdom and the united states against the background of firm specific human capital theory this paper investigates empirically the relative propensity of manufacturing industries in japan germany the united kingdom and the united states to hold excess labour over the business cycle both stock and utilization dimensions of the labour input are integrated into the study throughout discussion is linked to earlier research that has analysed the relative international performance of the japanese labour market

the redistributive roles of unemployment insurance and the dynamics of voting abstract public unemployment insurance is analyzed as the majority voting equilibrium policy of a dynamic stochastic economy abstracting from incentive effects we focus on redistribution some results are because of the distribution of heterogeneous employment opportunities public insurance may be democratically chosen even if complete private markets exist and because of the dynamics even when agents are intrinsically homogeneous the equilibrium benefit level or duration benefit schedule deviates from what has been described as optimal in the literature the effects of differences in the average frequency or duration of unemployment on equilibrium taxes and benefits are investigated with some unanticipated results

layoffs wages and unemployment insurance abstract the influence of unemployment insurance on wage and layoff behavior is analyzed in the context of optimal labor contracts responses of contract terms to changes in economic parameters are shown to depend in general on the nature of the initial contract the degree of workers risk aversion and the resolution of bargaining conflict layoffs are not necessarily reduced by an increase in experience rating or a reduction in the ui benefit product demand fluctuations tend to induce procyclical employment fluctuations but not wage fluctuation an implication of optimal contracts with private insurance suggests a reason for government intervention in ui provision

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

a note on overemployment underemployment in labor contracts under asymmetric information abstract models of labor contracts under asymmetric information may predict either overemployment or underemployment this paper shows that this result depends crucially on whether or not leisure is a normal good if firms are risk neutral

implicit contracts a survey 7mplicit contracts resolve the distribution of uncertainty and utilization of specific human capital between risk averse workers and less risk averse firms incomplete contracts are required to yield involuntary layoffs in contract markets otherwise contracts are efficient and pareto optimal by construction there is a close relation between contract theory and neoclassical labor market theory contracts smooth consumption but increase the volatility of labor supply and labor utilization to demand disturbances because contractural insurance eliminates the income effects of socially diversifiable risks this result is similar to the intertemporal substitution hypothesis however the price mechanism in a contract is substantially different contracts embody a nonlinear two part pricing scheme the lump sum part allocates the income consumption consequences of risks and the marginal pricing part allocates production and labor utilization this implicit pricing mechanism is in all respects flexible though the observed average hourly wage combines both parts and may give the outward appearanceof rigidity furthermore the observed average wage rate in a contract does not reflect marginal conditions necessary for structural econometric estimation indivisibilities appear necessary to account for the split between work sharing and layoffs contracts with private information are also considered in the nonlinear pricing context this abstract was borrowed from another version of this item

public school reform expectations and capitalization what signals quality to homebuyers author affiliation velma zahirovic herbert department of housing and consumer economics university of georgia 213 dawson hall athens ga 30602 3622 usa e mail vherbert uga edu corresponding author geoffrey k turnbull department of economics andrew young school of policy studies georgia state university p o box 3992 atlanta ga 30302 3992 usa e mail gturnbull gsu edu acknowledgment we would like to thank christopher bollinger and two anonymous referees for their helpful comments the authors are responsible for any errors 1 introductioneducation is one of the most important services provided by local governments low test scores high dropout rates high teacher turnover rates and other problems indicate that large urban school districts in the united states serve their students inadequately these deficiencies provide incentives for affluent families to leave cities for the suburbs or to move their children to private schools when these families move urban tax bases and economic activity are reduced when good students move to private schools the average academic quality of the remaining public school students declines which can reduce the quality of the education received in the public schools through influence on peer group effects and declining parental involvement and political support for these reasons education reform remains a key concern in urban areas this paper draws on local education reforms that occurred in east baton rouge parish louisiana in 1996 and 2001 to examine several questions left unresolved in the capitalization literature especially the literature concerned with how housing markets respond to different types of government supplied information about school quality two policy events in the school district provide a rare opportunity in this regard changes ordered by the federal court supervising the school district present natural experiments for observing the extent to which school characteristics are reflected in the housing market more importantly for our purposes the setting and the two policy events themselves highlight the roles of home owners expectations on measured capitalization as a legacy of a 40 year desegregation lawsuit the local school system was under direct federal court control for more than 15 years in the years preceding our first policy event students were randomly assigned to individual schools in an effort to equalize racial composition a method that eliminated school quality as a location specific house attribute e g it was not unusual for different children in the same family to attend different schools 1 in a surprise move in the summer of 1996 the presiding judge ordered the elimination of random school assignment in favor of stable attendance zones thereby creating a direct tie between house location and school quality this change from random to zone school assignment represents a natural experiment and an opportunity to observe how the local housing market values the policy change further in light of the history of the 40 year federal lawsuit and 15 years of direct court control of the local school system the public had little confidence in the federal court s ability to improve education quality the overwhelming defeat of a major school tax referendum following the court s creation of school attendance zones is evidence of this lack of confidence this is precisely the type of environment in which we expect to find little or no systematic capitalization of measured school quality differences there is evidence that public confidence in the school system improved during the next few years enrollments ceased their inexorable declines and stabilized within a few years and more importantly voters passed a major school tax referendum at that time as well both observations signal an important reversal in public opinion regarding the perceived viability of school reform

regional inflation spatial locations and the balassa samuelson effect evidence from japan we empirically analyse regional inflation using data from japan where there is no regulation to impede the free movement of labour capital goods and services across regions in particular our analysis will focus on the geographical location of regions and the productivity known as the balassa samuelson bs effect as explanations for the dynamics of regional inflation based on a spatial model which is consistent with the theoretical specification of the bs we have confirmed that while it is a relatively small country in terms of land area both spatial location and productivity are important determinants of regional inflation

does additional spending help urban schools an evaluation using boundary discontinuities this study exploits spatial anomalies in school funding policy in england to provide new evidence on the impact of resources on student achievement in urban areas anomalies arise because the funding allocated to local education authorities lea depends through a funding formula on the additional educational needs of its population and prices in the district however the money each school receives from its lea is not necessarily related to the school s own specific local conditions and constraints this implies that neighbouring schools with similar intakes operating in the same labour market facing similar prices but in different leas can receive very different incomes we find that these funding disparities give rise to sizeable differences in pupil attainment in national tests at the end of primary school showing that school resources have an important role to play in improving educational attainment especially for lower socio economic groups the design is geographical boundary discontinuity design which compares neighbouring schools matched on a proxy for additional educational needs of its students free school meal entitlement fsm in adjacent districts the key identification requirement is one of conditional ignorability of the level of lea grant where conditioning is on geographical location of schools and their proportion of fsm children

unemployment insurance and market structure abstract this paper examines the impact of unemployment insurance ui on employment and unemployment in an industry in which the prices can vary due to some market power some non conventional results are obtained it is shown that if there is free entry and exit average industrial employment may be a decreasing function of the experience rating because the number of firms in the industry is itself a decreasing function of this parameter this contradicts the conventional view which was arrived at using models of a perfectly competitive industry with no entry and according to which employment should be an increasing function of the experience rating the general conclusion is that for industries with different degrees of market power the same ui scheme has different impacts on employment and unemployment

unemployment insurance and quits in canada in two recent policy changes the canadian government acted to limit the eligibility of job quitters and those dismissed for cause for unemployment insurance ui we study the effects of these policy changes on separation behaviour we find no evidence that these policy changes induced a relabelling of separations towards ui eligible reasons but we do find quite different responses across demographic groups women and young men are inhibited from quitting their jobs by the new quit penalties but prime age males seem unaffected by the large increase in the cost of quitting imposed by the changes

social security benefits and employer behavior evaluating social security early retirement benefits as a form of unemployment insurance employers often shed older workers by encouraging them to take early retirement an implicit contract model suggests that this behavior will be influenced by the social security early retirement program when demand is weak and layoffs are necessary social security benefits can act like a form of unemployment insurance effectively subsidizing workforce reductions by lowering the cost to the firm of shedding older workers since social security benefits are not subject to experience rating the result is an inefficiently high level of early retirements this paper concludes with a discussion of policies for restoring early retirements to efficient levels

the returns to labour services in west german manufacturing industry production functions distinguishing between the stock and utilisation dimensions of factor labour and capital inputs are critically surveyed an extension to the existing literature is suggested whereby normal and overtime hours are separated within an appropriate non linear functional specification the econometric performance of this model is then compared with the main alternatives from the existing literature the empirical work is based on pooled cross section time series data which refer to west german manufacturing industries 1968 1978 estimates of the returns to labour services are also discussed in the light of related theoretical aspects of factor demand functions

property tax shifting under imperfect competition the hedonic price models are commonly used to empirically assess the degree to which property taxes are shifted from property owners to property renters the findings of these studies vary sporadically in terms of the degree of tax shifting the competitiveness of housing markets may significantly influence the degree of tax shifting in this article we allow a nonzero price cost markup in the hedonic price equation and examine the impact of market power on property tax shifting in our case study we examine the property specific characteristics occupancy record and local property tax associated with hundreds of managed rental properties in central new hampshire the results show that depending on the degree of market power exercised by a property management firm the anti competitive structure of the market may significantly contribute to property tax shifting from property owners to property renters