price distributions and competition considerable evidence demonstrates that significant dispersion exists in the prices charged for seemingly homogeneous goods this paper adopts a simple flexible equilibrium model of search to investigate the way the market structure influences price dispersion using the noisy search approach the paper demonstrates the effects of having a single large price leading firm with multiple outlets and a competitive fringe of small firms with one retail outlet each

information transmission cournot and bertrand equilibria we examine how incentives for two duopolists to honestly share information change depending upon the nature of competition cournot or bertrand and the nature of the information structure while in earlier papers uncertainty is about an unknown common demand intercept in the present paper uncertainty is about unknown private costs the different information structure reverses the incentives to share information while with unknown common demand sharing is a dominant strategy with bertrand competition and concealing is a dominant strategy with cournot competition with unknown private costs sharing is a dominant strategy with cournot competition and concealing is a dominant strategy with bertrand competition

reconciling the old and new census bureau education questions recommendations for researchers beginning with the 1990 census and the january 1992 current population survey cps the bureau of the census changed the emphasis of its educational attainment question from years of education to degree receipt using a matched sample from the 1991 and 1992 march cps this article addresses how to reconcile the old and new questions the effects of those methods on the estimated return s to education are then examined both the estimated linear return and the estimated college high school wage differential are slightly larger using information from the new question

price setting in online markets does it click using a unique dataset of daily u s and u k price listings and the associated number of clicks for precisely defined goods from a major shopping platform we shed new light on how prices are set in online markets which have a number of special properties such as low search costs low costs of monitoring competitors prices and low costs of nominal price adjustment we document that although online prices are more flexible than offline prices they nevertheless exhibit relatively long spells of fixed prices large size and low synchronization of price changes considerable crosssectional dispersion and low sensitivity to predictable or unanticipated changes in demand conditions qualitatively these patterns are similar to those observed for offline prices a finding that suggests a need for more research on the sources of price rigidities and dispersion

competitive search equilibrium in this paper i construct an equilibrium for markets with frictions which is competitive in the sense that all agents are price takers and maximize utility subject to a set of market parameters i show that the equilibrium allocation is socially optimal i also show how the competitive search equilibrium can be achieved if employers with vacancies can advertise publicly the wages they pay

education ranking and competition for jobs i study workers incentives to invest in general human capital education in the presence of search induced unemployment workers queue for jobs and firms prefer to hire the most productive applicants because of rent sharing as a result an unemployed worker s ranking relative to other job seekers will influence his job finding rate this creates a rat race where workers invest in education partly in order to achieve a better ranking in equilibrium identical workers may have incentives to diversify in terms of education and the investments in education may exceed the socially optimal level

unemployment dynamics and duration dependence in france the netherlands and the united kingdom this paper analyzes unemployment dynamics in the french dutch and u k labor market it presents a method to distinguish between the effects of duration dependence and unobserved heterogeneity on the exit rate out of unemployment it turns out that for british male unemployed there is strong genuine negative duration dependence for french unemployed there is no strong duration dependence during the first year of unemployment while for dutch unemployed there is nonmonotonic duration dependence for all groups of french and dutch individuals significant unobserved heterogeneity is found for u k male unemployed heterogeneity seems to be empirically unimportant copyright 1994 by royal economic society

signaling quality through prices in an oligopoly firms signal quality through prices even if the market structure is very competitive and price competition is severe in a symmetric bertrand oligopoly where products may differ only in their quality and each firm s product quality is private information unknown to consumers and to other firms there exist symmetric fully revealing perfect bayesian equilibria where low quality firms randomize over an interval of prices and high quality firms charge high prices signaling requires that the market power and rent of low quality firms be large enough and often this requires that high quality firms exercise sufficient market power there is a unique symmetric fully revealing equilibrium satisfying the d1 criterion in this equilibrium too both low and high quality firms may exhibit considerable market power market power of high quality firms may persist even as the number of firms becomes arbitrarily large every d1 equilibrium involves some revelation of information

how do competitive pressures affect incentives to innovate when there is a market for inventions competition and intellectual property ip protections are complements in stimulating innovation when ip is appropriable a market for inventions forms and competitive pressures increase incentives to innovate competition among producers the demand side of the market for inventions and competition among inventors the supply side of the market for inventions create incentives to innovate when ip is not fully appropriable markets for inventions are limited and competitive pressures can decrease incentives to innovate firms vertically integrate r d and production and share technology to appropriate the returns to ip this implies that antitrust policy and ip protections are complements

how to translate results from auctions to procurements abstract the translation of statements from auctions to procurements is not always straightforward we define a duality relationship between them and provide the appropriate transformations needed for establishing it additionally we prove that affiliation is preserved under these transformations and establish the linkage principle for procurements

search costs and equilibrium price dispersion in auctions a leading explanation for price dispersion in posted price markets is search costs we incorporate this insight into a model of competing second price auctions similar to ebay by doing so we extend the narrow literature on competing auctions to capture price dispersion and grow the already large literature on price dispersion to include auctions we provide evidence on search costs and price dispersion using data collected from ebay identifying search costs by exploiting a discontinuity in the visibility of auctions due to ebay s search tool 1 we thank aaron bodoh creed greg lewis steve tadelis and various seminar participants for helpful comments nate woody for programming assistance and the cornell university institute for social sciences for financial support the views expressed herein are solely those of the authors and do not necessarily reflect those of the u s department of justice 1

trading in networks theory and experiments intermediation is a prominent feature of economic production and exchange two features of intermediation are salient coordination among traders between the source and the destination and competition between alternative combinations of intermediaries we develop a simple model to study these forces and we test the theoretical predictions in experiments our theoretical analysis yields a complete characterization of pricing equilibrium in networks there exist both ecient and inecient equilibria suggesting a key role of coordination among intermediaries strategic interaction leads to either buyer and seller retaining all surplus or intermediaries extracting all surplus we develop conditions on network structure under which these di erent extremal outcomes arise respectively laboratory experiments show that eciency prevails in almost all cases so traders are successful in coordination subjects coordinate on extreme surplus division finally experiments highlight the role of network structure in determining pricing and the

demographic differences in cyclical employment variation demographic differences in patterns of employment variation over the business cycle are examined in this paper three primary conclusions emerge first both participation and unemployment must be considered in any analysis of cyclical changes in the labor market second young people bear a disproportionate share of cyclical employment variation third failure to consider participation has led to undue pessimism about the effect of aggregate demand policy on high unemployment groups if participation did not surge reduction in overall unemployment to its 1969 level would reduce the unemployment of almost all demographic groups to very low levels

demographic and time patterns in layoffs and quits this article decomposes the monthly transition from employment to unemployment as measured by gross flow data into layoffs and quits for ten age sex groups it examines three patterns for each subflow over the 1967 83 periods and compares age and sex groups it finds that layoffs are more cyclically sensitive than quits into unemployment and that trend is a more influential determinant of layoffs than business cycle factors for most males whereas the opposite is true for most females other researchers have not found such robust cyclical results probably because they have not distinguished between layoffs and quits in the employment to unemployment transition policy implications are briefly discussed

price dispersion in the small and in the large evidence from an internet price comparison site this paper examines four million daily price observations for more than 1 000 consumer electronics products on the price comparison site http shopper com we find little support for the notion that prices on the internet are converging to the law of one price in addition observed levels of price dispersion vary systematically with the number of firms listing prices the difference between the two lowest prices the gap averages 23 per cent when two firms list prices and falls to 3 5 per cent in markets where 17 firms list prices these empirical results are an implication of a general clearinghouse model of equilibrium price dispersion

causes and consequences of layoffs using probit analysis this article finds that differential treatment accounts for a substantial portion of the higher layoff rates of blacks in comparison to whites however women are found to be considerably less prone to layoffs than men with similar characteristics among those who obtained subsequent employment taking into account the possible selectivity bias in such a subsample white males are hurt more by layoffs than black males in terms of both short term and long term earnings growth women s earnings are not necessarily affected by layoff at all however whites and males are found to be more likely to be reemployed than blacks and females respectively

exchange of cost information in oligopoly when do oligopolists gain by sharing their private information about their costs with one another what are the social welfare effects of such information exchange i study these questions by comparing the oligopolists expected profits under a cost sharing agreement with their expected profits in the bayesian equilibrium that would arise without cost sharing i also analyse the firms decisions to form a trade association to share their cost data under conditions of linear demand and cournot behaviour industrywide information exchange is the unique point in the core of the trade association membership game the exchange of cost data increases expected profits and welfare but reduces expected consumer surplus cost sharing increases efficiency by raising the market shares of lower cost firms and reducing the variability of aggregate output consumer surplus is diminished however because the variance of output is reduced and consumer surplus is a convex function of output

long term effects of a recession at labor market entry in japan and the united states abstract we examine effects of entering the labor market during a recession on subsequent employment and earnings for japanese and american men using comparable household labor force surveys we find persistent negative effects of the unemployment rate at graduation for less educated japanese men in contrast to temporary effects for less educated american men the school based hiring system and the dismissal regulation prolong the initial loss of employment opportunities for less educated japanese men the effect on earnings for more educated groups is also stronger in japan although the difference between the two countries is smaller than for less educated groups

information mobile telephony and traders search behavior in niger information and communications technologies have spread rapidly in developing countries we investigate the impact of mobile phones on traders search behavior in niger by constructing a theoretical model of search in which traders engage in sequential search for the optimal sales price using a trader panel dataset spanning 2005 2007 we find empirical support for the model in that the duration of mobile phone coverage is associated with increased search activity this effect evolves dynamically over time and is stronger for larger traders who engage in arbitrage over longer distances results provide empirical evidence for the observed linkages between mobile telephony and price dispersion

collusion and price rigidity we consider an in nitely repeated bertrand game in which prices are publicly observed and each rm receives a privately observed i i d cost shock in each period we focus on symmetric perfect public equilibria sppe wherein any punishments are borne equally by all rms we identify a tradeoff that is associated with collusive pricing schemes in which the price to be charged by each rm is strictly increasing in its cost level such fully sorting schemes offer efficiency bene ts as they ensure that the lowest cost rm makes the current sale but they also imply an informational cost distorted pricing and or equilibrium path price wars since a higher cost rm must be deterred from mimicking a lower cost rm by charging a lower price a rigid pricing scheme where a rm s collusive price is independent of its current cost position sacri ces efficiency bene ts but also diminishes the informational cost for a wide range of settings the optimal symmetric collusive scheme requires i the absence of equilibrium path price wars and ii a rigid price if rms are sufficiently impatient however the rigid pricing scheme cannot be enforced and the collusive price of lower cost rms may be distorted downward in order to diminish the incentive to cheat when the model is modi ed to include i i d public demand shocks the downward pricing distortion that accompanies a rm s lower cost realization may occur only when current demand is high

the quality of innovation and the extent of the market abstract i present a comprehensive model of international trade in technology that considers both the demand for inventions and the supply of inventions on the demand side domestic and foreign firms make strategic technology adoption decisions on the supply side inventors compete to sell licenses for their technology to domestic and foreign firms countries benefit from international trade in technology because they obtain the best invention from a larger pool of inventions international trade in technology increases the extent of the market for inventions and thereby improves the quality of innovation technology trade lowers prices increases outputs and increases the volume of trade in differentiated products when traded products are not close substitutes international markets for technology generate gains from trade the results of the analysis are robust to the possibility of technology transfer either through expropriation or imitation protection of intellectual property rights preserves incentives for entry of inventors and improves the quality of innovation

unemployment insurance recall expectations and unemployment outcomes this paper empirically examines the importance of explicitly accounting for the layoff rehire process in the analysis of unemployment outcomes in the united states we find that the spells of individuals who initially expect to be recalled account for much more of the unemployment of unemployment insurance ui recipients than do spells actually ending in recall our results indicate that the recall and new job escape rates from unemployment have quite different time patterns and are often affected in opposite ways by explanatory variables we also find that the probability of leaving unemployment both through recalls and new job finding increases greatly around the time that ui benefits lapse over the past fifteen years many studies have empirically analyzed the determinants of individual unemployment spell durations in the united states much of this literature has used a job search framework in which the unemployed are viewed as permanently displaced workers who are unattached to jobs the possibility of recall to a former job a process not requiring search has been omitted from explicit consideration in the majority of these studies 2 an explicit treatment of the layoff rehire process is necessary for a proper understanding of the determinants of unemployment durations and of the impacts of unemployment policies in the united states for at least three reasons first temporary layoffs in which workers are often rehired by their original employers are a quantitatively quite important feature of the u s labor market 3 second expectations concerning the likelihood of recall are likely to affect the responses of employers and unemployed workers to labor market interventions such as reemployment bonuses and subsidies

do employers use unemployment as a sorting criterion when hiring evidence from a field experiment the stigma associated with long term unemployment spells could create large inefficiencies in labor markets while the existing literature points toward large stigma effects it has proven difficult to estimate causal relationships using data from a field experiment we find that long term unemployment spells in the past do not matter for employers hiring decisions suggesting that subsequent work experience eliminates this negative signal nor do employers treat contemporary short term unemployment spells differently suggesting that they understand that worker firm matching takes time however employers attach a negative value to contemporary unemployment spells lasting at least nine months providing evidence of stigma effects

vertical mergers in procurement markets abstract this paper uses computational methods that reveal ambiguous strategic effects of vertical mergers in a duopoly setting featuring incomplete information about sellers costs and differences in sellers productive capabilities first vertical mergers can be jointly unprofitable second the buyer s preferred merger partner is almost always the seller with lower expected costs and is typically the larger seller third vertical mergers always reduce the unintegrated seller s profits sometimes dramatically finally vertical mergers can increase total welfare some of the results contrast qualitatively with unambiguous findings from models with symmetric sellers which suggests that caution should be used in drawing general inferences from those models

job search stigma effect and escape rate from unemployment this article formulates job search models incorporating certain types of the stigma effect of unemployment it is assumed that the probability of getting a job offer given the unemployment individual contacts the firm is influenced by the duration of unemployment and is justified in a signaling context the optimal search is analyzed for one sector as well as across several independent labor market segments it is shown that there are reasonably general conditions on the search environments for which both the individual reservation wage and escape rate are negative duration dependent a fact observed in empirical studies

marketplaces and matching this paper models equilibrium trading patterns when marketplaces exist and goods are differentiated when first visiting the market a buyer samples a stock of goods if fortunate the buyer matches with and purchases one of these goods and then exits the market if an initial match does not exist the buyer can now only match with the flow of new goods for sale the previous stock has been sampled and rejected in a steady state the current stock of unmatched traders on one side of the market is trying to match with the flow of new traders on the other side it is shown that this market behaviour describes matching patterns between unemployed job seekers and vacancies in uk job centres

price dispersion in the lab and on the internet theory and evidence price dispersion is ubiquitous in settings that closely approximate textbook bertrand competition we show that only a little bounded rationality among sellers is needed to rationalize such dispersion a variety of statistical tests based on datasets from two independent laboratory experiments and structural estimates of the parameters of our models suggest that bounded rationality based theories of price dispersion organize the data remarkably well evidence is also presented to suggest that the models are consistent with data from a leading internet price comparison site

the employment effect of reforming a public employment agency by how much does an increase in operating effectiveness of a public employment agency pea and a reduction of unemployment benefits reduce unemployment using a recent labour market reform in germany as background we find that an enhanced effectiveness of the pea explains about 20 of the observed post reform unemployment decline the role of unemployment benefit reduction explains just about 5 of the observed decline due to disincentive effects resulting from the reform the reform of the pea could have had an even higher impact on unemployment reduction if there had been less focus on long term unemployed workers

on the effects of ranking by unemployment duration abstract we propose a theory based on the firm s hiring behavior that rationalizes the observed significant decline of callback rates for an interview and exit rates from unemployment and the mild decline of reemployment wages over unemployment duration we build a directed search model with symmetric incomplete information on worker types and non sequential search by firms sorting due to firms testing of applicants in the past makes expected productivity fall with duration which induces firms to rank applicants by duration in equilibrium callback and exit rates both fall with unemployment duration in our numerical exercise using u s data we show that our model can replicate quite well the observed falling patterns with the firm s ranking decision accounting for a sizable part

identifying the hand of past distinguishing state dependence from heterogeneity a basic problem in social science is to ascertain the importance of initial endowments on subsequent outcomes of a dynamic process interest in this topic centers on two distinct issues a do initial endowments have a temporally persistent effect on outcomes i e is there heterogeneity b are the effects of initial endowments attenuated or accentuated by subsequent experiences of the process being studied or by related processes i e is there state dependence these two questions show up in a variety of contexts 1 the importance of family background on a person s subsequent education and earnings is a hotly debated topic do market or nonmarket mechanisms reinforce or diminish initial endowments 2 the incidence of criminal activity is concentrated among a small population of repeated offenders are certain persons prone to criminality or does crime breed crime 3 are persons who experience unemployment more likely to experience future unemployment due to loss of work experience or market stigma 4 does early entry into an industry confer an advantage of incumbency or does it merely proxy the basic managerial and innovative ability of early entrants many formal models of state dependent processes or processes with persistent effects of initial conditions have been formulated invariance of steady states to initial endowments was viewed as a desirable feature of an economic model in the 1960 s and 1970 s path dependent synergism and nonergodicity are fashionable features of models today is the choice between models with long run dependence on initial conditions and those without solely a matter of intellectual esthetics can data discriminate between these two classes of models how many economically extraneous statistical regularity conditions have to be imposed in order to distinguish between these models how many and what kind of maintained assumptions are required in order to let the data speak on these important questions in this paper i focus on one nonergodic model that receives much attention in the literature the model of duration dependence and heterogeneity discussed by herbert silcock 1954 and also examined by tony lancaster 1979 chris elbers and geert ridder 1982 myself and burton singer 1984 and myself and bo honore 1989

the business cycle labor market transitions by age and the great recession abstractusing matched monthly cps data this article studies differences in labour force transitions across age groups focusing on periods prior to and after the start of the great recession monthly transitions between employment unemployment and nonparticipation of 25 55 year old males are examined from 1996 through 2013 prior to the great recession 1996 2007 younger groups of workers are more likely to move from employment to unemployment and face an increased risk beyond that of other workers of making this transition as the economy worsens however this differential responsiveness no longer appears after the start of the great recession before and after the start of the great recession younger groups of workers are more likely to move from unemployment to employment however there is no extra responsiveness among younger workers to the business cycle transitions into and out of the labour force nuance these findings however there is no evidence of differential responsiveness among younge

racial discrimination in labor markets with posted wage offers we analyze race discrimination in labor markets in which wage offers are posted if employers with job vacancies receive multiple applicants they choose the most qualified but may choose arbitrarily among equally qualified applicants in the model firms post wages workers choose where to apply and firms decide which workers to hire labor market frictions greatly amplify racial disparities so mild discriminatory tastes or small productivity differences can produce large wage differentials between the races compared with the nondiscriminatory equilibrium the discriminatory equilibrium features lower net output lower wages for both white and black workers and greater profits for firms this abstract was borrowed from another version of this item

bertrand competition with cost uncertainty abstract we analyze the classical model of bertrand competition in a homogeneous good market with constant marginal costs and uncertainty regarding rivals costs first we show that there exists a mixed strategy nash equilibrium under the conventional equal sharing rule second we illustrate the result for the case of piecewise affine market demand

statistical discrimination and duration dependence in the job finding rate this article models a frictional labour market where employers endogenously discriminate against the long term unemployed the estimated model replicates recent experimental evidence which documents that interview invitations for observationally equivalent workers fall sharply as unemployment duration progresses we use the model to quantitatively assess the consequences of such employer behaviour for job finding rates and long term unemployment and find only modest effects given the large decline in callbacks interviews lost to duration impact individual job finding rates solely if they would have led to jobs we show that such instances are rare when firms discriminate in anticipation of an ultimately unsuccessful application discrimination in callbacks is thus largely a response to dynamic selection with limited consequences for structural duration dependence and long term unemployment

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

implicit contracts explicit contracts and wages over the past decade the search for an explanation of aggregate money wage stickiness in the face of substantial shifts in the marginal revenue product of labor of the kind that was associated with an increase in real wages in the depression of the 1930 shas led to an extensive examination of explicit union and implicit nonunion employment contracting arrangements this distinction can be exaggerated long term union contracts have an implicit element in the sense that they specify only a limited number of contingencies to which wages will be adjusted moreover the implicit contracting branch of the literature has pushed in the direction of implying that the explicit contracts observed in the union sector may be formalizations of common informal arrangements in the nonunion sector so that differences between the sectors in the behavior of wages and employment may be more apparent than real the purpose of this paper is to examine the empirical basis for some of the key propositions of implicit contract theories and to note some important differences in the outcome of implicit and explicit contracting

simultaneous vs sequential price competition with incomplete information abstract we compare equilibria with sequential and simultaneous moves under homogeneous good bertrand competition when unit costs are private information under an alternative interpretation we examine the consequences of awarding a right of first refusal in a first price procurement auction with endogenous quantity

duopoly information equilibrium cournot and bertrand abstract in a duopoly model where firms have private information about an uncertain linear demand it is shown that if the goods are substitutes not to share information is a dominant strategy for each firm in bertrand cournot competition if the goods are complements the result is reversed furthermore the following welfare results are obtained 1 i with substitutes in cournot competition the market outcome is never optimal with respect to information sharing but it may be optimal in bertrand competition if the products are good substitutes with complements the market outcome is always optimal 2 ii bertrand competition is more efficient than cournot competition 3 iii the private value of information to the firms is always positive but the social value of information is positive in cournot and negative in bertrand competition

a traditional interpretation of macroeconomic fluctuations under the traditional interpretation of macroeconomic fluctuations aggregate demand shocks move output and prices in the same direction while aggregate supply shocks move output and prices in opposite directions this paper examines the joint behavior of u s output unemployment prices wages and nominal money and asks whether it is consistent with this interpretation the answer is a qualified yes

duration dependence and labor market conditions evidence from a field experiment this article studies the role of employer behavior in generating negative duration dependence the adverse effect of a longer unemployment spell by sending fictitious resumes to real job postings in 100 u s cities our results indicate that the likelihood of receiving a callback for an interview significantly decreases with the length of a worker s unemployment spell with the majority of this decline occurring during the first eight months we explore how this effect varies with local labor market conditions and find that duration de pendence is stronger when the local labor market is tighter this result is consistent with the prediction of a broad class of screening models in which employers use the unemployment spell length as a signal of unobserved productivity and recognize that this signal is less informative in weak labor markets jel code j64

work histories and lifetime unemployment a long standing question in economics is how important unobserved differences across workers are for explaining unemployment i revisit this topic using variation in lifetime unemployment across workers in u s data a comparison of workers often unemployed with the rest shows that although differences in job finding rates increase over the course of a career differences in job separation rates are large right from the start i develop a directed search model with symmetric unobserved heterogeneity in which agents learn workers types from their labor market histories to rationalize these findings the model cannot match the data if unobserved heterogeneity is neglected

contracts job experience and cyclical labor market adjustments longitudinal estimates of the variability of individual wages hours and weeks worked over the course of changing demand states are provided for all workers generally and for workers of varied levels of job experience emphasis is placed on that part of job experience represented as years on current job a commonly used proxy for the magnitude of firm specific skills interpretation of resulting estimates in the context of the labor market contracting literature is attempted generally significant procyclical patterns are found for real weekly wages weekly hours and weeks worked the extent of weekly wage variability is much greater than is generally suggested in the literature furthermore workers with greater tenure exhibit greater cyclical wage and hours variability and less weeks variability finally empirical distinctions are drawn separately for white collar and blue collar as well as union and nonunion workers

search costs and equilibrium price dispersion in auction markets abstract a leading explanation for price dispersion in posted price markets is search costs we incorporate this insight into a model of competing second price auctions similar to ebay by doing so we extend the narrow literature on competing auctions to capture price dispersion and grow the already large literature on price dispersion to include auctions we provide evidence on search costs and price dispersion using data collected from ebay identifying search costs by exploiting a discontinuity in the visibility of auctions due to ebay s search tool

ex ante price offers in matching games non steady states a matching problem is considered in which sellers can publicly commit to a trading price that differs from the price at which buyers expect to trade elsewhere in the market when demand and supply are nearly equal the equilibrium ex ante price offer lies below the price associated with the nash bargaining split this relationship reverses when the level of excess demand is large sellers always have an incentive to make ex ante offers when prices elsewhere are determined by nash bargaining this can be interpreted to mean that nash bargaining is an unstable pricing institution copyright 1991 by the econometric society

why are wages cyclical in the 1970 s this article investigates cyclicality in real wages between 1969 and 1982 using panel study of income dynamics data there is little evidence that movements in and out of the labor market induced aggregate wage cyclicality during these years however cyclicality in the movement of workers between heterogeneous labor market sectors affected aggregate wage cyclicality while sector location is important sector selectivity is not correlated with wages yet even within sectors cyclicality is present in real wages over this time period and is the result of cyclicality in overall wage levels as well as in the coefficients associated with particular worker characteristics

why do temporary help firms provide free general skills training the majority of u s temporary help supply ths firms offer nominally free unrestricted computer skills training a practice inconsistent with the competitive model of training i propose and test a model in which firms offer general training to induce self selection and perform screening of worker ability the model implies and the data confirm that firms providing training attract higher ability workers yet pay them lower wages after training thus beyond providing spot market labor ths firms sell information about worker quality to their clients the rapid growth of ths employment suggests that demand for worker screening is rising

conservation when landowners have bargaining power continuous conservation investments and cost uncertainty spatially heterogeneous costs of securing conservation agreements should be accounted for when prioritizing properties for conservation investment most researchers incorporating conservation costs into analyses have relied on estimates of landowners opportunity costs of accepting a conservation agreement implicitly assumed in such studies is therefore that those who produce biodiversity landowners receive none of the surplus available from trade instead landowners could use their bargaining power to gain profits from conservation investments we employ game theory to determine the surplus landowners could obtain in negotiations over conservation agreements and the consequent effects on conservation outcomes when enrolment decisions are governed by continuous variables e g the proportion of a property to enrol in addition we consider how landowner uncertainty regarding the opportunity costs of other landowners affects these outcomes landowners ability to gain surplus is highly variable and reflects variation in the substitutability of different properties for achieving a specified conservation objective the ability of landowners to obtain profits from conservation agreements results in conservation outcomes that are substantially diminished relative to when landowners accept investment at opportunity costs uncertainty increases landowner profits leading to a greater diminution in conservation benefits

the assignment of workers to jobs in an economy with coordination frictions this paper studies the assignment of heterogeneous workers to heterogeneous jobs owing to the anonymity of a large labor market workers use mixed strategies when applying for jobs this randomness generates coordination frictions two workers may apply for a particular job whereas an identical job gets no applications the model generates assortative matching with a positive but imperfect correlation between matched workers and firms types it predicts that a worker s wage is increasing in her job s productivity and a firm s profit is increasing in its employees productivity the model also yields a version of the welfare theorems

perception and information in a competitive location model this paper considers a situation in which two competitors locate one facility each at the vertices of a tree their decisions are based on the capture of demands at the vertices of the tree as opposed to the usual models it is assumed that the true demands are unknown and that each competitor has its own perception of them the paper investigates a facility planner s advantage that results from knowledge concerning his competitor s perception stackelberg solutions are analyzed as well as possible advantages to the competitor who locates first

the effects of social networks on employment and inequality we develop a model where agents obtain information about job opportunities through an explicitly modeled network of social contacts we show that employment is positively correlated across time and agents moreover unemployment exhibits duration dependence the probability of obtaining a job decreases in the length of time that an agent has been unemployed finally we examine inequality between two groups if staying in the labor market is costly and one group starts with a worse employment status then that group s drop out rate will be higher and their employment prospects will be persistently below that of the other group

competition among entrepreneurs i examine a three stage model of schumpeterian competition among entrepreneurs in the initial entry stage entrepreneurs invest in innovation and establish firms in the next stage entrepreneurs choose prices strategically make irreversible investments and compete to serve consumers while faced with asymmetric information about each others innovations in the final creative destruction stage firms with better technologies remain in the market while firms with inferior technologies exit the market the model features strategic pricing by firms and the possibility of heterogeneous technologies remaining in the market the model provides a necessary and sufficient condition for creative destruction copyright 2010 the author 2009 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

directed search on the job heterogeneity and aggregate fluctuations we study a labor market where workers search for jobs both on the job and off the job in the model there are aggregate productivity shocks and match specific shocks we outline the proof of existence of an equilibrium which we call a block recursive equilibrium bre in which individuals decisions and market tightness are independent of the distribution of workers over wages or contracts a critical assumption that is responsible for a bre to exist is that search is directed by firms posting of contracts we explain why a bre does exist under the assumption of directed search and why it does not under the assumption of random search finally we generalize the proof of existence of a bre to allow workers to be ex ante heterogeneous with respect to some observable characteristics such as education and skill this abstract was borrowed from another version of this item

nonemployment stigma as rational herding a field experiment abstract long spells of unemployment are known to reduce the likelihood of re employment but it is difficult to discern the reasons for this observation using an experimental method that controls for search intensity and possible discouragement of job applicants i document that job market opportunities for the nonemployed diminish rapidly over time in this experiment duration dependence is solely due to firm perceptions why do firms view long spells of nonemployment as negative signals rational herding is one important factor managers believe that unemployed applicants were previously interviewed and if the applicants were productive they would have been hired

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

real wages and the business cycle the objectives of this review are threefold 1 to characterize the empirical literature on the cyclical behavior of real wages 2 to identify the sources of the differences in results across studies and 3 to enumerate key factors that determine the cyclicality of real wages given a host of measurement and methodological issues drawing firm conclusions is difficult but several generalizations can be made the estimated cyclicality of real wages depends crucially on the time period of analysis and the choice of whether to examine the production or the consumption wage composition effects play an important but complicated role as well

monotone comparative statics under uncertainty this paper analyzes monotone comparative statics predictions in several classes of stochastic optimization problems the main results characterize necessary and sufficient conditions for comparative statics predictions to hold based on properties of primitive functions that is utility functions and probability distributions the results apply when the primitives satisfy one of the following two properties i a single crossing property which arises in applications such as portfolio investment problems and auctions or ii log supermodularity which arises in the analysis of demand functions affiliated random variables stochastic orders and orders over risk aversion

skill accumulation in the market and at home abstract an evolving outside option is introduced into a stochastic directed search model with skill loss during non employment using multi spell data from the sipp i show that average reemployment wages are only mildly sensitive to unemployment duration while the job finding probability is highly sensitive to duration with evidence of true duration dependence in both variables though untargeted the model produces a quantitatively accurate decline in the job finding probability and starting wage improving over a model with a fixed outside option the addition of aggregate shocks leads to an nonlinear response of the unemployment and participation rates during and after recessions with more severe recessions resulting in stronger hysteresis

bertrand competition when rivals costs are unknown the conclusions of the bertrand model of competition are substantially altered by the presence of asymmetric information about rivals costs asymmetric information eliminates the discontinuity in the bertrand model and significantly alters the properties of the market equilibrium in the bertrand nash equilibrium when rivals costs are unknown firms price above marginal cost and have positive expected profit the analysis is extended to franchise competition the market equilibrium is sensitive to market structure and yields incentives for entry copyright 1995 by blackwell publishing ltd

on the existence of positive equilibrium profits in competitive screening markets abstract frictionless consumer choices and price competition are often associated with competitive markets and vanishing equilibrium profits we discuss vanishing profits in competitive screening markets like insurance we assume symmetric firms which exhibit constant returns to scale consumer heterogeneity creates the possibility of adverse selection firms can offer multiple contracts in equilibrium and importantly in any deviation nash equilibrium profits vanish if each consumer has a unique optimizing bundle at equilibrium prices or more generally if there exists a linear ordering of contracts that dictates the preferences of firms whenever consumers are indifferent between multiple optimal contracts of particular interest equilibrium profits vanish if for each agent indifference curves are steeper than iso profit curves the results extend to miyazaki wilson spence equilibria we provide examples of economies where there exists an equilibrium with strictly positive profit and show that these examples are robust hold for an open set of economies

bertrand competition under uncertainty we look at a bertrand model in which each firm may be inactive with a known probability so the number of active firms is uncertain the model has a mixed strategy equilibrium in which industry profits are positive and decline with the number of firms the same features which make the cournot model attractive unlike those in a cournot model with similar uncertainty bertrand profits always increase in the probability that firms are inactive profits decline more sharply than in the cournot model the pattern found empirically in bresnahan and reiss 1991

unemployment dynamics and duration dependence a major issue in the analysis of unemployment durations concerns distinguishing genuine duration dependence of the exit rate out of unemployment from unobserved heterogeneity we present a method for the nonparametric estimation of both phenomena designed to be applicable to time series data on aggregate outflows from different duration classes the model explicitly takes into account that individual exit rates are affected by the business cycle and by seasonal effects the method is applied to u s data we find diverging duration effects among black and white individuals however except for white males duration dependence is dominated by unobserved heterogeneity

noncontractible heterogeneity in directed search this paper provides a directed search model designed to explain the residual part of wage variation left over after the impact of education and other observable worker characteristics have been removed workers have private information about their characteristics at the time they apply for jobs firms value these characteristics differently and can observe them once workers apply they hire the worker they most prefer however the characteristics are not contractible so firms cannot condition their wages on them this paper shows how to extend arguments from directed search to handle this allowing for arbitrary distributions of worker and firm types the model is used to provide a functional relationship that ties together the wage distribution and the wage duration function this relationship provides a testable implication of the model this relationship suggests a common property of wage distributions that guarantees that workers who leave unemployment at the highest wages also have the shortest unemployment duration this is in strict contrast to the usual and somewhat implausible directed search story in which high wages are always accompanied by higher probability of unemployment

in search of a stylised fact do real wages exhibit a consistent pattern of cyclical variability the paper surveys the studies on the cyclical behaviour of real wages published from the twenties onwards the traditional simple neoclassical model of the labour market suggests that real wages tend to move countercyclically however from a theoretical viewpoint there are few reasons to expect this behaviour once the simple model is extended to account for imperfect competition uncertainty lagged responses or contracting between firms and workers empirical studies give different answers to the problem the contributions reviewed in the paper are arranged roughly in a chronological order the interwar period the postwar pre econometric studies the econometric work using aggregate data the evidence produced on the basis of longitudinal data the analyses of the shock responsiveness of real wages and finally the most recent papers attempting a reconciliation of the somewhat conflicting evidence derived from aggregate and panel data

an equilibrium theory of learning search and wages we propose an equilibrium theory of learning from search in the labor market which addresses the search behavior of workers the creation of jobs and the determination of wages as functions of labor market histories in the model each worker has incomplete information about his job finding ability and learns about it from his search outcomes the theory formalizes a notion akin to discouragement over each uninterrupted unemployment spell unemployed workers update their beliefs about their job finding abilities downward and reduce their desired wages one contribution of the paper is to integrate learning from search into an equilibrium framework by inducing endogenous heterogeneity in workers beliefs learning from search provides a novel explanation for a set of related empirical observations about the labor market including unemployment duration dependence and wage dispersion another contribution is to apply lattice theoretic techniques to analyze learning from experience which is useful because learning generates convex value functions and in principle multiple solutions to a worker s optimization problem

real business cycles in this paper we demonstrate how certain very ordinary economic principles lead maximizing individuals to choose consumption production plans that display many of the characteristics commonly associated with business cycles our explanation is entirely consistent with i rational expectations ii complete current information iii stable preferences iv no technological change v no long lived commodities vi no frictions or adjustment costs vii no government viii no money and ix no serial dependence in the stochastic elements of the environment we also provide a completely worked out example of the type of artificial economy we have in mind the time series properties of the example exhibit some major features of observed business cycles although this type of model may not be capable of explaining all of the regularities in actual business cycles we believe that it provides a useful well defined benchmark for assessing the relative importance of factors e g monetary disturbances

bertrand competition with intermediation abstract we consider a duopolistic bertrand competition setting in which competing firms can turn into intermediaries the intermediation option allows firms to take advantage of the rival firm s low price we then give conditions for the existence of equilibrium