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

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

distinguishing between whole farm vs partial farm participation in the conservation reserve program by distinguishing between the decision to participate in the conservation reserve program crp and the decision for whole farm vs part farm participation we model participation as separate binary decisions our results suggest the farm characteristics and other factors affect the decision to participate in crp differently than the decision regarding whole farm vs part farm participation this model formulation also helps to clarify the conditions under which the effect of crp payments on the acreage enrolled in the program is positive or negative

the effect of scale on the response to reform by chinese state owned construction units abstract using firm level data on large and medium state owned construction units a production function approach evaluates the effect of scale on the response of chinese state enterprises to reform large state units have greater economies of scale but are less productive and less input price efficient as investment increases in nonproductive fixed assets large unit profits are declining fastest and a comparison of coastal interior and ministry level units contradicts the hypothesis that competition is the primary source of this decline instead falling profits are explained by the increased autonomy which allows these units to be more inefficient

the effect of child support payments on the labor supply of female family heads an econometric analysis recent census bureau statistics show that women who receive child support payments have higher earnings and work longer hours than women who do not does this suggest that child support unlike all other nonwage income does not deter work effort or are women who receive it simply different we use 1979 1982 cps data on divorced or separated women to estimate the determinants of hours worked when afdc participation and child support are endogenous we find evidence of unobservable differences between women who receive child support and those who do not controlling for these both child support and other nonwage income appear to reduce hours worked but the deterrent effect of child support is considerably less

labour supply of married women in canada 1980 this study uses recently released data from the 1981 census to reex amine the labor supply behavior of married women in canada using j j heckman s procedure to correct for selectivity bias and incorporating the influence of income taxes this study finds small wage and income effects on canadian wives labor supply the estimat es are similar in magnitude to those reported by a n akamura and m nakamura 1981 in their study of data from the 1971 census and t o t he estimates reported in a more recent canadian study by c robinson and n tomes 1985 who used data drawn from the 1979 quality of life survey

unemployment insurance and subsequent job duration job matching versus unobserved heterogeneity the relationship between unemployment insurance ui benefit duration unemployment duration and subsequent job duration is investigated using a multi state duration model with state specific unobserved heterogeneity i examine two potential explanations for the negative correlation between unemployment and job spell durations ui benefits increase job matching quality the matching effect versus unobserved heterogeneity adverse selection the matching effect is found to be weak although new jobs accepted within 5 weeks of benefit termination seem to have a higher dissolution rate the negative correlation between unemployment and job duration is mostly explained by unobserved heterogeneity various simulations indicate that increasing the maximum benefit duration by one week will raise expected unemployment duration by 1 0 to 1 5 days but will raise expected job duration by 0 5 to 0 8 day only copyright 2001 john wiley sons ltd

takeovers and other influences on economic performance a plant level analysis the results of an empirical investigation into the effects of takeovers and other variables on corporate performance is reported our sample of 972 establishments is taken from the workplace industrial relations survey 1984in which the plant is the unit of investigation and the assessment of performance is made by mangers using logit analysis we find that the main determinansts of relative financial performance are avoidance of takeover and strength of market position the main determinants of growth of sales are profitability change of ownership smaller size and lack of market dominance in these results we find support at the plant level for views on the effects of mergers market dominance and the determinants of growth that have traditionally been demonstrated at the level of the firm

wage returns to ownership and fee responses to physician supply the labor and entrepreneurial components of reported physician net income are separated in an analysis of input and output market performance a wage equation corrected for selectivity bias is estimated for employee physicians and the results indicate that the performance of the labor market for primary care physicians is consistent with competitive theory the parameters are used to predict opportunity wage rates for self employed physicians differences between net income per hour and the predictions indicate that 16 percent of net income from practice is attributable to entrepreneurship evidence of negative selectivity into employee status is also found copyright 1990 by mit press

the effects of derivatives on firm risk and value using a large sample of nonfinancial firms from 47 countries we examine the effect of derivative use on firm risk and value we control for endogeneity by matching users and nonusers on the basis of their propensity to use derivatives we also use a new technique to estimate the effect of omitted variable bias on our inferences we find strong evidence that the use of financial derivatives reduces both total risk and systematic risk the effect of derivative use on firm value is positive but more sensitive to endogeneity and omitted variable concerns however using derivatives is associated with significantly higher value abnormal returns and larger profits during the economic downturn in 2001 2002 suggesting that firms are hedging downside risk

working life well being and welfare reform motivation and institutions revisited summary this article revisits the relation between economic institutions and motives to work it proposes moving away from a dominant polemical focus on the impact of a single source of security income support towards a multi factorial analysis based on control over working life as a source of well being and motivation to work drawing on surveys of two urban constituencies in sao paulo brazil it is found that income security supports an aristotelian principle of work motivation as individual development however labour market institutions and opportunity levels affect this link implications include a need to consider the distribution of economic control as a key aspect of both human and economic development

how valuable is a good reputation a sample selection model of internet auctions on the online auction site ebay by convention sellers do not ship goods to winning bidders until after they have received payment so there is an opportunity for sellers to take advantage of bidders trust realizing this the designers of ebay created a system that relies on self enforcement using reputation several recent studies have found that bidders give little or no reward to sellers who have better reputations i show that in fact sellers are strongly rewarded for the first few reports that they have behaved honestly but marginal returns to additional reports are severely decreasing

evidence on the volunteer labor supply of married women 1 introduction in this paper i investigate the volunteer labor supply of married women there are dozens of studies that examine the labor supply of married women and a smaller number that investigate the supply of volunteer labor in general as far as i know there are none that have focused on the supply of volunteer labor by married women i analyze time diary data for the 1970s to consider one main question and three subsidiary questions i what was the direct effect of economic variables after tax wage rate and other income on married women s volunteering both participation and hours ii does the number of children in the family influence the volunteering of married women to the extent that rising wages may induce smaller family size is this an indirect channel that reduces volunteering if one of the motivations for volunteering is to increase the quantity or quality of activities for one s own children the 1970s is an especially interesting time period to examine in the united states as that was the decade that saw the first large increases in married women s labor force participation rates iii are time and donations substitutes or complements for married women iv do the data support the brown and lankford 1992 modeling conjecture concerning a sequence of time allocation decisions as opposed to the gronau model of household time allocation where such decisions are made simultaneously gronau 1986 i find that i the volunteer labor supply for married women is positively sloped and inelastic with an estimated wage elasticity of 0 64 rises in the net wage have a small negative effect on married women s participation in volunteer activities a 25 rise in the net wage is associated with a 1 drop in the probability of volunteering there is a small negative other income from assets and husband s earnings elasticity of volunteer labor supply 0 09 so other sources of income mattered for married women s volunteering in the 1970s the effect of other income on married women s volunteer participation is positive ii having more children increases the probability of volunteering but reduces the number of hours volunteered iii donations of time and money appear to be substitutes overall the elasticity of married women s volunteer hours with respect to the tax price of giving is greater than two the participation effect is again negative this result is tentative because the data are not based on tax return information and i lack good information on cash donations iv there is mixed support for the brown and lankford conjecture the finding of a positive wage elasticity of volunteer labor supply is at odds with the opportunity cost of time interpretation of the wage especially as the finding for other income is also negative implying that volunteer hours are an inferior good substitution and income effects would therefore both be in a negative direction as the net wage rises the results with the sequential specification are sensible and easily interpreted but the key parameter estimate does not quite meet conventional standards of statistical significance increased hours of work decrease married women s participation and hours an added test of the sequential model is less favorable the wage findings suggest that rising wages for women caused a reduced incidence of volunteering among married women but if anything increased the hours of volunteering one possible vehicle for this would be the entry of women into professional careers where volunteering is a normal part of the career another possible explanation is that married women with a loose attachment to volunteering stopped volunteering and those married women with greater attachment to volunteering increased their hours commitments to offset the participation effect the link between children and volunteering is important as an indicator of how much selfinterest is involved in volunteering for example school volunteering may be a way of providing enhanced investment in one s own children where the benefit to others is a by product

female income and the divorce decision evidence from micro data escalating divorce rates during the 1960s and 1970s led to large numbers of academic investigations into the causes of divorce most of these studies concentrated on a significant increase in female income that resulted from rising female labour force participation rates the difficulty with quantifying these arguments is that it is possible to observe the income of married females or it is possible to observe the income of divorced females but it is not possible to observe both outcomes simultaneously this research attempts to resolve these difficulties by using sample selection techniques to correct for possible bias from simple observation of the income of married and divorced females

competition in regional environmental policies when plant locations are endogenous abstract a two region model is presented in which an imperfectly competitive firm produces a good with increasing returns at the plant level production of the good causes local pollution the firm decides whether to maintain plants in both regions serve both regions from a single plant or shut down if the disutility of pollution is high enough the two regions will compete by increasing their environmental taxes standards until the polluting firm is driven from the market alternatively if the disutility from pollution is not as great the regions will usually compete by undercutting each other s pollution tax rates

job displacement and the transitions to re employment and early retirement for non employed older workers abstract despite the relatively higher frequency of job displacement among older workers in europe little is known about its effect on the work retirement decision employing individual data from the european community household panel for a number of countries with differences in their institutional environments the effect of job displacement for non employed workers is identified separately for the transitions into re employment and retirement the findings suggest that in countries with relatively more generous unemployment insurance provisions for the older unemployed which offer a pathway to early retirement older displaced workers exhibit lower re employment and higher retirement rates compared to the non displaced these results are robust to dynamic selection due to unobserved heterogeneity and to the endogeneity of displacement

testing for sample selection bias a simple regression test of the null hypothesis of no sample selection bias has been suggested by j j heckman because of its computational simplicity this test is widely used by applied researchers this paper shows that heckman s test is equivalent to the lagrange multiplier test of the null hypothesis this allows us to readily deduce that the simple regression test also has desirable large sample properties

unemployment insurance and unemployment over time an analysis with event history data using event history data this paper analyzes the distribution of reemployment spell durations conditional on the completed length of the preceding contiguous spell of unemployment the model is used to infer how unemployment insurance through unemployment duration may affect the likelihood of reentering unemployment special attention is paid to the endogeneity between unemployment and reemployment duration and the sample information contained in the fact that some individuals obtain reemployment by recall as opposed to acceptance of a new job copyright 1995 by mit press

unemployment insurance and male unemployment duration in canada a model of unemployment duration is estimated with weekly micro data on canadian men entitlement provisions in the unemployment insurance program and demand conditions are found to have a significant effect on the probability of leaving unemployment the probability of a worker leaving unemployment declines with the duration of unemployment holding unemployment insurance entitlement constant when entitlement is allowed to vary the probability of leaving first falls and then generally rises with unemployment duration these results are robust with respect to allowing for person specific unobserved heterogeneity and alternative specifications of duration dependence

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

comparing public and private schools the puzzling role of selectivity bias recent articles using the same data and variants of the same estimation technique report conflicting estimates of the relative quality of education provided by public and catholic schools this article explains the reasons for the conflict in so doing the article clarifies the assumptions underlying the increasingly popular two step methods for controlling selectivity bias and highlights the hazards of using these methods when the assumptions are not satisfied the article also illustrates an alternative method for detecting the presence of selectivity bias

guestworker migration remittances and the extended family evidence from pakistan the paper places migration in the context of the extended family it models informal loans between migrant and extended family for financing the costs of international labor migration to show repayments to extended family is important we trace the effects of such loans on migrant savings and remittance to the immediate family we employ a standard life cycle approach which predicts that the demand for extended family financing rises with migration costs and falls with pre migration wealth remittance to the immediate family and savings retained abroad both fall with the pre migration loan these hypotheses are tested using data from a survey of return migrants to pakistan carried out in 1986

bank capital structure regulatory capital and securities innovations since late 1993 nonfinancial corporations have used financial instruments that permit them to treat preferred stock dividends as tax deductible interest bank holding companies bhcs however did not issue these trust preferred securities tps until 1996 when the federal reserve qualified them as tier 1 capital we delineate and test five not mutually exclusive hypotheses by 1 analyzing the stock market s reaction to the fed s ruling and to tps filings and 2 comparing bhcs that issued tps with those that did not we find that regulatory capital requirements tax savings and uninsured sources of funds had significant positive effects on bhcs demand for capital and that the market responded favorably to tps filings our event study findings are contrary to prior empirical results in that we find a positive market reaction to equity offerings

does reducing unemployment insurance generosity reduce job match quality abstract this paper analyzes how a change in slovenia s unemployment insurance law affected the quality of jobs workers found after periods of unemployment taking advantage the natural experiment we show through difference in differences estimation results that reducing the potential duration of unemployment benefits had no detectable effect on wages on the probability of securing a permanent rather than a temporary job or on the duration of the post unemployment job

r d and subsidies at the firm level an application of parametric and semi parametric two step selection models this paper analyzes the effects of public r d subsidies on r d expenditure in the german manufacturing sector the focus is on the question whether public r d funding stimulates or crowds out private investment cross sectional data at the firm level is used by apllying parametric and semiparametric selection models it turns out that public funding increases firms r d expenditure altough the magnitude of the treatment effect depends on the assumpions imposed by the particular selection model

wage discrimination in the reemployment process this paper examines wage discrimination by gender in the reemployment market by looking at the experiences of unemployed individuals and decomposing their wage gap upon reemployment the neumark decomposition technique is extended to incorporate selectivity and counter factual estimates are used to explain the development of the wage gap over time whereas total discrimination upon reemployment is declining over time the part directly attributable to hiring is increasing policy makers should consider that employers constrained by existing legislation that does not address hiring issues directly are switching over to discriminatory hiring practices that are becoming relatively easier to adopt less likely to be detected and harder to prove in a court of law

the effectiveness of yts as a manpower policy using data from the 1985 and 1986 scottish people s surveys this paper attempts to measure the effectiveness of the youth training scheme by estimating the impact of youth training scheme participation on both the subsequent probability of employment and the subsequent earnings potential the youth training scheme is found to have a positive impact on the probability of employment after allowing for possible sample selection bias owing to participation being nonrandom there are indications that the youth training scheme may have a positive impact on subsequent wages but the estimates are so imprecise that it was not possible to draw any statistically significant conclusions about wage effects copyright 1990 by the london school of economics and political science

bidding for firms recently toyota sought a plant location in the united states the 800 million plant will employ 3000 workers and numerous states offered toyota generous investment incentives hoping this would induce toyota to select their state the commonwealth of kentucky won this competition but the price was high the present value of the payments exceeds 125 million the payment of investment incentives for the toyota plant is not unique in 1976 pennsylvania paid 75 million to attract a volkswagen plan nissan honda and mazda received generous investment incentives when locating plants in the united states and this bidding is not limited to states to attract the headquarters of the presbyterian church usa with its 1300 jobs and 38 million annual payroll civic leaders in louisville kentucky offered the church a warehouse and 6 2 million for renovation of the structure bidding the church away from kansas city missouri in this paper we contend that this competition may result from the average cost pricing of publicly provided goods and services 2 when the marginal cost of providing a firm and its workers with public services is less than the tax revenue they generate a government may offer the firm subsidies that reduce the distortions the average cost pricing of the public service creates thus this competition for industry is not a zero sum game where the subsidies are only transfers from the government to the firm rather these subsidies may facilitate the efficient location of industry

order submission strategy and the curious case of marketable limit orders we provide empirical evidence on order submission strategy of investors with similar commitments to trade by comparing the execution costs of market orders and marketable limit orders i e limit orders with the same trading priority as market orders the results indicate the unconditional trading costs of marketable limit orders are significantly greater than market orders we attribute the difference in costs to a selection bias and provide evidence suggesting the order submission strategy decision is based on prevailing market conditions and stock characteristics after correcting for the selection bias the results show the average trader chooses the order type with lower conditional trading costs

labor market effects of unemployment insurance design with the emergence of the great recession unemployment insurance ui is once again at the heart of the policy debate in this paper we review the recent theoretical and empirical evidence on the labor market effects of ui design we also discuss policy issues related to ui design including the structure of benefits the role of liquidity constraints and the pros and cons of a ui system in which the generosity of ui benefits is varying over the business cycle finally we identify potential areas of future research

wage and labor supply effects of illness in cote d ivoire and ghana instrumental variable estimates for days disabled abstract sickness should make individuals less productive but there are problems in measuring this effect first how is adult morbidity measured in a household survey second how is the impact or morbidity on productivity inferred if earning is partly used to improve health self reported functional activity limitation due to illness is considered an indicator of morbidity for wage earners and self employed people to deal with both the measurement and joint determination problems an instrumental variable estimation approach is used where local food prices and health services instrument for disability days that reduce wages by at least 10 and hours by 3 or more

the employer size wage gap evidence for britain university of edinburgh and university of sussexfinal version received 5 may 1992 this paper presents estimates for the employer plant size wage gap for britain using anordered probit model selectivity corrected wage equations are estimated for three plant sizecategories in a comparison between plants with more than 500 workers and those with lessthan 100 a wage gap estimate of over 17 per cent is detected the wage effects of unionizationin plants with more than 500 workers is reported as insignificant in contrast to evidenceprovided by idson and feaster 1990 for the united states no evidence of non randomsorting of workers across plant size is detected

the determinants of migrating with a pre arranged job and of the initial duration of urban unemployment an analysis based on indian data on rural to urban migrants abstract based on survey data on 1 400 rural migrants in delhi this paper examines within a multivariate context the determinants of migrating with a pre arranged job and of the initial duration of urban unemployment the results show that the probability of moving with a prearranged job increases with education and with age and is higher for those who seek non manual jobs for migrants who arrive in the city without a pre arranged job unemployment duration depends on marital status premigration information on urban employment opportunities and on the reliance on contacts for job search

can welfare abuse be welfare improving abstract i analyze quantitatively a model of labor search with unemployment insurance ui savings voluntary quits and various labor attachment requirements in particular i study welfare consequences of a powerful reform giving ui entitlement to workers quitting their jobs voluntarily in order to search for another one results of the model calibrated to the us labor market show that there may be significant welfare gains associated with pursuing a generous entitlement policy for quitters as compared to the us status quo moreover i employ the assumption of monetary search costs and show that it can explain the empirically documented unemployed worker search behavior finally by inducing different unemployment benefit eligibility requirements the model identifies a concrete policy that could help us understand differences in the unemployment rate match quality and income inequality between the us and europe

pension wealth and household savings tests of robustness abstract a substantial literature exists on the impact of pension schemes both public and private on the level of household saving yet there is no clear consensus on the impact of pensions on private saving in this paper we show how beliefs about this displacement effect are modified by prior beliefs both about variables which might be relevant in an equation for private savings and about the magnitude of the displacement effect using data for 8279 canadian households and estimates of pension wealth both private and social security which we construct for each household in the sample the estimated displacement effects are found to be relatively robust with respect to both types of prior belief

unemployment vs mismatch of talents reconsidering unemployment benefits we develop an equilibrium search matching model with risk neutral agents and two sided ex ante heterogeneity unemployment insurance has the standard effect of reducing employment but also helps workers to get a suitable job we show through calibrations how the mere difference on unemployment insurance when countries experience a common skilled biased technological shock may result in differences in unemployment productivity growth and wage inequality these results are consistent with the contrasting performance of the labour market in europe and the united states in the last twenty five years the model is used to address some political economy issues

employment spells and unemployment insurance eligibility requirements in this paper we examine whether the requirements that workers must satisfy to qualify for unemployment insurance ui benefits in any succeeding period of joblessness affect the duration of employment spells this behavioral consequence of a ui system has been neglected in empirical research which has instead focused on the effects of ui parameters on the actions of the unemployed the effect is identified by a unique change in the eligibility requirements of the canadian ui system in 1990 which increased the weeks of employment required to establish ui eligibility we provide a variety of estimates of this behavioral effect in our preferred set of results we find a significant increase in the employment hazard in the week that an individual satisfies the eligibility requirement in many regions of the country in the spirit of feldstein s 1976 study of temporary layoffs the results provide new evidence of the impact of ui system parameters on the actions of employers and workers

unemployment insurance wage dynamics and inequality over the life cycle we investigate the relationship between life cycle wages and individual membership of unemployment insurance schemes in denmark we separate permanent from transitory wages and characterise them using membership of unemployment insurance funds we find that unemployment insurance is associated with lower wage growth heterogeneity over the life cycle and greater wage instability changing the nature of wage inequality from permanent to transitory although we are in general unable to formally test for moral hazard against adverse selection into unemployment insurance robustness checks suggest that moral hazard is the relevant interpretation

symbolism matters the effect of same sex marriage legalization on partnership stability abstract registered partnership rp and marriage in the netherlands are identical in terms of rights and obligations but may differ in symbolism exploiting same sex marriage legalization ssml in the netherlands as a policy shock we investigate the effect of marital symbolism on partnership stability applying a mixed competing risks model to administrative micro data we disentangle selectivity into marriage from the effect of getting married our main finding is that partnerships that transformed into marriage had a substantially lower separation rate we take this result as evidence of the symbolic effect of marriage stabilizing partnerships we discuss economic mechanisms of marital symbolism related to marriage premiums

do efficiency wages explain dismissals this study modifies rebitzer s 1987 model of efficiency wages to predict dismissal from employment using a sample selection method and data from australian workplaces the analysis supports the predictions that both very high and very low levels of required effort loose labour markets and high dismissals costs are associated with fewer dismissals among other results we find extensive internal labour markets and active unions reduce dismissals the evidence suggests that large employers rely more heavily on dismissals to motivate employees although such employers screen more effectively and so exhibit lower dismissal rates jel j24 j41 j42

how does the benefit effect vary as unemployment spells lengthen summary this paper investigates how the effect of income while unemployed on the probability of an individual leaving unemployment varies with the length of time that the individual has been unemployed we examine this question in the context of a variety of alternative econometric models we extend the proportional hazards model with unrestricted baseline hazard to one in which there are unrestricted effects of a subset of the explanatory variables and also consider models that can be estimated as series of binary response models the proportional hazard restrictions are rejected for the sample of british unemployed men analysed and in the binary sequence framework logit and probit models based on symmetric distributions dominate in likelihood terms the extreme value form model implied by extension of the proportional hazards formulation logit models with a flexible form for the duration dependence which also incorporate unobserved heterogeneity in a flexible way are estimated the results for all formulations indicate a rapidly declining effect of unemployment income as a spell lengthens with no significant effect for the long term unemployed the preferred specifications which allow for omitted heterogeneity indicate no significant effect after about 5 months and this result is robust to the inclusion or exclusion of previous labour market experience variables and to the choice of mixing distribution

sample selection and biases in local house value indices abstract analysis of cross sectional or intertemporal variations in house values among localities requires reliable house value indices however prior studies applying the hedonic method to transaction data have reported price series that may be biased our paper investigates a possible cause of bias and uses a censored regression technique extended to an intertemporal model to derive an unbiased index we apply our method to 1971 1991 data from the miami florida msa and find evidence in time varying amounts of bias our results suggest that prior studies using the hedonic method and samples consisting only of sold houses have understated the intertemporal variability of house prices

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

benefit duration unemployment duration and job match quality a regression discontinuity approach summary we use a sharp discontinuity in the maximum duration of benefit entitlement to identify the effect of extended benefit duration on unemployment duration and post unemployment outcomes employment stability and re employment wages we address dynamic selection which may arise even under an initially random assignment to treatment estimating a bivariate discrete time hazard model jointly with a wage equation and correlated unobservables owing to the non stationarity of job search behavior we find heterogeneous effects of extended benefit duration on the re employment hazard and on job match quality our results suggest that the unemployed who find a job close to and after benefit exhaustion experience less stable employment patterns and receive lower re employment wages compared to their counterparts who receive extended benefits and exit unemployment in the same period these results are found to be significant for men but not for women copyright 2012 john wiley sons ltd

the impact of late nineteenth century unions on labor earnings and hours iowa in 1894 this paper presents an analysis of data on male workers taken from an 1894 survey of the iowa labor market consistent with the results of earlier research by paul douglas the author finds evidence of a statistically significant and economically important union earnings premium the analysis also shows that late nineteenth century unionism like unionism in the twentieth century tended to reduce wage dispersion on the other hand the author finds no evidence that late nineteenth century unions reduced the length of the workday for union members compared to nonunion workers

job mobility wage determination and market segmentation in the presence of sample selection bias this paper tests the hypothesis that mobility between jobs is an important determinant of individual wages and that econometric estimates of wage determination should correct for sample selectivity bias in job mobility we also test the hypothesis that different patterns of job mobility produce different appropriate corrections for sample selectivity bias in different segments of the labour market we conclude that labour market segments do differ and in particular that one can identify a marginal or low wage sector with mobility patterns and pay packages which differ from the pattern one can discern in the labour market as a whole mobilite entre emplois determination des salaires et segmentation du marche quand il y a biais de selection dans l ehantillonnage ce memoire verifie l hypothese que la mobilite entre emplois est un element determinant des salaires des individus et la proposition que les calibrations econometriques du processus de determination des salaires doivent etre corrigees pour tenir compte d un biais de selection dans l echantillonnage de mouvements entre emplois les auteurs verifient aussi l hypothese que differents patterns de mobilite entre emplois commandent des corrections appropriees differentes dans differents segments du marche du travail les auteurs en arrivent a la conclusion que les divers segments du marche du travail sont differents et qu en particulier on peut reperer un secteur marginal ou de bas salaires ofu les patterns de mobilite entre emplois et les remunerations different remarquablement de ce qui se passe dans le marche du travail dans son ensemble

unemployment fears and deflationary spirals the interaction of incomplete markets and sticky nominal wages is shown to magnify business cycles even though these two features in isolation dampen them during recessions fears of unemployment stir up precautionary sentiments which induces agents to save more the additional savings may be used as investments in both a productive asset equity and an unproductive asset money but even a small rise in money demand has important consequences the desire to hold money puts deflationary pressure on the economy which provided that nominal wages are sticky increases wage costs and reduces firm profits lower profits repress the desire to save in equity which increases the fear of unemployment and so on this is a powerful mechanism which causes the model to behave differently from both its complete markets version and a version with incomplete markets but without aggregate uncertainty in contrast to previous results in the literature agents uniformly prefer non trivial levels of unemployment insurance

when the going gets tough financial incentives duration of unemployment and job match quality in the aftermath of the great recession the spanish government reduced the replacement rate rr from 60 percent to 50 percent after 180 days of unemployment for all spells beginning on or after july 15 2012 using social security data and a differences in differences approach we find that reducing the rr by ten percentage points or 17 percent increases workers odds of finding a job by 41 percent relative to similar workers not affected by the reform to put it differently the reform reduced the mean expected unemployment duration by 5 7 weeks or 14 percent implying an elasticity of 0 86 a regression discontinuity approach indicates that the reform increased the job finding rate by 26 percent we find strong behavioral effects as the reform reduced the expected unemployment duration right from the beginning of the unemployment spell while the reform had no effect on wages it did not decrease other measures of post displacement job match quality after 15 months the reform decreased unemployment insurance expenditures by 16 percent about one half of which are explained by job seekers behavioral changes

the temporal nature of growth determinants in new bank foundings implications for new venture research design abstract several authors have suggested the founding period as a critical time in the development of a firm arguing that the resource and decision choices made at this point have a substantive impact on the firm s future yet historically most studies have measured new venture choices considerably after the founding period we suggest that the uniqueness of the founding event is important and test its validity through the examination of two implicit assertions these implicit assertions are those of temporal stability and temporal locus of growth determinants

life cycle schooling and dynamic selection bias models and evidence for five cohorts of american males this paper examines an empirical regularity found in many societies that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education we examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it we show that the implicit economic model assumes myopia the intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data we produce an alternative choice theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions

evaluating the impact of french employment policies on individual labour market histories this paper deals with the evaluation of some public employment policies set up in france during the 1980 s to improve the labour market prospects of unskilled young workers the evaluation implemented in this paper is restricted to the impact of such public measures on durations and outcomes of subsequent spells of unemployment and employment the econometric study is conducted with non experimental longitudinal microdata recording individual labour nlarket histories a particular attention is paid to the differential effects of various types of measures according to the educational level of recipients programmes involving a higher level of on thejob training such as alternating work training programmes in private firms are principally beneficial to the less educated young workers in contrast for more educated young workers work fare programmes in the public sector decrease the intensity of transition from the subsequent unemployment spell to regular jobs for that subgroup work fare programmes may act as a signal of low employment performance

unemployment insurance in europe unemployment duration and subsequent employment stability the disincentive effect of unemployment insurance on unemployment duration has been the focus of the empirical literature the potential effect of unemployment insurance on post unemployment outcomes which may be regarded as beneficial by improving job matching has attracted much less attention this paper provides evidence on the effect of unemployment benefits on unemployment and employment duration in europe using individual data from the european community household panel for eight countries country specific estimates based on multivariate discrete time duration models controlling for observed and unobserved individual heterogeneity suggest that although receiving benefits has an adverse effect in the sense of increasing unemployment duration there is also a positive effect by increasing subsequent employment duration this beneficial effect of unemployment insurance on employment stability is pronounced in countries with relatively generous benefit systems and for recipients who have remained unemployed for at least six months these findings are in line with theories suggesting a matching effect of unemployment insurance

unemployment dynamics among migrants and natives unemployment rates are often higher for migrants than for natives this could result from longer periods of unemployment as well as from shorter periods of employment this paper jointly examines male native migrant differences in the duration of unemployment and subsequent employment using german panel data and bivariate discrete time hazard rate models compared to natives with the same observable and unobservable characteristics unemployed migrants do not flnd less stable positions but they need more time to flnd these jobs the probability of leaving unemployment also varies strongly between ethnicities while flrst and second generation turks are identifled as the major problem group therefore policy should concentrate on the job flnding process of turkish migrants to flght their disadvantages on the labor market

pigou tiebout property taxation and the underprovision of local public goods abstract pigou s proposition that the use of distorting taxes rather than neutral head taxes reduces public service levels is examined in this paper a simple model with a national system of competing local governments is utilized to demonstrate that the use of a distorting property tax on mobile capital decreases the level of residential public services the case where public services are an intermediate producer good is also considered

employment dynamics of immigrants versus natives evidence from the boom bust period in spain 2000 2011 this article studies whether the durations in unemployment and employment for immigrants and natives respond differently to changes in economic conditions and to the receipt of unemployment benefits using spanish administrative data for the period 2000 2011 we estimate multi spell duration models that disentangle unobserved heterogeneity from true duration dependence our findings suggest that immigrants are more sensitive to changes in economic conditions both in terms of unemployment and employment hazards the effect of the business cycle is not constant but decreases with duration at a higher rate among immigrants we provide evidence that the higher job separation rates and lower capital labor complementarity of immigrants are mechanisms that are possibly compatible with these results we also find evidence of a disincentive effect of unemployment benefits on unemployment duration which is stronger for immigrants but only at the beginning of the unemployment spell especially under good economic conditions finally unemployment benefits increase job match quality only for native workers with temporary contracts jel j64 j61 c23 c41 j65

the definition of part time employment a switching regression model with unknown sample selection rejecting the standard less than thirty five hours per week categorization of part time workers this paper offers an empirically justified definition of the part time employed the definition is based on the distinction through wage payments that employers make between a high hours full time and a low hours part time group of workers a switching regression model of wage equations with deterministic but unknown sample selection is estimated resulting in a significant split between high hours and low hours workers that is higher than the standard definition wage differentials are calculated and decomposed and estimates from the structural choice model are presented copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

competing for a duopoly international trade and tax competition we analyse the tax subsidy competition between two potential host governments to attract the plants of rms in a duopolistic industry competition between identical countries for a monopoly rm s plant is known to result in subsidy in ation which leaves the winning country indierent towards hosting the rm in sharp contrast we show that with two rms both are taxed in equilibrium and the host countries appropriate the entire social surplus generated within the industry despite the explicit non cooperation between governments we extend our baseline model to allow for dierences in country size we investigate when this size asymmetry becomes su ciently large to change the nature of the equilibrium inducing concentration of production in the larger country

on the choice of incentives in firms abstract simple models of individual and group incentives under uncertainty are compared and comparative performance is shown to depend upon various exogenous parameters the incentive effects of profit sharing will thus vary with organizational and other characteristics that may be difficult to observe and attempts to quantify productivity effects that neglect selection bias are likely to be misspecified significant selection effects are found in previously used firm level data and productivity effects of existing profit sharing are found to be much larger than potential effects in firms without sharing arrangements this throws doubt on policies to encourage sharing in isolation

the match quality gains from unemployment insurance this paper assesses the benefits of unemployment insurance ui by measuring its effect in match quality we note that ui generosity should affect the decision to match or not and should therefore have some effect on match quality using nlsy data we analyze the relationship between postunemployment job tenure and measures of the state level ui generosity and the unemployment rate at the time the job is started we show that greater ui generosity leads to longer job tenure furthermore we find some evidence that this effect is more pronounced during busts ui having a limited dampening effect on the cyclical variation in match quality

arthritis and the earnings of men an analysis incorporating selection bias abstract arthritis is a chronic and crippling disease which affects the work effort and earnings of more than 14 million working age victims this paper examines the effects of arthritis on the earnings of men aged 18 to 64 arthritis has large and significant effects on earnings most models incorporating selection bias have examined groups with lower labor force participation rates than prime age males but significant selection bias is found here when selection bias is considered the estimated absolute effects of arthritis are increased and the percentage of the gap between arthritic and non arthritic males explained by arthritis as opposed to other factors increases this study is unusual in identifying the effects of a single disease on earnings

the joint design of unemployment insurance and employment protection a first pass unemployment insurance and employment protection are typically discussed and studied in isolation in this paper we argue that they are tightly linked and we focus on their joint optimal design in a simple model with risk averse workers risk neutral firms and random shocks to productivity we show that in the first best unemployment insurance comes with employment protection in the form of layoff taxes indeed optimality requires that layoff taxes be equal to unemployment benefits we then explore the implications of four broad categories of deviations from first best limits on insurance limits on layoff taxes ex post wage bargaining and ex ante heterogeneity of firms or workers we show how the design must be modified in each case finally we draw out the implications of our analysis for current policy debates and reform proposals from the financing of unemployment insurance to the respective roles of severance payments and unemployment benefits

does risk matter the case of wage labour allocation by owner cultivators this study analyses the impact of revenue risk on the hiring out behaviour of owner cultivators since hiring out is not certain labour market risk is also allowed for a large sample of owner cultivators residing in semi arid regions in india and hence subject to high production and labour market risks is used for this purpose it is found that possibly because production risks carry forward into the local labour market households are unable to use the labour market as a hedge against production risk we also find that labour force participation is positively affected by increases in the real wage rate a result that is contrary to the findings of earlier studies using data from less developed agriculture several other insights also result

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

housing purchases and transitory income a study with panel data in this paper we explore the role of transitory income in the housing purchase decision because of moral hazard considerations banks typically require downpayments to be financed internally hence transitory income is potentially important in overcoming the downpayment constraint using a novel approach to the measurement of permanent and transitory income we estimate a two stage model in which households decide whether to purchase housing in the first stage and the quantity to be purchased in the second the results indicate a significant role for transitory income in both decision stages

child support welfare dependency and poverty female headed families have among the highest poverty rates of any major demographic group in the united states the purpose of this paperis to investigate empirically the effectiveness of current child support enforcement policies and to determine their role in reducing poverty and welfare dependency a special supplement to the april 1982 current population survey provides the data for the analysis the results indicate that child support enforce ment may represent an effective means for re ducing welfare program costs but isunlikely to have a dramatic effect on either welfare de pendency or poverty copyright 1986 by american economic association

unemployment compensation and high european unemployment a reassessment with new benefit indicators generous unemployment benefits lie at the heart of the conventional explanation for persistent high unemployment the effects of benefit generosity on work incentives are more ambiguous in a broader behavioural framework in which workers get substantial disutility from unemployment given income and know that unemployment has scarring effects in the future the micro evidence suggests modest effects of changes in generosity but there are reasons to doubt that the impacts on national unemployment rates are consequential the empirical case for the orthodox prediction comes from cross country regressions on the oecd s gross replacement rate grr but the published evidence is mixed and we find little support in the pattern of annual changes in the grr and the unemployment rate for oecd countries over the last three decades we take advantage of new and much improved net replacement indicators from the oecd which show little correlation with either the grrs or with unemployment and employment rates we conclude that the available evidence does not offer compelling support for the conventional view

economic rents derived from hospital privileges in the market for podiatric services abstract this study examines the relative impacts of human capital and market conditions on the economic rents associated with hospital privileges in the market for footcare an empirical model of hospital privileges for podiatrists is formulated based on the pauly redisch model of hospital behavior the privelege model is then incorporated into a model of podiatrists earnings via a selection adjustment as proposed by heckman and lee the results indicate the persistance of economic rents even after controlling for unobserved quality factors

gender differences in displacement cost evidence and implications this paper uses a unique and newly available data set on displaced workers to estimate differences in the wage costs of displacement between women and men while predisplacement wages rise at about the same rate with tenure for women as men in this data set women lose more from displacement than men and the magnitude of this loss increases with tenure overall we interpret our results as not supportive of the specific capital hypothesis that women accumulate less firmspecific human capital than men and we suggest that future attempts to explain our result focus on gender differences in the process of search for a new job

on the empirical relationship between unemployment duration unemployment insurance and voluntary unemployment abstract this paper is concerned with the detection of the empirical consequences of nonstationarity in the search behavior of the unemployed initially workers are laid off and forced to search while unemployed upon re employment individuals may choose an employment search strategy continue search for better offers or initiate unemployment voluntarily by quitting their job if it is optimal to do so we refer to this strategy as voluntary unemployment we analyze how this decision is related to benefit exhaustion or more generally to the completed duration of unemployment and we are therefore able to find a relationship between unemployment duration and the incidence of voluntary unemployment the model is estimated from a panel of young canadian labor force participants

efficient unemployment insurance this paper constructs a tractable general equilibrium model of search with risk aversion an increase in risk aversion reduces wages unemployment and investment unemployment insurance has the opposite effect insured workers seek high wage jobs with high unemployment risk an economy with risk neutral workers achieves maximal output without any unemployment insurance but an economy with risk averse workers requires a positive level of unemployment insurance to maximize output therefore moderate unemployment insurance not only improves risk sharing but also increases output

tax competition in imperfectly competitive markets abstract the literature on strategic trade policy has shown that in imperfectly competitive markets governments have an incentive to subsidize exports of their own firms yet the consequence of the departure from laissez faire is a wasteful subsidy race in contrast this paper shows that even in imperfectly competitive markets there is a strong tendency for laissez faire to prevail the driving force is the firms willingness to exploit tax or subsidy differentials by relocating production a small tax differential induces firms to change their place of production the change in market structure has a negligible effect on the oligopoly equilibrium but a non negligible impact on government revenues when tax policy is non discriminatory governments gain lose by attracting all firms when production is taxed subsidized hence laissez faire is the only equilibrium since from the point of view of the two producing countries laissez faire nondiscrimination pareto dominates the intervention equilibrium discrimination nondiscrimination is a simple device to result in a mutual beneficial outcome

jeux sans frontieres tax competition and tax coordination when countries differ in size closer international integration is putting increasing pressure on existing national tax structures this paper uses a simple two country model to address a range of consequent policy concerns focusing particularly on the role of country size differences in size exacerbate the inefficiency from noncooperative behavior harming both countries the smaller country loses from harmonization to any tax rate between those set in the noncooperative equilibrium but both countries gain from the imposition of a minimum tax anywhere in that range the fully optimal response to freer cross border trade however may be to do nothing jel h20 h77

political hierarchies and political shirking abstract we analyze how citizens can screen candidates for high political office in a political hierarchy in our model politicians differ in willingness to misuse discretionary powers of office those politicians willing to abuse the powers of office knaves can be induced in a hierarchy to reveal their type while in low office thus disqualifying themselves for advancement hierarchy s capacity for screening knaves out of high office depends on the conditions for reappointment to low office a seemingly perverse rule that reappoints shirking politicians can perform well to demonstrate an empirical application we analyze shirking in the house bank check bouncing scandal

industrial blackmail dynamic tax competition and public investment a dynamic model of intergovernmental competition for a large plant is presented when local productivity is uncertain one firm determines the location of its plant in each period by conducting an auction soliciting bids from local governments equilibrium subsidies from the local governments are derived the author also consider a two stage game where local governments first choose a level of costly infrastructure then participate in the sequential auction even when costs are identical across locations investing in different levels of infrastructure is a nash equilibrium moreover when infrastructure is endogenous in this manner it is chosen efficiently

estimating random effects production function models with selectivity bias an application to swedish crop producers abstract in this paper the estimation of production functions and measurement of the rate of technical change is performed when selectivity bias is expected a sample selection model consisting of a selection and a regression equation is estimated using heckman s two stage method it is discussed in the context of a production function where the underlying technology is represented by a translog functional form for the regression a random effects model with heteroscedastic variances is assumed this model and an alternative conventional model retaining heteroscedasticity without considering selectivity bias are estimated using the generalized least squares method the data used are a large rotating panel data set from swedish crop producers over the period 1976 1988 the empirical results from the comparison between these two models show that the introduction of heteroscedasticity and the integration of sample selection in the production relationship is important the impact of a correction for selectivity bias on the results in terms of input elasticities and returns to scale is found to be significant

estimation of a labour supply model with censoring due to unemployment and underemployment this study proposes and implements a method of labour supply estimation which is appropriate when the sample contains unemployed and underemployed workers the estimation method consists of excluding unemployed and underemployed workers from the sample and then using to avoid selection bias an extension of heckman s approach to the case where two correlated selection rules generate the sample hausman s specification test is then used to determine whether ignoring constrained workers has led to biases in traditional labour supply estimates and the empirical results suggest that previous estimates of several important parameters are biased since the biases go in the direction that would be predicted by the hypothesis that the unemployed and underemployed are constrained the results support this hypothesis