the replacement problem abstract a prototypical vintage capital model of economic growth is developed where the decision to replace old technologies with new ones is modeled explicitly technological change is investment specific depreciation in this environment is an economic not a physical concept the vintage capital economy s balanced growth paths and transitional dynamics are analyzed the transitional dynamics are markedly different from the standard neoclassical growth model

growth and unemployment this paper analyses the effects of growth on long run unemployment using a search model of equilibrium unemployment where growth arises explicitly from the introduction of new technologies that require labour reallocation for their implementation the analysis uncovers and compares between two competing effects of growth on unemployment the first is a capitalisation effect whereby an increase in growth raises the capitalised returns from creating jobs and consequently reduces the equilibrium rate of unemployment the second is a creative destruction effect whereby an increase in growth reduces the duration of a job match thereby raising the equilibrium level of unemployment both directly by raising the job separation rate and indirectly by discouraging the creation of job vacancies this paper asks the question of how the rate of economic growth affects unemployment in the long run the main consideration that leads us to think that this is an interesting question has to do with the re allocative aspect of growth in the long run faster economic growth must come from a faster increase in knowledge to the extent that the advancement of knowledge is embodied in industrial innovations it is likely to raise the job destruction rate through automation skill obsolescence and the bankruptcy associated with the process of creative destruction in short increased growth is likely to produce an increased rate of job turnover and the search theories of lucas and prescott 1974 and pissarides 1990 imply that an increased rate of job turnover will result in a higher natural rate of unemployment this conclusion is also consistent with the empirical results of davis and haltiwanger 1990 which show that periods of high unemployment tend to be periods of high job turnover at the establishment level it suggests the possibility of a positive longrun tradeoff between growth and unemployment at least over some range there has been relatively little attention paid to our question in the literature on longrun determinants of unemployment for example the recent empirical examination by layard nickell and jackman 1991 of unemployment rates among oecd countries did not even consider the rate of economic growth as a possible explanatory variable this is consistent with the seminal theoretical work of phelps 1968 which implies that the natural rate of unemployment is independent of the rate of productivity growth the only

sources of intra industry wage dispersion how much do employers matter observed human capital explains less than half of wage variation in bls industry wage surveys establishment based wage differentials controlling for occupation account for 20 70 percent of intra industry wage variation this corresponds to a standard deviation in wages of 14 percent of the mean almost as large as interindustry wage variation investigation suggests that establishment wage differentials are not random variations or returns to usual measures of human capital

creative destruction and uncertainty uncertainty rises in recessions but does uncertainty cause downturns or vice versa this paper argues that counter cyclical uncertainty fluctuations are a by product of technology growth in a firm dynamics model with endogenous technology adoption faster technology growth widens the dispersion of firm level productivity shocks a benchmark uncertainty measure moreover faster technology growth spurs a creative destruction process generates a temporary downturn and renders uncertainty counter cyclical estimates from structural vector autoregressions vars on u s data confirm the model s predictions on average 1 4 of the cyclical variation in uncertainty is driven by technology shocks this fraction rises to 2 3 around the dot com bubble

persistence of interindustry wage differentials a reexamination using matched worker firm panel data we estimate interindustry wage differentials using new french longitudinal data that allow a tracking of workers and their firms over time we find that when measured on a cross sectional basis they primarily reflect the interindustry variations in unmeasured labor quality however interindustry wage differentials are only a minor component of interfirm wage differentials the average differential in wages paid to the same workers by different firms is about 20 30 in a given industry wage policies are more favorable to workers in large capital intensive firms

unemployment and productivity in the long run the role of macroeconomic volatility abstract this paper presents a new empirical regularity between the volatility of productivity growth and long run unemployment for a given level of long run productivity growth a theoretical framework based on asymmetric real wage rigidities is shown to have the potential to rationalize this finding the model tends to fit u s long run unemployment better than a specification based on long run productivity growth only especially during the great moderation and the great recession

determinants of long run unemployment this paper investigates the determinants of long run unemployment and growth by extending the endogenous growth model of howitt and aghion 1998 to allow for a more general treatment of the labor market in the spirit of pissarides 1990 we find that i both long run growth and unemployment depend not only on factors that affect long run growth as identified in endogenous growth models with full employment but also on certain labor market parameters ii long run unemployment may rise or fall with growth depending on the model s parameters and iii though government policies that promote growth indirectly through improvement in labor market efficiency always reduce the long run unemployment rate policies that directly encourage investment in research and development may increase the unemployment rate

foreign owned firms around the world a comparative analysis of wages and employment at the micro level abstract this paper provides the first microeconomic cross country analysis of the effects of foreign ownership on wages employment and worker turnover rates using firm level and linked worker firm data we apply a standardised methodology for three developed germany portugal uk and two emerging economies brazil indonesia we find that wage effects are larger in developing countries and that for each country the largest effect on wages comes from workers who move from domestic to foreign firms employment growth after foreign takeover is concentrated in high skill jobs in contrast to widespread fears there is no evidence that wage gains come at the expense of greater job insecurity separation rates actually fall slightly after takeover we conclude that the positive effect of foreign ownership on wages is not primarily driven by its impact on incumbent wages but by its impact on the creation of high wage jobs

whose greed whose grievance and whose opportunity effects of foreign direct investments fdi on internal conflict abstract this paper investigates the influence of foreign direct investments on the probability of civil conflict onset contributing to the debate on globalization and civil conflict i relax the common assumption that all forms of globalization are equivalent in their effects on civil conflict i also incorporate the cross sectoral heterogeneity of investments in existing arguments about the socioeconomic externalities of foreign direct investments as determinants of conflict with long time horizons and managerial control of their foreign affiliates foreign direct investors are strategic players aiming to maximize profits and uniquely able to alter their environment through socio political channels this distinguishes fdi from trade and foreign portfolio investments through a combination of political agency and socio economic influences on grievance and greed among domestic groups some types of fdi are likely to alleviate the risk of civil conflict service sector fdi while others exacerbate it primary sector fdi analyses using a new data set of sector specific fdi stock 1980 2013 lend empirical support to the argument showing that economic globalization can have simultaneous positive and negative externalities these findings are informative for the current dialogue on the role of global markets in sustainable development

technology shocks and job flows we consider a version of the solow growth model where technological progress can be investment specific or investment neutral the labour market is subject to search frictions and the existing productive units may fail to adopt the most recent technological advances technological progress can lead to the destruction of technologically obsolete jobs and cause unemployment we calibrate the model to replicate the high persistence that characterizes the dynamics of firms neutral technology and the frequency of firms capital adjustment we find that neutral technological advances increase job destruction and job reallocation and reduce aggregate employment investment specific technological advances reduce job destruction have mild effects on job creation and are expansionary hence neutral technological progress prompts schumpeterian creative destruction while investment specific technological progress operates essentially as in the standard neoclassical growth model using structural var models we provide support to the key dynamic implications of the model copyright 2007 wiley blackwell

the dynamics of technological unemployment this article compares the short and long run effects of technological progress on employment it presents a simple model of frictional unemployment capturing the negative creative destruction effects of technological change on employment in the long run faster technological change accelerates job obsolescence which reduces the equilibrium level of employment but it is also shown to have short run positive and potentially important effects on employment this tends to partially reconcile the schumpeterian view of the effects of technological change on labor markets with facts such as the response of most oecd unemployment rates to the 1970s productivity slowdown

income and employment dynamics in europe cosci s and sabato v 2007 income and employment dynamics in europe regional studies 41 295 309 the study intends to deepen the analysis of the dynamics of income and employment in europe between 1989 and 1996 by considering the complex spatial consequences of the failure of the fordist production model previous studies found evidence of polarization in unemployment rates and persistence in per capita income in european regions when objective 1 regions are excluded from the analysis different results are obtained but a marked difference in the dynamics of income and unemployment rate is still found this difference may have been caused by country effects and the features of two specific kinds of regions old industrialized regions and urban and capital regions the relationship between the dynamics of employment and the dynamics of income is therefore significantly affected by the spatial consequences of production changes and socio economic transformations cosci s et sabato v 2007 les dyn

frictional wage dispersion in search models a quantitative assessment we propose a new measure of frictional wage dispersion the mean min wage ratio for a large class of search models we show that this measure is independent of the wage offer distribution but depends on statistics of labor market turnover and on preferences under plausible preference parameterizations observed magnitudes for worker flows imply that in the basic search model and in most of its extensions frictional wage dispersion is very small notable exceptions are some of the most recent models of on the job search our new measure allows us to rationalize the diverse empirical findings in the large literature estimating structural search models

paying more to hire the best foreign firms wages and worker mobility i introduction as globalization evolves there is greater interest in its labor market implications one dimension of this question concerns the role of foreign firms in terms of their remuneration of host economy workers while earlier cross sectional evidence suggests that foreign firms offer more generous pay levels than their domestic counterparts aitken et al 1996 feenstra and hanson 1997 some of these results have been questioned in recent research based on longitudinal worker level data martins 2004 heyman et al 2007 andrews et al 2007 moreover firm level studies based on foreign acquisitions of domestic firms find mixed results 1 the main problem in research about the foreign ownership wage differential concerns unobserved heterogeneity across workers employed in either domestic or foreign firms if firm affiliation is correlated with other factors that may affect wages but that are not controlled for then estimates will be biased while some research that aims to tackle this issue considers the case of acquisitions when the same workers can be observed under the two types of firms here we approach the unobserved heterogeneity challenge from an original perspective worker mobility specifically we draw upon a longitudinal census of the portuguese labor market in order to consider virtually all spells of interfirm worker mobility over a long period of time 1991 2000 such mobility spells allow us to observe the same workers when employed by domestic and foreign firms in order to disentangle the wage policy of the firm from the heterogeneity of the workforce we also consider selection effects namely the unexplained differences in the wages of workers who are to experience a movement to a different firm before such movement occurs these unexplained wage differences are likely to capture additional skills not measured in the data but that are observable by those workers current employers such as ability motivation etc on the other hand the wage policy effect which is more directly related to the goal of this paper concerns differences in remuneration experienced by workers who engage in interfirm mobility as they move between firms such differences in remuneration practices across firms are predicted by noncompetitive models of the labor market namely efficiency wages and search models moreover the scope for such wage policy differences is also supported by abundant empirical evidence including that of rent sharing discrimination cohort effects and other evidence of firm heterogeneity in general abowd et al 1999 bartelsman and doms 2000 as far as we know our paper is the first to conduct a systematic analysis of interfirm worker mobility drawing on census data these population data are particularly important for our purpose as the analysis of even large samples would dramatically diminish one s ability to follow workers over time furthermore we are the first to conduct such an extensive analysis in the context of the foreign ownership wage differential literature 2 finally our results may also be useful in terms of reconciling some contrasting evidence for different countries and in terms of shedding light on the role of worker mobility as a channel of productivity spillovers from foreign to domestic firms fosfuri et al 2001 javorcik 2004 unlike earlier research based on foreign acquisitions our paper finds very strong evidence of a sizeable positive wage policy effect for foreign firms however selection effects are also present but at a much smaller scale these results are robust to a number of checks including the consideration of the case of displaced workers and an analysis of the wage growth patterns of movers when in hiring firms the structure of the paper is as follows section ii describes the data sections iii and iv present the results and the robustness analysis finally section v concludes

instrument choice when regulators and firms bargain abstract we compare outcomes with an emissions tax and an emissions standard when a firm and regulator engage in cooperative bargaining over the stringency of the regulation bargaining is motivated by giving the firm a choice of abatement technologies if the firm s preferred technology differs from the regulator s the first best outcome is not an equilibrium of the traditional noncooperative game in which the regulator is a stackelberg leader the regulator may therefore choose to offer the firm a more lenient regulation if it agrees to switch technologies we find that the resulting bargaining outcomes differ for a tax and a standard even though information is symmetric and we identify conditions under which each instrument yields lower social costs

job matching and propagation in the u s labor market the vacancy unemployment ratio and employment react sluggishly to productivity shocks we show that the job matching model in its standard form cannot reproduce these patterns due to excessively rapid vacancy responses extending the model to incorporate sunk costs for vacancy creation yields highly realistic dynamics creation costs induce entrant firms to smooth the adjustment of new openings following a shock leading the stock of vacancies to react sluggishly

the non linear dynamics of output and unemployment in the u s this paper studies the joint dynamics of u s output and unemployment rate in a nonlinear var model the nonlinearity is introduced through a feedback variable that endogenously augments the output lags of the var in recessionary phases sufficient conditions for the ergodicity of the model potentially applying to a larger class of threshold models are provided the linear specification is severely rejected in favor of our threshold var however in the estimation the feedback is found to be statistically significant only on unemployment while it transmits to output through its cross correlation this feedback effect from recessions generates important asymmetries in the propagation of shocks a possible key to interpret the divergence in the measures of persistence existing in the literature the regime dependent persistence also explains the finding that the feedback from recession exerts a positive effect on the long run growth rate of the economy an empirical validation for the schumpeterian macroeconomic theories

growth unemployment and labour market institutions evidence from a cross section of eu regions the responsiveness of unemployment to growth is an issue of ongoing political and academic interest economic growth is supposed to be the key to increase labour demand and reduce unemployment departing from okun s law most research on the unemployment intensity of growth has focused on national disparities and the role of labour market institutions empirical evidence at the regional level is scarce we investigate differences in regional labour market responsiveness and their potential determinants for a cross section of european regions the data set covers the nuts 2 regions in the eu15 for the period 1980 to 2002 following a spatial modelling approach interaction among neighbouring labour markets is taken into account our findings point to substantial differences in labour market effects of output growth among european countries and regions both national labour market institutions and regional characteristics such as structural change explain a significant part of these disparities

wages and foreign ownership a comparative study of mexico venezuela and the united states abstract this paper explores the relationship between wages and foreign investment in mexico venezuela and the united states despite very different economic conditions and levels of development we find one fact that is robust across all three countries higher levels of foreign investment are associated with higher wages however in mexico and venezuela foreign investment is associated with higher wages only for foreign owned firms there is no evidence of wage spillovers leading to higher wages for domestic firms the lack of spillovers in mexico and venezuela is consistent with significant wage differentials between foreign and domestic enterprises in the united states where the evidence suggests some wage spillovers from foreign to domestic enterprises wage differentials are smaller

unemployment dynamics in britain we examine the inter related dynamics of the unemployment flows and stock our model allows them to be linked through the standard accounting identity but also through behavioural relationships we find that for the uk the bulk of the correlation between duration and the unemployment stock arises from the dependence of duration on unemployment taking careful account of the inter temporal identity outflow shocks have contributed little to the evolution of unemployment since the late 1960s given that the correlation of duration and unemployment arises from the behavioural relationship we show that unemployment dynamics arise mostly from shocks to the inflow unemployment remains one of europe s more pressing economic and social problems as highlighted in the eu s lisbon declaration of 2000 a dynamic approach to unemployment starts from the recognition that unemployment is a stock and changes through shocks to the outflow and inflow the research and policy focus has generally been on the outflow process or equivalently unemployment duration a glance at figure 1 shows why this might be so it reveals a very strong co movement of the unemployment rate and the proportion of the unemployed out of work for a year or more analysts have used data like this to argue that the source of unemployment fluctuations has been changes in the outflow process 1 possibly as a consequence of this most policies directed at reducing unemployment focus on improving the search effectiveness and employability of the currently unemployed the unemployment flows and stock are related in quite complex ways and in this paper we focus on these inter related dynamics the model we use allows them to be linked in two ways first there is the simple accounting relationship whereby shocks to the flows accumulate in the stock second search and matching models suggest behavioural relationships of the flows depending on unemployment the presence of the nonlinear accounting identity in the model makes the analysis of the joint system problematic so we proceed sequentially investigating first one link and then the other we find that for the uk the bulk of the correlation between duration and the unemployment stock displayed in figure 1 arises from the dependence of the former on the latter we find a strong dependence of the outflow rate on unemployment taking careful account of the inter temporal identity on the other hand outflow shocks have contributed little to the evolution of unem

learning matching and growth we examine an endogenous growth model in which market frictions are an integral part of the economic environment workers invest in education when young which raises their productivity onice employed the level of schooling also acts as a key determinant of the rate of economic growth by influencing workers ability to accumulate additional human capital on the job once schooling is completed workers search for employment the division of the surplus between vacancies and searching workers is characterized as is the optimal level of education the economy may display multiple steady state growth paths

the effect of foreign acquisition on employment and wages evidence from finnish establishments employee characteristics by skill groups makes it possible to disentangle the effect of foreign ownership on wages from its effects on the quality of the workforce furthermore this information allows us to examine the heterogeneity of the effect of foreign acquisition on wages and employment third the long timespan of our data thirteen years enables us to consider the effects of foreign acquisition in the long run hiring and firing costs may delay the effects of foreign acquisition by looking at the effects of acquisition in several periods after it has taken place these delays can be taken into account we believe finland to be an interesting case study for the effects of foreign ownership it is a typical example of a small open economy where foreign investment plays an important role furthermore our data cover the years 1988 2001 when the share of foreign direct investments rose rapidly in finland this increase is depicted in figure 1 and it partly reflects the worldwide trend in foreign direct investment but the years 1988 2001 were also characterized by two phenomena which undoubtedly led to the increase in the share of foreign owned firms first finland experienced a very severe recession in the early 1990s and the recovery from this crisis was associated with a rapid restructuring of the economy and a growth of new industries in particular the export oriented high tech sector 2 second finland joined the european union in 1995 which naturally removed a considerable number of barriers to foreign investment in the finnish economy the results derived by both matching and regression methods indicate that foreign acquisition has a positive effect on wages in all skill groups this wage increase is not immediate but occurs within one to three years after the acquisition the magnitude of this effect increases with the level of schooling of the workers the results indicate that there is a small decrease in the share of highly educated workers after foreign acquisition the decrease in the share of highly educated workers after acquisition also seems to hold for domestic acquisitions the paper is organized as follows the next section briefly describes the theoretical background for the analysis and reviews some previous empirical findings the third section describes the statistical framework and the fourth section presents the data sets the results are provided in the fifth section the last section concludes the paper

sex wages and productivity an empirical analysis of israeli firm level data sex discrimination in labor markets may generate a wage gap between men and women that exceeds any gap in marginal productivity we test for this type of discrimination using unique firm level data on manufacturing firms in israel there is a statistically significant negative association between wages and the proportion of a firm s workforce that is female however there is also a statistically significant negative association between marginal productivity and the proportion of females the difference beween the wage and productivity gaps is small relative to wage regression estimates of wage discrimination and is not statistically significant which is most consistent with no discrimination

sticky prices fair wages and the co movements of unemployment and labor productivity growth abstract this paper studies the co movements of unemployment and labor productivity growth for the u s economy measures of co movements in the frequency domain indicate that co movements between variables differ strongly according to the frequency first long term and business cycle co movements are larger than short term co movements second co movements are negative in the short and long run but positive over the business cycle a new keynesian model that combines nominal rigidity on the goods market sticky prices and real rigidity on the labor market fair wages is shown to be quantitatively consistent with the observed co movements both in the long term and over the business cycle however the model fails to explain the short term co movements

market frictions technology adoption and economic growth this paper develops an endogenous growth model with labor market matching and technology adoption while labor market search and entry frictions lengthen technology diffusion exogenous technology arrival may creatively destruct jobs in the short run such interrelationships give rise to multiple equilibria global and local indeterminacy under which a small autonomous technological improvement may create a large growth effect we characterize the effects of exogenous technology arrival on equilibrium matching adoption effort wage and the overall dispersion of wages social inefficiency arises as a result of individuals failure to account for free rider thick matching job destruction effects in making technology adoption decision

choosing the right instrument the role of public revenues for environmental policy this paper analyses the optimal choice of second best optimal environmental policies using a partial equilibrium model the paper first reconfirms the well known result that the existence of a double dividend in its weak definition favours environmental policy instruments which maximise tax revenues for a given improvement in environmental quality additional revenues can be used to reduce the distortion of existing taxes such as taxes on labour and capital income without uncertainty environmental taxes and auctioned permits are equally appropriate in the presence of uncertainty however the optimal choice of taxes or tradable permits depends on the relative magnitudes of the marginal environmental damage and the marginal benefit from consuming a polluting good in the second part the paper therefore analyses how the revenue capacity affects the optimal choice of environmental policy instruments in the presence of uncertainty the paper shows that the first best choice rule between price and quantity regulation weitzman 1974 remains valid in a second best world with distortionary taxation

employment and wage effects of privatisation evidence from hungary romania russia and ukraine we use longitudinal methods and universal panel data on 30 000 initially state owned manufacturing firms in four transition economies to estimate the impacts of privatization on employment and wages the results in all four countries consistently reject job losses and they never imply large wage cuts from privatization to either foreign or domestic owners the domestic privatization estimates are close to zero for employment while for wages they are negative but small in magnitude estimated foreign privatization effects are nearly always positive and sometimes large for both outcome variables we find that the negligible consequences of domestic privatization result from effects on scale productivity and costs that are large but offsetting in hungary and romania and from small effects of all types in russia and ukraine the positive employment outcome of foreign ownership results from a substantial scaleexpansion effect that dominates the productivity improvement effect and the positive wage outcome from productivity improvement dominating the cost reduction effect

fiscal decentralization and economic growth abstract fiscal decentralization may indeed have a direct impact on economic growth but the theoretical underpinnings for this relationship remain largely undeveloped a fair summary of the empirical search for a direct relationship between fiscal decentralization and economic growth is that it remains an open question much less attention has been devoted in the literature to the indirect channels through which fiscal decentralization may affect economic growth we argue that much work remains to be done before policy advisors and decision makers can formulate and implement decentralization programs on the basis of improving the rate of economic growth

selection on observed and unobserved variables assessing the effectiveness of catholic schools in this paper we measure the effect of catholic high school attendance on educational attainment and test scores because we do not have a good instrumental variable for catholic school attendance we develop new estimation methods based on the idea that the amount of selection on the observed explanatory variables in a model provides a guide to the amount of selection on the unobservables we also propose an informal way to assess selectivity bias based on measuring the ratio of selection on unobservables to selection on observables that would be required if one is to attribute the entire effect of catholic school attendance to selection bias we use our methods to estimate the effect of attending a catholic high school on a variety of outcomes our main conclusion is that catholic high schools substantially increase the probability of graduating from high school and more tentatively attending college we find little evidence of an effect on test scores

matching as a tool to decompose wage gaps abstract this paper presents a methodology that uses matching comparisons to explain gender wage differences the approach emphasizes gender differences in the supports of the distributions of observable characteristics and provides insights into the distribution of unexplained gender pay differences this nonparametric alternative to the blinder oaxaca bo decomposition does not require the estimation of earnings equations and divides the gap into four additive elements two of these are analogous to the elements of the bo decomposition but computed only over the common support of the distributions of characteristics while the other two account for differences in the supports

french unemployment a transatlantic perspective french unemployment why france and the usa are alike the paper compares the french and us labour markets it shows that differences in unemployment rates are especially acute for young and old workers but appear to be negligible for middle aged workers all french workers however experience job flows that are quite distinct from their american counterparts as they are exposed to long spells of infrequent unemployment which is the opposite to the us case critical differences across ages and skills regarding the patterns of exit from and entry into employment are also displayed the paper dispels the view that these differences originate from the behaviour of the unemployed or the set of institutions that guide their decisions and that this is new to the french labour market daniel cohen arnaud lefranc and gilles saint paul

in search of the natural rate of unemployment abstract the natural rate of unemployment can be measured as the time varying steady state of a structural vector autoregression for post war us data the natural rate implied by this approach is more volatile than most previous estimates with its movements accounting for the bulk of the variation in the unemployment rate as well as substantial portions of the variation in aggregate output and inflation these movements in turn can be related to variables associated with labor market search theory including unemployment benefits labor productivity real wages and sectoral shifts in the labor market there is also a strong negative relationship between inflation and the corresponding measure of cyclical unemployment supporting the existence of a short run phillips curve

solving optimal growth models with vintage capital the dynamic programming approach this paper deals with an endogenous growth model with vintage capital and more precisely with the ak model proposed in r boucekkine o licandro l a puch f del rio vintage capital and the dynamics of the ak model j econ theory 120 1 2005 39 72 in endogenous growth models the introduction of vintage capital allows to explain some growth facts but strongly increases the mathematical difficulties so far in this approach the model is studied by the maximum principle here we develop the dynamic programming approach to the same problem by obtaining sharper results and we provide more insight about the economic implications of the model we explicitly find the value function the closed loop formula that relates capital and investment the optimal consumption paths and the long run equilibrium the short run fluctuations of capital and investment and the relations with the standard ak model are analyzed finally the applicability to other models is also discussed

replacement echoes in the vintage capital growth model this paper is concerned with a non standard source of fluctuations called echo effects i e the ability of an economy to reproduce its own past history in the 1960s growth theorists believed that this property could arise in vintage capital models taking the form of replacement echoes this line of research was stopped after the publication of solow et al 15 who showed that echoes should vanish in a solow growth model with vintage capital however the fundamental reason for this result has nothing to do with vintages rather it comes directly from the main assumption in a solow growth model i e at equilibrium investment is a constant fraction of output and does not depend on any optimal replacement rule we claim that in a more general ramsey model replacement echoes do not necessarily vanish and we show this in the case when instantaneous utility is linear c 1997 academic press

search unemployment and growth we develop a model to study the effects of changes in the size of technological innovations upon search and waiting time unemployment when search is costly and shocks are positively autocorrelated we find that increases in the size of innovations increase steady state search decrease steady state waiting time unemployment and decrease total unemployment

the productivity effects of privatization longitudinal estimates from hungary romania russia and ukraine this paper estimates the effect of privatization on multifactor productivity using comprehensive panel data on initially state owned manufacturing firms in four economies we exploit the data s longitudinal dimension to control for preprivatization selection and estimate long run impacts the estimates are robust to functional form but sensitive to selection controls our preferred random growth estimates imply positive multifactor productivity effects of 15 percent in romania 8 percent in hungary and 2 percent in ukraine but a 3 percent effect in russia the foreign privatization effect is larger 18 35 percent in all countries positive domestic effects appear immediately in hungary romania and ukraine and continue growing thereafter but emerge only five years after privatization in russia

theory ahead of language in the economics of unemployment this paper discusses from the perspective of modern theories of unemployment several unemployment concepts that have been used over the years it argues that many of these concepts are of limited value and are dominated by a few simple concepts that are basic in the analysis of stochastic general equilibrium models

distance to the efficiency frontier and foreign direct investment spillovers are firms in the former communist economies converging to the world standard this is the key question in the most challenging economic transformation at the start of this century while expert opinions differ on what constitutes a successful and complete transition it is generally acknowledged that transition economies need to raise their productivity substantially in order to catch up with the advanced countries 1 in this chapter we show how much progress has been made in reducing the distance between the efficiency of domestic firms and the world technology frontier in two transition economies the czech republic and russia and we assess whether the presence of foreign firms in these countries contributes to the reduction of the productivity gap either through knowledge spillovers or competition

unemployment and growth some empirical evidence from structural time series models this study investigates the empirical relationship between unemployment and growth in a number of oecd economies a structural time series model is used for labour productivity growth to demonstrate that in most economies there seems to be a negative correlation between unemployment and labour productivity growth the results provide little support for the theory that recessions may stimulate productivity growth the use of a structural time series approach allows an attempt to model the underlying dynamics of productivity growth jointly with the effect of unemployment

sectoral differences in the use of information technology and matching efficiency in the us labour market the present study examines how the heterogeneity of use of information technology in production affects the probability that an unemployed worker will be matched with a vacancy using us time series from 1967 to 2007 i construct measures of dispersion of the stocks of software and hardware per worker across 13 industries the measures exhibit three waves whose timing roughly corresponds to the diffusion of mainframe computers in the 1960s and 1970s personal computers in the 1980s and the internet in the late 1990s after controlling for other influences i find that the probability of transitioning from unemployment to employment responds negatively to an increase in either measure the results imply that by enhancing technical heterogeneity the diffusion of a new technology may suppress the job finding rate

contracting productivity growth in this paper we analyze the interactions between growth and the contracting environment in the production sector allowing incompleteness in contracting implies that viable production relationships for firms and workers and therefore the profitability of industries depend on the rates of innovation and growth the speed at which new innovations arrive in turn depends on the profitability of production for the usual reasons examined in the endogenous growth literature we show that these interactions can have important implications which are consistent with observed phenomena in both the micro and macro environment in particular we demonstrate that a technological shock increasing productivity of research can through this interaction lead to a productivity slowdown and a shift in labor market contracts away from firms providing implicit guarantees of lifetime employment and towards shorter term contractor type arrangements we show the consistency of an increase in the proportion of the labor force under short term employment increased relative returns of workers in high productivity sectors and increased income inequality with a productivity slowdown of finite duration

growth and unemployment short run and long run tradeoffs abstract we consider the role of search unemployment and wage bargaining in determining the relationship between growth and unemployment while the long run tradeoffs between unemployment and growth are weak the short run tradeoffs are much stronger their comovement varies along the transitional path and depends upon the underlying structural change the consequences of the growth unemployment nexus for fiscal policy are addressed the analysis provides insights into the debate regarding the appropriate fiscal policy in light of the increased debt following the initial response to the recent financial crisis our analysis strongly supports an increase in government investment as the appropriate fiscal policy

the impact of tfp growth on steady state unemployment theoretical predictions of the impact of total factor productivity tfp growth on unemployment are ambiguous and depend on the extent to which new technology is embodied in new jobs we evaluate a model with embodied and disembodied technology capitalization and creative destruction effects in econometric estimates with a panel of industrial countries we find a large negative impact of tfp growth on unemployment which implies that embodied technology and creative destruction play no role in the steady state dynamics of unemployment capitalization effects explain some of the estimated impact but a part remains unexplained

foreign direct investment education and wages in indonesian manufacturing this paper examines whether the higher wages paid by foreign owned manufacturing plants than by domestically owned plants typical of most countries represents a higher price for labor that is does it reflect a higher price for workers of a given quality as represented by the level of education we then ask whether foreign owned plants pay a higher price for labor given the characteristics of the plants foreign owned firms are found to pay a higher price for labor of a given educational level than domestically owned ones only a part of the difference is associated with plant characteristics rather than ownership

do hostile takeovers reduce extramarginal wage payments hostile takeovers may have significant implications for long term employment contracts if they facilitate the opportunistic expropriation of extramarginal wage payments we test the expropriation hypothesis by studying the relationship between proxies for extramarginal wage payments and subsequent hostile takeover activity this paper improves on existing research by using firm and establishment level data from a salary survey of employers in addition we observe characteristics of wage and employment structures both before and after the occurrence of a hostile takeover and hence can see whether the data are consistent with reductions in extramarginal wage payments following such takeovers results from this ex post experiment provide evidence consistent with the hypothesis that hostile takeovers result in reductions of extramarginal wage payments to more tenured workers mostly through cutbacks in senior positions at firms with relatively steep wage profiles

a north south model of trade with search unemployment abstract in this paper i build a north south model of international trade economic growth and search frictional unemployment in the north growth is driven by a process of creative destruction in the north followed by imitation in the south i study the effects of intellectual property rights protection and trade liberalization on unemployment and welfare in the north intellectual property rights protection decreases unemployment and increases welfare trade liberalization increases welfare but has an ambiguous effect on unemployment it decreases unemployment if workers in the north have a high outside option and increases it if their outside option is low i provide empirical evidence in support of the last result using data for 20 oecd countries

is there really a foreign ownership wage premium evidence from matched employer employee data numerous studies on firm level data have reported higher average wages in foreign owned firms than in domestically owned firms this however does not necessarily imply that the individual worker s wage increase with foreign ownership using detailed matched employer employee data on the entire swedish private sector we examine the effect of foreign ownership on individual wages controlling for individual and firm heterogeneity as well as for possible selection bias in foreign acquisitions we distinguish between foreign greenfields and takeovers and compare foreign owned firms with both domestic multinationals and local firms our results show a considerably smaller wage premium in foreign owned firms than what has been found in studies conducted at a more aggregate level moreover foreign takeovers of swedish firms tend to have no or even a negative effect on wages

specific capital and vintage effects on the dynamics of unemployment and vacancies in a reasonably calibrated mortensen and pissarides matching model shocks to average labor productivity can account for only a small portion of the uctuations in unemployment and vacancies shimer 2005a in this paper i argue that if vintage speci c shocks rather than aggregate productivity shocks are the driving force of uctuations the model does a better job of accounting for the data i add heterogeneity in jobs matches with respect to the time

foreign ownership and wages evidence from hungary 1986 2008 this article estimates the wage effects of foreign direct investment fdi using firm level and linked employer employee panel data containing a large number of foreign acquisitions over a long per

the economics of new blood abstract we construct a dynamic general equilibrium model of search and matching where public knowledge grows through time and workers accumulate a fraction of this knowledge through education retraining due to search delays the unemployment pool is populated by vintages of workers of differing productivities through intergenerational rivalry the human capital of older generations is rendered obsolete relative to that of the new blood higher knowledge growth exacerbates intergenerational competition thereby lowering education and growth while raising unemployment and inequality these findings help explain wage compression expansion and the hump shaped wage tenure profile across cohorts

labor search and matching in macroeconomics abstract the labor search and matching model plays a growing role in macroeconomic analysis this paper provides a critical selective survey of the literature four fundamental questions are explored how are unemployment job vacancies and employment determined as equilibrium phenomena what determines worker flows and transition rates from one labor market state to another how are wages determined what role do labor market dynamics play in explaining business cycles and growth the survey describes the basic model reviews its theoretical extensions and discusses its empirical applications in macroeconomics the model has been developed against the background of difficulties with the use of the neo classical frictionless model of the labor market in macroeconomics its success includes the modelling of labor market outcomes as equilibrium phenomena the reasonable fit of the data and when inserted into business cycle models improved performance of more general macroeconomic models at the same time there is evidence against the nash solution used for wage setting and an active debate as to the ability of the model to account for some of the cyclical facts

distribution and growth in an economy with limited needs variable markups and the end of work this article studies a model of the distribution of income under bounded needs utility derived from any given is bounded from above and demand is therefore not isoelastic on the other hand introducing new varieties always increases utility it is assumed that each variety is owned by a monopoly workers can specialise in material goods production or in the knowledge sector which designs new varieties as productivity increases the economy moves from a solovian zone where wages increase with productivity to a marxian zone where they paradoxically decline with productivity

technical progress and early retirement this paper claims that technical progress induces early retirement of older workers it presents a model where human capital is technology specific so that technical progress erodes some existing human capital this affects mostly older workers who have a smaller incentive to learn the new technology since their career horizon is shorter hence they tend to work less we find support to this erosion effect in hrs data which shows that retirement and unemployment of older workers are positively related to technical progress in their sectors unlike the effect across sectors the model is ambiguous about the aggregate effect of technical progress on labor supply of older workers while in sectors with many innovations it falls due to the erosion effect in other sectors it increases due to higher wages to examine which effect dominates we run a time series test using us data and find that the rate of average technical progress reduces aggregate labor force participation by the old namely the erosion effect dominates

multinational enterprises and wage costs vertical fdi revisited abstract this study explores how wage costs for high skilled and less skilled labor in host countries affect the level of affiliate activities conducted by foreign mnes we find support for vertical fdi in the sense that more fdi is conducted in countries where less skilled labor is relatively cheap in addition we find that skilled wage cost premia also affect fdi activities previously associated with horizontal fdi i e local affiliate sales consequently the potential effects of relative wage costs on mne activities are large rough calculations suggest that more than 20 percent of us affiliate sales in 1998 can be attributed to skilled wage cost premia