why are there so many long term sick in britain this paper examines the upward trend of numbers in receipt of invalidity benefit the major contributory benefit for the long term sick in britain since 1971 possible explanations include the rising level of unemployment through much of the period the heightened link between ill health and early retirement changes in the real level of benefits and changes in the composition of the workforce these possibilities are examined using a variety of methodologies time series cross section and fixed effects models copyright 1991 by royal economic society

incentives productivity and labor contracts the relationship between age earnings profiles and worker incentives is examined by contrasting wage and salary workers with the self employed it is argued that the steepness of wage and salary workers age earnings profiles reflects the desire to provide work incentives to those workers since self employed workers do not face this agency problem they are used as a benchmark to gauge productivity empirical support of the proposition is provided and the effects of human capital accumulation are separated empirically from incentive effects the most important conclusion is that under some strong assumptions most of the slope in age earnings profiles is accounted for by the desire to provide incentives rather than by on the job training

a million off incapacity benefit how achievable is labour s target since 1997 welfare reform has been a defining feature of the uk s labour government this article assesses the extent to which the new aspiration to reduce the number of incapacity benefit claimants by one million within 10 years is deliverable the assessment is based on a model of flows on and off incapacity benefits and their impact on the stock of claimants in particular the analysis takes account of the major geographical variations in the distribution of incapacity claimants and the ability of britain s divergent regional economies to absorb substantial numbers of extra workers the article concludes that without an accelerated revival in the economies of the north scotland and wales labour looks set to fall short of the one million target

local level incapacity benefits rolls in britain correlates and convergence mcvicar d local level incapacity benefits rolls in britain correlates and convergence regional studies there is considerable variation across british local authority districts in the proportion of the working age population claiming incapacity benefits ranging from 2 in hart to 16 in merthyr tydfil and easington in 2008 these claimant rates are strongly correlated with local unemployment rates and self reported disability rates but spatial differences in claimant rates for incapacity benefits were even greater a decade ago this paper describes the extent of this claimant rate convergence and discusses possible explanations for it mcvicar d 2008 hart 2 merthyr tydfil easington 16 10 mcvicar d la liste des demandeurs des prestations d incapacite en grande bretagne a l echelle loc

a general equilibrium model with external scale economies in production abstract a general equilibrium model of an urban economy is described the standard residential land use model is extended to include a well defined production employment sector external scale economies occur in the production of the city s export good the model is designed for the numerical computation of equilibria and optima

college scholarship rules and private saving this paper examines the effect of existing college scholarship rules on the incentive to save the analysis shows that families that are eligible for college scholarships face education tax rates on capital income of between 22 percent and 47 percent in addition to regular federal and state income taxes the empirical analysis developed here based on the 1986 survey of consumer finances implies that these high tax rates have a powerful adverse effect on the accumulation of financial assets copyright 1995 by american economic association

nonpecuniary benefits to farming implications for supply response to decoupled payments we develop a household model wherein farmers allocate labor to maximize utility from leisure consumption and nonpecuniary benefits from farming the model shows that farmers with decreasing marginal utility of income respond to higher decoupled payments by decreasing off farm labor and increasing farm labor resulting in greater agricultural output we then estimate the difference between farm and off farm returns to labor using data from three nationally representative farm household surveys the finding of a large on farm off farm wage differential provides compelling evidence of substantial nonpecuniary benefits from farming

job search requirements for older unemployed transitions to employment early retirement and disability benefits we use a recent policy change in the netherlands to study how changes in search requirements for the older unemployed affect their transition rates to employment early retirement and sickness disability benefits the reform becoming effective on january 1 2004 requires the elderly to formally report their job search efforts to the employment office in order to avoid a temporary cut in benefits before the new law was passed unemployed individuals were allowed to stop all search activity at the moment they turned 57 5 estimating various duration models using difference in difference and regression discontinuity approaches we find that for several groups of individuals who are affected by the policy change the stricter search requirements significantly increases their entry rate into employment however we also find evidence of a higher outflow to sickness disability insurance schemes a presumably unwanted side effect of the policy change

economics of a bottleneck abstract drawing on vickrey amer econ rev 59 251 261 1969 and subsequent literature this paper provides a thorough economic analysis of the simplest bottleneck model of road congestion with peak load demand in the morning rush hour a fixed number of identical individuals one per car must travel from home to work between which is a bottleneck of given capacity the costs of travel include queuing time and schedule delay time early or late for work the frequency distribution of departure times adjusts so that in equilibrium all individuals have the same travel costs the paper extends the previous literature by examining a coarse toll and solving for optimal capacities the application of congestion tolls can generate efficiency gains by altering the frequency distribution of departure times previous estimates of the efficiency gains from congestion tolling are likely to be substantially downward biased because they have ignored this effect

discrete equilibrium price dispersion an explicit solution of an equilibrium model with price setting firms and searching customers makes possible a number of comparativestatics predictions about how cost differences among firms search costs of customers and taxes will affect the mean and variance of the distribution of market prices another implication of the model is that a firm s demand depends on the difference between its price and the average price in the market

racial discrimination in the labor market theory and empirics we review theories of race discrimination in the labor market taste based models can generate wage and unemployment duration differentials when combined with either random or directed search even when strong prejudice is not widespread but no existing model explains the unemployment rate differential models of statistical discrimination based on differential observability of productivity across races can explain the pattern and magnitudes of wage differentials but do not address employment and unemployment at their current state of development models of statistical discrimination based on rational stereotypes have little empirical content it is plausible that models combining elements of the search models with statistical discrimination could fit the data we suggest possible avenues to be pursued and comment briefly on the implication of existing theory for public policy jel j15 j31 j64 j71

where are all the self employed women push and pull factors influencing female labor market decisions previous research focuses on factors that influence self employment participation in part because entrepreneurship has been associated with economic growth this literature has tended to focus only on men or the comparison of women to men while ignoring substantial heterogeneity in employment decisions among women by investigating the impact of individual household and local economic and cultural characteristics on the labor market outcomes of different groups of women we get a more comprehensive picture of their self employment decision recognizing self employment as one of multiple labor market choices we use multinomial logit and two confidential geocoded micro level datasets to study women s career choices in urban areas we find that the effects of various push and pull factors differ between married and unmarried women in particular more progressive gender attitudes pull married women into self employment while household burdens associated with children push them into self employment for unmarried women the local business climate and individual characteristics have the strongest influence in both cases the motivations for women are quite different than men

labour market performance effects of discrimination and loss of skill we examine the impact of discrimination on labor market performance when workers are subject to a risk of losing skills during an unemployment experience within a search and matching framework we show that both natives and immigrants are affected by discrimination discrimination in one sector has positive spillovers inducing employment to increase in the other sector and the effect on labor market performance therefore depends on whether discrimination is present in only one sector or in both discrimination may induce workers to train more or less than natives after having lost their skills dependent upon in which sector there is discrimination net output tends to be most negatively affected by discrimination among high skilled workers jel j15 j31 j61 j64 j71

second best congestion pricing schemes in the monocentric city abstract this paper considers second best congestion pricing in the monocentric city with endogenous residential density and endogenous labour supply a spatial general equilibrium model is developed that allows consideration of the three way interactions between urban density traffic congestion and labour supply congestion pricing schemes are analysed that are second best by design and not because distortions exist elsewhere in the spatial economy like cordon charging and flat kilometre charges both for cobb douglas utility and for ces utility the analyses suggest that the relative welfare losses from second best pricing compared to first best pricing are surprisingly small

medicare reform the larger picture the medicare problem is examined as part of the larger problem of providing for the overall financial needs of the elderly several myths about medicare are discussed and sources and uses of the elderly s full income are estimated the paper explores policy options to deal with technology induced increases in health care expenditures and excessive dependence of the elderly on transfers from the young the paper concludes that if americans wish to continue to enjoy the benefits of medical advances they will have to work before and after age 65 and will have to increase their rate of saving substantially

disability and self employment evidence for the uk this article examines the self employment decision for disabled and nondisabled workers in the uk using labour force survey lfs data it is found that self employment may provide an important means by which those with work limiting disabilities can accommodate their impairment

ethnic unemployment rates and frictional markets the unemployment rate in france is roughly 6 percentage points higher for african immigrants than for natives in the us the unemployment rate is approximately 9 percentage points higher for blacks than for whites commute time data indicates that minorities face longer commute times to work potentially reflecting more difficult access to jobs in this paper we investigate the impact of spatial mismatch on the unemployment rate of ethnic groups using the matching model proposed by rupert and wasmer 2012 we find that spatial factors explain 1 1 5 percentage points of the unemployment rate gap in both france and the us amounting to 17 25 of the relative gap in france and about 10 17 5 in the us among these factors differences in commuting distance play the most important role in france though longer commuting distances may be mitigated by higher mobility in the housing market for african workers overall we still conclude that labor market factors remain the main explanation for the higher unemployment rate of africans

disadvantage and discrimination in self employment caste gaps in earnings in indian small businesses using the 2004 2005 india human development survey data we estimate and decompose the earnings of household businesses owned by historically marginalized social groups known as scheduled castes and tribes scsts and non scsts across the earnings distribution we find clear differences in characteristics between the two types of businesses with the former faring significantly worse the mean decomposition reveals that as much as 55 of the caste earnings gap could be attributed to the unexplained component quantile regressions suggest that gaps are higher at lower deciles providing some evidence of a sticky floor finally quantile decompositions reveal that the unexplained component is greater at the lower and middle deciles than higher suggesting that scst owned businesses at the lower and middle end of the conditional earnings distribution face greater discrimination

changes in wage discrimination against people with disabilities 1984 93 a group of health impaired workers who self report in the survey of income and program participation that their productivity is not affected by their impairment is used to separately measure the effects of discrimination from the effects of poor health on earnings in 1984 and 1993 the results indicate that in 1984 only 3 7 percentage points of the earnings gap is due to discrimination and the amount of discrimination did not decrease by 1993 although discrimination did not change over the 1984 to 1993 period the negative effects of poor health on the earnings of people with disabilities fell substantially

gender discrimination estimation in a search model with matching and bargaining this article develops a search model of the labor market with matching bargaining and employers taste discrimination in which under necessary but standard distributional assumption it is possible to separately identify gender discrimination and unobserved productivity differences the equilibrium shows that both prejudiced and unprejudiced employers wage discriminate maximum likelihood estimates on cps data indicate that half of the employers are prejudiced average female productivity is 6 5 lower and two third of the gender earning differential may be explained by prejudice an affirmative action policy is implemented resulting in a redistribution of welfare from men to women at no cost for employers welfare

search bargaining and employer discrimination this article analyzes becker s 1957 1971 theory of employer discrimination within a search and wage bargaining setting discriminatory firms pay workers who are discriminated against less and apply stricter hiring criteria to these workers the highest profits are realized by firms with a positive discrimination coefficient moreover once ownership and management are separated both highest profits and highest utility can be realized by firms with a positive discrimination coefficient thus market forces like entry or takeovers do not ensure that wage differentials due to employer discrimination disappear

self employment and self selection in developing country labor markets labor markets in less developed countries ldcs have traditionally been characterized as non competitive this view is expressed in well known models in the development economics literature for example the labor surplus model of lewis 16 asserts that labor in rural areas of ldcs in early stages of development is so abundant that if the wage rate were determined competitively it would be below the subsistence level hence institutions are assumed to arise to determine the wage rate non competitively and to provide the resulting excess supply of labor to agriculture with a subsistence level of living the harristodaro 11 model of rural urban migration asserts that labor unions minimum wage laws public sector hiring practices and other institutional factors tend to keep formal sector wages in urban areas above labor market clearing levels the resulting excess supply of labor in urban areas is assumed to survive at a subsistence level by becoming selfemployed in the low productivity informal sector recent empirical studies provide little support for the non competitive view of ldc labor markets evidence from india thailand malaysia kenya and guatemala suggests that labor markets are much less imperfect than often assumed an important empirical finding in several of these studies is that self employed workers appear to have higher earnings than their wage employee counterparts in urban areas 2 this fact is inconsistent with the notion that self employment is typically a low productivity occupation engaged in by individuals who are searching for scarce well paying formal sector jobs the purpose of this study is to analyze and estimate a model of individual choice between wage and self employment in the ldc context the model incorporates a production function in the self employment sector that includes managerial ability as an input analysis of the influence of managerial ability on the choice of self employment leads to a theory that can explain the observed pattern of earnings of the urban self employed compared to wage employees implications of the model for estimation of production function

racial discrimination and professional basketball salaries in the 1990s racial differences in professional basketball player salaries are examined to determine whether the 20 premium paid to whites in the mid 1980s has persisted into the 1990s ols and tobit regressions indicate no difference between white and black salaries controlling for player and team characteristics for the 1994 95 season however censored quantile regressions show substantial racial differences at certain points in the salary distribution whites earn less than blacks at the lower end of the distribution although the difference is not statistically significant and varies with minutes played in contrast whites receive a significant premium 18 at the upper end of the salary distribution these findings are consistent with a form of consumer discrimination in which sports fans prefer to see white star players all else equal

labor market effects of september 11th on arab and muslim residents of the united states we investigated whether the september 11 2001 terrorists attacks had any effect on employment earnings and residential mobility of first and second generation arab and muslim men in the united states we find that september 11th did not significantly affect employment and hours of work of arab and muslim men but was associated with a 9 11 percent decline in their real wage and weekly earnings with some evidence that this decline was temporary the adverse earnings effects were strongly linked to hate crime incidence estimates also suggest that the terrorists attacks reduced intrastate migration of arab and muslim men

the best and the brightest or the least successful self employment entry among male wage earners in sweden this paper analyzes self employment entry among swedish born male wage earners is it the best and the brightest or the least successful that become self employed the residual from an income regression is used as an indicator of who belongs to which group we find that both wage earners who receive a lower income than predicted i e have a negative residual and those who receive a higher income than predicted i e have a positive residual are more likely to become self employed than those who receive an income close to the predicted one however splitting self employment into different types depending on corporate form and number of employees we find that the self employed are drawn from both tails of the residual distribution only if it is a matter of unincorporated firms wage earners who become self employed and start an incorporated firm are only drawn from the top of the residual distribution using self employment income and turnover as measures of self employment performance we find a positive linear relationship between the income residual and performance

an equilibrium search matching model of discrimination abstract a model in which firms have incomplete information about workers at the hiring stage is shown to entail discrimination as the unique stable equilibrium outcome even if no agents have a taste for discrimination and groups are ex ante identical groups which are discriminated against e g blacks women earn lower wages and endure longer unemployment spells

customer discrimination and employment outcomes for minority workers this paper investigates the effects of customer discrimination on the employment and earnings of minorities particularly blacks data are used from a new survey of employers in four large metropolitan areas in the united states our results show that the racial composition of an establishment s customers has sizable effects on the race of who gets hired particularly in jobs that involve direct contact with customers and in sales or service occupations race of customers also affects wages with employees in establishments that have mostly black customers earning less than those in establishments with mostly white customers

ethnic fractionalization in an african labour market abstract we find evidence of ethnic fractionalization and its consequences in an african labour market we consider earnings differentials between members of different ethnic groups and between employers relatives unrelated co ethnics and other workers in the ghanaian manufacturing sector variations in a standard set of observed workers characteristics explain a large proportion of the earnings differentials between ethnic groups however the greatest proportion is explained by the ethnic fractionalization of the labour market combined with variations in employers characteristics workers who are related to their employers earn a premium and there is statistical discrimination in favour of inexperienced co ethnic workers

public health insurance individual health and entry into self employment we investigate the impact of a differential treatment of paid employees versus self employed workers in a public health insurance system on the entry rate into self employment health insurance systems that distinguish between the two sectors of employment create incentives or disincentives to start a business for different individuals we estimate a discrete time hazard rate model of entry into self employment based on representative household panel data for germany which include individual health information the results indicate that an increase in the health insurance cost differential between self employed workers and paid employees by 10 per month decreases the probability of entry into self employment by 1 7 of the annual entry rate this shows that entrepreneurship lock which an emerging literature describes for the system of employer provided health insurance in the usa can also occur in a public health insurance system therefore entrepreneurial activity should be taken into account when discussing potential health care reforms

panel estimates of the determinants of british regional male incapacity benefits rolls 1998 2006 this article explores the determinants of the proportion of the working age male population claiming incapacity benefits ib across the 11 british government office regions for the period 1998 to 2006 three different approaches are adopted to modelling register dynamics first treating ib stocks as if they were trend stationary albeit with persistence and estimating reduced form models for their logs second treating ib stocks as if they were nonstationary and examining their long run determinants plus short run equilibrium reversion properties third focusing on the determinants of gross inflows and outflows that together drive ib stocks given the nature of the data no approach is ideal yet the models provide reasonably robust evidence that labour market changes specifically falling unemployment rates and rising real earnings have contributed to falling male ib stocks over the period

why have uk disability benefit rolls grown so much abstract over the last 30 years many countries including the uk have seen a dramatic rise in the share of the working age population receiving sickness and disability benefits hereafter disability benefits this is despite health levels that are generally thought to be slowly improving this paper describes the time path of uk disability benefit rolls and explores the existing uk literature together with literature from the usa in search of potential explanations for it since the early 1990s despite a number of detailed descriptive studies surprisingly little attention has been paid to quantifying the importance of the different factors believed to be driving the uk benefit roll growth this is all the more surprising given the continued growth and the level of policy attention recently and currently devoted to disability benefits in the uk

explaining applications to the u s disability system a semiparametric approach this study investigates the determinants of applications for u s disability benefits between 1986 and 1993 using a semiparametric discrete factor procedure separately for men and women approximating a dynamic optimization model the estimation accounts for a variety of potential biases that were unaddressed in prior studies our results indicate different responses of men and women to variations in policy measures past labor earnings and fringe benefits as well as benefit eligibility and benefit amounts clearly affect application behavior

strategic gains from discrimination abstract according to a classical argument an employer handicaps herself if basing hiring decisions on factors unrelated to productivity therefore discrimination is undermined by competition this paper in contrast argues that being discriminatory can be a commitment device that helps an employer and its rivals to partially segment the labor market which leads to lower wages and higher profits discrimination can thus be an endogenous response to competition indeed the relationship between discrimination and competition can be non monotone moreover the logic suggests that a ban on wage discrimination may instead lead to discrimination in hiring

on revenue recycling and the welfare effects of second best congestion pricing in a monocentric city abstract this paper examines congestion taxes in a monocentric city with pre existing labor taxation when road toll revenue is used to finance labor tax cuts 35 of the optimal road tax in our numerical model does not reflect marginal external congestion costs but rather functions as a ramsey mirrlees tax i e an efficiency enhancing mechanism allowing for an indirect spatial differentiation of the labor tax this adds a quite different motivation to road pricing since welfare gains can be produced even in absence of congestion we find that the optimal road tax is non monotonic across space reflecting the different impacts of labor supply elasticity and marginal utility of income which both vary over space the relative efficiencies of some archetype second best pricing schemes cordon toll flat kilometer tax are high 84 and 70 respectively when road toll revenue is recycled lump sum the optimal toll lies below its pigouvian level extensions in a bimodal framework show that the optimality of using road toll revenue to subsidize public transport depends on the initial inefficiency in public transport pricing

the rise in the disability rolls and the decline in unemployment between 1984 and 2001 the share of nonelderly adults receiving social security disability insurance income di rose by 60 percent to 5 3 million beneficiaries rapid program growth despite improving aggregate health appears to be explained by reduced screening stringency declining demand for less skilled workers and an unforeseen increase in the earnings replacement rate we estimate that the sum of these forces doubled the labor force exit propensity of displaced high school dropouts after 1984 lowering measured u s unemployment by one half a percentage point steady state calculations augur a further 40 percent increase in the rate of di receipt

second best policies for congestion externalities abstract this is the third in a series of three articles on the topic of congestion externalities we use an urban general equilibrium model to test the efficiency of several second best policies for congestion externalities the most efficient second best policy is a program of land use controls the program generates a welfare gain of 3 38 per household per week a unit tax on commuting is a less efficient policy with a welfare gain of 1 15

does racial prejudice affect black entrepreneurship evidence exploiting spatial differences in prejudicial attitudes abstractthis article explores the relationship between racial prejudice towards blacks and the black white self employment rate gap and provides the first direct empirical evidence that racial prejudice negatively impacts black self employment particularly in high start up cost industries to perform this analysis i construct a measure of prejudicial attitudes using responses from the general social survey and estimate the relationship between self employment and this index using the american community survey i find that an amount of prejudice equal to the difference in least and most prejudiced census divisions increases the black white self employment rate gap in high start up cost industries by 10 4 16 8 depending upon whether parental self employment is controlled for and represents the entire impact of racial prejudice on the black white self employment rate gap additionally racial prejudice widens the black white self employment income gap by between 6 4 and 8 2 in my full specification d

the rise and fall of disability insurance enrollment in the netherlands as recently as 15 years ago the high level of disability insurance di enrollment was considered to be one of the major social and economic problems of the netherlands indeed the netherlands was characterized as the country with the most out of control disability program of oecd countries but since about 2002 the netherlands has seen a spectacular decline in its disability insurance enrollment rate radical reforms to the dutch di system were implemented over the period 1996 to 2006 we cluster these reforms in three broad categories 1 reducing the incentives of employers to move workers to disability 2 increased gatekeeping and 3 tightening disability eligibility criteria while enhancing worker incentives the reforms appear to have been very effective since 2002 yearly di inflow rates dropped from 1 5 percent in 2001 to about 0 5 percent of the insured population in 2012 we argue that particularly the interaction of employer incentives and formal employer obligations has contributed to the substantial decrease in di inflow on the downside however it seems workers with bad health have sorted into temporary employment without employers bearing the financial responsibility of their benefit costs

nepotism discrimination and the persistence of utility maximizing owner operated firms reply much debate in the discrimination literature surrounds whether employers with biased preferences can persist in the market 7 10 this issue is a natural extension of the broader literature on owner operated firms which focuses on the consistency of utility and profit maximization 12 13 14 18 26 27 theories of owner operated firms which have a long history in economics model the entrepreneur as both a producer and consumer of goods that determines the level of production and consumption jointly through utility maximization 2 9 16 22 31 this approach is applied in this paper to examine employer discrimination and nepotism our analysis provides necessary conditions for utility maximizing firms to persist in the market and shows how biased preferences can yield seemingly uneconomic input and output choices that are in fact rationally inefficient empirical results using data on family farms support the prediction that utility maximizing entrepreneurs trade profit for nonmarket goods and do not hire inputs to maximize profits competitive neoclassical theories of the labor market do not provide a clear theoretical resolution to the issue of persistence of employer nepotism and discrimination the employer discrimination model proposed by becker 4 5 and extended by arrow 1 postulates that entrepreneurs maximize utility that increases with profit but decreases with a nonmarket attribute of some workers e g race ethnicity or gender these models predict that white male workers may initially have better market opportunities than comparable minority or female workers however entrepreneurs who hire based on nonproductive attributes are also predicted to earn less than a normal rate of return and because they derive disutility from an aspect of owning and operating a firm can improve their welfare by leaving the industry and converting firm assets to those that do not require employment decisions e g stocks and bonds this result has the important policy implication that market intervention may not be necessary to improve the relative pay and employment of disadvantaged groups when employers are the source of the discrimination alternatively goldberg 15 uses the arrow 1 framework but postulates that employers

bridging the gender gap identifying what is holding self employed women back in ghana rwanda tanzania and the republic of congo quantile decomposition methods are used to study the determinants of the gender gap in self employment earnings across the earnings distribution of four sub saharan countries the republic of congo

is there employment discrimination against the disabled abstract using differences in the work limiting nature of a disability employment discrimination against the disabled is separated from the unobserved effect of disability on productivity the uk evidence suggests unobserved productivity differences are an important influence on the employment gap

disability insurance and unemployment insurance as substitute pathways in this article we estimate the degree of substitution between enrolment into disability insurance di and unemployment insurance ui in the netherlands starting in the 1990s many policy measures aimed at reducing di enrolment and increase labour force participation we quantify whether these policy measures have led to a reduction in hidden unemployment in di a side effect of the reforms may be increased pressure on ui therefore we simultaneously estimate reverse substitution that is hidden disability in ui to this end we employ a sample of firms in the dutch avo database from the period 1993 to 2002 using instrumental variables in a bivariate tobit specification we identify the hidden components in both respective schemes the estimation results indicate that about 3 of all dismissals took place through di which implies that about one quarter of the di enrolments observed in our sample in fact consists of hidden unemployment we find no evidence for reverse substitution of disabled perso

disability capacity for work and the business cycle an international perspective important policy issues arise from the high and growing number of people claiming disability benefits for reasons of incapacity for work in oecd countries economic conditions play an important part in explaining both the stock of disability benefit claimants and inflows to and outflows from that stock employing a variety of cross country and country specific household panel data sets as well as administrative data we find strong evidence that local variations in unemployment have an important explanatory role for disability benefit receipt with higher total enrolments lower outflows from rolls and often higher inflows into disability rolls in regions and periods of above average unemployment in understanding the nature of the cyclical fluctuations and trends in disability it is important to distinguish between work disability and health disability the former is likely to be influenced by economic conditions and welfare programmes while the latter evolves in a slower fashion with medical technology and demographic changes there is little evidence of health disability being related to the business cycle so cyclical variations are driven by work disability the rise in unemployment due to the current global economic crisis is expected to increase the number of disability insurance claimants

disability insurance benefits and labor supply a critical input for assessing the optimal size of disability insurance programs is the elasticity of labor force participation with respect to the generosity of benefits unfortunately this parameter has been difficult to estimate in the context of the u s disability insurance program since all workers face an identical benefits schedule i surmount this problem by studying the experience of canada which operates two distinct disability insurance programs for quebec and for the rest of canada the latter program raised its benefits by 36 percent in january 1987 whereas benefits in quebec were constant i find a sizable labor supply response to the policy change my central estimates imply an elasticity of labor force nonparticipation with respect to disability insurance benefits of 0 28 0 36

beauty productivity and discrimination lawyers looks and lucre we propose models with an ascriptive characteristic generating earnings differentials and causing sectoral sorting allowing us to distinguish among sources producing such differentials we use longitudinal data on a large sample of graduates from one law school and measure beauty by rating matriculation photographs 1 betterlooking attorneys who graduated in the 1970s earned more than others after 5 years of practice an effect that grew with experience 2 attorneys in the private sector are better looking than those in the public sector differences that rise with age these results support theories of dynamic sorting and customer behavior

is college financial aid equitable and efficient nk reed based financial aid is often defended both on grounds of equity and efficiency equity because it provides equality of opportunity and efficiency because it encourages the formation of productive human capital james 1988 however need is now determined in a way that is both inequitable and inefficient an informal survey of my colleagues who do not study financial aid revealed no one who named the financial aid system as a substantial tax on savings however once this interpretation was suggested they quickly revealed their unanimous and disturbing impression that savings are summarily confiscated from parents upon their first child s matriculation at university though exaggerated this impression is not without foundation two families with identical earnings paths pay dramatically different amounts for college if one saves more than the other thus while the financial aid system may contribute to vertical equity since the poor get more aid than the rich its horizontal inequities are substantial moreover the federal rules for financial aid raise significant efficiency concerns 1 they might conceivably distort many household decisions including family size and the spacing of children however this paper will focus upon the most important incentive distorted by present policies the incentive to save because saving leads to receiving less financial aid a family s return to saving is substantially below the social return this may lead to families making inefficient intertemporal choices and correspondingly to an inefficient loss of capital formation

disability retirement and unemployment substitute pathways for labour force exit an empirical test for the case of germany this paper studies the determinants of disability retirement and unemployment of older workers two labour market phenomena which the german public discussion combines under the label of early retirement the implicit assumption that these two mechanisms are exchangeable pathways into permanent retirement is tested using panel data the transition rates from employment into disability retirement and into unemploymentare estimated and compared statistical tests reject the hypothesis that disability retirement and unemployment are substitutes

failure or voluntary exit reassessing the female underperformance hypothesis abstract we reevaluate the female underperformance hypothesis by challenging the assumption that female owned ventures are more likely to fail instead of equating exit with failure we draw on exit literature and feminist theories to argue that female entrepreneurs are actually more likely than males to exit voluntarily we argue for further gender differences by using an even more fine grained conceptualization of entrepreneurial exit failure exit for personal reasons and exit for other professional financial opportunities post hoc analyses also point to within gender heterogeneity depending on family status a sample probe of 219 spanish entrepreneurs who had exited their business supports our overall reasoning

optimal cordon pricing abstract this paper presents a simple spatial model of traffic congestion for a monocentric city to investigate the effects of cordon pricing on trip making and congestion level in each location optimal cordon pricing is obtained as a combination of the cordon location i e distance of the cordon from the cbd and the amount of toll charged there that maximizes the total social surplus in a city under optimal cordon pricing trips originating from locations inside the cordon are under priced those just outside the cordon are over priced and those near the urban fringe are under priced numerical simulations using the parameter values based on japanese data suggest that cordon pricing attains an economic welfare level very close to the first best optimum

the role of employer employee interactions in labor market cycles evidence from the self employed self employed workers are less likely to be affected by implicit contracts efficiency wages and other forces that mute wage cyclicality and exacerbate employment cyclicality this observation motivates our comparison of the cyclical experience of the self employed with wage and salary workers who clearly have an employer we find negligible or small differences in annual hours cyclicality between the two groups but hourly wages and annual earnings are much more cyclical for the self employed these results are consistent with efficient contracting models where employers smooth workers income without causing inefficiencies in hours of work

the general equilibrium effects of congestion externalities abstract this is the second in a series of three articles on the topic of congestion externalities we use an urban general equilibrium model to compute two types of cities the market equilibrium city in which congestion externalities occur and the optimum city the optimum city has a more dispersed distribution of employment and a more concentrated distribution of residence if the population of the city is fixed the optimum pricing of transportation generates a per capita welfare gain of 3 78 per week if the population of the city is endogenous the internalization of congestion externalities causes the city to grow

why do disability benefit rolls vary between regions a review of the evidence from the usa and the uk mcvicar d 2006 why do disability benefit rolls vary between regions a review of the evidence from the usa and the uk regional studies 40 519 533 over the last 30 years many organization for economic co operation and development oecd countries have seen a dramatic rise in the share of the working age population receiving earnings replacement sickness and disability benefits the reasons behind this growth particularly for the usa but also to a lesser extent elsewhere have been extensively researched in the economics literature what have been less well researched are the large spatial differences in the size of disability benefit rolls that have emerged in some countries over this period the uk displays a distinct regional pattern where working age men and women in the north are considerably more likely to be claiming disability benefits than those in the south the usa has its own version of the north south divide with many southern states displaying disproportionately large disabilit

going onto invalidity benefit a study for women 1977 78 1983 84 the main form of state insurance for long term sickness in britain is invalidity benefit there has been a dramatic growth in the stock of claimants on this benefit since its introduction in 1971 a logit model is fitted to explain at the individual level the probability of entering invalidity benefit among over 50 000 women in 1977 8 and over 65 000 in 1983 4 demographic characteristics played a powerful role in this model pay and benefit rates were also significant married women s entry probabilities were highly sensitive to local labour market conditions and much more so than other population groups

directed search coordination failure and seller profits an experimental comparison of posted pricing with single and multiple prices we experimentally examine posted pricing and directed search in one treatment capacity constrained sellers post fixed prices which buyers observe before choosing whom to visit in the other firms post both single buyer applied when one buyer visits and multibuyer when multiple buyers visit prices we find based on a 2 2 two buyers and two sellers market and a follow up experiment with 3 and 2 3 markets that multibuyer prices can be lower than single buyer prices or prices in the one price treatment also allowing the multibuyer price does not affect seller profits and increases market frictions

fear and lathing in the michigan furniture industry employee based discrimination a century ago i introduction despite progress made in the conceptualization of labor market discrimination the sources of discrimination continue to elude economists in their empirical investigations d amico 1987 the primary reason for this failure is inadequate data since studying the sources of discrimination demands information on workers institutional settings in particular the examination of employee based discrimination requires information on coworkers attributes in addition to the characteristics of the worker himself because of this direct tests of employee based discrimination in the modern economy are nearly impossible to make most tests must be rather indirect 1 here we attempt to examine the sources of discrimination by focusing on discrimination by fellow employees in an era in which intergroup tensions were important as they are now we link two themes in labor economics by analyzing employee based discrimination as a special example of a compensating wage differential the data from the 1889 michigan bureau of labor annual report on the furniture industry are uniquely suited to the analysis of employee based discrimination because they include information on the individual worker his firm and his coworkers for over 5000 workers and because the workers surveyed come from several ethnic groups using the data we measure the magnitude and character of employee based discrimination as we examine specific aspects of ethnic interaction in the labor market in the late 1800s empirically we find that employee based discrimination was important in this labor market workers of one ethnic group received a higher wage when working with members of other groups wages rose by about 0 1 percent when the proportion of coworkers in the worker s own ethnic group fell by one percentage point this response was greater in small cities small firms and among certain ethnic groups including the american born dutch and poles protestants were generally paid more when working with catholics thus the wage of the furniture worker was determined not only by his ability to lathe but also by fear and other feelings toward his coworkers we close by attempting to measure the additional labor costs generated by employee based discrimination within a multi ethnic work force concluding that they were probably offset by several benefits which rendered complete segregation unnecessary ii model and data our model of the labor market unites becker s 1971 model of employee based discrimination with rosen s 1974 hedonic wage model we assume that employers sell goods in a competitive output market and hire mobile workers in a competitive input market following the hedonic wage model firms make job offers to workers that include both wage and nonwage benefits a worker chooses the wage nonwage benefit bundle to maximize utility the nonwage benefits bundle to which we restrict our attention is the ethnic composition of the firm 2 as the work force of his firm includes more workers whom he likes dislikes the worker s wage should fall rise the data from the seventh annual report of the michigan bureau of labor 1890 include the worker s wage birth place father s birth place and several human capital measures age occupation years of experience in occupation years with present employer a literacy proxy place of residence and marital status for each individual 3 table i shows the characteristics of the american born foreign born and sons of immigrants in the sample the report is organized by firm with the name and location of the firm followed by a list of the employees in the firm containing thirty three pieces of information about each individual 4 therefore it is possible to measure the ethnic characteristics of each worker s fellow employees and the effect of work force composition on the worker s wage iii expectations about employee and employer discrimination 1889 nativism reached a peak in the united states around 1890 and michigan was a center of nativist feeling

disability benefits replacement ratios and the labour market a time series approach in this paper a study of factors affecting the number of disability beneficiaries in norway is presented equations determining entry rates into the disability benefit system are estimated using aggregated time series data grouped by sex and age unemployment is found to influence disability entry the results regarding effects of the replacement ratio are ambiguous a model determining the number of beneficiaries including the estimated entry equations is presented the model is used to simulate the effect of counterfactual changes in exogenous variables on the number of disability beneficiaries

self screening in targeted public transfer programs the self screening properties of initial eligibility determination a mechanism often under the control of the administrators of targeted transfer programs are derived and the use of this mechanism in the social security disability insurance system is explored empirically an increase in the rigor of initial eligibility screening may discourage potential applicants because they are unaware of appeal prospects and because the eligibility decision delay is lengthened as denied applicants are forced to appeal their claims in the disability program a 10 percent increase in the initial denial rate induces a 4 percent decrease in applications self selection is nonperverse

do young firms owned by recent immigrants outperform other young firms this study compares the performance of new businesses owned by recent immigrants with that of other new firms it addresses an on going unresolved discussion in the academic and professional literatures by drawing on a large sample of canadian business owners whose firms began trading between 2000 and 2004 and using taxation data to track 2004 to 2008 performance the results provide empirical evidence that young immigrant owned exporter firms outperformed young domestically founded firms whether or not they exported however immigrant owned young enterprises that did not export underperformed other young firms owner level factors such as gender growth intentions and experience also influenced growth performance among young smes the results provide evidence that suggests that immigrants have resources such as access to international networks that provide competitive advantage over non immigrant owners that export or aspire to export not all immigrant business owners however are able to lever such advantages the implications of the findings for research and policy are discussed

congestion land use and job dispersion a general equilibrium model abstract in dispersed cities congestion tolls would drive up central wages and rents and would induce centrally located producers to want to disperse closer to their workers and their customers paying lower rents and realizing productivity gains from land to labor substitution but the tolls would also induce residents to want to locate more centrally in order to economize on commuting and shopping travel in a computable general equilibrium model we find that the centralizing effect of tolls on residences dominates on the decentralizing effect of tolls on firms causing the dispersed city to have more centralized job and population densities under stylized parameters we find that efficiency gains from levying congestion tolls on work and shopping travel are 3 0 of average income about 80 of such gains come from road planning and 20 from tolls

entrepreneurial women and men two different species the ability of the self employed to create additional job opportunities is a fundamental concern given the huge increases in public resources targeted at new venture creation in the u k and other countries since 1979 this study initially concentrates on identifying differences in the personal and demographic characteristics of women and men in four potential labour market states namely unemployment waged employment single self employment and job creating self employment it then goes on to consider labour market transitions over a four year period between 1991 and 1995 the key findings are firstly that women entrepreneurs are better educated than their male counterparts and secondly that flows into self employment were considerably higher for men than women furthermore proportionately three times as many male self employed in 1991 had gone on to become job creating self employed by 1995

disability gender and the labour market in wales jones m k latreille p l and sloane p j 2006 disability gender and the labour market in wales regional studies 40 823 845 wales exhibits high rates of disability and inactivity and a higher incidence of mental health problems than other parts of britain using data from the welsh local labour force survey 2001 the results indicate that the low participation rate of the disabled in wales is partly attributable to their having fewer qualifications marginal effects suggest education could be a potent remedy for improving their labour market status in terms of the pay differential between disabled and non disabled individuals it would appear that disabled women in wales suffer disproportionately to disabled men only in the case of women is there evidence consistent with the presence of discrimination but this estimate is relatively small jones m k latreille p l et sloane p j 2006 l invalidite le genre et le marche du travail au pays de galles regional studies 40 823 845 le pa

comparative advantage in self employment and paid work the author reports a study of self employment paid work choice based on a representative sample of white canadian men the main findings are as follows relative potential earnings is the main choice determinant potential earnings differences between groups is primarily due to unobserved factors market values of observed characteristics are similar between groups and relative potential earnings based only on observed characteristics are not an explainer of choice and paid workers have higher potential earnings in both sectors with a greater advantage in paid work but the apparent comparative advantage is not significant

consumer discrimination and self employment self employment rates and incomes differ significantly by race we show that these differentials arise in markets with consumer discrimination and incomplete information about the price of the good and the race of the seller equilibrium income distributions have two properties mean black incomes are lower than mean white incomes and the returns to ability are lower for black than for white sellers able blacks therefore are less likely to self select into the self employment sector than able whites using the 1980 census data we find that observed racial differences in the self employment income distributions are consistent with the theoretical predictions

the mechanisms of spatial mismatch the spatial mismatch hypothesis smh argues that low skilled minorities residing in us inner cities experience poor labour market outcomes because they are disconnected from suburban job opportunities this assumption gave rise to an abundant empirical literature which is rather supportive of the smh surprisingly it is only recently that theoretical models have emerged which probably explains why the mechanisms of spatial mismatch have long remained unclear and not properly tested this article presents relevant facts reviews the theoretical models of spatial mismatch confronts their predictions with available empirical results and indicates which mechanisms deserve further empirical tests

disability and the labour market an analysis of british males this paper attempts using data from the british labour force survey 1996 to examine to what extent differences in labour market outcomes between able bodied and disabled men may be attributed to differences in endowments of human capital and associated productivity differences both labour force participation and selectivity corrected human capital equations are estimated and decomposition techniques applied to them using the methodology of baldwin and johnson baldwin m johnson w g 1994 labor market discrimination against men with disabilities journal of human resources xxix 1 winter 1 19 the employment effects of wage discrimination against the disabled are also estimated evidence of both substantial wage and participation rate differences between able bodied and disabled men are found which have implications for the operation of the 1995 disability discrimination act

a bivariate probit approach to the determination of employment a study of teen employment differentials in los angeles county following a bivariate probit approach and using the 1990 public use microdata samples pums for los angeles county this study shows that the employment of teenage workers depends on both the worker s participation decision as well as the employer s hiring decision omission of the role of participation decision from the estimation of employment probability yields misleading evidence of hiring discrimination against blacks this evidence however disappears when the participation and hiring equations are estimated jointly in a bivariate framework the study finds no evidence of discrimination against females and latinos in addition the study shows that family household and neighbourhood characteristics play significant roles in the determination of teen employment

the employment of married women in the united kingdom 1970 83 the proportion of married women in employment in the united kingdom grew rapidly during the 1970s rising from around 50 to 60 per cent the paper investigates this change using a time series of cross sections from the family expenditure survey an attempt is made to assess how much of the change was due to trends in the observable characteristics of the population and what part was played by changes in behavioural and other factors reflected in the coefficients of the model a technique of growth accounting is proposed and used to this purpose excerpt

new labour and the labour market the recent run of good macroeconomic news masks mounting evidence that worklessness is increasingly concentrated on selected individuals households and socio economic groups and in geographical areas these distributional aspects have been overlooked or ignored over the last 20 years but we believe they now form the most pressing labour market and social problems facing this administration we focus on what we view as the government s selected priorities the concentration of unemployment on certain individuals groups and areas increasing inactivity especially marked among less educated older men low pay persistence of low wages and its relationship with job loss and the distribution of work across households and child poverty many of these problems leave lasting scars on individuals so that successful intervention may beneficially change an individual s life chances we examine the evidence on each of these issues and the current state of policy aimed to reduce their scale or intensity copyright 2000 by oxford university press

turnover and promotion of lawyers an inquiry into gender differences this paper analyzes the turnover and promotion of male and female lawyers using data on two cohorts of lawyers one which entered law firms between 1969 and 1973 and the other entering between 1980 and 1983 this study considers whether law firm promotion decisions have differed for women and if so whether these differences have declined over time a competing risks duration model is employed to capture the link between the lawyer s decision to stay or leave and the firm s decision to grant or deny promotion we find that over the entire sample period women are considerably less likely to be promoted and slightly more likely to leave the firm without being promoted however we also find that the parametric differential between men and women in partnership hazards has been reduced substantially and in the most general of our specifications eliminated across the two cohorts in contrast the gap between male and female job turnover rates does not appear to change over time we find that the gap between males and females in the cumulative partnership rate at seven years of experience falls from 32 to 14 percent the turnover gap increases about 0 2 percent with females slightly more likely to exit from the firm in the later period

the impact of economic conditions on participation in disability programs evidence from the coal boom and bust abstract we examine the impact of the coal boom of the 1970 s and the coal bust of the 1980 s on disability program participation these shocks provide clear evidence that as the value of labor market participation increases disability program participation falls for the disability insurance program the elasticity of payments with respect to local earnings is between 0 3 and 0 4 and for supplemental security income the elasticity is between 0 4 and 0 7 consistent with a model where qualifying for disability programs is costly the relationship between economic conditions and program participation is much stronger for permanent than for transitory economic shocks

the welfare gains from pricing road congestion using automatic vehicle identification and on vehicle meters it is a widely accepted proposition that there is a general underpricing of auto travel in u s cities auto travel imposes a congestion externality with an efficient peak period level estimated at lo 23t per mile on urban freeways small 1121 2 3 but for most urban auto travel tolls consist almost entirely of the gasoline excise tax at a fuel economy of 15 miles per gallon the auto toll implied by the current high gas tax in the united states of 25e per gallon is only 1 7e per mile this is much too low for most peak period travel and even underprices some off peak travel the purpose of this study is to estimate the welfare gains which are possible under different regimes for imposing higher auto tolls in urban areas the three regimes studied are associated with a higher gas tax and systems called automatic vehicle identification and on vehicle metering the framework for the study is a model of a city whose shape is that of a wedge or pie slice of a circle the model s features include

a stock flow analysis of the welfare caseload this paper reconsiders the methods used in previous studies to assess the welfare caseload movements during the 1990s we develop a model in which the welfare caseload is the net outcome of past flows onto and off of the caseload and show that such a stock flow model can explain some of the anomalous findings in previous studies we then estimate the stock flow model using california administrative data we find that approximately 50 percent of the caseload decline in california can be attributed to the declining unemployment rate these estimates are more robust and larger than those obtained when applying more typical methods to the same california data

employer discrimination evidence from self employed workers during the last two decades the issue of equality according to sex and race has become one of increasing importance to economists an extant literature on the economics of discrimination began with the pioneering work of becker 1957 this paper is an attempt to shed further light on the extent of employer discrimination by sex and race by comparing the earnings of self employed workers to their wage and salary counterparts in short if employer discrimination is a principal source of discrimination against blacks and women then we would expect the black white and female male earnings ratios to be higher for the self employed compared to their wage and salary counterparts no discrimination of this type is applicable to self employed workers in addition blacks and women should be relatively overrepresented among the self employed compared to wage and salary workers in the economy section ii of this paper further elaborates on this indirect method to estimate the extent of employer discrimination in the labor market for blacks and women in section iii the results of this method are presented using the 1978 current population survey as the data source results indicate the black white and female male earnings ratios are no larger for the self employed compared to their wage and salary counterparts even after making various attempts to adjust for differences in other variables that affect earnings and to limit the influence of consumer discrimination on the results

home based work and women s labor force decisions home based work differs from other employment because the work site is the home itself this difference means that the fixed costs of working at home are less than the fixed costs of working on site and that home based workers may engage in joint market and household production using data from the 1990 census we find that home based work is an attractive option for women for whom the fixed costs of work are high women who have small children are disabled or live in rural areas and that home based workers are more likely to choose self employment than are on site workers

an equilibrium search model with coworker discrimination this article analyzes the effect of coworker discrimination on wage and unemployment differentials between males and females using a search model an increase in female participation drives up the wage offer to female workers and raises female employment moreover an increase in the degree of discrimination by males results in gains to them in terms of higher wages and lower unemployment but results in losses to females in terms of lower wages and higher unemployment the benefit to males provides an explanation for the persistence of discrimination