a machine learning approach to identifying different types of uncertainty abstract we implement natural language processing techniques to extract uncertainty measures from federal reserve beige books between 1970 and 2018 business and economic related uncertainty is associated with future weakness in output higher unemployment and elevated term premia on the other hand political and government uncertainty while high during recent times has no statistically significant impact on the economy

individual and aggregate labor supply with coordinated working times i analyze two extensions to the standard model of life cycle labor supply that feature operative choices along both the intensive and extensive margin one assumes that individuals face continuous wage hours schedules while the other assumes that all work must be coordinated across individuals though similar qualitatively the two models have very different implications for aggregate labor supply responses to tax policy in the first model curvature in the individual utility from leisure function plays relatively little role but in the second model it is of first order importance the second model also has important implications for what data are best able to provide evidence on the extent of curvature in the utility from leisure function

optimal income taxation with adverse selection in the labour market this article studies optimal linear and non linear redistributive income taxation when there is adverse selection in the labour market unlike in standard taxation models firms do not know workers abilities and competitively screen them through non linear compensation contracts unobservable to the government in a miyazaki wilson spence equilibrium adverse selection leads to different optimal tax formulas than in the standard mirrlees 1971 model because of the use of work hours as a screening tool by firms which for higher talent workers results in a rat race and for lower talent workers in informational rents and cross subsidies the most surprising result is that if the government has sufficiently strong redistributive goals welfare is higher when there is adverse selection than when there is not policies that endogenously affect adverse selection are discussed the model has practical implications for the interpretation estimation and use of taxable income elasticities which are central to optimal tax design

production complementarities and flexibility in a model of entrepreneurship abstract the focus of this paper is the flexibility in working hours as a motive for entrepreneurship the model exhibits inflexibilities for workers and entrepreneurs which arise due to complementarities in production in addition it allows for volatile value of leisure to make flexibility in hours desirable differences in occupation specific flexibility disciplined with the observed patterns in hours level persistence dispersion and income persistence dispersion can explain relatively low income levels of entrepreneurs in the us and the occupation specific distributions of working hours and income policy relevance of the model features is discussed using experiments of workweek restrictions and income taxation

a shred of credible evidence on the long run elasticity of labor supply all public policies regarding taxation and the redistribution of income rely on assumptions about the long run effect of wages rates on labour supply the variation in existing estimates calls for a simple natural experiment in which men can change their hours of work and in which wages have been exogenously and permanently changed we use a panel dataset of taxi drivers who choose their own hours and who experienced two exogenous permanent fare increases and estimate an elasticity of labour supply of 0 2 implying that income effects dominate substitution effects in the long run labour supply of males

does work pay in france monetary incentives hours constraints and the guaranteed minimum income abstract this paper uses a representative sample of individuals on france s main welfare program the revenu minimum d insertion or rmi to estimate monetary incentives for employment among welfare recipients based on the estimated joint distribution of wages and hours potentially offered to each individual we compute potential gains from working in a very detailed manner relating these gains to observed employment we then estimate a simple structural labor supply model we find that potential gains are almost always positive but very small on average especially for single mothers because of the high implicit marginal tax rates embedded in the system employment rates are sensitive to incentives with extensive margin elasticities for both men and women usually below one conditional on these elasticities simulations indicate that existing policies devoted to reducing marginal tax rates at the bottom of the income distribution such as the interessement earnings top up program have little impact in this population due to their very limited scope the negative income tax prime pour l emploi seems to be an exception

first impressions matter signalling as a source of policy dynamics we provide the first direct empirical support for the importance of signalling in monetary policy by testing two key predictions from a novel structural model first all policymaker types should become less tough on inflation over time and secondly types that weigh output more should have a more pronounced shift voting data from the bank of england s monetary policy committee strongly support both predictions counterfactual results indicate signalling has a substantial impact on interest rates over the business cycle and improves the committee designer s welfare implications for committee design include allowing regular member turnover and transparency regarding publishing individual votes

anti herding and strategic consultation in this paper i analyze how careerist decision makers aggregate and use information provided by others i find that decision makers who are motivated by reputation concerns tend to anti herding i e they excessively contradict public information such as the prior or others recommendations i also find that some decision makers may deliberately act unilaterally and not consult advisers although advice is costless moreover advisers to the decision maker may not report their information truthfully even if the advisers care only about the outcome they bias their recommendation since they anticipate inefficient anti herding behavior by the decision maker

estimating the cost of leisure time for recreation demand models abstract in this paper we propose a method of determining the opportunity cost of leisure time with an empirical recreation demand application typically the opportunity cost of leisure time is assumed to be some fraction of the wage rate this practice has limitations first it assumes that individuals can trade time for money at their wage second it offers no guidance about how to value the time of an individual who is not in the labor force this paper proposes a method of determining this cost that does not suffer from these drawbacks an empirical example is provided which demonstrates the proposed approach and contrasts it with commonly applied approaches

an examination of firms employment costs the existence of quasi fixed costs of work may affect firms desired employee hours and number of workers which has important implications for the estimation of labour supply parameters firm level data from the 1982 employment opportunity pilot project is used to estimate the importance to firms of employee quasi fixed costs related to searching hiring training and firing specifically this paper examines how these costs affect number of workers and hours per worker turnover and vacancies to the extent that the costs are determined by the firm s presumably exogenous industrial classification an attempt is made to control for biases due to employee heterogeneity as well results show that higher costs are associated with lower turnover fewer vacancies and longer hours as predicted by a model of labour demand

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

decision making in committees transparency reputation and voting rules in this paper i analyze the effect of the transparency of the decision making process in committees on the decisions that are eventually taken i focus on committees whose members are motivated by career concerns so that each member tries to enhance his own reputation when the decision making process is secretive the individual votes of the committee members are not exposed to the public but only the final decision thus individuals are evaluated according to the group s decision i find that in such a case group members are induced to comply with preexisting biases for example if the voting rule demands a supermajority to accept a reform individuals vote more often against reforms and exacerbate the conservatism of the voting rule when the decision making process becomes transparent and individual votes are observed this effect disappears and such committees are then more likely to accept reforms i also find that coupled with the right voting rule a secretive procedure may induce better decisions than a transparent one

publicity of debate and the incentive to dissent evidence from the us federal reserve transparency in committee decision making may have clear benefits by making members more accountable to outside observers we consider one potential cost the possibility that publishing records of deliberations will make members more reluctant to offer dissenting opinions we construct a model that compares incentives for members with career concerns to voice dissent when deliberations occur in public or in private we test the model using an original dataset based on deliberations of the federal reserve s federal open market committee asking whether the fomc s 1993 decision to begin releasing transcripts of its meetings has altered incentives for dissent we find evidence that this is indeed the case there has been much recent discussion of the advantages of transparency in agency relationships both in and outside of government while research has attempted to model this issue theoretically there has been less progress with empirical tests a problem due no doubt in large part to the fact that it is difficult to make before and after comparisons of a shift in transparency often no data are available on an agent s actions prior to the establishment of transparency in this article we focus on one specific type of transparency publishing verbatim transcripts of committee meetings and one specific reason why this type of transparency might not be desirable the possibility that the quality of deliberation on a committee will suffer if the deliberations take place in public we develop a theoretical model that helps to identify the potential costs of this type of transparency and we then test the model empirically using an original dataset on deliberations of the federal reserve s federal open market committee fomc our dataset is unique in that it records views expressed by policymakers at fomc meetings and not just their official votes our empirical tests focus in particular on the observed effect of the institutional change that occurred in 1993 when the fomc decided to begin releasing transcripts of its meetings after a delay of five years transparency is a particularly relevant issue in monetary policy because it is commonly argued that when central banks take actions such as publishing macroeconomic forecasts revealing individual votes on monetary policy committees or releasing minutes of meetings this will lead to improved economic outcomes while simultaneously facilitating democratic accountability 1

the estimation of a joint wage hours labor supply model in this paper the standard cross sectional static model of labor supply is modified to make the wage endogenous and a joint wage hours model is estimated the econometric technique addresses the non linearity of the budget constraint by approximating the constraint by a series of discrete points the results show that the budget constraint is indeed nonlinear that hours affect the wage quadratically that true wage elasticities are lower as a result and that the model fits the hours distribution much better than the standard tobit model

the economics of moonlighting a double self selection model the model proposed here for obtaining the labor supply functions of moonlighters uses a double self selection system to explore the husband s decision to moonlight together with his wife s decision to work subsequently the labor functions are classified under two regimes depending on whether the wife works the model is estimated based on a cross section of 4 448 married couples from the survey of income and program participation wave 2 i find that the household production time of husbands and wives are substitutes and that specific human capital deters moonlighting copyright 1990 by mit press

the workers value of the remaining employment contract duration this paper introduces and applies a method for estimating workers marginal willingness to pay for job attributes employing data on job search activity worker s willingness to pay for the remaining duration of the employment contract is derived we provide evidence that workers attach substantial value to the remaining contract duration a temporary worker with a remaining contract of 6 months is willing to pay about 10 of the wage to increase the contract by one month

voting collective action and liberalisation in latin america the rise and fall of the hillinger paradox chile s economic and political evolution after the 1982 83 financial crisis has been offered as a model for the rest of latin america this paper interprets the 1973 military coup and national recovery during the 1980s and 1990s in terms of the presence and absence respectively of the hillinger 1971 paradox the paradox arises when democratic voting on platforms consisting of several issues leads to majority support for a platform itself consisting of issues none of which is supported by the majority in the early 1970s a particular expression of the hillinger paradox led chile to the verge of a bloody civil war and to a prolonged military dictatorship in the mid 1980s an important policy question that of differentiated industrial protection versus free trade was solved by a stable compromise in favour of the latter this avoided the hillinger paradox and eventually made electoral politics possible again

on the evidence of a working spouse penalty in the managerial labor market this analysis of march 1993 current population survey data suggests that managers with working wives earn lower wages than their counterparts with non working wives the labor supply decisions of managers wives appear to be unaffected by that is exogenous with respect to their husbands wages in contrast there is evidence that the labor supply decisions of non managers wives are affected by their husbands wages and when the analysis takes account of that endogeneity it is found that non managers do not suffer a working spouse penalty the analysis also highlights some important issues related to the use of instrumental variables

compensating wage differentials for mandatory overtime this paper examines the extent to which individuals who are employed by firms that require mandatory overtime receive a compensating wage differential for this distasteful working condition while the empirical results indicate that the average worker does not receive a positive differential for this working condition the results do indicate that unionized workers and perhaps newly hired workers receive a positive differential the paper then develops a framework to determine if any observed compensating differential is in fact fully compensating the application of this framework to the mandatory overtime issue reveals that the fully compensating differential would be relatively small the methodology developed in this paper should prove useful in a variety of other contexts

managerial incentive problems a dynamic perspective the paper studies how a person s concern for a future career may influence his or her incentives to put in effort or make decisions on the job in the model the person s productive abilities are revealed over time through observations of performance there are no explicit output contingent contracts but since the wage in each period is based on expected output and expected output depends on assessed ability an implicit contract links today s performance to future wages an incentive problem arises from the person s ability and desire to influence the learning process and therefore the wage process by taking unobserved actions that affect today s performance the fundamental incongruity in preferences is between the individual s concern for human capital returns and the firm s concern for financial returns the two need be only weakly related it is shown that career motives can be beneficial as well as detrimental depending on how well the two kinds of capital returns are aligned it is well understood by now that informational externalities may place special demands on the organization of economic exchange simple price mediated markets will frequently fail in the presence of asymmetric information in that case more elaborate contractual arrangements have to be used as substitutes for the price system lately considerable effort has been devoted to the analysis of contracting under incomplete information with the objective to understand the range of economic institutions that emerge in response to the failure of the price system the analysis of moral hazard has played a prominent role in this development moral hazard problems arise when for some reason or another transacting parties cannot contract contingent on the delivery of the good for instance in buying labour services it may be that the amount of labour supplied is not directly observable precluding a simple exchange of wage for labour as a partial remedy to this problem an imperfect mutually observed signal about the supply of labour can be used as a proxy in the contract frequently output is taken as such a proxy the drawback is that output is often influenced by other factors than labour input which induce undesirable risk into the contract one is therefore faced with a tradeoff between allocating risk associated with incomplete observability and providing incentives for a proper supply of labour gaining insight into this tradeoff is important not only for understanding contracting in the small e g managerial incentive schemes but also because it is closely related to the fundamental tension between equity and efficiency in the society as a whole while our understanding of moral hazard has advanced a lot in past years it is clear that much work remains an important question that has received little attention until

the demand for leisure time in the presence of constrained work hours w douglass shaw this article presents a labor supply model designed to address situations of overemployment or underemployment in the labor market previous labor supply models have taken the possibility of work hour constraints into consideration but typically assumed that the existence of fixed work hours only influenced the decision of labor force participation this ignores situations in which individuals choose to be employed at fixed hour jobs even though these jobs do not offer the desired work hours jel j22 i introduction early attempts to incorporate time into consumer theory such as those by becker 1965 and by deserpa 1971 and to explain behavior in labor markets such as heckman s 1974 pioneering study relied on the assumption that individuals are able to freely adjust the hours they work the ability of an individual to achieve equilibrium in these models depends on flexible work hours for many individuals however hours of work are likely to be constrained individuals wishing to increase or decrease their work time may face a decision of either accepting the fixed hour schedule or exiting the labor force more refined models of labor force participation put forth by moffitt 1982 tummers and woittiez 1990 and zabel 1993 recognized this by incorporating a fixed hour constraint directly into the labor force participation decision generally these models assume that individuals decide whether or not to accept employment by comparing offered hours with desired hours if desired hours exceed offered hours then the individual enters the labor force models with a fixed hour constraint represent an improvement but they ignore the possibility that a large proportion of the labor force is likely to be either underemployed or overemployed due to the ubiquity of fixed hour employment the presence of these types of jobs is well documented in the literature schor 1991 lists several reasons including lack of lower skilled jobs costly fringe benefits and increased business competition why underemployment and overemployment is prevalent in the u s workplace prior studies by mossin and bronfenbrenner 1967 and by altonji and paxson 1988 document underemployment in the workplace in a study of the u s work force ham 1982 found that unemployed and underemployed workers ranged from 19 2 in 1973 to 28 2 in 1970 1 on the overemployment side tarling 1987 claims that recent evidence indicates that many employees would be prepared to forgo some of their earnings in order to reduce their hours of work p 85 bockstael et al 1987 make a simi lar observation noting that in their sample individuals with fixed working hours appear to value time much more highly than the wage rate and would be willing to trade work for leisure p 301 hahnel 1998 concluded that results from a 1994 survey suggest that u s workers have a slight preference for pay cuts in order to reduce their work hours about 50 of the respondents claimed they would accept a 10 reduction in pay in order to work a four day week well over half of the respondents in the survey claimed that it was either fairly difficult or almost impossible to reduce their work hours and over 60 reported that reducing their work hours would have a negative impact on their careers although the existence of underemployment and overemployment is well documented explicitly accounting for it in labor supply models remains largely unexplored in the literature in this paper the labor supply model originally analyzed by heckman 1974 is extended to recognize and incorporate fixed hour situations heckman s model which has been described as the most prevalent in the literature by zabel 1993 is derived by comparing reservation and market wages in its original form it posited a strong link between the labor force participation decision and the labor supply decision

household search or individual search does it matter most labor market search models ignore the fact that decisions are often made at the household level we fill this gap by developing and estimating a household search model with on the job search and labor supply we find that ignoring the household as a decision making unit has relevant empirical consequences in estimation the individual search model implies gender wage offer differentials almost twice as large as the household search model in the application the individual search model implies female lifetime inequality 30 lower than the household search model labor market policy effects on lifetime inequality are also sensitive to the specification

the 35 hour workweek in france straightjacket or welfare improvement workweek reduction laws may be beneficial if market interactions do not fully take into account the preferences reflected in declining secular trends in working hours the most recent law in france shortened the workweek from 39 to 35 hours in 2000 for large firms and in 2002 for small firms analysing differences between large and small firm employees before and after the law we find that aggregate employment was unaffected but labour turnover increased as firms shed workers who became more expensive survey responses indicate that the welfare impact of the law was different across groups of workers women but not men may have benefited from coordination to a shorter workweek and there is also evidence of negative welfare effects for managers possibly due to the law s administrative burden marcello estevao and filipa sa

work hour mismatch and job mobility adjustment channels and resolution rates this paper analyses the role of job changes in overcoming work hour constraints and the work hour mismatches resulting from these constraints i e differences between actual and desired work hours building on previous findings that job change increases the flexibility of actual work hours the study addresses two as yet neglected questions in the context i how do changes in desired work hours in addition to changes in actual work hours contribute to the resolution of these mismatches ii does the increased flexibility help actually to resolve work hour mismatches we exploit information about the magnitude of the prevailing mismatch to improve both the credibility and interpretation of the results we find that job change increases the probability of resolving work hour mismatches but far less than expected with free choice of hours across jobs instead large fractions of workers either stay or switch into overemployment we thoroughly investigate the robustness and heterogeneity of our results

job changes and hours changes understanding the path of labor supply adjustment we use british panel data to investigate single women s labor supply changes in response to three reforms that affected individuals work incentives we use these reforms to identify changes in labor supply there is evidence of small hours of work effects for two of such reforms a third reform in 1999 instead led to a significant increase in single mothers hours of work the mechanism by which the labor supply adjustments were made occurred largely through job changes rather than hours changes with the same employer this is little overall effect of the reforms on wages

are two heads better than one monetary policy by committee two experiments were conducted to test the common hypothesis that groups make decisions more slowly than individuals one of these experiments imitates real life monetary policy decisions in both cases the hypothesis is found wanting groups are not slower than individuals in both experiments we also find that group decisions are on average better than individual decisions this holds regardless of whether the groups make decisions by unanimity or majority rule simple mechanical theories of group decisionmaking that the group follows its average player median player or best player do not explain the results group interactions seem to matter

exchange rate fluctuations and immigrants labour market outcomes new evidence from australian household panel data abstract in this paper we exploit plausibly exogenous changes in exchange rates across home countries over time and panel data to identify the causal impact of exchange rate fluctuations on australian immigrants labour market outcomes we present new and robust evidence that unlike immigrants in the us those in australia as a whole do not reduce their yearly labour market outcomes when the local currency appreciates while female immigrants don t adjust their labour activities male immigrants reduce their weekly labour supply and hence earn less when the australian dollar appreciates this work also highlights the importance of controlling for individual heterogeneity as well as gender when modelling the labour market behaviour of immigrants

theoretical and practical arguments for modeling labor supply as a choice among latent jobs models of labor supply derived from stochastic utility representations and discretized sets of feasible hours of work have gained popularity because they are more practical than standard approaches based on marginal calculus in this paper we argue that practicality is not the only feature that can be addressed by means of stochastic choice theory this theory also offers a powerful framework for developing a more realistic model for labor supply choices founded on individuals having preferences over jobs and facing restrictions on the choice of jobs and hours of work we discuss and clarify how this modeling framework deviates from both the conventional discrete approach van soest 1995 as well as the standard textbook approach based on marginal calculus hausman 1985 we furthermore discuss how the model based on job choice offers the possibility of conducting a richer set of simulations of alternative policies

whose preferences are revealed in hours of work it has become orthodox in economics research to interpret the association between hourly earnings and working hours as the expression of the preferences of workers this convention originated in h gregg lewis explanation for the decline in hours of work since the nineteenth century his explanation rested on an explicit resolution of the identification problem inherent in any quantity hours price wage relation for over 40 years researchers have neglected this identification problem with the result that the findings in the purported labor supply literature are of questionable value jel j22 j23 c13

the long run information effect of central bank communication abstract why do long run interest rates respond to central bank communication whereas existing explanations imply a common set of signals drives short and long run yields we show that news on economic uncertainty can have increasingly large effects along the yield curve to evaluate this channel we use the publication of the bank of england s inflation report from which we measure a set of high dimensional signals the signals that drive long run interest rates do not affect short run rates and operate primarily through the term premium this suggests communication plays an important role in shaping perceptions of long run uncertainty

employment contracts job search theory and labour turnover preliminary empirical results summary the empirical implications of a model in which a worker participates in a labour market in which a job offer consists of a wage hour pair are examined here hours are not freely adjustable and the wage rate is typically different from the marginal value of leisure a theoretical model is proposed some natural conjectures on effects of wage changes are shown not to hold and a preliminary empirical investigation based on denver income maintenance experiment data is undertaken the persistence of business cycles has led economists to consider explicitly potential sources of stickiness in wage and price adjustments particularly stickiness of nominal wages one explanation of slow adjustments of wages to shocks is that information arrives too rapidly with too much volatility or too much asymmetry for workers wages and hours to adjust so that the worker s wage is always equal to the value of his marginal product of labour and simultaneously to his marginal value of leisure time to avoid continuous adjustment workers and firms engage in implicit or explicit employment contracts azariadis 1975 modelled underemployment equilibria in a model with contracts baily 1977 studied a model in which certain fixed costs induce layoffs as firms respond to demand fluctuations more recent work by burdett and mortensen 1980 has considered the terms of equilibrium contracts in the labour market hart 1983 reviews the theory of optimal employment contracts emphasizing the role of asymmetric information fischer 1977a and implicitly phelps and taylor 1977 considered the effects of multiperiod contracts in dynamic macroeconomic models and found that certain policy neutrality results of the new classical macroeconomics could be invalidated under certain conditions it is worth mentioning at this point that keynes clearly recognized that the link between the real wage paid to workers and the value of their leisure time had to be broken before macropolicy of the keynesian type would be effective indeed keynesian macroeconomic problems arise because this link is broken keynes repeatedly refers to nominal wage bargains as providing the rigidity he wanted to model the importance of implicit or explicit employment agreements in economic theory has led to a small number of empirical studies which explicitly allow for divergence between the wage keynes 1936 ch 2 and 18 malinvaud 1977 provides a related discussion in some models contracts serve only to introduce a somewhat arbitrary rigidity barro 1977 notes that rational agents are unlikely to write contracts the provisions of which make all parties worse off see also the comment by fischer 1977b

fixed costs and hours constraints hours constraints are typically identified by worker responses to questions asking whether they would prefer a job with more hours and more pay or fewer hours and less pay because jobs with different hours but the same rate of pay may be infeasible when there are fixed costs of employment or mandatory overtime premia the constraint in those cases may be illusory cross section estimates of reported hours constraints are consistent with this model implying that the overall level of hours constraints may exaggerate the extent to which the labor market is characterized by frictions and imperfections

labour supply search and taxes abstract classical labour supply theory is one of the most sophisticated parts of labour economics yet there is no compelling theoretical reason to believe in an outcome on a classical labour supply curve and it is unclear whether it is a good empirical description of the way in which labour markets actually work this paper uses the techniques of search theory to analyse the impact of changes in the tax system on incentives to work when individuals do not have flexibility of hours within jobs it is shown how the traditional comparative statics are of some use but are rarely the whole story and some comparative statics results are surprising

international spillovers of policy uncertainty using the baker et al 2013 index of policy uncertainty for six developed countries this paper estimates spillovers of policy uncertainty we find that spillovers account for slightly more than one fourth of the dynamics of policy uncertainty in these countries with this share rising to one half during the financial crisis the us and uk are responsible for a large fraction of the spillovers since the financial crisis while the remaining countries are all net receivers of policy uncertainty shocks during and after this period

female labor supply with a discontinuous nonconvex budget constraint incorporation of a part time full time wage differential this paper incorporates the well documented part time full time wage differential into an empirical labor supply model with both a heterogeneity and a random error term and estimates that model fo

after work shopping employment effects of a deregulation of shop opening hours in the german retail sector abstract this study investigates the impact of a deregulation of shop opening laws on employment in the german retail sector exploiting the gradual change in the opening times of shops across states and using data from the german socio economic panel difference in differences estimates indicate an average increase in the employment probability driven by a rise in the likelihood of working marginal part time hours workers in small firms are likely to experience a reduction of their propensity to work for individuals facing high family related supply side constraints the change in shop opening hours has opposing effects on employment positive on lower and negative on upper parts of the hours distribution overall the deregulation is estimated to have raised the likelihood of working fewer hours than desired by the workers

constrained by hours and restricted in wages the quality of matches in the labor market this paper examines the explicit loss born by workers who face constraints in their working hours by analyzing differences in actual and desired hours and wages men tend to be underemployed while women are evenly split between over and underemployment losses in surplus are generally small but 10 of underemployed men and women experience losses of more than 34 or 50 of surplus respectively the loss measure is also an important determinant in predicting labor market transitions meaning increases in surplus losses generate a higher probability of changing from workers present jobs or changing the number of hours jel j22 j41

estimating compensating wage differentials using voluntary job changes evidence from germany the author develops a model predicting that in a labor market that attaches a wage premium to jobs with a disamenity a compensating wage differential the premium s upper bound will be defined by the average wage change of voluntary job movers whose consumption of the disamenity rises as a result of their move its lower bound by the wage change of those whose consumption of the disamenity falls these predictions will not hold if as predicted by a segmented labor market model the labor market attaches a wage penalty to workplace disamenities using longitudinal data on job characteristics and wages in germany in 1984 2001 the author estimates the market returns to four workplace disamenities heavy workload job insecurity poor hours regulation and a mismatch between skills possessed and skills required the results broadly support the existence of compensating differentials in the german labor market

hours flexibility and retirement i introduction standard models of labor supply depict workers as choosing to work any positive amount of hours they wish at the competitive wage paid to persons of their type implicit in these models is the assumption that employers offer to workers at a particular wage a menu of infinitely many hours options from which workers may choose however this assumption seems fundamentally at odds with how the labor market functions in particular the distribution of weekly hours of work suggests that workers may be offered only a limited set of hours options by the employers 1 this study examines how employer imposed minimum hours of work requirements affect workers retirement decisions 2 we present a simple theoretical framework which shows that workers who cannot lower their hours of work in one period are more likely to retire by some subsequent date than workers not so constrained the intuition is straightforward given his characteristics and the wage he commands there is a particular hours level which a person desires to work in any period equivalently between any two time periods a worker initially working a given amount of hours desires that his hours change over time by a particular amount for workers with jobs that feature flexible hours the actual change in hours worked over time always perfectly matches the desired change if the worker desires to withdraw from the labor force then he does so if he desires to work fewer positive hours in the later period he changes his labor supply to precisely the desired level for workers with the same desired change in labor supply but who face hours constraints the only way to lower hours of work from one positive amount to another is to change jobs because such job changes are associated with transition costs the worker chooses from among a set of less than ideal options he can continue at the present job and be overemployed alternatively he can pay a transition cost and work the desired hours level in a new job or he can withdraw completely from the labor force thus unlike the worker whose hours are flexible the hours constrained worker retires both when he desires to work 0 h and when he wishes to work some positive amount less than he did previously but faces relatively high transition costs we tested the prediction that hours constrained workers are more likely to retire over time using a sample of retirement aged individuals from the health and retirement study hrs we found that a large fraction of workers aged 55 64 yr cannot lower their usual weekly hours of work in 1992 these constraints are prevalent for both men and women among people working different hours level and across all types of jobs exploiting the panel feature of the data and using a series of empirical tests we found that hours constrained workers are much more likely than their unconstrained peers to be retired by 1996 we document few differences in observed characteristics between constrained and unconstrained workers suggesting that the results do not derive from differences in latent retirement propensities across workers or to unmeasured job characteristics moreover we controlled carefully for demographic and job information we also conducted some simple tests to assess the likelihood that the results derive from sorting by job type constrained or unconstrained or simple measurement error and found that our main estimates continue to obtain the study s emphasis that hours constraints make it difficult for workers to satisfy changing labor supply preferences without changing jobs is also the main focus of altonji and paxson 1992 these authors showed that in a sample of prime aged women events likely to generate large changes in labor supply preferences such as the birth of a child or a child starting school tend to be associated with large changes in hours worked only for persons who change jobs

on committees of experts a committee makes a decision on a project on behalf of the public members of the committee agree on the a priori value of the project and hold additional private information about its consequences they are experts who care about the value of the project and about being considered well informed before voting on the project members can exchange their private information simultaneously we show that reputational concerns make the a priori unconventional decision more attractive and lead committees to show a united front these results hold irrespective of whether information can be manipulated or not also reputational concerns induce members to manipulate information and vote strategically if their preferences differ considerably from those of the member casting the decisive vote our last result is that the optimal voting rule balances the quality of information exchange and the alignment of interests of the decisive voter with those of the public

monetary policy preferences of individual fomc members a content analysis of the memoranda of discussion the memoranda of discussion provide detailed records of federal open market committee fomc meeting deliberations procedures are developed for coding the textual data in the memoranda and assessing the reliability of those codings the codings are then used in the estimation of parameters of individual fomc members reaction functions data from the 1970 to 1976 period are employed in the estimation in the future similar methods could be used to analyze newly released transcripts of fomc meetings held after 1976

google it up a google trends based uncertainty index for the united states and australia we develop uncertainty indices for the united states and australia based on freely accessible real time google trends data our google trends uncertainty gtu indices are found to be positively correlated to a variety of alternative proxies for uncertainty available for these two countries var investigations document an economically and statistically significant contribution to unemployment dynamics by gtu shocks in the united states in contrast the contribution of gtu shocks to unemployment dynamics in australia is found to be much milder and substantially lower than that of monetary policy shocks

tax reform sector specific labor supply and welfare effects this paper focuses in particular on the 1992 tax reform in norway in this reform the top marginal tax rates were cut considerably we find that the impact on overall labor supply is rather modest but these modest changes shadow for stronger sectoral changes the tax reform stimulated the women to shift their labor from the public to the private sector and to work longer hours a calculation of mean compensated variation calculated within the framework of a random utility model shows that the richest households benefited far more from the 1992 tax reform than did the poorest households

the pricing of job characteristics when markets do not clear theory and policy implications this article examines nonsequential search when jobs vary with respect to nonpecuniary characteristics in the presence of frictions in the labor market the equilibrium job distribution need not show evidence of compensating wage differentials the model also generates several pervasive features of labor markets unemployment and vacancies apparent discrimination and market segmentation when workers are homogeneous restrictions on the range of job offers decrease welfare and cannot reduce unemployment however when workers have heterogeneous preferences such restrictions may lower unemployment and can even lead to a pareto improvement in welfare we consider the impact of policies banning discrimination and regulating working conditions

monetary policy surprises and interest rates evidence from the fed funds futures market abstract this paper estimates the impact of monetary policy actions on bill note and bond yields using data from the futures market for federal funds to separate changes in the target funds rate into anticipated and unanticipated components interest rates response to anticipated target rate changes is small while their response to unanticipated changes is large and highly significant these responses are generally consistent with the expectations hypothesis of the term structure surprise target rate changes have little effect on expectations of future actions however which helps to explain the lack of empirical support for the expectations hypothesis at the short end of the yield curve

determinants of voluntary overtime decisions determinants of voluntary overtime decisions i introduction since the passage of the fair labor standards act in 1938 the minimum legal overtime pay premium has remained time and one half for persons working more than forty hours per week in 1978 approximately 59 percent of the labor force was subject to this provision and coverage has not changed since then 1 the labor market effects of overtime provisions including the decision on the part of both employers and employees to utilize overtime has generated a great deal of intellectual debate for example union groups have long stressed the importance of raising the legal minimum premium in order to stimulat employment through a substitution of additional employees for longer e g overtime hours previous research by ehrenberg and schumann 1982 has estimated that these effects are likely to be quite small to date studies of overtime behavior such as ehrenberg 1971a have focused on the decisions of employers implicit in these studies is the assumption of a perfectly elastic supply response by the employee to employer overtime policy however just as employers attempt to minimize costs in demanding overtime hours taking into account quasi fixed labor costs in addition to overtime premiums employees attempt to maximize utility in supplying overtime hours from the worker s perspective the decision to work overtime and perhaps more generally to take a job where overtime is regularly available or required can be thought of as resulting from a comparison of the utility derived from an overtime versus a no overtime state within this framework the voluntary overtime decision depends on relative wages overtime to straight time and nonlabor income and will be strongly conditioned on such personal factors as the worker s marital status and age this study attempts to advance our knowledge of the labor market effects of overtime policies by explicitly modelling employee responses to variations in the legal parameters of the overtime system 2 our model allows us to estimate substitution and income elasticities for overtime and thereby enables us to evaluate the effects of a variety of policies on a worker s voluntary overtime decision policy simulations suggest that legislative changes to increase the overtime premium or reduce the number of hours after which the mandatory premium takes effect would induce greater voluntary overtime on the part of worker yet because of offsetting income and substitution effects the net induced effects of such policies are not quantitatively large we also find that mandatory overtime provisions are most likely to be found in settings where quasi fixed employment costs are highest the remainder of this paper is organized as follows section ii develops a theoretical model of the voluntary overtime decision section iii presents the empirical model to be estimated section iv discusses the data used in estimation and the construction of key variables section v presents the empirical findings section vi reports the results of a simulation analysis of the effects of a number of policy alternatives on the voluntary overtime decision section vii investigates the sensitivity of the policy simulations to the empirical specification finally section viii summarizes the major conclusions and gives suggestions for further research ii the voluntary overtime decision the voluntary overtime decision can be though of as resulting from a straightforward maximization of utility subject to a budget constraint consider a worker who possesses a monotonic strictly quasi concave utility function in market goods income and labor supply u y h where y is income and h is hours of work the budget constraint facing the worker is y wh n where w is the net of taxes wage rate and n is net nonwage income to make the problem empirically tractable we utilize the stone geary utility function in this paper

career concerns of mutual fund managers we examine the labor market for mutual fund managers using data from 1992 1994 we find that termination is more performance sensitive for younger managers we identify possible implicit incentives created by the termination performance relationship the shape of the termination performance relationship may give younger managers an incentive to avoid unsystematic risk direct effects of portfolio composition may also give younger managers an incentive to herd into popular sectors consistent with these incentives we find that younger managers hold less unsystematic risk and have more conventional portfolios promotion incentives and market responses to managerial turnover are also studied

developing news based economic policy uncertainty index with unsupervised machine learning i propose creating a news based economic policy uncertainty epu index by employing an unsupervised algorithm able to deduce the subject of each article without the need for pre labelled data

adjustment costs firm responses and micro vs macro labor supply elasticities evidence from danish tax records we show that the effects of taxes on labor supply are shaped by interactions between adjustment costs for workers and hours constraints set by firms we develop a model in which firms post job offers characterized by an hours requirement and workers pay search costs to find jobs we present evidence supporting three predictions of this model by analyzing bunching at kinks using danish tax records first larger kinks generate larger taxable income elasticities second kinks that apply to a larger group of workers generate larger elasticities third the distribution of job offers is tailored to match workers aggregate tax preferences in equilibrium our results suggest that macro elasticities may be substantially larger than the estimates obtained using standard microeconometric methods

is tomorrow another day the labor supply of new york city cabdrivers the labor supply of taxi drivers is consistent with the existence of intertemporal substitution my analysis of the stopping behavior of new york city cabdrivers shows that daily income effects are small and that the decision to stop work at a particular point on a given day is primarily related to cumulative daily hours to that point this is in contrast to the analysis of camerer et al who find that the daily wage elasticity of labor supply of new york city cabdrivers is substantially negative implying large daily income effects this difference in findings is due to important differences in empirical methods and to problems with the conception and measurement of the daily wage rate used by camerer et al

nurses wanted is the job too harsh or is the wage too low when entering the job market nurses choose among different kind of jobs each of these jobs is characterized by wage sector primary care or hospital and shift daytime work or shift this paper estimates a multi sector job type random utility model of labor supply on data for norwegian registered nurses rns in 2000 the empirical model implies that labor supply is rather inelastic 10 increase in the wage rates for all nurses is estimated to yield 3 3 increase in overall labor supply this modest response shadows for much stronger inter job type responses our approach differs from previous studies in two ways first to our knowledge it is the first time that a model of labor supply for nurses is estimated taking explicitly into account the choices that rn s have regarding work place and type of job second it differs from previous studies with respect to the measurement of the compensations for different types of work so far it has been focused on wage differentials but there are more attributes of a job than the wage based on the estimated random utility model we therefore calculate the expected value of compensation that makes a utility maximizing agent indifferent between types of jobs here between shift work and daytime work it turns out that norwegian nurses working shifts may be willing to work shift relative to daytime work for a lower wage than the current one

real business cycle views of the great depression and recent events a review of timothy j kehoe and edward c prescott s great depressions of the twentieth century this book collects essays most of which were published earlier into an advertisement for real business cycle rbc analysis half of the essays discuss the great depression half discuss events of the 1980s and 1990s they all use the general equilibrium model of economic growth to analyze short run fluctuations in the rate of economic growth of various countries i find that the use of closed economy models without frictions is not useful for the analysis of short run variations in the rate of economic growth almost all of these essays end by claiming that variations in the rate of gdp growth were due to changes in the rate of total factor productivity tfp growth they do not provide any explanation for fluctuations in the rate of tfp growth leaving the reader no closer to understanding these periods of depression and slow growth i discuss in turn the essays on the great depression the essays on more recent fluctuations and the definition of great depressions used in this volume

interregional migration and interindustry labour mobility in canada a simultaneous approach this paper argues that interindustry labour mobility and interregional migration are simultaneously determined processes it estimates a bivariate probit model of migration and mobility using data for canada and concludes that the interindustry mobility of labour is dominated by the availability of employment hours and that wage differentials are a statistically significant but small determinant of interregional migration since interindustry mobility is much larger in magnitude than interregional migration quantity constraints in labour markets are of central importance to the adaptive capacity of the economy summary in fre excerpt

preferences or private assessments on a monetary policy committee using bank of england voting data we show empirically that members votes are driven by heterogeneous individual assessments of the economy as well as their individual policy preferences estimates indicate that internal committee members form more precise assessments than externals and are also more hawkish the estimates allow the first quantification of the gain due to information aggregation on monetary policy committees the marginal gain from additional committee members tapers quickly after five members there is no evidence of gains through externals moderating internals preferences a relatively small committee of highly informed internal members emerges as a desirable committee structure

labor supply preferences hours constraints and hours wage tradeoffs in a labor market with tied hours wage packages and wage dispersion for a particular type of job constrained workers may be willing to sacrifice wage gains for better hours when changing jobs likewise workers may accept jobs offering undesirable hours only if the associated wage gains are large we investigate this issue empirically by examining whether overemployment and underemployment on the initial and new job affects the relation between hours changes and wage changes for quitters our results generally support the view that an individual requires compensation to work in a job that given the individual s particular preferences offers unattractive hours

equilibrium search and tax credit reform an empirical equilibrium job search model with wage posting is developed to analyze the labor market impact of uk tax reforms the model allows for a rich characterization of the labor market with hours responses accurate representations of the tax and transfer system and both worker and firm heterogeneity the model is estimated with pre reform longitudinal survey data using a semi parametric estimation technique and the impact of actual tax reform policies is simulated the model predicts that the british working families tax credit and contemporaneous reforms increased employment with equilibrium effects found to play a relatively minor role

interpreting labor supply regressions in a model of full and part time work we construct a family model of labor supply that features adjustment along both the intensive and extensive margin intensive margin adjsutment is restricted to two values full time work and part time work using simulated data from the steady state of the calibrated model we examine whether standard labor supply regressions can uncover the true value of the intertemporal elasticity of labor supply parameter we find positive estimated elasticities that are larger for women and that are highly significant but they bear virtually no relationship to the underlying preference parameters

strategic central bank communication discourse analysis of the bank of japan s monthly report abstract we conduct a discourse analysis of the bank of japan s monthly report and examine its characteristics in relation to business cycles we find that ambiguous expressions tend to appear more frequently with negative expressions and this tendency is more pronounced in recessions this suggests that the central bank communicates strategically by obfuscating the reports when their private information is unfavorable

transparency and deliberation within the fomc a computational linguistics approach how does transparency a key feature of central bank design aect the deliberation of monetary policymakers we exploit a natural experiment in the federal open market committee in 1993 together with computational linguistic models particularly latent dirichlet allocation to measure the eect of increased transparency on debate commentators have hypothesized both a benecial discipline eect

the labor supply effects of the social security earnings test the social security earnings test taxes away benefits at a 33 50 rate once earnings pass a threshold amount i investigate the response to three past changes in the earnings test rules each applying to some age groups and not others i find that beneficiaries bunch in substantial numbers just below the earnings threshold and the bunching shifts when the earnings test rules change these shifts in the budget constraint are incorporated into an econometric model to identify income and substitution effects the estimation yields significant elasticities that suggest considerable deadweight loss suffered by working beneficiaries

testing whether unemployment represents intertemporal labour supply behaviour in the lucas rapping 1969 model of the labour market fluctuations in unemployment represent individuals optimally adjusting their labour supply behaviour in response to fluctuations in wage rates over the business cycle in this paper i propose and implement a misspecification test of the lucas rapping treatment of unemployment as labour supply behaviour using panel data this test extends previous such work with micro data by simultaneously allowing for intertemporal substitution uncertainty and endogenous unemployment using the standard specification of intertemporal labour supply behaviour i find strong evidence against this interpretation of unemployment there are two possible interpretations of the test results the first is that it is necessary to turn to alternative models of the labour market in which unemployed workers are off a supply function the second is that the test results indicate the necessity of moving to more complex models of intertemporal substitution however given current econometric techniques and data sets these alternative models of intertemporal substitution will be extremely difficult to test

does uncertainty affect real activity evidence from state level data abstract we use variation in the effect of us wide or global uncertainty on state level uncertainty to identify the impact of this shock on real activity we find that increases in uncertainty do have an adverse impact on real income employment and unemployment thus uncertainty shocks can be a source of economic fluctuations

the wrong kind of transparency in a model of career concerns for experts when is a principal hurt from observing more information about her agent this paper introduces a distinction between information on the consequence of the agent s action and information directly on the agent s action when the latter kind of information is available the agent faces an incentive to disregard useful private signals and act according to how an able agent is expected to act a priori this conformist behavior hurts the principal in two ways the decision made by the agent is less likely to be the right one discipline and ex post it is more difficult to evaluate the agent s ability sorting the paper identifies a necessary and sufficient condition on the agent signal structure under which the principal bene ts from committing not to observe the agent s action the paper also shows the existence of strategic complementarities between information on action and information on consequence the results on the distinction between action and consequence are then used to interpret existing disclosure policies in delegated portfolio management in particular they are consistent with hitherto puzzling evidence that mutual funds systematically overperform pension funds

constraints on the choice of work hours agency versus specific capital lifetime contracts imply that at a given time wages and value of marginal product vmp will diverge the contract will specify hours as well as wages since firms will desire to prevent workers from working more when the wage is greater than vmp and from working less when the wage is less than vmp if hours are set efficiently workers will face binding hours constraints the agency model and the firm specific capital models make opposite predictions regarding the relation between work hours constraints and job tenure we test these predictions our results indicate that neither model explains the observed pattern of hours constraints

testing the predictive value of subjective labour supply data empirical implementation of labour supply theories is usually based on realized labour market behaviour this requires strong assumptions about the impact of labour demand a possibility to avoid these assumptions is to make use of subjective data on desired labour supply in this paper we investigate whether respondents answers to survey questions on the desired number of working hours contain additional information on the preferences of the individuals using panel data for the netherlands we analyze whether deviations between desired hours and actual hours of work help to predict future job changes or changes in hours worked we use parametric and recently developed nonparametric tests the results suggest that subjective information on desired working hours are helpful in explaining female labour supply for males the evidence is mixed

security analysts career concerns and herding of earnings forecasts several theories of reputation and herding see e g scharfstein and stein 1990 suggest that herding among agents should vary with career concerns our goal in this paper is to document whether such a link exists in the labor market for security analysts specifically we look at the relationship between an analyst s job tenure a proxy for career concerns and various measures of stock earnings forecast performance we establish the following key results 1 older analysts are more likely to produce earnings forecasts of firms before younger ones 2 their forecasts also deviate more from the consensus forecast than their younger counterparts we argue that these results are consistent with some reputational models of herding we also establish a number of auxiliary findings regarding the relationship between forecast accuracy and frequency of forecast revisions with job tenure

search for nonwage job characteristics a test of the reservation wage hypothesis previous structural models of job search behavior have been based upon the reservation wage property this article provides estimates of a more general search model that nests models with the reservation wage property the estimates lead to rejection of the reservation wage property the model includes hours of work in the utility function but other nonwage job characteristics can be included as well an experiment based on the estimated parameters indicates that a significant proportion of job offers would be mistakenly predicted to be accepted or rejected under the restrictions implied by the reservation wage property

monetary policy uncertainty and economic fluctuations uncertainty associated with the monetary policy transmission mechanism is a key driving force of business cycles to investigate this link we propose a new term structure model that allows the volatility of the yield curve to interact with macroeconomic indicators the data favors a model with two volatility factors that capture shortterm and long term monetary policy uncertainty increases in either of them lead higher unemployment rates but they interact with ination in opposite directions

sectoral labour supply choice restrictions and functional form this is the authors submitted article version which is the pre peer reviewed version of the article the article changed title in the peer reviewing process from analyzing labor supply behavior with latent job opportunity sets and institutional choice constraints later published as discussion paper no 399 http brage bibsys no ssb handle urn nbn no bibsys brage 21006

hourly versus salaried payment and decisions about trading time and money over time using longitudinal data from the british household panel survey the authors examine how individuals employment compensation salaried or hourly affects their decisions to trade time for money res

adjustment cost and incentives to work evidence from a disability insurance program abstract how important is adjustment cost for individuals who face a change in work incentives induced by a policy change i provide the first estimate of adjustment cost in the context of a disability insurance di program by exploiting a policy change that increased work incentives by increasing the exemption threshold i use bunching at the thresholds to estimate adjustment cost and earnings elasticity the estimates of adjustment cost are quite sizeable and heterogeneous the estimates of earnings elasticity from both static and dynamic models are larger than the elasticity estimated with no adjustment cost suggesting that adjustment cost attenuates the responses to work incentives policies designed to increase labor supply will work if the work incentives are large enough to offset the adjustment cost accounting for adjustment cost then might explain the disparate findings on the effects of an increase in work incentives on the labor supply of beneficiaries of di programs