incomplete wage posting we consider a directed search model in which workers differ in productivity productivity becomes observable to firms after assessing their workers on the job but it is not verifiable firms with vacancies choose between posting a noncontingent wage and leaving wages subject to bargaining with the worker under wage bargaining firms cannot optimize the trade off between paying higher wages and having a larger probability of filling vacancies but wage bargaining makes wages increasing in worker productivity and so may allow firms to attract better workers into the vacancy when workers heterogeneity is large and bargaining powers come close to satisfying hosios s rule firms opt for bargaining yet equilibria with bargaining fail to maximize aggregate net income and sometimes are not constrained pareto optimal

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

discretion in hiring job testing technologies enable firms to rely less on human judgement when making hiring decisions placing more weight on test scores may improve hiring decisions by reducing the influence of human bias or mistakes but may also lead firms to forgo the potentially valuable private information of their managers we study the introduction of job testing across 15 firms employing low skilled service sector workers when faced with similar applicant pools we find that managers who appear to hire against test recommendations end up with worse average hires this suggests that managers often overrule test recommendations because they are biased or mistaken not because they have superior private information the firms in our setting may therefore be able to improve outcomes of hires by limiting managerial discretion and relying more on test recommendations

estimation of an asymmetric stochastic volatility model for asset returns a stochastic volatility model may be estimated by a quasi maximum likelihood procedure by transforming to a linear state space form the method is extended to handle correlation between the two disturbances in the model and applied to data on stock returns

general training in labor markets common value auctions with unobservable investment abstract this paper studies the puzzle of employer financing for the general training of workers a parsimonious theory is developed based on asymmetric information between employers about the quantity of training the labor market is modeled as a common value auction with an informed and an uninformed bidder the novel feature of the game is that one of the bidders can make an unobservable investment that increases the value of the item before the auction by randomizing the amount of training provided an employer can create an endogenous adverse selection problem enabling it to compress the wage structure and capture some returns from its training investment the model generates continuous equilibrium wage and training distributions and identical employees can receive different wage offers and training levels a parametric example is used to illustrate how the shape of the wage distribution depends on the elasticity of production with respect to human capital

dynamic conditional score models a review of their applications abstractin this paper applications of dynamic conditional score dcs models are reviewed and those models are discussed in relation to classical time series models from the literature dcs models

institutional labor economics the new personnel economics and internal labor markets a reconsideration the author illustrates the utility of institutional labor economics and makes a case for a reconsideration of it two recent developments motivate this effort the rise of new personnel economics npe as a significant subfield of labor economics and the substantial shifts in work organization that have taken place since the 1990s understanding how and why firms have reorganized work opens the door for a renewed interest in institutional approaches the author explains that the rules of institutional labor markets ilms emerge from the competition between organizational interest groups unions personnel professionals and the government and competing views of firms objectives resulting in the rise of ilms the slow diffusion of high performance work systems strategies used to obtain a high level of commitment from workers the use of contingent employees and the spread of new promotion rules in response to equal employment opportunity pressures as such the role of power and influence in establishing work rules is of central concern though more conventional npe considerations also remain important

atypical work and pay author affiliation john t addison department of economics moore school of business university of south carolina 1705 college street columbia sc 29208 usa ecceaddi moore sc edu corresponding authorchristopher j surfield department of economics college of business and management saginaw valley state university 7400 bay road university center mi 48710 usa csurfiel svsu edu acknowledgment the authors are more than usually indebted to two referees for their particularly helpful comments on earlier drafts of this paper and to our co editor for her perseverance 1 introductioneven as the economy continues to recover the u s is increasingly becoming a nation of part timers and free lancers of temps and independent contractors this disposable labor force is the most important trend in business today and it is fundamentally changing the relationship between americans and their jobs for companies large and small the phenomenon provides a way to remain globally competitive while avoiding the vagaries of market cycles but for workers it can mean an end to security and sense of significance that come from being a loyal employee one by one the tangible bonds that once defined work in america are giving way castro 1993 p 43 the frequency of alternative work arrangements such as temporary employment on call work and independent contracting nonstandard forms of employment commonly referred to as atypical work has steadily increased in recent decades see for example segal and sullivan 1997 research on atypical work alternative work arrangements we shall use the two terms interchangeably has tended to focus on the nature and extent of these arrangements and their impact on a worker s employment history e g addison and surfield 2006 although compensation levels have been accorded less attention the thrust of much of the earnings literature is pessimistic compared with regular or open ended employment alternative work arrangements often appear to offer inferior remuneration the public perception remains that workers in these alternative work arrangements constitute a disposable workforce characterized by low paying and precarious or unstable jobs abstracting for the moment from the complications introduced by the diversity of alternative work arrangements there are a number of reasons why their incumbents might earn less than regular workers for example wage differentials between atypical workers and those in open ended employment can arise from supply side differences among heterogeneous workers and employer preferences on the supply side a subset of workers may favor nonstandard work forms over regular employment and be prepared to accept lower pay one example would be adults who are heavily involved in household production and another is older workers who have moved out of career jobs but supply side differences alone are insufficient to sustain a permanent ceteris paribus differential in favor of regular workers in addition atypical workers and regular workers must not be fully fungible and employers must not be indifferent between them negative wage gaps for atypical work are not the only possibility admitted by the competitive model atypical workers may earn higher wages than their counterparts in regular employment if the aggregate demand for these nonstandard arrangements is greater than the number of individuals seeking such employment thus to adapt hirsch s 2005 p 527 argument in respect of part timers if firms use atypical work as low cost means of adjusting to variable and uncertain demand the relatively large supply of atypical workers required may run up against mobility or substitution constraints across labor markets delineated by geography occupation and industry and give rise to positive equilibrium wage gaps for atypical workers negative wage gaps may of course also be more apparent than real

does demand for product quality increase worker training abstract we uniquely examine the relationship between firm organized training and the sensitivity of consumer demand to product quality cross section panel fixed effect and instrumental variable estimates confirm that british workplaces provide more intensive training when their product demand is more sensitive to product quality robustness checks including using alternative key variable definitions and a counterfactual analysis examining the importance of competing on price support this confirmation

preentry contacts and the generation of nascent networks in organizations this paper investigates the impact of individuals social ties at organizational entry on the formation of intraorganizational networks when individuals enter organizations with one or more preentry relationships in place i argue they form more extensive networks post entry than their untied counterparts however it is also suggested that under some conditions i e when quality is more certain the relationship between pre and postentry social structure is contingent on individuals quality attributes i test and find support for these hypotheses in a study of new business and law professionals the results indicate that individuals with an initial advantage in social ties form more extensive networks post entry than those without such an advantage and that when certainty about quality is high this effect depends on the quality attributes of the new entrants implications of this study for research on social networks resource accumulation and inequality are discussed

inefficient hiring in entry level labor markets hiring inexperienced workers generates information about their abilities if this information is public workers obtain its benefits if workers cannot compensate firms for hiring them firms will hire too few inexperienced workers i determine the effects of hiring workers and revealing more information about their abilities through a field experiment in an online marketplace i hired 952 randomly selected workers giving them either detailed or coarse public evaluations both hiring workers and providing more detailed evaluations substantially improved workers subsequent employment outcomes under plausible assumptions the experiment s market level benefits exceeded its cost suggesting that some experimental workers had been inefficiently unemployed

the effect of joint custody on family outcomes since the 1970s almost all us states have introduced a form of joint custody after divorce i analyze the causal effect of these custody law reforms on different family outcomes my identification strategy exploits the different timing of reforms across the us states estimations based on state panel data suggest that the introduction of joint custody led to an increase in marriage rates an increase in overall fertility including a shift from nonmarital to marital fertility and an increase in divorce rates for older couples accordingly female labor market participation decreased further male suicide rates and domestic violence fell in treated states the empirical evidence is consistent with the hypothesis that joint custody increased the relative bargaining power of men within marriage

dividing the costs and returns to general training data from the national longitudinal survey of youth indicate that the employer often pays the explicit costs of not only on site training but also off site general training although few of these costs appear to be passed on to workers in the form of a lower wage while in training completed spells of general training paid for by previous employers have a larger wage effect than completed spells of general training paid for by the current employer a model where contract enforcement considerations cause employers to share the costs and returns to purely general training can explain these findings

training and worker effort a signalling perspective this paper analyzes the interaction between firms investment in general skills training and workers incentives it shows that when a firm has an informational advantage over its workers its provision of free general skills training can serve as a signal that there will be a long term relationship between the firm and its workers this signal induces the workers to exert more effort in learning firm specific skills which enhances the firm s profits in contrast with most of the existing literature the model implies that firms may provide free general skills training even if there is no labour market friction ce memoire analyse l interaction entre l investissement des entreprises dans l acquisition d habiletes generales de leurs employes et les incitations des travailleurs a fournir un effort on montre que quand une firme a un avantage informationnel sur ses travailleurs le fait de fournir gratuitement de la formation qui permette aux employes d acquerir des habiletes generales peut servir de signal qu il va y avoir une relation a long terme entre la firme et ses travailleurs ce signal incite les travailleurs a investir plus d effort dans l acquisition d habiletes specifiques a la firme ce qui augmente les profits de l entreprise ce modele en porte a faux par rapport au gros de la litterature existante suggere que les entreprises peuvent fournir gratuitement de la formation permettant aux employes d acquerir des habiletes generales meme s il n y a pas de friction dans le marche du travail

why do firms train theory and evidence this paper offers a theory of training whereby workers do not pay for the general training they receive the superior information of the current employer regarding its employees abilities relative to other firms creates ex post monopsony power and encourages this employer to provide and pay for training even if these skills are general the model can lead to multiple equlibria in one equilibrium quits are endogenously high and as a result employers have limited monopsony power and provide little training while in another equilibrium quits are low and training is high using microdata on german apprentices we show that the predictions of our model receive some support from the data

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

reconsidering institutional labor economics the author illustrates the utility of institutional labor economics and makes a case for a reconsideration of it two recent developments motivate this effort the rise of new personnel economics npe as a significant subfield of labor economics and the substantial shifts in work organization that have taken place since the 1990s understanding how and why firms have reorganized work opens the door for a renewed interest in institutional approaches the author explains that the rules of institutional labor markets ilms emerge from the competition between organizational interest groups unions personnel professionals and the government and competing views of firms objectives resulting in the rise of ilms the slow diffusion of high performance work systems strategies used to obtain a high level of commitment from workers the use of contingent employees and the spread of new promotion rules in response to equal employment opportunity pressures as such the role of power and influence in establishing work rules is of central concern though more conventional npe considerations also remain important

human capital investment under asymmetric information the pigovian conjecture revisited this article investigates how human capital investment labor turnover and wages are jointly determined when the current employer knows more about a worker s productivity than potential employers results derived are quite different from or unexplored by the standard human capital theory we show that the information asymmetry can cause an externality distortion in human capital investment because higher productivity due to the investment may not be recognized by the market the investment level increases in the degree of firm specificity of human capital the underinvestment problem is more severe when human capital is general than when it is firm specific

investment in general training the role of information and labour mobility following the seminal work of becker i964 it is widely accepted in the literature that firms will be unwilling to finance training which workers may use in other firms this paper takes issue with this prediction and suggests that firms will frequently share in the cost of such general training 1 becker argues that a firm which pays for the training of workers in skills of potential use to other firms will lose these workers since other firms bear none of the costs of general training they can attract a worker with such training by outbidding the firm which trained him recognising this absence of property rights over an investment in general training firms will refuse to provide it hence if general training is to take place the trainee will have to pay for it if potential trainees are unwilling or unable to pay general training will not take place a shortage in general training is likely to emerge this may be especially pronounced in developing countries 2 in contrast the outlook for

firm sponsored general education and mobility frictions evidence from hospital sponsorship of nursing schools and faculty this study asks why hospitals provide direct financial support to nursing schools and faculty this support is striking because nursing education is clearly general clearly paid by the firm and information asymmetries appear minimal using aha and survey data i find hospitals employing a greater share of their msa s registered nurses are more likely to provide direct financial support to nursing schools and faculty net of size and other institutional controls given the institutional context i interpret this result as unusually specific evidence that technologically general skill training may be made de facto specific by imperfect and costly mobility

employers in the boom how did the hiring of less skilled workers change during the 1990s abstract employers became more willing to hire a range of disadvantaged workers during the 1990s boom including minorities workers with certain stigmas such as welfare recipients and those without recent experience or high school diplomas the wages paid to newly hired less skilled workers also increased on the other hand employers demand for specific skill certification rose over time as did their use of certain screens the results suggest that the tight labor markets of the late 1990s in conjunction with other secular changes raised hiring costs and induced employers to shift toward screens that seemed more cost effective

looking beyond the bridge the effect of temporary agency employment on labor market outcomes abstract we perform a comprehensive analysis of the stepping stone effect of temporary agency employment on unemployed workers using the timing of events approach we investigate not only whether agency employment is a bridge into regular employment but also its effect on post unemployment wages and job stability for unemployed danish workers we find evidence of large positive treatment effects particularly for immigrants and for individuals considered less employable our results show that agency employment is in tendency effective in tight labor markets where firms use agency employment primarily to screen potential candidates for regular posts finally our results suggest that agency employment may improve subsequent match quality in terms of wages

skill gaps skill shortages and skill mismatches evidence and arguments for the united states concerns over the supply of skills in the u s labor force especially education related skills have exploded in recent years with a series of reports not only from employer associated organizatio

a dynamic multivariate heavy tailed model for time varying volatilities and correlations we propose a new class of observation driven time varying parameter models for dynamic volatilities and correlations to handle time series from heavy tailed distributions the model adopts generalized autoregressive score dynamics to obtain a time varying covariance matrix of the multivariate student t distribution the key novelty of our proposed model concerns the weighting of lagged squared innovations for the estimation of future correlations and volatilities when we account for heavy tails of distributions we obtain estimates that are more robust to large innovations we provide an empirical illustration for a panel of daily equity returns

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

the impact of product market competition on training provision evidence from canada while standard models of training focus on how input market affects firms training decisions this paper investigates the impact of product market competition on training provision using the longitudinal data from statistics canada s workplace and employee survey we find that increased competition is strongly associated with more training provision this association is unlikely to be driven by unobserved heterogeneity specific measures used and other relevant factors to the extent that training is a significant source of human capital and industry competitiveness our results suggest that increasing training is an important channel through which competition raises productivity

is firm sponsored training a palliative a common agency approach we analyse the issue of firm sponsored training under product market imperfections in this setting qualification becomes a public good for firms when their profits are increasing in the stock of skilled workers but remains a private good to students workers students have to pay a tuition fee but at the same time firms sponsor education universities sell training to both we prove that the proportion of skilled workers is larger in more competitive economies industries while the share of firms in the financing of training is a monotonically decreasing function of the degree of competition an increase of the latter indeed increases the equilibrium skilled wage while reducing its sensitivity to an increase of the supply of skilled workers the firms aggregate expenditures on training per worker are nevertheless a nonmonotonic function of the competitiveness of the economy

training and union wages abstract this paper investigates whether unions through imposing wage floors that lead to wage compression increase on the job training our analysis focuses on germany based on a model of unions and firm financed training we derive empirical implications regarding apprenticeship training intensity layoffs wage cuts and wage compression in unionized and nonunionized firms we test these implications using firm panel data matched with administrative employee data we find support for the hypothesis that union recognition via imposing minimum wages and wage compression increases training in apprenticeship programs

the growth of temporary services work the temporary help services industry which provides client firms with workers on an as needed basis has expanded at a phenomenal rate over the last 20 years since 1972 the industry s employment has grown at an annual rate of over 11 percent and its share of total u s employment has risen from under 0 3 percent in 1972 to more than 1 8 percent in 1995 the growth of the temporary services industry has fueled controversy some analysts fear that temporary workers may become locked into a labor market underclass with low wages no benefits negligible job security little training and no possibility for advancement others challenge such claims and point to efficiencies created by temporary employment relationships this article will examine the growth of the temporary services industry and discuss the quality of temporary services jobs how such jobs fit into workers careers and some of the forces that may be driving the growth of temporary services work

the economics of private sector training a survey of the literature abstract this survey organizes and summarizes existing theoretical work on private sector training the theoretical models focus on investment efficiency finance and turnover recent developments in the on the job training literature are characterized by strategic interaction between employers and employees and emphasize market imperfections

uncertainty shocks and balance sheet recessions this paper investigates the origin and propagation of balance sheet recessions i first show that in standard models driven by tfp shocks the balance sheet channel disappears when agents can write contracts on the aggregate state of the economy optimal contracts sever the link between leverage and aggregate risk sharing eliminating the concentration of aggregate risk that drives balance sheet recessions i then show that uncertainty shocks can help explain this concentration of aggregate risk and drive balance sheet recessions even with contracts on aggregate shocks the mechanism is quantitatively important and i explore implications for financial regulation

investment in general human capital and turnover intention a key area of personnel economics focuses on the provision of human resource practices by firms such as why one type of compensation is offered over another edward p lazear and paul oyer 2007 while this area of research includes various types of wage compensation it also includes types of nonwage compensation which have been shown to have sizable effects on worker behavior such as mobility in the case of health insurance and traditional pension plans the present analysis examines the effect of employer sponsored investment in general human capital administered through tuition reimbursement programs on employee turnover employer provided tuition reimbursement is a widespread program in which firms provide financial assistance for the direct cost of coursework taken by employees estimates of the percentage of firms that offer this program are as high as 85 percent peter cappelli 2004 these programs support investment in an employee s general human capital skills that are transferable across employers because accredited academic institutions are responsible for curriculum development instruction and certification and serve students employed at a wide variety of establishments these programs represent a puzzle because firms are unlikely to make general human capital investments without some expectation of receiving an ex post return but standard human capital theory human capital work and outcomes

career concerns matching and optimal disclosure policy raiders may suffer from information disadvantage since the current employer is often better informed about his workers quality when workers have career concerns and matching influences productivity the initial employer can strategically disclose information to influence incentives and matching efficiency long term complete contracts induce full disclosure when raiders are perfectly competitive the optimal short term contract induces full disclosure if raiders are perfectly competitive and the workers are risk neutral and are not liquidity constrained these conditions are not only sufficient but also almost necessary for full disclosure partial disclosure may be optimal if any of these conditions is relaxed

costes de contratacion y empresas de trabajo temporal una explicacion de la disparidad regional en espana the temporary work agencies twa industry experienced continuous growth throughout the 90s and now represents around 15 of temporary hiring in spain more interestingly are markable regional disparity in this sector exists across spanish provinces by developing a simple theoretical model and using panel data methodology this article examines the spanish caseand suggests that the costs of recruiting training and screening could explain a large part of the regional disparity this result is supported by the empirical fact that the twa firms have greater success in markets with low unemployment rates where the average duration of unemploymen tis longer and in provinces with higher concentrations of urban population respectively

does atypical work help the jobless evidence from a caeas cps cohort analysis atypical employment such as temporary on call and contract work has been found disproportionately to attract the jobless but there is no consensus in the literature as to the labour market consequences of such job choice by unemployed individuals using data from the current population survey we investigate the implications of the initial job finding strategies pursued by the jobless for their short and medium term employment stability at first sight it appears that taking an offer of regular employment provides the greatest degree of employment continuity for the jobless however closer inspection indicates that the jobless who take up atypical employment are not only more likely to be employed 1 month and 1 year later than those who continue to search but also to enjoy employment continuity that is not less favourable than that offered by regular open ended employment