armington models and terms of trade effects some econometric evidence for north america elasticities of substitution among u s imports from mexico canada the rest of the world and competing domestic production are estimated for twenty two mining and manufacturing sectors based on quarterly data for 1980 88 these elasticities will provide a benchmark for computable general equilibrium models of north american trade liberalization the authors also find that estimated armington elasticities are low and therefore researchers may want to reconsider the device of using high values of armington elasticities in multicountry computable general equilibrium models to avoid large terms of trade losses associated with preferential trade liberalization

the effectiveness of a reemployment bonus abstract this paper investigates the effectiveness of the recently proposed reemployment bonus relative to the regular unemployment insurance benefits in a model where endogenous search effort plays a crucial role and the bonus is fully portrayed as an incentive contract

explaining the transitions out of unemployment in spain the effect of unemployment insurance a multinomial logit model and matched files from the spanish active population survey epa are used to study transitions out of unemployment among men aged 20 59 in addition to demographic characteristics other explanatory variables included in the regressions pertain to previous job characteristics and the spell of unemployment in this article special attention is paid to the impact of unemployment insurance benefits on the re employment probability consistent with previous work it is found that receipt of unemployment insurance is associated with lower probabilities of re employment and of withdrawal from the labour force more importantly a differential effect of benefit receipt is obtained when comparing time periods before and after 1992 indeed in april of that year the labour authority made eligibility requirements for unemployment insurance more restrictive and curtailed benefit amounts

job search and impatience workers who are more impatient search less intensively and set lower reservation wages the effect of impatience on exit rates from unemployment is therefore unclear if agents have exponential time preferences the reservation wage effect dominates for sufficiently patient individuals so increases in impatience lead to higher exit rates the opposite is true for agents with hyperbolic time preferences using two large longitudinal data sets we find that impatience measures are negatively correlated with search effort and the unemployment exit rate and are orthogonal to reservation wages impatience substantially affects outcomes in the direction predicted by the hyperbolic model

reservation wages and unemployment in manufacturing a case study the distribution and determinants of reservation wages are examined using a large new data set of unemployed skilled manufacturing workers reservation wage ratios are smaller than previous evidence would suggest while the period of unemployment and eligibility for unemployment compensation play their anticipated roles in addition two new relationships are demonstrated first workers displaced from jobs outside their primary occupation have significantly lower reservation wages than those unemployed from their major occupation second the requirement for a union job is shown to play a surprisingly large and important role in determining reservation wages finally a simultaneous equation system captures the possibility of dual causation between reservation wages and months of unemployment we find no evidence that higher reservation wages cause longer unemployment

the competitive effects of a new product introduction a case study this paper analyzes the competitive effect of a new product introduction we break the overall competitive effect into two parts the effect on the prices of existing products due to increased competition and the effect of having additional product variety using data from both before and after the introduction we directly estimate the price effects and the additional variety effect then using only the estimated post introduction demand structure along with an assumed model of competition we estimate the price effects indirectly by comparing the indirect and direct estimates we assess the validity of alternative models of competition for the industry

unemployment benefits and labor market transitions a multinomial logit model with errors in classification this paper utilizes validation data on survey response error in the current population survey to generalize the standard multinomial logit model to allow for spurious events that result from classification error the authors basic approach could be used with other stochastic models of discrete events as well they illustrate their algorithm by studying the effect of unemployment insurance on transitions from unemployment to employment and on labor force withdrawal their results confirm earlier work suggesting that unemployment insurance lengthens unemployment spells and show that correcting for classification error strengthens the apparent effect of unemployment insurance on spell durations copyright 1995 by mit press

climate policy in hard times are the pessimists right conventional wisdom holds that the state of the economy has a strong impact on citizens appetite for environmental policies including climate policy assuming median voter preferences prevail periods of economic prosperity are likely to be conducive and economic downturns are likely to be detrimental to ambitious climate policy using original surveys in the united states and germany we engage in a critical re assessment of this claim the results show that for the most part individuals perceptions of their own economic situations have no significant effect on their policy support negative perceptions of the national economic outlook reduce support for climate policy in the us but not in germany however the magnitude of this national economy effect in the us is small on the other hand individuals climate risk perceptions consistently have a statistically significant and large effect across various model specifications and interestingly this pattern holds for the us whose government is among the less ambitious in global climate policy as well as germany which is among the frontrunners our study indicates that the state of the economy may not trump climate risk considerations as conventional wisdom claims

changes in labor force status among the unemployed i argue against the popular view that young black men experience more joblessness than their white counterparts because they have priced themselves out of the labor market the seemingly excessive reservation wages of jobless young black men what they

do economic conditions affect public support for environmental policy abstract economic conditions are typically viewed as having an important influence on environmental policy in particular it is widely believed that under adverse economic conditions electorates and governments prioritize economic growth and jobs over costly ecological restraint the empirical evidence for this received wisdom however remains surprisingly contradictory we contribute to this debate by studying a case where the odds of the economy environment trade off claim holding true should be high an emerging economy in severe recession and environmental policy with high short term costs and long term benefits based on a representative survey n 2449 in brazil implemented in late 2015 early 2016 we examine how ego and socio tropic economic conditions both perceived and real affect citizens preferences concerning the mitigation of deforestation and climate change we find no robust evidence for an economy environment trade off the main policy implication is that from a public opinion perspective there is considerable room for ambitious environmental policy even under adverse economic conditions

do hypothetical and actual marginal willingness to pay differ in choice experiments application to the valuation of the environment abstract in this paper we test the validity of choice experiments with donations for environmental projects in particular we test whether or not there are differences in preferences between a hypothetical and an actual choice experiment our experiments indicate no differences in addition internal tests of validity indicate transitive and stable preferences in both experiments although there are some indications of possible learning effects during the experiment

differentiating the consumer benefits from labeling of gm food products although recurrent evidence is found that consumers have different willingness to pay for gm and non gm products there is disagreement in the scientific community about the size of consumer benefits from gm labeling in this article we use a theoretical model based on a standard constant elasticity of substitution ces to explain the importance of the quality effect it is shown that failing to consider the quality effect may yield an overestimation of benefits from gm labeling voluntary or mandatory

on the interaction between vertical and horizontal product differentiation an application to banking the author studies the conditions under which banks offer remote access note there exists interaction between location and taste for remote access offering remote access is an instrument to partially segment depositors according to their taste for that technology the interaction between location and taste for remote access enhances this effect different equilibria emerge as the result of two effects first introducing remote access steals depositors from the opponent as the product specification becomes more appealing second deposit rate competition is affected as remote access determines the substitutability of banks copyright 1996 by blackwell publishing ltd

job search by employed and unemployed youth analysis of data from the new youth cohort of the national longitudinal survey yields evidence that young unemployed job seekers chose higher levels of search effort as measured by number of methods used and time spent per method and lower reservation wages relative to offered wages than did comparable employed job seekers in 1981 these differences in search choices at least partly explain differences in search outcomes between the two groups unemployed searchers apparently were more likely than employed searchers to gain new employment and the wages they obtained were slightly lower the author argues that the greater search effort by unemployed job seekers is due to the higher costs of search they bear because of foregone earnings

keeping time an analysis of errors in the measurement of unemployment duration this study uses longitudinal microdata from the current population survey to examine the consistency with which unemployment duration is reported an estimate of measurement error is proposed and analyzed a significant negative relationship is found between the initial month s unemployment duration and the reported change between surveys on average persons who begin spells of unemployment in the second month report durations greater than the actual time elapsed overall the average duration of unemployment in this sample may be overstated by at least two weeks a brief discussion of some implications for empirical labor market research concludes the article

unemployment insurance overpayments evidence and implications this paper presents the principal findings of the most comprehensive study yet undertaken of payment errors in the unemployment insurance ui program among the five states studied illinois kansas louisiana new jersey and washington the percentage of benefit weeks with payment errors ranged in 1981 82 from 12 percent to 52 percent with an average of 26 percent in each state overpayments greatly exceeded underpayments with inadequate job search efforts the primary cause of the overpayments found the authors discuss the implications of their findings for previous research and for ui program administration

mandatory versus voluntary labelling of genetically modified food evidence from an economic experiment opponents of the voluntary labelling scheme for genetically modified gm food products often argue that consumers have the right to know and therefore advocate mandatory labelling in this article we argue against this line of reasoning using experimental auctions we show that the quality of the signal generated by a mandatory labelling scheme is affected by the number of labels in the market if there are two labels one for gm products and one for non gm products mandatory and voluntary labelling schemes generate a similar degree of uncertainty about the quality of products that do not carry a label

reservation wages and their labor market effects for black and white male youth this paper presents an empirical analysis of self reported reservation wages for unemployed young black and white males the results show that young blacks seek wages which are comparable to those of young whites in absolute terms but which are higher relative to what is available on the demand side of the market these relatively higher reservation wages of young blacks contribute to their unemployment durations and somewhat to their subsequently received wages changes in reservation wages may thus help to explain the trends in wages and employment of young blacks in recent years

milk by any other name consumer benefits from labeled milk this article uses revealed preferences of consumers to study the consumer benefits from rbst free and organic labeled milk the article specifies and estimates a quadratic aids demand system model for different milk types using u s supermarket scanner data the introduction of rbst free and organic milk is used to estimate consumer benefits that are decomposed into two components competitive and variety effects results show significant consumer benefits from organic milk and to a lesser extent from rbst free milk based on the findings we explore implications for present u s labeling standards th eu s food sector is going through rapid transformations in terms of new product introduction and innovations organic and genetically modified gm food products are leading the way in changing the landscape of available choices to consumers this rapid expansion of product space has taken place concomitantly with an increase in public policy concerns on issues of standardization labeling health risks and associated consumer welfare in this paper we explore these broader issues in the context of a specific product introduction the introduction of recombinant bovine somatotropin rbst free and organic milk in the u s market from a policy perspective understanding the market for organics and the various components of that demand i e what portion is for gm free and what is for other attributes of organics can help determine the value of creating a national standard and the potential welfare losses to consumers of weakening such a standard are consumers willing to pay extra for organic and rbst free milk if so how

ethics welfare and markets an economic analysis the present article examines society s welfare when goods with identical physical attributes can be produced using two alternative technologies one of them less ethically desirable but less expensive for at least some producers for the scenario where identification costs must be borne by producers and consumers of the high quality good the outcome under unregulated markets is identical to the optimal solution of a central planner constrained to neither ban the undesirable technology nor segregate the low quality good however under certain circumstances the unregulated market equilibrium may be improved upon by government intervention that shifts the burden of identification costs to the producers of the low quality good or which bans the production of the low quality good the optimal intervention needs to be determined case by case and depends on consumer preferences relative production costs and relative costs of identification and fraud prevention

an empirical model of employed search unemployed search and nonsearch the 1969 1971 national longitudinal surveys data on young men were used to study the employed worker s choice among employed search unemployed search and not searching for a new job we assume that an unobserved variable search intensity governs this choice such that unemployed search involves a greater intensity than employed search which of course is associated with greater intensity than nonsearch the principal results are that current wages seniority collective bargaining coverage employment outside construction and employment by government are each ceteris paribus negatively associated with search intensity further each of these variables lowers the probability of not searching and raises the probabilities of employed and unemployed job search

aggregation and imperfect competition on the existence of equilibrium we present a new approach to the theory of imperfect competition and apply it to study price competition among differentiated products the central result provides general conditions under which there exists a pure strategy price equilibrium for any number of firms producing any set of products this includes products with multi dimen sional attributes in addition to the proof of existence we provide conditions for uniqueness our analysis covers location models the characteristics approach and probabilistic choice together in a unified framework to prove existence we employ aggregation theorems due to prekopa 1971 and borell 1975 our companion paper caplin and nalebuff 1991 introduces these theorems and develops the application to super majority voting rules we present a new approach to the theory of imperfect competition and apply it to study price competition among differentiated products the central result is that there exists a pure strategy price equilibrium for any number of firms producing any set of products in addition to the proof of existence we provide conditions for uniqueness our model both unites diverse strands of the earlier literature and opens up uncharted areas for future analysis in particular we expand the traditional one dimensional framework to allow for multi dimen sional product differentiation our approach involves twin restrictions on consumer preferences one on individuals preferences the other on the distribution of preferences across society these are generalizations of the restrictions supporting 64 majority rule presented in caplin and nalebuff 1988 to prove existence we apply a new technique of aggregation this technique is valuable in a variety of other problems in the companion paper we use the aggregation result to generalize our earlier work on 64 majority rule and to characterize the relationship between the distribution of human capital and the distribution of income caplin and nalebuff 1991 there are additional applications in statistics and in search theory we begin with a brief review of the early literature on imperfect competition describing in more detail the existence problem and previous solutions section 3 presents our twin assumptions and shows that they cover many standard cases in section 4 we introduce the aggregation theorem and use it in the analysis of demand functions the proof of existence of equilibrium is in section

the differential effects of output shocks on unemployment rates by race and gender 1 introduction the issues of unemployment and output are central to many macroeconomic policy debates a major source of disagreement among policymakers deals with the maximum sustainable level of output growth that is consistent with the absence of inflation when the economy s rate of output growth exceeds the maximum sustainable rate there will be upward pressure on the economy s overall price level traditional macroeconomic theory emphasizes the role that tight labor markets play in this inflationary pressure the commonly held belief is that in a tight labor market firms must bid workers away from other firms if they wish to expand the size of their workforce hence labor costs in the economy will tend to rise since labor is a major input in the production of virtually all goods and services an increase in labor costs without an accompanying increase in productivity will tend to increase the economy s overall price level conversely when the economy contracts labor costs in the economy will tend to fall inducing a downward movement in the economy s overall price level the labor market is therefore linked to changes in economic activity and to changes in the economy s price level a common feature in many macroeconomic models is the connection between departures from the equilibrium rate of unemployment i e the natural or normal rate and the business cycle these macroeconomic models suggest that unanticipated departures from a steady state in the output market should be related to departures of the actual unemployment rate from the normal rate however the economy s aggregate unemployment rate is actually a weighted average of the unemployment rates of various demographic groups the rate of each demographic group is influenced by that group s flows into and out of unemployment since many of the factors that determine these flows have been found to differ by demographic group it is expected that a given aggregate output shock may have differential effects on the unemployment rates of various groups this article focuses on how unanticipated changes in real output affect the unemployment rate of different demographic groups we examine the time series behavior of black male white male black female and white female monthly unemployment rates over the january 1972august 1999 period specifically we estimate a vector autoregression var and then conduct simulations in the form of impulse responses to determine the extent to which each of these unemployment rates is affected by an aggregate output shock i e an unanticipated change in aggregate output we compare and contrast the magnitude and the persistence of these responses across the groups because the traditional impulse response function generated from a var is sensitive to how the researcher chooses to order the variables with different orderings often giving vastly different results we employ the recently developed generalized impulse response function koop pesaran and potter 1996 pesaran and shin 1998 this technique allows researchers to examine impulse responses that are robust to changes in ordering in the following sections we highlight the major literature that this article builds upon and then we discuss the basics behind the nature of the relationship between the unemployment rate and output a discussion of the data the methodology and the results follows the article closes with concluding remarks and policy implications 2 related literature a number of studies have examined racial differences in unemployment rates and in factors that may affect unemployment rates using data on displaced workers fairlie and kletzer 1998 examine racial differences in job displacement over the years 1984 1992 and find that black males experienced greater rates of job displacement and lower rates of reemployment than white males petterson 1998 uses data from the national longitudinal survey of youth for the 19791986 period to examine the reservation wages of black males compared with those of white males and contrary to earlier research argues that these differences do not explain much if any of the racial employment gap

how much carbon offsetting and where implications of efficiency effectiveness and ethicality considerations for public opinion formation a fundamental policy design choice in government led climate change mitigation is what role should flexibility mechanisms like carbon offsetting play in reducing greenhouse gas ghg emissions since public opinion affects the policy choices of government we investigate how arguments regarding carbon offsetting s economic efficiency effectiveness and ethicality which have been key points in the public debate impact the public s preferences we fielded an online framing experiment in the united states n 995 to empirically identify how arguments for and against carbon offsetting influence public preferences for the inclusion of offsetting in national ghg mitigation policy we find that the public s support for international offsetting increases and support for reductions at their source i e within firms own operations diminishes when considerations of economic efficiency gains are at the forefront support for offsetting declines when individuals are confronted with arguments concerning its effectiveness and ethicality which suggests that future policies will require clear standards of additionality in order to address these concerns moreover we find that how carbon offsetting is framed matters even amongst climate skeptics and support could potentially be enhanced via improved communication on efficiency gains

employer tax evasion in the unemployment insurance program we use unique data to analyze employer tax compliance with unemployment insurance ui provisions the data indicate that employers may have underreported 728 million of ui taxes nationally in 1987 alone to formally examine this noncompliance a theoretical model of payroll tax evasion is developed showing that increasing payroll tax rates among other things likely increases noncompliance by risk neutral firms this prediction is empirically verified the finding that ui tax evasion is systematically related to various firm characteristics suggests that ui audits may be effectively targeted by statistical profiles derived from our model thereby improving compliance