lay offs as signals the canadian evidence in r gibbons and l f katz 1991 the signaling content of layoffs and the resulting costs to the displaced workers are investigated evidence of this signaling effect is found among displaced workers in the united states in this paper a similar exercise is conducted using canadian data which are better in several respects they provide information on union status search activity and more accurate measures of postdisplacement salaries and displacement length results show evidence of a signaling effect in white collar occupations but not in blue collar jobs regardless of union status also signaling effects persist for the first three years in the postdisplacement job

a review of the recent empirical literature on displaced workers this article reviews the empirical literature on job displacement job displacement is widespread and strongly countercyclical tending to peak during economic downturns but concentrated in indus

does employment protection create its own political support this paper investigates the ability of employment protection to generate its own political support a version of the mortensen pissarides model is used for this purpose if wages are set through nash bargaining workers value employment protection because it strengthens their hand in wage negotiations workers in high productivity matches benefit most from higher wages as they expect to stay employed for longer by reducing turnover employment protection shifts the distribution of match specific productivity toward lower values thus stringent protection in the past actually reduces support for employment protection today introducing involuntary separations reverses this conclusion now workers value employment protection because it delays involuntary dismissals workers in low productivity matches gain most since they face the highest risk of dismissal the downward shift in the productivity distribution is now a shift towards supporters

what happens to wages after displacement faced with limited resources policymakers need to know when and where to target support for displaced workers the academic literature offers little support presenting wide ranging results with no consistent explanation for the observed differences in wages after workers are displaced in this paper we demonstrate that the heterogeneity found in the literature is consistent with varying market conditions the results suggest that support for displaced workers can be more efficiently allocated by considering the timing and location of displacement

dual labor markets efficiency wages and search this article presents an equilibrium model of a dual labor market firms are assumed to be identical ex ante and dualism arises endogenously the dual labor market outcome is supported by efficiency wage and search considerations firms choose wage effort requirement packages optimally given optimal search and effort choice by workers and vice versa we prove existence and investigate the occurrence and nature of dual labor market equilibria

measuring and estimating exchange market pressure in the eu abstract this paper estimates a model of exchange market pressure for several eu currencies vis a vis the german mark over the period 1980 94 it differs from previous work in that we use principal components analysis to derive a measure of exchange market pressure rather than adding exchange rate and reserves changes or using ad hoc weighting schemes secondly we also try to explain movements in our measure of exchange market pressure by a wealth augmented monetary model the results suggest that exchange market pressure can indeed be explained by differential money growth the change in the long term interest rate differential real depreciation budget deficit and the current account for five members of the eu s exchange rate mechanism

a dynamic model of occupational choice abstract a dynamic model of occupational choice is developed where within an occupation the match at the current job may help forecast matches at future jobs an index policy is shown to be optimal each occupation is assigned an index and the occupation with the highest index is sampled when training costs are low and layoff risks are nonnegligible occupations in which job matching information is relatively occupation specific receive higher indices however this result is reversed when training costs are sufficiently high

needs and targeting this paper shows that when in the manner of the recent targeting literature the resources available for poverty relief are allocated across heterogeneous groups so as to minimize a well behaved index of aggregate poverty the optimal response to an increase in the needs of some group may be to reduce the resources allocated to it necessary and sufficient conditions for optimally targeted benefits to be inversely related to needs are established under two polar forms of poverty alleviation strategy pure contingency and strict means testing and the wider methodological implications of this possibility discussed copyright 1992 by royal economic society

reputation and hierarchy in dynamic models of employment the employment relationship with employees ability and their actions both private information thus combining adverse selection with moral hazard is modeled as a repeated game with self enforcing contracts being perfect bayesian nash equilibria under termination contracts the equilibrium contract structure consists of a hierarchy of ranks finite in number even though ability is continuous reputation acts as an effective device for worker discipline without the need for involuntary unemployment selection by bonding is not in general incentive compatible but selection by promotion of employees through the ranks is many other features correspond to observed employment structures

lasting or latent scars swedish evidence on the long term effects of job displacement recently improved swedish register data have made it possible to remedy many weaknesses of previous research on displaced workers using linked employer employee data we identify all workers displaced in 1987 due to an establishment closure and follow them over both a predisplacement period of 4 years and a postdisplacement period stretching until 1999 we find that the displaced workers suffer both earnings losses and worsened labor market position not only during a transitory period of adjustment but also in the longer run these longer run effects seem to be driven by an increased sensitivity to subsequent macroeconomic shocks

exchange market pressure in paraguay 1963 88 monetary disequilibrium versus global and regional dependency the relevance of the monetary approach to exchange market pressure for paraguay s small open economy is compared to that of two competing keynesian structural approaches which emphasize respectively global and regional dependency effects estimation results for the three models including formal comparisons using nonnested hypothesis tests and forecast accuracy staistics suggest that the explanatory power of the monetary model is dominated by that of the regional dependency model with the global dependency model having an intermediate degree of applicability this result is intuitive given the extreme dependency of the paraguayan economy on argentina and brazil

earnings losses and unemployment of displaced workers in germany data from the german socio economic panel are used to examine the experiences of german workers following job displacement due to plant closure in the year of displacement annual earnings decline

measuring the effect of subsidized training programs on movements in and out of employment despite over two decades of u s experience in operating large scale subsidized training programs for low income and unemployed workers the effects of these programs are still highly controversial the controversy arises from the difficulty of specifying the model of participant outcomes in the absence of training that is necessary in any nonexperimental program evaluation in this paper we suggest that some of these difficulties may be overcome by focusing on a very simple measure of outcomes namely the probability of employment we present a variety of estimates of the effect of training on the probability of employment for the 1976 cohort of adult male participants in the comprehensive employment and training act ceta program our methods range from a simple comparison of pre and post training employment probabilities between trainees and nonparticipants to a fully specified first order markov model of employment probabilities with individual heterogeneity there is consistent evidence across methods that ceta participation increased the probability of employment in the three years after training by from 2 to 5 percentage points classroom training programs appear to have had significantly larger effects than on the job programs although the estimated effects of both kinds of programs are positive we also find that movements in and out of employment for trainees and nonparticipants are reasonably well described by a first order process conditional on individual heterogeneity in the context of this model ceta participation appears to have increased both the probability of moving into employment and the probability of continuing employment

job displacement and the transitions to re employment and early retirement for non employed older workers abstract despite the relatively higher frequency of job displacement among older workers in europe little is known about its effect on the work retirement decision employing individual data from the european community household panel for a number of countries with differences in their institutional environments the effect of job displacement for non employed workers is identified separately for the transitions into re employment and retirement the findings suggest that in countries with relatively more generous unemployment insurance provisions for the older unemployed which offer a pathway to early retirement older displaced workers exhibit lower re employment and higher retirement rates compared to the non displaced these results are robust to dynamic selection due to unobserved heterogeneity and to the endogeneity of displacement

do wages rise with job seniority a reassessment the authors provide new estimates of the return to job seniority using a dataset similar to that employed in joseph altonji and robert shakotko do wages rise with job seniority review of economic studies 1987 and robert topel specific capital mobility and wages journal of political economy 1991 they consider the strengths and weaknesses of these studies treatment of economy wide trends their dating conventions for tenure and wages their handling of wage observations that might span multiple jobs and their estimation approaches re estimation points to an effect often years of tenure on the log wage equal to 11 which is above the preferred estimate of altonji and shakotko but far below that of topel changes in earnings distributions and in the employment relationship motivate the examination of more recent data perhaps surprisingly the return to tenure has probably increased over time

minimum wage effects on labor market outcomes under search matching and endogenous contact rates building upon a continuous time model of search with nash bargaining in a stationary environment we analyze the effect of changes in minimum wages on labor market outcomes and welfare although minimum wage increases may or may not lead to increases in unemployment in our model they can be welfare improving to labor market participants on both the supply and demand sides of the labor market we discuss identification of the model using current population survey data on accepted wages and unemployment durations and show that by incorporating a limited amount of information from the demand side of the market it is possible to obtain credible and precise estimates of all primitive parameters we show that the optimal minimum wage in 1996 depends critically on whether or not contact rates can be considered to be exogenous and we note that the limited variation in minimum wages makes testing this assumption problematic

the gender gap in early career wage growth in the uk the gender pay gap on entry to the labour market is approximately zero but ten years after labour market entry there is a gender wage gap of almost 25 log points this article explores the reason for this gender gap in early career wage growth considering three main hypotheses human capital job shopping and psychological theories human capital factors can explain about 11 log points job shopping about 1 5 log points and the psychological theories up to 4 5 log points depending on the specification but a substantial unexplained gap remains women who have continuous full time employment have had no children and express no desire to have them earn about 8 log points less than equivalent men after 10 years in the labour market

female leadership and gender equity evidence from plant closure abstract we use unique worker plant matched panel data to measure differences in wage changes experienced by workers displaced from closing plants we observe larger losses among women than men comparing workers who move from the same closing plant to the same new firm however we find a significantly smaller gap in hiring firms with female leadership the results are strongest among women who are displaced from male led plants and from less competitive industries our results suggest an important externality to having women in leadership positions they cultivate more female friendly cultures inside their firms

economic conditions and alcohol problems this study investigates the relationship between macroeconomic conditions and two alcohol related outcomes liquor consumption and highway vehicle fatalities fixed effect models are estimated for the 48 contiguous states over the 1975 1988 time period alcohol consumption and traffic deaths vary procyclically with a major portion of the effect of economic downturns attributed to reductions in incomes rather than employment the intake of hard liquor is the most sensitive to the state of the macroeconomy there is no evidence however that fluctuations in economic conditions have a disproportionate impact on the drunk driving of young adults

equivalence scale relativities and the extent of inequality and poverty most inequality and poverty theory analyzes equivalent income distributions for homogeneous populations incomes are assumed to be deflated by an equivalence scale that accounts for differences in needs between households yet in practice there is no consensus about what the appropriate equivalence scale is the authors analyze how the choice of equivalence scale affects inequality and poverty measures and show that there is a systematic relationship between equivalence scale generosity and the extent of inequality and poverty they consider most of the measures in common use and provide some empirical illustrations copyright 1992 by royal economic society

the welfare costs of worker displacement abstract recent work has documented the large persistent earnings losses associated with the displacement of high tenure workers in this paper we assess the welfare costs of this risk assuming that workers do not have access to insurance markets we find that the cost is substantial on the same order of magnitude as the cost associated with unemployment risk we also argue that long duration unemployment insurance is likely to exacerbate this cost and that government financed severance payments are a far more effective way of dealing with the displacement risk

a structural model of us aggregate job flows this paper contributes to the analysis of jobs flows dynamics through the explicit modelling of job creations and job destructions we propose a simple matching model extended for endogenous separation and tractable heterogeneity the parameters of the model are estimated using a simulation based estimation method we then test the ability of trade externalities generated by the matching process to i propagate reallocation and aggregate disturbances in the whole labor market and ii generate the observed distribution of aggregate job flows the results clearly indicate that the model is able to match the dynamics of us aggregate job flows copyright 2002 john wiley sons ltd

piece rates fixed wages and incentives evidence from a field experiment data from a field experiment are used to estimate the gain in productivity that is realized when workers are paid piece rates rather than fixed wages the experiment was conducted within a tree planting firm and provides daily observations on individual worker productivity under both compensation systems unrestricted statistical methods estimate the productivity gain to be 20 since planting conditions potentially affect incentives structural econometric methods are used to generalize the experimental results to out of sample conditions the structural results suggest that the average productivity gain outside of the experimental conditions would be at least 21 7

earnings losses of displaced workers revisited recent literature reviews conclude that job displacement results in sustained earnings losses bruce c fallick 1996 lori g kletzer 1998 and that estimates of the size of those reductions vary with the type of data used in the analysis the industry within which displacement occurs and business cycle conditions the largest estimated losses were obtained using administrative data from pennsylvania during the 1970s and 1980s louis s jacobson robert j lalonde and daniel g sullivan 1993a the data covered a period of high unemployment in a heavily indus trialized state characterized by disproportionate job losses in manufacturing thus the ability to generalize those results to more favorable economic times and states with a greater reliance on service sector employment has been questioned to address these issues administrative data are used to similarly examine the impact of job displacement on earnings losses of workers in connecticut from 1993 to 2004 the work of jacobson lalonde and sullivan jls also provided important methodologi cal advancement by adapting analytical techniques developed for program evaluation james j heckman and v joseph hotz 1989 to the context of job displacement the same techniques fixed effects and time trend estimators as those used in the original jls publication are initially employed here then the methods are extended to include matching estimators developed since their publication both nearest neighbor estimators of average treatment on the treated att and differenced average treatment on the treated datt are adapted to the context of this study heckman hidehiko ichimura and petra todd 1997 heckman et al 1998 and rajeev h dehejia and sadek wahba 1999 2002 the results presented here for connecticut differ in some ways from those found in the work of jls using data from pennsylvania in the period immediately following job loss regardless of the technique employed earnings reductions for workers displaced through mass layoff range from 32 percent to 33 percent jls reported immediate losses of more than 40 percent six years later using the same estimators as jls earnings reductions in connecticut range from 13 percent to 15 percent they report sustained losses in pennsylvania of 25 percent the smaller long term impacts in connecticut demonstrate that under more ordinary economic times esti mated losses from administrative data lie within the range observed using other data sources this finding resolves a long standing conflict among the results of high quality studies that have used differing data sources to study earnings reductions following job loss 1 using two different matching estimators earnings losses six years after mass layoff are 12 percent the matching estimators compare those who experienced mass layoff to compari sons with the same ex ante probability of the event these smaller losses are consistent with the

the impact of an early career recession on schooling and lifetime welfare this paper evaluates the lifetime welfare and labor market consequences of experiencing a recession during youth using a directed search equilibrium model with heterogeneous agents and aggregate shocks in particular the model allows for endogenous schooling decisions over the business cycles the counterfactual analysis shows that experiencing the 1981 1982 recession in youth causes a 1 6 to 2 3 loss in lifetime welfare endogenizing the schooling decision avoids overestimation of welfare loss because of the selection effect and the human capital effect i also decompose lifetime wage changes into different channels changes from schooling work experience and job mobility this article is protected by copyright all rights reserved

job displacement s long run effect on access to employer provided health insurance and other fringe benefits abstract this paper investigates the effect of job displacement on access to employer provided fringe benefits we find that displacement is associated with lost access to all seven employer provided benefits investigated these losses increase the cost of displacement by 10 per year

equilibrium wage and dismissal processes i develop and estimate an equilibrium model of the labor market in which inefficient employees are systematically eliminated from the sector of the market characterized by asymmetric information and moral hazard systematic selection on the distribution of productivity characteristics produces wage sequences that are increasing in tenure for employees never previously terminated even in the absence of long term contracting between employees and individual firms i provide sufficient conditions for there to exist a unique termination contract type of equilibrium and i estimate the equilibrium model using microlevel data from the national longitudinal survey of youth panel

scar effects of unemployment an assessment of institutional complementarities this article uses panel data from the survey of income and program participation sipp and the european community household panel echp for a comparative analysis of workers post unemployment earnings trajectories in the united states and 12 western european countries across the study sample of industrialized countries results of difference in difference propensity score matching show post unemployment earnings losses to be largely permanent and particularly significant for high wage and older workers as well as for women the analyses also show that negative effects of unemployment on workers subsequent earnings are mitigated through either generous unemployment benefit systems or strict labor market regulation these effects stem partly from favorable behavioral responses that prevent downward occupational and industrial mobility and partly from changes in the overall structure of labor markets favoring the transferability of worker skills between jobs these positive effects materialize despite t

the impact of us economic variables on bank of canada policy direct and indirect responses abstract the impact of us economic variables on canadian monetary policy is assessed using quarterly data for 1963 88 canadian monetary base growth is regressed upon the least squares predictors of 11 us and canadian variables using a generalized least squares procedure that permits isolation of i direct responses by the monetary authority to its expectations of the us variables and ii indirect responses to past us influences that impact upon the current fitted values of the canadian variables the results reveal significance of both direct and indirect us influences on canadian policy across fixed and floating exchange rate regimes

a dynamic analysis of educational attainment occupational choices and job search this article examines career choices using a dynamic structural model that nests a job search model within a human capital model of occupational and educational choices wage growth occurs in the model because workers move between firms and occupations as they search for suitable job matches and because workers endogenously accumulate firm and occupation specific human capital simulations performed using the estimated model reveal that both self selection in occupational choices and mobility between firms account for a much larger share of total earnings and utility than the combined effects of firm and occupation specific human capital

wage growth due to human capital accumulation and job search a comparison between the united states and germany this paper compares the sources of wage growth of young male workers in two countries with very different labor market institutions the united states and germany the author first develops a simple method for decomposing wage growth into components due to general human capital accumulation firm specific human capital accumulation and job search the empirical analysis uses data from administrative records germany and the national longitudinal survey of youth united states for cohorts entering the labor market in the late 1970s and early 1980s although the two countries differed substantially in mobility rates they were similar in the sources of wage growth with general human capital accumulation being the most important single source and job search accounting for an additional 25 or more of total wage growth there is no evidence that returns to firm specific human capital accumulation were higher for german apprentices than for u s high school dropouts or graduates

state dependence individual heterogeneity and the choice of employment status evidence from korea abstractfocusing on the individual heterogeneity this article examines the causes of an individual s employment status choice and the extent of state dependence in the korean labour market we estimate a dynamic multinomial logit model using the panel data drawn from the first to fifteenth wave of the korean labour and income panel study the results suggest the presence of state dependence individual characteristics and growth background have a significant effect on the choice of employment status gender is still an important employment factor males are more likely to be employed and this gender effect is highest for regular employment re one s educational attainment and age operate in opposite directions that is educational attainment age has a positive negative impact on the choice of a regular job and a negative positive impact on the choice of a non regular job contrary to our expectations a wealthy family background reduces the probability of individuals being wage workers and rais

price index dispersion and utilitarian social evaluation the living standard indicator in utilitarian social evaluation functions usef is the ratio of a nominal living standard and a price index we show that under weak association of price indices and nominal living standards and usual concavity conditions on utility functions utilitarian social welfare increases with price index dispersion when the aggregate price level is superior to the arithmetic mean of price indices and diminishes when it is inferior to the harmonic mean

displacement induced joblessness previous research examining the nonemployment of displaced workers suffers from methodological flaws which reinforce widely held but substantially incorrect views about the pattern of postseparation joblessness in particular adjustment difficulties have been overstated for nonwhites long tenure workers and those terminated during periods of high unemployment and underestimated for persons in manufacturing industries or white collar occupations

empirical models of the exchange rate separating the wheat from the chaff various popular exchange rate models a standard monetary model a portfolio balance model and sticky price models are estimated and evaluated using u s canadian data for the 1970s nonnested hypothesis tests demonstrate that none are correctly specified the data suggest 1 the exchange rate persistence observed is not fully explained by any of the models 2 the small durbin watson statistics indicate longer lags are required 3 the current account is a useful explanatory variable 4 the portfolio balance model fits the data well but has potentially serious problems measuring the stock of foreign assets this abstract was borrowed from another version of this item

testing interest rate parity and rational expectations for canada and the united states the purpose of this paper is to examine the joint hypothesis of interest rate parity and rational expectations for canada and the united states using monthly data two approaches to testing are considered 1 the substitution method and 2 testing the cross equation non linear rational expectations restrictions from solving the interest rate parity equation it is demonstrated that standard application of the substitution method requires the assumption that the interest rate parity equation holds deterministically tests for unit roots in the spot exchange rate and interest rate differentials are also investigated

the canadian us dollar exchange rate a test of alternative models for the seventies abstract three basic models of bilateral exchange rate determination are evaluated on the basis of the canadian experience in the 1970s we examine wealth effects and incorporate consistent expectations in the traditional models based on reduced form equations empirical results reject a simple monetary approach and the stickly price asset market model but concur with a version of the stock flow model of exchange rate determination

how destructive is creative destruction effects of job loss on job mobility withdrawal and income we analyze short and long term effects of worker displacement our sample consists of male workers displaced from norwegian manufacturing plants we find that displacement increases the probability of leaving the labor force by 31 the drop out rate from the labor force is particularly high in the first years following displacement the average earnings effects for those who remain in the labor force are moderate a 3 loss relative to non displaced workers after seven years splitting displaced workers on within and between firm movers we find that the estimated earnings loss is entirely driven by between firm movers who experience a 3 6 loss transfers to other plants within multi plant firms upon displacement are quite common our results support the view that human capital is partly firm specific and partly industry specific we find no evidence suggesting that human capital is plant specific

involuntary layoffs in a model with asymmetric information concerning worker ability this paper examines the contract between a risk neutral firm and its risk averse employees assuming that worker ability is privately learned by the firm after a period of employment employers in an external spot labour market attempt to infer worker quality from the observable actions taken by the firm such as the number of workers it lays off the threat of spot market raids distorts the optimal contract layoffs may be involuntary and can exceed efficient levels a seniority layoff rule may be included in the contract to avoid the adverse selection problems that arise if layoffs are conducted on the basis of ability

wages and job mobility of young workers this paper presents a discrete time version of jovanovic s model of worker firm matching descriptive evidence is presented that supports the notion that unobserved worker firm heterogeneity is an important component in the intertemporal structure of wages for young workers a structural econometric model of wage dynamics under worker firm sorting is developed and estimated finally a formal test of the matching model is carried out and the matching structure on intertemporal covariances of wages is not rejected my results indicate the necessity of jointly considering processes of turnover and wage growth when analyzing the labor market experiences of young workers

optimal unemployment insurance with human capital depreciation and duration dependence this paper studies the effect of human capital depreciation and duration dependence on the design of an optimal unemployment insurance ui scheme our results partially confirm those obtained in most previous studies benefits should decrease with unemployment duration the optimal program also generates two main novel features which are not present in stationary models first if human capital depreciates rapidly enough during unemployment ui transfers are bounded below by a minimal assistance level that arises endogenously in the efficient program second we study the optimality of imposing a history contingent wage tax after reemployment our numerical simulations based on the spanish and us economies show that the wage tax should decrease with the length of worker s previous unemployment spell and become a wage subsidy for long term unemployed workers as a by product of our study we develop a systematic approach suitable for studying recursively a wide range of dynamic moral hazard problems and other models with similar characteristics

measuring poverty changes with bounded equivalence scales australia in the 1980s when measuring poverty an equivalence scale is used to take account of the different income needs of different family types however there is little consensus about the choice of scale a method is presented here that permits general statements about changes in poverty to be made which will be true for a range of equivalence scales the method is used to describe changes in poverty in australia between 1981 82 and 1989 90 different scales lead to estimates of the increase in the head count poverty rate between 1981 82 and 1989 90 of between 1 7 and 0 6 percentage points at commonly chosen poverty thresholds

female labour supply and household employment shocks maternity leave as an insurance mechanism this paper investigates the role of unpaid maternity leave in providing household insurance against paternal employment shocks the main outcome is the timing of a mothers return to work after having a child exploiting the us family and medical leave act we find that mothers eligible for maternity leave speed up their return to work in response to a paternal shock with the conditional probability of being in work 49 higher than in households with no unpaid maternity leave further evidence is provided on the insurance role of unpaid maternity leave through i no significant interaction between paid maternity leave and the paternal shock and ii smoothing of consumption effects of the shock for households covered by unpaid leave

do consumers respond to future income shocks evidence from social security reform in taiwan abstract a prediction of the basic permanent income hypothesis life cycle model is that an unexpected increase in future income produces an immediate increase in current consumption this paper tests that prediction using data from taiwan the 1985 labor standards law granted all employees in covered industries a windfall retirement severance benefit my results indicate that consumption did not increase immediately for those who were granted the windfall relative to those who received no windfall moreover consumption for those receiving a greater windfall did not increase relative to those who were granted less

an empirical model of sectoral movements by unemployed workers using canadian data i investigate the relationships among sectoral mobility unemployment spells and total unemployment recent north american evidence suggests that incidence shifts toward high wage high tenure workers may increase equilibrium unemployment through decreasing sectoral mobility and increasing spells using a multiple spell transition model i find that while shifts toward such workers may have these effects composition changes that lead to higher mobility can also increase unemployment a further investigation into the relative roles of mobility and spell lengths in driving total unemployment indicates that the influence of the former is comparatively small

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

measuring the degree of exchange market intervention in a small open economy abstract in this article i introduce an index of intervention activity which can be calculated on the basis of observed data this intervention index measures intervention activity as the proportion of exchange market pressure relieved by exchange market intervention the properties of the intervention index are established analytically using a model of a small open economy with rational expectations the index is used to calculate measures of bilateral and multilateral intervention for canada over the period 1975 1990

interpreting panel data on job tenure tenure responses in the panel study of income dynamics psid and the national longitudinal surveys are often inconsistent with calendar time these inconsistencies pose special problems in the psid because job changes cannot be identified directly so researchers must infer them from error ridden tenure data we use alternative rules for partitioning psid data into jobs and then estimate several wage and mobility models to assess the sensitivity of parameter estimates to the partitioning method we also assess the importance of replacing raw tenure data with imputed measures that are internally consistent

declining labor turnover and turbulence abstract the rate of job loss has been on a secular decline for the last four decades or longer changes in demographics or industry composition do not account for the trend this paper seeks to identify the possible sources of the decline using a simple search and matching model with two types of workers experienced and inexperienced where the former type faces a risk of skill loss during unemployment the calibrated model suggests that a higher risk of skill loss during unemployment results in a lower job separation rate because workers accept lower wages in exchange for job security various other potential hypotheses are also examined

a theory of dual labor markets with application to industrial policy discrimination and keynesian unemployment this paper develops a model of dual labor markets based on employers need to motivate workers in order to elicit effort from their workers employers may find it optimal to pay more than the going wage this changes fundamentally the character of labor markets the model is applied to a wide range of labor market phenomena it provides a coherent framework for understanding the claims of industrial policy advocates it also can provide the basis for a theory of occupational segregation and discrimination that will not be eroded by market forces finally the model provides the basis for a theory of involuntary unemployment

the budget contraction effect how contracting budgets lead to less varied choice how do consumers adjust their spending when their budget changes a common view is that the allocation of one s current budget should not depend on previous budget allocations contrary to this the authors find that when the budget contracts to a particular level consumers select less variety as measured by the number of different items with some of the budget allocated to them than when their budget expands to that same level this budget contraction effect stems from a reduction in variety under the contracting budget not from variety expansion under the expanding budget evidence from five experiments indicates that the effect is driven by a desire to avoid feelings of loss associated with spreading allocation cuts relative to reference quantities from previous allocations across many items

a re examination of the monetary model of exchange market pressure canada 1963 1988 in re evaluating the performance of the girton and roper 1977 two country monetary model of exchange market pressure emp for canada estimates are provided for an extended specification that allows for unrestricted dynamics results show the hypothesized negative effect of domestic credit growth on emp to be supported throughout the relevance both of the dynamics and of the hypothesized unitary tradeoff between exchange rate and international reserve movements for bank of canada policy is demonstrated for the sequence of fixed and floating exchange rate regimes contained in the 1963 1 1988 1 sample

worker displacement and the added worker effect this article examines the added worker effect which is the labor supply response of wives to their husbands job losses unlike past studies which focused on the husbands current unemployment status this article analyzes wives responses before and after job losses to examine the life cycle labor supply adjustments using panel study of income dynamics data reveals small predisplacement effects and large persistent postdisplacement effects the timing of the responses differs with type of displacement possibly because of differences in the information acquired before job loss long run labor supply increases compensate for over 25 of the husbands lost income

unstable money demand and the monetary model of the exchange rate in this paper the authors investigate the importance for the monetary model of exchange rate determination of j frankel 1979 of allowing unrestricted dynamics and of accounting for shifts in the demand for money due to financial innovation based on estimation and simulation results for the canada u s bilateral exchange rate over the 1970 85 period the aut hors find strong evidence in favor of a generalized approach to dynamic specification but find that the shif t adjustment of official money supply data has only minor implications for the empirical results moreover neither modification is sufficient to generate a monetary model that is well supported by the data

are children really inferior goods evidence from displacement driven income shocks abstract this paper explores the causal link between income and fertility by analyzing women s fertility response to the large and permanent income shock generated by a husband s job displacement i find that the shock reduces total fertility suggesting that the causal effect of income on fertility is positive a model that incorporates the time cost of children and assortative matching of spouses can simultaneously explain this result and the negative cross sectional relationship i also find that a husband s displacement accelerates childbearing which is consistent with lifecycle models of fertility in which the incentive to delay is driven by expected earnings growth

occupational self selection in a labor market with moral hazard abstract this paper studies the determinants and implications of self selection when firms imperfectly observe worker effort the effects of the resulting moral hazard problem on the self selection mechanism are analyzed in a model in which workers simultaneously choose an employment sector and an effort level the implications of the model reveal that in the presence of moral hazard workers effort decisions become an additional mechanism determining the pattern of selection into sectors workers sector specific endowments impact sectoral allocation through their effect on workers comparative advantage as well as their effect on workers shirking propensity the model is then used in an empirical application that analyzes workers self selection into white collar and blue collar occupations the estimation results based on data from the national longitudinal survey of youth suggest that workers occupational self selection leads to higher wages and lower dismissal rates in both occupations compared to an economy in which workers are randomly assigned to each occupation the difference in dismissal rates between the two occupations is driven by the higher expected productivity in the white collar sector the positive effects of occupational sorting diminish as the labor market becomes increasingly characterized by moral hazard results also suggest that human capital investments in skills that are most relevant to blue collar jobs may generate higher wages and lower dismissal rates in both white collar and blue collar occupations

employment risk and job seeker performance using detailed labor recruitment data in combination with randomized variation in individuals outside job opportunities i show that providing job certainty during recruitment leads to substantial job seeker performance gains job seeker performance is highest and effort lowest among those assigned to receive a guaranteed outside job offer where employment risk is eliminated while performance is lowest and effort highest among those receiving no chance of an outside job offer performance among those assigned uncertain outside job offers consistently lies between the two extremes i conjecture that the pattern of results is most consistent with stress induced performance reductions attributable to job uncertainty i rule out several other competing theories

the cost of job loss this article identifies an equilibrium theory of wage formation and endogenous quit turnover in a labour market with on the job search where risk averse workers accumulate human capital through learning by doing and lose skills while unemployed optimal contracting implies the wage paid increases with experience and tenure indirect inference using german data determines the deep parameters of the model the estimated model not only reproduces the large and persistent fall in wages and earnings following job loss a new structural decomposition finds foregone human capital accumulation while unemployed is the worker s major cost of job loss

is unemployment insurance addictive evidence from the benefit durations of repeat users the author finds evidence that the past occurrence of a spell of insured unemployment lengthens the duration of future spells descriptive statistics from canadian administrative data covering mid 1971 to early 1990 suggest that unemployment insurance ui claimants tend to spend a longer and longer time collecting benefits with each additional claim they make this finding contradicts the implication of static neoclassical models that successive ui spells should be of the same length the author hypothesizes that the stigma attached to receiving unemployment benefits erodes with each new ui claim an individual files

penalized or protected gender and the consequences of nonstandard and mismatched employment histories millions of workers are employed in positions that deviate from the full time standard employment relationship or work in jobs that are mismatched with their skills education or experience yet little is known about how employers evaluate workers who have experienced these employment arrangements limiting our knowledge about how part time work temporary agency employment and skills underutilization affect workers labor market opportunities drawing on original field and survey experiment data i examine three questions 1 what are the consequences of having a nonstandard or mismatched employment history for workers labor market opportunities 2 are the effects of nonstandard or mismatched employment histories different for men and women and 3 what are the mechanisms linking nonstandard or mismatched employment histories to labor market outcomes the field experiment shows that skills underutilization is as scarring for workers as a year of unemployment but that there are limited penalties for workers with histories of temporary agency employment additionally although men are penalized for part time employment histories women face no penalty for part time work the survey experiment reveals that employers perceptions of workers competence and commitment mediate these effects these findings shed light on the consequences of changing employment relations for the distribution of labor market opportunities in the new economy

the income losses of displaced workers abstract we use a new matched worker firm dataset for the united kingdom to estimate the income loss resulting from firm closure and mass layoffs we track workers for up to nine years after the displacement event and the availability of predisplacement characteristics allows us to implement difference in differences estimators using propensity score matching methods income losses during the first five years after the displacement event are in the range 18 35 percent per year for workers whose firm closes down and 14 25 percent for workers who exit a firm which suffers a mass layoff these losses are largely due to periods of nonemployment which is consistent with previous work from europe but contrasts with that from the united states

the long run consumption effects of earnings shocks although prior studies of job displacement and disability have measured the impact of these shocks in terms of lost earnings no previous research has linked these permanent earnings shocks to the

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

on the measurement of poverty official statistics in the united states and the united kingdom show a rise in poverty between the 1970 s and the 1980 s but scepticism has been expressed with regard to these findings in particular the methods employed in the measurement of poverty have been the subject of criticism this paper re examines three basic issues in measuring poverty the choice of the poverty line the index of poverty and the relation between poverty and inequality one general theme running through the paper is that there is a diversity of judgments which enter the measurement of poverty and that it is necessary to recognize these explicitly in the procedures adopted there is likely to be disagreement about the choice of poverty line affecting both its level and its structure in this situation we may only be able to make comparisons and not to measure differences and the comparisons may lead only to a partial rather than a complete ordering the first section of the paper discusses the stochastic dominance conditions which allow such comparisons illustrating their application by reference to data for the united states the choice of poverty measure has been the subject of an extensive literature and a variety of measures have been proposed in the second section of the paper a different approach is suggested considering a class of measures satisfying certain general properties and seeking conditions under which all members of the class which includes many of those proposed give the same ranking those sceptical about measures of poverty often assert that poverty and inequality are being confounded the third section of the paper distinguishes four different viewpoints and relates them to theories of justice and views of social welfare

do past unemployment spells affect the duration of current unemployment abstract on the basis of monthly labor force histories of respondents constructed from the panel study of income dynamics this paper finds no occurrence dependence in unemployment spells positive occurrence dependence in unemployment insurance spells and substantial heterogeneity in occurrence dependence

unemployment in regional labor markets using structural theories to understand local jobless rates in west virginia the author uses a range of structural labor market models to understand differing regional jobless rates in a state affected by pockets of structural unemployment four theories of regional structural unemployment are presented and their hypotheses are statistically evaluated using west virginia county panel data the author then presents case study evidence to compare these statistical results with the realities of the county labor markets both types of empirical evidence suggest that a segmented non market clearing model in which structural unemployment stems from queuing for above market clearing wages in both a high wage primary sector and a lower wage secondary sector can shed the most light on regional unemployment rates in west virginia

unemployment and subsequent earnings estimating scarring among british men 1984 94 this paper estimates the impact of unemployment on earnings following re employment for a large and representative sample of british men 1984 94 unemployment incidence is found to have only a temporary effect an average earnings setback of 10 on initial re engagement largely eroding over two years the effect of unemployment duration by contrast is permanent a one year spell adding a further penalty of 10 percentage points these wage penalties are least for young men and the low paid those most at risk of unemployment and greatest for prime age and highly paid men

the effects of unemployment and underemployment on employment opportunities results from a correspondence audit of the labor market for college graduates the authors use data from a resume audit to estimate the impact of unemployment and underemployment on the employment prospects of recent college graduates they find no statistical evidence linking unemployment spells of different durations to employment opportunities by contrast college graduates who are underemployed have callback rates that are 30 lower than those of applicants who are adequately employed the null effects associated with unemployment and the adverse effects associated with underemployment are robust across cities with relatively tight and loose labor market conditions internship experience obtained while completing one s degree substantially reduces the negative effects of underemployment the data support the proposition that employers view underemployment as a strong signal of lower expected productivity

can immigrants insure against shocks as well as the native born we examine the impact of job displacement and serious health problems on multiple measures of individual and household well being using longitudinal data we extend the previous literature by exami

job matching and occupational choice this paper presents a model of job matching the generalizes the existing literature by allowing for different jobs types or occupations such differences affect the value of job specific experience inducing a career profile where certain types are sampled before others more specifically the analysis shows that it is optimal for the young and inexperienced to gravitate toward jobs exhibiting a certain kind of risk then after deriving the equilibrium job turnover rate for an economy in which people do not switch occupations panel data are used to estimate its underlying parameters the hypothesis that people do not switch occupations is rejected against the alternative that they do thus providing empirical support for the theoretical extension undertaken here

income after job loss the role of the family and the welfare state that displaced workers suffer long lasting earnings losses is a stylized fact raising the question whether these losses are replaced by other means for married men increased labour supply by the wife may be one way another possibility is that the public welfare system offsets the same losses i used a swedish longitudinal data set containing married couples where the husband was either employed or made redundant in 1987 by an establishment closure there was no evidence that husbands job loss positively affected wives annual earnings although husbands utilization of unemployment insurance increased significantly government transfers including also sickness insurance disability insurance and means tested social benefits did not fully replace husbands long run earnings losses hence displaced workers seem to suffer also from long lasting losses in family income which in many respects is a better measure of economic welfare than individual earnings or wages

minimum wage effects in the longer run exposure to minimum wages at young ages could lead to adverse longer run effects via decreased labor market experience and tenure and diminished education and training while beneficial longer run effects could arise if minimum wages increase skill acquisition evidence suggests that as individuals reach their late 20s they earn less the longer they were exposed to a higher minimum wage at younger ages and the adverse longer run effects are stronger for blacks if there are such longer run effects of minimum wages they are likely more significant than the contemporaneous effects on youths that are the focus of research and policy debate

are workers permanently scarred by job displacements this paper investigates whether workers suffer lasting scars following job displacements using david t ellwood s 1982 terminology scars represent persistent effects whereas blemishes are transitory adjustments which dissipate over time more precisely dislocated individuals are defined as scarred if they continue to earn less or to be unemployed more than their nondisplaced counterparts even after the conclusion of a several year adjustment period

unemployment history and frictional wage dispersion abstract recent evidence shows that baseline search models struggle to match the observed levels of wage dispersion this paper studies a random matching search model with human capital losses during unemployment wage dispersion increases as workers accept lower wages to avoid long unemployment spells the model explains between a third and half of the observed residual wage dispersion when adding on the job search the model accounts for all of the residual wage dispersion and generates substantial dispersion even for high values of non market time the paper thus addresses the trade off between explaining frictional wage dispersion and the cyclical behavior of unemployment