the role of warnings in regulation keeping control with less punishment abstract regulatory agencies frequently present violators with warnings not pursuing prosecution if the violation ceases upon receipt of the warning we show how such warnings may help regulators to keep control prosecution is costly for the regulator and insufficient prosecution efforts yield low penalties thus with a limited regulatory budget threats of harsh sanctions are credible only if the number of violators is low this produces multiple nash equilibria if firms may make mistakes the economy can accidentally switch from one equilibrium to another warnings reduce substantially the probability of such accidental switches from the full compliance to the no compliance equilibrium

sectoral transformation and labour market flows in this chapter we examine the dynamics of adjustment in the labour market and in particular the movement of workers between industries it is often assumed that the speed with which the labour market must adjust has increased due to globalisation and or technological change if this is the case then these forces may be responsible for greater instability in the workplace the displacement of growing numbers of especially unskilled workers from declining sectors longer periods of unemployment and wage losses

sectoral shifts and cyclical unemployment a substantial fraction of cyclical unemployment is better characterized as fluctuations of the frictional or natural rate than as deviations from some relatively stable natural rate shifts of employment demand between sectors of the economy necessitate continuous labor reallocation since it takes time for workers to find new jobs some unemployment is unavoidable this paper presents evidence that most of the unemployment fluctuations of the seventies unlike those in the sixties were induced by unusual structural shifts within the u s economy simple time series models of layoffs and unemployment are constructed that include a measure of structural shifts within the labor market these models are estimated and a derived natural rate series is constructed

an estimate of a sectoral model of labor mobility this paper develops a model of sectoral labor mobility and tests its main implications the model nests two distinct hypotheses on the origin of mobility a sectoral shocks and b worker employer mismatch we estimate the relative importance of each hypothesis and find that the bulk of labor mobility is caused by mismatch rather than by sectoral shift we then try to put a value on society s match specific information that is we ask to what extent the availability of the option to change jobs raises gnp we find that the mobility option raises expected earnings by roughly between 8 5 percent and 13 percent of labor earnings which translates to an increase in gnp of between 6 percent and 9 percent

intergenerational occupational mobility in great britain and the united states since 1850 comment using historical census and survey data long and ferrie forthcoming found a significant decline in social mobility in the united states from 1880 to 1973 we present two critiques of the long ferrie study first the data quality of the long ferrie study is more limiting than the authors acknowledge second and more critically they applied a method ill suited for measuring social mobility of farmers in a comparative study between 1880 and 1973 a period in which the proportion of farmers dramatically declined in the u s we show that long and ferrie s main conclusion is all driven by this misleading result for farmers

learning your comparative advantages we introduce an equilibrium labor market model where workers gradually learn about their unobserved production abilities while engaged in a productive activity occupation workers observe their output and extract information that allows them to make inferences about their unobserved aptitudes because workers are learning about themselves their output informs them not only about their productivity in their current occupation but about their likely productivity in other occupations as well as workers acquire more information they self select into the occupations in which they expect to perform best and their wages increase returns to experience here capture improved job selection by workers as they sort through occupations and learn

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

does unmeasured ability explain inter industry wage differentials this paper provides empirical assessments of the two leading explanations of measured inter industry wage differentials 1 true wage differentials exist across industries and 2 the measured differentials simply reflect unmeasured differences in workers productive abilities first we summarize the existing evidence on the unmeasured ability explanation second we construct a simple model which shows that if matching is important then endogenous job change decisions can create important self selection biases even in first differenced estimates of industry wage differentials third we analyze a sample that approximates the experiment of exogenous job loss we find that i the wage change experienced by a typical industry switcher closely resembles the difference in the relevant industry differentials estimated in a cross section and ii pre displacement industry affiliation plays an important role in post displacement wage determination

toward an integrated approach to industry dynamics and labor mobility industrial dynamics and labour mobility are two fields of economic research that have developed fast in recent years but along what are essentially separate lines this paper shows that the processes those two fields deal with can be highly interdependent and demonstrates the usefulness of and the opportunity for an integrated approach to the dynamics of industries and labour mobility it concludes with a list of questions that inform a research agenda dedicated to such approach

inter industry wage premiums and industry specific productivity in taiwan by using taiwan s manpower utilization survey data for the 1978 2000 period different inter industry wage premiums in taiwan are observed and the impact of workers industry specific productivity on the wage explored the empirical results show that industry specific skills result in industry stayers having higher wages than industry switchers through their reservation wages it is also found that the pre displacement industry affiliations that are associated with the post displacement wages are explained by the workers unobserved abilities furthermore by comparing the different residual means between industry switchers and stayers based on each industry s wage equation it is found that the switchers are low wage workers who tend to be located in the high wage industries the high wage industry leavers are also found to have higher post displacement wage residuals than the low wage industry leavers these results suggest that the differences in industry wage premiums may be explained by the industry

excess worker reallocation workers face a trade off between macroeconomic and individual incentives to work in different occupations industries namely between search frictions and personal comparative advantages workers endowed with heterogeneous multi dimensional skills search for jobs that require different skill combinations in equilibrium specialized individuals contact few selected types of vacancies where they are likely to be hired those with weak comparative advantages are seldom chosen among competing applicants thus seek any job type in a tight labour market comparative advantages dominate waiting costs offsetting labour mobility across industries occupations excess worker reallocation is lower and matches are more successful consistently with direct and indirect evidence

understanding gross worker flows across u s states abstract the main cross sectional and time series properties of state level gross and net worker flows wages and rents are characterized using micro data from the u s census a dynamic general equilibrium model of worker migration is introduced to explain the stylized facts in the model a location may experience simultaneous inflows and outflows of workers recent migrants choose to migrate more often than incumbent workers thus locations that attract high numbers of migrants also tend to experience high outflow rates this pattern is a robust feature of the data and cannot be explained by models of net flows only

r d and aggregate fluctuations the research and development r d sector is considered one of the main driving forces of sustainable growth in the long run the sector however also shows excessive volatility which raises interesting questions regarding the sources of this volatility as well as the nature of the relation between the sector and aggregate fluctuations using data from the united states bureau of economic analysis and national science foundation we show that technology innovations are the main source of fluctuations in r d investment while r d technology shocks are important in driving aggregate output fluctuations after taking nominal innovations into consideration such as shocks in monetary policy and inflation capital investment specific shocks explain 70 percent of fluctuations of r d investment while r d technology shocks explain 30 percent of the variation in the output of the non r d sector technology innovations jointly explain most of the variation of output in the r d sector and 78 percent of the variation of output in the rest of the economy

mismatch versus derived demand shift as causes of labour mobility labour mobility may be caused by shifts in the derived demand for labour on the part of firms or sectors or it may be caused by mismatches between workers and their jobs both reasons may be important and this paper merges them into one model it explores the consequences for a wage tenure relationships and b the issue of sluggishness of wages caused by the implied selectivity of workers into preferred jobs and sectors

inter and intrasectoral shocks effects on the unemployment rate intersectoral shocks require resource reallocation across sectors while intrasectoral shocks require resource reallocation within sectors a crucial difference between these shocks is that the former require much higher adjustment costs than the latter using accounting data to calculate returns on capital in manufacturing industries i generate proxies for these shocks i find that the magnitude of intrasectoral shocks is much greater than that of intersectoral shocks but intersectoral shocks explain the aggregate unemployment rate better than intrasectoral shocks i also find that intersectoral shocks are more closely related to the unemployment rate in the later part of the sample considered

intersectoral labor mobility and the growth of the service sector one of the most striking changes in the u s economy over the past 50 years has been the growth in the service sector between 1950 and 2000 service sector employment grew from 57 to 75 percent of total employment however over this time the real hourly wage in the service sector grew only slightly faster than in the goods sector in this paper we assess whether or not the essential constancy of the relative wage implies that individuals face small costs of switching sectors and we quantify the relative importance of labor supply and demand factors in the growth of the service sector we specify and estimate a two sector labor market equilibrium model that allows us to address these empirical issues in a unified framework our estimates imply that there are large mobility costs output in both sectors would have been double their current levels if these mobility costs had been zero in addition we find that demand side factors that is technological change and movements in product and capital prices were responsible for the growth of the service sector

real business cycles in this paper we demonstrate how certain very ordinary economic principles lead maximizing individuals to choose consumption production plans that display many of the characteristics commonly associated with business cycles our explanation is entirely consistent with i rational expectations ii complete current information iii stable preferences iv no technological change v no long lived commodities vi no frictions or adjustment costs vii no government viii no money and ix no serial dependence in the stochastic elements of the environment we also provide a completely worked out example of the type of artificial economy we have in mind the time series properties of the example exhibit some major features of observed business cycles although this type of model may not be capable of explaining all of the regularities in actual business cycles we believe that it provides a useful well defined benchmark for assessing the relative importance of factors e g monetary disturbances

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

rising occupational and industry mobility in the united states 1968 97 we document and analyze the high level and the substantial increase in worker mobility in the united states over the 1968 97 period at various levels of occupational and industry aggregation this is important in light of the recent findings that human capital of workers is largely occupation or industry specific to control for measurement error in occupation and industry coding we develop a method that utilizes the psid retrospective occupation industry supplemental data files we emphasize the importance of our findings for understanding a number of issues such as the changes in wage inequality aggregate productivity job stability and life cycle earnings profiles