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

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

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

progressive taxation and income inequality in dynamic competitive equilibrium abstract this paper establishes the existence of a non degenerate distribution of income in a simple dynamic economy when agents who are heterogeneous in their rates of impatience face a progressive tax system in this dynamic setting income inequality can vary positively with the degree of tax progressivity moreover the inherent heterogeneity in agents behavior can explain why measures of inequality such as the standard deviation of income or atkinson s gini tend to be dynamically much more sluggish than aggregate measures such as total income finally the adjustment in the degree of inequality resulting from an exogenous change in tax policy may take some time before becoming effective this result also arises from agents asymmetric responses to policy changes

ex day behavior tax or short term trading effects this study examines the behavior of share prices around the ex dividend dates before and after the introduction of the 1988 income and corporation taxes act that reduced substantially the tax differential between dividends and capital gains in the united kingdom we find that in the pre 1988 period when the differential taxation of dividends and capital gains is high ex day returns are positive and significant in contrast in the post 1988 period ex day returns are in most cases negative and insignificant further analysis reveals that while ex day returns are significantly related to dividend yield and to the length of the settlement period they are not affected by the commonly used measures of transaction costs such as the bid ask spread and trading volume or by the day of week month of the year type of dividend distribution or number of days to the actual receipt of the cash dividend we conclude that taxation affects significantly ex day share prices in the previous studies have documented that the risk adjusted abnormal returns on the ex dividend dates are positive and significantly related to the dividend yield the interpretation of these findings is however controversial the question relates to what category of investors sets ex day prices elton and

what have we learned from empirical studies of unemployment and turnover unemployment reminds economists that we have a lot to be modest about twenty years ago robert hall 1972 asked why is the unemployment rate so high at full employment at the time hall wrote male unemployment in the united states had risen to 3 5 percent and it would peak at 4 4 percent in the recession of 1971 since then every cyclical low of unemployment has exceeded the one before it the end of the 1980 s expansion reduced unemployment to about 4 5 percent and unemployment peaked at 7 4 percent of the labor force in the recession that just ended the natural rate of unemployment has evidently risen through time which led lawrence summers 1986 to place a modifier in hall s question why is the unemployment rate so very high in what follows i pose three questions about the causes and consequences of rising joblessness first who are the unemployed i will show that unemployment and nonparticipation are heavily concentrated among the least skilled and more importantly that virtually all of the long term increase in joblessness occurs among low wage men unemployment and nonparticipation among highly skilled men are unchanged since the 1960 s second what factors have caused jobless time to rise there are many theories including changes in labor force demographics social programs that discourage employment and changes in the amount of frictional unemployment caused by sectoral shifts none of these is consistent with the evidence which points instead to a secular decline in the demand for lessskilled workers the data also cast doubt on nonmarket clearing models of rising unemployment wages are demonstrably flexible in the long run and they have fallen dramatically among the unskilled whose jobless rates have risen third what happens to the unemployed in contrast to the view that unemployment spells cause transitory reductions in income recent evidence indicates that job losses have substantial and permanent effects on earning power many of the unskilled who are unemployed or out of the labor force appear to have been high wage workers whose specialized skills have become obsolete

costs of business cycles for unskilled workers abstract unskilled workers are subject to a much larger risk of unemployment during recessions than are skilled workers moreover unskilled workers earn less income which limits their ability to self insure we examine how this heterogeneity in unemployment risk and income across different skill groups translates into heterogeneity in the cost of business cycles we find that the welfare cost of business cycles for unskilled workers is substantially higher than the welfare cost for skilled workers

can progressive taxation account for cross country variation in labor supply abstract the difference between average hours worked in the us and average hours worked in continental european countries has been increasing since the early 1970s to explain this phenomenon this paper develops an endogenous growth model with two key properties agents are heterogeneous in their rates of time preference and labor skills and the model incorporates progressive income taxes the model is calibrated to us and german data for the periods 1971 1974 and 1986 1989 our findings suggest that the degree of progressivity is a major factor in explaining the patterns of the us and german labor supply over time predictions of the model also match the distributional trends in both countries during this time period

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

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

dividend yield and expected returns abstract previous research examining the relation between dividend yield and equity returns documents a u shaped pattern arising from the positive capm adjusted average excess return of zero dividend firms in contrast this paper reports that zero dividend firms earn negative average excess returns relative to firms of similar size despite the apparent conformity of these results to the predictions of after tax asset pricing models the negative size adjusted excess returns cannot be drive solely by tax effects these excess returns which are concentrated in the initial zero dividend years and approach 1 per month are attributed to possible dividend expectation effects rather than taxes

tax progressivity and tax incidence of the rich and the poor with the labor supply being flexible a revenue neutral increase in the tax progressivity decreases the tax incidence of the rich and increases the tax incidence of the poor if the tax scheme is highly progressive

the limits of wage flexibility to curing unemployment this article takes a critical look at the view that wage flexibility us style is the panacea to european unemployment problems it shows that the wage flexibility in the us in the 1980s 1990s was associated with rising inequality and falling real wages for many workers reduced rather than increased employment for the low paid and less skilled whose wages fell and arguably contributed to the growth of a significant criminal population the proportion of american men incarcerated comes close to the proportion of european men long term unemployed the limits to wage flexibility in curing unemployment noted in the paper does not mean the reductions in pay may not under some circumstances raise employment but rather that by themselves massive pay cuts for the low paid are no cure to economic problems copyright 1995 by oxford university press

technology and the us labor market evidence from the sectoral and regional decomposition of the change in the us workforce skill mix abstract researchers have found indirect evidence supporting the role of technology in changing the workforce skill mix in the us by decomposing the change in the skill mix into within between industry components this paper provides additional support for the role of technology by extending the decomposition analysis into both the sectoral and the regional dimensions

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

measuring the influence of unemployment insurance on unemployment experiences this article investigates the comprehensive effects of unemployment insurance ui policies on the amount of time and unemployment that individuals report between jobs the econometric model jointly determines the effects of ui on the lengths of nonemployment spells the classification of these spells as unemployment and the likelihood of collecting program benefits the model carefully attempts to isolate variation in ui benefits attributable to differences in generosity across programs to avoid biases in estimating policy effects induced by other contaminating sources of benefit variation using data on men from the national longitudinal survey of youth the empirical results find a ui recipients typically experience longer spells between jobs at least up to the exhaustion of ui benefits and report substantially larger fractions of these spells as unemployment b weekly benefit amounts exert no significant influence on the likelihood of ui recipiency on the length of spells between jobs or on t

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

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

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

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

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

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

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

dividends and capital asset prices tax based dividend models of capital asset pricing assume that dividends are known at the time prices are set dividends which are announced and paid in the same month and dividends which were expected but cancelled in the month constitute surprises which interfere with many empirical tests of the effects of expected dividend yield on returns this paper avoids these problems by relating returns to forecasts of dividend yield obtained from past data three distinct views of the importance of dividends to investors have received support at one time or another according to the two most important views dividends have a neutral and a negative effect on security prices respectively miller and modigliani 1 and miller and scholes 12 13 favor complete substitutability of dividends and capital gain brennan 6 and litzenberger and ramaswamy 9 have developed models which incorporate differential taxation of income and capital gain in these models the tax disadvantage of income changes the investor s portfolio problem from one of optimization of mean and variance of portfolio before tax return to optimization in after tax terms stocks with relatively large dividend yields should provide high expected returns and so sell for low prices to compensate the investor for the tax much of the empirical evidence seems to favor the view that tax disadvantages of dividend income do not escape investors attention and that returns are higher when they include dividend income to compensate the investor for the tax liability however interpretation of the available evidence is difficult and it is significant that most of these researchers remain unconvinced that their own findings can be satisfactorily explained by tax effects ball brown finn and officer 1 interpret their estimates as being far too strong to be explained in terms of differential taxation blume 3 reaches a similar conclusion but litzenberger and ramaswamy attribute their results to the tax disadvantage of

a simulation based approach to the study of coefficient of variation of dividend yields abstract existing empirical studies of dividend yields and dividend policies either make no assumption or the normal distribution of the dividend yields data the statistical results will be biased because they cannot reflect the finite support set property of dividend yields which can only range from 0 to 1 we posit that the assumption that dividend yields follow a beta distribution is more appropriate the coefficient of variation cv is used to measure the stability of dividend yields if we assume dividend yields follow a normal distribution then the maximum likelihood estimate for coefficient of variation is given by s x this only gives us a point estimate which cannot depict the full picture of the sampling distribution of the coefficient of variation a simulation based approach is adopted to estimate cv under the beta distribution this approach will give us a point estimate as well as the empirical sampling distribution of cv with this approach we study the stability of dividend yields of the hang seng index and its sub indexes of the hong kong stock market and compare the results with the traditional approach

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

the health and earnings of rejected disability insurance applicants applicants for social security disability benefits who fail to pass the medical screening form a natural control group for beneficiaries data drawn from the 1972 and 1978 surveys of the disabled done for the social security administration show that fewer than 50 percent of rejected male applicants work typical earnings of those that do are less than 59 percent of median earnings for other men their age these data cast doubt on recent econometric work that suggests that the disincentive effects of the social security disability program have been substantial copyright 1989 by american economic association

the role of unemployment insurance in an economy with liquidity constraints and moral hazard the potential welfare benefits of unemployment insurance along with the optimal replacement ratio are studied using a quantitative dynamic general equilibrium model to provide a role for unemployment insurance agents in our economy face exogenous idiosyncratic employment shocks and are unable to borrow or insure themselves through private markets in the absence of moral hazard replacement ratios as high as 65 are optimal and the welfare benefits of unemployment insurance are quite large however if there is moral hazard and the replacement ratio is not set optimally but is instead set to an empirically plausible value the economy can be much worse off than it would be without unemployment insurance

are housing bubbles contagious a case study of las vegas and los angeles home prices this paper asks whether speculative house price pressure in an economic center can spill into related housing markets in other words are bubbles contagious i develop a theoretical model that allows for speculative price appreciation to spread from one market to another i estimate an error correction model using quarterly housing data for las vegas and los angeles and fundamental market variables from 1978 quarter 2 through 2008 quarter 1 las vegas prices show significant persistence and adjust slowly to disequilibrium contagious price and income growth from the los angeles market sustained by naive expectations contributed to the bubble that formed in las vegas

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

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

taxes and company dividends a micro econometric investigation exploiting cross section variation we use panel data for 1 218 uk industrial and commercial companies between 1970 and 1990 to investigate whether dividends are affected by taxes cross section variation in the tax cost of paying dividends results from surplus advance corporation tax act affecting some firms during this period observations on firms moving into and out of surplus act allow us to identify the effect of taxes whilst controlling for unobserved firm specific influences our results suggest that the tax cost has a statistically significant and quantitatively important influence on dividends

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

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 new approach to estimating value income ratios with income growth and time varying yields abstract value income ratios such as dividend yields in finance and price rent ratios in housing and real estate markets impact society in a variety of ways this paper proposes a new type of the present value model that features income growth with time varying yields it offers a new risk perspective which may alleviate timid investor behavior in market downturns while cooling down the market in seemingly booming times a binding relationship the value income ratio adjusted by yields of the asset and growth in income is revealed this has notable implications for empirical research which examines value income ratios time and again incorrectly perceived market behavior distorts the formation of investor behavior and vice versa which has serious consequences to the functioning of the market and beyond

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

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

lost in transition the costs and consequences of sectoral labour adjustment this paper uses an equilibrium search and matching model to study canada s sectoral labour adjustment in 2002 2006 during an increase in global commodity prices and exchange rate appreciation i estimate economically significant adjustment costs for the aggregate economy in this episode and demonstrate that difficulty in transferring skills between jobs for individual workers can be an important contributor to these aggregate costs the analysis also demonstrates that the level of unemployment benefits impacts the economy s sectoral composition its aggregate productivity and the speed of its adjustment to shocks ce texte utilise un modele d equilibre de la recherche et de l arrimage pour etudier les ajustements sectoriels du travail au canada dans la periode 2002 2006 une periode d appreciation des prix globaux des produits de base et du taux de change j estime que les couts d ajustement sont economiquement significatifs pour l economie agregee au cours de cet episode et que la difficultea transferer les competences entre emplois pour les travailleurs individuels peut etre une source importante de ces couts agreges les analyses montrent aussi que le niveau des prestations d assurance emploi a un impact sur la composition sectorielle de l economie sur la productivite et sur la vitesse des ajustements aux chocs

the price dividend ratio and limits to arbitrage evidence from a time varying estr model abstract recent share price dynamics has led to much debate within academic and practitioner circles researchers have typically argued that either a bubble component exists within prices or that the price dividend relationship exhibits persistence this note shows that an empirical model designed to capture limits to arbitrage can explain the movement in prices over the recent past

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

a simple examination of the empirical relationship between dividend yields and deviations from the capm abstract several papers have been published in recent years dealing with both the theoretical and the empirical impact of dividend yields on security returns dividends have been postulated as affecting stock returns because of tax effects agency costs and the wealth transfer hypothesis in this paper we perform a purely empirical examination of whether and to what extent deviations from the zero beta form of the capm are explained by divident yields the paper demonstrates that dividend yield has a large and statistically significant impact on return above and beyond that explained by the zero beta form of the capm this is consistent with the findings of litzenberger and ramaswamy in addition our results are consistent with the findings of small firm effects

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

unemployment insurance and unemployment spells this paper tests the effects of the level and length of unemployment insurance benefits on unemployment durations the paper particularly studies individual behavior during the weeks just prior to when benefits lapse higher unemployment insurance benefits are found to have a strong negative effect on the probability of leaving unemployment however the probability of leaving unemployment rises dramatically just prior to when benefits lapse individual data are used with accurate information of spell durations and the level and length of benefits the semiparametric estimation techniques used in the paper yield more plausible estimates than conventional approaches and provide useful diagnostics copyright 1990 by the econometric society

unemployment insurance in the united states layoff incentives and cross subsidies we survey unemployment insurance ui in the united states and provide new evidence on the ui payroll tax most ui receipt is due to firms that pay part of the ui costs of their layoffs but weak experience rating leads most firms to pay considerably less than the full costs industries consistently receiving subsidies from the ui system are construction manufacturing and mining finally a large fraction of layoffs resulting in payment of ui are made by firms that are not charged for the costs of the claim because they have employed the individual for less than 2 quarters

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

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

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

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

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 risk and wage differentials workers in less secure jobs are often paid less than identical looking workers in more secure jobs we show that this lack of compensating differentials for unemployment risk can arise in equilibrium when all workers are identical and firms differ only in job security i e the probability that the worker is not sent into unemployment in a setting where workers search for new positions both on and off the job the worker s marginal willingness to pay for job security is endogenous increasing with the rent received by a worker in his job and depending on the behavior of all firms in the labor market we solve for the labor market equilibrium and find that wages increase with job security for at least all firms in the risky tail of the distribution of firm level unemployment risk unemployment becomes persistent for low wage and unemployed workers a seeming pattern of unemployment scarring created entirely by firm heterogeneity higher in the wage distribution workers can take wage cuts to move to more stable employment

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

simulating fundamental tax reform in the united states this paper uses a new large scale dynamic life cycle simulation model to compare the welfare and macroeconomic effects of transitions to five fundamental alternatives to the u s federal income tax including a proportional consumption tax and a flat tax the model incorporates intragenerational heterogeneity and a detailed specification of alternative tax systems simulation results project significant long run increases in output for some reforms for other reforms namely those that seek to insulate the poor and initial older generations from adverse welfare changes long run output gains are modest

lost jobs and health insurance an analysis of the impact of employment volatility on firm provided health insurance it is an established fact that there are high levels of employment volatility in the us despite the importance of employer provided benefits in the us health insurance system the impact of prior job instability on one s future ability to obtain insurance coverage is not well understood this article finds a negative relationship between the volatility of a worker s employment and her likelihood of receiving firm provided health insurance previous employment volatility reduces each of the four factors necessary to receive such insurance a worker s subsequent chances of getting a job her chances of getting a job in a firm that offers coverage her chances of staying with the firm long enough to become eligible for coverage and her ability to take up insurance if offered the most important impact is on the last her ability to take up insurance if offered lack of employment is not the only and not even the largest barrier to individual coverage under this system this finding has important policy imp

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