should a carbon tax be differentiated across sectors abstract if some but not all countries are cooperating to reduce co2 emissions one could make the following argument a high carbon tax for carbon intensive tradeable sectors in the cooperating countries will reduce the production of goods from these sectors and therefore co2 emissions in the cooperating countries however this will to a large extent be counteracted by increased production of such goods in the countries that have no climate policy and since it is only total co2 emissions from all countries that are relevant for the climate there is no point in a policy that simply relocates co2 emissions from the cooperating countries to the countries that have no climate policy according to this line of reasoning carbon intensive tradeable sectors should thus face a lower carbon tax than other sectors of the economy this paper shows that a carbon tax should not be differentiated across sectors in the economy provided one can use import and export tariffs on all traded goods it is also shown that such a differentiation of carbon taxes is optimal for the cooperating countries if they are prevented from using tariffs on the traded goods however informational or political factors constraining the use of tariffs are likely also to constrain the possibility of differentiating carbon taxes between sectors

comparative advantage and the equilibrium rate of unemployment abstract this paper develops a two country heckscher ohlin model with endogenous equilibrium involuntary unemployment to examine the question wat is the effect of free trade on the equilibrium rates of unemployment in the laborabundant and labor scarce countries it is shown that free trade leads to a decline in the equilibrium rate of unemployment in the labor abundant country but to a rise in unemployment in the labor scarce country

the response of the informal sector to trade liberalization this paper studies the relationship between trade liberalization and informality it is often claimed that increased foreign competition in developing countries leads to an expansion of the informal sector defined as the sector that does not comply with labor market legislation using data from two countries that experienced large trade barrier reductions in the 1980 s and 1990 s brazil and colombia we examine the response of the informal sector to liberalization in brazil we find no evidence of a relationship between trade policy and informality in colombia we do find evidence of such a relationship but only for the period preceding a major labor market reform that increased the flexibility of the colombian labor market these results point to the significance of labor market institutions in assessing the effects of trade policy on the labor market

a model of efficiency wages as a signal of firm value we consider performance contracts with firm private information the verifiable components of the contract an up front wage and employment may serve both as a signal and a performance incentive job rent may be necessary for signaling and since efficient signaling is multidimensional there is an inextricable link between job rent and underemployment signaling can explain the lack of explicit bonding in actuality though our basic model is static our underemployment result is not a consequence of firm myopia when the firm is farsighted it will not maximize the joint future surplus if it cannot extract the worker s share at present copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the regionalism debate an overview the following sections are included introductiondefinitionswto provisions for ptashistorical evolutioneffects on union membersvinerian analysis welfare effects of a tariff preferencetransport costs and ptasrules of origin in ftasnon traditional gains guaranteed market access shelter from contingent protection locking in the reforms and dispute settlementimplications for the global trading systemcan pta expansion lead to global free trade do ptas make multilateral liberalization less likely do ptas lead to a rise in trade barriers against nonmembers the spaghetti bowl phenomenonwto illegal policies in ptasopen regionalism deep integrationconclusions minimizing the adverse effects of ptasreferences this abstract was borrowed from another version of this item

are those paid more really more productive the case of experience this study uses computerized personnel microdata on the white male managerial and professional employees at a major u s corporation to address the following question can the additional earnings which are associated with more labor market experience at a point in time really be explained by higher productivity at the same point in time our answer to this question based on both cross sectional and longitudinal information is that performance plays a substantially smaller role in explaining cross sectional experience earnings differentials and earnings growth than is claimed by those who have adopted the human capital explanation of the experience earnings profile this response depends critically on our assumption that the performance ratings which supervisors give to their white male managerial and professional subordinates adequately reflect the subordinates relative productivity in the year of assessment we present a great deal of evidence which strongly supports this assumption

mutual holding companies evidence of conflicts of interest through disparate dividends abstract the mutual holding company mhc structure establishes a dual class stock that creates a unique opportunity to transfer wealth from thrift depositor owners to new minority shareholders through the disparate payment of dividends we show that mhcs are priced higher than comparable non mhcs and dividend policy is a significant component of this valuation we also show that mhc thrifts pay significantly higher dividends than non mhc thrifts and that an office of thrift supervision ots ruling reducing the potential for disparate dividends between the two classes of shareholders resulted in lower dividends these results have policy implications of special significance given that the ots reversed its position in 2000 and because of the current controversy over the use of the mhc structure in the financial service industry

inequality and inefficiency in a model of occupational choice with asymmetric information abstract this paper presents a model of an economy with two occupations in which one occupation has access to some private information it is shown that even if all individuals are identical equality of ability and there is free entry into occupations equality of opportunity this may not be sufficient to equalize the rewards to occupations in equilibrium the only equilibrium may be one where one occupation earns more than the other and entry to the lucrative occupation is rationed we extend the analysis to the case of heterogenous individuals where we show that under reasonable assumptions asymmetric information worsens the distribution of income we also look at inefficiencies and show that with asymmetric information it may be the least productive individuals who become managers

signalling by direct disclosure under asymmetric information abstract in this paper an informational asymmetry exists between investors and the issuer of an initial public offering about the value of the security to avoid market failure a solution is proposed in which the issuer makes a disclosure about firm value that is verified by an investment banker the investment banker enters into a contingent contract with investors which imposes a penalty if the ex post observable cash flow indicates fraudulent disclosure a bivariate signalling model is formulated and solved and testable implications are derived from comparative statics analysis

chasing after good jobs do they exist and does it matter if they do most people believe that there are such things as good jobs jobs that a worker would consider herself lucky to get but for economists the existence of good jobs is debatable in this paper i provide a definition of a good job based on various theories of the labour market a job that involves a surplus captured partly by the worker i use that definition to guide an empirical investigation of the existence and importance of good jobs i conclude that good jobs do exist that the labour market does not just function according to a roy model with wage differentials reflecting only skill differentials compensating differentials or bond posting and that their impact on the overall wage structure is substantial finally i discuss the implications of the existence of good jobs for policy setting and for assessments of the justice of a society resume la chasse aux bons emplois est ce qu ils existent et est ce que cela importe qu ils existent la plupart des gens croient qu il y a telles choses que de bons emplois des emplois qu un travailleur se trouverait chanceux d avoir mais pour les economistes l existence de bons emplois est discutable dans ce texte l auteur propose une definition de bon emploi fondee sur diverses theories du marche du travail un emploi qui engendre un surplus capture en partie par le travailleur il utilise cette definition pour guider son enquete empirique sur l existence et l importance de bons emplois on conclut que les bons emplois existent que le marche du travail ne fonctionne pas seulement selon le modele de roy avec des differentiels de salaires qui refletent seulement les differentiels d habiletes les differentiels compensatoires ou le depot d une caution et que leur impact sur la structure globale des salaires est substantielle finalement l auteur discute les implications de l existence de bons emplois sur la definition de politiques et sur l evaluation du caractere juste d une societe

climate policy without tears cge based ancillary benefits estimates for chile this study examines a hithertoneglected set of benefits from climate policy viz the reduction in emissions of localair pollutants and the associated healthbenefits in this case for residents ofsantiago de chile by using an economy widemodel we are able to compare these monetisedbenefits to the direct costs of carbonabatement thereby determining the scope for no regrets co2 reductions sensitivityanalysis is performed in recognition of theuncertainty surrounding certain key parameterand exogenous variable values notably households willingness to pay wtp forreduced mortality and morbidity risk and thesubstitution elasticities among energy sourcesand between energy and other inputs ourresults suggest that even with the mostconservative assumptions low wtp lowelasticities chile could reduce co2emissions by almost 20 from the 2010 baselinewith no net welfare loss though a 10 reduction is closer to optimal if insteadchile were to target a 20 reduction inparticulate concentrations a particulate taxwould incur slightly lower costs than anequivalent carbon tax to achieve the samehealth benefits while the latter is asecond best method of addressing localpollution the welfare loss of choosing thisinstrument could be fully compensated by carboncredit sales at a world market price of 20 tc

an equilibrium search matching model of discrimination abstract a model in which firms have incomplete information about workers at the hiring stage is shown to entail discrimination as the unique stable equilibrium outcome even if no agents have a taste for discrimination and groups are ex ante identical groups which are discriminated against e g blacks women earn lower wages and endure longer unemployment spells

migration unemployment and discrimination abstract this paper uses a dynamic efficiency wage model to analyze the consequences of immigration for a small country when there is discrimination against immigrants in a dual labor market with unemployment discrimination is of the type equal pay for equal work but unequal work which is characteristic of economies with guest worker systems the model exhibits three regimes for rising immigration levels immigration is most beneficial for natives in the intermediate regime an analysis of regime switches shows that changes attributable to globalization and technical progress are consistent with growing opposition to immigration

capital gains tax rates and the cost of capital for small business evidence from the ipo market abstract we examine the issue prices of small initial public offerings around the 1993 tax law change that reduced the capital gains tax on qualified small business stock we compare the actual issue price of new stock with a benchmark price that is not affected by the change in capital gains tax we find that after controlling for ipo underpricing the issue prices of qualifying small business stock after the tax rate change are significantly higher than the issue prices before the change a control sample of nonqualifying firms shows no significant difference in issue prices

racial disparity in unemployment abstract in the united states black workers earn less than their white counterparts and have higher rates of unemployment empirical work indicates that most of this wage gap is accounted for by differences in cognitive skills that emerge at an early age in this paper we demonstrate that the same is not true for black white disparity in unemployment a large unexplained unemployment differential motivates the paper s second contribution a potential theoretical explanation this explanation is built around a model that embeds statistical discrimination into the subjective worker evaluation process that lies at the root of the efficiency wage theory of equilibrium unemployment

optimal containment and policy differentiation under unilateral climate policy without a broad international agreement climate policy is less effective due to carbon leakage we investigate whether this negative effect can be addressed by partially containing the policy s effects to intermediate goods sectors such as electricity or transportation services we use a three sector model to study a policy that taxes emissions caused by intermediate goods production while subsidizing the intermediate good we characterize the optimal containment policy for combating carbon leakage and show that it complements the concept of policy differentiation

vertical structure and strategic environmental trade policy abstract the idea that environmental trade policy can be used to achieve competitive advantage in international markets has important implications for the way we conceive free trade this paper considers strategic environmental policy in a model that makes explicit the vertical structure that supports production of the traded good including intranational vertical relationships in the analysis of strategic environmental trade policy has substantial qualitative effects when vertical contracts are allowed the optimal policy to levy on a polluting input under both quantity and price competition in the international market is the pigouvian tax

a theory of signalling during job search employment efficiency and stigmatised jobs this paper discusses why redundant skilled workers may be reluctant to accept interim unskilled jobs if skilled work is more satisfying or less arduous for highly productive workers then such workers invest more in moving quickly between skilled jobs thus high productivity workers tend to search on the job and if unemployed will specialise in job search rather than take an interim position if individual differences in productivity are known to the worker but not the potential employer then search strategy may be used as a productivity signal with more than the efficient proportion of workers searching on the job and too few accepting interim unskilled jobs optimal policy requires a subsidy on interim unskilled jobs

signalling by underwriter retention rate in the ipo market underwriters in taiwan have to purchase 10 25 of shares offered in initial public offerings ipos for their own accounts we present a signalling model showing that the underwriter retention rate can serve as a signal of firm value to investors because underwriters are investors as well this mechanism can reduce information asymmetry between issuers and investors the model shows that when underwriters retain more proportion of ipo shares in equilibrium the initial return is greater and the subscription success rate is lower we further test the propositions using 616 ipo firms in taiwan for the period 1998 2004 overall the empirical results support the propositions developed from the signalling model

signalling and the pricing of new issues this paper develops a signalling model with two signals two attributes and a continuum of signal levels and attribute types to explain new issue underpricing both the fraction of the new issue retained by the issuer and its offering price convey to investors the unobservable intrinsic value of the firm and the variance of its cash flows many of the model s comparative statics results are novel empirically testable and consistent with the existing empirical evidence on new issues in particular the degree of underpricing which can be inferred from observable variables is positively related to the firm s post issue share price

labor market integration in urban ethiopia 1994 2004 abstractan analysis of panel data on individuals in a random selection of urban households in ethiopia reveals large sustained and unexplained earnings gaps between public and private and formal and informal sectors over 1994 2004 at the same time we find first that the rate of mobility increased in the two pairs of sectors sample transitions rates grew across survey waves while state dependence in sector choice decreased second the correlation between sector choice and earnings gaps increased over the same period in particular the correlation between comparative earnings and selection into the informal sector was high throughout the survey decade and increased in magnitude over the second half of the period these results suggest that ethiopia s urban labor markets might be integrating

part time status and hourly earnings of black and white men labor economists now believe that wages and hours are jointly determined creating a premium in the hourly pay of full time workers the size and nature of this premium however varies considerably by race it is shown here that full time work carries a far lower premium for black workers than for white workers and has very different implications for blacks occupational status

intraindustry trade high wage jobs and the wage gap abstract drawing on the empirical fact that the high wage primary sector is characterized by monopolistic competition the paper shows using a dual labor market model that intraindustry trade results in an expansion of high wage premium jobs along with a decline in the wage gap

human capital and information this paper examines the issue of the establishment size wage effect it analyzes a cross section for the year 1979 with information on 607 individuals and the 60 private sector establishments where they work it discusses four theories of the establishment size wage effect and uses empirical proxies to test them it shows that when a dummy variable on computer access in the establishment is introduced as a regressor the establishment size variable is an insignificant regressor this result and other evidence supports the contention that the establishment size coefficient captures the effect of unobserved human capital accumulation

the macroeconomics of specificity specific quasi rents arise in a variety of economic relationships and are exposed to opportunism unless fully protected by contract rent appropriation has important macroeconomic consequences resources are underutilized factor markets are segmented production suffers from technological sclerosis job creation and destruction are unbalanced recessions are excessively sharp and expansions run into bottlenecks while depending on the shock expansions may require reinforcement or stabilization recessions should typically be softened in the long run institutions may evolve to alleviate the problem by balancing appropriation technology choice will also be affected with the appropriated factor partially excluding the other from production to reduce appropriation

old industrial regions and employability inactivity has been growing across the developed world and is especially high in old industrial areas a general move towards more flexible labour markets and the restructuring in these regions ove

screening competition and job design economic origins of good jobs in recent decades many firms offered more discretion to their employees often increasing the productivity of effort but also leaving more opportunities for shirking these high performance work systems are difficult to understand in terms of standard moral hazard models we show experimentally that complementarities between high effort discretion rent sharing screening opportunities and competition are important driving forces behind these new forms of work organization we document in particular the endogenous emergence of two fundamentally distinct types of employment strategies employers either implement a control strategy which consists of low effort discretion and little or no rent sharing or they implement a trust strategy which stipulates high effort discretion and substantial rent sharing if employers cannot screen employees the control strategy prevails while the possibility of screening renders the trust strategy profitable the introduction of competition substantially fosters the trust strategy reduces market segmentation and leads to large welfare gains for both employers and employees

premiums to employment in larger establishments evidence from peru abstract examination of the employer size wage effect for males in urban peru suggests the following higher wages in larger establishments do not merely compensate for higher worker quality or inferior working conditions size differences in the use of rising wage tenure profiles cannot provide a market clearing explanation for the employer size wage effect unless workers are extremely impatient thus larger employers appear to pay premiums unionization explains none of the premiums and minimum wage compliance explains at best a small fraction shirking based efficiency wage explanations for premiums are implausible because peruvian job security legislation greatly inhibits dismissals in larger establishments explanations meriting further research involve the use of high wages to reduce turnover and to improve productivity enhancing morale

supervision and wages across industries this paper uses supervision data from a supplement to the 1977 wave of the panel survey of income dynamics to examine differences in supervision and wages across industries and to evaluate relationships between supervision practices and interindustry wage differentials the results demonstrate that workers in high wage industries are supervised with equal or greater stringency than secondary sector workers further the results offer no evidence that interindustry differences in monitoring contribute to interindustry wage differentials such findings appear to contradict explanations for industry wage premiums that are motivated by efficiency wage models of shirking copyright 1993 by mit press

wage premiums and profit maximization in efficiency wage models abstract the standard shirking model of efficiency wages is essentially a continuous time repeated prisoners dilemma game thus to sustain an equilibrium with employment requires sufficient gains from future co operation each division of these gains corresponds to some equilibrium efficiency wages correspond to employees receiving the gains bonds allow firms to receive them in markets well informed about agents pasts employment is independent of the distribution of gains but in anonymous markets with more workers than jobs employment is highest in efficiency wage equilibria efficiency wages thus arise naturally as the unique efficient equilibrium without recourse to assumptions that limit bonding

gender and industry differences in employment cyclicality evidence over the postwar period this paper explains how cyclical patterns of employment vary between genders and across industries and how these two factors are related by gender differences in the industry distribution of workers evidence shows that men s employment is more procyclical than women s and that men s overrepresentation in highly volatile industries more than accounts for the gender gap in employment cyclicality

new issues on the u k unlisted securities market the ability of entrepreneurs to signal firm value the present paper investigates whether small firm entrepreneurs are able to signal the value of their firms to potential investors when seeking a listing on the u k unlisted securities market usm the signals considered are the percentage of equity retained by the original entrepreneurs the net proceeds raised by an issue the choice of advising agents to an issue the disclosure of an earnings forecast and the level of underpricing of the new issue in addition the possible interactions between the individual signals are considered and included in the analysis the results of the empirical analysis suggest that firm value is positively and significantly related to the percentage of retained equity and the net proceeds raised thus suggesting therefore that stock markets will invest at higher values ceteris paribus if entrepreneurs indicate confidence in their enterprises via levels of equity retention and the funds they intend to invest in future projects

signaling and the valuation of unseasoned new issues a comment in the march 1982 issue of this journal david downes and robert heinkel 1 present an empirical examination of the role of signaling in the valuation of initial public offerings of common stock for a large sample of unseasoned new issues they examine the leland pyle 2 signaling hypothesis that firm value should be positively related to the fraction of equity retained by the original shareholders downes and heinkel conclude that the data are consistent with the leland pyle signaling hypothesis in this comment i present a more complete test of the leland pyle signaling model i also present two alternative explanations for the positive empirical relation between firm value and insider holdings which i label the agency hypothesis and the wealth effect hypothesis i find that the testable implications of the agency hypothesis are supported while the evidence is ambiguous with respect to the testable implications of the wealth effect and signaling hypotheses

adverse selection in labor markets and international trade this analysis considers trade between countries with labor market distortions due to adverse selection comparative advantage is caused either by a better mix of high and low productivity workers or by the absence of adverse selection in one country in either case free trade may lead to a loss for the inferior country a trading equilibrium is pareto better than an equilibrium in a fully integrated economy with perfect factor mobility if both countries face adverse selection otherwise the trading equilibrium is pareto inferior subsidies for production of the imported good may improve the social utility of the inferior country copyright 1995 by the editors of the scandinavian journal of economics

multiple free trade equilibria in micro models of unemployment abstract neoclassical theory suggests that trade patterns are linked to autarkic differences in relative opportunity costs we demonstrate that when the heckscher ohlin samuelson model is extended to allow for unemployment there are forces present that create multiple free trade equilibria even when both countries are identical and autarkic equilibrium is unique there is no necessary link between relative opportunity costs and trade patterns while our primary focus is on search generated unemployment we argue that the analysis also applies to situations where unemployment is generated by minimum wages efficiency wages or implicit contracts

signalling and the valuation of unseasoned new issues revisited this paper provides further empirical evidence on the relation between entrepreneurial ownership retention and the initial value of unseasoned common shares a canadian data set is employed to estimate the various empirical specifications used in previous studies and to examine additional variables suggested by recent developments in the theoretical literature the estimation is carried out using a more general procedure to correct for heteroskedasticity in contrast to previous findings the entrepreneurial ownership reten tion signal does not possess statistical significance in any ofthe models examined

is work special justice and the distribution of employment i investigate from an egalitarian welfarist standpoint the issue of whether state guaranteed employment should be offered as a matter of right to able bodied poor citizens who suffer chronic or persistent unemployment an affirmative answer is defended one consideration supporting this right to work is that provision of transfer aid in the form of jobs rather than cash screens nonneedy bohemians from the class of beneficiaries the main conclusion of the essay is defended from one objection based on efficiency wage models of the labor market and from another based on the alleged impossibility of maintaining the self respect and self esteem of able bodied individuals who fail to earn their own keep independently in a market economy

institutional quality and international trade institutions quality of contract enforcement property rights shareholder protection and the like have received a great deal of attention in recent years yet trade theory has not considered the implications of institutional differences beyond treating them simply as different technologies or taxes the purpose of this paper is twofold first we propose a simple model of international trade in which institutional differences are modeled within the framework of incomplete contracts we show that doing so reverses many of the conclusions obtained by equating institutions with productivity institutional differences as a source of comparative advantage imply among other things that the less developed country may not gain from trade and factor prices may actually diverge as a result of trade second we test empirically whether institutions act as a source of trade using data on us imports disaggregated by country and industry the empirical results provide evidence of institutional content of trade institutional differences are an important determinant of trade flows

double dividend analysis with screen an empirical study for switzerland this paper presents an empirical study that quantifies the effects of an ecological fiscal reform as recently rejected by the swiss population the measure aims to encourage employment and at the same time to dissuade from an excessive energy use and thereby decrease energy induced external costs co2 etc the analysis is based on the model screen a general equilibrium model using the complementarity format for the hybrid description of economy wide production possibilities where the electricity sector is represented by a bottom up activity analysis and the other production sectors are characterised by top down production functions a dynamic formulation of the activity analysis of technologies allows for the reproduction of endogenous structural change see frei c w haldi p a sarlos g 2003 dynamic formulation of a top down and bottom up merging energy policy model energy policy 31 10 1017 1031 the labour market is formulated according to the microeconomically founded efficiency wages and calibrated for switzerland the study includes the development of a consistent set of top down bottom up and labour data for switzerland the collection of bottom up data on the electricity sector just before liberalisation was not easy the electricity sector characterising data was prepared based on original statistics about 140 swiss electricity companies

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

inter industry wage differentials revisited wage volatility and the option value of mobility analysis of data from the psid reveals that idiosyncratic wage volatility varies inversely with inter industry wage differentials and is positively correlated with both returns to industry tenure and rates of inter industry mobility an incomplete markets life cycle model in which inter industry mobility decisions and wage differentials are endogenously determined in equilibrium is then developed and shown to be capable of rationalizing these features of the data in the model the ability of worker to switch industries generates option value that is large enough to offset the standard risk premium that workers demand for exposure to excess wage volatility

segmented labor markets new evidence from a study of four race gender groups using data from a supplement to the 1983 current population survey the author tests hypotheses of segmented labor market theory two labor market sectors a primary sector and secondary sector are identified on the basis of occupational segmentation as inferred from workers answers to the question of whether specific skills or prior training were conditions for their employment the results show significant unexplained earnings differentials across sectors for each of four groups black men black women white men and white women other segmented labor market hypotheses are also generally supported by the results but distinct variations are found across the four groups

employment wages and the economic cycle differences between immigrants and natives in this paper we analyse differences in the cyclical pattern of employment and wages of immigrants and natives for two large immigrant receiving countries germany and the uk we show that despite large differences in their immigrant populations there are similar and significant differences in cyclical responses between immigrants and natives in both countries even conditional on education age and location we decompose changes in outcomes into a secular trend and a business cycle component we find significantly larger unemployment responses to economic shocks for low skilled workers relative to high skilled workers and for immigrants relative to natives within the same skill group there is little evidence for differential wage responses to economic shocks we offer three explanations for these findings an equilibrium search model where immigrants experience higher job separation rates a model of dual labour markets and differences in the complementarity of immigrants and natives to capital

discrimination and open unemployment in a segmented labour market jobs in the primary sector require firm specific training with wages determined as a result of bargaining firms pay for the training and since they are imperfectly informed about worker productivity they test workers before hiring them the secondary sector is competitive taking a job in the secondary sector signals low productivity and therefore workers in the secondary sector are unable to get jobs in the primary sector open unemployment coexists with unfilled vacancies for low wage jobs

interindustry wage differentials in manufacturing rents and industrial structure this paper examines industry structure and trade performance as determinants of industry wage differentials in canadian manufacturing it is similar to work done by l katz and l summers for the united states determinants regressors include occupational structure share of youth share of females valued added capital intensity and measures of trade performance value added was the most important factor import competition is negatively correlated with wage differentials while export orientation is positively but weakly correlated with wage differentials

theoretical foundations for sticky wages abstract the paper compares three different types of theoretical explanation of sticky wages they are implicit contracts efficiency wage models and insider outsider models it then reconsiders keynes rationale for sticky wages which focuses on relative wage issues finally the paper considers possible directions for future research

the labor market and corporate structure abstract we analyze the impact of labor demand and labor market regulations on the corporate structure of firms higher wages are associated with lower monitoring irrespective of whether these high wages are caused by labor market regulations unions or higher labor demand we also find that the organization of firms has important macroeconomic implications in particular monitoring is a type of rent seeking activity and the decentralized equilibrium spends excessive resources on monitoring labor market regulations that reduce monitoring by pushing wages up may increase net output or reduce it only by a small amount even though they reduce employment

bank lending and initial public offerings abstract in this paper we test the hypothesis that banking relations are a signal about firm value we argue that bank processing of asymmetric information and external monitoring of corporate activities reduce the ex ante uncertainty of investors about firm value we demonstrate that the existence of bank debt and or lines of credit lowers the expected initial return associated with initial public offerings the empirical results are robust with respect to the inclusion of variables which reflect other mechanisms that can ameliorate ex ante uncertainty our work adds to the body of evidence that supports the hypothesis that intermediaries provide valuable asset services to corporate borrowers

stratification social networks in the labour market and intergenerational mobility young individuals taking the locational choices made by their altruistic parents as given decide whether or not to acquire skills the use of location specific word of mouth communication in the transmission of information about skilled job opportunities implies that the local social environment partly determines an individual s expected returns to education stratified equilibria when they exist are characterised by low intergenerational social mobility and inefficient use of talent in addition the equilibrium responses to factors that generally encourage education may in stratified outcomes be highly asymmetric across socio economic groups non stratified equilibria are likely to be destabilised by measures that encourage education

the determinants of dismissals tests of the shirking model with individual data abstract this study tests the shirking model by estimating dismissal equations with data on individual workers fires were found to depend negatively on firm size and on the local and industry unemployment rates and to depend positively on the capital labor ratio

efficiency wages in a ricardian model of international trade abstract this paper examines the implications of efficiency wages for international trade in a simple extension of the ricardian model in which labour performs two different tasks in production and where workers are imperfectly monitored in the performance of one of the tasks as a result of the factor market distortion the one factor economy may behave like a heckscher ohlin model an important result is that transfers of income have efficiency reducing effects and hence the standard aggregate analysis of trade policy may be inappropriate

migration unemployment and development a dynamic two sector analysis abstract a time minimizing problem of attaining a full employment state is solved in a dual economy model with harris todaro migration mechanism and with a positive level of urban unemployment in the starting period it appears that the optimum solution lies in the specialization of investment in the urban sector at least in the initial stage of development if the per capita capital stock in the urban sector is very small in the starting period

efficiency wage models of unemployment keynesian economists hold it to be self evident that business cycles are characterized by involuntary unemployment but construction of a model of the cycle with involuntary unemployment faces the obvious difficulty of explaining why the labor market does not clear involuntarily unemployed people by definition want to work at less than the going wage rate why don t firms cut wages thereby increasing profits

on socioeconomic causes of wait unemployment abstract this paper discusses implications of wait unemployment in a two sector model with a dual labour market primary sector firms pay efficiency wages the wage rate in the secondary sector is determined by labour supply and demand most queueing models assume that workers for the primary sector are only recruited from the pool of unemployed instead this paper explains wait unemployment by assuming that people care about their relative status in society the model is presented in general terms and a closed form solution is obtained by specifying functional forms the results emphasize the need for proper manpower policies to reduce structural unemployment

the trade off between supervision cost and performance based pay does gender matter the study adds to the literature by providing new empirical evidence consistent with efficiency wage theory and by providing estimates of the average cost of supervising a worker by industry this research uses the 1996 wave of the nlsy and incorporates estimates of supervision cost computed from industry classifications we further detect presence of no gender differences neither in risk averseness nor in productivity gains associated with cost of supervision and performance based pay while the findings imply that employers should consider the incentive effects of supervision and performance based pay when constructing pay schemes there is no need for employers to devote resources to constructing gender specific payment mechanisms our evidence suggests that profit maximizing firms should treat males and females equally and develop gender neutral pay schemes

inter industrial wage differentials evidence from latin american countries the recent literature on inter industrial wage differentials for the united states suggests that the labour market equilibrium features non competitive elements however the lessons from the united states need not carry over to other countries especially developing economies this article analyses the wage differentials in selected latin american countries despite the sharp contrasts between the latin american and the us economies our results show more similarities than differences with those reported in past studies wage differentials are substantial and persist over time the differentials are also correlated across occupations and to a lesser extent across establishment sizes

is there less discrimination in occupations where recruitment is difficult the authors empirically test the cross sectional relationship between hiring discrimination and labor market tightness at the level of the occupation to this end they conduct a correspondence tes

the relationship between ownership financing decisions and firm performance a signaling model we develop a signaling model to show how adverse selection and moral hazard interact to determine a firm s ownership structure and financing and investment decisions endogenously testable implications are derived regarding the relationship between insider ownership performance measures such as tobin s q ratio and elements of financial structure such as the debt equity ratio

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

minimum wage legislation in a dual labor market the paper studies the equilibrium effects of minimum wage legislation in an economy with coexisting primary and secondary labor markets owing to difficulties in monitoring relative wages and the threat of job loss play a functional role in eliciting effort from primary sector workers minimum wage laws hence affect the primary wage and employment level even if the law only binds in the secondary labor market furthermore interaction between the two sectors can also alter the secondary outcome relative to the standard analysis and has implications for participation decisions and for the level of unemployment

an efficiency wage model with explicit monitoring abstract this paper develops an efficiency wage model of involuntary unemployment in a small open economy which uses two factors to produce three goods one of which is non traded monitoring aimed at reducing shirking by workers in all industries the analysis shows how a tariff on imports may lower employment but paradoxically raise social welfare at the same time as the paper also demonstrates the optimal policy combination includes not only taxes on capital and monitoring as well as a subsidy on employment but also despite the small country assumption a tax on consumption

free trade and global warming a trade theory view of the kyoto protocol this paper demonstrates how three important results in environmental economics true under mild conditions in closed economies are false or need serious amendment in a world with international trade in goods since the three results we highlight have framed much of the ongoing discussion and research on the kyoto protocol our viewpoint from trade theory suggests a re examination may be in order specifically we demonstrate that in an open trading world but not in a closed economy setting 1 unilateral emission reductions by the rich north can create self interested emission reductions by the unconstrained poor south 2 simple rules for allocating emission reductions across countries such as uniform reductions may well be efficient even if international trade in emission permits is not allowed and 3 when international emission permit trade does occur it may make both participants in the trade worse off and increase global emissions

labor contracts under asymmetric information when workers are free to quit this paper examines the impact of workers ability to quit on the performance of labor contracts between workers and privately informed firms while the need to induce workers to remain with the firm necessarily lowers total welfare the effect on employment levels is to reduce the magnitude of the inefficiency due to asymmetric information whether this inefficiency is under or overemployment the model predicts that employment distortions increase with the strength of lock in effects on workers a prediction which contrasts with the results of efficiency wage models and which may help in empirical testing of labor contract theory

empirical assessment of the impact of auditor quality on the valuation of new issues abstract this paper reports empirical tests of an hypothesized positive relation between audit quality and firm specific risk that is predicted by datar feltham and hughes 1991 theoretical analysis of auditor choice when firms go public three types of proxies for ex ante firm specific risk are used to test this relation regression coefficients that theory relates to the firm specific risk ex ante proxies available from prospecti and ex post variances in returns results from the first are moderately consistent with our hypothesis while those from the latter two are either mixed or contrary

the case for international emission trade in the absence of cooperative climate policy we evaluate the efficacy of international trade in carbon emission permits when countries are guided strictly by their national self interest to do so we construct a calibrated general equilibrium model that jointly describes the world economy and the strategic incentives that guide the design of national abatement policies countries decisions about their participation in a trading system and about their initial permit endowment are made noncooperatively so a priori it is not clear that permit trade will induce participation in international abatement agreements or that participation will result in significant environmental gains despite this we find that emission trade agreements can be effective that smaller groupings pairing developing and developed world partners often perform better than agreements with larger rosters and that general equilibrium responses play an important role in shaping these outcomes