trade and direct investment in producer services and the domestic market for expertise foreign producer services can provide substantial benefits for domestic firms we build on earlier monopolistic competition models of intermediate producer services in this paper results show that 1 while foreign services are partial equilibrium substitutes for domestic skilled labour they may be general equilibrium complements 2 service trade can provide crucial missing inputs that reverse comparative advantage in final goods 3 the optimal tax on imported services may be a subsidy and 4 in our dynamic formulation there may be earnings losses for immobile workers along a transition path that suggest potentially important equity consequences of reform jel classification f12 f16 f23 commerce international et investissement direct dans les services de production et le marche interieur de l expertise les services de production en provenance de l etranger peuvent engendrer des avantages substantiels pour les entreprises domestiques dans ce memoire les auteurs construisent sur la base de certains modeles anterieurs de concurrence monopolistique de services de production intermediaires les resultats montrent que 1 alors que les services de l etranger sont des substituts pour le travail domestique specialise en equilibre partiel en equilibre general ils peuvent etre des complements 2 le commerce de services peut fournir des intrants cruciaux qui manquent et ce faisant renverser les avantages comparatifs dans les produits finaux 3 la fiscalite optimale imposee sur les services importes peut etre une subvention et 4 dans la formulation dynamique du modele il peut y avoir perte de revenus pour les travailleurs immobiles le long du sentier de transition ce qui suggere qu il peut y avoir des consequences importantes au plan de l equite associees a certaines reformes

market externalities of large unemployment insurance extension programs we provide evidence that unemployment insurance affects equilibrium conditions in the labor market which creates significant market externalities we provide a framework for identification of such equilibrium effects and implement it using the regional extension benefit program rebp in austria which extended the duration of ui benefits for a large group of eligible workers in selected regions of austria we show that non eligible workers in rebp regions have higher job finding rates lower unemployment durations and a lower risk of long term unemployment we discuss the implications of our results for optimal ui policy jel e24 j64 j65 r23

unemployment insurance and male unemployment duration in canada a model of unemployment duration is estimated with weekly micro data on canadian men entitlement provisions in the unemployment insurance program and demand conditions are found to have a significant effect on the probability of leaving unemployment the probability of a worker leaving unemployment declines with the duration of unemployment holding unemployment insurance entitlement constant when entitlement is allowed to vary the probability of leaving first falls and then generally rises with unemployment duration these results are robust with respect to allowing for person specific unobserved heterogeneity and alternative specifications of duration dependence

the impact of the potential duration of unemployment benefits on the duration of unemployment abstract this paper examines the impact of the potential duration of unemployment insurance ui benefits on unemployment in the united states first we use a large sample of household heads to examine differences in the unemployment spell distributions of ui recipients and nonrecipients sharp increases in the escape rate from unemployment both through recalls and new job acceptances are apparent for ui recipients around the time of benefits exhaustion such increases are not apparent at similar points of spell duration for nonrecipients second our analysis of accurate administrative data from 12 states indicates that a one week increase in potential benefit duration increases the average duration of the unemployment spells of ui recipients by 0 16 to 0 20 weeks

cooperative investments induced by contract law lecture on the first sfb tr 15 meeting gummersbach july 18 20 2004this paper revisits the economic analysis of contract law for a setting of cooperative investments while che and chung 1999 have shown that expectation damages perform rather poorly the present paper argues that this negative result follows from their impicit assumption of unilateral expectation damages yet the very nature of cooperative investments gives rise to the possibility that both parties may claim expectation damages it is shown that such a regime of bilateral expectation damages provides the incentives for the first best solution even in a framework of binary choice where for selfish investments the traditional overreliance result would hold

economic effects of the syrian war and the spread of the islamic state on the levant this paper uses a global computable general equilibrium framework with new detail on six levant countries the arab republic of egypt iraq jordan lebanon the syrian arab republic and turkey to quantify the direct and indirect economic effects of the syrian war and the advance of the islamic state on the levant syria and iraq bear the brunt of the direct economic costs while the other levant countries lose in per capita but not in aggregate terms the fact that the islamic state s spread has undermined regional trade adds to varying degrees to the direct costs in all levant economies and in the case of syria and iraq doubles the welfare losses all these countries are foregoing opportunities to expand intra levant trade and the associated gains in economic efficiency and diversification the average welfare effects are not indicative of within country incidence which varies among workers landowners and capitalists

the impact of the arab spring on the tunisian economy this paper uses synthetic control methodology to estimate the output loss in tunisia as a result of the arab spring the results suggest that the loss was 5 5 percent 5 1 percent and 6 4 percent of gdp in 2011 2012 and 2013 respectively these findings are robust to a series of tests including placebo tests and are consistent with those from an autoregressive distributed lag model of tunisia s economic growth moreover this paper finds that investment was the main channel through which the economy was adversely impacted by the arab spring

does the worldwide shift of fdi from manufacturing to services accelerate economic growth a gmm estimation study abstract we examine the effect of manufacturing and service fdi foreign direct investment on their own sector growth the spillover to the other sectors and the overall economy in host countries we identify significant sectoral and inter industry spillover effects with various data classifications and types of fdi flows evidence reveals that growth effect of manufacturing fdi operates by stimulating activity in its own manufacturing sector and is prevalent in latin america caribbean in europe central asia middle to low income countries and economies with large industry share a surge of service fdi is likely to spur growth in service industries but hurt activity in manufacturing industries financial service fdi enhances growth in south east asia and the pacific high income countries and service based economies by stimulating activity in both manufacturing and service sectors however nonfinancial service fdi drains resources and hurts manufacturing industry in the same group of countries we conclude that a shift from manufacturing to service fdi is likely to lead to deindustrialization in certain regions and types of economies if this shift is spearheaded by nonfinancial fdi

unemployment insurance recall expectations and unemployment outcomes this paper empirically examines the importance of explicitly accounting for the layoff rehire process in the analysis of unemployment outcomes in the united states we find that the spells of individuals who initially expect to be recalled account for much more of the unemployment of unemployment insurance ui recipients than do spells actually ending in recall our results indicate that the recall and new job escape rates from unemployment have quite different time patterns and are often affected in opposite ways by explanatory variables we also find that the probability of leaving unemployment both through recalls and new job finding increases greatly around the time that ui benefits lapse over the past fifteen years many studies have empirically analyzed the determinants of individual unemployment spell durations in the united states much of this literature has used a job search framework in which the unemployed are viewed as permanently displaced workers who are unattached to jobs the possibility of recall to a former job a process not requiring search has been omitted from explicit consideration in the majority of these studies 2 an explicit treatment of the layoff rehire process is necessary for a proper understanding of the determinants of unemployment durations and of the impacts of unemployment policies in the united states for at least three reasons first temporary layoffs in which workers are often rehired by their original employers are a quantitatively quite important feature of the u s labor market 3 second expectations concerning the likelihood of recall are likely to affect the responses of employers and unemployed workers to labor market interventions such as reemployment bonuses and subsidies

fdi waves waves of neglect of political risk studies of the impact of local political risk on foreign direct investment inflows overlook that worldwide fdi comes in waves using a simple model we show that the impact of political risk on fdi inflows is likely to be weaker the larger the worldwide amount of fdi which may question standard estimates and their policy implications using a large sample of developing and developed economies we estimate the sensitivity of the distribution of fdi inflows across countries to the local political risk we find that it is a decreasing function of the worldwide amount of fdi this finding has been upheld after many robustness checks

the middleman as a panacea for supply chain coordination problems abstract the prevalence of intermediaries middlemen in supply chains is often seen as a dying remnant of less efficient times despite predictions that supply chains will rapidly cut out the middleman as technological advances have eased logistics middlemen have continued to thrive in this paper we demonstrate a transaction role of middlemen that may help clarify their staying power in a model with self interested decision making by both a manufacturer and a retailer wherein incentive misalignment creates investment and production inefficiencies we show that the integrated first best outcome can be achieved with simple cost based contracts if and only if a middleman is present we further show that the approach of utilizing a middleman to fully coordinate the supply chain is robust in that it can be applied to a variety of circumstances discussed in the literature including multilateral investment effort choices multiple product providers and logistical investments made by the middleman

does the sophistication of use of unemployment insurance evolve with experience the subject of this paper is the repeat use of ui ei benefits in canada the first objective is to investigate empirically the pattern of adjustment that ui users exhibit over a multiple claim horizon our secondary objective is to investigate a behavioural channel that might potentially underlie observed adjustment effects namely individual learning effects we estimate an econometric model of how certain features of their claims change as they file subsequent claims we find strong empirical patterns suggesting that there does appear to be some sort of an adjustment process beneficiaries tend to approach a desired value for these particular facets of their ui claims there appears to be some process of growing sophistication of ui use which some might label gaming the system reflecting the adjustment of claims and the concomitant employment patterns to the provisions and rules of the regime we also uncover evidence in favour of the existence of individual learning effects ce texte examine l usage a repetition des prestations d assurance chomage au canada le premier objectif est d etudier empiriquement le pattern d ajustement des recipiendaires de prestations au fil de multiples reclamations le second objectif est d etudier un canal d ajustement des comportements qui pourrait sous tendre les ajustements observes les effets d apprentissage individuel on calibre un modele econometrique qui expose certains aspects des reclamations qui changent au fil des reclamations qui se repetent des resultats empiriques robustes suggerent qu il semble y avoir un processus d ajustement les beneficiaires tendent a s approcher de valeurs desirees pour certaines facettes de leurs reclamations d assurance chomage il semble y avoir un processus de sophistication dans l usage de l assurance chomage ce que certains pourraient appeler bien jouer avec le systeme reflechissant l ajustement des reclamations et des patterns concomitants d emploi aux dispositions et reglements du regime on decouvre aussi l existence d effets d apprentissage individuel

quantity constrained household responses to ui reform this paper explores the consequences of adopting a household perspective when evaluating proposals for the reform of the canadian unemployment insurance system a model of joint behavior that allows demand side constraints to limit labor supply choices is estimated quantity constraints faced by one spouse are thus important determinants of the other s behavior predicted household responses to unemployment insurance reform proposals are negligible and differ from those that would be obtained using a model of unconstrained individual behavior copyright 1990 by royal economic society

unemployment insurance and unemployment dynamics one of the puzzling features of the recent behavior of the canadian unemployment rate is its persistence in the presence of a sustained expansion in real national income neither deficient aggregate demand nor a once for all supply side induced increase in the natural rate provides a convincing explanation of this phenomenon this paper presents a model that explains how aspects of unemployment insurance in canada will cause persistence unemployment will be highly serially correlated even if output is not the authors document the increased persistence of the unemployment rate since 1977 and show that the model accounts for much of this phenomenon

how changes in financial incentives affect the duration of unemployment this paper studies how changes in the two key parameters of unemployment insurance the benefit replacement rate rr and the potential benefit duration pbd affect the duration of unemployment to identify such an effect we exploit a policy change introduced in 1989 by the austrian government which affected various unemployed workers differently a first group experienced an increase in rr a second group experienced an extension of pbd a third group experienced both a higher rr and a longer pbd and a fourth group experienced no change in the policy parameters we find that unemployed workers react to the disincentives by an increase in unemployment duration and our empirical results are consistent with the predictions of job search theory we use our parameter estimates to split up the total costs to unemployment insurance funds into costs due to changes in the unemployment insurance system with unchanged behaviour and costs due to behavioural responses of unemployed workers our results indicate that costs due to behavioural responses are substantial

efficient reliance and damage measures for breach of contract this article considers a situation where the buyer or the seller of a good must engage in expenditures on specific capital before the exchange either to prepare to use the product or to prepare to sell it it is assumed that postbreach bargaining is possible and carried out in a cooperative fashion and that buyers and sellers form expectations about the outcome of such bargaining in a specific way without enforceable contracts the potential appropriability of specific rents results in inefficiently low levels of investment three damage measures commonly used to enforce contracts are shown to produce inefficiently high levels of investment and to be pareto ranked from best to worst as follows specific performance expectation damages and reliance damages

global effects of developed country trade restrictions on textiles and apparel this paper uses an applied general equilibrium model to analyze the impacts of quota and tariff restrictions used by developed countries against textile and clothing imports from developing countries in the model countries are represented by their actual size in terms of gdp weakening rent transfer effects compared to partial equilibrium analysis results based on 1986 data suggest annual global gains from elimination of quotas and tariffs of around 23 billion in aggregate developing countries gain around 8 billion suggesting that gains to developing countries from improved access more than offset losses from foregone rent transfers as quotas and tariffs are abolished copyright 1990 by royal economic society

do exporters gain from vers previous literature has concentrated on the rent transfer accruing to exporting countries when a voluntary export restraint ver is binding this paper studies the efficiency and distributional effects arising when vers force factors out of industries in which they are most productive a theoretical model of the industry under the ver is developed to establish qualitative conditions under which a ver will result in spillovers of exports to unrestricted markets industry contraction and loss in national welfare key parameters of demand and supply are estimated for leather footwear exports from taiwan subject to the u s orderly marketing agreement and their implications explored in a calibrated simulation exercise the results make a strong indictment of vers for most plausible parameter values vers distort exports reduce industry size and cause overall economic losses especially if the affected industry is large

expectations of unemployment insurance and unemployment duration over the years there have been frequent changes in unemployment insurance ui benefits such changes could influence spells in progress as well as future spells if individuals anticipate changes they are likely to adjust their behavior the effect of changes in benefits on unemployment duration therefore will be difficult to predict accurately without accounting for individual expectations this article investigates the extent to which individuals anticipate changes in ui entitlement the results suggest that individuals have significant although not perfect foresight about changes in ui provisions assuming perfect foresight might represent actual expectations more closely than assuming no foresight

risky business political instability and greenfield foreign direct investment in the arab world which foreign direct investments are most affected by political instability analysis of quarterly greenfield investment flows into countries in the middle east and north africa during the period from 2003 to 2012 shows that adverse political shocks are associated with significantly reduced investment inflows in the non resource tradable sectors by contrast investments in natural resource sectors and non tradable activities appear insensitive to such shocks political instability is thus associated with increased reliance on non tradables and aggravated resource dependence

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

the reemergence of segmented labor market theory according to dual labor market theory the labor market can be usefully described as consisting of two sectors a high wage primary sector with good working conditions stable employment and substantial returns to human capital variables such as education and experience and a low wage secondary sector with the opposite characteristics moreover primary jobs are rationed that is not all workers who are qualified for primary sector jobs and desire one can obtain one finally the sector of the labor market in which an individual is employed directly influences his or her tastes behavior patterns and cognitive abilities thus the dual labor market model or more generally segmented labor market models is simultaneously a description of the income distribution a claim about the absence of market clearing and a radical departure from the standard neoclassical assumption of fully rational actors and exogenously determined preferences while this last element is potentially the most interesting even its proponents fail to give it the attention it deserves and related work has not been incorporated into the segmented labor market model in this paper we therefore concentrate on the first two elements of the model segmented labor market theory was sufficiently popular in the late 1960 s and early 1970 s to be taken seriously by prominent mainstream labor economists however two influential and largely negative reviews glenn cain 1976 michael wachter 1974 portrayed the segmented labor market hypothesis as largely atheoretical and based at best on questionable statistical analysis it seems fair to say that even sympathetic mainstream critics felt that key insights from the segmented labor model could be incorporated into neoclassical analysis and that the remaining elements of the model did not form a sufficiently coherent theory to pose a challenge to the neoclassical model whatever the merits of this perception it is clear that advocates of the segmented labor market approach did not develop a formal theory which conformed to the standards of mainstream economists with some notable exceptions michael piore 1975 david gordon 1972 the work was atheoretical moreover the empirical methods used tended to fall outside the norm for example interviews observational studies and historical and institutional analysis advocates of the segmented labor market perspective mostly radical political economists chose instead to develop their own research program outside the mainstream the reemergence of segmented labor market theory is linked with the reversal of these two tendencies the theory has been pursued by economists using modern tools of imperfect information theory and state of the art econometrics as a result the approach has again attracted the attention of the mainstream even a few years ago it would have been a clairvoyant observer who predicted that lawrence summers would be working on a theoretical model of labor market duality with jeremy bulow 1986 that robert solow would count among his recent work a dual market model with ian mcdonald 1985 and that james heckman would publish an article in which he undertook an empirical test of a dual market model failed to reject the model and then devoted much of the rest of the article to attacking his and other tests of the dual labor market view see his article with v joseph hotz 1986 since the theoretical developments are largely associated with efficiency wage and departments of economics university of california berkeley ca 94720 and nber and boston university 270 bay state road boston ma 02215 and nber respectively this study was supported in part by nsf grant no ses 8606139 lang acknowledges support from a sloan faculty research fellowship dickens acknowledges support from the institute of industrial relations at berkeley

some estimates of the effects of unemployment insurance on re employment duration abstract this paper examines how re employment spell durations are affected by the potential unemployment benefit period an ex ante notion and benefit exhaustion an ex post notion the extent to which benefit duration affects re employment duration is found to depend on the nature of the separation

canadian labour market performance in international perspective my objective is to assess canadian labour market outcomes in recent decades and to compare canada s performance with that experienced in other industrialized countries the focus is on three key dimensions employment unemployment and the structure of earnings although my main purpose in the paper is to examine the canadian record i also ask what we can learn from canada s experience about the causes of some of the salient economic developments in oecd countries the rise and persistence of unemployment in europe and the growth of income inequality in countries such as the united states the united kingdom canada and australia let s begin with the question how well has the canadian economy performed during the past three decades if our reference point is the 1950s and 1960s the answer is likely to be poorly indeed the first twenty five years following the second world war now appear as a golden era since that period real income growth has been slow earnings have become more unequally distributed and unemployment has trended upward reaching levels that would have been considered outside the range of plausibility in the 1960s however most of the advanced countries have experienced a sharp deterioration in their economic performance since the early 1970s the turbulent world economic environment has made it difficult to sustain the kind of outcomes ob

unemployment insurance meets the classical labor supply model abstract through making average income dependent on the breakdown of non employment into frequency and duration the classical labor supply model with unemployment insurance has important implications for labor force participation the duration of employment and unemployment and modes of worker behavior that are by and large consistent with empirical knowledge

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

expectation damages divisible contracts and bilateral investment this paper examines the efficiency of expectation damages as a breach remedy in a bilateral trade setting with renegotiation and relationship specific investment by the buyer and the seller as demonstrated by edlin and reichelstein 1996 no contract that specifies only a fixed quantity and a fixed per unit price can induce efficient investment if marginal cost is constant and deterministic we show that this result does not extend to more general payoff functions if both parties face the risk of breaching the first best becomes attainable with a simple price quantity contract

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