the effects of changes of the job offer arrival rate on the duration of unemployment generally it is acknowledged that changing the job offer arrival rate has two opposite effects on unemployment duration for a basic job search model sufficient conditions on the wage offer distribution have been derived ensuring that one of the effects dominates however these are not satisfied for the popular families of wage offer distributions here i show that the conditions can be weakened at virtually no cost the set of distributions satisfying the new conditions is considerably larger than the set previously established in particular it includes all wage offer distribution families that are popular in structural empirical research

job search and commuting time we structurally analyze a job search model for unemployed individuals that allows jobs to have different wage commuting time combinations the structural parameter of interest is the degree of willingness to pay for commuting time we use a unique dataset containing responses by unemployed individuals on the optimal search strategy to estimate this parameter without the need to rely on functional form assumptions we address specification errors in the model and measurement errors in the data the results identify types of individuals who have a high disutility of commuting time

estimating reservation wages of employed workers using a stochastic frontier according to search theory workers form reservation wages such that employment offers paying wages less than the reservation wage are rejected the first job offer paying a wage higher than the reservation wage is accepted and search is terminated though the reservation wage is clearly a matter of individual taste and unobservable a number of empirical articles have nevertheless appeared on the subject the present paper adds to this literature its novel aspects are that it uses data on employed workers rather than unemployed workers as is usually the case and that it applies a comparatively new econometric technique stochastic frontier estimation to the problem of estimating reservation wages our interests in this paper are twofold first the paper provides estimates of worker reservation wages utilizing the stochastic frontier regression technique second we use these estimates to test various hypotheses regarding the response of reservation wages to factors that search theory suggests are important in the determination of reservation wages the remainder of the paper is organized as follows section ii discusses the previous empirical literature on the reservation wage section iii sketches the theory and estimation techniques we use section iv lays out a framework for assessing the validity of the approach used here finally section v presents the empirical results

on the possibility of an inverse relationship between tax rates and government revenues abstract when arthur laffer and other supply side advocates plot total tax revenue as a function of a particular tax rate they draw an upward sloping segment called the normal range followed by a downward sloping segment called the prohibitive range a brief literature review indicates that tax rates on the prohibitive range in theoretical and empirical models have been the result of particularly high tax rates high elasticity parameters or both the labor tax rate which maximizes total revenue for example will depend on the assumed labor supply elasticity this paper introduces a new curve which summarizes the tax rate and elasticity combinations that result in maximum revenues separating the normal area from the prohibitive area a general purpose empirical u s general equilibrium model is used to plot the laffer curve for several elasticities and to plot the newly introduced curve using the labor tax example results indicate that the u s could conceivably be operating in the prohibitive area but that the tax wedge or labor supply elasticity would have to be much higher than most estimates would suggest

reservation wages expected wages and unemployment we model unemployment duration reservation and expected wages simultaneously for individuals not in work where wage expectations are identified via an exogenous policy shock the policy shock increased expected wages which were found to be positively associated with reservation wages

campeau s acquisition of federated post bankruptcy results abstract this paper updates kaplan 1989 by comparing federated department stores value before its purchase by campeau corporation to its post bankruptcy value the post bankruptcy value includes all direct and indirect costs of bankruptcy and financial distress federated s assets increased in value by 3 1 billion in 1992 dollars or 1 6 billion in 1987 dollars this increase is only slightly below that in kaplan 1989 suggesting that net bankruptcy costs were modest and possibly nonexistent the federated purchase illustrates that a highly leveraged transaction can increase value but still be unable to meet its debt obligations and bankruptcy and financial distress need not be costly

an econometric analysis of reservation wages this paper describes an analysis of survey data on unemployed people who reported their asking wage and the wage they expected to earn we show that if agents behavior is described by the standard optimal job search model one can use these data to deduce structural parameters rather than estimate them and we report our deductions from two surveys 1 of british unemployed people

is corporate bankruptcy efficient abstract auctions allocate resources to their highest valued uses yet bankruptcy does not use auctions instead judges determine a value and parcel out interests on the assumption that this valuation is correct errors inevitable in this process lead many persons to conclude that bankruptcy is inefficient this essay argues that the conclusion does not follow the costs of error in valuation may be less than the cost of conducting an auction legal rules endure because they are efficient or because they transfer wealth transfers are an implausible explanation of the current bankruptcy regime leaving efficiency as the prevailing explanation

effective tax rates in macroeconomics cross country estimates of tax rates on factor incomes and consumption abstract this paper proposes a method for computing tax rates using national accounts and revenue statistics using this method we construct time series of tax rates for large industrial countries the method identifies the revenue raised by different taxes at the general government level and defines aggregate measures of the corresponding tax bases this method yields estimates of effective tax rates on factor incomes and consumption consistent with the tax distortions faced by a representative agent in a general equilibrium framework these tax rates compare favorably with existing estimates of marginal tax rates and highlight important international differences in tax policy

a structural dynamic analysis of job turnover and the costs associated with moving to another job this paper provides an empirical analysis of the labor market behavior of employed individuals using a structural on the job search model the costs associated with moving to another job are allowed to be nonzero and may depend on the wage level it is shown that under certain conditions the optimal strategy has the reservation wage property the model is estimated using data on job durations and subjective responses concerning the search strategy the results reveal some strong sources of inflexibility of the labor market copyright 1992 by royal economic society

search behaviour transitions to non participation and the duration of unemployment using longitudinal micro data on unemployed individuals for 1983 85 a structural job search model is estimated the model allows for transitions from unemployment to nonparticipation an extended version of the model deals with the influence of on the job search and prospective wage increases on search behavior of the unemployed the empirical results show that the probability of accepting a job offer is almost one for most unemployed individuals a large portion of unemployment spells ends in a transition out of the labor force the effects of changes in benefits on duration appear to be extremely small copyright 1990 by royal economic society

declining reservation wages and learning empirical studies of job search strongly suggest that the reservation wages of unemployed job seeking individuals decline with the length of their respective unemployment spells previous explanations of this behaviour based on age effects liquidity constraints and limited unemployment benefits are not adequate we provide a new answer to this question based on the reasonable assumption that workers do not have precise knowledge of the distribution of the prevailing wages an individual model of job search and learning is formulated it is shown that the declining trend of reservation wages naturally arises due to the selection process when search costs are not too small the example of a normal wage offer distribution is analysed and the implications are discussed

personal income taxes in developing countries comparative work on income taxes in developing countries has commonly looked at average tax rates these rates are often constructed by dividing revenue collections by some measure of private or personal income recent controversies have however focused on the incentive effects of marginal tax rates this article develops and applies a simple methodology to compare marginal official tax rates across a sample of fifty developing countries as would be expected given differences in fiscal capacity the poorest and the lower middle income countries impose relatively low marginal rates and the rates for the upper middle income and developed countries are higher conversely several low and lower middle income countries tax thresholds start at income levels which are low relative to their mean income when compared with those of developed countries the results warn against trying to derive information on the disincentive effect of a country s tax schedule from the highest marginal rate the authors data show that this is not an accurate indicator of overall disincentive effects

individual wealth reservation wages and transitions into employment we investigate the relationship between financial wealth reservation wages and labor market transitions wealth is assumed to affect the level of the reservation wage and the employment probability we test for the validity of this assumption by estimating a simultaneous equations model of reservation wages labor market transitions and wealth the data used for the analysis relate to a sample of unemployed job searchers we use subjective information on the reservation wage wealth is found to have a significantly positive impact on the reservation wage the overall impact of wealth on the employment probability is negative though small

supply side economics old truths and new claims this paper prepared for the annual meetings of the american economic association examines the claims that were made at the beginning of the decade by the new supply siders and contrasts their views with the traditional supply side economics that has been a prominent part of economics since adam smith the analysis gives particular attention to the pace of recovery and growth and to the revenue effects of the 1981 tax cut this abstract was borrowed from another version of this item

unemployment duration and the restart effect some experimental evidence in this paper we analyse the effect of ihe restart programme in the united kingdom this programme consisis of an interview of tbe long term unemployed to counsel them on effective job search failure to attend the interview carries the threat of the cessation of unemployment benefits the results using experimental data indicate that the programme has a significant effect of reducing unemployment duration estimation of an independent competing risks model distinguishing between exits from unemployment to a job a training placement or to signing off unemployment benefit shows that the channels through which restart works differs according to exit type

risk attitudes and reservation wages of unemployed workers evidence from panel data abstract this paper studies risk attitudes of unemployed job seekers and their relationship to self reported reservation wages we find that risk aversion is prevalent and that reservation wages decrease slightly over time furthermore risk aversion and reservation wages are negatively correlated

an analysis of reservation wages for the economically inactive abstract data for the economically inactive are used to calculate elasticity estimates of the reservation wage and exit probability to state benefits and the arrival rate of job offers the inactive react in similar ways to benefit increases as the unemployed

search models and applied labor economics individual effects in a nonlinear model explicit treatment of heterogeneity in the empirical job search model this paper extends the empirical version of a job search model to permit heterogeneity in the location of wage offer distributions population variance in wage offers is decomposed into variance due to heterogeneity and variance facing each individual heterogeneity is found to be an important source of offer variance in the population the amount of pure wage offer dispersion facing individuals is found to contribute little to population variance

should unemployment insurance vary with the unemployment rate theory and evidence we study how the marginal welfare gain from increasing the unemployment insurance ui bene t level varies over the business cycle we do this by estimating how the moral hazard cost and the consumption smoothing bene t of ui vary with labor market conditions which we identify using variation in the interaction of ui bene t levels with the unemployment rate within u s states over time we nd that the moral hazard cost is procyclical greater when the unemployment rate is relatively low by contrast we do not nd evidence that the consumption smoothing bene t varies with the unemployment rate we use these empirical results to estimate the marginal welfare gain and we nd that it is modest on average but varies positively with the unemployment rate jel h5 j64 j65

search for nonwage job characteristics a test of the reservation wage hypothesis previous structural models of job search behavior have been based upon the reservation wage property this article provides estimates of a more general search model that nests models with the reservation wage property the estimates lead to rejection of the reservation wage property the model includes hours of work in the utility function but other nonwage job characteristics can be included as well an experiment based on the estimated parameters indicates that a significant proportion of job offers would be mistakenly predicted to be accepted or rejected under the restrictions implied by the reservation wage property

approximating the effective protection coefficient without reference to technological data when proposals for reform of tariff or subsidy policies are made attempts to predict the effect on incentives are frequently hampered by the need for input output technical data this article develops and illustrates the use of a methodology for approximating effective protection coefficients epcs when such data are unavailable or outdated it derives the equations which approximate the epc from statistical analysis of a cross section of existing epc studies for four agricultural commodities corn cotton rice and wheat informational requirements for computing approximations include the nominal protection coefficients on output and tradable inputs and readily available macroeconomic data these approximation equations perform well in an out of sample test

is chapter 11 costly abstract we examine a sample of 459 firms filing for chapter 11 during the period 1991 1998 and find that our sample firms experience significant improvements in their operating performance during chapter 11 our evidence is consistent with the hypothesis that chapter 11 if anything provides net benefits to bankrupt firms in the cross section firms with higher debt ratios experience greater improvements in operating performance and the complexity of the renegotiation process negatively affects the improvement we find no relationship between chapter 11 outcome and changes in risk adjusted firm value in chapter 11

conflicts of interest and market illiquidity in bankruptcy auctions theory and tests i develop and estimate a model of cash auction bankruptcy using data on 205 swedish firms the results challenge arguments that cash auctions as compared to reorganizations are immune to conflicts of interest between claimholders but lead to inefficient liquidations i show that a sale of the assets back to incumbent management is a common bankruptcy outcome sale backs are more likely when they favor the bank at the expense of other creditors on the other hand inefficient liquidations are frequently avoided through sale backs when markets are illiquid that is when industry indebtedness is high and the firm has few nonspecific assets the problem of designing an efficient bankruptcy law has received considerable attention in the last decade much of the debate has centered around the optimality of two different stylized bankruptcy procedures cash auctions such as the u s chapter 7 code and structured bargaining represented by the u s chapter 11 reorganization code recently several european countries including france germany and great britain have changed their bankruptcy regulation by introducing reorganization procedures similar to chapter 11 at the same time the chapter 11 code has been criticized by academics including baird 1986 emphasizing that the bargaining procedure frequently results in long and wasteful negotiations these critics argue that chapter 11 should instead be replaced with a mandatory auction procedure other researchers such as aghion hart and moore 1992 and shleifer and vishny 1992 have pointed out that a cash auction is likely to suffer from considerable inefficiencies arising from transaction costs and market illiquidity the nature and costs of the chapter 11 procedure are

on the use of expectations data in estimating structural dynamic choice models despite the importance of expectations in models of decision behavior under uncertainty few empirical economists have made use of subjective expectations data in estimating such models assuming that expectations about future behavior accurately portray optimal future behavior conditional on current information it is shown that such data can provide similar information about the decision process as can data on current or retrospective behavior the value of self reported choice expectations is illustrated by using information on respondents expected future occupation in the estimation of a structural dynamic model of teacher career decisions under uncertainty

the gender reservation wage gap evidence from british panel data abstract our findings suggest the existence of a gender reservation wage gap the presence of children particularly pre school age children plays an important role in determining the proportion of this gap that can be explained by individual characteristics

the reservation wage curve evidence from the uk we investigate the relationship between an individuals reservation wage and unemployment in the local area district largely unexplored in the literature this adds to the work which has examined the association between employee wages and unemployment the wage curve

cyclical variation in vacancy durations and vacancy flows an empirical analysis abstract this paper presents an empirical analysis of vacancy durations and vacancy flows in the netherlands over the years 1980 1988 we distinguish vacancies according to required occupation and educational levels we derive estimates of average vacancy durations and we use these to derive estimates of vacancy flows we find that vacancy durations generally increase with the required educational level moreover vacancy flows tend to be more responsive to the business cycle at lower educational levels while vacancy durations are more responsive at higher educational levels the number of vacancies generated by employers has not decreased during the recession in the early 80s which points to a dominant role of the supply of applicants in explaining the cyclical pattern of vacancy durations

the effect of active labor market programs on not yet treated unemployed individuals labor market programs may affect unemployed individuals behavior before they enroll such ex ante effects are hard to identify without model assumptions we develop a novel method that relates self reported perceived treatment rates and job search behavioral outcomes like the reservation wage to each other among newly unemployed workers job search theory is used to derive theoretical predictions to deal with effect heterogeneity and selectivity the effects of interest are estimated by propensity score matching we apply the method to the german active labor market program system using a novel data set including self reported assessments of the variables of interest as well as unusually detailed information on behavior attitudes and past outcomes we find that the system generates a negative ex ante effect on the reservation wage and a positive effect on search effort jel j64 c21 d83 d84

job separation in a non stationary search model a structural estimation to evaluate alternative unemployment insurance systems this paper considers a job search model in which the environment is not constant throughout the unemployment spell and where jobs do not last for ever in this situation reservation wages can be lower than they would be in a model without consideration of such separations but they can initially be higher precisely because of the non constant environment the model is estimated structurally by using spanish data for the period 1985 1996 the main finding is that after controlling for unobserved heterogeneity the unemployment hazard rate is almost flat during the first six months however after this duration the highly decreasing job offer arrival rate comes to be the only significant factor given that acceptance probabilities become equal to one the estimated parameters are used to evaluate different unemployment insurance designs we conclude that a non monotonic pattern in unemployment benefits joint with a tax paid by workers and based on unemployment duration makes this duration 13 2 lower than it currently is in spain copyright 2006 john wiley sons ltd

the information content of wage and duration data in a search model estimates of the parameters of the wage offer density and the offer arrival process of a simple search model are presented in this paper the optimality constraint from the search model is treated as a restriction and its effect on parameter estimates is analysed estimates from wage data alone and estimates from duration data alone can be interpreted as unrestricted estimates while estimates obtained from wage and duration data together can be interpreted as restricted estimates this interpretation allows a test of the optimality constraint which is rejected by the data used estimates reveal a substantial difference in the information contained in wages and the information contained in durations but benefit elasticities are consistent with findings from previous studies

unemployment benefit duration and incentives in britain how robust is the evidence abstract recent years have seen considerable advances in the econometric treatment of micro data in models of unemployment duration this paper examines the evidence from such models concerning the effects of unemployment benefits on incentives to work in britain widely accepted results of a small but significant benefit effect are reproduced using a sample of 1 231 unemployed men however these results are only found when benefit receipt is assumed to follow a hypothetical pattern which is shown to be unrealistic and over generous when more realistic calculations of benefits are used no benefit effect is found the paper also argues that search theory is of little help in determining the choice between competing functional forms and explanatory variables results concerning benefits are shown to be sensitive to the latter