the long term effects of ui extensions on employment the majority of papers analyzing the employment effects of unemployment insurance ui benefit durations focus on the duration of the first unemployment spell in this paper we make two contributions first we use a regression discontinuity design to analyze the long term effects of extensions in ui durations these estimates differ from standard estimates in that they incorporate differences in ui benefit receipt and employment due to recurrent unemployment spells second we derive a welfare formula of ui extensions that incorporates recurrent nonemployment spells

wage inflation and the post 1991 duration puzzle abstract we find that the unusually low wage inflation in the u s after 1991 can be traced to unusually high rates of mean unemployment duration given the level of the unemployment rate further the divergence of the duration and unemployment rate time series after 1991 can be partially explained by a rise in the fraction of the unemployed who were older job losers this change in the composition of the unemployed is what we might expect from widespread corporate downsizing

the british low wage sector and the employment prospects of the unemployed abstractare low wages a way for the unemployed to switch to higher paying jobs using data from the british household panel survey the labour market dynamics of unemployed low paid and higher paid employed men are analysed moreover the respective un employment duration and occupational skill level are accounted for results show that in general low wages significantly reduce the risk of future unemployment and increase the chances of ascending the salary ladder especially in the case of long term unemployment 360 days furthermore the occupational skill level has a substantial influence on the upward mobility of low paid jobs individuals working in the initial period in a low paid and higher skilled occupation have on average an 11 percentage points higher probability of entering higher pay compared to when working in a low paid and low skilled occupation

long horizon mean reverting stock prices revisited this paper reexamines long horizon stock returns and finds that previous work overstates the evidence of mean reversion the overstatement is largely due to the implicit weighting of ordinary least squares tests which place more weight on the depression and world war ii observations which have both large error variances and stronger mean reverting tendencies additionally the reliance on asymptotic statistics and the improper focus on only the most negative estimates of mean reversion contribute to the overstatement using generalized least squares randomization tests on the 1926 to 1987 period the random walk cannot be rejected for value or equally weighted real returns at any of 10 return horizons or by joint tests over all 10 horizons simultaneously additionally the random walk cannot be rejected for the extended 1871 to 1987 period

is there a threat effect of labour market programmes a study of almp in the danish ui system this article focuses on unemployed individuals reaction to compulsory labour market programmes prior to participation in denmark after having received ui benefits for a given period of time continued benefits are made conditional on participation in a labour market programme i estimate individuals reaction to compulsory programmes using legislative changes in the duration of benefits period as identification i find that compulsory programmes do indeed motivate individuals to find employment prior to participation the effect is large and is even comparable in size to the effect of benefits exhaustion found in studies of american ui systems

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

matching with interviews abstract this paper explores how interviews affect the matching process when worker productivity is private information wages are determined by a single round of strategic bargaining after the worker is interviewed the implications of this hiring process for the efficiency of matching and the incidence and severity of statistical discrimination are considered the better are firms at identifying productive workers the worse the average quality of the unemployment pool so interviewing tends to slow down matching for every one multiple pareto rankable equilibria are possible such that any social group in a bad equilibrium faces stricter hiring standards longer spells of unemployment and lower welfare

job queues and wages this paper uses job applications data to investigate the relationship between job queues and wage differentials the main finding is that openings for jobs that pay the minimum wage attract more job applicants than jobs that pay either slightly more or slightly less than the minimum wage this spike in the job application rate distribution suggests that ex ante rents generated for employees by an above market level minimum wage are not completely dissipated by reductions in nonwage benefits in addition we find that highly unionized firms large firms and firms in high wage industries tend to receive relatively many job applicants for openings

formalizing the informal sector in a changing south africa small scale manufacturing on the witwatersrand abstract this paper examines a recent south african policy initiative aimed at assisting small mainly informal black traders and manufacturers by providing facilities assistance and a comparatively deregulated work environment in desegregated industrial parks outside the black urban townships the impact on these businesses has been generally positive thus far with some dramatic improvements recorded it is necessary however to understand these efforts to semi formalize the informal sector within the broader south african context during the 1980s the state and major capitalist interests sought to modernize apartheid not least by promoting the evolution of a sizable black middle class this process is currently becoming even more crucial as the struggle to secure the continued dominance of capitalist relations of production in postapartheid south africa intensifies

the effects of unemployment compensation in general equilibrium with search unemployment it is shown that when the effects of an increase in unemployment subsidies are studied in a general equilibrium framework unemployment increases far less than in a partial partial model in fact the result may very well be a decrease in unemployment if the general equilibrium forces are strong enough in the model used in this paper an increase in unemployment compensation unambiguously decreases the rate of unemployment copyright 1990 by the editors of the scandinavian journal of economics

an empirical examination of the sources of changes over time in the job finding rate using reservation wages and rejected wage offers we consider a structural dynamic job search model where nonstationarity originates from the change over time in the benefit level the job offer arrival rate and the wage offer distribution the model is estimated on the french sample of the echp taking advantage of direct observation of reservation wages rejected job offers and associated rejected wages we find that the offered wages deteriorate rapidly 13 8 over six months 19 2 over one year and 30 over two years and that changes in the wage offer distribution are the unique source of negative duration dependence in the hazard

the effects of exchange rate risk on economic performance the turkish experience this study examines the effects of real exchange rate risk on the economic performance for an emerging small open economy turkey when the ratios of the total foreign exchange liabilities of the central bank of the republic of turkey cbrt to 1 total reserves 2 the cbrt s reserves and 3 the cbrt s total turkish lira liabilities are taken proxy of exchange rate risk the empirical evidence suggests that the increase in exchange rate risk causes a depreciation in the real exchange rate an increase in prices and a decrease in output

does unemployment compensation affect unemployment duration abstract we use a flexible hazard rate model with unrestricted spell duration and calendar timeeffects to analyse a dataset including all norwegian unemployment spells during the1990 s the dataset provides a unique access to conditionally independent variation inunemployment compensation we find that a marginal increase in compensation re duces the escape rate from unemployment significantly irrespective of business cycleconditions and spell duration the escape rate rises sharply in the months just prior tobenefit exhaustion while men are more responsive than women with respect to mar ginal changes in compensation women are most responsive with respect to benefitexhaustion keywords unemployment spells business cycles unemployment compensation non parametric duration analysis jel classification c41 j64 the ragnar frisch centre for economic research oslo we wish to thank the re search council of norway for financial support and christian brinck harald goldstein costas meghir espen moen steinar strom rolf aaberge and three anonomyous referees for helpful comments cor respondence to knut roed the ragnar frisch centre for economic research gaustadalleen 21 0349oslo norway e mail knut roed frisch uio no

state dependence individual heterogeneity and the choice of employment status evidence from korea abstractfocusing on the individual heterogeneity this article examines the causes of an individual s employment status choice and the extent of state dependence in the korean labour market we estimate a dynamic multinomial logit model using the panel data drawn from the first to fifteenth wave of the korean labour and income panel study the results suggest the presence of state dependence individual characteristics and growth background have a significant effect on the choice of employment status gender is still an important employment factor males are more likely to be employed and this gender effect is highest for regular employment re one s educational attainment and age operate in opposite directions that is educational attainment age has a positive negative impact on the choice of a regular job and a negative positive impact on the choice of a non regular job contrary to our expectations a wealthy family background reduces the probability of individuals being wage workers and rais

are us stock index returns predictable evidence from automatic autocorrelation based tests this article re examines the evidence of return predictability for three major us stock indices using two recently developed data driven tests namely the automatic portmanteau box pierce test and the wild bootstrapped automatic variance ratio test in tracking the time variation of return predictability via rolling estimation window we find that those periods with significant return autocorrelations can largely be associated with major exogenous events theoretically the documented time varying nature of predictable patterns is consistent with the adaptive markets hypothesis

intertemporal labour supply with search frictions starting in the 1970 s wage inequality and the number of hours worked by employed u s prime age male workers have both increased we argue that these two facts are related we use a labour market model with on the job search where by working longer hours individuals acquire greater skills since job candidates are ranked by productivity greater skills not only increase worker s productivity in the current job but also help the worker to obtain better jobs when job offers become more dispersed wage inequality increases and workers work longer hours to obtain better jobs as a result average hours per worker in the economy increase this mechanism accounts for around two thirds of the increase in hours observed in data part of the increase is inefficient since workers obtain better jobs at the expense of other workers competing for the same jobs copyright oxford university press

a search for long memory in international stock market returns abstract a major issue in financial economics is the behavior of stock returns over long as opposed to short horizons this study provides empirical evidence from the perspective of long memory analysis international evidence on long memory is explored using the morgan stanley capital international stock index data for eighteen countries two tests that are robust to short term dependence and conditional heteroskedasticity are employed a modified rescaled range test and a fractional differencing test the empirical results in general provide little support for long memory in international stock returns the findings are not sensitive to inflation adjustments in stock returns data sources and statistical methods used

efficient market hypothesis evidence from a small open economy this article studies the efficient market hypothesis for the istanbul stock exchange national 100 isen 100 price index within the lumsdaine and papell two structural breaks unit root test framework the main finding of the article shows that the isen 100 index is characterized by a unit root with two structural breaks which is consistent with the efficient market hypothesis in addition the article applies the augmented dickey fuller test runs test and the variance ratio test to test the weak form efficiency of the isen 100 the analyses are repeated for three sub periods delineated in view of the endogenously determined break points

duration dependent unemployment insurance payments and equilibrium unemployment this paper develops a model of equilibrium unemployment with duration dependent unemployment insurance ui payments as the government does not observe job offers there is a moral hazard problem because the option of receiving further ui payments raises the job seeker s value of remaining unemployment extending the duration of ui payments while reducing the level of payments to hold total generosity constant results in higher negotiated wages simulations suggest that a generosity neutral switch from a six month ui scheme to a one year scheme has small effects but a switch to an indefinite scheme has a large impact on wages and unemployment

extensive search intensive search and hiring costs new evidence on employer hiring activity this paper presents recent evidence on employer search to fill a position a 1982 employer survey sponsored by the national institute of education and the national center for research in vocational education provides the basis for analyzing employer search and hiring costs the paper examines the effects of such factors as employer size dismissal costs unionization on the job training adjustment costs capital and labor market conditions on intensive employer search extensive employer search and hiring costs intensive employer search is measured by the average number of hours the employer spends recruiting screening and interviewing per applicant extensive search is measured by the number of applicants seen per applicant interviewed and the number interviewed per employment

labor force participation and monetary policy in the wake of the great recession in this paper we provide compelling evidence that cyclical factors account for the bulk of the post 2007 decline in the u s labor force participation rate we then proceed to formulate a stylized new keynesian model in which labor force participation is essentially acyclical during normal times that is in response to small or transitory shocks but drops markedly in the wake of a large and persistent aggregate demand shock finally we show that these considerations can have potentially crucial implications for the design of monetary policy especially under circumstances in which adjustments to the short term interest rate are constrained by the zero lower bound

public policy in a model of long term unemployment this paper considers a model in which the unemployed have to incur a cost to maintain their skills if whether they have done so is not observable the economy has multiple equilibria supported by self fulfilling beliefs on the part of the employers one of these equilibria which we argue is more likely to arise has equilibrium discrimination against the long term unemployed who in response decide to let their skills atrophy as a result in this equilibrium the exit probabilities from unemployment are duration dependent it is shown that equilibrium discrimination survives even if workers are allowed to accept negative wages at the beginning of the employment relation since this equilibrium is highly inefficient constructive government action in the form of positive discrimination subsidies and labour market policies are suggested to correct the market failures however subsidies and positive discrimination by private firms are shown not to have beneficial effects labour market policies in the form of retraining of the long term unemployed are beneficial but reduce the likelihood of a switch to the pareto preferred equilibrium the most useful policy appears to be a limited form of positive discrimination by a government sector

frictional unemployment on labor flow networks abstract we develop an alternative theory to the aggregate matching function in which workers search for jobs through a network of firms the labor flow network the lack of an edge between two companies indicates the impossibility of labor flows between them due to high frictions in equilibrium firms hiring behavior correlates through the network generating highly disaggregated local unemployment hence aggregation depends on the topology of the network in non trivial ways this theory provides new micro foundations for the beveridge curve wage dispersion and the employer size premium we apply our model to employer employee matched records and find that network topologies with pareto distributed connections cause disproportionately large changes on aggregate unemployment under high labor supply elasticity

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

efficiency of the turkish stock exchange with respect to monetary variables a cointegration analysis in this study we test the semistrong form of the efficient market hypothesis in turkey by using the recently developed techniques in time series econometrics namely unit roots and cointegration the long run relationship between stock prices and inflation is investigated by assuming the possible existence of a proxy effect conclusions are made as to the efficiency of the turkish stock exchange and its possible implications for investors to our knowledge this is among the pioneering studies conducted in an emerging market that uses an updated econometric methodology to allow for an analysis of long run steady state properties together with short run dynamics

persistence and volatility of beveridge cycles this paper aims to explain the magnitude and cyclical behavior of the fluctuations in unemployment and vacancies adding demand externalities to an otherwise standard search and matching model reduces the need for exogenous shocks in explaining these fluctuations under plausible parameter values the equilibrium dynamics include a stable limit cycle that resembles the empirically observed counterclockwise cycles around the beveridge curve quantitatively these endogenous beveridge cycles can explain half of the volatility and almost all persistence of unemployment without any exogenous forces avoiding the amplification and propagation problems of the standard model

the anatomy of unemployment dynamics abstract this paper examines the relation between individual unemployment durations and incidence inflow size on the one hand and the time varying macroeconomic conditions in the economy on the other we develop a model for the analysis of aggregate unemployment incidence and duration data and estimate this model on quarterly french data over the period 1982 1994 stratified by sex we find upward trends in both incidence and durations the former is relatively important for females the latter for males male incidence and durations are countercyclical with only a minor role for cohort effects on durations in contrast female cohorts entering at the top of the cycle have relatively short unemployment spells and the female incidence is if anything procyclical there is strong seasonal variation in particular in the incidence finally we find relatively small non monotonic individual duration dependence in the first six quarters of unemployment unobserved heterogeneity explains the observed negative duration dependence at these durations we provide some evidence that negative individual duration dependence and not heterogeneity is important at higher durations

duration dependence in the exit rate out of unemployment in belgium is it true or spurious on the basis of aggregate data for the early 1990s we analyse the determinants of unemployment duration for laid off male workers in wallonia belgium our results indicate that if ranking in recruitment occurs the standard mixed proportional hazard specification can be too restrictive leading to an overstatement of the extent of true negative duration dependence we conclude that negative duration dependence is largely spurious we also decompose the time variation of the hazard in unobserved compositional and direct cyclical and seasonal effects we find counter cyclical variation in the quality of young workers but none for the prime aged copyright c 2004 john wiley sons ltd

urban attributes and wage disparities in brazil a multilevel hierarchical model fontes g g simoes r f and hermeto camilo de oliveira a m urban attributes and wage disparities in brazil a multilevel hierarchical model regional studies this paper examines the effects of urban scale and productive structure on individual wage levels in brazilian cities and metropolitan areas in 1990 and 2000 the estimation through hierarchical linear models enabled the inclusion of variables in different levels individual and urban and the decomposition of total wage variance the results showed significant and huge wage disparities among workers who share similar personal attributes but live in different regions of the country in addition the disparities persisted from 1990 to 2000 finally the results provided evidence that local economic and labour market factors played an important role in wage determination

ethnic discrimination in hiring labour market tightness and the business cycle evidence from field experiments several studies using observational data suggest that ethnic discrimination increases in downturns of the economy we investigate whether ethnic discrimination depends on labour market tightness us

ranking unemployment duration and wages it explores the implication of one central assumption when firms receive multiple acceptable applications they hire the worker who has been unemployed for the least amount of time this assumption ranking is contrasted with the assumption of random hiring no ranking by embodying this assumption in a model of the labour market with job creation destruction and matching the joint behaviour of unemployment the distribution of unemployment durations and wages are characterized the implication that the re employment prospects of employed workers were they to become unemployed are better than those of the currently unemployed appears to have been an important feature of european unemployment experience in the 1980 s this paper examines the effects of the composition of unemployment on wage determination it explores one central assumption when firms receive multiple acceptable applications they hire the worker who has been unemployed for the least amount of time we refer to this assumption as ranking and contrast it throughout to the assumption of random hiring or no ranking by embodying this assumption in a model of the labour market with job creation destruction and matching we characterize the joint behaviour of unemployment the distribution of unemployment durations and wages ranking has a number of important implications first in addition to the obvious result that the exit rate from unemployment is a decreasing function of duration we show that the effect of duration is stronger the higher the rate of unemployment second with the wage depending on the distributions of prospective unemployment durations the presence of long term unemployed per se has little effect on wages third looking at the relation between the wage and the aggregate level of unemployment and comparing ranking to the case of no ranking the wage moves less with the level of unemployment but more with the change in unemployment put simply ranking and no ranking models show exactly the same aggregate unemployment slightly different long run responses of wages to unemployment and sharply different wage dynamics the paper is organized as follows section i characterizes the matching process and derives a matching function based on an urn ball process with vacancies as urns and applications by unemployed workers as balls thus the distribution of applications per vacancy depends on aggregate unemployment and vacancies vacancies with at least one acceptable application are filled when a vacancy receives more than one acceptable application firms use a rule to choose among applicants thus the rule determines who is hired but does not affect the number of hires section ii uses this matching function in a model of the labour market with continual job creation and destruction and characterizes the equilibrium values of unemployment vacancies and hires

skill accumulation in the market and at home abstract an evolving outside option is introduced into a stochastic directed search model with skill loss during non employment using multi spell data from the sipp i show that average reemployment wages are only mildly sensitive to unemployment duration while the job finding probability is highly sensitive to duration with evidence of true duration dependence in both variables though untargeted the model produces a quantitatively accurate decline in the job finding probability and starting wage improving over a model with a fixed outside option the addition of aggregate shocks leads to an nonlinear response of the unemployment and participation rates during and after recessions with more severe recessions resulting in stronger hysteresis

monetary policy and efficiency in over the counter financial trade we develop a monetary model that incorporates over the counter otc asset trade after agents have made their money holding decisions they receive an idiosyncratic shock that affects their valuation for consumption and hence for the unique liquid asset namely money subsequently agents can choose whether they want to enter the otc market in order to sell assets and thus boost their liquidity or to buy assets and thus provide liquidity to other agents a unique feature of our model is that inflation affects welfare not only through the traditional channel i e through determining equilibrium real balances but also through influencing agents entry decisions in the financial market we use our framework to study the effect of inflation on welfare asset prices and otc trade volume in contrast to most monetary models which predict a negative relationship between inflation and welfare we find that inflation can be welfare improving within a certain range because it mitigates a search externality that agents impose on one another when they make their otc market entry decision

the effects of unemployment and underemployment on employment opportunities results from a correspondence audit of the labor market for college graduates the authors use data from a resume audit to estimate the impact of unemployment and underemployment on the employment prospects of recent college graduates they find no statistical evidence linking unemployment spells of different durations to employment opportunities by contrast college graduates who are underemployed have callback rates that are 30 lower than those of applicants who are adequately employed the null effects associated with unemployment and the adverse effects associated with underemployment are robust across cities with relatively tight and loose labor market conditions internship experience obtained while completing one s degree substantially reduces the negative effects of underemployment the data support the proposition that employers view underemployment as a strong signal of lower expected productivity

the causal nexus between oil prices and equity market in the u s a regime switching model abstract the aim of this paper is to analyse the causal link between monthly oil futures price changes and a sub grouping of s p 500 stock index changes the causal linkage between oil and stock markets is modelled using a vector autoregressive model with time varying parameters so as to reflect changes in granger causality over time a markov switching vector autoregressive ms var model in which causal link between the series is stochastic and governed by an unobservable markov chain is used for inferring time varying causality although we do not find any lead lag type granger causality the results based on the ms var model clearly show that oil futures price has strong regime prediction power for a sub grouping of s p 500 stock index during various sub periods in the sample while there is a weak evidence for the regime prediction power of a sub grouping of s p 500 stock indexes the regime prediction non causality tests on the ms var model show that both variables are useful for making inference about the regime process and that the evidence on regime prediction causality is primarily found in the equation describing a sub grouping of s p 500 stock market returns the evidence from the conditional non causality tests shows that past information on the other series fails to improve the one step ahead prediction for both oil futures and stock returns

income taxation in a frictional labor market a new model of wage dispersion is used to examine welfare aspects of income taxation the model retains the dynamics of wage posting models while exogenizing search effort therefore allowing more insight into policy issues the results highlight effects that standard analyses do not take into account the optimal income tax should depend on an incidence effect between workers and firms this incidence effect arises from firms trying to lower wages as much as possible an employment tax proves in certain cases to be the best method to encourage labor force participation

unemployment history and frictional wage dispersion abstract recent evidence shows that baseline search models struggle to match the observed levels of wage dispersion this paper studies a random matching search model with human capital losses during unemployment wage dispersion increases as workers accept lower wages to avoid long unemployment spells the model explains between a third and half of the observed residual wage dispersion when adding on the job search the model accounts for all of the residual wage dispersion and generates substantial dispersion even for high values of non market time the paper thus addresses the trade off between explaining frictional wage dispersion and the cyclical behavior of unemployment