oligopolistic models of investment and employment decisions in a regional context the purpose of this paper is to analyse and estimate employment and investment functions derived from a model of an imperfectly competitive firm with a putty clay technology in which both the level and the spatial allocation of factors of production are determined it will be shown that in general while for a given region the choice of technique is a function of factor prices of that region alone the optimal level of production depends upon a comparison of cost conditions across different regions in estimating the investment and employment function attention is paid to the appropriate way of modelling expected output the empirical application is based on data for southern italy disaggregated by industrial sectors using a fixed effect time series cross section model

interest controls and credit allocation in developing countries planning authorities in less developed countries ldcs often regard financial market intervention as an efficient way to induce gr wth and structural change elaborate regimes of interest ceilings and subsidies have been used to promote industrialization exporting geographic decentralization and other national priorities some of these programs have doubtless achieved their intended objectives however with inflation frequently exceeding controlled interest rates they have also tended to generate an excess demand for loans legally prohibited from price discrimination creditors have been obliged to allocate their portfolios according to various rationing criteria and loan applicants whom creditors find relatively unappealing have been forced to rely heavily on self finance or the unregulated curb markets mckinnon 1973 and shaw 1973 have argued that such rationing regimes lead to serious factor misallocations inappropriate technology choices and unnecessarily low growth rates in the past decade their perspective has been formalized with macro models of financially repressed economies and numerous supportive empirical studies have been reported fry 1982 surveys the literature surprisingly however several fundamental micro issues have received little attention what is the nature of the bias in credit allocation that nonprice rationing induces and how does

wage flexibility in the united states lessons from the past in another paper forthcoming i have contrasted wage setting in the 1920 s with that of the post world war ii period during the 1920 s and early 1930 s the u s bureau of labor statistics published an incomplete sample of reported wage change decisions at the establishment level perhaps the best way to summarize the results is to direct attention to table 1 which presents the distribution of manufacturing wagechange decisions during 1924 and 1925 years in which consumer price inflation was respectively 2 and 4 0 percent on a december to december basis the table shows a wide array of wagechange decisions ranging from cuts of over 20 percent to increases of similar magnitude this dispersion of decisions is remarkable by post world war ii standards moreover the postwar evidence suggests that nominal wage cuts are a rarity even in periods of low inflation when they do occur as in some recent union concessions the cuts result from a painful negotiations process against a background of threatened or actual mass layoffs by the 1920 s many features of modern corporate enterprise were present but unions were of little significance in most sectors including manufacturing the result of a sustained open shop campaign by employers after world war i there was little labor market intervention by government workers resented wage cuts during periods of generalized wage cutting such reductions became important causes of strikes but employers implemented them anyway and when employers did not want to take the blame for wage cuts they used company unions to negotiate reductions robert dunn 1927 pp 21 23 in short in the absence of unions or other institutional constraints the implicit contracts offered by employers in the 1920 s provided substantially more wage flexibility than existed after world war ii the wagesetting mechanisms of the 1920 s did not approach the flexibility of a classical auction market a fact of some comfort to implicitcontract theorists however it is unclear that one needs to go much beyond simple explanations of how wage cuts or even relative wage slippage would lead to worker resentment and management caution

the long run demand for skilled and unskilled labor in colombian manufacturing plants this note estimates the long run demand for skilled and unskilled labor using panel data for colombian manufacturing plants unobserved heterogeneity and measurement error problems that commonly arise in microdata production estimates are examined output measurement errors cause ols estimators to underestimate the output and wage response of employment demand time difference estimators exaggerate the measurement error biases instrumental variable estimates of the output elasticities are 0 89 and 0 76 and own wage elasticities are 0 42 and 0 65 for skilled and unskilled labor respectively the output elasticity is larger for skilled labor whereas the wage elasticity is larger for unskilled labor in virtually every industry

wages and labor management in african manufacturing using matched employer employee data on 10 african countries this paper examines the relationship beween wages worker supervision and labor productivity in manufacturing wages increase with rm size for both production workers and supervisors we develop a two tier model of supervision that can account for this stylized fact and we t the structural model to the data employee data is used to derive a rm speci c wage premium that is purged of the effect of worker observables we nd as trong effect of both supervision and wages on effort and hence on labor productivity labor management in sub saharan africa appears problematic with much higher supervisor to worker ratios than in morocco and a higher elasticity of effort with respect to supervision

real wages and the demand for skilled and unskilled male labour in ghana s manufacturing sector 1991 1995 abstract real wage rates in ghana have fallen substantially over the last 20 years in this paper survey data for the years 1991 1995 is used to assess the changes which have occurred in the 1990s it is shown that the real wage rate for the unskilled has continued to fall factor share equations for skilled and unskilled labour are estimated which show the rise in skilled wages leading to substitution to unskilled labour but no rise in the share of skilled labour in income the own price elasticities of skilled and unskilled labour are estimated at 0 44 and 0 52 respectively

skills investment and exports from manufacturing firms in africa it has been argued that africa will not be able to export manufactures as it lacks the necessary skills without an ability to export there will only be an incentive to invest in the sector if domestic demand grows rapidly comparative data for four african countries the cameroon ghana kenya and zimbabwe shows that in the early 1990s investment in manufacturing remained very low the micro evidence on manufacturing exports is wholly consistent with the macro in suggesting these are for most african countries negligible an exception is zimbabwe the paper uses a longer time series from ghana to ask how skills have impacted on manufacturing investment and exports in the 1990s two dimensions of skills are defined and measured the first is that observable in the education and experience of the workforce the second is the underlying efficiency with which the firm operates the latter is shown to be a significant determinant of both investment and exports these exports are relatively capital intensive unskilled labour intensive exports remain negligible possible reasons for these outcomes are discussed

the price responsiveness of the 1demand for labour by skill british mechanical engineering 1963 1978 it is commonplace in labour economics that employment changes in response to exogenous shifts in wages and aggregate demand depend among other factors on the degree of skill since the pioneering work of oi i962 and rosen i968 little work has been done in investigating this issue in the british context and this paper will attempt to remedy this deficiency we estimate a singular dynamic three skill labour demand system using time series data for british mechanical engineering we then calculate substitution wage and output elasticities for the demand for each kind of labour in such an analysis we must decide on two issues first the specification of technology second the modelling of dynamics in tackling the first issue we rely on the theory of duality samuelson i947 shephard i953 diewert i97i in choosing a model based on the cost function a cost function approach is advantageous for the following reasons first shephard s lemma allows us to move conveniently from any cost function to the cost minimising factor demands that underlie it second the cost function has factor prices as explanatory variables which may be regarded as exogenous at the industry level third the elasticities we seek to estimate are linear functions of the parameter estimates fourth the cost function is homogeneous of degree one in prices but this does not imply constant returns to scale see binswanger i974a the use of a cost function approach permits fewer constraints to be imposed on the production process in choosing the functional form we follow binswanger i974 a b berndt and wood i975 kesselman et al i977 and layard i983 in estimating the translog cost function which was first proposed by christensen et al i97i the generality of this functional form lies first in placing no apriori restrictions on the elasticities of substitution and second in that it may be regarded as a secondorder taylor series approximation to any arbitrary cost function near the equilibrium the factor demand system derived from the translog cost function is static and holds only in equilibrium however the existence of convex adjustments costs and of imperfections involved in obtaining information imply that there is some delay in adjusting employment to its desired level following exogenous wage and

changing effects of monetary policy in the u s evidence from a time varying coefficient var we estimate a time varying coefficient var model for the us economy to analyse i if the effect of monetary policy on output has been changing systematically over time and ii if monetary policy has asymmetric effects over the business cycle we find that the impact of monetary policy shocks has been gradually declining over the sample period 1962 to 2002 as some theories of the monetary transmission mechanism imply in addition our results indicate that the effects of monetary policy are greater in a recession than in a boom

equal pay as a moving target international perspectives on forty years of addressing the gender pay gap this paper provides an overview of the key factors impacting upon the gender pay gap in the uk europe and australia forty years after the implementation of the first equal pay legislation the pay gap remains a key aspect of the inequalities women face in the labour market while the overall pay gap has tended to fall in many countries over the past forty years it has not closed in some countries it has been stubbornly resistant or has even widened in reviewing the collection of papers that make up this special issue we identify four broad themes with which to group the contributions and draw out the explanations for diverse trends theoretical and conceptual debates legal developments and their impacts wage setting institutions and changing employer demands and newly emerging pay inequalities between and within educational and ethnic groups across the four themes we underline how the trends in the gender pay gap capture the dynamism of inequalities as the market power of different groups and stakeholders changes over times three key dimensions emerge from the papers to provide a framework for future research and policy discourse the relationship between litigation and bargaining strategies the interaction between wage setting institutions and new organisational practices and the increasing and range of diversity or equality strands competing for equal treatment we conclude that progress towards closing the gender pay gap will not be easy will require a collective effort of various actors and will not be quick

the effects of inflation and real wages on employment this paper considers the effects of inflation on employment the absence of index linked loans and the possibility that errors are committed in times of inflation lead to a higher probability of bankruptcy during inflation if firms care about bankruptcy this implies a lower level of employment empirical results confirming this are presented and suggest that higher inflation has substantially contributed to the fall in employment in the united kingdom the authors also demonstrate that a negative real wage elasticity is not robust to changes in specification copyright 1987 by the review of economic studies limited

solution and estimation of re macromodels with optimal policy macro models of monetary policy typically involve forward looking behavior except in rare circumstances we have to apply some numerical method to find the optimal policy and the rational expectations equilibrium this paper summarizes a few useful methods and shows how they can be combined with a kalman filter to estimate the deep model parameters with maximum likelihood simulations of a macro model with staggered price setting interest rate elastic output and optimal monetary policy illustrate the properties of this estimation approach

an econometric analysis of changes in the cost and production structure of the trucking industry 1953 1982 a cost function is estimated using a time series cross section database for the trucking industry covering the time period from 1953 through 1982 i e after the implementation of the motor carrier act of 1980 which essentially deregulated the industry two conclusions emerge first similarities between early periods of regulation and deregulation are greater than between early and late periods of regulation second a comparison of the regulated and deregulated cost functions indicates that the heaviest burden of regulation was borne by those firms which faced the highest costs copyright 1988 by mit press

unemployment in britain male unemployment in britain has risen from around 2 per cent in the 1950s to around 17 per cent in 1985 see figure 1 the figures are for male unemployment because there is no consistent series for women 1 even more remarkably unemployment has fallen in only three years out of the last twenty 1973 1978 and 1979 to account for this we need a model that explains both changes in the natural or non accelerating inflation rate of unemployment nairu and deviations from it we use a three equation supply side model centred on the labour market this has two main features the first concerns the determination of employment in the short run the labour demand function that we use cuts through the fruitless debate now raging especially in europe as to whether current unemployment is classical or keynesian according to the classical view employment is too high because real wages are too high according to the keynesian view real wages are not binding and unemployment is high because the product market does not clear with prices too high relative to nominal demand the whole debate is set in the framework of perfect competition yet in perfect competition prices are set by impersonal forces and it is not clear what could possibly stop prices clearing the market it is much more reasonable to think of prices as being set by imperfectly competitive firms existing prices being the best they can think of given the demand they face in this context firms demand for labour will depend on both the real product wage and the level of real aggregate demand this is the demand function we estimate and it conforms both to common sense and to the data however this does not imply that employment can be made to grow without limit by pumping up real demand for in the medium term when price surprises are eliminated our model determines three variables employment real wages and real demand on the basis of three equations an employment equation a price equation and a wage equation thus in the medium term there is a natural level of employment and corresponding to this a natural level of real aggregate demand the second key feature of our model concerns the medium term determination of unemployment in the medium term the planned mark up of wages over prices in wage settlements must be consistent with the mark up of prices over wage costs in employers pricing behaviour for if wage setters try to set real product wages higher than is consistent with employers pricing behaviour this generates ever increasing inflation thus the key to understanding unemployment in the medium term is the behaviour of wage setters if events occur that push them towards too high real wages then unemployment has to rise to offset these influences we shall call these influences wage pressure variables or push factors and they are clearly crucial in understanding unemployment the variables here include the social security system employment protection

asymmetric substitutability theory and some applications economists usually describe goods as being either gross complements or gross substitutes yet what is less known is that one good may be a gross substitute for a second good while the second good is a gross complement to the first good this paper shows the existence of asymmetric gross substitutability and shows some potential examples and applications

exchange rate fiscal and agricultural policies in africa does adjustment hurt the poor abstract trade exchange rate fiscal and agricultural sector policy reforms are the pillars of structural adjustment programs in africa results indicate that trade and exchange rate reforms are associated with a large decline in economic rents and a shift in relative prices that favor the rural and urban poor fiscal reforms have not brought about draconian belt tightening measures although the incidence of public spending particularly in the social sectors and in terms of public sector employment remains far from progressive reduction of export crop taxation contributes to higher incomes for the poor and domestic food crop liberalization has not led to increases in purchase prices of staple commodities for most low income households

the own wage elasticity of labor demand a meta regression analysis firms labor demand responses to wage changes are of key interest in empirical research and policy analysis however despite extensive research estimates of labor demand elasticities remain subject to considerable heterogeneity in this paper we conduct a comprehensive meta regression analysis to re assess the empirical literature on labor demand elasticities building on 942 elasticity estimates from 105 different studies we identify sources of variation in the absolute value of this elasticity heterogeneity due to the theoretical and empirical specification of the labor demand model different datasets used or sectors and countries considered explains more than 80 of the variation in the estimates we further find substantial evidence for the presence of publication selection bias as estimates of the own wage elasticity of labor demand are upwardly inflated

fiscal adjustment and labor market dynamics in an open economy this paper studies the labor market effects of fiscal adjustment in a two sector three good intertemporal framework key features of the model are an informal sector minimum wages unionized labor in the formal economy imperfect labor mobility and public production of intermediate inputs bluxuryq and wait unemployment prevail in equilibrium it is shown that if unions care sufficiently about employment and if the degree of openness is high an increase in the price of government services may reduce unemployment in the steady state a similar result would hold in an efficiency wage setting if the bdisciplinary effectq of unemployment is sufficiently strong d 2004 published by elsevier b v

price and monetary convergence in currency unions the franc and rand zones abstract theory suggests that a currency union will impose significant macroeconomic disciplines on its members the law of one price for example should lead to convergence of price levels at least for what may be regarded as tradeable goods likewise arbitrage would imply convergence of interest rates this paper looks at the two main surviving currency unions the franc and rand zones in africa to see whether and to what extent these generally accepted propositions find confirmation in the data each of the african currency unions has a dominant or core member france in the case of the franc zone and the republic of south africa rsa in the case of the rand zone our focus is on the small members in the periphery and for them there is the additional presumption that inflation and interest rates will be imported from the core despite some rather wide short run divergences and although convergence is slow we find that in the long run consumer price inflation is largely determined in the core the limited evidence available suggests that uncontrolled interest rates also converge to core country levels jel f31

on the estimation of factor substitution in the translog model the conventional approach to computation of the allen partial elasticities of substitution aes in the framewo rk of the translog production function requires to estimate a set of multivariate input demand functions this paper proposes an alternati ve way to compute the aess requiring only to estimate elasticities v ia a truncated single cost share equation value added separability and pairwise factor substitutabilities have both been validated under the nonlinear restriction the achievements of the alternative appro ach are by and large consistent with those of the conventional approa ch and with those in some of the existing studies copyright 1987 by mit press

new keynesian economics and the phillips curve models with sticky prices are an important part of new keynesian economics the author shows that several of the new keynesian models imply a formulation that is similar to the expectations augmented phillips curve of milton friedman and edmund phelps he then presents new estimates of the new keynesian phillips curve the author uses two proxies for price expectations survey based measures and an econometric based measure originally developed by bennett mccallum 1976 overall the results are consistent with the model but the survey based results are more precise suggesting that the surveys may be better measures of actual expectations copyright 1995 by ohio state university press

employment and deadweight loss effects of observed nonwage labor costs i introduction nonwage labor costs consist of several mandated benefits health training accident housing plans as well as several taxes and are intended to increase workers welfare and job security however these benefits tend to come at the expense of reducing employment and deadweight losses to quantify these resulting effects one needs a reliable measure of the employment labor cost elasticity most studies conducted on this subject find low estimated values for this elasticity which contrasts with policy makers enthusiasm to reduce labor costs in this article using a peruvian matched firm workers data set we find that nonwage labor costs reduce employment measured in total hours of work by 17 for white collars and by 53 for blue collars with associated deadweight losses of 10 and 35 of total contributions revenues respectively we also compute employment losses of compliance with mandated employers and workers contributions of 4 for white collars and 12 for blue collars with respective associated deadweight losses of 2 and 6 of contribution revenues these results come from estimating the long run unconditional firm level labor demand function by a procedure that corrects for endogeneity of wages we show that unbiased estimates even using small units such as firm level data require not only that wages are exogenous but also that their unobserved determinants are uncorrelated with the unobserved determinants of labor demand this requirement is not fulfilled in the likely event pointed out by becker 1993 that larger firms are matched with more productive workers consequently an estimation that corrects for endogeneity yields a larger labor cost elasticity of labor demand than one that does not like ordinary least squares ols in the past two decades there has been intensive theoretical and empirical research on the effects of labor market frictions on job creation western european economies characterized by large job security provisions have been the center of attention of this research that has modeled these frictions as adjustment costs in labor demand bentolila and bertola 1990 hamermesh 1989 hopenhayn and rogerson 1993 nickell 1987 rendon 2004 this literature finds that the effects of eurosclerosis that is labor markets with high firing costs are ambiguous in good times sclerotic labor markets create fewer jobs than free labor markets however in bad times sclerotic labor markets reduce job destruction most of the research done in latin america has been done under these guidelines obtaining statistically significant negative effects of job security provisions on employment rates 1 furthermore using country level data for latin america and organization for economic cooperation and development countries heckman and pages serra 2000 found large effects of job security provisions on employment 2 which are robust to several specifications ols random and fixed effects the authors present their results as a strong evidence against freeman s 2000 view that job security regulations mostly affect distribution but not efficiency and advocate the substitution of job security provisions by other mechanisms that provide income security at lower efficiency and inequality costs under a classic labor demand framework and using worker and firm level data this article provides new evidence in the same direction extending the computation of the effects of job security provisions to deadweight losses hamermesh 1993 surveys several studies on the estimation of labor demand and remarks that estimates of the labor cost employment elasticity should be interpreted and compared cautiously depending on the specification adopted capital is an explanatory variable in a short run labor demand estimation it is not in a long run labor demand estimation similarly output is included in the estimation of a conditional labor demand but excluded in the estimation of an unconditional labor demand

the rise in unemployment the rise in unemployment is one of the key world economic problems of our time its causes are complex particularly since although unemployment has risen in most countries the size of the increase differs greatly this wide ranging volume written by leading economists in the field contains detailed studies of the unemployment experience of most of the major developed economies providing an invaluable guide to this global dilemma

the impact of affirmative action on labor demand a test of some implications of the le chatelier principle this paper presents an alternative approach to measuring the impact of affirmative action on firms affirmative action is modeled as a series of hiring quotas if the quotas are binding then a firm subject to affirmative action will operate with greater costs of production have less elastic demand for inputs and be less able to substitute between most inputs the results are consistent with the hypothesis that affirmative action regulations significantly constrain firms behavior own wage elasticities are less elastic and most inputs are less substitutable for constrained firms further affirmative action raises costs by 6 5 percent for firms subject to the program copyright 1992 by mit press

monetary policy trade offs and the correlation between nominal interest rates and real output the authors present a structural model of the u s economy that combines their price contracting specification with a term structure relationship an aggregate demand curve and a monetary policy reaction function the model matches important features of postwar data well and provides a structural explanation of the correlation between real output and the short term nominal rate of interest the authors perform a battery of monetary policy experiments that show that as viewed through the lens of this model monetary policy has struck a good balance recently among competing monetary policy objectives copyright 1995 by american economic association

towards a gendering of the labour market regulation debate gender equality has become an issue in the labour market regulation debate now that evidence suggests that regulation is not always a barrier to good employment performance recent contributions have focused on its impact in exacerbating within workforce inequalities including gender inequality this article reveals that the evidence supporting this proposition is thin and inconclusive and questions the search for a cross national relationship between regulations and gender this approach leaves out of consideration the differences in institutional interactions in specific national contexts and the differences in the institution of gender across time and space this critique is developed through more detailed and context specific analyses of interactions between gender and six areas of labour market regulation the article concludes by arguing that simply introducing a general gender variable into non gendered analyses of labour markets misleads more than informs and distracts from the development of regulations to promote gender equality copyright the author 2011 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

what if the fed had been an inflation nutter a structural rational expectations model of us monetary policy is used to make a counterfactual experiment of a strongly inflation averse federal reserve bank results for us interest rates output and inflation over 1965 1999 are discussed

the ghanaian manufacturing sector 1991 95 firm growth productivity and convergence the removal of high levels of protection combined with substantial real devaluations have changed the environment in which ghanaian manufacturing firms have operated in the 1990s the changes in output composition and productivity which have occurred over this period are examined in this article survey evidence for the growth of the sector is shown to be consistent with data from sales tax returns analysis of the panel survey shows that in a comparative context the rate of job creation in ghana s manufacturing sector is high this rate is highest in medium sized firms small firms have not grown more rapidly than larger firms there has been no underlying growth in technical efficiency and output growth has been matched by a commensurate growth in labour and capital inputs labour productivity differs substantially by firm size due primarily to differences in physical not human capital endowments

economists views about parameters values and policies survey results in labor and public economics specialists in labor economics and public economics at 40 leading research universities provided opinions of policy proposals quantitative best estimates and 95 percent confidence intervals for economic parameters and answers to values questions regarding income redistribution efficiency versus equity and individual versus social responsibility their positions on policy are more closely related to their values than to their estimates of relevant economic parameters average best estimates of the economic parameters agree well with the relevant literature but individual best estimates are usually widely dispersed the individual 95 percent confidence intervals are much narrower than the substantial cross respondent variation in estimates would warrant

employment adjustment in uk manufacturing this analysis differs from previous studies of labor demand in its explicit inclusion of the costs to the firm of adju sting its workforce these costs include institutional factors such a s employment protection legislation and unions and market factors su ch as the degree of slack in the labor market two questions are addr essed what is the quantitative impact of these forces and does their inclusion improve the fit of a labor demand function the results sh owed these factors to have a strong influence on the rate of hiring f iring and to improve significantly on conventional labor demand funct ions copyright 1988 by royal economic society

a nonhomothetic generalized leontief cost function based on pooled data factor demand studies of komiya ozaki lau and tamura based upon detailed cross section data on individual production units have found that the nonhomothetic factor limitational nht fl demand system a nonhomothetic version of the leontief fixed coefficient model well explains the data these results however have mostly been ignored in the current literature on flexible functional forms and in fact none of the well known nonhomothetic flexible cost function forms includes the nht fl model i introduce a new nonhomothetic form of the generalized leontief gl cost function which includes the nht fl model as a special case empirical application to a pooled data set of the japanese iron steel industry indicates that his form is superior to the translog diewert wales gl and berndt khaled gl forms copyright 1990 by mit press

the impact of exchange rate volatility on plant level investment evidence from colombia abstract we estimate the impact of exchange rate volatility on firms investment decisions in a developing country setting employing plant level panel data from the colombian manufacturing census we estimate a dynamic investment equation using the system gmm estimator developed by arellano and bover 1995 and blundell and bond 1998 we find a robust negative impact of exchange rate volatility constructed either using a garch model or a simple standard deviation measure on plant investment consistent with theory we also document that the negative effect is mitigated for establishments with higher mark up or exports and exacerbated for lower mark up plants with larger volume of imported intermediates

unemployment getting the questions right in my opinion the form and conception of this conference exemplifies the right instinct for modern macroeconomics there is a fact a big unmistakable unsubtle fact essentially everywhere in the modern industrial capitalist world unemployment rates are much higher than they used to be two or three decades ago why is that if macroeconomics is good for anything it ought to be able to understand and explain that fact we should be able to produce a fairly convincing analytical account of the occurrence and persistence of unusually high unemployment rates you might think that to be a mere commonplace to what other sort of end would anyone organize a conference my experience however is that most high powered academic conferences are stimulated by purely technical developments or less often by ideological or political promotion rather than by the need to deal with an outstanding fact i do not blame anyone for this state of affairs we may not be blessed with many significant observations too big to be quibbled over and technical innovations do need to be thrashed out by experts anyway it is good to be faced by a brute fact that needs explanation it is what macroeconomics ought to be about i compliment the organizers also on a second aspect of the agenda the country by country organization of the papers we can all hope to learn something from cross country comparisons one of the few good ways we have to test analytical ideas is to see whether they can make sense of international differences in outcomes by appealing to international differences in institutional structure and historical environment the right place to start is within each country separately studied by someone who knows the peculiarities of its history and its data you might think that this too ought to be obvious but in fact the usual approach is just the opposite more often than not we fail to take institutional differences seriously one model is supposed to apply everywhere and always each country is just a point on a cross section regression or one among several essentially identical regressions leaving only grumblers to worry about what is exogenous and what is endogenous and whether simple parametrizations do justice to real differences in the way the economic mechanism functions in one place or another i have no way of knowing whether this organized effort will get anywhere in explaining high unemployment but it seems to be set up to give itself the best chance for better or worse probably for the better theoretical and empirical work are closely intertwined in macroeconomics scratch a macro theorist and you find a casual econometrician scratch a macro econometrician and you find a casual theorist usually you do not have to scratch very hard thus the discussion of the issues central to the conference has already hardened into certain characteristic forms there are questions already lying on the table that the individual country papers will be trying to answer i suspect that some

the rise in unemployment a multi country study one of the most remarkable features of recent economic history has been the remorseless rise in unemployment throughout the industrialized countries however while the trend to higher unemployment is universal the experience of individual countries also differs widely the increase is especially marked within the european community where unemployment rates rival those reached in the interwar years by contrast in the scandinavian countries and japan unemployment is lower and has risen very much less experience in the united states lies somewhere between these extremes and in the last few years unemployment there has fallen sharply

dynamic factor demands and the effects of energy price shocks a dynamic model is used to understand how sharp changes in energy prices affect investment behavior employment and energy use the authors discuss the theory behind their model selection model specifications estimation methods and data list parameter estimates and elasticities for the selected model and describe the simulations they conclude that 1 the data strongly reject the hypothesis of constant returns to scale within their specification of aggregate production 2 the data indicate adjustment costs on labor are small and 3 their results help reconcile some of the conflicting estimates of energy demand elasticities appearing in recent literature 23 references 3 figures 3 tables

explaining african economic performance africa has had slow growth and a massive exodus of capital in many respects it has been the most capital hostile region we review and interpret the aggregate level and microeconomic literatures to identify the key explanations for this performance there is a reasonable correspondence of the two sets of evidence pointing to four factors as being important these are a lack of openness to international trade a high risk environment a low level of social capital and poor infrastructure these problems are to a substantial extent attributable to government behaviour and the paper includes a review of the political economy literature which addresses that behaviour

wage rigidity micro and macro evidence on labor market adjustment in the modern sector aggregate data on wages and employment may provide misleading indicators of labor market conditions they may suggest inappropriate wage policies in the face of rising unemployment experienced in many developing countries during the 1980s such increases in unemployment are often attributed to wage rigidities a cursory review of aggregate data for the modern sector in cote d ivoire would support this view suggesting that employment declined during the 1979 84 recession due to an increase in real wages examination of disaggregated data from two labor force censuses of the modern sector however shows that real wages declined for specified classes of labor the work force was characterized by greater education training and experience workers with a given level of attributes received a lower real wage by the end of the recession than before it despite this drop in real wages employment in the modern sector declined

nonhomotheticity and technological bias in production this paper develops an approach to estimating nonhomotheticity and technological bias within the class of nonhomothetic ces production functions the model is applied to cross section firm level data covering seven industries in mexico brazil colombia and four central american countries for the period 1970 74 positive nonhomotheticity higher capital intensity for larger plant size given factor price ratios is found in six industries other results are that once nonhomotheticity is accounted for technological bias is not predominantly capitalusing and equality of capital intensity between transnational and domestic firms is pervasive

the cyclical sensitivity of wages the changing cyclical behavior of wages and prices 1890 1976 cross country and cross temporal differences in inflation responsiveness

employment and technological innovation evidence from u k manufacturing firms this article uses british firm level panel data on actual innovative activity drawn from different statistical sources to identify the effect of technical change on jobs previous work tends to find positive associations of proxies for technical change and employment but such studies suffer from various statistical drawbacks in this study even when one controls for fixed effects dynamics and endogeneity innovations have a positive and significant effect on employment which persists over several years there seems to be little direct role for spillover effects from industry innovations or any role for industry wages or union power

wages and unemployment in an urban african labour market this paper argues that urban labor markets in africa exhibit a wage curve similar to those found in the united states britain canada and other developed countries drawing on data from the ivory coast the author finds that urban wages are depressed by higher levels of unemployment this result is robust to changes in model specification and level of aggregation it is consistent with the model of wage determination developed by c shapiro and j stiglitz 1984 and d blanchflower and a oswald 1995 but not with claims that urban wages are invariant to unemployment copyright 1996 by royal economic society

active labor market policy evaluations a meta analysis this article presents a meta analysis of recent microeconometric evaluations of active labour market policies we categorise 199 programme impacts from 97 studies conducted between 1995 and 2007 job search assistance programmes yield relatively favourable programme impacts whereas public sector employment programmes are less effective training programmes are associated with positive medium term impacts although in the short term they often appear ineffective we also find that the outcome variable used to measure programme impact matters but neither the publication status of a study nor the use of a randomised design is related to the sign or significance of the programme estimate

australia s gender pay equity legislation how new how different what prospects australia s equal pay laws have recently been renovated through the workplace gender equality act 2012 and the fair work act 2009 in light of these changes it is timely to ask how effective australia s legislative approach is likely to be for progressing pay equity this article presents an analysis of australia s current equal pay provisions assessing their potential on the basis of their operation to date and through recent experience in canada and the uk although focused on outcomes we argue that australia s new workplace based mechanism under the workplace gender equality act may prove relatively ineffective in both diagnosing and remedying pay inequality in comparative perspective the fair work act provisions provide significant capacity to improve pay equity across large sectors of the labour market to date the use of these provisions point to some practical limitations in realising this potential moreover the inadequate legislative and policy integration between labour market sectoral workplace and individual approaches together with a wavering political commitment to equality legislation generally suggest gender pay inequity will remain a persistent feature of australian employment

wage differentials and moonlighting by civil servants evidence from cote d ivoire and peru as part of their efforts to reduce fiscal deficits many governments have allowed public sector salaries to erode often on the assumption that government workers are overpaid vis a vis those in the private sector that assumption is tested by analyzing public private pay differentials in cote d ivoire and peru switching regressions models are estimated using full information maximum likelihood fiml and the results are compared to those obtained using ordinary least squares ols techniques the ols yields seriously biased estimates of the pay structure suggesting that public wages are higher than private wages the fiml estimates show the opposite our probit analysis also shows that the wage disadvantage of civil servants is a determinant of the greater prevalence of moonlighting among public than private employees the evidence suggests that reductions in employment rather than pay while being less palatable in the short term will be more effective in the long run

labor and investment demand at the firm level a comparison of french german and u s manufacturing 1970 79 we investigate how labor and investment demand at the firm level gross as well as net and replacement investment separately differs in french german and u s manufacturing and has changed since the 1974 75 crisis we use three consistent panel data samples of large firms for 1970 79 and rely on simple models of the accelerator profits type we find that the accelarator effects and the profits effects did not vary much between 1970 73 and 1976 79 and were quite comparable in the three countries the former being of a more permanent nature and the latter more transitory to a large extent these effects account for the important changes and differences in labor and investment demand between the two subperiods and across the three countries

implicit contracts a survey 7mplicit contracts resolve the distribution of uncertainty and utilization of specific human capital between risk averse workers and less risk averse firms incomplete contracts are required to yield involuntary layoffs in contract markets otherwise contracts are efficient and pareto optimal by construction there is a close relation between contract theory and neoclassical labor market theory contracts smooth consumption but increase the volatility of labor supply and labor utilization to demand disturbances because contractural insurance eliminates the income effects of socially diversifiable risks this result is similar to the intertemporal substitution hypothesis however the price mechanism in a contract is substantially different contracts embody a nonlinear two part pricing scheme the lump sum part allocates the income consumption consequences of risks and the marginal pricing part allocates production and labor utilization this implicit pricing mechanism is in all respects flexible though the observed average hourly wage combines both parts and may give the outward appearanceof rigidity furthermore the observed average wage rate in a contract does not reflect marginal conditions necessary for structural econometric estimation indivisibilities appear necessary to account for the split between work sharing and layoffs contracts with private information are also considered in the nonlinear pricing context this abstract was borrowed from another version of this item

common elements of efficiency wage theories what relevance for developing countries conventional labour economics argues that wages are determined by supply and demand and that the typical firm is a wage taker efficiency wage theories state that wages are endogenous to a firm s own optimising behaviour and that the wage rate determines the labour productivity these theories raise questions regarding the effectiveness of expenditure reducing and expenditure switching adjustment policies this article reviews the theoretical and empirical literature on efficiency wages it examines alternative models highlights the emphasis of empirical research towards industrial countries and points out the need for a test based on the major implications of the theory

the effects of profit sharing on employment wages stock returns and productivity evidence from uk micro data this paper provides evidence based on u k firm level data that 1 the authors cannot reject the view that profit sharing firms view the total level of remuneration as the marginal cost of labor which is contrary to much of weitzman s analysis 2 there is some support for the popular view that profit sharing raises total remuneration and can therefore be inflationary and 3 the introduction of profit sharing does lead to higher productivity but this combined with the employment reducing consequences of 2 leads the authors to conclude that the net employment effect is small and uncertain copyright 1990 by royal economic society