Download or read book Essays on Frictions in the Labour Market and Macro Economics written by Gabriele Cardullo and published by . This book was released on 2007 with total page 168 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on International Macroeconomics with Labor Market Frictions written by C. Kim and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Labor Market Frictions and Macroeconomic Welfare written by Guanyi Yang and published by . This book was released on 2018 with total page 108 pages. Available in PDF, EPUB and Kindle. Book excerpt: Chapter 2 studies frictions in firm's hiring and firing decisions in an environment with dual labor markets. More firms execute employment decisions in two labor markets: a permanent (regular) market with firing costs and a frictionless temporary labor market. This paper studies the employment response of firms to heightened idiosyncratic risk and firing rigidity. Rising firing rigidity in the regular market and heightened risks reduce employment and output, which creates large welfare loss. By introducing a temporary labor market, firms switch from regular employment to temporary employment and reduce total employment loss. Thus, temporary employment creates a buffer for firms' employment decisions and for the economy's welfare. However, it cannot fully compensate the efficiency cost from rising firing cost and risk.

Download or read book Essays on the Macroeconomics of Labor Market and Firm Dynamics written by Felicien Jesugo Goudou and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis contributes to understanding labor market frictions and how these frictions impact macroeconomic aggregates such as unemployment and productivity. It also critically examines environmental policies such as carbon taxes and green financing. The first chapter examines how non-compete contracts signed between employers and employees affect unemployment, productivity, and welfare in the economy. These contracts stipulate that the employee, while under contract, cannot work for a competing employer for a specified period, typically ranging from one to two years after separation from their initial employer. This type of contract is widespread in the United States and affects at least one in five employees in the country. Results show that a high enforceable incidence of these contracts can compress wages and generate unemployment. This is primarily due to the fact that some individuals who have signed such contracts face difficulties in finding new employment after separating from their initial job. The article proposes reducing the duration of the post-employment restrictions of these contracts to mitigate their effects on workers. However, it is worth noting that these contracts partially benefit employers by incentivizing them to invest in employee training, thereby increasing overall productivity. Speaking of employment contracts, the second chapter evaluates the implications of the coexistence of temporary contracts (fixed-term contracts) and permanent contracts (indefinite-term contracts) on worker flows between unemployment, employment, and labor force non-participation over the life-cycle. This analysis is particularly important due to the effects of these flows on aggregate employment and wages over the life-cycle. It is found that transitions of individuals from permanent employment to unemployment are the most significant factor explaining aggregate employment over the life-cycle. Any policy aimed at increasing employment should target this flow of workers. Moreover, the transition of individuals from temporary employment to unemployment is significant in explaining the low employment of young individuals in European countries like France, especially for those with higher levels of education. The article goes further by constructing a model that explains the observed transition profiles during agents' life-cycle and analyzes how the effects linked to employment protection reforms in European countries are distributed among workers based on their level of education and age. Finally, the third chapter provides a critical assessment of environmental policies such as emissions taxes on production units and green financing. The article shows that despite their effectiveness in reducing emissions, these policies can negatively impact resource allocation, such as capital, among firms, thus reducing aggregate productivity. This is because some highly productive but seriously financially constrained firms may struggle to invest in emission reduction technology, while less productive but wealthy entrepreneurs invest more easily. The burden of emissions-related fiscal measures forces the former to exit the market, thereby reducing productivity. This suggests that other policies, such as green subsidies, are important to mitigate these potential distortions.

Download or read book Essays on Labor Market Frictions Technological Change and Macroeconomic Fluctuations written by Juuso Vanhala and published by . This book was released on 2007 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Macroeconomics and Labor Markets written by Lawrence F. Warren and published by . This book was released on 2016 with total page 218 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation contributes to the current understanding of labor markets, focusing on the use of micro level data and computational modeling to study the interaction of unemployment with various aspects of the macroeconomy. I address the fact that frictions in the labor market carry over into other dimensions of firms' and workers' decisions, such as a firm's incentive to utilize its current labor force, workers' participation in the labor market, and the decision to acquire or discharge debt. In Chapter 1, I study involuntary part-time employment over the business cycle. I document that the population at work part-time for economic reasons ($PTE$) is countercyclical, volatile, and transitory. Workers in $PTE$ are nearly three times more likely than the unemployed to return to full-time work in a given month, and seven times more likely than full-time workers to become unemployed. Using household survey data, I demonstrate that cyclical fluctuations in $PTE$ come from changes in the transition rates between full-time and part-time employment rather than between part-time and unemployment. Moreover, these movements are primarily due to within-job changes in hours. Accordingly, I model part-time work focusing on a firm's decision to hire, fire, or partially utilize its labor force. Firms in the model are heterogeneous in size and productivity, and are subject to search frictions. The model produces firm-level utilization of part-time employment which is consistent with observed worker flows, and varies across the size and age distributions of firms. Over the business cycle, the model matches the observed relative volatility of unemployment and $PTE$. Part-time labor utilization by firms increases the volatility of vacancies and unemployment in the model relative to the case with only an extensive margin. Chapter 2 studies the interaction of a participation margin in a labor market search model.

Download or read book Essays in Dynamics Macroeconomics with Market Frictions written by Chia-Ying Chang and published by . This book was released on 2002 with total page 288 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays in Macroeconomics written by Zhiming Fu and published by . This book was released on 2014 with total page 104 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies three main topics in macroeconomics: the impact of labor market frictions on labor supply and income inequality, the impact of goods market frictions on individuals' optimization decisions, and the housing market in the business cycle.

Download or read book Essays on Markets with Frictions written by Christoph Ungerer and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The classical treatment of market transactions in economics presumes that buyers and sellers engage in transactions instantly and at no cost. In a series of applications in the housing market, the labour market and the market for corporate bonds, this thesis shows that relaxing this assumption has important implications for Macroeconomics and Finance. The first chapter combines theory and empirical evidence to show that search frictions in the housing market imply a housing liquidity channel of monetary policy transmission. Expansionary monetary policy attracts buyers to the housing market, raising housing liquidity. Higher housing sale rates in turn allow lenders to threaten foreclosure more effectively, because the expected carrying costs on foreclosure inventory are lower. Ex-ante, this makes banks willing to offer larger loans, stimulating aggregate demand. The second chapter uses a heterogeneous firm industry model to explore how the macroeconomic response to a temporary employer payroll tax cut depends on the hiring and firing costs faced by firms. Controversially, the presence of non-convex labour adjustment costs suggests that tax cuts create fewer jobs in recessions. When firms hoard labour during downturns, they do not respond to marginal tax cuts by hiring additional workers. The third chapter develops a theory in which trader career concerns generate an endogenous transaction friction. Traders are reluctant to sell assets below historical purchase price, since realizing a loss signals to the employer that the trader is incompetent. The chapter documents empirically several properties of corporate bond transaction data consistent with this theory of career-concerned traders.

Download or read book Essays in Macroeconomics and Financial Frictions written by Christine N. Tewfik and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: My dissertation is comprised of three papers on the causes and consequences of the U.S. Great Recession. The emphasis is on the role that financial frictions play in magnifying financial shocks, as well as in informing the effectiveness of potential policies. Chapter 1, "Financial Frictions, Investment Delay and Asset Market Interventions," co-authored with Shouyong Shi, studies the role of investment delay in propagating different types of financial shocks, and how this role impacts the effectiveness of asset market interventions. The topic is motivated by the observation that, during the Great Recession, governments conducted large-scale asset market interventions. The aim was to increase the level of liquidity in the asset market and make it easier for firms to obtain financing. However, firms were observed to have delayed investment by hoarding liquid funds, part of which were obtained through the interventions. We construct a dynamic macro model to incorporate financial frictions and investment delay. Investment is undertaken by entrepreneurs who face liquidity frictions in the equity market and a collateral constraint in the debt market. After calibrating the model to the U.S. data, we quantitatively examine how aggregate activity is affected by two types of financial shocks: (i) a shock to equity liquidity, and (ii) a shock to entrepreneurs' borrowing capacity. We then analyze the effectiveness of government interventions in the asset market after such financial shocks. In particular, we compare the effects of government purchases of private equity and of private debt in the open market. In addition, we examine how these effects of government interventions depend on the option to delay investment. In Chapter 2, "Housing Liquidity and Unemployment: The Role of Firm Financial Frictions," I build upon the role that firms' ability to obtain funding plays in the severity of the Great Recession. I focus specifically on how the housing crisis reduced the ability of firms to obtain funding, and the consequences for unemployment. An important feature I focus on is the role of housing liquidity, or how easy it is to sell or buy a house. I analyze how an initial fall in housing market liquidity, linked to rising foreclosure costs for banks, affects labor market outcomes, which can have further feedback effects. I focus on the role that firm financial frictions play in these feedback effects. To this end, I construct a dynamic macro model that incorporates frictional housing and labor markets, as well as firm financial frictions. Mortgages are obtained from banks that incur foreclosure costs in the event of default. Foreclosure costs also affect the ease with which firms can borrow, and this influences their hiring decisions. I calibrate the model to U.S. data, and find that a rise in foreclosure costs that generates a 10% fall in the firm loan-to-output ratio results in a 3 percentage point rise in the unemployment rate. The rise in unemployment makes it more difficult for indebted owners to avoid defaulting on their mortgage. This rise in default, on the order of 20 percent, creates further slack in the housing market by both increasing the number of houses on the market and reducing the amount of buyers. Consequently, there are large drops in housing prices and in the size of mortgage loans. Notably, when firm financial frictions are absent, I observe a counter-factual fall in the unemployment rate, which mitigates the effects on the housing market, and even results in a fall in the mortgage default rate. The results highlight the importance of the impact of the housing market crisis on a firm's willingness to hire, and how firms' limited access to credit magnifies the initial housing shock. In Chapter 3, "Housing Market Distress and Unemployment: A Dynamic Analysis," I add to the contributions of my second paper, and extend the analysis to determine the dynamic effects of the housing crisis on unemployment. In Chapter 2, I focused on comparing stationary equilibria when there is a rise in the foreclosure costs associated with mortgage default. However, a full analysis must also take into account the dynamic effects of the shock. In order to do the dynamic analysis, I modify the model in my job market paper to satisfy the conditions of block recursivity. I do this by incorporating Hedlund's (2016) technique of introducing real estate agents in the housing market that match separately with buyers and sellers. Doing this makes the model's endogenous variables independent of the distribution of households and firms. Rather, the impact of the distribution is summarized by the shadow value of housing. This greatly improves the tractability of the model, and allows me to compute the dynamic response to a fall in a bank's ability to sell a foreclosed house, thus raising the costs of mortgage default. I find that the results are largely dependent on the size and persistence of the shock, as well as the level of firm financial frictions that are present. When firm financial frictions are high, as represented by the presence of an interest rate premium charged to firms, and the initial shock is large, the shock is transferred to firms via an endogenous rise in the cost of renting capital. Firms scale back on production and reduce employment. The rise in unemployment increases the debt burden for households with large mortgages. They can try and sell, but find it difficult to do so because they must sell at a high price to be able to pay off their debt. If they fail, they are forced to default, thus further raising the mortgage costs of banks, further reducing resources to firms, and propagating the initial shock. However, the extent of the propagation is limited; once the shock wears off, the economy recovers to its pre-crisis levels within two quarters. I discuss the reasons why, and what elements would be needed for greater persistence.

Download or read book Essays on Macroeconomics written by Ting Ji and published by . This book was released on 2015 with total page 89 pages. Available in PDF, EPUB and Kindle. Book excerpt: In these essays, I examine the role of allocating human capital and labor in an economy. The first chapter documents occupational inheritance-interpreted as children inheriting their parents' occupations-in China, India, and the US. I argue that the prevalence of occupational inheritance in China and India is largely due to two categories of impediments: (1) labor market frictions, e.g., parents' social networks and household registration, which ties rural families to agriculture in China, and the caste system, which restricts young workers' occupational choices in India, and (2) barriers to acquiring human capital, i.e., it is much easier for the young in the US to accumulate human capital from sources other than senior family members compared with the young in China and India. Based on a new tractable occupational choice model using techniques from Eaton and Kortum (2002), this chapter quantitatively evaluates the aggregate implications of occupational inheritance. Counterfactual experiments suggest that if the impediments mentioned above could be reduced to the US level, labor productivity would grow 57 to 73% in China and over fourfold in India. In addition, China has realized 60 to 74% of this growth potential from the 1980s to 2009. The second chapter builds on three empirical facts in the US labor market: from 1980 to 2005, there was (1) about 30% growth in low-skill service jobs, (2) about 9% increase in female labor force participation, and (3) almost constant average home production hours conditional on employment status and gender. I propose a hypothesis that the increase in female labor force participation decreases home production and leads households to purchase substitutable goods from the market. A simple accounting framework produces a benchmark quantitative exercise showing that this theory can explain about 50% of the increase in low-skill service jobs. In the third chapter, I develop a theory of efficient innovation. Individuals are heterogeneous in innovation ability, and the allocation of innovative agents into process innovation and product innovation determines the level of innovation efficiency and output growth rate. I identify several sources of inefficiency of the competitive economy, notably the frictions in the innovator market.

Download or read book Essays on Labour Market and Financial Frictions written by Alireza Sepahsalari and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on the Labour Market Macroeconomics written by Pedro Trivín and published by . This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on the Macroeconomics of Market Reforms and Self employment written by Yurim Lee and published by . This book was released on 2020 with total page 156 pages. Available in PDF, EPUB and Kindle. Book excerpt: The labor market is undoubtedly the closest and most intimate aspect of the economy that the individuals face. The type of employment has also evolved over time alongside the labor market. While much study has been focused on the labor market, not enough light has been shed on self-employment, which is unique in that it is a form of employment at the borderline of workers and firms. Relating the motivation for starting one's own business to the possibility of finding wage-paying jobs is even rarer, as much of previous literature see self-employment from the perspective of credit constraints or avoiding costly labor and tax regulations. As the share of self-employment is non-negligible (which is especially true in developing, small open economies), a proper understanding of self-employment is crucial in successfully carrying out structural reforms as well. With this agenda in mind, this dissertation seeks to understand two main issues. First is exploring how individuals' decisions towards choosing into self-employment can be tied to the state of the labor market (i.e. the probability of finding wage-paying work). This additional source of employment eventually affects the composition of the labor market and thus the business cycle dynamics. The second topic of the dissertation is studying the consequences of such self-employment on the macroeconomic efficiency and the outcomes of structural reforms on the product and labor markets. The first chapter focuses on the consequences of different decisions regarding the international financial market integration and exchange rate policy in a small open economy, Korea. The chapter is targeted towards a deeper understanding of a combination of policies under two important ingredients in a Dynamic Stochastic General Equilibrium (DSGE) model: producer entry into domestic and export markets and labor market frictions. Results show that under flexible exchange rates, access to international financial markets increases the volatility of both business creation and the number of exporting plants, with the effects on employment volatility being more modest. The exchange rate peg can have unfavorable consequences for the effects of terms of trade appreciation, and more financial integration is not necessarily beneficial under a peg. The combination of a floating exchange rate and internationally complete markets would be the best scenario for Korea among those the chapter focuses on. The second chapter introduces workers' endogenous transition in and out of self-employment in the traditional Diamond-Mortensen-Pissarides (DMP) framework, while keeping the crucial ingredients in a closed economy DSGE framework as explored in \autoref{chp:fmkorea}. Under such settings, labor market composition becomes more volatile, leading to greater fluctuations and higher welfare costs from business cycles. A comparison with a centrally planned economy shows that self-employment becomes an additional source of inefficiency in the economy. The lack of job creation by the self-employed implies reforms being less effective when targeted towards them. The third chapter brings together the first two chapters by allowing self-employment in a small open economy, calibrated for Korea. Specifically, the hiring firms produce tradable goods and engage in exporting, while the self-employed produce nontradable goods and only serve the domestic market. The model displays a much higher rate of self-employment (around 36% of employment) compared to the closed economy calibrated for the U.S. in the second chapter. It also shows the real exchange rate appreciating and terms of trade depreciating under financial autarky after a productivity shock, where the size of the fluctuations depends on the firm creation in both tradable and nontradable sectors. Allowing international borrowing leads to more consumption smoothing but relatively less entry in both hiring and self-employed firms, with unemployment becoming less volatile and terms of trade initially appreciating.

Download or read book Essays in Macroeconomics written by Michele Fornino and published by . This book was released on 2021 with total page 222 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the second chapter, Elia Sartori and I present a wage posting model with search frictions where idiosyncratic shocks to optimal firm size generate different returns to adjusting the workforce. Our approach takes the firms as the only decision makers, and it assumes a simple employment contract: firms pay a wage and may only change an employment relationship by paying exogenously specified costs. Labor market outcomes are modeled as a mean field game equilibrium in which aggregate statistics impacting firms' policies, which play the role of prices, are the hiring and poaching flow rates. Consistency of aggregate choices with prices builds on a reduced form matching function which subsumes the entire functioning of the labor market outside of firms. Leveraging and extending recently developed numerical methods, we can solve for the equilibrium. The model delivers nontrivial policy functions and aggregates, which can be used to quantify features of the endogenous reshuffling of workers both in the size ladder and in the wage ladder, including net poaching along these two margins, as presented in, e.g., Haltiwanger et al. (2017). A calibrated version of the model is able to generate an inverted net poaching schedule which is consistent with their finding that smaller firms poach workers from larger ones.

Download or read book Essays on Inflation Dynamics and Labour Market Frictions written by Paul Middleditch and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The inflation equation, more commonly known as the Phillips curve, lies at the heart of modern macroeconomic modeling. This Keynesian relationship between inflation and unemployment discovered by Phillips (1958) soon became widely adopted by policymakers in the 1960's. However, its empirical shortcomings led to competing theories such as the natural rate hypothesis by Friedman (1968), who alongside Phelps (1967) and Lucas (1972), condemned its implications of money non neutrality. More recently, the specification has adapted to capture nominal inertia led by the New Keynesian school of Fisher (1977) and Taylor (1980), as an answer to the classical result of neutrality. The Phillips curve remains as a relationship of interest to capture the aggregate behaviour of the supply side in the economy, connecting the labour market and the pricing decisions of firms. This Thesis consists of three self contained works, each of which are set out within their own chapter but connected by the employment of the theoretical framework of this inflation equation. They attempt to answer three specific economic questions related to inflation dynamics and labour market frictions. The first analysis concerns itself with the labour market policy of the working hours restriction; specifically with the question of how this labour market policy affects unemployment in the long run. I find weak evidence of a fall in unemployment shortly after the announcement of this policy. Secondly, whether or not one can capture the different characteristics displayed by the labour markets of the US and EU using labour market frictions in the determination of inflation dynamics. Our findings lead us to the conclusion that it is indeed possible to capture these characteristics when analyzing a Phillips curve specified in terms of unemployment. Lastly the question of whether aggregate prices are better represented by controlling for heterogeneity. The results obtained lead us to infer that controlling for heterogeneity of this kind does indeed affect the dynamics of the macro model and does not wash out in the aggregate.

Download or read book Three Essays on Labor Market Friction and the Business Cycle written by Jong-Seok Oh and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation examines the macroeconomic impact of reduced labor market friction on the U.S. business cycle after the mid-1980s. The first two essays investigate the relationship between labor market flexibility and macroeconomic stability from a post-Keynesian perspective. In the third essay which reviews the relationship between labor market flexibility and patterns of U.S. business cycle, I test the argument that after 1985 Okun's coefficient became larger due to the flexible labor market. In essay 1, considering two aspects of labor market flexibility, employment flexibility and real wage flexibility, I adopt the flex-output model (Skott, 2015) to first discuss employment flexibility and then extend it by incorporating real wage dynamics induced from a wage-price Phillips curve (Flaschel and Krolzig, 2006) to address real wage flexibility. The simulation of model explains that employment flexibility increases instability of an economy whereas real wage flexibility reduces it. Empirical results of this paper suggest that during the Great Moderation, real wage flexibility played a major role in stabilizing the U.S. economy. On the other hand, employment flexibility has contributed to destabilizing the economy during the Great Recession. In essay 2, using structural VAR analysis, I provide more rigorous empirical evidence to support the hypothesis in essay 1 - real wage flexibility played a major role in stabilizing U.S. economy during the Great Moderation, and employment flexibility has contributed to destabilizing the economy during the Great Recession. I found that during the Great Moderation (1) Employment and real wage flexibilities were operating simultaneously; (2) The employment flexibility was not so severe; (3) Flexible real wages functioned as an autonomic stabilizer; (4) Therefore, stabilized goods market during the Great Moderation can be explained by dominating effect of the real wage flexibility over the employment flexibility. For the Great Recession, however, severe asymmetry in the business cycle and the lack of observations obstructs reliable empirical work. In essay 3, I discuss the observations of increased cyclicality in aggregate hours and increased responsiveness of the (un)employment rate to output changes after 1985, which have contributed to recent debate about the validity of Okun's law. To investigate this, I measure Okun's coefficients in three phases of the business cycle - recessions, early expansions and late expansions. Related findings include: (1) The main determining factor for an increased coefficient for aggregate hours is the increased responsiveness of the employment rate during late expansions. (2) The increased responsiveness of hours per employee in early expansion is another main determining factor for more reactive aggregate hours. These findings conflict with the flexible labor market hypothesis that focuses mainly on firms' firing behaviors during recessions when they incur less costs than previously.