Download or read book Private Information Wage Stickiness and Labor Market Fluctuations written by Seung-Gyu Sim and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper develops a tractable job search model with information friction to analyze the underlying link between the performance-based compensation scheme and labor market fluctuations. Workers privately learn their match quality upon starting the job and keep searching for better paying jobs. Firms post performance-based wage schedules to encourage production. In contrast to the standard search and matching model with Nash-Bargaining sharing rule, this paper demonstrates that as reflecting internal pressure (incentive provision) as well as external pressure (market fluctuation), wages become sticky, which amplifies fluctuations in unemployment and vacancies.
Download or read book Private Information Wage Bargaining and Employment Fluctuations written by John Kennan and published by . This book was released on 2006 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: Shimer (2003) pointed out that although we have a satisfactory theory of why some workers are unemployed at any given time, we don't know why the number of unemployed workers varies so much over time. The basic Mortensen-Pissarides (1994) model does not generate nearly enough volatility in unemployment, for plausible parameter values. This paper extends the Mortensen-Pissarides model to allow for informational rents. Productivity is subject to publicly observed aggregate shocks, and to idiosyncratic shocks that are seen only by the employer. It is shown that there is a unique equilibrium, provided that the idiosyncratic shocks are not too large. The main result is that small fluctuations in productivity that are privately observed by employers can give rise to a kind of wage stickiness in equilibrium, and the informational rents associated with this stickiness are sufficient to generate relatively large unemployment fluctuations.
Download or read book The Labor Market and Economic Adjustment written by Pierre-Richard Agénor and published by International Monetary Fund. This book was released on 1995-11-01 with total page 98 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the role of the labor market in the transmission process of adjustment policies in developing countries. It begins by reviewing the recent evidence regarding the functioning of these markets. It then studies the implications of wage inertia, nominal contracts, labor market segmentation, and impediments to labor mobility for stabilization policies. The effect of labor market reforms on economic flexibility and the channels through which labor market imperfections alter the effects of structural adjustment measures are discussed next. The last part of the paper identifies a variety of issues that may require further investigation, such as the link between changes in relative wages and the distributional effects of adjustment policies.
Download or read book The Political Economy of Wages and Unemployment written by William Oliver Coleman and published by Edward Elgar Publishing. This book was released on 2010-01-01 with total page 251 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this tightly argued work William Coleman explores the macroeconomic implications of politically based restraints on competition in labour markets. Through a suite of compact models the author investigates the consequences of the labour force securing the best terms of sale for its labour by means of the electoral mechanism. He concludes that such ?electorally optimal' labour regulation can explain not only wage rigidity and unemployment, but also wage volatility; episodes of excess demand for labour; the co-existence of an inefficient state sector with an efficient private sector; and the preference for a minimum wage over a universal wage regulation. Finally, the approach can rationalise nominal wage rigidity, and not solely real wage rigidity. In sum, the analysis promises to both complete the Classical explanation of unemployment by predicting when, why and how real wages will be rigid, and at the same time to better secure Keynesian insights by suggesting how money rigidity may be characteristic of electorally optimal labour regulation.
Download or read book Labor Markets and Business Cycles written by Robert Shimer and published by Princeton University Press. This book was released on 2010-04-12 with total page 189 pages. Available in PDF, EPUB and Kindle. Book excerpt: Labor Markets and Business Cycles integrates search and matching theory with the neoclassical growth model to better understand labor market outcomes. Robert Shimer shows analytically and quantitatively that rigid wages are important for explaining the volatile behavior of the unemployment rate in business cycles. The book focuses on the labor wedge that arises when the marginal rate of substitution between consumption and leisure does not equal the marginal product of labor. According to competitive models of the labor market, the labor wedge should be constant and equal to the labor income tax rate. But in U.S. data, the wedge is strongly countercyclical, making it seem as if recessions are periods when workers are dissuaded from working and firms are dissuaded from hiring because of an increase in the labor income tax rate. When job searches are time consuming and wages are flexible, search frictions--the cost of a job search--act like labor adjustment costs, further exacerbating inconsistencies between the competitive model and data. The book shows that wage rigidities can reconcile the search model with the data, providing a quantitatively more accurate depiction of labor markets, consumption, and investment dynamics. Developing detailed search and matching models, Labor Markets and Business Cycles will be the main reference for those interested in the intersection of labor market dynamics and business cycle research.
Download or read book Unemployment Fluctuations Match Quality and the Wage Cyclicality of New Hires written by Mark Gertler and published by . This book was released on 2016 with total page 71 pages. Available in PDF, EPUB and Kindle. Book excerpt: Macroeconomic models often incorporate some form of wage stickiness to help account for employment fluctuations. However, a recent literature calls in to question this approach, citing evidence of new hire wage cyclicality from panel data studies as evidence for contractual wage flexibility for new hires, which is the relevant margin for employment volatility. We analyze data from the SIPP and find that the wages for new hires coming from unemployment are no more cyclical than those of existing workers, suggesting wages are sticky at the relevant margin. The new hire wage cyclicality found in earlier studies instead appears to reflect cyclical average wage gains of workers making job-to-job transitions, which we interpret as evidence of procyclical match quality for new hires from employment. We then develop a quantitative general equilibrium model with sticky wages via staggered contracting, on-the-job search, and variable match quality, and show that it can account for both the panel data evidence and aggregate labor market regularities. An additional implication of the model is that a sullying effect of recessions emerges, along the lines originally suggested by Barlevy (2002).
Download or read book Labor Market Adjustments in the Pacific Basin written by Peter Chinloy and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 270 pages. Available in PDF, EPUB and Kindle. Book excerpt: Peter T. Chinloy and Ernst W. Stromsdorfer I. Background to Adjustments in Labor Markets The book examines the process of adjustment in labor markets across countries arising from external shocks and shifts in international competi tiveness. The examination of specific countries and their data permits a comparison of alternative institutions for compensating and redeploying labor. Four countries are involved, whose labor markets are both competi tive and complementary: Canada, Japan, Mexico, and the United States. Both public labor market institutions, such as direct government com~ pensation of displaced workers and the effect of unemployment insurance, and private market arrangements, such as em loyer-employee agreements on layoffs, the work contract, and severance pay, are considered. Compara tive examination across countries of labor market and related insitutions is thus possible. The book has a common theme, namely the adjustment of labor markets to exogenous shocks, particularly those externally induced. The unifying focus in on workers whose specific skills in an industry or firm render them relatively immobile.
Download or read book Sticky Feet written by Claire H. Hollweg and published by World Bank Publications. This book was released on 2014-07-03 with total page 123 pages. Available in PDF, EPUB and Kindle. Book excerpt: This report quantifies labor mobility costs in developing countries and simulates the implied adjustment paths of employment and wages following a change in trade policy. High mobility costs are shown to reduce the potential gains to trade reform.
Download or read book Wage Rigidity and Job Creation written by Christian Haefke and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent research in macroeconomics emphasizes the role of wage rigidity in accounting for the volatility of unemployment fluctuations. We use worker-level data from the CPS to measure the sensitivity of wages of newly hired workers to changes in aggregate labor market conditions. The wage of new hires, unlike the aggregate wage, is volatile and responds almost one-to-one to changes in labor productivity. We conclude that there is little evidence for wage stickiness in the data. We also show, however, that a little wage rigidity goes a long way in amplifying the response of job creation to productivity shocks.
Download or read book The Labor Market and Macro Volatility written by Robert Ernest Hall and published by . This book was released on 2005 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The evolution of the aggregate labor market is far from smooth. I investigate the success of a macro model in replicating the observed levels of volatility of unemployment and other key variables. I take variations in productivity growth and in exogenous product demand (government purchases plus net exports) as the primary exogenous sources of fluctuations. The macro model embodies new ideas about the labor market, all based on equilibrium--the models I consider do not rest on inefficiency in the use of labor caused by an inappropriate wage. I find that non-standard features of the labor market are essential for understanding the volatility of unemployment. These models include simple equilibrium wage stickiness, where the sticky wage is an equilibrium selection rule. A second model based on modern bargaining theory delivers a different kind of stickiness and has a unique equilibrium. A third model posits fluctuations in matching efficiency that may arise from variations over time in the information about prospective jobs among job-seekers. Reasonable calibrations of each of the three models match the observed volatility of unemployment"--National Bureau of Economic Research web site.
Download or read book Fiscal Policy Implications for Labor Market Outcomes in Middle Income Countries written by Ara Stepanyan and published by International Monetary Fund. This book was released on 2015-01-23 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many governments have initiated public employment programs or expanded the existing ones in response to high unemployment. However, in many middle-income countries, a relatively large government coexists with persistently high unemployment. This paper explores the question of whether public employment gives rise to distortions in the labor market in the medium to long-run. Our findings do not provide any evidence that public employment reduces unemployment rate. The analysis in this paper shows that large public employment does significantly affect labor market outcomes in middle-income countries and leads to job destruction in the private sector. The extent of the impact is largely influenced by the degree of substitutability between public and private production and the size of the rents in the public sector.
Download or read book Three Essays on Labor Market Volatility Monetary Policy and Real Wage Stickiness written by Pierrick Clerc and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The starting point of this PhD dissertation is related to the Shimer puzzle, i.e. the unability of the search and matching model to reproduce the high volatility of the unemployment rate. Real wage rigidities were considered as the main solution to this puzzle. Nevertheless, Sveen and Weinke (2008) argue that those rigidities would not have any impact on the unemployment volatility when hours per worker are determined by the firms. In the first chapter, we argue that the capacity of real wage rigidities to solve the puzzle critically depends on the way that rigidities are introduced. When real wage stickiness results from the «credible bargaining» (Hall and Milgrom ,2008), we show that the unemployment volatility is magnified, even for hours being firms' decisions. A significant stabilization trade-off between inflation and unemployment is moreover restituted. However, we stress in the second chapter that the credible bargaining delivers a moderate degree of wage rigidity and then requires unrealistic values for some parameters to completely replicate the unemployment volatility. We integrate asymmetric information into this framework and show that the resulting higher wage stickiness fully reproduces the volatility for a plausible calibration. ln the last chapter, we emphasize that it is possible to solve the puzzle without resting on real wage stickiness, by considering a particular calibration of the model with endogenous separations. We also highlight a central mechanism of this framework, for which the volatility of the separation rate amplifies that of the job finding rate.
Download or read book Labor markets in an era of adjustment written by and published by World Bank Publications. This book was released on 1994 with total page 404 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Redistribution Recession How Labor Market Distortions Contracted the Economy written by Casey B. Mulligan and published by Oxford University Press, USA. This book was released on 2012-10-05 with total page 368 pages. Available in PDF, EPUB and Kindle. Book excerpt: Redistribution, or subsidies and regulations intended to help the poor, unemployed, and financially distressed, have changed in many ways since the onset of the recent financial crisis. The unemployed, for instance, can collect benefits longer and can receive bonuses, health subsidies, and tax deductions, and millions more people have became eligible for food stamps. Economist Casey B. Mulligan argues that while many of these changes were intended to help people endure economic events and boost the economy, they had the unintended consequence of deepening-if not causing-the recession. By dulling incentives for people to maintain their own living standards, redistribution created employment losses according to age, skill, and family composition. Mulligan explains how elevated tax rates and binding minimum-wage laws reduced labor usage, consumption, and investment, and how they increased labor productivity. He points to entire industries that slashed payrolls while experiencing little or no decline in production or revenue, documenting the disconnect between employment and production that occurred during the recession. The book provides an authoritative, comprehensive economic analysis of the marginal tax rates implicit in public and private sector subsidy programs, and uses quantitative measures of incentives to work and their changes over time since 2007 to illustrate production and employment patterns. It reveals the startling amount of work incentives eroded by the labyrinth of new and existing social safety net program rules, and, using prior results from labor economics and public finance, estimates that the labor market contracted two to three times more than it would have if redistribution policies had remained constant. In The Redistribution Recession, Casey B. Mulligan offers hard evidence to contradict the notion that work incentives suddenly stop mattering during a recession or when interest rates approach zero, and offers groundbreaking interpretations and precise explanations of the interplay between unemployment and financial markets.
Download or read book Employment Efficiency and Stick Wages written by Robert Ernest Hall and published by . This book was released on 2005 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: "I consider three views of the labor market. In the first, wages are flexible and employment follows the principle of bilateral efficiency. Workers never lose their jobs because of sticky wages. In the second view, wages are sticky and inefficient layoffs do occur. In the third, wages are also sticky, but employment governance is efficient. I show that the behavior of flows in the labor market strongly favors the third view. In the modern U.S. economy, recessions do not begin with a burst of layoffs. Unemployment rises because jobs are hard to find, not because an unusual number of people are thrown into unemployment"--National Bureau of Economic Research web site.
Download or read book Wage Rigidity and Unemployment written by Wilfred Beckerman and published by Bloomsbury Academic. This book was released on 1986 with total page 240 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Labor Markets in an Era of Adjustment Issues papers written by Susan Horton and published by . This book was released on 1994 with total page 404 pages. Available in PDF, EPUB and Kindle. Book excerpt:
