Social and Behavioral Sciences Commons^™

Poverty And Low Earnings In The Developing World, Gary S. Fields

Gary S Fields

More than three billion people are poor by international standards, and essentially all are to be found in the low- and middle-income countries of Asia, Africa, and Latin America. The issues for understanding poverty in the developing world - among them, self-employment and household enterprises, agricultural work, casual employment, and informal work – differ from those in the developed world. Different policy issues predominate: stimulating economic growth, harnessing the energies of the private sector, increasing paid employment, and raising the returns to self-employment. This chapter details how the poorer half of the world’s people work and gives an overview of …

Offshoring And Labor Market Outcomes In The Presence Of Collective Bargaining, Priya Ranjan

Priya Ranjan

This paper studies the implications of offshoring for unemployment and wages in a search unemployment framework when the wage is determined by collective bargaining. It shows that there is a non-monotonic relationship between the cost of offshoring and unemployment but the relationship between the cost of offshoring and wage is monotonic. Starting from a high cost of offshoring, a decrease in the cost of offshoring reduces unemployment first and then increases it. The wage is monotonically increasing in the cost of offshoring. Comparing autarky equilibrium with offshoring equilibrium, it finds that for a large range of the cost of offshoring, …

Vernon Briggs: Real-World Labor Economist

Vernon M Briggs Jr

[Excerpt] Vernon Briggs stepped into a wastebasket and launched my career as a labor economist. In the spring of 1969, I was sleepwalking through the undergraduate economics program at the University of Texas and sitting in Dr. Briggs’s labor economics class. He was vigorously making a point when his misstep off the small classroom stage produced a roar of laughter but did not break his train of thought. He woke me up; I thought, “Man, I want to be as passionate about my life’s work as this guy.

Regional Unemployment Dynamics In Poland. A Convergence Approach, Joanna Tyrowicz, Piotr Wojcik

Joanna Tyrowicz

In this paper we approach the regional unemployment dynamics in Poland. Using policy relevant NUTS4 level data for 1999 till 2006 we employ tools typically applied to income convergence analyses to inquire the patterns of unemployment distribution. We apply diverse analytical techniques to seek traces of convergence, including beta and sigma convergence as well as pass-through analysis.

We demonstrate that it is highly stable over time, while only weak "convergence of clubs" is supported by the data and only for the high unemployment regions. Results suggest no support in favour of beta-type convergence, i.e. convergence of levels. Even controlling for …

Nonlinear Stochastic Convergence Analysis Of Regional Unemployment Rates In Poland, Joanna Tyrowicz, Piotr Wojcik

Joanna Tyrowicz

This paper analyzes convergence of unemployment rates in Poland at NUTS4 level by testing nonlinear convergence, applying the modified KSS-CHLL for each pair of territorial units. The results suggest that actually the convergence is a rare phenomenon and occurs only in 1916 cases out of potential over 70 000 combinations. This paper inquires what systematic reasons contribute to this phenomenon.

There are some circumstances under which unemployment convergence should be more awaited than in the others. These include sharing a higher level territorial authority, experiencing similar labour market hardship or sharing the same structural characteristics. For each of these three …

Spillovers Across Labor Markets In Search Models: Effects Of "Animal Spirits" And Offshoring, Devashish Mitra, Priya Ranjan

Priya Ranjan

We study the effects of additional distortions or shocks, such as a fair-wage constraint and/or the possibility of offshoring unskilled jobs, in a two-factor general equilibrium model of unemployment with search frictions. While the direct point of impact of such shocks is on unskilled workers, we also find interesting indirect spillover effects on skilled workers. A binding fair-wage constraint increases the unskilled unemployment rate and can at the same time lead to a higher unemployment rate and a lower wage for skilled workers, as compared to an equilibrium where fairness considerations are absent or non-binding. Introducing offshoring of unskilled jobs …

Offshoring And Unemployment:The Role Of Search Frictions And Labor Mobility, Devashish Mitra, Priya Ranjan

Priya Ranjan

In a two-sector, general-equilibrium model with labor-market search frictions, we find that wage increases and sectoral unemployment decreases upon offshoring in the presence of perfect intersectoral labor mobility. If, as a result, labor moves to the sector with the lower (or equal) vacancy costs, there is an unambiguous decrease in economywide unemployment. With imperfect intersectoral labor mobility, unemployment in the offshoring sector can rise, with an unambiguous unemployment reduction in the non-offshoring sector. Imperfect labor mobility can result in a mixed equilbrium in which only some firms in the industry offshore, with unemployment in this sector rising.

Labor Retrenchment Laws And Their Effect On Wages And Employment: A Theoretical Investigation, Kaushik Basu, Gary S. Fields, Shub Debgupta

Gary S Fields

No abstract provided.

Presentation On The Arab Economies In A Changing World, Marcus Noland, Howard Pack

Marcus Noland

No abstract provided.

Offshoring And Unemployment, Devashish Mitra, Priya Ranjan

Priya Ranjan

In this paper, in order to study the impact of offshoring on sectoral and economywide rates of unemployment, we construct a two sector general equilibrium model in which labor is mobile across the two sectors, and unemployment is caused by search frictions. We find that, contrary to general perception, wage increases and sectoral unemployment decreases due to offshoring. This result can be understood to arise from the productivity enhancing (cost reducing) effect of offshoring. If the search cost is identical in the two sectors, or even if the search cost is higher in the sector which experiences offshoring, the economywide …

Michigan's Economic Competitiveness And Public Policy, Timothy Bartik

Timothy J. Bartik

No abstract provided.

A Reappraisal Of The Inflation-Unemployment Tradeoff, Marika Karanassou, Hector Sala, Dennis Snower

Dennis Snower

This paper offers a reappraisal of the inflation-unemployment tradeoff, based on "frictional growth", describing the interplay between nominal frictions and money growth. Whe the money supply growth in the presence of price inertia (due to staggered wage contracts with time discounting), the price adjustments to each successive change in the money supply are never able to work themselves out fully. In this context, temporary nominal rigidities let monetary policy have permanent real effects. Although our theory contains no money illusion, no permanent nominal rigidities, and no departure from rational expectations, there is a long-run inflation-unemployment tradeoff. Our empirical analysis suggests …

Wage Inequality And Skill Asymmetries, Peter Skott, Paul Auerbach

Peter Skott

Using a simple model with two levels of skill, we assume that high skill workers who fail to get high skill jobs may accept low skill positions; low skill workers do not have the analogous option of filling high skill position. This asymmetry implies that an adverse, skill neutral shock to aggregate employment may cause an increase in wage inequality, both between and within skill categories, as well as an increase in unemployment, especially among low skill workers. Movements in productivity, unemployment and inequality may thus be linked to induced overeducation and credentialism.

The Real Effects Of Money Growth In Dynamic General Equilibrium, Liam Graham, Dennis Snower

Dennis Snower

Dynamic New Keynesian models generally ignore steady state money growth. Within a standard New Keynesian framework, we show that the interaction between staggered nominal contracts and money growth leads to a long-run trade-off between output and money growth that is significant, and remains so when the contract length is endogenised. We show that the existence of the tradeoff depends crucially on a phenomenon we call employment cycling: firms’ substitution among different labor types over the course of the contract period. We discuss the plausibility of this phenomenon and show that when it is absent, money becomes super-neutral.

Unemployment In The European Union: A Dynamic Reappraisal, Marika Karanassou, Hector Sala, Dennis Snower

Dennis Snower

This paper examines the movements in EU unemployment from two perspectives: (a) the NRU/NAIRU perspective, in which unemployment movements are attributed largely to changes in the long-run equilibrium unemployment rate and (b) the chain-reaction perspective, in which unemployment movements are viewed as the outcome of the interplay between labor market shocks and prolonged lagged adjustment processes. We present an empirical analysis that distinguishes between unemployment movements arising from long-run equilibrium changes and those arising from lagged intertemporal adjustments. This analysis has far-reaching policy implications. Our analysis shows that the rise in EU unemployment over the 1970s and first part of …

The Return Of The Long-Run Phillips Curve, Liam Graham, Dennis Snower

Dennis Snower

This paper shows that the interaction between money growth and staggered nominal contracts gives rise to a long-run inflation-unemployment tradeoff.

Unemployment Scarring In High Unemployment Regions, Claudio Lupi, Patrizia Ordine

Claudio Lupi

This paper investigates the effect of individual unemployment experiences on re-employment wages. The empirical analysis is carried out on a panel of Italian individuals. The main result is that while in the northern regions the effect is similar to the one estimated for the UK, in the southern area of the country the impact is not significant. We link this result to the particular socio-economic environment in which the unemployment spells are experienced. We argue that this might be due to the fact that in a high unemployment environment individual unemployment experiences are perceived as "normal" and do not necessarily …

The Market Failure Approach To Regional Economic Development Policy, Timothy Bartik

Timothy J. Bartik

No abstract provided.

Policy Complementarities: The Case For Fundamental Labor Market Reform, Dennis Snower, David T. Coe

Dennis Snower

The paper analyzes complementarities among a variety of labor market policies. It shows that (a) a wide range of labor market institutions (.e.g unemployment benefits, job security legislation, and payroll taxes) have complementary effects on unemployment and thus (b) policies aimed at reforming these institutions are also complementary. These policy complementarities imply that partial labor market reform (directed at one institution, while leaving the other institutions in place) is unlikely to achieve significant reductions in unemployment. Rather labor market reform becomes particularly effective only once a broad range of institutional rigidities are dismantled simultaneously and the distributional objectives of the …

Expanding The Welfare System, Michael J. Orszag, Dennis Snower

Dennis Snower

The proposal involves the establishment of “welfare accounts” for every person in a country. There are to be four accounts: a retirement account (covering pensions), an unemployment account (covering unemployment support), a human capital account (covering education and training), and a health account (covering insurance against sickness and disability). Instead of the current welfare state systems - where welfare services are financed predominantly out of general taxes - people would make ongoing, mandatory contributions to each of these welfare accounts. The balances in these accounts would cover people’s major welfare needs. The government is to set mandatory minimum contribution rates …

Job Growth And The Quality Of Jobs In The U.S. Economy, Susan Houseman

Susan N. Houseman

No abstract provided.

Analysis Of Us Real Gnp And Unemployment Relations, Riccardo Fiorito, Masanao Aoki

riccardo fiorito

Instead of the more common unemployment rate, the time series data of the US unemployment level is used with real GNP and money stock too. The commonly perceived Okun's Law disappears when moving from the bivariate model to the trivariate model including also money.