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A clear consensus has emerged that agglomeration economies are an important factor explaining why firms cluster next to each other. Yet, because of non-trivial measurement challenges, disagreement remains over the sources of these agglomeration effects. This paper is the first to present direct evidence showing how localized knowledge spillovers arise from workers changing jobs within the same local labor market. Specifically, I assess the extent to which firm-to-firm labor mobility enhances the productivity of firms located near highly productive firms. Using a unique dataset combining Social Security earnings records and balance sheet information for Veneto, a region in Italy with many successful industrial clusters, I first identify a set of highly productive firms, then show that hiring workers with experience at these firms significantly increases the productivity of other firms. To address identification threats arising from both contemporaneous and future unobservable firm-level productivity shocks correlated with hiring, I use control function methods drawn from the productivity literature and a novel instrumental variable strategy, which exploits downsizing events at highly productive firms. My findings imply that worker flows can explain around 10 percent of the productivity gains experienced by incumbent firms when new highly productive firms are added to a local labor market.

Using new data matching remittances and monthly payroll disbursals, we demonstrate how fluctuations in migrants' earnings in the United Arab Emirates affect their remittances. We consider three types of income fluctuations that are observable by families at home: seasonalities, weather shocks and a labor reform. Remittances move with all of these income changes. Remittances do not move with an individual's growth in earnings over time. The slope of the relationship between earnings and time in the UAE varies across individuals and is not easy to observe by families. Thus, a key characteristic that drives remittance behavior is the observability of income rather than other features of these fluctuations. The results are consistent with a private information model where remittances are viewed by the migrant worker as payments to their families in an income-sharing contract.

The paper presents a model of an economy whose urban structure consists of cities of different types. All cities of different types. All cities produce a non-tradeable final good using both types of tradeable intermediate varieties. Each city has an internal spatial structure: individuals commute to the CBD in order to work, when employed, and to seek jobs, when unemployed. Hiring by each intermediate producing firm is subject to frictions, which are modeled in the Diamond-Mortensen-Pissarides fashion. Job matching requires either travel to the CBD for face to face contacts or, alternatively, referrals from social contacts.City type is conferred by specialization in producing one of the two types of intermediate varieties, diversified cities, where both types are produced, and there is intercity trade in intermediate varieties. The paper examines the properties of equilibrium with intercity trade and its dependence on such parameters as those pertaining to productivity, the matching process, the rate of job destruction and their consequences for unemployment, output and welfare across the economy along a steady state. The model's use of international trade tools confers a central role to labor market tightness, akin to factor intensity. A natural dependence of unemployment on city size is generated. The paper provides a framework for studying spatial mismatch. Equilibrium outcomes generically diverge from the planner's optimum: socially optimal unemployment trades off the probability of employment to search socts of firms independently for each skill type and independently of city size, and city sizes are independent of labor market tightness considerations but reflect both market size effects and the skill composition of the economy.

Online décembre 2015 compté en 12/2015; International audience; This article contributes to the literature on knowledge transfer via labor mobility by providing new evidence regarding the role of educational diversity in knowledge transfer. In tracing worker flows between firms in Denmark over the period 1995–2005, we find that knowledge carried by workers who have been previously exposed to educationally diverse workforces significantly increases the productivity of the hiring firms. Several extensions of our baseline specification support this finding and confirm that our variable of interest affects the arrival firm's performance mainly through the knowledge transfer channel.

This article documents a strong connection between unemployment and mental distress using data from the Spanish National Health Survey. We exploit the collapse of the construction sector to identify the causal effect of job losses in different segments of the Spanish labor market. Our results suggest that an increase of the unemployment rate by 10 percentage points due to the breakdown in construction raised reported poor health and mental disorders in the affected population by 3 percentage points, respectively. We argue that the size of this effect responds to the fact that the construction sector was at the center of the economic recession. As a result, workers exposed to the negative labor demand shock faced very low chances of re-entering employment. We show that this led to long unemployment spells, stress, hopelessness, and feelings of uselessness. These effects point towards a potential channel for unemployment hysteresis., We acknowledge financial support from the RecerCaixa programme 2012. The funds allowed the collection of data. It also financed a research assistant to clean the data and conduct the preliminary analysis. Hannes Mueller acknowledges financial support from the Ramon y Cajal programme and Spanish Ministry of Economy and Competitiveness, through the Severo Ochoa Programme for Centres of Excellence in R&D (SEV-2011-0075). Farré acknowledges the financial support of the Government of Catalonia (grant SGR2014-325) and the Spanish Ministry of Science (grant ECO2014-59959-P). These funds were used to finance the researchers to conduct the data analysis and the writing of the manuscript.

This paper examines the evolution of immigrant earnings in the United States between 1970 and 2010. There are cohort effects not only in wage levels, with more recent cohorts having lower entry wages through 1990, but also in the rate of wage growth, with more recent cohorts experiencing less economic assimilation. The slowdown in assimilation is partly related to a concurrent decline in the rate at which the new immigrants add to their human capital stock, as measured by English language proficiency. The data also suggest that the rate of economic assimilation is significantly lower for larger national origin groups.

This paper estimates the impact of the implementation of the 2006 Massachusetts health reform on job mobility. Theoretically, the effect is ambiguous, as the public health insurance expansion and low-income subsidies would be expected to increase mobility, but the employer mandate and price effects could either increase or decrease mobility depending on the relative impacts on an individual's current job and the attractiveness of other modes of employment or retirement. Utilizing data from tax returns that span 2002–10, in which job changes are identified using employer information reported on W-2 forms, we estimate the impact of the Massachusetts reform using a difference-in-differences approach, comparing the prevalence of job changes in Massachusetts to those of a comparison group, while controlling for individual fixed effects. The estimates suggest the Massachusetts reform generally did not have a significant impact on job separations overall, though it may have increased separations from primary jobs among married women. There is evidence, however, that mobility increased among low-income married couples, young married men, and older married women.

We investigate transitions between unemployment, low-paid employment and higher-paid employment using household panel data for the period 2001 to 2011. Dynamic panel data methods are used to estimate the effects of labour force status on subsequent labour force status. A distinctive feature of our study is the investigation of heterogeneity in the effects of unemployment and low-paid employment on future employment prospects. We find that there is state dependence in both unemployment and low-paid employment and clear evidence of a low-pay no-pay cycle for both men and women. Significant differences in effects across different subgroups of the population are, however, found. Typically, the young and the better educated face less severe penalties from unemployment or low-paid employment, and, for women, the cycle between low pay and no pay varies across subgroups. Moreover, in the case of men who have completed secondary schooling but have no further qualifications, low-paid employment actually decreases the chances of entering higher-paid employment by more than unemployment does. This is not the case for women, however, who clearly have a higher likelihood of entering higher-paid employment from low-paid employment than from unemployment, regardless of their age, education level or other characteristics.

Employing a lab experiment, we directly test the empirical importance of key attitudes underlying the models of taste-based and statistical discrimination in explaining ethnic hiring discrimination. We find evidence that employer concern that co-workers and customers will prefer collaborating with native individuals drives unequal treatment.

Hiring inexperienced workers generates information about their abilities. If this information is public, workers obtain its benefits. If workers cannot compensate firms for hiring them, firms will hire too few inexperienced workers. I determine the effects of hiring workers and revealing more information about their abilities through a field experiment in an online marketplace. I hired 952 randomly-selected workers, giving them either detailed or coarse public evaluations. Both hiring workers and providing more detailed evaluations substantially improved workers' subsequent employment outcomes. Under plausible assumptions, the experiment's market-level benefits exceeded its cost, suggesting that some experimental workers had been inefficiently unemployed. (JEL J23, J24, M51)

This paper aims to shed some light on the dynamics of the Spanish labor market, using data from the Spanish Labor Force Survey for the period 1987 to 2010. We examine transition rates in a three-state model and compare our results with those re- ported for the UK and the US. Explicitly introducing the employment duality present in the Spanish labor market, we study labor market dynamics in a four-state model set-up. We also analyze the behavior of these rates within two sub-periods of recession and a further two sub-periods of boom. We provide evidence of the cyclicality of the transition rates using unconditional and conditional correlations. Finally, we compute the contribution of the di erent transitions to unemployment rate volatility. Our over- all conclusion points out that the employment duality is the key to understand the unemployment volatility and the functioning of the Spanish labor market.

In this article, we use a stylized model of the labor market to investigate the effects of three alternative and well-known bargaining solutions. We apply the Nash, the Egalitarian and the Kalai-Smorodinsky bargaining solutions in the small firm's matching model of unemployment. To the best of our knowledge, this is the first attempt that has been made to implement and systematically compare these solutions in search-matching economies. Our results are twofold. First from the theoretical/methodological viewpoint, we extend a somewhat flexible search-matching economy to alternative bargaining solutions. In particular, we prove that the Egalitarian and the Kalai -Smorodinsky solutions are easily implementable and mathematically tractable within search-matching economies. Second, our results show that even though the traditional results of bargaining theory apply in this context, they are generally qualitatively different and quantitatively weaker than expected. This is of particular relevance in comparison with the results established in the earlier literature.

We analyse the rate of formation, the characteristics, and the performance of different types of new firms in Sweden over a decade. Comparisons with Denmark, Brazil, and the United States suggest that the environment for new firm formation in Sweden is not markedly different than elsewhere. In line with previous studies, spin-offs of incumbents perform better than other types of new firms, particularly if their parent firm continues to operate. A novel finding is that the larger the size of their parent, the greater is the rate of employment growth of spin-offs. This contrasts sharply with findings for firms with a single owner. Copyright 2013 The Author 2013. Published by Oxford University Press on behalf of Associazione ICC., Oxford University Press.

While many previous studies on temporary work have found disadvantages for temporary workers as compared to workers with a permanent contract, this study compares temporary work to the alternative of unemployment. Specifically, this paper investigates the potential integrative power of taking up a temporary job for unemployed workers as compared to the counterfactual situation of remaining unemployed and searching for another job. Applying a dynamic propensity-score matching approach based on British, (West and East) German, and Swiss panel data during the period of 1991-2009, it is shown that taking up a temporary job increases the employment chances during the subsequent five years in (West and East) Germany and the UK. Moreover, the chances of having a permanent contract remain higher and a persistent wage premium can be found during the subsequent five years of the career. Advantages of taking up a temporary job are slightly stronger in West Germany compared to East Germany, where temporary contracts are often based on public job creation measures with limited integration potential. Neither long-run advantages nor disadvantages of taking up a temporary job can be found in the case of the flexible Swiss labour market.

It is commonly claimed that the South African labor market is unusually inflexible owing to the strength of the country's unions and the system of centralized collective bargaining. One sign of labor market inflexibility is low responsiveness of wages to local unemployment. Analyzing data from the South African Living Standards Survey, the authors find that the elasticity of wages with respect to local unemployment rates in South Africa in 1993 was about -0.1. The similarity of this elasticity to that found in other countries, including the United States and the United Kingdom, is surprising given South Africa's national unemployment rate of over 30%. The wage curve elasticity persists over a much wider range of unemployment rates in South Africa than in OECD countries, implying that unemployment in South Africa can have a large impact on wages. (Free full-text download available at http://digitalcommons.ilr.cornell.edu/ilrreview/.)

Article first published online on October 10, 2012 We analyse how unemployment, job-finding and job-separation rates react to neutral and investment-specific technology shocks. Neutral shocks increase unemployment and explain a substantial portion of it volatility; investment-specific shocks expand employment and hours worked and contribute to hours worked volatility. Movements in the job-separation rates are responsible for the impact response of unemployment while job-finding rates for movements along its adjustment path. The evidence warns against using models with exogenous separation rates and challenges the conventional way of modelling technology shocks in search and sticky price models.

We offer an analysis of the existence of a positive relationship between minimum wages and economic growth in a simple one-sector overlapping generations economy where the usual Romer-typed knowledge spill-over mechanism in production represents the engine of endogenous growth, in the case of both homogeneous and heterogeneous (i.e., skilled and unskilled) labour. Assuming also the existence of unemployment benefits financed with consumption taxes not conditioned on age at a balanced budget, it is shown that minimum wages may stimulate economic growth and welfare despite the unemployment occurrence. Moreover, a growth-maximising minimum wage can exist. A straightforward message, therefore, is that a combination of minimum wage and unemployment benefit policies can appropriately be used to promote balanced growth and welfare.

We aim to examine how previous unemployment affects future unemployment and career complexity over the life course. Theory suggests that unemployment triggers negative chains of ‘low-pay-no-pay’ circles. Using longitudinal data on men aged 18–64 from the German Socio-Economic Panel, we employ sequence-based methods to quantify career complexity and dynamic panel models to test our hypotheses about the process of cumulative disadvantage on employment careers for the previously unemployed workers over time. We find that unemployment ‘breeds’ unemployment and increases career complexity over the life course. However, unemployment at older ages leads to much higher career complexity than at younger ages.

This paper studies the efficiency of educational choices in a two sector/two schooling level matching model of the labour market where a continuum of heterogenous workers allocates itself between sectors depending on their decision to invest in education. Individuals differ in ability and schooling cost, the search market is segmented by education, and there is free entry of new firms in each sector. Self-selection in education originates composition effects in the distribution of skills across sectors. This in turn modifies the intensity of job creation, implying the private and social returns to schooling always differ. Provided that ability and schooling cost are not too positively correlated, agents with large schooling costs — the ‘poor’ — select themselves too much, while there is too little self-selection among the low schooling cost individuals — the ‘rich’. We also show that education should be more taxed than subsidized when the Hosios condition holds.

Nine Austrian NUTS 2 inter- and intraindustrial job-to-job worker flows for 33 industries are analysed by means of input-output techniques, with these job-to-job flows being an intermediate input in the production of filled vacancies. A new dataset on individual labour market episodes allows for the tracing of individual careers. A linkage analysis of the Leontief multiplier shows that business services, wholesale&retail and the metal industry are ‘key’ industries in for- and backwarding employment, whereas construction and tourism exert an impact on other regional industries by absorbing workers upon aggregate external shocks. These findings can be incorporated in industrial employment forecasts or utilized in regional labour market impact studies.

This paper analyses the role of health on exits out of and entries into employment using data from the first twelve waves of the British Household Panel Survey (1991-2002). We use discretetime duration models to estimate the effect of health on the hazard of becoming non-employed and on the hazard of becoming employed. The results show that general health, measured by a variable that captures health limitations and by a constructed latent health index, affects entries into and exits out of employment; the effects being higher for men than for women. Moreover, results suggest that changes in mental health status influences only the hazard of nonemployment for the stock sample of workers. The results are robust to different definitions of employment, and to the exclusion of older workers from the analysis.

The consequences of introducing or tightening time limits on the receipt of high unemployment benefits are studied in a shirking model. Stricter time limits have an ambiguous impact on the net wage, and changes of utility levels of employed workers and recipients of high unemployment benefits have the same sign as the variation in the net wage. The utility differential between the two groups of unemployed shrinks. The relative income position of skilled workers moves in the same direction as the net wage of unskilled workers. When access to high benefits is denied for shirkers who are caught, stricter time limits may decrease employment. (JEL codes: H53, J41, J60) Copyright The Author 2009. Published by Oxford University Press on behalf of Ifo Institute for Economic Research, Munich. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Summary This paper addresses possible consequences of a minimum wage in a spatial context. An empirical analysis utilizing German data shows that a significant spatial wage structure exists and that, as a consequence, the share of workers earning wages below a minimum wage will be particularly high in rural counties even if we control for educational and occupational differences. A theoretical analysis discusses the implications for the spatial structure of the economy and shows that while the wages in the countryside will be affected positively, wages will decline in the city, where employment and population rise.Workers in the city will further suffer from an increase in housing costs. This supports concerns that urban poverty might increase as a result of the introduction of a minimum wage.

The article analyzes the factors associated with the reduction of poverty between 2003 and 2006 in Argentina. In particular, it examines the role of the labour market, monetary transfers, and demographic factors in poverty exits, taking into account the family composition of households. The data used comes from the Encuestas Permanentes de Hogares (EPH) [Permanent Household Survey]. Results indicate that labour market events are the most important factors associated with these transitions because they are more frequent and also because they have a more significant impact on family incomes. In addition, the results show that households with children and female household heads face greater difficulties to exit poverty than the rest of the households.

This paper uses efficiency wage theory and the existence of community-based sharing to hypothesize that labor markets in developing countries have multiple equilibria—the same economy can be stuck at different levels of unemployment with different levels of wages. The model is meant for developing economies where wage-productivity links are discernible and income-sharing among the poor is prevalent. It seems reasonable to posit that in such an economy more unemployment leads to more income sharing. The main results are generated combining this claim with a theoretical demonstration of the fact that more sharing increases unemployment rates. As corollaries, we show that (1) within the same society, two different racial groups that may be ex ante identical can have different levels of unemployment and wages in equilibrium and (2) the imposition of a legal minimum wage can raise employment. Copyright 2009 , Oxford University Press.

The issue of low-wage workers has received increased interest during last decades in many European countries. In this paper I analyse the patterns of low-wage employment in the Spanish labour market. Using a sample of Spanish workers extracted from the European Community Household Panel for the period 1995-2001, I first analyse the earnings distribution as a whole, looking at the characteristics of low, medium and high paid jobs. I also look at the evolution of these jobs over the period 1995-2001. Furthermore, I examine the determinants of being in a low-paid job using an analytical framework that is characterised by the ability to account for the endogeneity of initial conditions. Finally, I explore the effects of low pay on job mobility. For this purpose I adopt an approach based on competing risks in order to allow for different risks of failure.

We consider a version of the Solow growth model where technological progress can be investment specific or investment neutral. The labour market is subject to search frictions, and the existing productive units may fail to adopt the most recent technological advances. Technological progress can lead to the destruction of technologically obsolete jobs and cause unemployment. We calibrate the model to replicate the high persistence that characterizes the dynamics of firms' neutral technology and the frequency of firms' capital adjustment. We find that neutral technological advances increase job destruction and job reallocation and reduce aggregate employment. Investment-specific technological advances reduce job destruction, have mild effects on job creation, and are expansionary. Hence, neutral technological progress prompts Schumpeterian creative destruction, while investment-specific technological progress operates essentially as in the standard neoclassical growth model. Using structural VAR models, we provide support to the key dynamic implications of the model. Copyright 2007, Wiley-Blackwell.

This paper estimates the importance of workers’ outside options in wage determination. In models of search and bargaining, a worker’s wage is determined by the marginal product of labour and by a weighted average of wages in alternate jobs. Thus, the nature of the wage equation makes it difficult to isolate changes in workers’ outside options that are independent from changes in the marginal product of labour. This paper builds on the predictions of a search and bargaining model with multiple cities, industries and occupations to propose novel identification strategies. Using a unique administrative panel database for Germany, the study exploits differences in both the employment composition across cities and in job-specific skill transferability as sources of variation for identification. The main finding of the paper is that a 10% increase in the outside options of a worker generates a 7% wage increase.

This paper studies gender spillovers in career advancement using 11 years of employer-employee matched data on the population of white-collar workers at over 4,000 private-sector establishments in Norway. Our data include unusually detailed job information for each worker, which enables us to define seven hierarchical ranks that are consistent across establishments and over time in order to measure promotions (defined as year-to-year rank increases) even for individuals who change employers. We first find that women have significantly lower promotion rates than men across all ranks of the corporate hierarchy, even after controlling for a range of individual characteristics (age, education, tenure, experience) and including fixed effects for current rank, year, industry, and even work establishment. In measuring the effects of female coworkers, we find positive gender spillovers across ranks (flowing from higher-ranking to lower-ranking women) but negative spillovers within ranks. The finding that greater female representation at higher ranks narrows the gender gap in promotion rates at lower ranks suggests that policies that increase female representation in corporate leadership can have spillover benefits to women in lowers ranks.

Although private equity firms are often criticized for layoffs, little evidence exists regarding which employees lose their jobs and why. We argue that explanations for the job polarization process can also explain layoffs after buyouts. Buyouts reduce agency problems, which triggers automation, offshoring, and tougher bargaining with labor unions. We show that workers in less productive firms who perform routine or offshorable job tasks are more likely to lose their jobs. The opposite trend holds for workers who perform non-routine or non-offshorable job tasks. Moreover, workers who belong to aggressive labor unions are more likely to lose their jobs.

This paper investigates an equilibrium search model in which search frictions are increasing with the distance to a city’s central business district, allowing for on-the-job search and endogenous wage formation and land allocation. The findings suggest that the decentralized market results in a more segregated outcome than may be socially desirable. The externality comes from the misguided incentives for the low-paid workers, who have a high preference for central locations in order to climb up the job ladder. Policies reducing the rental costs of un- employed workers for locations close to the central business district may potentially increase welfare.

It is well documented that displaced workers suffer severe earnings losses, but not why this is so. One reason may be that workers are unable or unwilling to move to regions with better employment opportunities. We study this and find that job displacement increases regional mobility but, surprisingly, we also find that displaced workers who move suffer larger income losses than displaced workers who stay in the same region. This is not a selection effect, but reflects the fact that non-economic factors such as family ties are very important for the decision to migrate. Workers are less likely to move if they have family in the region where they already live, and job loss stimulates workers to relocate with parents and siblings when they live in different regions. Looking at earnings we find that the entire post displacement income difference between displaced movers and stayers is driven by workers moving to regions where their parents live or to rural areas. Furthermore, when looking at long-run family income, we find that the difference between displaced movers and stayers is very modest. With respect to selection, we find that migrants are positively selected on average, but very heterogeneous. They seem to be drawn disproportionately both from the high and the low end of the skill distribution in the region they leave.

This paper describes a dynamic factor model of 19 U.S. labor market indicators, covering the broad categories of unemployment and underemployment, employment, workweeks, wages, vacancies, hiring, layoffs, quits, and surveys of consumers' and businesses' perceptions. The resulting labor market conditions index (LMCI) is a useful tool for gauging the change in labor market conditions. In addition, the model provides a way to organize discussions of the signal value of different labor market indicators in situations when they might be sending diverse signals. The model takes the greatest signal from private payroll employment and the unemployment rate. Other influential indicators include the insured unemployment rate, consumers' perceptions of job availability, and help-wanted advertising. Through the lens of the LMCI, labor market conditions have improved at a moderate pace over the past several years, albeit with some notable variation along the way. In addition, from t he perspective of the model, the unemployment rate declined a bit faster over the past two years than was consistent with the other indicators.

We study the impact of graduating in a recession in Flanders (Belgium), i.e. in a rigid labor market. In the presence of a high minimum wage, a typical recession hardly influences the hourly wage of low educated men, but reduces working time and earnings by about 4.5% up to twelve years after graduation. For the high educated, the working time is not persistently affected, but the penalty on the hourly wage (and earnings) increases with experience, and attains roughly -6% ten years after labor market entry. We also contribute to the literature on inference with few clusters.

We simulate the effect of the introduction of premium differentiation (experience rating) in the Dutch Unemployment Insurance system on the demand for labor for a variety of sectors in the Dutch economy. For the simulations we use the Bentolila and Bertola (1990) framework as a point of departure. In the simulations, the introduction of experience rating is modeled as expenditure neutral: in the absence of premium differentiation the cost of financing UI is modeled as a wage tax (independent of the number of workers fired by the firm), whereas in the presence of experience rating this cost is attributed to firing cost (affected by the firing action). Thus, the introduction of experience rating results in a shift from wage cost to firing cost. Following the political debate on the issue in the Netherlands, we assume that the introduction of experience rating does neither lead to a change in tax rates paid by workers nor to a change in eligibility rules or replacement rates of benefit claimants. Specific attention is paid to the distinction between 'young' and 'old' workers . In the model, labor adjustment costs (hiring and firing costs) are linear. The model allows for uncertainty in the business cycle.

Mobility restrictions (e.g., severance payment, life-long tenure, and divorce ban) are widely observed. I present a partnership model that highlights the 'break-up externality' (i.e., the negative effect of a person's break-up decision on his current partner). Under this externality, there is too much searching for new partners and too much breaking-up of existing partnerships. Restrictions such as a break-up payment and break-up ban can reduce the levels of searching and breaking-up and improve welfare. Thus the paper rationalizes mobility restrictions as welfare-improving arrangements. (Copyright: Elsevier)

This paper examines the effect of a husband's job loss on the labor supply of his wife, an effect known as the 'added worker' effect. Unlike past added worker effect studies which focus on the effect of the husband's current unemployment status, this paper analyzes the wife's labor supply response in the periods before and after her husband's job displacement in order to examine the short- and long-run adjustments to an earnings shock. Using the Panel Study of Income Dynamics, small pre-displacement effects are found along with larger and persistent post-displacement effects. The timing of the wives' responses differs by the type of displacement (plant closing vs. permanent layoff), possibly due to differences in the information wives acquire prior to the displacement. In addition, the response is found to increase with the magnitude of the husband's wage loss, to have changed over time (70's vs. 80's) and to vary by the husband's pre-displacement earnings. The long-run increases in the wife's labor supply account for over 25% of the husband's lost income.

Following a breakthrough discovery, scientific knowledge with natural excludability may be best transferred to industry by the labor mobility of top scientists from universities and research institutes to firms. We model labor mobility as a function of scientist's quality (as measured by scientific citations) and his or her reservation wages which is determined by labor quality and the cost of moving, and also depends on the trial frequency, (number of potential firm employers), potential interfering offers from universities, and experienced increase in productivity of top scientists already in firms (reducing reservation values). Applying our model to bioscience and related industries, we find broad support in a group duration analysis. The time a star scientist remains in a university before moving to a firm is significantly decreased as the quality of the bioscientist and as her focus on human genetics increases; decreased as the expected frequency of offers increases with increases in local firms commercializing the technology and the percentage of ties to scientists outside the bioscientist's organization; decreased by experienced increase in productivity by other star scientists nearby who have already moved to firms. Only the number of top quality universities in the local area, via interfering university moves, increases the time a star scientist remains in a university before moving to a firm. We find some evidence of heterogeneity when we decompose the sample of bioscientists by their destination status, finding only quality remains significant across both affiliated scientists (full-time employment in a firm) and linked scientists (part-time employment), with all variables that are significant in the duration model also entering for linked scientists.

This study analyzes state dependence in low-wage employment of western German women using GSOEP data, 2000-2006. We estimate dynamic multinomial logit models with random effects and find that having a low-wage job increases the probability of being low-paid and decreases the chances of being high-paid in the future, in particular for low-paid women working part-time. However, concerning future wage prospects low-paid women are clearly better off than unemployed or inactive women. We argue that for women low-wage jobs can serve as stepping stones out of unemployment and are to be preferred to staying unemployed and waiting for a better job. Mit Daten des Sozio-ökonomischen Panels für 2000-2006 untersucht diese Studie die Wahrscheinlichkeit westdeutscher Frauen, in Niedriglohnbeschäftigungen zu verbleiben ("state dependence"). Wir schätzen dynamische multinomiale Logit-Modelle mit zufälligen Effekten und finden, dass ein Niedriglohnjob die Wahrscheinlichkeit einer Niedriglohntätigkeit in der Zukunft erhöht und die Chancen auf einen Hochlohnjob verringert. Dies gilt insbesondere für geringverdienende Frauen, die Teilzeit arbeiten. Allerdings sind die Aussichten bezüglich künftiger Löhne für Frauen in Niedriglohntätigkeiten deutlich besser als für solche, die arbeitslos oder inaktiv sind. Wir folgern daraus, dass für Frauen Niedriglohnjobs als Sprungbrett aus der Arbeitslosigkeit dienen können und dass sie eine bessere Alternative darstellen als arbeitslos zu bleiben und auf bessere Arbeitsplatzangebote zu warten.

This paper contributes to the existing literature on public employment showing that the wage setting policy of the public sector is an important determinant of private employment and unemployment. I look at the case of geographically homogeneous wages across regions with different productivity, and show that public employment generates a crowding out effect against private employment. This effect is larger the larger is the public sector share of total employment. However, when the government pays wages according to local productivity the crowing out effect vanishes. I present a two region two sector model based on Pissarides (2000) heterogeneous search and matching model where vacancies are posted by the private and the public sector as in Quadrini and Trigari (2007), Gomes (Forthcoming) and Boeing-Reicher et al. (2016). I calibrate the model to the Italian labor market and show that the uniform wage setting policy adopted by the central government, in the presence of productivity unbalance across regions, is responsible for up to 33% of the unemployment gap between the North and South. Moreover, I show that the geographical homogeneous wage setting is responsible for a stronger and geographically highly asymmetric response of unemployment to aggregate productivity shocks. I also allow for migration from one region to the other and find that it has only a very limited mitigating role in reducing this gap. Policy experiments suggest that reducing the size of public employment reduces unemployment in lower productive regions while allowing for regional wage setting in the public sector almost eliminates the unemployment differential.

This paper provides an empirical analysis of reference-dependent effects of unemployment on mental well-being. We show that the negative effect of unemployment on mental well-being depends on expectations about the future employment status. Several contributions to the literature have shown that the perception of the individual employment status depends on the surrounding unemployment rate. We argue that expectations are a possible link between unemployment rates and the individual employment status regarding changes in mental well-being. Theoretical foundation comes from models for reference-dependent preferences with endogenous reference points. We provide a simple theoretical model to motivate and structure the empirical analysis. Using data from the German Socio-Economic Panel, we estimate a pairwise interacted model for employment status and expectations over two time periods. Life satisfaction is used as a proxy for mental well-being. To identify a causal effect of unemployment, expectations and their interactions on mental wellbeing, the analysis relies on fixed effects and exogenous entries into unemployment due to plant closures. We confirm the standard result that unemployment has a negative effect on mental well-being. Furthermore, the results deliver empirical evidence for reference-dependent effects of unemployment on mental well-being. We find that becoming unemployed unexpectedly is more severe as if the unemployment was expected. Therefore, this paper contributes to the understanding of how mental well-being is affected by unemployment and delivers empirical support for the theoretical models of reference-dependent preference wit endogenous reference points determined by expectations.

Fixed-term contracts have become a major form of employment in Europe. Available evidence about whether temporary jobs are a stepping stone to a permanent employment or are a dead end is mixed. The usefulness of these jobs depends on the institutional and economic environment. Fixed-term contracts can be a pathway from unemployment to employment, but their potential as a stepping stone to permanent employment is undercut if there is a strong degree of segmentation in labor markets. If that is the case, the labor flexibility motive of employers ends up dominating the screening function in offering a fixed-term contract.

Public opinion in Europe seems worried about the effect of lower-wage country competition. In both newspaper articles and in policy debates, the term ‘social dumping’ is becoming more and more popular. In many countries, trade unions worried by the effect of what they call ‘unfair competition’, propose the adoption of a ‘social clause’ protecting domestic markets from commodities produced in countries were minimal labour conditions are not met. We analyse the effects of such a policy in the framework of a vertically differentiated Bertrand duopoly. In particular, we study the effects of such a policy on the relocation decisions of the firms and perform a welfare analysis. The welfare analysis takes explicitly into account the unemployment situation in the domestic country by accounting for the workers’ welfare losses due to job reductions following the relocation of firms. We characterize the optimal social clause policy both under domestic welfare maximization and from an efficiency point of view. We show that, on domestic welfare grounds, the case for a social clause policy is weaker the higher the domestic wage and the lower the foreign wage.

This paper uses a unique panel dataset of firms and workers to investigate the relationship between the firm’s lifecycle and the reallocation of labour. We distinguish labour reallocation associated with job reallocation, and reallocation of workers over a fixed configuration of jobs. We find that firms at the beginning and end of their lifecycles contribute disproportionately to labour market flows, with sorting between firms particularly important among young firms, whereas sorting within firms is more important among mature firms. We also find that high churning flows are associated with a lower probability of a young firm surviving.

This paper stresses the importance of a specification of the matching function in which the measure of job matches corresponds to the measure of job searchers. In many empirical studies on the matching function this requirement has not been fulfilled because it is difficult to find information about employed job searchers and job searchers from outside the labour market. In this paper, we specify and estimate matching functions where the flow corresponds to the correct stock. We use several approximations for the stock of non-unemployed job searchers. We find that the estimation results are sensitive to the approximation we use. Our main conclusion is that it is important to account for the behaviour of non-unemployed job searchers since otherwise the estimated parameters of the matching function may be seriously biased.

In this Manifesto, we make a set of proposals to fight unemployment in the EU. We believe that the European unemployment problem needs to be attacked on two fronts: through a broad spectrum of supply-side policies and the demand management policy. The expansion of aggregate demand is necessary to increase both investment and employment. However, unless supply-side measures are also taken, demand expansion can result in more inflation instead of more employment, because of the mismatch between the demand and supply of labour. What is important to stress is that both demand and supply-side policies must be adopted together by all European countries, in order both to avoid beggar-thy-neighbor problems and, at the same time, to catch all the possible complementary effects of these policies. JEL Codes: E24, E60, J30, J60, PSL Quarterly Review, V. 51, N. 206 (1998)

This study analyzes the educational attainment and early labor market outcomes of young migrants from the Former Soviet Union (FSU) who arrived in Germany between 1989 and 1994. The results reveal that migrants have lower educational attainments than natives, and that within the group of migrants, Jewish migrants perform better than ethnic German migrants. A decomposition analysis reveals that this competitive edge can, for the most part, be explained by a higher socioeconomic background. In the labor market, migrants cannot compensate for their educational disadvantage and have poorer labor market outcomes than natives. The results of this study stress the importance of an early educational integration of migrants for a successful labor market integration in the long run.

Usually, when the attention is focused on the different performances of the labour market, the overall rate of unemployment is at the center stage. But this is misleading: while short term unemployment can be seen as physiological for the the working of the labour market, long-term unemployment is certainly pathological. The paper considers how the different varieties of capitalism affect the rate of long-term unemployment, rather than the aggregate rate. The liberal market variety, where employment protection is the lowest, presents lower rates of long-term unemployment than the continental European and the Mediterranean varieties. In the latter both employment protection and long-term unemployment are the highest and labour market participation the lowest. The social-democratic Scandinavian variety gets the best of both worlds: low rates of long-term unemployment, high rates of labour participation, lower degree of inequality, with relatively high levels of employment protection. However the Scandinavian model may be hardly applicable in countries, such as the Mediterranean ones, where a sizable part of public opinion apparently adheres to the various specifications of the “lump of something” economic fallacy. Low rates of long-term unemployment and high levels of labour participation are also produced by the far-Eastern Asian variety, but at the cost of a markedly dualistic labour market structure.

The progressive wage tax is the instrument commonly used by democracies to fund public expenditures. Yet it still divides opinions about its impact on skill formation. We develop a general equilibrium model to analyze this impact, in the context of uncertain return on higher education. We show that the quantitative impact on skill formation of switching from the flat to the progressive tax varies with the level of efficiency with which higher education imparts graduates with suitable skills. This impact is negative when the level of efficiency of higher education is low and positive when it is high.

This paper studies how family firms reacted to the 2008 economic crisis by adjusting employment. In particular, we look at how the geographical distribution of the workforce may have led to divergencies between family and non-family firms. Using a difference-in-difference approach, we provide empirical evidence that paths of adjustment did diverge, with family firms systematically preferring to safeguard workplaces close to headquarters. We offer a new theoretical framework, the social recognition motive, that is consistent with this finding; it is based on contributions in the literature on corporate governance that stress the importance of the non-pecuniary benefits of the owner's control of the family firm. The social recognition motive originates from the psychological relation linking the family-firm owner with his or her community. The theory also offers a clear set of predictions that are all confirmed by the data. Alternative explanations, although theoretically plausible, seem to be ruled out in our setting.