Search

An examination of regional unemployment rates reveals that there are vast differences which cannot be explained by different institutional. Our paper traces these differences in the regions labour market performance back to the regions specialisation in products that are more or less advanced in their product cycle. The model we develop shows how profit maximisation and its interaction with individual preferences endogenously lead to initially increasing and then decreasing employment in the presence of process innovation. We show how processes of structural change develop in time and how they are linked to technological progress.

Textbook wisdom says that competition yields lower prices and higher consumer surplus than monopoly. We show in two versions of a simple location-product differentiation model with and without endogenous choice of products that these two results have to be qualified. In both models, more than half of the reasonable parameter values lead to higher prices with duopoly than with monopoly. If the product characteristics are exogenous to the firms, consumers may even be be better off with monopoly in average.

In Mikro- und Industrieökonomik ist scheinbar gewiss, dassWettbewerb zu niedrigeren Preisen führt und dass Konsumenten von Wettbewerb profitieren, während die etablierten Unternehmen einen Nachteil erleiden. Dieser Beitrag verwendet ein raumwirtschaftliches Standardmodell, um zu zeigen, dass dies nicht immer so sein muss. Der Grund ist, dass durch den Marktzutritt gerade die Konsumenten, deren Preiselastizität am größten ist, von dem Unternehmen bei der Preisbildung nicht berücksichtigt werden.

The aim of this study is to examine in which cases economic forces or historical singularities prevail in the determination of the long-run distribution of firms. We develop a relatively general model of heterogenous firms' location choice in discrete space. The main force towards an agglomerated structure is the reduction of transaction costs for consumers if firms are located closely, whilst competition and transport costs work towards a more disperse structure. We then assess the importance of the initial conditions by simulating and comparing the resulting distribution of firms for identical economic parameters but varying initial settings. If the equilibrium distributions of firms are similar we conclude that economic forces have prevailed, while differences in the resulting distributions indicate that 'history' is more important. The (dis)similarity of distributions of firms is calculated by means of a measure, which exhibits a number of desirable features.

Existing theoretical literature fails to explain the differences between the pay of workers that are covered by union agreements and others who are not. This study aims at closing this gap by a single general- equilibrium approach that integrates a dual labor market and a two- sector product market. Our results suggest that the so­ called 'union wage gap' is largely determined by the degree of centralization of the bargains, and, to a somewhat lesser extent, by the expenditure share of the unionized sector's goods.

(De)regulatory interventions frequently have unintended cross- market effects, which may or may not be desirable. We assess the effects of three policies on aggregate variables, in particular real income, from a theoretical perspective. Our results suggest that instruments acting upon wages have only a weak impact on real income, whereas the distribution of income is affected strongly. In contrast, a policy that enhances product market competition is fostering real income, but also impacts strongly on union wages and the distribution of income.

Our analysis is concerned with the impact of a regionalisation of unemployment insurance (UI) on workers’ preferences, on firms’ profits, and on effciency. The existence and the extent of UI are endogenously derived by maximising an objective function of the state. Three different types of regionalisation are considered which differ with respect to the area the UI objective function is related to, and with respect to the policy variable used to maximise it. It comes to light that workers are always in favour of central UI, while it depends on the type of regionalisation whether or not firms are better off with regional or with central UI. The same somewhat surprising result applies for efficiency.

This study examines how the size of trade unions relative to the la- bor force impacts on the desirability of different organizational forms of self-financing unemployment insurance (UI) for workers, firms, and with reference to an efficiency criterion. For this purpose, we respectively nu- merically compare the outcome of a model with a uniform payroll tax to a model where workers pay taxes according to their systematic risk of unemployment. Our results highlight the importance of the bargaining structure for the assessment of a particular UI scheme. Most importantly, it depends on the size of the unions whether efficiency favors a uniform or a differentiated UI scheme.

We examine the effects of regionalising the budget of unemployment insurance (UI) on wages, employment, and on UI parameters, which, for their part, determine the agents’ preferences concerning such a reform. A numerical example shows that, under reasonable assumptions, the intuition that the reform would enhance efficiency and improve the economic situation of agents from the low- unemployment region to the disadvantage of agents from the high- unemployment region is not valid in general.

The extent to which workers are threatened by unemployment differs considerably e.g. across branches of industry, age education, and regions. Nonetheless, it is customary to levy obligatory contributions to unemployment insurance UI) regardless of a worker´s specific risk of becoming unemployed. Branches of industry or regions characterized by a relatively high rate of unemployment are favoured by this practice because workers and / or employers pay less than the actuarial fair insurance premium. This leads to a distorsion of the decisions regarding where or what kind of labour is being supplied. The purpose of this paper is to discuss the effects of placing the UI under the opligation to equilibrate its budget in each region respectively, as opposed to on the whole. In the former case, the conditions of UI reflect the risk of unemployment within each region. The results may nevertheless be applied to other characteristics systematically influencing the probability to enter employment. Labor markets in both regions do not clear because the wage rate, bargained between trade unions and employers (right-to-manage-approach), is binding. Unions maximize the expected utility of a representative worker. This expected utility is affected, among other things, by the UI contributions employed workers have to pay, and by the UI benefits unemployed workers receive. In this paper it is assumed that the UI adjusts contributions to equilibrate its budget. In this case, contributions themselves will depend on the rate of unemployment, and thus on the bargained wages. The extent to which the unions take the interplay between wages and contributions into account, crucially depends on the size of a union. For atomistic unions (decentralized bargaining), the effect of the bargained wage the unemployment rate is negligible. Because every union neglects it, the total size of this externality however is considerable. The larger a union is with respect to the total workforce, the more of the effect is internal. It is interesting to analyze the effect in the context of regionalized UI because the way UI is organized affects, how elastic UI contributions react on variations of unemployment. Another important aspect is the role of migration. Protagonists of the regionalization of UI often point to the allocative advantages it has. The line of reasoning is that workers migrate to regions which are less concerned by unemployment and which are thus characterized by lower UI contributions. The regionalization thereby serves as a substitute for higher differences of wages, which do not perfectly reflect the relative regional scarcity of labor. This point of view is rather superficial. If there is unemployment in both regions, there is no direct allocative gain in reallocating workers from one region to the other. On the other hand, migration affects the UI`s parameters. If wages react on these, the efficiency may be affected, too. It is not quite clear, however, if it is improved or worsened by the regionalization of UI. Also, workers from the poor region may be better off, because the reinforced emigration ameliorates the probability of becoming employed, and vice versa. Since the effects of regionalization of UI on the economic agents, as well as on efficiency, are subject to the complex interplay of wages, UI contributions, and migration, a formal model is an adequate mean to identify the effects. In this paper, an analytical framework is established to analyze the effects of a regionalization of UI. Since many effects are ambigous in general, the model is calibrated with reasonable parameter values. Our results confirm the importance of the degree of centralization of unions for the assessment of the regionalization of UI by workers and employers, and for the efficiency of the measure.