Labor Market Model

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Gary S Fields - One of the best experts on this subject based on the ideXlab platform.

  • job creation in a multi sector Labor Market Model for developing economies
    Research Papers in Economics, 2016
    Co-Authors: Arnab K Basu, Gary S Fields, Nancy H Chau, Ravi Kanbur
    Abstract:

    This paper proposes an overlapping generations multi-sector Model of the Labor Market for developing countries with three heterogeneities - heterogeneity within self-employment, heterogeneity in ability, and heterogeneity in age. We revisit an iconic paradox in a class of multisector Labor Market Models in which the creation of high-wage employment exacerbates unemployment. Our richer setting allows for generational differences in the motivations for job search to be reflected in two distinct inverted U-shaped relationships between unemployment and high-wage employment, one for youth and a different one for adults. In turn, the relationship between overall unemployment and high-wage employment is shown to be non-monotonic and multi-peaked. The Model also sheds light on the implications of increasing high-wage employment on self-employed workers, who make up most of the world's poor. Nonmonotonicity in unemployment notwithstanding, increasing high-wage employment has an unambiguous positive impact on high-paying self-employment, and an unambiguous negative impact on free-entry (low-wage) self-employment.

  • a theoretical Model of the chinese Labor Market
    Research Papers in Economics, 2013
    Co-Authors: Gary S Fields, Yang Song
    Abstract:

    This paper constructs a theoretical Labor Market Model for China, and utilizes the Model to examine the effects of various Labor Market policies on economic well-being. Two key features of the Model are a segmented Labor Market involving three sectors – state-owned enterprises, private enterprises, and agriculture – and China's unique household registration system (hukou). The major existing theoretical Models of employment and development – the Lewis Model, the integrated Labor Market Model, the Harris-Todaro Model, and various segmented Labor Market Models – stylize different developing countries' Labor Markets in other ways but do not include these two key features. The paper first formulates the equations of the Model, then obtains a closed form solution given initial conditions, and then deduces the Labor Market and welfare consequences of several policy interventions, which include promoting rural development, reducing the cost-of-living in urban areas for rural hukou holders, and offering some rural workers the chance to convert from rural to urban hukou status. These policy interventions are analyzed using two alternative welfare criteria: first-order stochastic dominance and an abbreviated social welfare function. Using both social welfare criteria, it is shown that the rural development policy is unambiguously welfare-improving, while the other two policies have ambiguous effects on social welfare. None of these policies is unambiguously welfare-decreasing.

  • a welfare economic analysis of Labor Market policies in the harris todaro Model
    Journal of Development Economics, 2005
    Co-Authors: Gary S Fields
    Abstract:

    This paper presents a welfare economic analysis of the benefits of various Labor Market policies in the Harris–Todaro Labor Market Model. The policies considered are a policy of modern sector job creation, which I call modern sector enlargement (MSENL); a policy of rural development, which I call traditional sector enrichment (TSENR); and a policy of wage limitation in the urban economy, which I call modern sector wage restraint (MSWR). First, I analyze the inequality effects of these policies. I then perform two welfare economic analyses, the first based on summary measures of Labor Market conditions (total Labor earnings, unemployment, inequality of Labor incomes, and poverty rates) and the second based on dominance analysis in the Labor Market, in both cases assuming that the costs are borne elsewhere. The results of the welfare analyses are compared, and it is shown that TSENR unambiguously increases welfare in the Labor Market using both approaches, the other policies yield ambiguous results, and no policy is unambiguously welfare-decreasing.

Federico A Bugni - One of the best experts on this subject based on the ideXlab platform.

  • specification test for missing functional data
    Econometric Theory, 2012
    Co-Authors: Federico A Bugni
    Abstract:

    Economic data are frequently generated by stochastic processes that can be Modeled as realizations of random functions (functional data). This paper adapts the specification test for functional data developed by Bugni, Hall, Horowitz, and Neumann (2009, Econometrics Journal12, S1–S18) to the presence of missing observations. By using a worst case scenario approach, our method is able to extract the information available in the observed portion of the data while being agnostic about the nature of the missing observations. The presence of missing data implies that our test will not only result in the rejection or lack of rejection of the null hypothesis, but it may also be inconclusive.Under the null hypothesis, our specification test will reject the null hypothesis with a probability that, in the limit, does not exceed the significance level of the test. Moreover, the power of the test converges to one whenever the distribution of the observations conveys that the null hypothesis is false.Monte Carlo evidence shows that the test may produce informative results (either rejection or lack of rejection of the null hypothesis) even under the presence of significant amounts of missing data. The procedure is illustrated by testing whether the Burdett–Mortensen Labor Market Model is the correct framework for wage paths constructed from the National Longitudinal Survery of Youth, 1979 survey.

  • specification test for missing functional data
    Social Science Research Network, 2011
    Co-Authors: Federico A Bugni
    Abstract:

    Economic data are frequently generated by stochastic processes that can be Modeled as realizations of random functions (functional data). This paper adapts the specification test for functional data developed by Bugni, Hall, Horowitz and Neumann (2008) to the presence of missing observations. By using a worst case scenario approach, our method is able to extract the information available in the observed portion of the data while being agnostic about the nature of the missing observations. The presence of missing data implies that our test will not only result in the rejection or lack of rejection of the null hypothesis, but it may also be inconclusive.Under the null hypothesis, our specification test will reject the null hypothesis with a probability that, in the limit, does not exceed the significance level of the test. Moreover, the power of the test converges to one whenever the distribution of the observations conveys that the null hypothesis is false.Monte Carlo evidence shows that the test may produce informative results (either rejection or lack of rejection of the null hypothesis) even under the presence of significant amounts of missing data. The procedure is illustrated by testing whether the Burdett-Mortensen Labor Market Model is the correct framework for wage paths constructed from the NLSY79 survey.

  • specification test for missing functional data
    Research Papers in Economics, 2010
    Co-Authors: Federico A Bugni
    Abstract:

    Economic data are frequently generated by stochastic processes that can be Modeled as realizations of random functions (functional data). This paper adapts the speci cation test for functional data developed by Bugni, Hall, Horowitz and Neumann to the presence of missing observations. By using a worst case scenario approach, our method is able to extract the information available in the observed portion of the data while being agnostic about the nature of the missing observations. The presence of missing data implies that our test will not only result in the rejection or lack of rejection of the null hypothesis, but it may also be inconclusive. Under the null hypothesis, our specification test will reject the null hypothesis with a probability that, in the limit, does not exceed the significance level of the test. Moreover, the power of the test converges to one whenever the distribution of the observations conveys that the null hypothesis is false. Monte Carlo evidence shows that the test may produce informative results (either rejection or lack of rejection of the null hypothesis) in relevant economic Models. The procedure is illustrated by testing whether the Burdett-Mortensen Labor Market Model is the correct framework for wage paths constructed from the NLSY79 survey.

Yves Zenou - One of the best experts on this subject based on the ideXlab platform.

  • job search and mobility in developing countries theory and policy implications
    Journal of Development Economics, 2008
    Co-Authors: Yves Zenou
    Abstract:

    A Labor Market Model is developed in which the formal sector is characterized by search frictions whereas the informal sector is competitive. We show that there exists a unique steady-state equilibrium in this dual economy. We then consider different policies financed by a tax on firms' profits. We find that reducing the unemployment benefit or the firms' entry cost in the formal sector induces higher job creation and formal employment, reduces the size of the informal sector but has an ambiguous effect on wages. We also find that an employment/wage subsidy policy and a hiring subsidy policy have different implications. In particular, the former increases the size of the informal sector while the latter decreases it.

Cheng Wang - One of the best experts on this subject based on the ideXlab platform.

  • incentives and the cost of firing in an equilibrium Labor Market Model with endogenous layoffs
    International Economic Review, 2013
    Co-Authors: Cheng Wang
    Abstract:

    I study the effects of firing costs in an equilibrium Model of the Labor Market with moral hazard. Layoff is an incentive device, Modeled as termination of the optimal long-term contract. When the economy’s stock of firms is fixed, firing costs could reduce layoffs and increase worker welfare. In the long run when firms are free to enter and exit the Market, firing costs generate not only lower employment, longer unemployment durations, and lower aggregate output, but also lower welfare for both employed workers and new Labor Market entrants.

  • termination of dynamic contracts in an equilibrium Labor Market Model
    Research Papers in Economics, 2005
    Co-Authors: Cheng Wang
    Abstract:

    I construct an equilibrium Model of the Labor Market where workers and firms enter into dyamic contracts that can potentially last forever, but are subject to optimal terminations. Upon a termination, the firm hires a new worker, and the worker who is terminated receives a termination compensation from the firm and is then free to go back to the Labor Market to seek new employment opportunities and enter into new dynamic contracts. The Model permits only two types of equilibrium terminations that resemble, respectively, the two typical kinds of Labor Market separations observed in practice: involuntary layoffs and voluntary retirements. The Model allows simultaneous determination of its equilibrium turnover, unemployment, and retirement, as well as the expected utility of the new Labor Market entrants.

Thomas A Lubik - One of the best experts on this subject based on the ideXlab platform.

  • estimating a search and matching Model of the aggregate Labor Market
    Economic Quarterly - Federal Reserve Bank of Richmond, 2009
    Co-Authors: Thomas A Lubik
    Abstract:

    (ProQuest: ... denotes formulae omitted.) The search and matching Model has become the workhorse for Labor Market issues in macroeconomics. It is a conceptually attractive framework as it provides a rationale for the existence of equilibrium unemployment, such that workers who would be willing to work for the prevailing wage cannot find a job. By focusing on the search and matching aspect, that is, workers searching for jobs, firms searching for workers, and both sides being matched with each other, the Model also provides a description of employment flows in an economy. Moreover, the search and matching Model is tractable enough to be integrated into standard macroeconomic Models as an alternative to the perfectly competitiveWalrasian Labor Market Model. However, the search and matching framework has been criticized, most notably by Shimer (2005), for being unable to match key Labor Market statistics, chiefly the volatility of unemployment and job vacancies. This observation has generated a large amount of research intended to remedy this "puzzle." Most of this literature is largely theoretical and based on calibration. Only recently have there been efforts to more formally study the quantitative implications of the entire search and matching framework. This article is among the first attempts to take a search and matching Model to the data in a full-information setting.1 In this article I contribute to these efforts by estimating a small search and matching Model using Bayesian methods. My focus is mainly on the actual parameter estimates and the implied sources of business cycle fluctuations. Calibrating the search and matching Model tends to be problematic since some of the Model parameters, such as the bargaining share or the value of staying unemployed, are difficult to pin down. Hence, much of the arguments about the empirical usefulness of the search and matching Model center around alternative calibrations. This paper provides some perspective on this issue by adopting a full-information approach in estimating the Model. Parameters are selected so as to be consistent with the co-movement patterns in the full data set as seen through the prism of the theoretical Model. parameter estimates and the implied sources of business cycle fluctuations. Calibrating the search and matching Model tends to be problematic since some of the Model parameters, such as the bargaining share or the value of staying unemployed, are difficult to pin down. Hence, much of the arguments about the empirical usefulness of the search and matching Model center around alternative calibrations. This paper provides some perspective on this issue by adopting a full-information approach in estimating the Model. Parameters are selected so as to be consistent with the co-movement patterns in the full data set as seen through the prism of the theoretical Model. In a larger sense, this article also deals with the issue of identification in structural general equilibrium Models. I use the term "identification" loosely in that I ask whether the theoretical Model contains enough restrictions to back out parameters from the data. In that respect, the search and matching framework performs reasonably well. But identification also has a dimension that may be more relevant for the theoretical Modeler. I show that specific parameters, such as the worker benefit or search costs, can vary widely across specifications, and thus are likely not identified in either an econometric or economic sense. I also argue that they capture the stable behavior of an underlying structure. They therefore adapt to a change in the environment and might be better described as reduced-form coefficients. The article proceeds as follows. In the next section, I lay out a simple search and matching Model, followed by a discussion in Section 2 of the empirical strategy and the data used. In Section 3, I present the benchmark estimation results, discuss the estimated dynamics, and investigate the sources of business cycle fluctuations. …