THE EFFECTS OF IMMIGRATION IN A DISTORTED TWO-SECTOR ECONOMY

This paper examines the income, employment and distributional impact of immigration on a recipient economy facing an administered wage distortion. It is found that immigration increases the unemployment rate of the native population and shifts income distribution against labor and in favor of the nonlabor input. Its effect on the total income of the non-immigrants is, however, ambiguous, and depends on the relative importance of the increase in unemployment versus the net increase in the rent received by the owners of the non-labor input.     

THE SHIFTS IN LEAD-LAG PROPERTIES OF THE U.S. BUSINESS CYCLE

We document shifts in the lead-lag properties of the U.S. business cycle since the mid-1980s. Specifically, (1) the well-known inverted leading indicator property of real interest rates has completely vanished; (2) labor productivity switched from positively leading to negatively lagging output and labor inputs over the cycle; and (3) the unemployment rate shifted from lagging productivity negatively to leading positively. Many contemporary business cycle models produce counterfactual cross-correlations revealing that popular frictions and shocks provide an incomplete account of business cycle comovement. Determining the underlying sources of these shifts in the lead-lag properties and their consequences for macroeconomic forecasts is therefore a promising direction for future research. (JEL E24, E32, E43)     

Unemployment: A labor market perspective

Twentieth century economists have made countless attempts to resolve the causes and cures of unemployment. However none have ventured to consider unemployment not as a social problem but as a market response to political and economic incentives. By treating unemployment as a labor market, where workers rationally select periods of joblessness and where special interest groups profit from unemployment, this paper develops a theoretically consistent model to explain the effects that policy and economic variables have on unemployment. Empirical results support this approach and the worker disincentive effects of UI compensation by estimating simultaneously a demand and supply for unemployment.     

Labor Supply,Labor Demand,and Men's Underemployment in Rural and Urban Labor Markets1

Abstract This paper examines how the structure of the labor market differentially affects white men's underemployment in urban and rural areas. The effects of labor supply and demand, including special measures of public employment and two previously neglected aspects of competition—global industrial competition and sexual labor market competition—on unemployment, low-wage employment, and low-hours employment are examined. A higher proportion of females in the labor force in rural labor market areas provides benefits to men in the form of lower unemployment, but also costs them, through an increased prevalence of low-wage employment, while the opposite effects are evident for areas with concentrations in periphery service industries. The findings suggest that industrial restructuring in the form of increased foreign competition and an increased loss of core transformative jobs are especially threatening to rural men's employment adequacy.     

GEOGRAPHIC DIFFERENCES IN U.S. UNEMPLOYMENT RATES: A VARIANCE DECOMPOSITION APPROACH

This paper analyzes the determinants of the geographic dispersion of unemployment rates. The model presented here recognizes that structural labor market relationships differ across areas and that area unemployment rates and some of the explanatory variables are determined simultaneously. Most importantly, the methodology introduced here provides an estimate of the impact of each of the explanatory variables on the overall dispersion of unemployment rates, allowing comparison of several competing hypotheses that purport to explain why areas differ so widely in terms of their unemployment rates. The empirical results indicate that inter-area differences in product market demand and in sensitivity to changes in conditions in the product market are the most important factors accounting for geographic differences in unemployment rates. More generally, the results indicate that unemployment rates differ widely across areas not so much because areas differ in terms of the underlying characteristics that determine unemployment rates but because areas are so heterogeneous with respect to labor market structure.     

UNEMPLOYMENT AND OTHER MEASURES OF LABOR MARKET INEFFICIENCY: A COMPARISON OF U.K. AND U.S. LABOR MARKETS 1931–96

Although unemployment is often used as a measure of labor market inefficiency, economic theory indicates that market inefficiency is determined by both the gap between and the elasticities of supply and demand. Using time series data for the United States and United Kingdom, this article investigates how good the unemployment rate is as a measure of labor market inefficiency by calculating the deadweight loss associated with unemployment rates over time. Results show that the loss arising from unemployment is low across time and countries and that the unemployment rate is often a weak proxy for comparing labor market inefficiency. (JEL J6 )     

Types of structural unemployment in the United Kingdom

The author assesses the importance of each classification of "structural unemployment, namely technological, mismatch of skills, geographical mismatch, demographic shifts, institutional rigidities, 'unemployability', and capital-restructuring unemployment." in the United Kingdom. He also reviews recent evidence on regional wage differential adjustments and their impact on the disequilibrium within the British labor market.     

REGIONAL AND SECTORAL EVIDENCE OF THE MACROECONOMIC EFFECTS OF LABOR REALLOCATION: A PANEL DATA ANALYSIS

This article revisits the sectoral shifts hypothesis by examining unemployment fluctuations for 48 U.S. states over the period 1990:M01–2011:M12. We develop a panel approach that incorporates dynamics, parameter heterogeneity, aggregate factors, and cross‐sectional dependence (CSD). Our findings provide support for a positive and significant effect of the employment dispersion index on unemployment. This outcome is robust under alternative specifications and measures of employment dispersion. The empirical evidence corroborates the presence and relevance of CSD and heterogeneity among states. The results show that, once unobserved common factors and cross‐state heterogeneity are taken into account, labor reallocation has a significant effect on unemployment that is half the size of the estimate when cross‐sectional dependence is not taken into account. (JEL E24, E32, J21, R23, C23)     

Die soziale Diffrenzierung der Übergangsmuster in den Beruf

Growing risks in working lives and in the transition to the first job are supposed to be a core characteristic of labor market changes in the last two decades. However, they cover heterogeneous phenomena that have to be treated separately. Regarding the job entry process among in-firm training diploma holders, firm shifts, occupational shifts and unemployment represent distinct indicators of non-standard transitions to the first job. The empirical analyses, using data from the German IAB-employment-subsample 1975–1995, show that transition patterns have changed differently in the respective cohorts. The probability of experiencing specific transition patterns strongly depends on social structural as well as occupation-specific characteristics. The strongest risks at labor market entry are associated with combined firm and occupational shifts. There is no coherent evidence of a dominant trend towards less structured job entry patterns.     

LABOR FORCE COMPOSITION AND THE PHILLIPS CURVE

This paper presents a model of unemployment and wage inflation based on Phillips curves estimated by age-sex-color groups. The model is estimated using data for the period 1949–1967 with projections for the period 1968–1973. The paper concludes that when allowances are made for changes in the age-sex-color composition of the labor force the standard Phillips curve framework is quite capable of explaining the 1968–1973 period without resorting to the notion of a "natural rate of unemployment" or a "long run Phillips curve."     

Minimum wages and poverty with income-sharing

Textbook analysis tells us that in a competitive labor market, the introduction of a minimum wage above the competitive equilibrium wage will cause unemployment. This paper makes three contributions to the basic theory of the minimum wage. First, we analyze the effects of a higher minimum wage in terms of poverty rather than in terms of unemployment. Second, we extend the standard textbook model to allow for income-sharing between employed and unemployed persons in society. Third, we extend the basic model to deal with income sharing within families. We find that there are situations in which a higher minimum wage raises poverty, others where it reduces poverty, and yet others in which poverty is unchanged. We characterize precisely how the poverty effect depends on four parameters: the degree of poverty aversion, the elasticity of labor demand, the ratio of the minimum wage to the poverty line, and the extent of income-sharing. Thus, shifting the perspective from unemployment to poverty leads to a considerable enrichment of the theory of the minimum wage.      

LOSING BY LESS? IMPORT COMPETITION,UNEMPLOYMENT INSURANCE GENEROSITY,AND CRIME

Increased import competition from China has brought about a host of negative consequences for the most exposed industries and labor markets. Do social programs attenuate these harmful effects? We examine changes in import competition between 1990 and 2007, taking crime as our outcome of interest and unemployment insurance as our mitigating program. We find strong evidence that counties with access to more generous unemployment insurance experienced relatively smaller increases in trade‐induced property crime. This highlights a new and important positive externality of unemployment insurance. (JEL H00, R10)     

THE ECONOMIC CONSEQUENCES OF POLITICAL PHILOSOPHY

Workers' incentives to seek employment and remain employed are affected by a number of government policies. The policies themselves are in turn influenced by the political beliefs of the electorate about what working conditions and incomes should be. Using a simultaneous equations model of political climate and labor market conditions, this study shows that political liberalism may lead to decreased labor force participation and higher unemployment, particularly for women.     

Economic Theories of Low-Wage Work

This article examines economic theories of the low-wage labor market to increase understanding of economic inequality and poverty in the United States, particularly related to the labor market. On the one hand, neoclassical, labor monopsony, and Harris-Todaro models explain how minimum wage policies are related to supply and demand of labor, human capital, employment, and unemployment. On the other hand, the efficiency wage model, the dual labor market theory, and technology development and globalization account for the causes of the wage differentials. This article includes a conceptual map that illustrates the interrelationships between these economic theories of low-wage work.     

PUNISHMENT AND SOCIAL STRUCTURE REVISITED: UNEMPLOYMENT AND IMPRISONMENT IN THE UNITED STATES, 1948–1984

Several recent empirical studies of imprisonment trends in the United States and Western Europe confirm Rusche and Kirchheimer's thesis that unemployment affects imprisonment directly with crime held constant. This empirical confirmation, however, remains suspect because these studies fail to address alternative explanations adequately. This article examines these alternatives more thoroughly and considers a limitation on the scope of the thesis. In particular, because the thesis concerns competitive labor markets of industrial capitalism, we reason that unemployment plays less of a role in the dynamics of imprisonment where the labor market is less freely competitive. The analysis of post-World War II trends reveals robust results for the Rusche-Kirchheimer thesis and limited empirical support for differences in labor markets.     

EFFICIENCY WAGE MODELS OF UNEMPLOYMENT-ONE VIEW

Persistent wage rigidity and involuntary unemployment appear to be recurrent problems in most economies. What could be preventing the wage adjustment necessary to clear the labor market? Many recent papers claim to have found the answer in efficiency wage models. This paper surveys this literature and attempts to evaluate its accomplishments. It concludes that the efficiency wage models fail to explain wage rigidity or persistent involuntary unemployment.     

The employment effects of immigration: a balance sheet approach

The impact of immigration on unemployment in Canada is examined for the period 1983-1985. The authors attempt to construct a balance sheet of immigration in terms of labor supply and demand. They conclude that immigrants create more jobs than they fill, and that their net effect on the employment situation is positive. (SUMMARY IN FRE AND SPA)     

THE TIMING OF EXEMPTIONS FROM WELFARE WORK REQUIREMENTS AND ITS EFFECTS ON MOTHERS' WORK AND WELFARE RECEIPT AROUND CHILDBIRTH

I quantify the effects of welfare work exemptions on women's labor force participation and welfare receipt. This study, which also examines the age of youngest child (AYC) exemption, is the first to investigate the pregnancy exemption. Between‐state and within‐state variations in exemption length allow me to estimate the heterogeneous effects of each exemption by its timing and strictness. I find that the effects on labor force participation are driven by employment for the pregnancy exemption, inducing relatively stable welfare receipts. In contrast, the effects are driven by unemployment for the AYC exemption, which triggers more reliance on welfare after birth. (JEL I38)     

Shifting the Beveridge curve: What affects labour market matching?

This article explores short‐run determinants of the matching between labour demand and supply by identifying shifts in the Beveridge curves for 12 OECD countries between 2000Q1 and 2013Q4. Using three complementary methodologies (visual examination, cointegration techniques and non‐linear estimations), we find that labour force growth and employment protection legislation reduce the likelihood of outward shifts, and the higher the share of employees with intermediate levels of education and the long‐term unemployment, the more difficult the matching process. Active labour market policies (such as incentives for start‐ups or job‐sharing programmes) could facilitate matching, while passive policies (unemployment benefits or labour taxation) make matching significantly more difficult.     

Underemployment and depression: longitudinal relationships

We conceptualize employment status not as a dichotomy of working versus not working but as a continuum ranging from adequate employment to inadequate employment (involuntary part-time or low wage) to unemployment. Will shifts from adequate to inadequate employment increase depression as do shifts from employment to unemployment, and to what extent does prior depression select workers into such adverse employment change? We analyze panel data from the National Longitudinal Survey of Youth for the years 1992-1994 for the 5,113 respondents who were adequately employed in 1992. Controlling for prior depression, both types of adverse employment change resulted in similar, significant increases in depression. These direct effects persisted despite inclusion of such potential mediators as changes in income, job satisfaction, and marital status. Marital status buffered the depressive effect of both types of adverse change, but education and job dissatisfaction amplified the effect of unemployment on depression. Prior depression did not predict higher risk of becoming inadequately employed but did predict increased risk of unemployment, particularly for those with less education. These results confirm that both unemployment and inadequate employment affect mental health, and they invite greater efforts to monitor the extent and impact of underemployment.