Asymptotic relative efficiency of score tests in Weibull models with measurement errors

The main object of this paper is to discuss properties of the score statistics for testing the null hypothesis of no association in Weibull model with measurement errors. Three different score statistics are considered. The efficient score statistics, a naive score statistics obtained by replacing the unobserved true covariate with the observed one and a score statistics based on the corrected score statistics. It is shown that corrected and naive score statistics are equivalent and the asymptotic relative efficiency between naive and efficient score statistics is derived.     

Do Wages Compensate for Risk of Unemployment? Parametric and Semiparametric Evidence from Seasonal Jobs

Due to unique institutional and technological factors, seasonal agricultural jobs are characterized by much higher risk of unemployment than similar permanent jobs. I estimate compensating differentials for risk of unemployment and compare those with unemployment insurance benefits provided by the government. I use two sets of estimators. First, I calculate parametric estimates with Heckman correction. Second, I compute three versions of a distribution-free semiparametric estimator which is robust to misspecification of the residual distribution. The main finding of the paper is that there exists a positive compensating differential of 15.5% of the average wage. This corresponds to an implicit replacement rate significantly larger than the typical unemployment benefit.     

Social Capital is Associated with Earnings among Foreign‐born Mexican Men but not Women in Los Angeles County

The mechanisms through which social capital is accumulated may influence its relationship with hourly earnings. Because Mexican men and women accumulate social capital differently, for instance, gender may be an important factor for understanding social capital’s association with Mexican migrant earnings. Unlike past research that often fails to differentiate between various social capital metrics (e.g., social network member reciprocity, participation in civic group organizations, neighbourhood trust), this article estimates two of these associations with wages while controlling for individual‐, household‐ and neighbourhood‐level characteristics. Results suggest that foreign‐born Mexican men receive a wage premium from civic participation (bridging social capital) and a wage penalty from reciprocal social network exchange (bonding social capital). We also find that unauthorized legal status (among Mexican men and all migrants) and having children (among women) were negatively associated with hourly wages. We conclude with a discussion of the relative association of human and social capital with Mexican migrant wages.     

Optimal Maintenance Time for Repairable Systems Under Two Types of Failures

Determination of preventive maintenance is an important issue for systems under degradation. A typical maintenance policy calls for complete preventive repair actions at pre-scheduled times and minimal repair actions whenever a failure occurs. Under minimal repair, failures are modeled according to a non homogeneous Poisson process. A perfect preventive maintenance restores the system to the as good as new condition. The motivation for this article was a maintenance data set related to power switch disconnectors. Two different types of failures could be observed for these systems according to their causes. The major difference between these types of failures is their costs. Assuming that the system will be in operation for an infinite time, we find the expected cost per unit of time for each preventive maintenance policy and hence obtain the optimal strategy as a function of the processes intensities. Assuming a parametrical form for the intensity function, large sample estimates for the optimal maintenance check points are obtained and discussed.     

Deriving Harsanyi’s Utilitarianism from De Finetti’s Book-Making Argument

The book-making argument was introduced by de Finetti as a principle to prove the existence and uniqueness of subjective probabilities. It has subsequently been accepted as a principle of rationality for decisions under uncertainty. This note shows that the book-making argument has relevant applications to welfare: it gives a new foundation for utilitarianism that is alternative to Harsanyi’s, it generalizes foundations based on the theorem of the alternative, and it avoids arguments based on expected utility.     

On the Intuition of Rank-Dependent Utility

Among the most popular models for decision under risk and uncertainty are the rank-dependent models, introduced by Quiggin and Schmeidler. Central concepts in these models are rank-dependence and comonotonicity. It has been suggested that these concepts are technical tools that have no intuitive or empirical content. This paper describes such contents. As a result, rank-dependence and comonotonicity become natural concepts upon which preference conditions, empirical tests, and improvements in utility measurement can be based. Further, a new derivation of the rank-dependent models is obtained. It is not based on observable preference axioms or on empirical data, but naturally follows from the intuitive perspective assumed. We think that the popularity of the rank-dependent theories is mainly due to the natural concepts used in these theories.     

Regret theory and risk attitudes

We examine risk attitudes under regret theory and derive analytical expressions for two components—the resolution and regret premiums—of the risk premium under regret theory. We posit that regret-averse decision makers are risk seeking (resp., risk averse) for low (resp., high) probabilities of gains and that feedback concerning the foregone option reinforces risk attitudes. We test these hypotheses experimentally and estimate empirically both the resolution premium and the regret premium. Our results confirm the predominance of regret aversion but not the risk attitudes predicted by regret theory; they also clarify how feedback affects attitudes toward both risk and regret.     

Unemployment and Search for Work: Exploratory Analyses of Labour Market Attachment using CPS-Type Data

Abstract. This paper deals with measuring unemployment and labour market attachment in Italy, on the basis of CPS-type survey data. It is shown that the size and rate of unemployment are highly sensitive to modest variations in the definition of unemployment. This motivates a different approach. Based on the answers to a set of questions on search for work, a cluster analysis is performed, which yields four well established groups. Comparing them with the official labour force classifications, two “grey areas” appear at the borders between employment, unemployment and inactivity, which are of some interest in interpreting labour market attachment.     

The role and significance of endogenous firing costs in a matching model with endogenous job destruction

Traditional models of the labor market assume fixed firing costs. This paper explores the implications of variable firing costs, building this new assumption into a matching model with endogenous job destruction. The available evidence on the outcomes of cases brought to labor courts suggests that firing costs are negatively related with labor market tightness. In such a case, we may no longer invoke “rigidities” on labor markets as the cause of their poor performance. Our model yields three interesting results. First, labor markets may have multiple equilibria that cannot be Pareto-ordered; each with its own configuration in terms of average duration of unemployment and filled jobs, as well as employment protection. Second, the variability of firing costs produces a positive externality affecting the stability properties of these equilibria. Finally, the two externalities affect the efficiency of the social optimum, modifying the Hosios [Hosios, A.J., 1990. On the efficiency of matching and related models of search and unemployment. Review of Economic Studies 57, 279–298] condition. We use these results to interpret the recent history of European unemployment.