Modeling Earnings Dynamics

In this paper, we use indirect inference to estimate a joint model of earnings, employment, job changes, wage rates, and work hours over a career. We use the model to address a number of important questions in labor economics, including the source of the experience profile of wages, the response of job changes to outside wage offers, and the effects of seniority on job changes. We also study the dynamic response of wage rates, hours, and earnings to various shocks, and measure the relative contributions of the shocks to the variance of earnings in a given year and over a lifetime. We find that human capital accounts for most of the growth of earnings over a career, although job seniority and job mobility also play significant roles. Unemployment shocks have a large impact on earnings in the short run, as well as a substantial long‐term effect that operates through the wage rate. Shocks associated with job changes and unemployment make a large contribution to the variance of career earnings and operate mostly through the job‐specific error components of wages and hours.     

Correction to: Vertical and Horizontal Inequality in Ecuador: The Lack of Sustainability

Social Indicators Research - The article Vertical and Horizontal Inequality in Ecuador: The Lack of Sustainability, written Ivan Gachet, Diego F. Grijalva, Paúl A. Ponce and Damián...     

Welfare risks in early adulthood: A longitudinal analysis of social assistance transitions in Norway

Lorentzen T, Dahl E, Harsløf I. Welfare risks in early adulthood: a longitudinal analysis of social assistance transitions in Norway This study assessed the significance of critical life events and socio‐economic background in relation to the likelihood of young Norwegians receiving social assistance, asking how each of these factors contributes both independently and interactively. The data set was derived from a nationwide, longitudinal register and includes the entire 18‐year‐old cohort in 1993. A discrete‐time proportional hazard rate analysis controlling for unobserved heterogeneity was applied. The results indicate that both socio‐economic background and indicators of critical life events have strong independent effects on the likelihood of receiving social assistance. Significant interaction effects between socio‐economic background and certain indicators of critical life events were detected. However, contrary to our expectations, under certain circumstances, coming from a group with low socio‐economic status does not seem to ameliorate the effect of being exposed to critical life events.     

Central Bank Transparency as a Dialogical Accomplishment

This paper is a case study of the Czech central bank's communication with the public following the bank's decision to devalue the Czech currency. The aim is to contribute to knowledge of how central banks discharge their obligations to be transparent in communicating controversial decisions and actions. It is argued that transparency cannot be considered an individual act of the bank, but a joint dialogical accomplishment, which includes, among others, media and the public. The analysis of the interactions shows that the concepts of “dialogical networks” and “practical historians” are useful tools for elucidating how controversies in media develop over time.     

Weighted Median of the Data in Solving Least Absolute Deviations Problems

We consider the weighted median problem for a given set of data and analyze its main properties. As an illustration, an efficient method for searching for a weighted Least Absolute Deviations (LAD)-line is given, which is used as the basis for solving various linear and nonlinear LAD-problems occurring in applications. Our method is illustrated by an example of hourly natural gas consumption forecast.     

Critical objective function values in linear sum assignment problems

The linear sum assignment problem has been well studied in combinatorial optimization. Because of the integrality property, it is a linear programming problem with a variety of efficient algorithms to solve it. In the given research, we present a reformulation of the linear sum assignment problem and a Lagrangian relaxation algorithm for its reformulation. An important characteristic of the new Lagrangian relaxation method is that the optimal Lagrangian multiplier yields a critical bottleneck value. Lagrangian relaxation has only one Lagrangian multiplier, which can only take on a limited number of values, making the search for the optimal multiplier easy. The interpretation of the optimal Lagrangian parameter is that its value is equal to the price that must be paid for all objects in the problem to be assigned.