Unemployment Ratio Research Articles

Hiring Freeze and Bankruptcy in Unemployment Dynamics

This paper proposes a matching model that distinguishes between job creation by existing firms and job creation by firm entrants. The paper argues that vacancy posting and job destruction on the extensive margin, i.e. from firms that enter and exit the labour market, represents a viable mechanism for understanding the cyclical properties of vacancies and unemployment. The model features both hiring freeze and bankruptcies, where the former represents a sudden shut down of vacancy posting at the firm level with labour downsizing governed by natural turnover. A bankrupt firm, conversely, shut down its vacancies and lay offs its stock of workers. Recent research in macroeconomics has shown that a calibration of the Mortensen and Pissarides matching model account for 10 percent of the cyclical variability of the vacancy unemployment ratio displayed by U.S. data. A calibration of the model that explicitly considers hiring freeze and bankruptcy can account for 20 to 35 percent of the variability displayed by the data.

台湾のハイテク企業の地域経済分析

The purpose of this paper is to analysis how much “High Risk-High Return” Response can influence a regional economy. And Taiwanese high-tech companies are focused on and mainly their investment strategy and employment policy are analyzed in this paper.Taiwanese economy has been recovered steadily since 2002. And the economic growth ratio of 2004 1Q and 2Q reaches 6.72% and 7.88% respectively. This high growth comes from the private investment growth ratio (24.9%). Especially high-tech companies are in a position to lead this investment.In Taiwan, there are many excellent high-tech companies such as TSMC (Taiwan Semiconductor Manufacturing Company) in Semiconductor industry and AU Optronics Corporation in Liquid Crystal Display industry. They mainly adopt “High Risk-High Return” Response. They invest much money positively and profit much. They have played a large role to stimulate Taiwanese economy. And unemployment ratio of these years becomes lower consequently. Though “High Risk-High Return” Response of Taiwanese high-tech companies may involve a risk of losing much money, this has a salutary effect on Taiwanese economy now.“High Risk-High Return” Response can be essential for companies to survive, because it is not easy for companies to gain without much investment in today's fast-moving economy. This means that Japanese companies may have to adopt this “High Risk-High Return” Response to outpace foreign competition.JEL classification : R11, R39, R58

Small area inequalities in breast cancer mortality and screening

Despite the unfavourable epidemiological status, the Hungarian breast cancer control is a non-appropriately developed system having considerable geographical inequalities. The study objective was to describe the small-area pattern of breast cancer mortality and of frequency of mammographical examination. The influence of socio-economical status on these patterns was also studied. The standardised mortality ratios and the standardised relative frequency of mammography was determined for settlements, zipcode areas and small regions. Their correlations were analysed with education, unemployment ratio, ratio of Gypsy and German ethnic minorities, population size, smoking, distance to the nearest hospital. The South-Transdanubian Region (STR, consisting of three counties, 22 small regions, 444 zipcode areas and 643 settlements) with 1 million inhabitants was the study area. All the studied parameters had significant spatial variability at all levels of aggregation. Beyond the relatively low average mortality risk in the STR, mortality clusters and increasing time trend were identified in certain areas. The mortality and the usage of mammography were inversely correlated with the indices of deprivation. These factors explain 64.5 and 17.5% of the whole variability of local mortality risks at the level of settlements and small regions. The explanatory role of these factors was similarly high for usage of mammography as well (40.2 and 52.6% for small regions and zipcode areas). The factors having the strongest influence were the population size (in settlement level mortality model), ratio of gypsies (in small region level mortality and mammography usage models) and ratio of Germans (in mammography usage model for zipcode areas). Inserting the counties' approaches for screening organisation into the model, it revealed that the population based screening organisation applied in Tolna county has the highest influence being 4.4 times stronger than the most important socio-economic factors.Altogether,it seems that the monitoring of spatial inequalities could improve the performance of breast cancer control identifying the populations with special needs, and there is a need to explore the pathways by which the socio-economic factors can exert their profound influence on the epidemiological status. Moreover, since the results clearly demonstrated that it is possible to achieve relatively high screening participation rates in Hungarian economical and legislative circumstances, the application of this successful method should be encouraged in other areas with low performance screening system.

Public Goods, Tax Policies, and Unemployment in LDCs

We build a general equilibrium model of a small open economy characterized by unemployment and producing two privately traded goods and one nontraded public consumption good. The provision of public good is financed with an income tax or an excise tax on the manufactured good or an import tariff. Within this framework, the paper examines the effects of such policies on the country's unemployment ratio and welfare, and it derives the efficiency rules for public good provision for each policy instrument. It shows, among other things, that the private marginal cost of the public good always overstates its social marginal cost in the case of income taxes and may overstate it in the case of an excise tax on the manufactured good or a tariff even if the taxed good and the public good are substitutes in consumption.

The effects of benefits on unemployment and wages: A comparison of unemployment compensation systems

well-established tenet of the theory of unemployment is that unemploymentbenefits tend to increase the unemployment rate. This prediction is basedon two central pieces of labour economics, namely the job-search theory andthe efficiency-wage theory. In the job-search theory, unemployment benefitscause an increase in the duration of unemployment by reducing the incentive ofunemployed workers to search for and accept a job; in the efficiency-wagetheory, they reduce the cost of being unemployed and induce workers to ask forhigher wages, so the demand for labour decreases. Since the unemploymentrate is a function of the duration of unemployment and its incidence, unem-ployment therefore increases with both the level and the duration of benefits.Despite the strength of this theoretical prediction, the empirical evidencethat supports it is not very strong. Those studies which have detected an effectof benefits on unemployment duration have found it to be rather small. Othershave failed to detect any such effect at all. On average, estimates have impliedthat a 10 percentage point increase in the replacement rate (i.e. the ratio ofunemployment benefits to earnings from employment) would be associatedwith an increase of about 1-1½ weeks only in unemployment duration (Lancasterand Nickell, 1980; Meyer, 1990). This suggests that the impact of benefits onunemployment probably depends on a set of factors wider than the one usuallyconsidered in labour economics. The aim of this article is to investigate theconditions under which the provision of unemployment benefits would leavethe rate of unemployment unchanged.The main argument brought forward in the following analysis hinges onthe distinction between

A Comparative Static Model of the Relationship between Immigration and the Short-Run Job Prospects of Unemployed Residents

A novel theoretical approach is developed to illustrate the consequences of immigration for the probability that unemployed residents gain a job. Through the use of the vacancies to unemployment ratio it is shown that immigration in theory can either increase or decrease unemployed residents' employment probabilities, but that--contrary to populist rhetoric--an increase is more likely the more recessed is the labour market. With reference to feasible Australian values of the parameters of interest, it is demonstrated that in practically all circumstances immigration increases the overall employment prospects of unemployed residents. Even so, the analysis is very short run, and strong conclusions as to what might be happening over the longer term are not appropriate.

A Comparative Static Model of the Relationship between Immigration and the Short‐Run Job Prospects of Unemployed Residents

A novel theoretical approach is developed to illustrate the consequences of immigration for the probability that unemployed residents gain a job. Through the use of the vacancies to unemployment ratio it is shown that immigration in theory can either increase or decrease unemployed residents' employment probabilities, but that, contrary to populist rhetoric, an increase is more likely the more recessed is the labour market. With reference to feasible Australian values of the parameters of interest, it is demonstrated that in practically all circumstances immigration increases the overall employment prospects of unemployed residents. Even so, the analysis is very short run, and strong conclusions as to what might be happening over the longer term are not appropriate.

Estimating the density of unemployment duration based on contaminated samples or small samples

In estimating a density function for the duration of unemployment, we consider two departures from what would be ideal conditions. If the so-called digit preference effect produces local distortion in observed samples, we can apply a maximum entropy density estimation method. To establish the functional form of the density, we maximize entropy subject to moment restrictions. The global shape of the density is determined by the lower ordered sample moments which are not affected much by the digit preference effect. As a by-product of this method, we can establish the local transition structure of the digit preference effect. As a second case of departure from an ideal condition, we consider coarse sample observations where unemployment duration was observed only for 4, 10, 14, 26, and 52 weeks. Once the unemployment duration density is derived, quintile behavior over time, the Lorenz curve, and the Gini coefficient for the distribution of unemployment duration can be obtained. Finally, we discuss the ramifications of only focusing on the headcount ratio of unemployment when other information is available.

Credibility of European economic convergence

Credibility of European Economic Convergence. — The authors analyze economic convergence and its relation to European real interest rate differentials using a clustering method on seven macroeconomic key variables for 1979–1995. The results indicate that monetary convergence has progressed considerably but that there is hardly any real convergence in the EU. They also perform pooled nominal and real interest rate regressions with the individual cluster indicators as explanatory variables. The authors find significant positive effects of external (current account) and internal (unemployment ratios, government finance) imbalances on real interest rates. They also group countries according to economic reputation and find that real indicators remain significant for the high-reputation countries.

Macro-economic leading indicators of construction contract prices

An understanding of future trends in construction prices is likely to influence the construction investment strategy of a variety of interested parties, ranging from private and public clients to construction contractors, property speculators, financial institutions, and construction professionals. This paper derives leading indicators for construction prices in the United Kingdom. These indicators are based on two experimental methods: turning points of the basic indicators in relation to construction price turning points; and predictive power of lags of the basic indicators. It is concluded, based on the analyses, that unemployment level, construction output, industrial production, and ratio of price to cost indices in manufacturing are consistent leading indicators of construction prices. Building cost index and gross national product constitute coincident indicators. ‘Popular’ macro-economic time series such as nominal interest rate, inflation rate, real interest rate, all share index and money supply produced inconclusive results.

Policy Roundtable: Comment

generosity of the Unemployment Insurance program in Canada does explain a good part of the US-Canada unemployment gap observed in the 1980s, but fails to explain the gap prevailing in the 1990s. If anything, changes to the UI system should have contributed to close the gap in the 1990s. The rapid fall in the beneficiaries to unemployment ratio (the B/U ratio) in Canada since the beginning of the 1990s, as noted by several speakers, provides a first indication that any perverse effects the UI system may have had historically on the unemployment rate are fading away fast. An increasing proportion of total unemployment consists of unemployed persons who are not, or are no longer, collecting UI benefits. As Chart I shows, not only has the B/U ratio in Canada been falling drastically, but the difference between the B/U ratios in Canada and the US has been considerably reduced. This development suggests a narrowing of any differential impact the respective UI regimes may have had on the behaviour of the Canadian and US populations. A closer examination of the recent evolution of the relative generosity of the UI system also points to a declining role of UI in explaining the unemployment gap. This observation was made by several participants, including Manfred Keil, Andrew Sharpe and Charles Beach. Three subsequent reforms of the UI system, in 1990, 1993 and 1994, have contributed to reduce the benefits duration, disqualify voluntary quitters and lower the replacement rates. Table 1 summarizes the evolution of the relative generosity of the UI system since 1970. Two indices of work disincentives are represented: the Sargent index and the Fortin index. Both indices assume that the key UI parameters affecting workers' deci ion are the earnings replacement rate, the minimum number of weeks required to qualify for UI, and the number of weeks of benefit one receives if one works the mini-

NORWEGIAN WAGE CURVES

ABSTRACTThe paper presents empirical evidence on wage formation in Norway using annual time series data for manufacturing industry. First, we show that long‐run effects on consumer prices and taxes depend strongly on the exact definition of the empirical variables. Using the implicit factor income deflator, the wedge between consumer's and producer's real wages is insignificant. Second, our results indicate that there is a long‐run tradeoff between the wage level and the unemployment ratio and the Phillips curve specification is firmly rejected. Third, the paper presents empirical evidence in favour of a strongly non‐linear wage curve. Fourth, our results support the long‐term unemployment hypothesis, as increased proportion of long‐term unemployment shifts the wage curve outwards and to the right.

Urban growth, externality and welfare

This paper examines the short-run and long-run welfare implications of policies for promoting urban growth for less-developed countries. It is shown that the short-run effects of tariffs, wage and production subsidies on the urban unemployment ratio do not carry over to the long run. Along with agglomeration economies and intersectoral externality, the urban unemployment ratio plays a key role in determining social welfare.

Labor Turnover and the Natural Rate of Unemployment: Efficiency Wage versus Frictional Unemployment

Wage and unemployment responses to changes in economic environment are compared for efficiency wage and frictional models. Changes in aggregate demand, persistence of job-specific shocks, cost of living, and unemployment benefits are considered. Wages and unemployment move in the same direction in the two models, except that an upward shift in aggregate labor demand can reduce the real wage in the efficiency wage, but not the frictional, model. In a numerical simulation calibrated to U.S. data, real productivity shocks in the efficiency wage model yield a ratio of unemployment to wage variability close to that of the United States.

Export-share requirements and welfare in less developed countries: a three-sector general equilibrium analysis

This paper analyzes the welfare impacts of export-share requirements in a three-sector, general equilibrium, sector-specific unemployment model. We demonstrate that the favorable welfare impact of export-share requirements is mitigated by a rise in the unemployment ratio. In addition, we deduce the welfare impact of a change in tariff rate for a given level of export share. Our analysis suggests that the export-share requirement policy is always welfare improving in the long run. The policy may not improve welfare in the short or intermediate run, however; the condition under which export-share requirements are welfare enhancing is derived and interpreted.

Post‐unemployment wages, the probability of re‐employment, and the unemployment benefit

This paper presents empirical evidence on the effect of the unemployment benefit on post‐unemployment wages, the likelihood of re‐employment and reservation wages of unemployed job seekers in New Zealand. A specially designed survey and the resulting panel data utilised in the study, allow the first test of unemployment job matching hypotheses with New Zealand data. The question of the effect of the unemployment benefit on job search outcome remains generally unresolved in the empirical job search literature. The New Zealand case studied alleviates some measurement problems in earlier studies, especially those employing U.S. data (as noted in Welch, 1977; and Feldstein, 1978) in that the benefit level is not tied to a job seeker's previous wage, and that it is not experience rated, presenting favourable measurement conditions. The results indicate that a higher unemployment benefit replacement ratio was associated with a lower probability of re‐employment, but a higher post‐unemployment wage, mainly throu...

Content Protection, Urban Unemployment and Welfare

A three-sector general equilibrium model is developed to examine the resource allocation and welfare effects of domestic content protection. An increase in domestic content requirements lowers the urban unemployment ratio, the production of the domestic intermediate good, the import of the foreign intermediate good, and the national welfare.

Vacancies, Unemployment, and Black and White Wage Earnings: 1956–1983

Utilizing recent developments in the literature on vacancies and unemployment, the effects of changes in the vacancy to unemployment ratio on black and white wage earnings are examined. The primary result argues that black women's wage earnings are less sensitive to changes in the national vacancy to unemployment ratios than white earnings. Another way of interpreting this result is that black women are not experiencing wage gains when new jobs are created. This finding suggests that black women may not experience increases in earnings if the vacancy to unemployment ratio increases in the future.

Mismatch and Labour Mobility.

This book reports the proceedings of a conference on ‘Mismatch and labour mobility’, jointly sponsored by the Centre for Economic Policy Research (CEPR) at the London School of Economics and the Centro Interuniversitario di Studi Teorici per la Politica Economica (STEP), a joint research centre of the universities of Bologna and Venezia and the Bocconi University, Milan. The contributors examine the evidence on sectoral wage differentials, labour mobility and the ratio of unemployment to job vacancies, in detailed studies of seven countries, varying in labour market and macroeconomic structures: USA, Japan, West Germany, Sweden, UK, Italy, and Spain. Variations in unemployment rates across regions, occupations and demographics are analysed to search for insight into the growth and persistence of unemployment. Also included is a cross-country study of skills mismatch in relation to the effectiveness of training programs. The chapters are as follows: A cross-country comparison of sectoral mismatch in the 1980s / Fiorella Padoa Schioppa; Mismatch: a framework for thought / R. Jackman, R. Layard and S. Savouri [discussion / Sherwin Rosen]; Match and mismatch on the German labour market / Wolfgang Franz [discussion / Renato Brunetta]; Mismatch in Japan / Giorgio Brunello [discussion / Sushil Wadhwani]; Mismatch and internal migration in Spain, 1962-86 / Samuel Bentolila and Juan J. Dolado [discussion / Nicola Rossi]; Regional inequalities, migration and mismatch in Italy, 1960-86 / Orazio P. Attanasio and Fiorella Padoa Schioppa [discussion / Giuseppe Bertola]; Skill shortages and structural employment in Britain: a (mis)matching approach / Charles R. Bean and Christopher A. Pissarides [discussion / Ugo Trivellato]; Labour market tightness and the mismatch between demand and supply of less-educated young men in the United States in the 1980s / Richard B. Freeman [discussion / Michael Burda]; Skill mismatch, training systems and equilibrium unemployment: a comparative institutional analysis / David Soskice [discussion / Leonardo Felli]; Unemployment, vacancies and labour market programmes: Swedish evidence / Per-Anders Edin and Bertil Holmlund [discussion / Dennis J. Snower]; Mismatch and labour mobility: some final remarks / Katherine G. Abraham, S. J. Nickell.

Is Fiscal Spending Expansionary in a Dual Economy?

A two-region, three-sector, general equilibrium model is utilized to analyze ef fects of fiscal spending upon a dual economy. We examine the effects of fiscal spending on services prices, the urban unemployment ratio, and national income. The main result of this paper is that fiscal spending may be effective in mitigating unem ployment, as Keynesian economists have believe. More importantly, the fiscal policy may even be contractionary under certain plausible conditions.