Education and Labor Markets

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Essays on the macroeconomics of labor markets

Essays on the macroeconomics of labor markets

Previous papers have modeled the informal sector embedded in a search and match- ing framework. The goal of these studies was to understand the impact of government policies, such as taxation and the capability of enforcing compliance, on the size of the informal sector. Papers have modeled the way in which informal jobs are created in two different ways. First, a series of models focus on the worker’s decision to participate in the informal labor market. In these papers it is usually assumed the exogenous exis- tence of both formal and informal firms posting vacancies. Then, heterogeneous workers direct their search towards one of the two sectors according to the worker’s education (Kolm and Larsen (2004)), their moral costs of operating in the informal sector (Fugazza and Jacques (2004)), or productivity differences (Boeri and Garibaldi (2006)). Albrecht et al. (2009) argue that worker’s productivity is the major determinant of participation in the informal sector. In a model with heterogeneous workers, they show that the appear- ance of informal jobs is rooted in the decision of low productivity workers to become informal self-employed. The authors treat the informal sector as exogenous, where op- portunities to work in that sector arise exogenously. Zenou (2008) considers a model where the formal sector is subject to search frictions, whereas the informal market is competitive. The paper shows that informality is the result of matching frictions in the formal sector. As in Albrecht et al. (2009) the author distinguishes three labor markets: formal sector, informal sector and formal “unemployment”.
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144 Lee mas

The reasons behind the increasing wage inequality in Mexico

The reasons behind the increasing wage inequality in Mexico

In developed countries, where increasing wage inequality has been a subject of study, some authors have tried to link changes in wage distributions to industrial, demographic and economic changes in local labor markets. These authors consider that local labor markets are not totally integrated, at least in the short run, and that their differences can be used to better understand the greater wage dispersion. Blanchard and Katz (1992), for example, show that local labor markets in the US are integrated in the long run due to the mobility of goods and factors, but that in the short run (less than 10 years), these markets experience idiosyncratic changes that affect the wage and employment structures at a local level. Following this idea, Karoly and Klerman (1994) use regional panel data to try to explain the increasing wage inequality in this country. They suggest that local changes in the relative supply of education, the local unemployment rate, and less unionization cause important changes in local wage structures, but that change in the industrial composition of total output does not. This result is controversial, because many other studies find that changes in the industrial composition of output have important effects on local labor markets [Murphy and Welch (1991), Borjas and Ramey (1993), Bernard and Jensen (1998), among others]. In Mexico, there has been little
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37 Lee mas

Essays on the macroeconomics of labor markets

Essays on the macroeconomics of labor markets

Analyzing French data, she emphasizes learning about match quality, but also finds that learning-by-doing plays an important role during the first six months of an employment relationship, consistent with our story. The interaction between turnover and specificity of skills in a setting with search frictions and firing costs is also explored by Wasmer (2006), who argues that labor market institutions can affect investment decisions between general and specific human capital. Finally, Elsby and Shapiro (2012) study the interplay between the return to experience and labor supply in order to explain long-run trends in nonemployment by skill group. Following this introduction, Section 1.2 provides some empirical evidence by education on unemployment, its inflows and outflows, and on-the-job training. Section 1.3 outlines the model, which is then calibrated in Section 1.4. Section 1.5 contains the main simulation results of the model and a discussion of the mech- anism driving the results, while Section 1.6 explores other possible explanations for differences in unemployment dynamics by education. The main simulation results are presented for the population with 25 years of age and older. Section 1.7 shows that our conclusions remain unaffected when considering the whole working-age population and Section 1.8 conducts a further sensitivity analysis of the main quantitative results. Finally, Section 1.9 concludes with a discussion of possible avenues for further research. We provide data description, some fur- ther empirical checks, analytical proofs and additional robustness checks in the Appendix.
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Fighting informality in segmented labor markets : a general equilibrium analysis applied to Uruguay

Fighting informality in segmented labor markets : a general equilibrium analysis applied to Uruguay

this is a partial distribution and does not measure the impact on poverty and income distribution at a micro level. In order to analyze the effect of the simulated policies on poverty and inequality, the CGE analysis can be complemented with microsimulations. Several microsimulation techniques can be applied as a complement to CGE analysis. One of the most common ones is the so-called “top-down approach,” which is applied in a sequential fashion, taking parameters from the CGE model and feeding them into the micro module, without any further interaction between the macro and the micro level. Roughly, this approach has two variants: a) modeling the income generation process of the households; b) random assignation of changes in parameters to households in the survey. In this paper we apply the latter technique, developed by Ganuza et al. (2002) and applied in Vos et al. (2006) and other studies. This approach assumes that occupational shifts can be proxied by a random selection procedure within a segmented labor market structure. This procedure allows the imposition of counterfactual changes in key labor market parameters (participation rate, unemployment, employment composition by sector, wage structure, and so on) on a given distribution derived from household survey data, and the estimation of the impact of each change on poverty and income distribution at the household level. That is to say, random numbers are used to determine which persons at working age change their labor force status; who will change occupational category; which employed persons obtain a different level of education; and how new mean labor incomes are assigned to individuals in the sample. Hence, the assumption is that, on average, the effect of the random changes correctly reflects the impact of the actual changes in the labor market. Because of the introduction of a process of random assignation, the microsimulations are repeated numerous times in Monte Carlo fashion. This allows for construction of 95 percent confidence intervals for the indices of inequality and poverty, except in the case of the simulations of the effect of change in the structure and level of remuneration, which do not involve random numbers.
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Origen social y sobreeducacin en los universitarios espaoles: es meritocrtico el acceso a la clase de servicio?

Origen social y sobreeducacin en los universitarios espaoles: es meritocrtico el acceso a la clase de servicio?

Hypotheses of study is the variable that most strongly conditions the probability of being over-educated. Spanish universities are characterized by a high degree of hori- zontal stratification, since there is a marked contrast between the probabilities of over- education in the scientific-technical-health- care branches and in the social sciences- humanities branches. While disciplines such as engineering, medicine or architecture barely find over-education in their graduates (3%); economy and business (45%), law (42%) and history and social sciences (40%) all reveal elevated risks, measured by the predicted probabilities. Contrary to what would be expected, post-graduate studies have no significant influence on the proba- bility of over-education. It should be noted that the Master’s and doctorate programs are quite varied and our survey did not re- veal the quantity, institution and quality of the same. On the other hand, academic transcript does have a strong effect on the probability of over-education. Individuals with higher mean grades (outstanding/ho- nors) are seven times more likely to access qualified positions. Given that academic transcripts are an indicator of merit, these results are in line with the modernization theory that predicts the importance of this factor in accessing qualified employment in contemporary societies.
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48 Lee mas

Social Origins and Over-Education of Spanish University Graduates: Is Access to the Service Class Merit-Based?

Social Origins and Over-Education of Spanish University Graduates: Is Access to the Service Class Merit-Based?

Hypotheses of study is the variable that most strongly conditions the probability of being over-educated. Spanish universities are characterized by a high degree of hori- zontal stratification, since there is a marked contrast between the probabilities of over- education in the scientific-technical-health- care branches and in the social sciences- humanities branches. While disciplines such as engineering, medicine or architecture barely find over-education in their graduates (3%); economy and business (45%), law (42%) and history and social sciences (40%) all reveal elevated risks, measured by the predicted probabilities. Contrary to what would be expected, post-graduate studies have no significant influence on the proba- bility of over-education. It should be noted that the Master’s and doctorate programs are quite varied and our survey did not re- veal the quantity, institution and quality of the same. On the other hand, academic transcript does have a strong effect on the probability of over-education. Individuals with higher mean grades (outstanding/ho- nors) are seven times more likely to access qualified positions. Given that academic transcripts are an indicator of merit, these results are in line with the modernization theory that predicts the importance of this factor in accessing qualified employment in contemporary societies.
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48 Lee mas

Essays on labor markets and macroeconomic policy

Essays on labor markets and macroeconomic policy

The literature has only focused on the search-related distortion in the labor market following from a failure of the standard Hosios condition to hold. Faia (2009) analyzes optimal monetary policy in an economy char- acterized by distortions from monopolistic competition, quadratic costs of price adjustment, and matching frictions in the labor market under deviations from the Hosios condition. She finds that under the Ram- sey optimal policy the deviation of price inflation from zero should be larger, the higher the workers’ bargaining power relative to the elasticity of unemployment in the matching function. This finding follows from the incentives for firms to post vacancies becoming smaller when the work- ers’ bargaining power increases, which makes unemployment fluctuate above its constrained efficient level. However, those optimal deviations from zero inflation are small. Ravenna and Walsh (2011) use the linear- quadratic approach to compute optimal monetary policy in an economy with sticky prices `a la Calvo, matching frictions in the labor market, and an efficient steady state. The trade-off for the policy maker, and hence the potential deviation from zero inflation is generated by the presence of shocks to workers’ bargaining power. Those shocks imply a deviation from the Hosios condition, which makes job creation in the natural allo- cation inefficient. They find that the labor market structure has important implications for optimal monetary policy in the sense that ignoring the structure of the labor market, and hence implementing policy rules based on an incorrect perception of the nature of the welfare costs generated by labor market frictions, might lead to important welfare losses. However, they also find that zero inflation is nearly optimal.
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182 Lee mas

Disentangling the social, macro and micro-economic effects of agricultural droughts: An application to Spanish irrigated agriculture

Disentangling the social, macro and micro-economic effects of agricultural droughts: An application to Spanish irrigated agriculture

Abstract. Droughts affect irrigated agricultural production, reducing economic output and creating social stress. The economic consequences of droughts begin at the farm level, reaching the macro level along the production chain value. To the extent that crop markets adjust to the supply shocks and because droughts do not affect all sectors at the same time and with the same severity, it is instructive to conduct economic evaluations of drought effects at both micro- and macro-economic levels. The objective of this paper is to estimate the impact of water availability variations on the crops’ market values, the total value added of the agricultural sector and farm employment. We run regression models for these three economic variables and 14 provinces in Spain, comprising more than 50% of the Spanish irrigated area. Results show that the macro economic variables are only sensitive to water availability in the provinces where aridity and water stress are more severe. The value of the harvests obtained in irrigated land is largely explained by water availability. The time trend explains the largest percentage of variance of the three economic variables, including micro and macro.
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10 Lee mas

GLOBALIZATION AND EMERGING MARKETS

GLOBALIZATION AND EMERGING MARKETS

Consider the example of General Motors. In 1996, before undertaking a major initiative to streamline supply chain, product development, and order management systems, the giant automaker found it had more than 7,000 dis- crete information systems. Most of them were legacy, silos of information that did not integrate data flow across the enterprise. For example, design engi- neering used 22 different engineering systems, hindering collaboration among the global product development staffs. Since then, GM has dramatically over- hauled its global infrastructure in an attempt to reduce or eliminate such prob- lems and is building a platform for continuing optimization of its global net- work. 40 To optimize its global logistics operations, GM and global logistics company CNF have established a joint venture, Vector SCM. 41 Launched 5 years ago, Vector SCM has grown rapidly and plans to manage US$4.8 billion of GM’s US$5.5 billion total logistics spending worldwide in 2005. Vector SCM has built strong capabilities for continuously analyzing, designing, im- plementing, managing, and monitoring a global supply chain. This includes a
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30 Lee mas

The loyalty to pay TV in periods of economic difficulty in Mexico and Brazil

The loyalty to pay TV in periods of economic difficulty in Mexico and Brazil

The moral economy of the household is, hence, “an economy of meanings and a meaningful economy” (Silverstone, 1994, p. 48). The moral economy contributes to the creation and maintenance of what Giddens (1991, p. 38) named ontological security, that is, a “person’s fundamental sense of safety in the world”. This stability is challenged by any new technology introduced into a household (Hartmann, 2006) which needs to be integrated in people’s day-to-day routines, structures and values of their environments (Berker et al., 2006, p. 2). In stressful and difficult times, as it happens during economic crises, consumers modify their purchasing patterns, rethinking what is considered a luxury or a necessity, and redefining their willingness to pay for certain services. Almost all economic models of human behavior assume a rational decision-making process, which involves attaining a goal through the most cost-effective approach regardless of the value of such goal (Allingham, 2002). The rational choice model of economics—a fundamental axiom of Neoclassical Economic theory—would presume that, in times of scarcity and instability, the costs associated with most luxury and dispensable items would be the first to be cut to preserve economic well-being (Simon, 1955). However, during periods of sour economy, pay television seems to behave as a hedonic product (Medina, Herrero, & Etayo, 2016), a concept that emphasizes the emotional dimension of the consumption of media products (see Clement, Fabel, & Schmidt-Stölting, 2006).
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Europe's unemployment crisis : why especially high educated workers leave their labor markets

Europe's unemployment crisis : why especially high educated workers leave their labor markets

right of residence is granted without any restrictions for up to three months if the person is work- ing, self-employed, or a jobseeker[6]. This makes migration very easy inside the EU 15. Although Europe’s labor markets get interconnected by these rules, they are still functioning independently. In order to distinguish between unstable and stable European labor markets, I will classify countries according to three di↵erent characteristics: The overall unemployment rate by the end of 2011, the medium net income, and the activity rate. The higher the unemployment rate, the lower the net income level, and the lower the activity rate, the more unstable the economy. I will use the terms stable and unstable according to the following definition: Stable will be defined as resistant to change or not easily disturbed and unstable will be defined as tending strongly to change. The tendency to change does not refer to volatility, but to the fact that after a disturbance, something unstable changes more likely than something stable. I create an index that weighs equally every single category and summarizes the economic status of the 15 considered labor markets. After this categorization, the stable market consists of the following countries: Belgium, Denmark, Germany, France, Lux- embourg, Netherlands, Austria, Finland, Sweden, and the United Kingdom. The economies of the unstable market are: Ireland, Greece, Spain, Italy, and Portugal. The indicators are not always unique in their categorization. For instance, following the unemployment rate, Italy could very well be seen stable, nevertheless, with a low income level and a low activity rate, it will be unstable in this analysis.
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Public Health Workforce in Latin America and the Caribbean: assessment of education and labor in 17 countries

Public Health Workforce in Latin America and the Caribbean: assessment of education and labor in 17 countries

b) Occupational categories that perform work related to public health in their daily practice (e.g. primary care medical personnel, nursing technicians and as- sistants, health promoters, primary care technicians, laboratory technicians, and dental technicians). With respect to the first group, it is possible to formulate the following hypothesis based on empirical data: the majority of personnel trained in educational institutions as public health specialists does not work in primary care, is concentrated in urban areas, is not in contact with the population, and is partially dedicated to coordinating programs related to their specialization at the regional, municipal, or state level. In the labor market this category is confused with and/or refers to a specialist with a lesser status, in terms of income rank- ing, as compared to clinical specialists who traditionally have enjoyed social prestige and higher economic status (for example, surgeons, gynecologists, etc.); their income can be less than clinical specialists while they are also subject to flexible types of labor contracts.
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Book review  Beyond survival  Protecting households from health shocks in Latina America, by Baeza, Cristian C , y Truman G  Packard

Book review Beyond survival Protecting households from health shocks in Latina America, by Baeza, Cristian C , y Truman G Packard

he book by Cristian Baeza and Truman Packard is based on the next hypothesis: adverse health events reduce the consumption of goods and services different from health services, and many households become poor because of that. While the authors recognize that the evidence they present on the topic is limited, they propose the use of a “universal risk pool” as a way to eliminate the problem of poverty caused by health events.

7 Lee mas

CUESTIONES DE PROTECCION SOCIAL EN LA REGION ARABE: PANORAMA DE CUATRO PAISES

CUESTIONES DE PROTECCION SOCIAL EN LA REGION ARABE: PANORAMA DE CUATRO PAISES

Social protection work in the Arab region has features and weaknesses simi- lar to those faced in many developing countries. Its social security systems tend to cover only the formal sector and in a limited way. The social protection actual- ly being achieved is lacking, real benefits are often low and administrative costs high, and there are serious concerns about long-term financial sustainability. The prospects are for less protection and further marginalization of the unem- ployed, the abject poor, and workers in the informal sector in the future because of the already existing budgetary con- straints on social assistance programs and the already high and inefficient levels of public expenditure in general. CSO con- tributions to social protection tend to be small in scope, institutionally weak and often restricted by states which are reluc- tant to relinquish more of their declining social control.
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The gender wage gap in Peru 1986-2000: evidence from a matching comparisons approach

The gender wage gap in Peru 1986-2000: evidence from a matching comparisons approach

In this paper, I use the matching methodology in order to understand the distribution of the gender wage gap in Peru. The application of matching, instead of using the traditional Blinder-Oaxaca approach, is expected to be particularly beneficial in Peru due to its high occupational segregation. 6 In addition, informality also plays a role in the Peruvian labor markets since an important fraction of the jobs tend to fail at least one of the formality conditions (formal contract or access to insurance). Formality of the working class affects males and females differently: while 55% of males have informal jobs, the analogous figure for females is 65%. These gender gaps are also associated to gender differences in observable characteristics of the working population, such as age and schooling. In turn, this would presumably imply a severe problem of gender differences in the supports of the distributions for these characteristics, an issue that matching can address directly.
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29 Lee mas

Old Europe Ages. Can it Still Prosper

Old Europe Ages. Can it Still Prosper

The key arguments in our paper rest on a set of three-way comparisons that is best imagined by a two-by-two-by-two table. In one dimension, we model the two extreme positions of pension policy. One extreme is a fully-funded, voluntary private accounts system with no distortions and perfect intertemporal consumption smoothing. The other extreme is a pay-as-you-go pension system with flat benefits financed by a contribution that is perceived as a pure tax with the associated labor supply distortions. The second dimension reflects labor market policies. One extreme is the complete failure to adapt those institutional arrangements that keep labor force participation so low in France, Germany, and Italy. The result are unchanged low labor force participation rates by age and gender continuing in the future. The polar case, for some an extreme, is the adjustment of all societal systems, from kindergarten to retirement policies, to increase age and gender specific labor force participation rates across the board. Finally, the third dimension in these comparisons will isolate behavioral effects. One extreme is a fixed hours supply by each working individual. As polar case, we derive an hours supply function which is responsive to wages net of taxes and contributions.
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Media Markets, Special Interests, and Voters

Media Markets, Special Interests, and Voters

The rest of the paper proceeds as follows. In Section 2, I spell out the basic research design and describe the main data used in the paper (a Data Appendix presents a more complete description of the variables and sources of the analysis). Section 3 presents the main results for the impact of concentration of campaign contribution on incumbent vote shares across di↵erent media markets. In this section, I also present a number of robustness checks, including the placebo test designed to verify the identification hypothesis that the results are not driven by geographic characteristics or distance from the media center of the state. The section also shows that, unlike concentration, total share of money from interest groups does not a↵ect incumbent senators di↵erentially across media markets. The section concludes by showing that concentration indices are positively correlated with the relative frequency of news stories about candidates’ campaign money. Next, Section 4 shows that the main results are not driven by partisan trends, and finds little evidence of information spillovers across members of the same party, whether in the same or neighboring states. Section 5 demonstrates that the results of the paper are not sensitive to the exact classification of counties into those dominated by in-state or out-of-state media markets. I conclude in
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60 Lee mas

Capital Theory, Capital Markets and Q

Capital Theory, Capital Markets and Q

study the technical complementarity and substitutability of production goods, then why not focus as well on the technical productivity of production goods and the optimal, technical ratio between labor and nonlabor input? Lachmann (1977), as such, pretends to further the cause of subjectivism, but actually does a disservice to subjectivism with his physical theory of capital. His reference to the “importance of complementarity” in the light of “technical rigidity” (p. 200) and “coefficients of production” (p. 202) should, for example, be interpreted in this light. Lachmann (1977) later emphasizes “the existence of unemployed labour and unutilised resources” since they “provide potential complements for (…) new productive combinations.” (p. 206), which again demonstrates his fixation on material production. Lachmann (1956) even flat out admits that he is more concerned with a physical theory of capital, as he explicitly states: “The theory of capital is thus primarily a theory of the material instruments of production.” (p. 54) [emphasis mine]. Moreover, capital goods ought, according to Lachmann (1977), be considered separately from labor and “permanent” resources, as they are “more sensitive to unforeseen change.” (p. 203). If we take Lachmann’s capital theory to its extreme, economics has nothing to say about the real world, apart from some general statements that entrepreneurs combine complementary capital goods and that imperfect substitutability can lead to losses and “malinvestment.” Lachmann (1977), in effect, devised a new but equally fallacious justification of separating factors of production and to persist in the errors that characterized Böhm-Bawerk’s and Hayek’s material theories of capital, which was an unfortunate classical endowment to begin with. Lachmann (1977), if he would have used the imaginary construction of equilibrium, would have come to the conclusion that any maladjustments in the structure of capital arising out of imperfect combinations of productive assets would simply be one of the reasons why a potential arbitrage profit would exist for entrepreneurs to earn. Equilibrium would, then, be such that all prices of all productive assets reflect the fact the value of capital, such that no further “rearrangements” can be made to earn a profit. Yet, the focus on “complementarity” seems just one of the many material underlying motives of maladjustment and causes of profit opportunities. As an example, “geography” could equally be a concern. Yet economists would not pretend to have anything useful to say about the physical location of
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478 Lee mas

Trade and labor markets: evidence from the Colombian trade liberalization process

Trade and labor markets: evidence from the Colombian trade liberalization process

The decision to engage in tariff reduction was due to the Barco administration (1986-1990). In 1989 the government decided to implement several structural economic reforms, trade and labor reforms among them. However, the political situation −including the assassination of several presidential candidates and the collapse of the international coffee agreement− prevented the reforms to actually take place that year. Early 1990, still under the Barco administration, the idea of the trade reform was retaken, and the government decided to begin a gradual liberalization program. According to this program, non tariff barriers would progressively be eliminated during a first phase that should last two years starting in February 1990. This increment in international exposure would be compensated with tariff increases and especially with a depreciation of the exchange rate. The second phase would last three years and would reduce tariffs gradually until they reached an average of 25%.
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Boletín CEDE (Versión Inglés)

Boletín CEDE (Versión Inglés)

ties in each episode of the internal conflict that may be char- acterized by the sequence: Coalition – new Constitution – purge of other party members – party hegemony – IAC – coalition. On the other hand, it is argued that the key engine of this process has been the struggle between traditional po- litical parties, over the monopoly of establishing taxes and determining public expenditure, bureaucracy, contracts, and concessions. The distribution of fiscal power among the con- tending political parties constituted the main task of a bu- reaucrat located in the capital, Bogotá. The “Bogotá Prob- lem” consisted in forming coalitions, enacting Constitutions coherent with them, and then, consolidating a hegemonic power that monopolized fiscal power. The country’s complex topography made it possible for the parties to become stron- ger and to mobilize armies powerful enough to threaten the incumbent hegemony.
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