What Have We Learned about the Employment Effects of Severance Pay? Further Iterations of Lazear Et al.

In this study we examine the effect of severance pay on employment and unemployment, using data on industrialized OECD countries. Our starting point is Lazear’s [(1990) Quarterly Journal of Economics 105, 699–726] dictum that severance payment requirements unfavorably impact the labor market. We extend his sample period and add to his parsimonious specification a variety of fixed and time-varying labor market institutions. While the positive effect of severance pay on unemployment garners some support, there is no real indication of adverse effects in respect of the other employment outcomes identified here, namely, the employment-population ratio, the labor force participation rate, and long-term unemployment. Moreover, with the possible exception of collective bargaining coordination, the role of institutions is also more muted than suggested in the literature. We thank, without implicating, an anonymous referee for most helpful comments on the first draft of this paper.     

How Does Globalization Affect Income Inequality? A Panel Data Analysis

One of the major issues on the state of income inequality is the effect of globalization through foreign direct investment (FDI). It is well known that FDI inflows create employment opportunities for unskilled labor intensive countries. Hence, during recessionary (expansionary) periods, FDI outflows should cause an increase in a developing (developed) country’s unemployment rate, worsening income inequality. This study differs from the previous literature by employing the key variables FDI, trade volume, and GINI coefficient for a panel of three groups of countries (developed, developing, and miracle countries). We estimated panel cointegration coefficients via FM-OLS. Our results show that the effects of trade liberalization and FDI on income distribution differ for different country groups.     

Labor market dynamics over the business cycle: evidence from Markov switching models

This paper explores the evolution of the U.S. labor market across the business cycle and specifically the relationship between the unemployment rate and the average duration of unemployment. Labor market recoveries have long been thought of as lagging recoveries in broad economic activity. In particular, the unemployment rate peaks several months after official business cycle troughs and the average duration of unemployment lags further behind. Using estimates from Markov switching models of the unemployment rate, average duration of unemployment, jobless claims, and the exhaustion rate of regular unemployment insurance, this paper dates contractionary and expansionary phases of various aspects of the labor market and their relationship to the official phases of the business cycle. Evidence from these models suggests that inflows into unemployment recover almost contemporaneously with broad economic activity, while outflows recover almost a year after the end of official recessions. The differential timing in the recoveries of unemployment inflows and outflows, which is not a characteristic of most macro models of the labor market, accounts for the observed pattern between the unemployment rate and average duration of unemployment. Finally, when comparing the phases of the labor market to periods where Congress extends unemployment insurance benefits, it appears that policymakers target periods where the job finding rate is low, rather than periods where the stock of unemployed workers is high.     

Pro-market institutions and labor market outcomes: A panel-data analysis of U.S. metropolitan areas

We expand previous U.S. state-level research on the relationship between pro-market institutions and labor market outcomes by examining this relationship at the U.S. metropolitan-area level. Using panel data for 1992–2012 in a fixed-effects model, we investigate the effect of pro-market institutions on the unemployment rate, labor force participation rate, employment-population ratio, and employment growth across 366 U.S. metropolitan areas. The results indicate that pro-market institutions are associated with a lower unemployment rate, higher employment-population ratio, and faster employment growth. These results suggest that local-area policies are important for achieving favorable labor market conditions at the local level.     

Predicting FDI inflows: Exploring a nonlinear relationship between peace years,oil wealth,and the rule of law

Despite previous studies investigating the impacts of various factors such as peace years, natural resources, and the rule of law on foreign direct investment (FDI), empirical findings remain inconclusive. Therefore, this study investigates the interplay between these factors in shaping host country conditions that facilitate FDI inflows. Using generalized additive models, we examine the simultaneous effects of peace years, oil wealth, and the rule of law on FDI inflows in a sample of non-OECD countries from 1970 to 2009. Our results reveal that established peace is a critical factor in attracting FDI inflows for both oil-exporting and non-oil-exporting countries. However, the effects of the rule of law vary depending on oil wealth. Oil-exporting countries receive more FDI inflows when they have a weak rather than a strong rule of law, while non-oil-exporting countries tend to receive more foreign investments when they have a moderately strong rule of law. We argue that countries with oil wealth combined with a moderately weak rule of law provide an environment that is conducive to multinational corporations (MNCs) in extractive industries seeking monopoly rents. Conversely, countries without oil wealth should create stable yet efficient environments that protect property rights and promote labor market flexibility to appeal to non-resource-seeking MNCs.     

Gender,Decent Work,and Global Production Sharing in Indonesian Manufacturing

Abstract:

Global commodity chains reflect and affect gendered labor markets. This article uses the Decent Work framework from the International Labour Organization to analyze employment outcomes for Indonesian workers in manufacturing. This research investigates trends in feminized manufacturing sectors in variously sized firms. Regression analyses is used to evaluate how firm characteristics related to global production sharing effect decent work outcomes for women and men, as well as female share of employment itself. The results suggest that exports and FDI affect men and women differently and that feminization and decent work outcomes depend on how the sector is positioned along the global value chain.     

WHY ARE FERTILITY RATES AND FEMALE EMPLOYMENT RATIOS POSITIVELY CORRELATED ACROSS O.E.C.D. COUNTRIES?*

We develop a quantitative theory of fertility and labor market participation decisions in order to investigate the role of labor market frictions in generating the observed positive association between fertility and employment among O.E.C.D. countries. We find that unemployment induces females to postpone and space births, which, in turn, reduces the total fertility rate. Moreover, differences in female labor outcomes across the United States and Spain can account for the low fertility rate in Spain relative to the United States. We also find that labor market frictions can generate a positive association between female employment ratios and fertility rates across economies.     

Cash Transfers to the Poor and the Labor Market: An Equilibrium Analysis

This paper studies the effects of cash transfers to the poor on the labor market. This is investigated in a matching model with endogenous labor market participation and job destruction. Depending on their productivity, workers might want to stay in the job, become unemployed, or leave the labor market; in addition, workers out of the labor force might decide to search for a job. Cash transfers are introduced to all agents with income below a given level. Two qualitative results are found: (i) The size of cash transfers has a negative effect on the employment rate, but an ambiguous effect on the unemployment rate; and (ii) the coverage of this welfare program has a positive effect on the employment rate, and an ambiguous effect on the unemployment rate. The numerical simulations also show that: (i) if the government target is to reduce inequality and poverty, the more efficient policy is to increase the level of benefits instead of increasing the eligibility of the program; (ii) compared with a welfare program that condition eligibility to labor market participation, the “unconditional” cash transfer program has a stronger impact on inequality and poverty, but with a reduction in labor market participation and output.     

The consequences of labor market flexibility: Panel evidence based on survey data

We introduce a new data set on hiring and firing restrictions for 21 OECD countries for the period 1984-1990. The data are based on surveys of business people in the countries covered, so the indices we use are subjective in nature. Controlling for country and time fixed effects, and using dynamic panel data techniques, we find evidence that increasing the flexibility of the labor market increases both the employment rate and the rate of participation in the labor force. A conservative estimate suggests that if France were to make its labor markets as flexible as those in the US, its employment rate would increase 1.6 percentage points, or 14% of the employment gap between the two countries. The estimated effects are larger in the female than in the male labor market, although both groups seem to have similar long-run coefficients. There is also some evidence that more flexibility leads to lower unemployment rates and to lower rates of long-term unemployment. We also find evidence consistent with the hypothesis that inflexible labor markets produce “jobless recoveries” and introduce more unemployment persistence.     

Macroeconomic policy lessons of labor market frictions

The paper explores the consequences of macroeconomic policy for labor market outcomes in the presence of frictions. It shows how policy may be useful in over-riding frictions, as well as how it might generate adverse outcomes. A partial-equilibrium, empirically grounded model is used to simulate policy effects.The key results are that policy has effects on the stochastic behavior of key variables - measures that reduce unemployment also reduce its persistence and increase the volatility of vacancies. Hiring subsidies and unemployment benefits have substantial effects on labor market outcomes, while employment subsidies or wage tax reductions are not very effective policy instruments.     

Foreign Direct Investment Determinants in OECD and Developing Countries

In this paper we examine the foreign direct investment (FDI) inflow determinants in 24 Organisation for Economic Co‐operation and Development (OECD) and 22 developing (non‐OECD) countries over 1980–2012, using the standard fixed effects as well as a dynamic panel approach. The most robust finding is that lagged FDI, market size, gross capital formation and corporate taxation significantly affect FDI inflows in OECD countries. We also examine a group of developing countries, taking into consideration the increased share of world FDI inflows that developing countries have attracted, and compare the results. In this case, lagged FDI, market size, labor cost and institutional variables provide the most robust results. The empirical results have important policy implications indicating the factors that host economies should emphasize in order to attract FDI inflows.     

Migration and imperfect labor markets: Theory and cross-country evidence from Denmark,Germany and the UK

We investigate the labor market effects of immigration in Denmark, Germany and the UK, three countries which are characterized by considerable differences in labor market institutions and welfare states. Institutions such as collective bargaining, minimum wages, employment protection and unemployment benefits affect the way in which wages respond to labor supply shocks, and, hence, the labor market effects of immigration. We employ a wage-setting approach which assumes that wages decline with the unemployment rate, albeit imperfectly. We find that the wage and employment effects of immigration depend on wage flexibility and the composition of the labor supply shock. In Germany immigration involves only moderate wage, but large unemployment effects, since immigrants are concentrated in labor market segments with low wage flexibility. The reverse is true for the UK and Denmark.     

就业保护与劳动力市场绩效——基于跨国面板数据的实证分析

本文采用世界经济自由度指数和世界银行的世界发展指标,选取2002-2008年面板数据对就业保护的理论假说和经验分析进行了相应的验证。实证结果表明,就业保护提高了失业率,女性和青年受就业保护制度的影响程度更大;就业保护子指标对失业率的影响与理论估计一致,但显著性较低。其中,雇佣/解雇管制越低,失业率越低;法定解雇成本越高,失业率越低;服兵役时间越长,失业率越高;最低工资、集体协商、工时管制与失业率之间没有显著关系。就业保护问题的研究有助于改进我国的劳动立法,改善女性、青年的就业机会,提高就业率,发挥法律的增进市场效率的作用,为完善劳动力市场的运行机制提供理论支持。     

International Factor Mobility,Wages and Prices

This paper analyzes the joint influence of migration inflows and outward foreign direct investment (FDI) on wage bargaining. Labor migration and offshoring supported by FDI affect wage deals by changing the outside options of workers and firms. Unemployed workers may find alternative jobs either in the legal or in the illegal labor markets. Wages in this latter case are highly affected by migrants crowding this segment more than any other market. Firms may have the option of moving production partly or entirely to foreign low‐cost countries. A wage curve is designed theoretically, reflecting cross‐border labor and capital mobility, and estimated on panel data for 13 European countries over the period 1995–2013. The theoretical predictions of a joint negative effect on wages of FDI outflows and labor migration inflows are confirmed with some novel results.     

Relation between growth and unemployment in a model with labor-force participation and adverse labor institutions

Based on labor search models with an exogenous labor force, existing papers have found a negative relation between long-run economic growth and unemployment. Motivated by the fact that the labor force participation has changed substantially across OECD countries, this paper revisits the long-run relation by taking account of endogenous labor-force participation. We find that, via the effects on employment, changes in labor market institutions may increase or decrease long-run economic growth. Moreover, depending upon the effects on the labor force and employment, these labor market institutions may increase or decrease unemployment rates in the long run. Thus, changes in labor market institutions lead to a non-monotone relation between long-run economic growth and unemployment that is consistent with the data.     

Autocracy,Democracy, and FDI Inflows to the Developing Countries

Abstract

This paper investigates the relationship between political regimes and Foreign Direct Investment (FDI) inflows to the developing countries for a sample of 134 countries over the 1983–2002 period. Using two categorical measures of regime type and three different measures of FDI, this study finds that, regardless of the measures of regime type, democracies are not significantly associated with either FDI in level or FDI as a ratio to GDP; democracy is positively related to a higher level of per capita FDI, but this result is not robust to alternative measures of political regime. Taken as a whole, there is no evidence of a systematic relationship between democracy and FDI inflows. This result suggests that being a democracy does not help attract higher levels of FDI.     

Foreign direct investment in OECD countries: a special focus in the case of Greece

Foreign Direct Investment (FDI) is considered as an important instrument for economic development all over the world. The aim of this paper is to examine the FDI inflows determinants for 24 OECD countries. To this end we employ annual data from 1980 to 2012 for a series of potential FDI determinants that have been identified as the most important by the relevant literature. Our empirical strategy employs both the standard fixed effects panel as well as a dynamic panel approach. The empirical findings highlight the importance of market size, trade openness, unit labor cost, schooling, taxation, gross capital formation, institutional variables, and ROA/ROE as significant FDI determinants. In the case of the dynamic panel model those FDI inflows determinants are not uniform for all country groups. Additionally, the results indicate that corporate tax rates clearly affect FDI attractiveness. This finding is robust when testing different countries subgroups. The present study has important policy implications indicating the factors that host economies should place emphasis on in order to attract FDI inflows. Policy makers should not only pay attention to the corporate tax rate level but they should also design a simple, stable and transparent taxation system that minimizes the relevant business risk.     

ECONOMIC FREEDOM AND LABOR MARKET CONDITIONS: EVIDENCE FROM THE STATES

Using 1981–2009 data for the 50 states, this article examines the relationship between economic freedom and the unemployment rate, the labor force participation rate, and the employment‐population ratio. After controlling for a variety of state‐level characteristics, the results from most specifications indicate that economic freedom is associated with lower unemployment and with higher labor force participation and employment‐population ratios. (JEL J68, K31, O43)     

不完全劳动市场、政府干预与失业率

本文针对我国不完全的劳动市场,建立了一个短视一搜寻模型,目的是要说明,第一,虽然政府直接干预下的就业率高于无政府干预的劳动市场的均衡就业率,但是后者的社会总福利水平高于前者,而且,无政府干预情形下失业者的福利水平不会低于政府干预时在低工资岗位上的就业者的福利水平.这说明政府直接干预劳动市场虽然有可能降低失业率,但可能导致整个社会福利损失,也不利于提高低收入人群的福利水平.第二,我国现行的社会保障制度、户籍制度以及地方保护政策妨碍城乡劳动力自由流动,造成城市居民一般占据了工资较高的岗位,农村居民一般只能找到工资较低的岗位.这种匹配过程达到的劳动市场均衡,虽然有可能最大限度降低城镇失业率,但不是使得全国总失业率最低的均衡.