Do Benefit Cuts Boost Job Finding? Swedish Evidence from the 1990s

In June 1995, the Swedish parliament decided to cut the replacement rate in unemployment insurance from 80% to 75%, a change that took effect on 1 January 1996. The paper exploits a quasi-experimental feature of the benefit reform to examine the effect on job finding. We compare the evolution of transitions to employment before and after the reform among those affected and those not affected. Our estimates suggest that the reform caused an increase in the transition rate of roughly 10%. Moreover, the reform appears to have affected behaviour several months before its actual implementation in January 1996.     

Diversified Portfolios in Continuous Time

We study a financial market containing an infinite number ofassets, where each asset price is driven by an idiosyncraticrandom source as well as by a systematic noise term. Introducing"asymptotic assets" which correspond to certain infinitely welldiversified portfolios we study absence of (asymptotic) arbitrage,and in this context we obtain continuous time extensions ofatemporal APT results. We also study completeness and derivativepricing, showing that the possibility of forming infinitelywell diversified portfolios has the property of completing themarket. It also turns out that models where the all risk isof diffusion type are qualitatively quite different from modelswhere one risk is of diffusion type and the other is of Poissontype. We also present a simple martingale based theory for absenceof asymptotic arbitrage. JEL Classification: G12, G13,     

Unemployment Insurance in Theory and Practice

A hallmark of modern labor economics is the close interplay between the development of theory, data sources and econometric testing. The evolution of the economic analysis of unemployment insurance provides a good illustration. New theoretical approaches, in particular job-search theory, have inspired a large amount of empirical research, some of it methodologically innovative and most of it highly relevant for economic policy. The paper presents a broad survey and an assessment of the economic analysis of unemployment insurance as it has evolved since the 1970s.     

Size distributions and the optimal size of firms

Conclusions We have assumed a specific statistical process which governs the competition among firms on the market.This process assumes that the consumer choice in the market is the decisive factor in determining size distributions. There are clearly many other relations e. g. between firms that are important for the process. We have assumed that they are of minor importance.We have assumed that the size distribution has reached an equilibrium and it is this equilibrium that we have studied. This is at best only true approximately. An extension of the presentation above would be to study non-equilibrium situations (open systems) which has proved to be fruitful in other contexts.     

On the road to the Golden Age

Summary To find a pattern leading to the Golden Age it is necessary to introduce a principle for the division of consumption between generations.The Golden Rule result gives the fraction of G. N. P. that each generation saves on behalf of future generations but since this fraction is constant, previous generations have made an identical sacrifice on behalf of the present one.In a similar fashion it is postulated here that every generation chooses the proportion of G. N. P. which it wishes to save while requiring previous generations to save in exactly the same way. This means that although very generations would like to increase its consumption, it does not wish earlier generations to do so since that would leave less total G. N. P. in the present.The part of G. N. P. to be invested is assumed to be a certain, to be determined, function of time. The production function is taken to be Cobb-Douglas with constant returns to scale. The optimal growth path is determined under various assumptions about labour supply. It is shown that the Golden Age results are obtained as time approaches infinity.With 1 FigureThis research has been financed by a grant from the Tri-Centennial Fund of the Bank of Sweden.