Do the French pension reforms increase re-employment of older unemployed workers?

ABSTRACT

The sustainability of Social Security financing has pushed authorities to reform their policy to increase the labour market participation of older workers. While most of the studies have focused on the consequences of pension reform on retirement decisions, we analyse the effects of two French pension reforms, which increased the period of contribution and the minimum retirement age, on transitions out of unemployment and into employment with a difference-in-differences approach. We find that both retirement reforms have positive effects on the re-employment of older unemployed workers. The pension reforms are also accompanied by an increase of the transitions into inactivity. The results suggest that the reforms have delivered significant effects by reducing the unemployment of older workers.     

To search or not to search? The effects of UI benefit extension for the older unemployed

In Finland the older unemployed can collect unemployment insurance benefits until retirement, while the entitlement period for younger groups is two years. In 1997 the eligibility age of persons benefiting from extended benefits was raised from 53 to 55. This paper takes advantage of this quasi-experimental setting to identify the effect of extended benefits on transitions out of unemployment among the older unemployed. We apply a competing risks version of a split population duration model to account for multiple exit routes and the possibility that some of the older unemployed may not be active in the labour market due to pension rules. Our finding is that roughly half of the unemployed with extended benefits withdraw from job search.     

Do increases in energy efficiency improve environmental quality and sustainability?

Governments world-wide increasingly see energy efficiency as an important aspect of sustainability. However, there is a debate in the literature as to whether the impact of improved energy efficiency on reducing energy use might be partially, or more than wholly, offset through “rebound” and “backfire” effects. This paper clarifies the theoretical conditions under which such effects would occur and explores their likely significance using a computable general equilibrium (CGE) model of the Scottish economy. We find that for Scotland a general improvement in energy efficiency in the production sectors of the economy initially produces rebound effects that eventually grow into backfire. Energy use ultimately increases in response to an efficiency gain and the ratio of GDP to CO₂ emissions falls. The economic factors underpinning rebound effects are straightforward: energy efficiency improvements result in an effective cut in energy prices, which produces output, substitution, competitiveness and income effects that stimulate energy demands. However, the presence of strong rebound or even backfire does not mean that efficiency-enhancing policies are irrelevant: rather it suggests that such policies operating alone are insufficient to generate environmental improvements. The implication is that a co-ordinated portfolio of energy policies is required.     

Do search frictions matter for inflation dynamics?

We assess the empirical relevance for inflation dynamics of accounting for the presence of search frictions in the labor market. The new Keynesian Phillips curve explains inflation as being mainly driven by current and expected future marginal costs. Recent empirical research has emphasized different measures of real marginal costs to be consistent with observed inflation persistence. We argue that, allowing for search frictions in the labor market, real marginal cost should also incorporate the cost of generating and maintaining long-term employment relationships, along with conventional measures, such as real unit labor costs. In order to construct a synthetic measure of real marginal costs, we use newly available labor market data on worker finding and separation rates that reflect hiring and firing costs. We then estimate a new Keynesian Phillips curve by generalized method of moments (GMM) using the imputed marginal cost series as an observable and find that the contribution of labor market frictions in explaining inflation dynamics is small.     

Opportunity costs in buying and short selling—Do they really matter?

The experimental results of the paper reveal that people do not take into consideration opportunity costs or opportunity profits when buying and short selling lottery tickets. These results are inconsistent with basic economic and finance theories.     

On the socially optimal density of coin and banknote series: Do production costs really matter?

By adding denominations to their coin and banknote series central banks can increase the efficiency of cash payments. In practice, however, they opt for a denominational structure with a relatively low density. The literature holds that this is because of the production costs involved. To test this proposition, we introduce a per-denomination fixed cost into the matching model of Lee et al. (2005) and parameterize the model with data on the production of US dollar banknotes. Our simulations demonstrate that central banks could increase the density of their currency systems beyond the observed level without the efficiency gains for transactors being dwarfed by the additional production costs for the central bank itself. This suggests that the explanation for the low density rather lies with costs incurred by consumers and merchants - and anticipated by central banks - that are not yet in any of the extant models.     

Employed Job Search among Young Workers: Do Women Still Search Differently than Men in the Internet Age?

Using data from the 2008–2011 waves of the National Longitudinal Survey of Youth 1997, this study explores the job search methods and strategies utilized by young workers. Although women are found to be marginally less likely to engage in on-the-job search than men, when they do they are equally likely to use the internet. The most important gender difference identified is that marriage serves as a strong inhibiting factor to search, both online and offline, for women but not so for men. In terms of search methods, men and women show almost identical patterns of usage. While there is substitution between online and offline search within particular method categories, employed searchers are generally using the internet as a complement to rather than as a replacement for more traditional offline search methods.     

Rising trade costs? Agglomeration and trade with endogenous transaction costs

Abstract.  While transport costs have fallen, the empirical evidence also points at rising total trade costs. In a model of industry location with endogenous transaction costs that seeks to replicate features from the machinery industry, we show how and under which conditions a decline in transport costs can lead to an increase in the total cost of trade. The subtle relationship between (endogenous) transport costs and the sensitivity of trade to distance is also explored.     

Do the skilled and prime-aged unemployed benefit more from training? Effect heterogeneity of public training programmes in Germany

This study analyses the treatment effects of public training programmes for the unemployed in Germany. Based on propensity score matching methods, we extend the picture that has been sketched in previous studies by estimating the treatment effects of medium-term programmes for different skill and age groups. Our results indicate that programme participation has a positive impact on employment probabilities and earnings for almost all sub-groups. We find little evidence for the presence of heterogeneous treatment effects, and the magnitude of the differences is quite small. Our results thus – at least in part – conflict with the strategy to provide training increasingly to individuals with better employment prospects.     

Do workers perceive high wage settlements of craft unions as fair?

In recent years, Germany has experienced an increasing impact of craft unions that negotiate high wage increases for the occupations they represent. This article analyses under which conditions workers perceive such over-proportional wage increases for occupational groups represented by craft unions as (rather) fair. We use a vignette approach, asking respondents for their fairness perceptions of several hypothetical scenarios. The results show that perceptions depend on the burdens of the occupational group, the size of the wage increase, information policies and potential consequences for other groups. These findings are in line with social and organizational justice theories about equity and informational justice.     

Macroeconomics and Politics Revisited: Do central banks Matter?

This paper provides a model encompassing both partisan influences on monetary policy and the issue of central bank independence. In a regime of partial independence, central bank's policy responses are not immune from partisan influences. Still, the latter fail to affect systematically the expected output level in election years. The predictions of the model are consistent with the empirical literature on partisan cycles and account for some of its controversial findings.     

Who pays the high health costs of older workers? Evidence from prostate cancer screening mandates

Between 1992 and 2009, 30 US states adopted laws mandating that health insurance plans cover screenings for prostate cancer. Because prostate cancer screenings are used almost exclusively by men over age 50, these mandates raise the cost of insuring older men relative to other groups. This article uses a triple-difference empirical strategy to take advantage of this quasi-random natural experiment in raising the cost of employing older workers. Using Integrated Public Use Microdata Series data from the March Supplement of the Current Population Survey, I find that the increased cost of insuring older workers results in their receiving 2.8% lower hourly wages, being 2% less likely to be employed and being 0.7% less likely to have employer-sponsored health insurance.     

Discouraged workers in developed countries and added workers in developing countries? Unemployment rate and labour force participation

Changes in the unemployment rate can have differing impacts on the labour force participation rate depending on the strength of the added worker effect and the discouraged worker effect. This paper documents the differences in the relationship between the unemployment rate and the labour force participation rate across a panel of developing countries and OECD countries. We employ a system GMM approach to control for and to establish the bi-directional causality between unemployment and labour force participation. We find that the discouraged worker effect does dominate in developed countries, while dominance of the added worker effect in developing countries leads to an increase in labour force in the face of rising unemployment.     

Protection and skills: Does trade policy favor low‐skill workers?

Many believe that international trade barriers in rich nations help low‐skill workers. Also, the empirical endogenous protection literature strongly implies that protection decreases with skill levels. This paper presents evidence against this conventional wisdom. Regressions based on a political economy model with search frictions and unemployment imply that protection and skill levels actually have a mound‐shaped relationship: industries with skills in the middle range get more protection than industries at either end of the distribution. Apparently, the politics of trade policy trump social concerns, rendering protection less “progressive” than is commonly believed.     

Do cost efficiency gap and foreign competitors matter concerning optimal privatization policy at the free entry market?

In this paper, we demonstrate that in contrast to the case with exogenous number of foreign private firms, partial privatization is always the best policy for the public firm in long-run equilibrium, which casts doubt on the robust result in Matsumura and Kanda (J Econ 84(1):27–48, 2005) who argued that welfare-maximizing behavior by the public firm is always optimal in mixed markets. Critical cost gap determines that long-run degree of privatization is larger than the short-run one. In particular, regarding the scenario wherein one public firm competes with domestic private firms and foreign private firms, equilibrium price is lower than marginal cost of public firm instead of being equivalent to marginal cost of the public firm, and that public firm’s outputs, profit, and social welfare is the smallest in the concerned mixed oligopoly models.     

What explains trade costs? Institutional quality and other determinants

This paper investigates the impact of institutional quality on trade costs across 133 countries during 1995–2014. The results show that good institutional quality significantly reduces the three types of trade costs, that is, total trade costs, trade costs of agricultural goods, and trade costs of manufactured goods. Furthermore, the effect of institutional quality is significant in reducing trade costs with regard to the different trading country pairs, the different subperiods, the components of institutional quality, and the endogeneity issue. This paper contributes to the literature by confirming a significant and negative relationship between institutional quality and trade costs from a global perspective.     

Trade Policy and Antitrust: Do Consumers Matter to Legislators?

We provide one of the first efforts to measure the importance of consumer preferences in legislators' trade policy decisions by estimating the degree to which the level of antitrust enforcement in the legislator's state impacts his or her vote on free trade agreements. To the extent that antitrust and trade liberalization are both viewed as pro‐consumer in nature, we would expect to see a positive relationship between antitrust enforcement in their legislative district and Congressional votes in support of trade liberalization. We find evidence suggesting that consumer preferences do play a role in legislative decisions on trade policy.     

Allocative efficiency measurement revisited—Do we really need input prices?

The traditional approach to measuring allocative efficiency exploits input prices, which are rarely known at the firm level. This paper proves allocative efficiency can be measured as a profit-oriented distance to the frontier in a profit-technical efficiency space. This new approach does not require information on input prices. To validate the new approach, we perform a Monte-Carlo experiment providing evidence that the estimates of allocative efficiency employing the new and the traditional approach are highly correlated. Finally, as an illustration, we apply the new approach to a sample of about 900 enterprises from the chemical manufacturing industry in Germany.     

Gender and climate change: Do female parliamentarians make difference?

This paper investigates whether female political representation in national parliaments influences climate change policy outcomes. Based on data from a large sample of countries, we demonstrate that female representation leads countries to adopt more stringent climate change policies. We exploit a combination of full and partial identification approaches to suggest that this relationship is likely to be causal. Moreover, we show that through its effect on the stringency of climate change policies, the representation of females in parliament results in lower carbon dioxide emissions. Female political representation may be an underutilized tool for addressing climate change.