Unemployment insurance and union bargaining — an insider-outsider approach

A trade union is required to tax its own members to fund unemployment benefit paid to its unemployed members in an insider-outsider model of union bargaining over wages and employment. An increase in unemployment benefit imposed by the government increases employment overall but not necessarily the employment of insiders if the tax rate is exogenously fixed by the government.This paper has benefited from comments of Mick Common, Dipak Ghosh, Bob Hart, and Robin Ruffell. The comments of two anonymous referees and the advice of the Editor have greatly improved the presentation of the paper. Any remaining errors or omissions are the responsibility of the authors.     

Economic consequences of an aging population

Europe and Japan are experiencing the aging of their populations. Aging implies a restructuring of the economy. Political issues which arise in an aging society include 1) a voting majority for the interests of the elderly, 2) a voting majority of females, 3) the domination of the decision power in corporate and similar ruling bodies, and 4) unemployment or a long wait for promotion for younger people. Economic issues of an aging society include 1) population aging often occurs under reduced rates of growth of per capita national income, 2) the relative economic status of the elderly very much depends on the currently existing tax transfer systems, and 3) the income of families whose head is over age 65 has generally been more unequally distributed than the income for younger families. Issues concerning the labor supply of the elderly include 1) the availability of pension income and health limitations strongly influence decisions to retire and 2) older workers become disheartened and choose early retirement when facing bad reemployment prospects. In general, population aging is likely to have its most substantive effect on the overall level of productivity in an economy where technical knowledge is changing rapidly and strong competition necessitates a high degree of adaptability of the labor force.     

Unemployment and welfare consequences of international outsourcing under monopolistic competition

This paper challenges the conventional academic view that international outsourcing is just another form of gainful trade. Contrary to that view, we show that labour‐service outsourcing can reduce the high‐wage country's welfare even when product‐market trade is beneficial, within a model that combines involuntary unemployment and monopolistic competition. Outsourcing's impact on welfare is worsened by a definite loss of jobs and a possible contraction in the range of varieties produced worldwide. While owners of capital benefit from outsourcing under certain conditions, labour's welfare always falls.     

Unemployment benefits and recall jobs: a split population model

We study the transitions out of unemployment of the recipients of insurance benefits, focusing on whether or not they are recalled to their previous employment. Specifically, a split population duration model (SPDM) for the recall decision by employers is compared with a standard duration model (SDM). We find significant differences between the SPDM and the SDM estimates, both with regard to their magnitude and expected sign. Some of the variables record undervalued estimated hazard rates in the SDM with respect to the SPDM.     

Investment sequencing in the brick industry: an application of grounded theory

Since the work of George Richardson on the problem of investmentcoordination, the literature has focused on explaining equilibriumin investment games and neglected the problem of how investmentsare coordinated. This paper reports the findings of a case studyof the brick industry which used grounded theory techniquesto develop a new analysis of investment coordination. Our mainfindings indicate that, despite the high cost of excess capacityand the very clear signalling of investment intentions, brickfirms are reluctant to stand back and delay their own investmentswhen a rival firm is expanding. The fact that for the most partexcess investment is avoided is explained by reference to firms'heterogeneity and constraints to investment.     

The structuralist theory of imported inflation: an application to South Africa

This study emphasizes the importance of identifying the origin of inflation in the present context of inflation targeting by many emerging market and transition economies. The analysis shows, based on South African data, how structural (supply) and demand inflation can be distinguished. The results indicate that South Africa's inflation experience between 1973q1 and 1998q4 is characterized by two monetary regimes. During the first regime (1973q1–1984q4) the long-run cause of inflation is demand-pull. The second regime (1987q1–1998q4) represents major changes to structural (‘imported’) and cost-push inflation. The two-year period 1985–1986 signifies structural change from the first to the second regime. Moreover, the results in the second regime remain robust when the inflation model is subjected to ‘new’ out-of-sample data until 2001q2. Evidence of structural (‘imported’) inflation in the second regime suggests that inflation should not entirely be squeezed out of the system nor should it necessarily be kept at the lowest possible level, because some inflation may be regarded as the natural by-product of the growth and development process. South Africa's inflation experience points to several lessons for existing (and potential) emerging market and transition economies with some form of inflation targeting.     

Challenges of population aging in China

Utilizing the most recent census and survey data as well as the new ProFamy method, this paper presents and analyzes the trends of challenges of population aging and elderly living arrangements in China in the first half of twenty-first century. It discusses the serious challenges and related policy recommendations concerning the old-age insurance program in rural China.     

The housing problem and revealed preference theory: duality and an application

This paper exhibits a duality between the theory of revealed preference of Afriat and the housing allocation problem of Shapley and Scarf. In particular, it is shown that Afriat’s theorem can be interpreted as a second welfare theorem in the housing problem. Using this duality, the revealed preference problem is connected to an optimal assignment problem, and a geometrical characterization of the rationalizability of experiment data is given. This allows in turn to give new indices of rationalizability of the data and to define weaker notions of rationalizability, in the spirit of Afriat’s efficiency index.     

How environmental concern influences the investment decision: an application of capital theory

We develop a conceptual analysis of long-run decisions about the economy and the environment. In particular, we focus on the innovation of a new technique of production. We base our study on three components. First, capital theory as means of describing production. Second, joint production as implied by the laws of thermodynamics. Third, the time structure of the produced waste by-product, characterised by the magnitude of its degradation rate. The crucial variable in our analysis is the decision maker's time horizon. We show that, unlike in the no pollution case or in the flow pollution case, extending the time horizon when there is a polluting capital bad may make it less likely that a new technique of production is introduced. We conclude that fully taking into account dynamic aspects of environmental pollution considerably increases the complexity of economic valuation and the need for environmental precaution when making an investment decision.     

Unemployment vs. Mismatch of Talents: Reconsidering Unemployment Benefits

We develop an equilibrium search-matching model with risk-neutral agents and two-sided ex-ante heterogeneity. Unemployment insurance has the standard effect of reducing employment, but also helps workers to get a suitable job. We show, through calibrations, how the mere difference on unemployment insurance, when countries experience a common skilled-biased technological shock, may result in differences in unemployment, productivity growth and wage inequality. These results are consistent with the contrasting performance of the labour market in Europe and the United States in the last twenty-five years. The model is used to address some political economy issues.     

The feasibility of low inflation: theory with an application to the argentine case

In this paper we review the Argentine experience of hyperinflation, concentrating on understanding why stabilization took so long, and was only implemented by the most unlikely candidate. To explain these facts we present a voting model in which politicians' actions transmit information about the state of the economy and thus shape voters' behavior. We discuss the implications of the model for countries which are going through the same instability that characterized Argentina in the late 80s.     

Education, segregation and marital sorting: theory and an application to the UK

This paper presents a model of the intergenerational transmission of education and marital sorting. Parents matter both because of their household income and because their human capital determines the distribution of a child's disutility from making an effort to become skilled. We show that an increase in segregation has potentially ambiguous effects on the proportion of individuals that become skilled in the steady state, and hence on marital sorting, the personal and household income distribution, and welfare. We calibrate the steady state of our model to UK statistics. We find that an increase in the correlation of spouses in their years of education will bring about a small increase in the proportion of skilled individuals when the relative supply of skilled individuals is variable at the family level and a decrease when this supply is fixed. Ex-ante utility (of an unborn individual) increases in the first case and decreases in the second. The welfare effect of increased sorting is negative for unskilled individuals and positive for skilled individuals. Increased segregation always leads to an increase in welfare inequality between skilled and unskilled individuals.     

Critique of zero population growth theory

This is a critique of widely held theories concerning the relationship between population growth and economic development. "The central purpose of this paper is to critically analyse the zero population growth movement. The hypotheses of Neo-Malthusian theory or Zero Population Growth and the concept of Population Bomb will be briefly stated in Section 1. Section 2 will discuss the theory of demographic transition. Section 3 will critically examine the validity of the Neo-Malthusian theory of population growth. Our conclusions and recommendations will be stated in Section 4." The author's main contention is that overconsumption in developed countries is the major cause of the deterioration of the environment rather than overpopulation in the developing countries.     

A theory of cooperation in games with an application to market socialism

Abstract

Economic theory has focused almost exclusively on how humans compete with each other in their economic activity, culminating in general equilibrium (Walras–Arrow–Debreu) and game theory (Cournot–Nash). Cooperation in economic activity is, however, important, and is virtually ignored. Because our models influence our view of the world, this theoretical lacuna biases economists’ interpretation of economic behavior. Here, I propose models that provide micro-foundations for how cooperation is decentralized by economic agents. It is incorrect, in particular, to view competition as decentralized and cooperation as organized only by central diktat. My approach is not to alter preferences, which is the strategy behavioral economists have adopted to model cooperation, but rather to alter the way that agents optimize. Whereas Nash optimizers view other players in the game as part of the environment (parameters), Kantian optimizers view them as part of action. When formalized, this approach resolves the two major failures of Nash optimization from a welfare viewpoint – the Pareto inefficiency of equilibria in common-pool resource problems (the tragedy of the commons) and the inefficiency of equilibria in public-good games (the free rider problem). An application to market socialism shows that the problems of efficiency and distribution can be completely separated: the dead-weight loss of taxation disappears.     

自然失业率的机理与实证分析——基于资本构成理论的研究

依据马克思主义的资本构成、资本积累和资本循环理论,设计模型对自然失业率直接测量,从分析可知,自然失业率取决于人均资本量、资本构成、平均工资等变量。对我国1991～2009年自然失业率的实证分析显示,我国自然失业率稳定上升。提出应通过深化经济结构调整、调节收入分配两极分化等措施降低自然失业率。     

Collective female labour supply: theory and application

This article deals with female labour supply in the collective framework. It studies married couples and starting from the empirical observation that the husband's labour supply is generally fixed at full-time. It shows that, in this case, structural elements of the decision process, such as individual preferences or the rule that determines the intra-household distribution of welfare, can be identified if household demand for at least one commodity, together with the wife's labour supply, is observed. These theoretical considerations are followed by an application using French data.     

Ecological residence：theory and application in China

This paper makes an overall introduction of ecological residence （ER）, a new type of eco-building and studiesits origin, definition, status quo and characteristics. Firstly, it shapes like a forest seen from afar and like a garden seeninside; secondly, its environment should be up to the natural level; thirdly, designing, management, green energyutilization and sanitation should be up to environmental standard; fourthly, the green ecology concept is not only appliedto building but also rooted in the residents. In this paper, the features of ecological residence are summarized - coziness,health, high-efficiency and beauty, and principles of ecological residence are proposed - ecology-based, human-oriented,local-conditions-based and systematic. Also, techniques, problems and various understandings are discussed for theenhancement of ecological residence.