Education policies,pre-college human capital investment and educated unemployment

Journal of Economics - This paper employs a search and matching model featuring endogenous pre-college human capital investment to examine how education policies, such as subsidies, scholarships,...     

The role of unemployment in wage determination: further evidence on the wage curve from Turkey

This paper presents an empirical estimation of the correlation between wages and regional unemployment rates in Turkey, more specifically it explores the role of regional unemployment rates in wage determination. The analysis builds upon a series of recent empirical studies on the wage-unemployment relationship, now commonly known as ‘the wage curve’, a downward sloping curve in wage-unemployment space. The existing studies are for most part in advanced market economies, while this paper presents one of the few attempts at a wage curve analysis within the context of a developing market economy. A cross-sectional estimation of micro level individual wage data for the Turkish labour market in 1994, suggest a statistically significant negative correlation between wages and regional unemployment rates. Separate regressions for men and women, however, show a wage curve to exist only in the male labour market. The study also presents the results on other variables of wage determination such as returns to schooling, returns to age, job tenure, gender, industrial and occupational affiliation of the worker, economic sector and union status.     

Job search,wage offers,and unemployment insurance

Several previous studies have estimated that unemployment insurance (UI) causes an increase in the duration of unemployment and have concluded from this that UI raises reservation wages. However, job-search theory implies that UI can also affect duration through its impact on job offer arrival rates and/or through an impact on wage offers. In this paper we attempt to identify these possible additional effects using survey data on a sample of unemployed individuals. Like previous studies, we find that UI significantly increases unemployment duration. However, part of this effect is estimated to stem from a decrease in the offer arrival rate as well as from a higher reservation wage.     

Regional unemployment and human capital in transition economies1

Differences in regional unemployment in post‐communist economies are large and persistent. We show that within‐country regional variation in inherited human capital in four such economies explains the bulk of regional variation in unemployment; we explore potential explanations. Our evidence suggests that internal skill‐biased migration and the flow of foreign direct investment are not working as adjustment mechanisms but rather help explain the lack of convergence in regional unemployment rates. Although this capital and labour mobility pattern is consistent with the presence of regional skill spillovers, we find little support for this hypothesis. Instead, the observed migration pattern appears to arise from different skill‐specific adjustments to regional shocks brought about in part by labour‐market institutions such as guaranteed welfare income.     

Growth,unemployment and public capital

Abstract. Existing literature has studied the growth effects of fiscal policy in models with full-employment. The aim of this paper is to study these growth effects in an endogenous growth model with unemployment and compare them with the effects obtained when there is full-employment. To this end, we assume that unemployment arises due to the existence of unions. We also assume that the government finances, by means of income taxes, both public capital and an unemployment benefit. Public capital increases total factor productivity and modifies the elasticity of the labor demand. We show that the effects of fiscal policy on both employment and growth crucially depend on the relation between this elasticity and public capital. We would like to thank Jordi Caballé, Fernando Sánchez, Manuel Santos and an anonymous referee for their helpful comments. Sorolla is grateful for financial support to Spanish Ministry of Education through DGICYT grant SEC2000-0684 and to Generalitat de Catalunya through grant SGR2001-164. Raurich is grateful to Universitat de Girona for financial support through grant 9100075.     

Aggregate demand, the wage gap and unemployment in LDC's

This paper begins with the Todaro framework which relates LDC urban unemployment to the existence of an urban-rural wage gap. An explanation of the wage gap is developed from aggregate demand conditions in the urban sector, providing a Keynesian theory of LDC unemployment. Various policies to alleviate LDC unemployment are considered. Aggregate demand policies are most certain of success when the response of urban output to these policies is low, a situation which has usually been held to invalidate demand policies in LDC's. Import substitution policies promote unemployment and should be reversed or even replaced by rural sector subsidization.     

Egalitarian wage policies, unemployment and skill-biased technological change

A popular explanation for the rise in European unemployment during the past decades is that relative wages failed to adjust to changes in relative productivities. Many economists reject this hypothesis on the ground that the ratios of low- to high-skill unemployment did not increase. Building on a search model, I argue that relative unemployment rates are affected by skill-neutral, as well as skill-biased shocks; hence stable ratios are theoretically consistent with a mix of skill-biased and skill-neutral shocks. Yet, numerical exercises confirm that wage rigidity in the face of skill-biased shocks probably did not explain much of the European unemployment experience.     

Institutions,capital stock and wage setting in Spain

This article confronts two distinct perspectives of the labour market: the institutionalist view?–?highlighting equilibrium and labour market institutions?–?and the Chain Reaction Theory?–?emphasizing dynamics and the growth drivers’ role in labour market performance. We consider the ratio of public to private capital stock as a growth driver relevant to the labour market; provide different economic rationales for this ratio to exert a negative influence in wage setting; and explore its empirical relevance in the context of a wage setting curve for Spain comprising the standard variables. There are two main results. First, several institutional variables taken to be critical to explain unemployment in the mainstream literature are not relevant for the Spanish wage setting curve. Second, there is a negative and significant influence of the ratio of public to private capital stock, which is robust to different specifications of the wage setting equation.     

Human capital investment,credentialing, and wage differentials

This study considers how individuals determine at what ratio they will invest in two different types of education. The first type contributes to the development of labor skills, while the other does not. We refer to the former as human capital investment and the latter as unproductive investment, which improves test scores but has no beneficial effect on students' human capital. We formulate an overlapping‐generations economy in which the rich and poor households invest in both types of education. We find that the ratio of human capital investment to unproductive investment is lower in the economy with medium size of the wage differentials. In a dynamic analysis, we identify two patterns of stable steady states for the dynamics of the wage differentials, namely, no‐inequality and high‐inequality steady states. Further, we show that a rapid increase in the level of skill‐biased technology may cause a switch from a steady state with no‐inequality to one with high inequality. This causes at least a temporary increase in the ratio of unproductive investment during the transition to the new steady state.     

Firm heterogeneity and immigrant wage assimilation

This article investigates the role of job mobility in immigrant wage assimilation. I use longitudinal linked employer–employee data for Portugal to estimate the immigrant wage catch-up in log wage regressions with both individual and firm fixed effects. I show that moving to firms with higher wage premiums accounts for approximately 30% of the immigrant wage catch-up in the first years.     

Growth and unemployment in a shirking efficiency wage model

Abstract.  The relationship between growth and unemployment in a general equilibrium shirking efficiency wage model is explored. In contrast to past work on this subject, detected shirkers are not dismissed but instead incur a monetary punishment. As a result of this modification, the model can account for a stable rate of unemployment when there is positive population growth and/or technological growth in the economy. Moreover, I show that institutions and policies that limit the ability of firms to punish detected shirkers or restrict their use of discretionary bonuses can increase unemployment and reduce the economy's long run growth rate. JEL Classification: E0, J41     

Economic development, growth of human capital, and the dynamics of the wage structure

In this paper I elucidate the sources of growth of human capital in the course of economic development. On the supply side (Section 1) I include the growth of family income, urbanization, the demographic transition, and the rising cost of time.The supply side alone cannot explain the continuous growth of human capital as it implies a self limiting decline in rates of return below those in alternative investments. Such declines are offset by growing demands for human capital in the labor market. Growth of demand for labor skills is a function of capital accumulation and of technological changes. Evidence on this hypothesis is summarized in Section 2 and on supply responses to growing demand for human capital in Section 3. Changes in the skill and wage structures in the labor market are an important part of the evidence.The reciprocal relation between economic growth and the growth of human capital is likely to be an important key to sustained economic growth. A caveat applies to indirect effects of economic growth on family instability, which may lead to a deterioration of childhood human capital in some sectors of society.     

Production,unemployment and wage flexibility in an ICT-assisted economy: A model

This paper presents a simple macroeconomic model in which a fall in money wages has contractionary effects on output and employment. As it is well known this argument in itself is not novel: the contractionary effect of a rise in the mark-up is a standard result in Kaleckian models of imperfect competition. The new contribution of this paper lies in the fact that the contractionary effect of a money wage decline is consistent with perfect competition and rationality of economic agents. This result depends on an original specification of the production side and the associated implications for pricing. This specification, which embraces many features of modern production (characterized by a massive use of ICT), represents the first attempt to use Georgescu Roegen's contribution to production analysis within a Keynesian macroeconomic framework.     

Investment in human capital and gender wage differences: evidence from the NLSY

This paper uses data from the National Longitudinal Survey of Youth (NLSY) to investigate gender differences in returns to various forms of human capital. Since the NLSY includes relatively detailed information regarding on- and off-the-job training, we place special emphasis on measuring gender differences in the incidence of and returns to formal post-school training. Also considered is the role of nonhuman capital factors such as industry and occupation in explaining the wage gap. It is found that about 60% of the gender wage gap in the sample is explained by mean differences in individual characteristics and market circumstances. This suggests a smaller role for discrimination in explaining the wage gap than previous research has found. The research indicates that training does not affect the gender wage gap. Also it is found that there is no statistically significant difference in the rate of return to other measures of human capital for women versus men. Our research suggests that the largest factors contributing to the wage gap are differences in the stocks of human capital for men and women, and differences in the distributions of men and women across industries and occupations.     

Inequality,unemployment, and endogenous growth in a political economy with a minimum wage

This paper presents development of an endogenous growth model with heterogeneous households and political determination of the minimum wage. We investigate the interaction of inequality, unemployment, and economic growth. First, the arguments in this paper show that a positive correlation exists between inequality and unemployment, Second, the interaction between inequality and economic growth is shown to be a positive relation if high inequality pertains in a society. It is a negative relation if low inequality pertains.      

Unproductive labour,capital accumulation and profitability crisis in the Greek economy

The focus of this paper is on the evolution of the major macroeconomic variables of classical political economy and the contrast with their orthodox counterparts in the quest to identify the causes of the current crisis in the Greek economy. Our analysis shows that declining profitability past a certain point leads to a stagnant mass of real net profits that discourage investment and increase unemployment. More specifically, for the period 1970–2007 for which we have detailed data, we identify the so-called silent depression of the 1970s and early 1980s, the new golden age of accumulation during which the capitalization of the production process led to a rapidly growing productivity and with stagnant or slowly rising real wages increased the rate of surplus value to new heights. As a consequence, the rate of profit from the mid-1980s onwards displayed a mildly rising trend and remained at a much lower level than that of the early 1970s. The rate of profit starts to fall after 2007, the year of the onset of the (world) economic crisis, and this continues up to 2014. Our econometric analysis based on an ARDL model further shows that the incremental rate of return, a variable derived from, and therefore strictly related to the average rate of profit, constitutes a by far more concrete measure of profitability and, in combination with the real interest rate, shapes the process of capital accumulation.     

Low level equilibrium trap,unemployment, efficiency of education system,child labour and human capital formation

This paper builds an overlapping generations household economy model to examine the impact of adult unemployment on the human capital formation of a child and on child labour, as viewed through the lens of the adult’s expectations of future employability. The model indicates that the higher the adult unemployment rate in the skilled sector, the lesser is the time allocated by an unskilled adult towards schooling of her child. We also find that an increase in the unskilled adult’s wage may or may not decrease child labour in the presence of unemployment. The model predicts that an increase in child wage increases schooling and human capital growth rate only if the adults in the unskilled sector earn less than subsistence consumption expenditure. As the responsiveness of skilled wage to human capital increases, schooling and human capital growth rates increase. The model dynamics bring out the importance of education efficiency and parental human capital in human capital formation of the child. In the case of an inefficient education system, generations will be trapped into low level equilibrium. Only in the presence of an efficient education system, steady growth of human capital is possible. Suitable policies that may be framed to escape the child labour trap are discussed as well.     

Firm wage differentiation in Eastern GermanyA non-parametric analysis of the wage spread

In Eastern Germany, wage differentiation between firms has clearly grown, parallel to individual wage differentials. Nevertheless, the wage spread between firms is still much less than in Western Germany. In this paper, a non‐parametric decomposition is used to analyze the difference between the wages spread in the two parts of Germany. Only part of the difference can be explained by different economic structures in Eastern Germany. By far, the greater part of the difference in the wage spread between firms in the two parts of the country is due to the fact that differences in wages paid by firms of the same type in Eastern Germany are much less than those of their counterparts in Western Germany. A striking result of the analysis is that the gap in the wage variance between Eastern and Western Germany is increasing.     

人力资本、创意阶层及其区域空间分布研究

文章首先比较了人力资本与创意阶层的区别和联系,随后分析了我国创意阶层的区域空间分布特征。通过分析得出,我国创意阶层的空间分布差异显著,并且呈现与经济发展水平非一致的特性。为了深入分析创意阶层区域空间分布的原因,文章使用岭回归分析方法,并结合2003—2007年中国30个省际面板数据进行实证研究。研究结果表明,城市文化机会、公共服务能力、高等教育能力、生态设施水平、创意产出水平和高科技指标对我国创意阶层的分布具有显著的影响。最后,文章据此提出相关政策建议。