Directed search with heterogeneous firms: an experimental study

Directed search models labor markets where workers observe wages before deciding where they will apply. This paper tests this model for the case of heterogeneous firms in a laboratory experiment. The theory predicts that more productive firms offer higher wages and workers apply more often to these higher wages. In consequence, more productive firms are more likely to match and the market is more efficient than the prediction of an alternative model where search is random. The main results of the experiment are that average firms offer wages that are close to or a little lower than the theoretical predictions but highly variable and workers apply more often to high offers but not to the extent predicted. The markets are no more efficient than random search predicts, because of the variation in wage offers.     

On the Efficiency of Job Search with Social Networks

This paper provides a simple matching model in which unemployed workers and employers can be matched together through social networks and through more efficient, and also more costly, methods. In this framework, decentralized decisions to utilize social networks in the job search process can be inefficient and give rise to multiple equilibria. More precisely, in a decentralized equilibrium, social networks can be overutilized, with respect to an efficient allocation, in some circumstances and underutilized in others. Moreover, the existence of different job search methods can give rise to a higher job search intensity than the efficient one. This is in sharp contrast with the standard result, derived in matching models, according to which search intensity is always too low if not efficient. Finally, in the presence of different job search methods, conditional unemployment benefits hikes, which can be used as a coordination device to improve welfare when individuals.     

Spatial connectivity as a recovery process indicator: The L'Aquila earthquake

The main objective of this paper is to prove that spatial connectivity can be an effective spatial indicator for monitoring and evaluating the recovery process after the event of an earthquake. It integrates variables such as distance, travel time and quality of public transport service. We hypothesize that there is a relationship between the connectivity to the central business districts in cities, and the satisfaction with the locations of new settlements assigned to the homeless population during a recovery process. If this hypothesis holds true, then the satisfaction with new settlements will be correlated with the inhabitants' preference to either stay, or to search for a new site. This will then support the evaluation of the success of a recovery process. To prove this relationship we investigated the twelve months recovery process in L'Aquila in Italy. Spatial data sets were used and analyzed using GIS. Fieldwork data and interviews were conducted in order to investigate the satisfaction of persons living in newly established places outside of the city. We compared the strength of the desire of the interviewees to move away, against the travel distance and travel time to the city center. The statistical analysis reveals that the preference to search for another place was significantly correlated with the distance between new settlements and the city center of L'Aquila. To a lesser degree it was correlated with the travel time. The regression indicated that the distance between the new settlements and the inner city strongly influences the preference to either stay or to move.     

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.     

Farsighted network formation

This paper studies a model of dynamic network formation when individuals are farsighted: players evaluate the desirability of a “current” move in terms of its consequences on the entire discounted stream of payoffs. We define a concept of equilibrium which takes into account farsighted behavior of agents and allows for limited cooperation amongst agents. We show that an equilibrium process of network formation exists. We also show that there are valuation structures in which no equilibrium strategy profile can sustain efficient networks. We then provide sufficient conditions under which the equilibrium process will yield efficient outcomes.     

Equilibrium in Auction and Bargaining Markets When Agents Can Wait and Search

The paper studies two market structures and two modes of trade. The agents, buyers and sellers, can choose whether to stay or search. The meetings take place randomly, and trades are consummated by auction or by bargaining. There are altogether four possible markets but in equilibrium at most two markets are active simultaneously. There is almost always a unique evolutionary stable equilibrium which consists of an auction market when the numbers of buyers and sellers differ greatly, and two simultaneous auction markets when the numbers are relatively close.     

On the Provision of Insurance against Search‐Induced Wage Fluctuations*

Should workers be provided with insurance against search‐induced wage fluctuations? To answer this question, I rely on the numerical simulations of a model of on‐the‐job search and precautionary savings. The model is calibrated to low‐skilled workers in the United States. The extent of insurance is determined by the degree of progressivity of a non‐linear transfer schedule. The fundamental trade‐off is that a more generous provision of insurance reduces incentives to search for better‐paying jobs, which increases the cost of providing insurance. I show that progressivity raises the search intensity of unemployed workers, which reduces the equilibrium rate of unemployment, but it lowers the search intensity of employed job seekers, which reduces the output level. I also solve numerically for the optimal non‐linear transfer schedule. The optimal policy is to provide little insurance up to a monthly income level of $1350, so as to preserve incentives to move up the wage ladder, and nearly full insurance above $1450. This policy reduces the standard deviation of labor income net of transfers by 34 per cent and generates a consumption‐equivalent welfare gain of 0.7 per cent. The absence of private savings does not fundamentally change the shape of the optimal transfer function, but tilts the optimal policy towards more insurance, at the expense of a less efficient allocation of workers across jobs.     

Who stays,who goes,who returns?

We study the determinants of East–West migration within Germany during the period 1990–2006, using administrative data, the German Microcensus and the German Socio‐Economic Panel. We find that in addition to income prospects and employment status, two well‐known determinants of migration, psychological and social factors play an important role in determining the migration decision. Men and women move from East to West in proportionate numbers, but among individuals who lived in the East in 1989 women are more likely to migrate. The migrant body in the second wave of migration, starting in the late 1990s, is increasingly composed of young, educated people. By focusing on differences between temporary and permanent migrants, we find that older and single individuals are more likely to return East than stay permanently in the West, compared with younger and married individuals. Finally, the life satisfaction of permanent migrants increases significantly after a move, while that of temporary migrants remains essentially flat.     

An experimental test of a committee search model

The objective of this paper is to design a laboratory experiment for an infinite-horizon sequential committee search model in order to test some of the implications obtained by the model in Albrecht et al. (2010) (AAV). We find that, compared with single-agent search, the search duration is longer for committee search under the unanimity rule, but is shorter for committee search in which at least one vote is required to stop searching. In addition, according to estimates from round-based search decisions, subjects are more likely to vote to stop searching in committee search than in single-agent search. This confirms that agents are less picky in committee search. Overall, the experimental outcomes are consistent with the implications suggested by the AAV model. However, despite the prediction from the AAV model, we could not obtain a significant outcome in relation to the size order of the probabilities of voting to stop searching in committee search for the various plurality voting rules.     

Waiting to settle: Multilateral bargaining with subjective biases

We study multilateral bargaining games where agents disagree over their bargaining power. We show that if agents are extremely optimistic, there may be costly delays in an arbitrarily long finite game but if optimism is moderate, all sufficiently long games end in immediate agreement. We show that the game with extreme optimism is highly unstable in the finite-horizon, and we examine the ramifications of this instability on the infinite-horizon problem. Finally, we consider other voting rules, and show that the majority-rule may be more efficient than the unanimity rule when agents are optimistic.     

Water quality trading with asymmetric information,uncertainty and transaction costs: A stochastic agent-based simulation

We examine the efficiency of emissions trading in bilateral and clearinghouse markets with heterogeneous, boundedly rational agents making decisions under imperfect and asymmetric information, and transaction costs. Results are derived using a stochastic agent-based simulation model of agents’ decision-making and interactions. Trading rules, market structures, and agent information structures are selected to represent emerging water quality trading programs. The analysis is designed to provide a strong test of the efficiency of trading occurring through the two market structures. The Differential Evolution algorithm is used to search for market trade strategies that perform well under multiple states of the world. Our findings suggest that trading under both bilateral and clearinghouse markets yields cost savings relatively to no trading. The clearinghouse is found to be more efficient than bilateral negotiations in coordinating point–nonpoint trading under uncertainty and transaction costs. However, the market under both structures is unlikely to achieve or even approximate least-cost pollution control allocations. Expectations of gains from water quality trading should, therefore, be tempered.     

Efficient contract enforcement

We study how the efficient choice of contract enforcement interacts with the efficient allocation of capital in a simple production economy. Contract enforcement makes trade possible but requires an aggregate investment of capital that is no longer available for production. In such an economy, more dispersion in ex-ante marginal products makes it optimal to invest more resources in enforcement. Furthermore, implementing the optimal allocation requires a specific distribution of the cost for enforcement across agents that is not monotonic and results in a redistribution of endowments. At the efficient solution, agents at the bottom of the endowment distribution benefit the most from investment in enforcement and these investments lead to a reduction in consumption and income inequality.     

Equilibrium unemployment, search behaviour and unemployment persistency

Unemployment persistency and high equilibrium unemployment isoften assumed to be caused by rigidities and low search efficiencyin the labour market, especially in European welfare stateswith generous income replacement schemes. These arguments aretested on data from Sweden, an old welfare state with a longperiod of full employment that has changed into a situationwith high unemployment. Data show a clear and very strong unemploymentduration dependency, but it is not possible to prove that thisis a result of low employability among the long-term unemployed.Getting a job is most of all associated with relative qualifications,recall expectations and local labour market conditions, andnot with search behaviour or high wage demands. It is arguedthat unemployment duration when unemployment is high can bestbe understood as a selection process rather than a search process,and that econometric estimations of equilibrium unemploymentare too pessimistic about the potential for an expansive economicpolicy. It is also argued that an active labour market policyis a more efficient compliment to such a policy than changesin income replacement ratios.     

Behavioral Mechanism Design

This paper studies the mechanism design problem for the class of Bayesian environments where agents do care for the well‐being of others. For these environments, we fully characterize interim efficient (IE) mechanisms and examine their properties. This set of mechanisms is compelling, since IE mechanisms are the best in the sense that there is no other mechanism which generates unanimous improvement. For public good environments, we show that these mechanisms produce public goods closer to the efficient level of production as the degree of altruism in the preferences increases. For private good environments, we show that altruistic agents trade more often than selfish agents.     

Where to go? Workers' reasons to quit and intra- vs. interindustry job mobility

We show that workers' reasons for quitting their job affect their decision to stay in or leave their industry, using survey data among public sector employees in the Netherlands. Workers quitting for e.g. pay, work pressure, or job duties move relatively often to another industry, in contrast to workers quitting for commuting time or the atmosphere at work. This suggests that workers use their experience in the initial job to update their expectations on other jobs in the industry, as the first set of job aspects is more likely to be related among jobs within an industry than the latter. Furthermore, it is shown that workers' reasons to quit fully explain the differences in wage growth between intra- and interindustry job movers. Lastly, we find that workers who quit for pay or management often leave the public sector altogether.     

Assignment maximization

We evaluate the goal of maximizing the number of individuals matched to acceptable outcomes. We present two mechanisms that maximize assignments. The first is Pareto efficient and undominated—in terms of the number of assignments—in equilibrium. The second is fair for unassigned agents and assigns weakly more agents than any stable mechanism in equilibrium.     

HUMAN CAPITAL ACCUMULATION AND LABOR MARKET EQUILIBRIUM*

We analyze an equilibrium labor market with on‐the‐job search and experience effects (as workers learn by doing). The analysis yields a Mincer wage equation with worker fixed effects and endogenously determined firm fixed effects. Equilibrium sorting—where over time more experienced workers also tend to move to better paid employment—has a significant impact on wage inequality.     

我国盈利公告效应的动态特征

国外对盈利公告效应(earnings announcement effect)的研究得出两条规律:(1)提前依次异动:股价不仅在盈利公告当日依次变动,而且之前已提早反应。(2)后动有序持续:股价的走势在公告后较长时间内依然不变。这两条规律在我国也存在吗?本文旨在探索上述市场规律,寻找我国盈利公告效应的动态特征。我们运用事件分析法考察了1998—2000年闻沪市对上市公司盈利公告的反应。结果发现,上述两条规律在我国均有不同形式的体现。首先,股价确有提前异动,但仅限于盈利有增长的公司,其原因并非完全出于市场预期,却不排除有消息泄露的可能性。其次,股价亦有后动持续现象,但相当无序,表现最佳的竟为盈利最差的公司,其股价在公告之后大幅上涨;究其原因,它与我国特有的宝贵"壳资源"现象关系密切。     

Sequencing,timing and filling rates of recruitment channels

This paper analyses the recruitment process by which employers adjust their search strategies. The focus is, in particular, on the sequence and timing of recruitment channels. Two search strategies are identified. One strategy is to advertise a vacancy, and to form a pool of candidates by activating subsequent recruitment channels such that candidates are added to the pool. An alternative strategy used by employers is to start searching via informal channels, consider applicants at arrival and continue their search along a new recruitment channel if no suitable candidates show up. Results suggest that when informal personal contacts are available to the employer, this ‘switching of channel’ strategy is preferred. Moreover, the results of this paper are consistent with the view that informal search methods are potentially more efficient than using an advertisement and forming a pool of applicants, in particular when vital positions in firms have to be filled.     

Monitoring Job Offer Decisions,Punishments, Exit to Work,and Job Quality

Unemployment insurance systems include the monitoring of unemployed workers and punitive sanctions if job search requirements are violated. We analyze the causal effect of sanctions on the ensuing job quality, notably on wages and occupational level. We use Swedish data and estimate duration models dealing with selection on unobservables. We also develop a theoretical job search model that monitors job offer rejection versus job search effort. The empirical results show that, after a sanction, the wage rate is lower and individuals move more often to a part‐time job and a lower occupational level, incurring human capital losses.