‘Marginal employment’ and the demand for heterogeneous labour – elasticity estimates from a multi-factor labour demand model for Germany

We develop a structural multi-factor labour demand model which distinguishes between eight labour categories including marginal employment, i.e. low-paying jobs with only a few working hours and partially exempted from employee's social security contributions. Using a new panel data set for Germany, the model is estimated both for the number of workers and total working hours. For unskilled and skilled workers in full-time employment, we find labour demand elasticities similar to previous estimates. Our new estimates of own-wage elasticities for marginal employment range between??0.13 (number of male workers in West Germany) to??1 (working hours for women).     

Are price strategies effective in managing demand of high residential water users?

Encouraging water use efficiency and water conservation is one of the primary goals of water utility companies nationwide. This study estimates price elasticity of residential water demand to measure the responsiveness of water use to price changes, particularly for high water users. Household-level water use data for high residential water users from Central Florida were analysed using 3-stage least square (3SLS). Estimated price elasticity ranges between ?0.07 and ?0.14. This price elasticity estimate is below most of the estimates reported in the literature (in absolute value). The results imply that for price strategies to be effective in managing water demand of high residential water users, a significant price increase would be needed. Overall, this study highlights the importance of designing water conservation policies tailored to specific groups of customers, and the importance of using these strategies effectively and fairly for different customer groups.     

New estimates of labour supply elasticities for married women in Canada 1996–2005

In this article, we estimate income and substitution labour supply and participation elasticities for Canadian married women using data from the Survey of Labour and Income Dynamics 1996–2005. We use the Canadian Tax and Credit Simulator (CTaCS) and detailed information on the structure of income at the household level to compute the marginal tax rates faced by each individual. We then use these marginal tax rates to compute net own-wage, spouse-wage, and nonlabour income. We show how the magnitude of the estimated elasticities varies depending on whether net or gross wages and income are used in the estimation procedure, and quantify biases caused by using average tax rates instead of marginal tax rates. Finally, because marginal tax rates vary significantly over the sample, we use quantile regressions to compare elasticities at different points of the hours distribution. Overall, our results show that public policies now have, on average, less scope for influencing hours of work than 10 years ago. However, the quantile results show that wives working fewer hours per week are more sensitive to changes in their own or spouses’ wages.     

Do rational demand functions differ from irrational ones? Evidence from an induced budget experiment

Various studies (e.g. Becker, 1962; Ariely et al., 2003) have noted anomalies concerning the relationship between observed demand and the preferences presumed to motivate it. We re-examine these findings using experimental choice data. After separating our subjects’ choices into rational and irrational subsets based on consistency with the axioms of revealed preference, we estimate and compare demand coefficients. Mirroring Ariely et al.'s ‘coherently arbitrary’ choice, both rational and irrational demand estimates exhibit negative price and positive endowment coefficients. However, a comparison of the full set of demand coefficients indicates significant differences between the two, yielding an observable artefact of the preference hypothesis. Relaxing the goodness-of-fit of the revealed preference test (Afriat, 1987; Varian, 1994) does not alter our findings.     

Are Temporary Help Agencies changing mobility patterns in the Spanish labour market?

This paper examines to what extent the intermediation of Temporary Help Agencies affects workers transitions into and out of employment in the Spanish youth labour market throughout the 1990s. The results obtained show that this type of intermediation presents a positive impact on the likelihood of leaving unemployment, although only for short-term unemployed individuals; at the same time, however, the employment hazard rate is substantially higher for agency workers. We also find that employment hazard rates were substantially affected in the 1990s by the extensive use of fixed-term contracts, although the 1997 labour market reform is found to slightly reduce this hazard rate. Finally, very young workers, women and those with low qualification levels are more likely to be affected by high labour turnover.JEL Classification: J24, J62This work has benefited from financial support by CICYT SEC2002-04471 and SEC 2003-C4028. We would like to express our gratitude to the Spanish Ministry of Labour for providing the database for this research, and to the seminar participants at IV Jornadas de Economía Laboral (Valencia), XXVI Simposio de Análisis Económico (Alicante), U. Santiago, U. Toulouse, U. Pompeu Fabra, the Workshop on Job Stability and Security in European Labor Markets (IZA, Bonn) and the XIV EALE Conference (Paris) for valuable suggestions. The comments from the editor and one referee were very useful to improve the final version of this paper. The usual disclaimer applies.     

Are women less likely to be managers in the UK labour market?

This paper investigates the gender gap within management roles in the UK. We find that female workers are less likely to become managers than male workers because women are traditionally expected to provide the majority of care for their family. This implies that women are pressured to do more informal work than men, which limits their formal working experience and impedes their career development. We also find that the probability of becoming a manager adopts an inverted U-shape relationship with age. This likelihood of becoming a manager also increases with employment duration and educational attainment due to the accumulation of relevant experience and human capital.     

The effects of price on household demand for food and calories in poor countries: are our databases giving reliable estimates?

Food price policy relies heavily on estimated price elasticities of food demand to help balance the nutritional and economic objectives in poor countries. Economists use either unit values (ratios of household expenditure to quantity purchased) or community prices (enumerated from vendors in local markets) as proxies for market prices when estimating price elasticities with household survey data. Biases are believed to result from using unit values, due to measurement error and quality effects, but evidence on this issue is lacking and even less is known about community prices. This article provides an empirical evidence from Vietnam, which suggests that economists should exercise caution when estimating price elasticities from household surveys. A 14-food demand system is estimated alternatively with unit values or community prices, and the elasticity of calories with respect to rice prices is calculated. This elasticity is more than twice as large (?0.54 versus ?0.22) when community prices are used rather than unit values. Hence, conclusions about the nutritional effects of rice price increases appear sensitive to data choices made by economists. More generally, this discrepancy suggests that the household survey databases commonly used by economists may not provide reliable estimates.     

Parameter estimates comparison of earnings functions in the PSID and CPS data, 1976–2007

Comparing earnings equations in the Panel Study of Income Dynamics (PSID) and the Current Population Survey, we find that the PSID considerably underestimates the returns to education during the 1992–2007 period. Non-random selection in the PSID sample appears to be the reason.     

Why are initial estimates of productivity growth so unreliable?

This paper argues that initial estimates of productivity growth will tend to be much less reliable than those of most other macroeconomic aggregates, such as output or employment growth. Two distinct factors complicate productivity measurement. (1) When production increases, factor inputs typically increase as well. Productivity growth is therefore typically less variable than output growth, meaning that measurement errors will tend to be relatively more important. (2) Revisions to published estimates of production and factor inputs tend to be less highly correlated than the published estimates themselves. This further increases the impact of data revisions on published productivity estimates.To assess the extent of these problems in practice, we detail the importance of historical revisions to the most commonly-used measures of US aggregate productivity growth, expanding on previous empirical work by Aruoba (2008) and Anderson and Kliesen (2006). We find that such revisions have contributed substantially to policymakers’ forecast errors for US productivity growth.     

Are you hiring Johnny Football or Johnny Doe? Uncertain labour quality and the measurement of monopsony in college football

I assess monopsony in the college football labour market as it relates to both typical and elite performers, while also accounting for the uncertain performance quality of prospective players who are in this labour market. Existing studies suggest that the marginal revenue product (MRP) of elite collegiate players later drafted into the National Football League (NFL), significantly exceeds their compensation. These comparisons overstate monopsony rents because schools don’t know ex ante which prospects will become these elite performers. Using financial data spanning 2004–2011 from 114 major schools, I estimate the MRP of players sorted into three ex post quality tiers, and find that while eventual NFL draftees generate revenue that significantly exceeds their compensation, a majority of scholarship players do not. Then, using Rivals.com talent ratings of 6,604 prospective players recruited from 2002–2008, I estimate the probability that prospects will reach each ex post quality tier given their ex ante ratings. MRP estimates are adjusted by these conditional probability estimates to reflect the expected MRP of prospects, which allows more appropriate assessment of monopsony rents. I find that schools possess substantially less monopsony power than unadjusted MRP estimates suggest.     

Employment in family managed firms: Less but safe? Analysing labour demand of German family managed firms with a treatment model for panel data

This paper analyses the differences in labour demand between family and non-family managed firms. These firms seem to have better employment performance than non-family controlled companies. Therefore, this study applies a treatment model for panel data controlling for endogeneities of being a family managed firm or not. The results of the estimations indicate that labour demand is possibly larger because of family members joining the firms as extra employees. Moreover, labour turnover is lower, supporting the assumption that family firms offer some kind of implicit labour contracts. However, in opposite to previous results, it seems that only small family managed firms show different employment behaviour.     

Balance sheet in the REDD +: Are global estimates measuring the wrong costs?

This article challenges some of the assumptions underpinning the UN programme to Reduce Emissions from Deforestation and forest Degradation (REDD +) in developing countries. Firstly, it argues that the cost-effectiveness of REDD + may have been exaggerated as current estimates ignore some cost categories as well as the evolution of drivers. Whilst REDD + remains a ‘low-hanging fruit’ for climate mitigation, if all costs were included estimates would be at the high end of the currently accepted range. Secondly, the article highlights that REDD + will be affected by a large funding gap at least until the entry into force of a new climate protocol in 2020. This gap is due as much to the poor status of public finances in donor countries as to the languishing state of carbon markets, and it calls for a revision of the assumptions regarding the design of the programme. Finally, it is advocated that, in order to contribute to the development of the programme, economic research on REDD + should consider different policy options, assessing their efficiency and identifying measures that increase their cost-effectiveness.     

Are wages equal across sectors of production?

The assumption that national labour markets are homogeneous across tradable and non‐tradable goods is common in multisector (open‐economy) macro models and crucial for the prominent Balassa–Samuelson hypothesis. To test it, this study introduces a novel, theory‐based method of distinguishing the tradable and non‐tradable sectors to the Balassa–Samuelson literature and employs modern empirical methods and a large and detailed macro dataset. It finds that both the internal relationship between productivity and wages in the tradable and non‐tradable sectors postulated by the Balassa–Samuelson hypothesis and its external transmission mechanism are rejected.     

Are the treasures of game theory ambiguous?

Goeree and Holt (Am Econ Rev 91:1402?C1422, 2001) experimentally study a number of games. In each case, they initially find strong support for Nash equilibrium; however, by changing an apparently irrelevant parameter, they find results which contradict Nash equilibrium. In this paper, we study the five normal form games from Goeree and Holt (Am Econ Rev 91:1402?C1422, 2001). We argue that their results may be explained by the hypothesis that subjects view their opponents?? behaviour as ambiguous. Ambiguity-aversion causes players to avoid strategies, which give low out of equilibrium payoffs. Similarly, ambiguity preference can make strategies with high payoffs more attractive.     

What are the determinants of hiring? The importance of product market demand and search frictions

In this article, we study the importance of product market demand and search frictions for hiring. We use a search-matching model with imperfect competition in the product market to derive an equation for total hiring in a local labour market, and estimate it on Swedish panel data. If product markets are imperfectly competitive, product demand shocks should have a direct effect on employment for given levels of prices and wages. Our main finding is that product demand has such a direct effect on hiring. This highlights the importance of taking imperfect competition in the product market into account in studies of employment dynamics and hiring. We also find that, for given levels of prices, wages, and product demand, the number of unemployed workers in a local labour market has a positive effect on hiring, suggesting that search frictions matter. Quantitatively, product demand shocks seem to be more important for understanding the variation in hiring than shocks to the number of unemployed workers.     

Are cyclical patterns of international housing markets interdependent?

This paper investigates the relationships among the US, UK, and Canadian housing markets from two aspects: the driving forces of housing cycles and the structures of correlation coefficients in different phases of housing cycles. The results indicate that the structures of driving forces and correlation coefficients are deeply hinged on the international housing markets. For the US and Canada pair, the driving forces of cyclical patterns are related to each other and the regime-switching correlation coefficients are always positive. However, for the US and UK pair and the UK and Canada pair, the driving forces are independent and there is no consistent pattern for the correlations.     

Are there asymmetries of nonlinearities in UK output?

This paper investigates whether quarterly post-war UK output growth contains either asymmetries or nonlinearities through subjecting the series to a variety of diagnostic testa and by fiting various nonlinear business cycle models. No evidence is uncovered of any form of asymetric or nonlinear departure from the pure random walk with drift model of output.