On recalls, layoffs, variable hours, and labor adjustment costs

The paper analyzes the employment policy of a firm that can vary both hours and the level of employment. The analysis differs from previous work in the adjustment cost literature in that the firm is able to change its employment not only through hires, layoffs, and quits, but also by recalls of employees who were previously laid off. Thus, we introduce the possibility of the firm inventorying the labor input. It is shown that this labor inventory potential is necessary if the firm is to ever lay off workers. Further, it is demonstrated that linear rather than strictly convex adjustment costs are then required if the firm is to always recall employees who were previously laid off prior to hiring new workers.     

FAMILIES, TIME AND MONEY IN CANADA, GERMANY, SWEDEN, THE UNITED KINGDOM AND THE UNITED STATES

Using microdata from the Luxembourg Income Study, we assess "time crunch" for families with children in Canada, Germany, Sweden, the U.K. and the U.S. Both theory and empirical evidence suggest that both time and money are important inputs to the well-being of parents and children. We present cross-country comparisons of "total available adult hours" under different assumptions about the varying time needs of families of different size. We also present estimates of "time shortages." In all cases, we provide separate estimates for families located at different points in the country income distributions, since being short of both time and money is likely to be particularly problematic. Although paid work hours are highest for high-income families, we nonetheless find significant numbers of lower-income families in which parents work very long hours in the paid labor market; this is particularly the case in the U.S.     

The contracting value of tainted reports in cost reduction settings

While cost accounting is a well-developed discipline with a rich institutional past, it is criticized for being manipulable. This criticism is due, in part, to the existence of multiple, yet equally accepted cost allocation procedures or cost estimation techniques. Employing a principal-agent model, cost accounting is modeled as a menu of alternative methods which, conditional on agent effort, produce noisy, unbiased and independently distributed (i.e., equally defensible) measures from which a single realization is selected ex post as the report used to contract with the agent. Assuming that the report does not indicate which method produced it, the report modeled is “tainted” in that the lowest (most favorable to the agent) outcome is reported, where the “amount” of tainting corresponds to the menu's size. The paper identifies bright-line conditions where the principal's expected net payoff is independent of the amount of tainting, demonstrating that tainting does not necessarily affect the report's incentive value.     

Estimating exchange rate dynamics with diffusion processes: an application to Greek EMU data

Recently various exchange rate models capturing the dynamics during the transition from an exchange rate arrangement of floating rates into a currency union have been derived. Technically, these stochastic equilibrium models are diffusion processes which have to be estimated by discretely sampled observations. Using daily exchange rate data prior to the Greek EMU-entrance on 1 January 2001, we develop a rigorous estimation procedure. Our estimates point to an increasing interventionist economic policy in the run-up to the Greek EMU entrance. A comparison of this econometric indication with policy information provided (ex-post) by the Bank of Greece (BoG) in its Annual Report 2000 reveals that the BoG indeed pursued such an active policy stance (so-called institutional frontloading strategies).      

Negligent hiring: Reducing the risk

In recent years, the responsibility of employers to hire people who are not dangerous or violent has been heightened by the tort, negligent hiring. The courts have ruled that certain employers owe a special duty to employees and third parties (e.g., customers or clients) to protect them from the harmful or criminal acts of other employees. This article contrasts negligent hiring to respondent superior and negligent entrustment, describes the components of negligent hiring, and reviews important legal cases. The article also discusses how employers can minimize the risk of negligent hiring through prudent human resource practices.     

Export Composition and Manufacturing Employment in the US during the Economic Downturn of 1991-92

This paper examines the effect that export composition had upon manufacturing employment in the US during the 1991 recession. Although it takes, on average, approximately $66 000 in exports to create one job, the exact gains in terms of total employment depend upon the labour-intensity of the products being exported. Foreign sales by the chemical and textile industries result in a far greater increase in employment than exports by the petroleum refining or steel industries. This analysis estimates the employment effects of manufacturing exports over the 1989-95 period, utilizing an input-output model to capture both direct and indirect effects. The results demonstrate that export composition has, at times, both strengthened and reduced demand for labour. Consequently, if job-creation is a national goal, it may be in the interests of the US to promote exports from sectors that are labour-using.     

Strategy-proofness and Arrow's conditions: Existence and correspondence theorems for voting procedures and social welfare functions

Consider a committee which must select one alternative from a set of three or more alternatives. Committee members each cast a ballot which the voting procedure counts. The voting procedure is strategy-proof if it always induces every committee member to cast a ballot revealing his preference. I prove three theorems. First, every strategy-proof voting procedure is dictatorial. Second, this paper's strategy-proofness condition for voting procedures corresponds to Arrow's rationality, independence of irrelevant alternatives, non-negative response, and citizens' sovereignty conditions for social welfare functions. Third, Arrow's general possibility theorem is proven in a new manner.