The estimation of utility‐consistent labor supply models by means of simulated scores

We consider a utility‐consistent static labor supply model with flexible preferences and a nonlinear and possibly non‐convex budget set. Stochastic error terms are introduced to represent optimization and reporting errors, stochastic preferences, and heterogeneity in wages. Coherency conditions on the parameters and the support of error distributions are imposed for all observations. The complexity of the model makes it impossible to write down the probability of participation. Hence we use simulation techniques in the estimation. We compare our approach with various simpler alternatives proposed in the literature. Both in Monte Carlo experiments and for real data the various estimation methods yield very different results. Copyright © 2008 John Wiley & Sons, Ltd.     

On the impact of managerial bonus systems on firm profit and market competition: the cases of pure profit,sales, market share and relative profits compared

By designing remuneration schemes based on a bonus rewarding specific firm‐level outcomes, the owners/shareholders of a firm can manipulate the behavior of their managers. In practice, different bonus anchors take center stage: some are profit‐based, others use sales as the key yardstick and still different ones focus on relative performance vis‐à‐vis a peer group. In this paper, we focus on the impact of remuneration schemes on firm‐level profitability. The profit effect is investigated for (all possible combinations of) four bonus systems using delegation games. In the context of a linear Cournot model for two or three firms, we model a two‐ or three‐stage decision structure where, in the first stage (or first two stages), an owner decides on the bonus system for his manager and where, in the final stage, the manager takes the daily output decision for her firm. It appears that the bonus system based on relative (profits) performance is superior throughout. Copyright © 2008 John Wiley & Sons, Ltd.     

Absenteeism in Israeli schoolteachers: An organizational ethics perspective

Two studies are presented with the purpose of investigating teacher absences in Israel from the perspectives of organizational normative behavior (Study 1) and organizational ethical climate (Study 2). Study 1 posits that absence may represent shirking behavior, and tested this hypothesis by investigating temporal absence trends of the entire public teacher population in Israel around weekends, holidays, and days of heavy workload. Results provide evidence which supports our theoretical expectations. Study 2 proposes that teachers' work absences are associated with the school's ethical climate. Using a sample of high-school teachers, our results supported this hypothesis, particularly for low-seniority and non-tenured teachers. We suggest that the normative behavior and ethical climate perspectives offer new vistas for advancing our understanding of absence behavior in organizations.     

On the effectiveness of individual wage incentive plans in manufacturing firms

This study was designed to investigate individual wage incentive plans (IWIPs) in manufacturing industry. Two sets of hypotheses were formulated. The first dealt with certain characteristics, primarily organizational, that distinguish firms with IWIPs from those that did not introduce such plans. The second proposed certain correlates of the effectiveness of IWIPs.

These hypotheses were tested in a random probability sample (n = 80) of manufacturing firms in Israel. In each firm, at least two management representatives were interviewed. The analyses were all conducted at the firm level.

Firms with IWIPs (n = 60) were found to be larger and older relative to those without such plans. No difference was observed in the extent to which these two groups of firms used other types of wage incentives (e.g. group incentives). The second set of hypotheses was tested only in the subsample of firms with IWIPs. As expected, in this subsample a firm's labour productivity (mean level = 121 per cent) was closely related (r = .44) to the mean premium (36 per cent) that the covered employees received. The technical characteristics of the time study procedure, used to set performance standards for the IWIPs, were found not to be related to the level of either labour productivity or premium paid. These two criteria of IWIP effectiveness were found to be significantly higher in firms wherein the local union initiated the plan (n = 18) relative to the firms wherein management was the initiating party (n = 42). These and related findings are discussed in the broader context of current opinions on the pros and cons of IWIPs.     

Tight LP-based lower bounds for wavelength conversion in optical networks

With the introduction of optical switching technology in telecommunication networks, all-optical connections, so-called lightpaths, can be established. Lightpaths have to be assigned a wavelength in such a way that no two lightpaths sharing a fiber use the same wavelength. The wavelength of operation can only be exchanged by the deployment of a wavelength converter. In this paper, we study the minimum converter wavelength assignment problem. We develop three integer programming formulations to minimize the number of converters and study their properties. Where the first two formulations lack the power to provide non-trivial lower bounds, tight lower bounds can be computed by solving the linear relaxation of the third formulation by delayed column generation. In fact, the lower bound equals the best known solution value for all realistic instances at our disposal. In a computational study, we compare different strategies to enhance the column generation algorithm.     

Retirement of Older Workers and Employment of the Young

Policy makers have often argued that an additional benefit of facilitating early retirement is that it creates employment for the young. This may happen if older and younger workers are substitutes. Nowadays policies are aimed at increasing employment of older people to counter the economic consequences of an aging population. Opponents of such policies argue that these will adversely affect youth employment. This paper revisits the nexus between employment of older and younger workers, if only to put any concerns for adverse effects of later retirement on youth employment to rest. To empirically investigate this issue we estimate a dynamic model of employment of the young, prime age and old people using panel data of 22 OECD countries over the time period 1960–2008. Our empirical analysis does not support the hypothesis that employment of the young and old are substitutes and finds some minor complementarities. This suggests that encouraging later retirement will have no adverse effect on youth employment.     

Job satisfaction,lifestyle and demographics of U.S. hospitality industry workers — versus others

A study intended to compare the U.S. hospitality industry employees' work attributes, demographics and lifestyles with employees in four other industry groupings found out that in all three major areas hospitality employees were typified by very specific characteristics. In demographic characteristics these employees came from minority groupings and large families and perceived themselves to be of lower social class. They were less satisfied with their job and life in general and did not think their job to be an important element in their self-accomplishment.     

The systems approach to household labor supply in the Netherlands

Summary Deaton and Muellbauer's `Almost Ideal Demand System' is employed to model the joint determination of family income and male and female labor supply of individual households in the Netherlands. Family composition effects are incorporated as quasi-price effects, as originally proposed by Batten. The model is estimated for a cross-section of households in the Netherlands in 1982, to explain both actual hours of work and preferred hours of work. An analysis of the effects of rationing of male labor supply, by a mandatory reduction of the length of the working week, points to a sizeable compensating effect on female labor supply.The authors thank Jacques Siegers, Joop Hartog, Tom Wansbeek and a referee for helpful comments on an earlier draft. Geert Ridder kindly provided his maximum likelihood computer program GRMAX, which was used in the estimation of the model.