The anatomy of unemployment dynamics

This paper examines the relation between individual unemployment durations and incidence (inflow size) on the one hand and the time-varying macroeconomic conditions in the economy on the other. We develop a model for the analysis of aggregate unemployment incidence and duration data and estimate this model on quarterly French data over the period 1982-1994 stratified by sex. We find upward trends in both incidence and durations. The former is relatively important for females, the latter for males. Male incidence and durations are countercyclical, with only a minor role for cohort effects on durations. In contrast, female cohorts entering at the top of the cycle have relatively short unemployment spells and the female incidence is, if anything, procyclical. There is strong seasonal variation, in particular in the incidence. Finally, we find relatively small non-monotonic individual duration dependence in the first six quarters of unemployment. Unobserved heterogeneity explains the observed negative duration dependence at these durations. We provide some evidence that negative individual duration dependence, and not heterogeneity, is important at higher durations.     

Termination restrictions and investment in general training

Conditional separation payments efficiently increase firms’ investment in general training if the latter is not directly contractible. Since training is vested in the worker on separation, a firm's return to training is zero when a match ends or, more generally, when the firm's outside return is binding. Large enough conditional separation penalties ensure that, independently from outside opportunities, the ex post situation is one of bilateral monopoly. This allows the firm to capture a positive share of the return to the general component of training in all states of nature. A fixed wage contract and large enough separation penalties ensure that the firm's investment decision is fully efficient if training is general in Becker's (1964) sense.     

Learning the master's trade: Apprenticeship and human capital in Ghana

This paper explores the institution of apprenticeship in Ghana. A model is presented where apprenticeship training is idiosyncratic, increasing an individual's productivity in the current firm, but not in any other firm. Still, individuals are willing to fund apprenticeships as they can reap the returns to the specific training of apprenticeship if they manage to acquire the capital required to start their own firms, and replicate the technology and business practice of the apprenticeship firm. Predictions of the model for the productivity and remuneration of different workers are developed and tested using both a linked employer–employee survey of manufacturing firms and a national household survey.     

Public pension programmes and the retirement of married couples in Denmark

In this paper we study the economic determinants of the joint retirement process of married couples. We propose a tractable dynamic discrete choice model for retirement decisions which allows for non-trivial saving behaviour. We estimate the model on a 1% sample of Danish couples of potential retirement age drawn from a population-based administrative register. The introduction and subsequent reforms of a publicly financed early retirement programme provide us with variation in the data to insure identification of the parameters of interest: the elasticities of participation/retirement with respect to income flows. Our estimates imply a significant asymmetry in the sensitivity of retirement behaviour of men and women with respect to variation in their own, or their spouse's, income flows.     

JOB FLOWS AND UNEMPLOYMENT IN AN EQUILIBRIUM UNEMPLOYMENT MODEL WITH FIRM‐SPECIFIC SKILL TRAINING*

We introduce productivity enhancing firm‐specific skill training into the labour search model in which the firm‐specific skill training intensity and the job destruction rate are endogenously determined. It is shown that the higher the intensity of such training, the lower the rates of unemployment, job creation and job destruction. The paper's model provides a theoretical framework to understand the often mentioned peculiarity of the Japanese labour market; prevalently low rates of unemployment, job creation and job destruction in Japan are due to its training system which promotes workers to acquire firm‐specific skills.     

Evaluation of training in African enterprises

The importance of skill-shortage in Africa, combined with the extensive use of training, necessitates appropriate evaluation of training programs. By using firm data from Sub-Saharan Africa, we evaluate the effect of on-the-job training on log wages using matching estimators. We find that training tends to improve wages, and that the effect is larger and more well-determined when we focus on long training durations and large firms.     

Debt, managerial compensation and learning

Using a dynamic model with uncertainty and asymmetric information, we study the impact of debt and bankruptcy on managerial compensation and learning. In this model, compensation has two roles to play—providing incentives to the manager and learning about his type. We show that debt, through bankruptcy, acts as a substitute of compensation in both dimensions and derive conditions under which debt lowers average compensation, pay-performance sensitivity and increases learning. We also examine the choice of debt and show that firm value can be increased due to debt's effect on managerial compensation, abstracting from other costs and benefits of debt. Finally, we conduct comparative statics with respect to the underlying parameters.     

SHORT-TERM CONTRACTS REGULATIONS AND DYNAMIC LABOUR DEMAND: THEORY AND EVIDENCE

We present a dynamic labour demand model where we evaluate the impact of employment regulations on permanent and temporary employment. We consider three different kinds of regulations, namely firing costs, hiring costs and a constraint on temporary contracts. These regulations differently affect the size and composition of employment. The theoretical results are interpreted and questioned on the basis of empirical evidence on the employment effects of the regulation reforms that occurred in the major European countries in the period 1983–1999. The empirical analysis is based on a new set of time‐varying indicators on permanent employment protection, fixed‐term contracts and temporary agency work regulations. We find evidence in support of the hypothesis that fixed‐term contracts have been effective stepping‐stones to permanent jobs during the period under observation. On the contrary, flexible temporary agency work regulations seem to induce a substitution of permanent with temporary contracts.     

A sticky floors model of promotion, pay, and gender

According to raw data from the British Household Panel Survey, full-time women are more likely than men to be promoted. Controlling for observed and unobserved individual heterogeneity, we find that women are promoted at roughly the same rate as men, but may receive smaller wage increases consequent upon promotion. To help explain these phenomena, we construct a new “sticky floors” model of pay and promotion. In our model, women are just as likely as men to be promoted but find themselves stuck at the bottom of the wage scale for the new grade.     

Foreign subsidiaries as a channel of international technology diffusion: Some direct firm level evidence from Belgium

The use of foreign direct investment as a channel of international spillovers is by now fairly established in the empirical literature on innovation and growth. It is often argued that subsidiaries of foreign multinational enterprises are a mechanism through which technological know-how flows across borders. For foreign subsidiaries to be channels of international spillovers, these subsidiaries need to source know-how internationally and transfer their know-how to the local economy. Using direct firm level evidence from the Belgian Community Innovation Survey on the occurrence of technology transfers, we find that foreign subsidiaries are indeed more likely to acquire technology internationally. But after controlling for the superior access to the international technology market that foreign subsidiaries enjoy, we find that these firms are not more likely to transfer technology to the local economy as compared to local firms.