Performance pay and changes in U.S. labor market dynamics

A shift in the design of labor compensation occurred at around the mid-1980s in the U.S. and deals with an increased role of performance pay in driving the cyclical movements of wages. Using a DSGE model we show that this structural change accounts at least qualitatively for many observed changes in the U.S. labor market dynamics. It generates the disappearance of the procyclical response of labor productivity to non-technology shocks and the reduction of the contractionary effects of technology shocks on hours. Moreover, it is conducive to a drop in the volatility of output, a parallel increase in the volatility of wages and to changes in unconditional correlations consistent with what documented in the U.S. between the pre- and post-1984 periods.     

Exchange Rate,External Orientation of Firms and Wage Adjustment

We estimate the effect of exchange rate movements on firm‐level wages, using a representative panel of Italian manufacturing firms. We show that the direction and size of wage adjustment is shaped by the international exposure of each firm on both the sale and cost side of the balance sheet, similar to the response of employment documented in (Nucci and Pozzolo, Journal of International Economics 2010; 82 : 112.). Through the revenue side, wages tend to rise after a currency depreciation and the effect is more pronounced the higher is the firm's exposure to sales from exports. Through the expenditure side, a depreciation induces a cut in the firm's wages, and the effect is larger the higher is the incidence of imported inputs in total production costs. For a given degree of external orientation, both these effects are larger for firms with a lower market power. Moreover, we document that the effect of exchange rates on wages is shaped by the extent of sectoral import penetration in the domestic market.     

The Demography of Business Closings

This study shows that establishment dissolution declines with age and that age at dissolution differs for broad industry and geography groups, establishment affiliation status, and establishment size. These findings, largely confirming results presented elsewhere, are drawn from age-specific dissolution ratios and establishment life tables calculated for select establishment sub-populations. The paper uses Bureau of the Census Standard Statistical Establishment List datasets, a census of establishments with employment for the United States for the 1987 and 1988 years.     

The exchange rate, employment and hours: What firm-level data say

Using a representative panel of manufacturing firms, we estimate the response of job and hours worked to currency swings, showing that it depends primarily on firms' exposure to foreign sales and their reliance on imported inputs. We also show that, for a given international exposure, the response to exchange rate fluctuations is magnified when firms exhibit a lower monopoly power and when they face foreign pressure in the domestic market through import penetration. The degree of substitutability between imported and other inputs and the distribution of workers by type introduce additional degrees of specificity in the employment sensitivity to exchange rate swings. Moreover, we show that episodes of entry and exit in the export market are associated with a heterogeneous employment response depending on the degree of external orientation when the switch of export status occurs.     

Counting the Self-Employed Using Household and Business Sample Data

This study compares the number and attributes of self-employed workers using the 1982 and 1987 Characteristics of Business Owners (CBO) data and data from Annual Demographic Files (ADF) of the Current Population Survey (CPS) for the same reference years. Both sources of data have been widely used in empirical studies of entrepreneurship/self-employment. Substantial and inexplicable differences were found in the two data series' estimates of the number of self-employed men and women for both reference years. In terms of individual attributes, the CBO and CPS appear to report reasonably similar profiles of self-employed individuals in terms of marital status and geographic location, and similar systematic gender differences in the industrial distributions of these individuals. However, in terms of other attributes captured by both data series, including age, the two series exhibit notable dissimilarities.     

The 1982 Characteristics of Business Owners dataset

The 1982 Characteristics of Business Owners (CBO) dataset is a microdata file containing data on approximately 91,000 small businesses and 100,000 owners of those businesses. This dataset is unique in that it unites information on the personal attributes of business owners with information on various attributes of their businesses. The CBO dataset is also distinguished by the large volume of data that it contains on minority and female business owners and their businesses. This paper provides an overview of the coverage and contents of the dataset, and the design of the survey upon which it is based. In addition, the strengths and limitations of the CBO dataset are discussed and illustrated through synopses of studies that made use of these data.Economist, U.S. Small Business Administration, Washington, D.C. The views expressed in this paper are the authors and do not necessarily represent those of the U.S. Small Business Administration.     

Geographic labour mobility and the cost of housing: evidence from Italy

In recent years, internal migration in Italy has declined markedly, notwithstanding the widening of the North-South gap in terms of unemployment rates and real income. Here, the extent to which the housing market has contributed to the decline is examined. Preliminary to this analysis, differentials in the cost of housing between the macro-areas of the country are estimated using data on the market price of houses located in 96 provincial capitals. Econometric evidence is provided supporting the view that the North-South housing price differential is a notable factor in explaining the falling pattern of mobility. The positive impact on migration from the South to the North of a wider gap in the two areas in terms of income and employment prospects has been offset by the housing price differential, which has steadily risen at least from the mid-1980s onwards. Yet, a considerable share of the decrease in mobility remains unexplained, possibly owing to the heterogeneity in the composition of migration flows across different cohorts.