Produce or speculate? Asset bubbles, occupational choice and efficiency

We study the macroeconomic effects of rational asset bubbles in an overlapping-generations economy where asset trading requires specialized intermediaries and where agents freely choose between working in the production or in the financial sector. Frictions in the market for deposits create rents in the financial sector that affect workers' choice of occupation. When rents are large, the private gains associated with trading asset bubbles may lead too many workers to become speculators, thereby causing rational bubbles to lose their efficiency properties. Moreover, if speculation can be carried out by skilled labor only, then asset bubbles displace skilled workers away from the productive sector and raise income and consumption inequalities. Classification-JEL: E22; E44; G21.Rational bubbles; occupational choice; dynamic efficiency.

Recent Labour Market Trends in the Visegrad Group Countries

The large declines in the Slovak and Czech employment appeared because the countries' GDPs grew smaller while real wages grew bigger. Shorter working hours and limitations on labour productivity that the two countries introduced could not reverse the unfavourable employment trends that occurred during economic downturn.Duże spadki zatrudnienia w Słowacji i Czechach były związane ze słabym wzrostem PKB i silnym wzrostem płac realnych. Redukcje czasu pracy i wydajności pracy nie były w stanie odwrócić niekorzystnych tendencji w zatrudnieniu

Análisis de la heurística en la contratación empresarial a través de una cartera de derivados reales

Departing from the notion that labour legislation should be founded in the generation of job stability a model for recruitment is presented in which the employer is likened to the holder of an investment portfolio containing two real derivatives – swap or the option of sale. This model allows us on one hand to analyze sensitivity to the variables that are at play in an employment contract and, on the other, look at the effects that the most recent reforms in Spanish labour laws have had on contracting decisions made by employers. The results are clear: social security benefits are shown to be the most sensitive variable on the work contract, and applying the changes proposed in the latest labour reforms, this effect is upheld. The study concludes that reducing the costs of dismissal does not increase the likelihood of employers’ taking on new staff.Dada la situación actual y partiendo del supuesto que como herramienta para una correcta política de empleo la legislación laboral debe sentar las bases sólidas para que en el momento de recuperación económica se generen puestos de trabajo estables, se presenta un modelo de simulación de contratación que nos va a permitir un análisis de sensibilidad de las distintas variables a tener en cuenta en una regulación del mercado laboral. El modelo consiste en asimilar el comportamiento del empresario al del propietario de una cartera de inversión compuesta por dos derivados reales, un swap y una opción de venta americana. Este modelo nos permite, por un lado, hacer un análisis de sensibilidad de las diferentes variables que intervienen en la contratación, y, por otro lado, analizar los efectos que la última reforma laboral española tiene sobre la decisión de contratar del empresario. Los resultados son claros, la variable que más sensibilidad presenta sobre la contratación es la cuota patronal de la seguridad social, y aplicando los cambios propuestos en esta última reforma laboral, se concretan estos efectos y también se concluye que la reducción de los costes de despido no acelera la decisión de contratar.Dada a situação atual e partindo do suposto que como ferramenta para uma correta política de emprego, a legislação laboral deve instituir as bases sólidas para que, no momento da recuperação econômica, se gerem postos de trabalho estáveis, se apresentem um modelo de simulação de contratação que nos permitirá uma análise de sensibilidade das diferentes variáveis a considerar em uma regulação do mercado laboral. O modelo consiste em assimilar o comportamento do empresário ao do proprietário de uma carteira de investimento composto por dois derivados reais, um swap e uma opção de venda americana. Esse modelo nos permite, por um lado, fazer uma análise de sensibilidade das diferentes variáveis que intervêm na contratação e, por outro lado, analisar os efeitos que a última reforma laboral espanhola tem sobre a decisão de contratar do empresário. Os resultados são claros, a variável que mais sensibilidade apresenta sobre a contratação é a cota patronal da previdência social e aplicando as mudanças propostas nesta última reforma laboral, concretizam-se esses efeitos e também se conclui que a redução dos custos de demissão não acelera a decisão de contrata

Monitoring and Pay: An Experiment on Employee Performance under Endogenous Supervision

We present an experimental test of a shirking model where monitoring intensity is endogenous and effort a continuous variable. Wage level, monitoring intensity and consequently the desired enforceable effort level are jointly determined by the maximization problem of the firm. As a result, monitoring and pay should be complements. In our experiment, between and within treatment variation is qualitatively in line with the normative predictions of the model under standard assumptions. Yet, we also find evidence for reciprocal behavior. Our data analysis shows, however, that it does not pay for the employer to solely rely on the reciprocity of employees

Poaching and firm-sponsored training: first clean evidence

A series of seminal theoretical papers argues that poaching of employees may hamper company-sponsored general training. However, the extent of poaching, its determinants and consequences, remains an open empirical question. We provide a novel empirical identification strategy for poaching and investigate its causes and consequences. We find that only a small number of training firms in Germany are poaching victims. Firms are more likely to poach employees during an economic downturn. Training firms respond to poaching by lowering the share of new apprentice intakes in the following years

Firm heterogeneity and wages under different bargaining regimes : does a centralised union care for low-productivity firms?

This paper studies the relationship between wages and the degree of firm heterogeneity in a given industry under different wage setting structures. To derive testable hypotheses, we set up a theoretical model that analyses the sensitivity of wages to the variability in productivity conditions in a unionsised oligopoly framework. The model distinguishes centralised and decentralised wage determination. The theoretical results predict wages to be negatively associated with the degree of firm heterogeneity under centralised wage-setting, as unions internalise negative externalities of a wage increase for low-productivity firms. We test this prediction using a linked employeremployee panel data set from the German mining and manufacturing sector. Consistent with our hypotheses, the empirical results suggest that under industry-level bargaining workers in more heterogeneous sectors receive lower wages than workers in more homogeneous sectors. In contrast, the degree of firm heterogeneity is found to have no negative impact on wages in uncovered firms and under firm-level contracts

Labor Market Segmentation and Efficient Bargaining in a Macroeconomic Model

Claas O. Labor Market Segmentation and Efficient Bargaining in a Macroeconomic Model. Center for Mathematical Economics Working Papers. Vol 600. Bielefeld: Center for Mathematical Economics; 2018.This paper studies the implications of a segmented labor market with efficient wage– employment bargaining on the internal labor market and a competitive external labor market on the temporary equilibrium of a closed monetary macroeconomy of the AS– AD type with government activity, fiat money, and expectations. Workers have identical preferences, those on the internal labor market are represented by a labor union. There is no mobility between the labor markets. Union power measured by the share of the production surplus allotted to the union and union density measured by the fraction of workers who are union members impact the functional income distribution, but neither affect the individual employment levels nor the aggregate employment level and the aggregate supply function. The wage on the internal labor market is above the wage on the external labor market if and only if the profit share of total revenue is smaller than under a fully competitive labor market. Unique temporary equilibria exist for all combinations of union power and union density. The paper provides a complete comparative-statics analysis showing in particular a negative price effect of union power and a positive price effect of union density. In general, the effects of union power and union density on any equilibrium value are usually of opposite signs. Single-labor-market models with a fully competitive or a fully unionized labor market are special or limiting cases of the segmented-labor-market model