Optimal Unemployment Insurance in Labor Market Equilibrium when Workers can Self-Insure

I develop an equilibrium matching model in which workers have preferences over consumption and hours of work and are able to self-insure against unemployment risks by accumulating precautionary wealth. Wages and working hours are the outcomes of Nash bargaining between workers and firms. I focus on an unemployment insurance (UI) system with constant benefits of indefinite duration financed through a constant labor income tax. Low-wealth individuals work unusually long hours to quickly accumulate precautionary wealth. The Frisch elasticity of labor supply governs a worker’s utility cost of supplying labor and hence the cost of accumulating precautionary wealth. A lower elasticity implies a higher utility cost of adjusting hours. I take Frisch elasticities from recent research using household data and find that the optimal level of UI benefits is between 34 and 40 percent of average compensation. The potential welfare gains from moving from current 34 percent to the optimal policy are as large as 0.13 percent of lifetime consumption. The optimal replacement rate is decreasing in the Frisch elasticity of labor supply.Unemployment insurance; Labor supply; Matching equilibrium; Self-insurance

Retraining the Unemployed in a Matching Model with Turbulence

I investigate to what degree differences in retraining opportunities are responsible for the divergence of unemployment rates between the U.S. and Europe since the early 1980s. I provide some evidence for higher retraining rates in the U.S. as compared to Europe and further show that there is tremendous heterogeneity across OECD countries with respect to retraining. In my model, unemployed workers not only search for jobs but also for suitable retraining programs. I find that when it becomes more difficult to find suitable retraining programs, enrollment rates, productivity and the unemployment rate decline. Furthermore, this paper is the first attempt to investigate the role of retraining in economies that are subject to economic turbulences as described by Ljungqvist and Sargent (1998, 2004). Using a similar parametrization as Ljungqvist and Sargent (2004), I find that the generosity of unemployment benefits, the main driving force in their model, is not an important determinant of unemployment, even during tumultuous economic times, if sufficiently good retraining institutions are available. Economies with more flexible retraining institutions adjust better to economic turbulence, and as a result, feature lower unemployment rates and higher productivity and output. My results suggest that differences in retraining opportunities play an important role in explaining cross-country differences in unemployment rates.Retraining the Unemployed, European Unemployment, Economic Turbulence

Review of Estimates of the Frisch Elasticity of Labor Supply

Among the models that CBO uses to analyze the economic effects of changes in federal fiscal policy is a life-cycle growth model. That model requires an estimate of the responsiveness of the supply of labor to a one-time temporary change in after-tax compensation, which is described by the so-called Frisch elasticity. CBO incorporates into its analyses an estimate of the Frisch elasticity that ranges from 0.27 to 0.53, with a central estimate of 0.40. This paper describes how CBO derived that range from the research literature

Optimal Unemployment Insurance in Labor Market Equilibrium when Workers can Self-Insure

I develop an equilibrium matching model in which workers have preferences over consumption and hours of work and are able to self-insure against unemployment risks by accumulating precautionary wealth. Wages and working hours are the outcomes of Nash bargaining between workers and firms. I focus on an unemployment insurance (UI) system with constant benefits of indefinite duration financed through a constant labor income tax. Low-wealth individuals work unusually long hours to quickly accumulate precautionary wealth. The Frisch elasticity of labor supply governs a worker’s utility cost of supplying labor and hence the cost of accumulating precautionary wealth. A lower elasticity implies a higher utility cost of adjusting hours. I take Frisch elasticities from recent research using household data and find that the optimal level of UI benefits is between 34 and 40 percent of average compensation. The potential welfare gains from moving from current 34 percent to the optimal policy are as large as 0.13 percent of lifetime consumption. The optimal replacement rate is decreasing in the Frisch elasticity of labor supply

Deposition Sequence Determines Morphology of C-60 and 3,4,9,10-Perylenetetracarboxylic Diimide Islands on CaF2(111)

Loske F, Reichling M, Kühnle A. Deposition Sequence Determines Morphology of C-60 and 3,4,9,10-Perylenetetracarboxylic Diimide Islands on CaF2(111). Japanese Journal of Applied Physics. 2011;50(8): 08LB07.The coadsorption of C-60 and 3,4,9,10-perylenetetracarboxylic diimide (PTCDI) molecules on atomically flat terraces of the CaF2(111) surface is studied under ultra-high vacuum conditions using non-contact atomic force microscopy (NC-AFM). Deposition of PTCDI molecules on CaF2(111) yields needle-shaped, molecularly well-ordered crystals. Upon following deposition of C-60 molecules, the PTCDI islands are completely covered by C-60. For the opposite deposition order, the initially grown C-60 islands are not covered by PTCDI molecules, instead, most of the PTCDI molecules condense in pure islands, while only few PTCDI molecules nucleate at the edges of previously grown C-60 islands. Simultaneous deposition of both molecules results in an intermixed phase with yet another island morphology. The observed fundamental differences in island morphology suggest that different dewetting barriers are involved in the formation process. (C) 2011 The Japan Society of Applied Physic

Steering molecular island morphology on an insulator surface by exploiting sequential deposition

Loske F, Reichling M, Kühnle A. Steering molecular island morphology on an insulator surface by exploiting sequential deposition. Chemical Communications. 2011;47(37):10386-10388.Depending on the deposition order in coadsorption of C(60) and SubPc molecules on CaF(2) (111), distinctly different island morphologies can be obtained. We demonstrate that non-equilibrium processes can play a significant role in molecular structure formation and constitute a new route for complex molecular patterning of an insulating surface

Quantitative description of C-60 diffusion on an insulating surface

Loske F, Lübbe J, Schütte J, Reichling M, Kühnle A. Quantitative description of C-60 diffusion on an insulating surface. Physical Review B. 2010;82(15): 155428.The diffusion of C-60 molecules on large, atomically flat terraces of the CaF2(111) surface is studied under ultrahigh vacuum conditions at various substrate temperatures below room temperature. The weak molecule-substrate interaction on this insulating surface makes a direct observation of hopping events difficult. Therefore, to determine a quantitative value of the diffusion barrier, we employ the so-called onset method. This method is based on the analysis of spatial properties of islands created by nucleation of diffusing C-60 molecules, as measured by noncontact atomic force microscopy. We first determine the critical cluster size to be i* = 1 from coverage-dependent island size distributions prepared at a fixed substrate temperature. The diffusion barrier of E-d=(214 +/- 16) meV and an attempt frequency of nu(0)=1.4 X 10(12 +/- 0.6) s(-1) are then obtained by analyzing the island densities at different substrate temperatures

Growth of ordered C-60 islands on TiO2(110)

Loske F, Bechstein R, Schütte J, Ostendorf F, Reichling M, Kühnle A. Growth of ordered C-60 islands on TiO2(110). Nanotechnology. 2009;20(6):065606.Non-contact atomic force microscopy is used to study C-60 molecules deposited on the rutile TiO2(110) surface in situ at room temperature. At submonolayer coverages, molecules adsorb preferentially at substrate step edges. Upon increasing coverage, ordered islands grow from the decorated step edges onto the lower terraces. Simultaneous imaging of bridging oxygen rows of the substrate and the C-60 island structure reveals that the C-60 molecules arrange themselves in a centered rectangular superstructure, with the molecules lying centered in the troughs formed by the bridging oxygen rows. Although the TiO2(110) surface exhibits a high density of surface defects, the observed C-60 islands are of high order. This indicates that the C-60 intermolecular interaction dominates over the molecule-substrate interactions that may cause structural perturbations on a defective surface. Slightly protruding C-60 strands on the islands are attributed to anti-phase boundaries due to stacking faults resulting from two islands growing together

Second-Layer Induced Island Morphologies in Thin-Film Growth of Fullerenes

Körner M, Loske F, Einax M, Kühnle A, Reichling M, Maass P. Second-Layer Induced Island Morphologies in Thin-Film Growth of Fullerenes. Physical Review Letters. 2011;107(1): 16101.Deposition of fullerenes on the CaF(2)(111) surface yields peculiar island morphologies with close similarities to previous findings for (100) surfaces of other ionic crystals. By means of noncontact atomic force microscopy we find a smooth transition from compact, triangular islands to branched hexagonal islands upon lowering the temperature. While triangular islands are two monolayers high, hexagonal islands have a base of one monolayer and exhibit a complicated structure with a second-layer outer rim and trenches oriented towards the interior. By developing a kinetic growth model we unravel the microscopic mechanisms of the structure formation