Estimating Incentive and Welfare Effects of Non-Stationary Unemployment Benefits

The distribution of unemployment duration in our equilibrium matching model with spell-dependent unemployment benefits displays a time-varying exit rate. Building on Semi-Markov processes, we translate these exit rates into an expression for the aggregate unemployment rate. Structural estimation using a German micro-data set (SOEP) allows us to discuss the effects of a recent unemployment benefit reform (Hartz IV). The reform reduced unemployment by only 0.3%. Contrary to general beliefs, we find that both employed and unemployed workers gain (the latter from an intertemporal perspective). The reason is the rise in the net wage caused by more vacancies per unemployed worker.Non-stationary unemployment benefits, endogenous effort, matching model,structural estimation, Semi-Markov process

Estimating Incentive and Welfare Effects of Non-stationary Unemployment Benefits

The distribution of unemployment duration in our equilibrium matching model with spell-dependent unemployment benefits displays a time-varying exit rate. Building on Semi-Markov processes, we translate these exit rates into an expression for the aggregate unemployment rate. Structural estimation using a German micro-data set (SOEP) allows us to discuss the effects of a recent unemployment benefit reform (Hartz IV). The reform reduced unemployment by only 0:3%. Contrary to general beliefs, we find that both employed and unemployed workers gain (the latter from an intertemporal perspective). The reason is the rise in the net wage caused by more vacancies per unemployed worker.Non-stationary unemployment benefits, endogenous effort, matching model, structural estimation, Semi-Markov process

Estimating Incentive and Welfare Effects of Non-Stationary Unemployment Benefits

The distribution of unemployment duration in our equilibrium matching model with spell-dependent unemployment bene?ts displays a time-varying exit rate. Building on Semi-Markov processes, we translate these exit rates into an expres- sion for the aggregate unemployment rate. Structural estimation using a German micro-data set (SOEP) allows us to discuss the effects of a recent unemployment bene?t reform (Hartz IV). The reform reduced unemployment by only 0.3%. Contrary to general beliefs, we ?nd that both employed and unemployed workers gain (the latter from an intertemporal perspective). The reason is the rise in the net wage caused by more vacancies per unemployed worker.Non-stationary unemployment bene?ts, endogenous effort, matching model, structural estimation, Semi-Markov process

Search Equilibrium, Production Parameters and Social Returns to Education: Theory and Estimation

We introduce different skill groups and production functions into the Burdett-Mortensen equilibrium search model. Supermodularity in the production process leads to a positive intrafirm wage correlation between skill groups. Theory implies that increasing returns to scale can lead to a unimodal earnings density with a decreasing right tail even in the absence of productivity dispersion. Our empirical results indicate economy-wide increasing returns to scale. We use the structural estimates of the production parameters to investigate whether private returns toeducation equal social returns. Our estimates suggest a positive welfare effect from increasing the share of medium-skilled agents in the workforce. --Search,wage correlation,social returns to education

Competitive and Segmented Informal Labor Markets

It has been recently argued that the informal sector of the labor market in a developing economy shows a dual structure with one part of it being competitive to the formal sector and another part being the result of market segmentation. To test this hypothesis we formulate an econometric model which allows for a heterogeneous informal sector with unobserved individual a?liation and which takes into account selection bias induced by the employment decision of individ- uals. Our test results for the urban labor market in C^ote d'Ivoire indeed show existence of both competitive and segmented employment in the informal sector. --developing economy,informal labor market,segmentation,comparative advantage,selection bias,latent structure,finite mixture models

Competitive and Segmented Informal Labor Markets

It has recently been argued that the informal sector in developing countries shows a dual structure, with part of the informal sector being competitive to the formal sector and part of the informal sector being the result of market segmentation. We formulate an econometric model to test this hypothesis. The model allows for sector multiplicity with unobserved sector affiliation in the informal sector and takes into account sample selection bias induced by the employment decision of individuals. An estimation of the model for the urban labor market in C^ote d'Ivoire shows that the informal labor market is indeed composed of two segments with both competitive as well as segmented employment.informal labor market,segmentation,comparative advantage,selection bias,latent structure,finite mixture

Competitive and Segmented Informal Labor Markets

It has recently been argued that the informal sector of labor markets in de- veloping economies shows a dual structure with part of the informal sector being competitive to the formal sector and part of the informal sector being the result of market segmentation. To test this hypothesis, we formulate an econometric model which allows for a heterogeneous informal sector with unobserved individ- ual sector a±liation in the informal sector and which takes into account selection bias induced by the employment decision of individuals. Our empirical results for the urban labor market in C^ote d\'Ivoire show the existence of both competitive and segmented employment in the informal sector.developing economy, informal labor market, segmentation, comparative advantage, selection bias, latent structure, finite mixture models

Parametric vs. Nonparametric Estimation of an Equilibrium Search Model with Employer Heterogeneity

We demonstrate that non-monotone behaviour of the right tail of earnings density may lead to the fact that nonparametric estimation of the Bontemps et al. (2000) equilibrium search model with employer heterogeneity does not yield consistent estimates. We propose an easy way of checking whether the Bontemps et al. (2000) estimation procedure can be applied and review the robustness of the alternative strategy once the Bontemps et al. (2000) procedure is inapplicable. --

Estimating Incentive and Welfare Effects of Non-Stationary Unemployment Benefits

The distribution of unemployment duration in our equilibrium matching model with spell-dependent unemployment benefits displays a time-varying exit rate. Building on Semi-Markov processes, we translate these exit rates into an expression for the aggregate unemployment rate. Structural estimation using a German micro-data set (SOEP) allows us to discuss the effects of a recent unemployment benefit reform (Hartz IV). The reform reduced unemployment by only 0.3%. Contrary to general beliefs, we find that both employed and unemployed workers gain (the latter from an intertemporal perspective). The reason is the rise in the net wage caused by more vacancies per unemployed worker.non-stationary unemployment benefits, endogenous effort, matching model, structural estimation, semi-Markov process

Estimating Incentive and Welfare Effects of Non-Stationary Unemployment Benefits

The distribution of unemployment duration in our equilibrium matching model with spell-dependent unemployment benefits displays a time-varying exit rate. Building on Semi-Markov processes, we translate these exit rates into an expression for the aggregate unemployment rate. Structural estimation using a German micro-data set (SOEP) allows us to discuss the effects of a recent unemployment benefit reform (Hartz IV). The reform reduced unemployment by only 0.3%. Contrary to general beliefs, we find that both employed and unemployed workers gain (the latter from an intertemporal perspective). The reason is the rise in the net wage caused by more vacancies per unemployed worker.non-stationary unemployment benefits, endogenous effort, matching model, structural estimation, Semi-Markov process