Employment and Hours of Work

This paper develops a dynamic model of the labor market in which the degree of substitution between employment and hours of work is determined as part of a search equilibrium. Each firm chooses the demand for working hours and the number of vacancies, and the hourly wage rate is determined by Nash bargaining. A firm increases the demand for hours as recruitment becomes more costly. Labor market tightness influences the composition of labor demand through its impact on the wage rate. Restricting working hours can expand employment, but doing so is not necessarily efficient. When there are two industries that differ in their equipment costs, workers employed by firms with higher equipment costs work longer and earn more.employment, hours of work, search frictions.

Can the health insurance reforms stop an increase in medical expenditures for middle- and old-aged persons in Japan?

Using two-period panel data from the Nippon Life Insurance Research Institute, this paper tests the hypothesis that an increase in the self-pay ratio of medical expenditures associated with the Japanese health insurance reforms of April 2003 reduced household medical expenditures. We find that the increase in the self-pay ratio had a positive but insignificant effect on the share of medical expenses in household expenditure. However, when we employ the data as repeated cross-sectional observations to increase the sample size, the increase in the self-pay ratio has a significantly positive effect on the share of medical expenditures. This provides corroborating evidence that middle- and old-aged persons were unable to reduce their demand for medical services with the increase in the self-pay ratio. An additional finding is that medical services are a necessary good, particularly for those aged 61 years or older and those with medical expenditures accounting for a relatively high share of medical expenditures in high household expenditure.Health insurance, Medical expenditures, Engle curve, Middle- and old-aged persons, Japan

Dual Poverty Trap: Intra- and Intergenerational Linkages in Frictional Labor Markets

This paper constructs an overlapping generations model with a frictional labor market to explain persistent low education in developing countries. When parents are uneducated, their children often face difficulties in finishing school and therefore are likely to remain uneducated. Moreover, if children expect that other children of the same generation will not receive an education, they expect that firms will not create enough jobs for educated workers, and thus are further discouraged from schooling. These intergenerational and intragenerational mechanisms reinforce each other, creating a serious poverty trap. Escape from the trap requires the well-organized and combined implementation of a subsidy for schooling, the provision of free education, support for disadvantaged children, and public awareness programs.overlapping generations model; education; poverty trap; job search; coordination failure

Precautionary Demand for Labor in Search Equilibrium

This paper studies firmsf job creation decisions in a labor market with search frictions. A simple labor market search model is developed in which a firm can search for a second employee while producing with a first worker. A firm expands employment even if the instantaneous payoff to a large firm is less than that of staying small--a firm has a precautionary motive to expand its size. In addition, this motive is enhanced by a greater market tightness. Because of this effect, firmsf decisions become interdependent--a firm creates a vacancy if it expects other firms to do the same, creating strategic complementarity among firms and thereby self-fulfilling multiple equilibria.labor demand, firm size distribution.

Is longer unemployment rewarded with longer job tenure?

This paper examines whether or not a prolonged unemployment period can raise the quality of job matching after unemployment. We focus on job tenure as an indicator of a good quality job match after unemployment. We match two sets of Japanese administrative data compiled by the public employment security offices: one includes information about the circumstances of job seekers receiving unemployment insurance, and the other includes information about job seekers applying for jobs. We first show a negative relationship between unemployment duration and the subsequent job duration. Restricting the sample to job seekers who lower their reservation wage in the final 59 days before expiration of unemployment insurance, we secondly show an even greater negative effect of unemployment duration on the following job duration. The importance lies not only in the duration of unemployment. If job seekers keep a high reservation wage because of the benefits of unemployment insurance, and lower it in response to the expiration of insurance, prolonged unemployment will result in short job duration after unemployment.job search, quality of job match, unemployment duration, unemployment insurance

Unemployment and Workplace Safety in a Search and Matching Model

Are recessions really good for workplace safety? This paper develops a model with search to consider the determinants of workplace safety and then investigates the relationship between unemployment and the incidence of work-related injury. There is a view following Arai and Thoursie (2005), Ruhm (2000) and Boone and van Ours (2006) that the rate of work-related injury is procyclical. However, data from several countries do not necessarily support this view. This paper considers an alternative approach to support the countercyclical variation in the rate of work- related injury in which the firm bargains about the optimal input for workplace safety.Job Search, Workplace Safety, Work-Related Injury and Illness, Unemployment

Child labor, schooling, and poverty in Latin America

The authors probe further into how household attributes affect the probability that children will work, and the probability of enrollment and success in school. Focusing on four household surveys in Brazil, Ecuador, Nicaragua and Peru, they find that most child labor is takes place in rural areas, and that more boys than girls are recorded as workers. Children in the poorest income groups enter school late, and often exit before completing the basic school cycle. Enrollment rates for children in the wealthiest families are more than 90 percent for ages 6 to 15. For the poorest children, enrollment rates don't rise above 90 percent until age 8, and fall below 90 percent again by age 12. While the enrollment gap across income groups is only a few percentage points for children aged 8 to 11, about 15 percent of the poorest children already have spent one, ortwo fewer years in school by age 8, compared to the children in the wealthiest households. In addition, those poorest children begin to drop out of school in large numbers after the age of 11. For children aged 14 to 16, the difference in enrollment rates between rich and poor nearly doubles (from 20 to 34 percentage points).