Substitution and crowding-out effects of active labour market policy

The search model contains two matching technologies, the public employment service (PES) with its type-specific registers for workers and vacancies, and the search market where firms advertise vacancies and unemployed who have not been placed by the PES search for jobs. The placement activity of the PES increases the bargained wages, reduces active job search, decreases the number of advertised vacancies, but - compared with the laissez- faire regime - increases employment and per capita consumption. Of all the instruments of ALMP, the probabilities of a match, the portion of unskilled not interested in a job, and the hiring subsidies generate crowding-out effects. The productivity of the unskilled, (re-employment)bonuses, penalties for violations of the search rule, and the stringency of the search rule cause crowdingin effects. Assistance for problem groups is less effective than promoting active job search. -- Das Suchmodel umfasst zwei Matching-Technologien, die des PES mit typspezifischen Registern für Arbeitslose und Vakanzen und die des Suchmarkts, wo Firmen Vakanzen annoncieren und nicht Vermittelte nach Stellen suchen. Die Vermittlungstätigkeit des PES erhöht die Lohnkosten, reduziert die aktive Suche und die annoncierten Vakanzen, senkt im Vergleich zum Laissez-faire Regime die Arbeitslosenquote und steigert den Pro-Kopf-Konsum. Von den Instrumentvariablen der ALMP verdrängen die Matchwahrscheinlichkeiten, der Anteil der "Arbeitsunwilligen" und die Lohnkostenzuschüsse Arbeitsplätze. Die Produktivität der Geringqualifizierten, (Wiederbeschäftigungs-) Prämien, Sanktionen für Suchregel-Verstöße sowie die Intensität der Regeldurchsetzung senken die Arbeitslosigkeit. Die Förderung von "Problemgruppen" ist weniger wirkungsvoll als die Förderung der aktiven Jobsuche.Matching model,active labor market policy,PES,search market,heterogeneous unemployment pool,ranking

Job Security as an Endogenous Job Characteristic

This paper develops a hedonic model of job security (JS). Workers with heterogeneous JS-preferences pay the hedonic price for JS to employers, who incur labor-hoarding costs from supplying JS. In contrast to the Wage-Bill Argument, equilibrium unemployment is strictly positive, as workers with weak JS-preferences trade JS for higher wages. The relation between optimal job insecurity and the perceived dismissal probability is hump-shaped. If firms observe demand, but workers do not, separation is not contractible and firms dismiss workers at-will. Although the workers are risk-averse, they respond to the one-sided private information by trading wage-risk for a higher JS. With two-sided private information, even JS-neutral workers pay the price for a JS guarantee, if their risk premium associated with the wage-replacement risk is larger than the social net loss from production.job security; hedonic market; implicit contract theory; guaranteed employment contract; severance pay contract; asymmetric information; prudence

A hiring subsidy for long-term unemployed in a search model with PES and random search

Our search model combines two search methods, the public employment service (PES) and random search. The separation rate is endogenous, the job matching process consists of three rounds. In the first and the second respectively the short-term (STU) and the long-term unemployed (LTU) randomly search for a vacancy. During the last round the PES matches registered jobseekers with registered vacancies. The LTU cause training costs and, during the training period, have a lower marginal product than the STU. The effects of the hiring subsidy and of profiling techniques to increase the effectiveness of the PES depend on the target group they are geared towards. For skill groups, who have relatively low private search costs in comparison with their productivity, not only the hiring subsidy but also the job placement activities of the PES are counterproductive and reduce overall employment. -- Das Modell kombiniert zwei Suchmethoden, den staatlichen Vermittlungsdienst (PES) und die private Jobsuche. Die Trennungsrate des Modells ist endogen, der Matching Prozeß umfasst drei Phasen. In der ersten und zweiten suchen jeweils die Kurzzeitarbeitslosen (STU) und die Langzeitarbeitslosen (LTU) nach annoncierten Stellen, in der dritten vermittelt der PES registrierte Jobsucher mit registrierten Vakanzen. LTU verursachen Trainingskosten und haben während der Einarbeitungszeit eine geringere Produktivität als STU. Die Wirkungen des Lohnkostenzuschusses für LTU und der Maßnahmen zur Erhöhung der Vermittlungseffektivität des PES hängen von der Zielgruppe ab. Für Zielgruppen, deren private Suchkosten im Vergleich zu ihrer Arbeitsproduktivität relativ gering sind, erweisen sich nicht nur der Lohnkostenzuschuss sondern auch die staatliche Vermittlungsaktivität als kontraproduktive Instrumente, die die gesamtwirtschaftliche Beschäftigung reduzieren.Matching model,hiring subsidy,endogenous separation rate,active labour market policy,PES,search market

Do Targeted Hiring Subsidies and Profiling Techniques Reduce Unemployment?

To reduce unemployment targeted hiring subsidies for long-term unemployed are often recommended. To explore their effect on employment and wages, we devise a model with two types of unemployed and two methods of search, a public employment service (PES) and random search. The eligibility of a new match depends on the applicant’s unemployment duration and on the method of search. The hiring subsidy raises job destruction and extends contrary to Mortensen-Pissarides (1999, 2003) the duration of a job search, so that equilibrium unemployment increases. Like the subsidy, organizational reforms, which advance the search effectiveness of the PES, crowd out the active jobseekers and reduce overall employment as well as social welfare. Nevertheless, reforms are a visible success for the PES and its target group, as they significantly increase the service’s placement rate and lower the duration of a job search via the PESMatching model; hiring subsidy; endogenous separation rate; active labour market policy; PES; random search

A Hiring Subsidy for Long-Term Unemployed in a Search Model with PES and Random Search

Our search model combines two search methods, the public employment service (PES) and random search. The separation rate is endogenous, the job matching process consists of three stages. In the first and the second respectively the short-term (STU) and the long-term unemployed (LTU) randomly search for a vacancy. In the last stage the PES matches registered jobseekers with registered vacancies. The LTU cause training costs and, during the training period, have a lower marginal product than the STU. The effects of the hiring subsidy and of profiling techniques to increase the effectiveness of the PES depend on the target group. For target groups, who have relatively low private search costs in comparison with their productivity, not only the hiring subsidy but also the job placement activities of the PES are counterproductive and reduce overall employment.matching model, hiring subsidy, endogenous separation rate, active labour market policy, PES and search market

Base Period, Qualifying Period and the Equilibrium Rate of Unemployment

Unemployment benefits, benefit duration, base period and qualifying period are constituent parameters of the unemployment insurance system in most OECD countries. From economic research we know that the amount and duration of unemployment benefits increase unemployment. To analyze the effects of the other two parameters we use a matching model with search frictions and show that there is a trade-off between the qualifying and the base period on the one hand and the amount and duration of the unemployment benefits on the other. A country that combines a high level of unemployment benefits with a long benefit duration can neutralize the effect on the equilibrium rate of unemployment with a long qualifying and/or a short base period. -- Lohnersatzleistungen, Anspruchsdauern, Rahmenfristen und Anwartschaftszeiten sind konstituierende Parameter der Arbeitslosenversicherungen in den meisten OECD Ländern. Ökonomische Untersuchungen zeigen, dass Höhe und Dauer der Lohnersatzleistungen die Arbeitslosigkeit erhöhen. Im Rahmen eines Matching-Modells untersuchen wir die Wirkung der anderen beiden Parameter und zeigen, dass ein trade-off zwischen der Anwartschaftszeit und der Rahmenfrist auf der einen und der Höhe und der Dauer der Lohnersatzleistungen auf der anderen Seite existiert. Ein Land mit einer hohen Arbeitslosenunterstützung und langer Anspruchsdauer kann die Wirkung auf die Arbeitslosenquote durch eine lange Anwartschaftszeit und eine kurze Rahmenfrist neutralisieren.Unemployment insurance,base period,qualifying period

Do Targeted Hiring Subsidies and Profiling Techniques Reduce Unemployment?

To reduce unemployment targeted hiring subsidies for long-term unemployed are often recommended. To explore their effect on employment and wages, we devise a model with two types of unemployed and two methods of search, a public employment service (PES) and random search. The eligibility of a new match depends on the applicant's unemployment duration and on the method of search. The hiring subsidy raises job destruction and extends contrary to Mortensen-Pissarides (1999, 2003) the duration of a job search, so that equilibrium unemployment increases. Like the subsidy, organizational reforms, which advance the search effectiveness of the PES, crowd out the active jobseekers and reduce overall employment as well as social welfare. Nevertheless, reforms are a visible success for the PES and its target group, as they significantly increase the service's placement rate and lower the duration of a job search via the PES.matching model, hiring subsidy, endogenous separation rate, active labour market policy, PES, random search

The Measurement of Human Intellectual Capital in the United States Air Force

For centuries, companies used basically the same accounting system developed in the fifteenth century to measure economic performance. Through much of this period the tangible value of a firm, its plants, property and equipment, was closely related to the market value of the firm. With the dawning of the information age, America has evolved from a manufacturing based economy to a service oriented economy. Closely related to this change from a blue collar to white collar workplace has been the widening gap between the market value of a company and its tangible assets. Roughly equal before, now the tangible assets may represent as little as ten percent of the market value of a company. This difference in value between the tangible assets and the market value represents the value of the intangible assets. Many people define the intangible assets of a company as its intellectual capital. Since the intangible assets might represent ninety percent of the value of the firm, investors and managers alike are seeking ways to define and measure these assets. The Air Force, in many ways, is similar to a large corporation. It deals with budgets, rapidly changing world environments, performance expectations, retention, training and similar concerns. The Air Force reduced the officers in the active duty force from 98,059 in 1989 to 69,892 in 1997. This research addresses the effect of the draw down on the USAF\u27s intellectual capital. The uniqueness of the military is discussed and measures are developed specifically for the Air Force. The measures developed for the Air Force are evaluated for the years of the military draw down and conclusions are made based upon the results

Invariant Box-Parameterization of Neutrino Oscillations

The model-independent "box" parameterization of neutrino oscillations is examined. The invariant boxes are the classical amplitudes of the individual oscillating terms. Being observables, the boxes are independent of the choice of parameterization of the mixing matrix. Emphasis is placed on the relations among the box parameters due to mixing--matrix unitarity, and on the reduction of the number of boxes to the minimum basis set. Using the box algebra, we show that CP-violation may be inferred from measurements of neutrino flavor mixing even when the oscillatory factors have averaged. General analyses of neutrino oscillations among $n\ge 3$ flavors can readily determine the boxes, which can then be manipulated to yield magnitudes of mixing matrix elements