3,893 research outputs found

    Temporary Layoffs and Unemployment Insurance: Is Experience Rating Desirable?

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    This paper explores how the introduction of an experience rated system of unemployment insurance affects employment and welfare in a model where implicit contracts between firms and workers give rise to wage rigidities and unemployment. In the literature, it has been argued that experience rated systems of unemployment insurance may reduce long term employment as firms anticipate the higher costs of layoffs implied by experience rating. Our analysis shows that, despite the higher costs of layoffs, the introduction of experience rating may increase long term employment. Moreover, it unambiguously increases welfare.unemployment insurance, labour markets, implicit contracts

    Risk aversion does not justify the introduction of mandatory unemployment insurance in the shirking model

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    The introduction of unemployment insurance is usually thought to increase welfare if workers are sufficiently risk averse. We analyse the effects of introducing mandatory unemployment insurance in the shirking model. Surprisingly, we find that introducing unemployment insurance reduces welfare irrespective of the degree of risk aversion.Efficiency Wages, Shirking, Unemployment Insurance

    A Model of B2B Exchanges

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    B2B exchanges are revolutionizing the way businesses will buy and sell a variety of intermediary products and services. It is estimated that most of the roughly $7 trillion worth of business transactions are likely to go through these new institutions within the next decade. This paper tries to understand the economics governing the transactions within B2B exchanges and analyze their likely evolution over time. In doing so, we start by providing the rigorous definitions to a number of critical concepts broadly used in the context of B2B exchanges including "market fragmentation", "critical mass" and buyer-seller "connectivity". We describe equilibrium behavior in the exchange and analyze it as a function of these critical concepts. Next, we study the evolution of the exchanges in a dynamic system where buyers and sellers enter (exit) the exchange based on the relative economic surplus (loss) they receive inside vs. outside the exchange. Our results have important implications for practice. For example, we show that equilibrium prices within the marketplace may not always decrease with lower search costs. However, buyer surplus rises with lower search costs even if prices are higher in the exchange. We also show that the general view that demand and supply (so-called "liquidity") either grows or shrinks in the marketplace may not always hold and it is quite possible to have a marketplace that is stable even though only a relatively small proportion of the market participants transact in it. Finally, we also provide conditions under which the exchange should subsidize buyers or seller in order to achieve critical mass.

    Analysis of Indirect Effects in a Hydrologic Model for Use in Determining Potential Primary Productivity

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    A current program of the Land-Use and Land-Cover Change (LUC) at the International Institute for Applied Systems Analysis is to determine the potential primary productivity of agricultural crops for parts of China, the former Soviet Union, and Mongolia. The work in this paper, supported by the Dynamic Systems group, is in collaboration with that LUC program. The main goal is to provide a methodology for investigating some of the indirect processes and pathways which affect primary productivity of crop production and to introduce a different modeling approach in estimating the potential productivity. The three main objectives of this research are the following: 1. Use network analysis to identify and quantify the indirect processes that affect the primary production of crop growth, 2. Develop a flow-storage compartment model to be used in the network analysis, 3. Quantify the flow-storage model using a dynamical simulation model. Although many factors control the primary productivity of a region, a main one is the availability of water, so the simulation model used here is based on the hydrologic budget of the study region. A four-compartment hydrologic model is developed which includes the within-system transfers between ground water, surface water, atmosphere, and vegetation, along with the external water transfers with the environment. When available, on-site climatic data are used to evaluate the model's parameters. The model is applied to a homogeneous region with a single cover type. Specifically, the model is calibrated using data from the Kursk region of Russia and the crop barley. This research shows that the atmosphere and soil moisture content both contribute important direct and indirect pathways for the water to reach the vegetation and subsequently affect primary production. Also, based on this model, the primary productivity is most sensitive to the vegetation growth rate and the rate of evapotranspiration. The model rationale and the results are discussed herein
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