From one to many islands : the emergence of search and matching models

The notion of frictional unemployment first arose in the writings of Beveridge, Pigou and Hicks. Why did it fail at the time to grow into a fully fledged theory ? Our answer is simple. This failure was due to the fact these economists were unwilling and/or unable to go beyond the then-prevailing Marshallian approach, in particular to depart from its trade organization assumptions. They did not realize that these assumptions excluded any rationing outcome in general, and any unemployment result in particular. We make our claim in three steps. First, we make explicit the trade-organization assumptions underpinning Marshall’s equilibrium theory. Our second step is a study of the attempts at introducing unemployment in a Marshallian framework. We start with an examination of Beveridge’s, Pigou’s and Hicks’s early works on wages and unemployment. We also briefly discuss how and why Keynes was able to shift attention from frictional to involuntary unemployment. Newt, for a reason that will become clear as the paper evolves, we ponder Friedman’s celebrated Presidential Address inaugurating the notion of a natural rate of unemployment. In our third and last step we look at the papers by McCall, Lucas and Prescott, Mortensen and Pissarides that paved the way for the present thriving research literature. We show that their success in providing an equilibrium unemployment result stems from the fact that they have indeed departed from the Marshallian trade-organization assumptionsSupply and Demand; Marshall; Search; Matching

Selective Reductions in Labor Taxation Labour Market Adjustments and Macroeconomic Performance

We use a calibrated general equilibrium model with heterogeneous labor and search to evaluate the quantitative effects of various labor tax cut scenarios. The focus is on skill heterogeneity combined with downward wage rigidities at the low end of the skill ladder. Workers can take jobs for which they are overeducated. We compare targeted and non-targeted tax cuts, both with or without over-education effects. Introducing over-education changes substantially the employment, productivity and welfare effects of a tax cut, although tax cuts targeted on the least skilled workers always have larger effects.Minimum Wage, Job Creation, Job Destruction, Job Competition, Search Unemployment, Taxation, Computable General Equilibrium Models

Selective Reductions in Labour Taxation: Labour Market Adjustments and Macroeconomic Performance

Significant differences in unemployment incidence in Europe have been observed across skill groups, with the least skilled suffering the highest and most persistent unemployment rates. To identify policies alleviating this problem, we study the impact of reductions in employer social security contributions. We construct a general equilibrium model with three types of heterogeneous workers and firms, matching frictions, wage bargaining and a rigid minimum wage. We find evidence in favour of narrow tax cuts targeted at the minimum wage but we argue that it is most important to account for the effects of such reductions on both job creation and job destruction. The failure to do so may explain the gap between macro- and microeconometric evaluations of such policies in France and Belgium. Policy impact on welfare and inefficiencies induced by job competition, ladder effects and on-the-job search are discussed.Skill Bias, Minimum Wage, Job Creation, Job Destruction, Job Competition, Search Unemployment, Taxation

Selective Reductions in Labour Taxation : Labour Market Adjustments and Macroeconomic Performance

Significant differences in unemployment in Europe have been observed across skill groups, with the least skilled suffering the highest and most persistent unemployment rates. To identify policies alleviating this problem, we study the impact of reductions in employer social security contributions. We construct a general equilibrium model with three types of workers and firms, matching frictions, wage bargaining and a rigid minimum wage. We find evidence in favour of narrow tax cuts targeted at the minimum wage, but we argue that it is most important to account for the effects of such reductions on both job creation and job destruction. The failure to do so may explain the gap between macro- and microeconometric evaluations of such policies in France and Belgium. Policy impact on welfare and inefficiencies induced by job competition, ladder effects and on-th-job search are quantified and discussed.Minimum Wage, Job Creation, Job Destruction, Job Competition, Search Unemployment, Taxation, Computable General Equilibrium Models

The role of a support person during labour

Introduction: The changes that have occurred in the obstetrics in the last years are not only culturally conditioned, but they also constitute the sum of experiences of many generations of the women in labour. The change of a labour management style and the partner’s presence at that time is the result of variable expectations of women as well as the courage and determination of representatives of medical professions. When both partners are aware and active during the labour, a mother has the comfort of giving a birth in the sense of safety, and the father feels the full acceptance of a child as it eliminates the fear of physical contact with a baby. Objectives: The objective of this work is to know the opinion of women about the support person during labour. Materials and methods: The anonymous surveys were used as the research method. The study involved 187 women in labour, after the family labour in the average age of 29 ± 10 years. It was directed at the women after the family labour to know their opinion about the role of a support person during labour. Results: The conducted analysis has proved that the couples make decision together as to the family labour 59.4%. The factors that influence on this decision are the following to stay together (53.5%) and to provide the sense of safety (38.5%). According to 87.7% of the surveyed, the major type of the partner’s activity during the labour was his emotional support. 90.9% of the women confirm their partner would participate during the another labour again. Conclusions: 1.The decision about the family labour is made together by both partners. 2.Because of the partner’s presence during a labour, there are more chances for the better relationship of a man with his child in the future. 3.The major motivation for the man’s presence during the labour is to provide the sense of safety to his woman in labour

Labor market frictions, unemployment and economic policy

This thesis arose from curiosity about how labor market fortunes are determined in a world whereby decisions are taken in the presence of various labor market institutions, how well the computational general equilibrium models can match the observed labor market outcomes, and how has taken place the evolution of methodology employed by the studies of macro- and labor economics. This work is a modest attempt to better understand search and matching, their prehistory, as well as their ability to explain labor market phenomena and policy applications. As a result, this dissertation looks at the search and matching framework from various angles: historical, positive and normative. After studying the emergence of search and matching, we employ a number of computational general equilibrium models with embodied labor market frictions to test how they fare in reproducing the actual labor market outcomes and what policies could possibly be recommended on their basis. We focus predominantly on unemployment and a selection of institutions --- labor taxes, minimum wages and social security systems --- mainly in the European economies. One of the essays investigates whether a one-sided search model with human capital accumulation and mirco-level turbulence could be consistent with the Great Moderation. The following one studies the effect of tax cuts in the presence of minimum wages, job competition and on-the-job search. Finally, we look at the ability of a matching model placed in the OLG framework to explain the joint evolution of unemployment and participation in the last decades.(ECON 3) -- UCL, 201

Selective Reductions in Labor Taxation Labour Market Adjustments and Macroeconomic Performance

We use a calibrated general equilibrium model with heterogeneous labor and search to evaluate the quantitative effects of various labor tax cut scenarios. The focus is on skill heterogeneity combined with downward wage rigidities at the low end of the skill ladder. Workers can take jobs for which they are overeducated. We compare targeted and non-targeted tax cuts, both with or without over-education effects. Introducing over-education changes substantially the employment, productivity and welfare effects of a tax cut, although tax cuts targeted on the least skilled workers always have larger effects

From One to Many Islands: The Emergence of Search and Matching Models

The notion of frictional unemployment failed to grow into a full-fledged theory in the writings of Beveridge, Pigou and Hicks, as these economists were unwilling and/or unable to go beyond the then-prevailing Marshallian approach. Here, first we make explicit the trade organization assumptions underpinning Marshall's equilibrium theory. Next we examine Beveridge's, Pigou's and Hicks' early works on wages and unemployment. Finally, we look at the seminal papers that paved the way for search literature: McCall, Lucas and Prescott, Mortensen and Pissarides. We show that they succeed in providing an unemployment result, because they indeed depart from the Marshallian trade organization

Labour Market Adjustments and Macroeconomic Performance

Unemployment remains the main concern of most EU countries. Substantial differences are observed not only across countries but also across regions of the same country. Important differences also exist across skill groups. We focus here on the skill dimension and report on some results obtained for the Belgian economy, keeping in mind though that the analysis could be extended to other countries characterised by the same problems. We argue that low-skilled unemployment can be explained in terms of biased technological change and relative wage rigidities (related to labour market institutions). We explore in that context the effects of targeted labour tax cuts. We find that it is most important to take into account the effect of such tax cuts on both the job creation and the job destruction rates. The failure to do so may explain the gap between macro- and micro-econometric evaluations of such policies. We also briefly discuss the impact on welfare and examine the consequences of job competition (ladder effect)

Selective Reductions in Labour Taxation: Labour Market Adjustments and Macroeconomic Performance ∗

Significant differences in unemployment incidence in Europe have been observed across skill groups, with the least skilled suffering the highest and most persistent unemployment rates. To identify policies alleviating this problem, we study the impact of reductions in employer social security contributions. We construct a general equilibrium model with three types of heterogeneous workers and firms, matching frictions, wage bargaining and a rigid minimum wage. We find evidence in favour of narrow tax cuts targeted at the minimum wage but we argue that it is most important to account for the effects of such reductions on both job creation and job destruction. The failure to do so may explain the gap between macroand microeconometric evaluations of such policies in France and Belgium. Policy impact on welfare and inefficiencies induced by job competition, ladder effects and on-the-job search are discussed