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| 2. |
- Baley, Isaac, et al.
(author)
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Cross-Phenomenon Restrictions: Unemployment Effects of Layoff Costs and Quit Turbulence
- 2023
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In: Review of Economic Dynamics. - : Elsevier Inc. - 1096-6099 .- 1094-2025. ; 50, s. 43-60
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Journal article (peer-reviewed)abstract
- Cross-phenomenon restrictions associated with returns to labor mobility can inform calibrations of productivity processes in macro-labor models. We exploit how returns to labor mobility influence effects on equilibrium unemployment of changes in (a) layoff costs, and (b) distributions of skill losses coincident with quits (“quit turbulence”). Returns to labor mobility intermediate both effects. Ample labor reallocations observed across market economies that have different layoff costs imply that a turbulence explanation of trans-Atlantic unemployment experiences is robust to adding plausible quit turbulence.
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| 3. |
- Baley, Isaac, et al.
(author)
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Quit Turbulence and Unemployment
- 2024
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In: SSRN Electronic Journal. - : Elsevier BV. - 1556-5068.
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Other publication (other academic/artistic)abstract
- Steven Weinberg (2018) says: (1) new theories that target new observations should be constrained to agree with observations successfully represented by existing theories; and (2) preserving successes of earlier theories helps to discover unanticipated understandings of yet other phenomena. Weinberg's advice helps us to answer the question: how do higher risks of skill losses coinciding both with involuntary layoffs (“layoff turbulence”) and with voluntary quits (“quit turbulence”) affect equilibrium unemployment rates? An earlier analysis that had included only layoff turbulence had established a positive relationship between turbulence and the unemployment rate within generous welfare states, but the absence of that relationship in countries with stingier welfare states. A subsequent influential analysis found that even very small amounts of quit turbulence would lead to a negative relationship between turbulence and unemployment rates. But that finding was based on a peculiar calibration of a productivity distribution that generates returns to labor mobility that make the model miss the positive turbulence-unemployment rate relationship that has been a theoretical basis for explaining the persistent trans-Atlantic unemployment divide that emerged in post-1970s data and also miss observations about labor market churning. Repairing the faulty calibration of that productivity distribution not only brings models with quit turbulence into line with those observations but also puts the spotlight on macro-labor calibration strategies and implied returns to labor mobility
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| 4. |
- Baley, Isaac, et al.
(author)
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Returns to Labor Mobility: Layoff Costs and Quit Turbulence
- 2021
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Other publication (other academic/artistic)abstract
- Although they are studied too rarely, returns to labor mobility transmit important forces that decisively shape outcomes in macro-labor models. By focusing on returns to labor mobility, this paper sheds new light on calibrations of influential macro-labor studies and resolves an issue about the turbulence-theoretic explanation of trans-Atlantic unemployment experiences. It does so by invoking a cross-phenomenon restriction -- in our case, how returns to labor mobility determine effects on unemployment of changes in layoff costs, on the one hand, and changes in quit turbulence, on the other hand. We also spotlight two distinct perspectives and associated sources of data: one from labor economics and another from the economics of industrial organization. Ultimately, we are reminded of the rule that new theories "must not throw out all the successes of former theories. ... to preserve the successes of the past is not only a constraint, but also a guide."
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| 5. |
- Domeij, David, et al.
(author)
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Public Sector Employment and the Skill Premium: Sweden versus the United States 1970-2012
- 2019
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In: Scandinavian Journal of Economics. - : Wiley: 24 months. - 1467-9442 .- 0347-0520. ; 121:1, s. 3-31
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Journal article (peer-reviewed)abstract
- Swedish census data and tax records reveal an astonishing decline in the aggregate skill premium of 30 percent between 1970 and 1990, with only a modest recovery in the next couple of decades. In contrast, the US skill premium rose by around 24 percent over those four decades. A theory that equalizes wages with marginal products can rationalize these disparate outcomes when we replace commonly used measures of total labor supplies by private sector employment. The dramatic decline in the skill premium in Sweden is the result of an expanding public sector that has disproportionately hired unskilled labor.
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| 6. |
- Graves, Sebastian, et al.
(author)
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Time averaging meets labor supplies of Heckman, Lochner, and Taber
- 2023
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Other publication (other academic/artistic)abstract
- We incorporate time-averaging into the canonical model of Heckman, Lochner, and Taber (1998) (HLT) to study retirement decisions, government policies, and their interaction with the aggregate labor supply elasticity. The HLT model forced all agents to retire at age 65, while our model allows them to choose career lengths. A benchmark social security system puts all of our workers at corner solutions of their career-length choice problems and lets our model reproduce HLT model outcomes. But alternative tax and social security arrangements dislodge some agents from those corners, bringing associated changes in equilibrium prices and human capital accumulation decisions. A reform that links social security benefits to age but not to employment status eliminates the implicit tax on working beyond 65. High taxes with revenues returned lump-sum keep agents off corner solutions, raising the aggregate labor supply elasticity and threatening to bring about a “dual labor market” in which many people decide not to supply labor.
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| 7. |
- Ljungqvist, Lars, et al.
(author)
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A labor supply elasticity accord?
- 2011
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In: American Economic Review. - : American Economic Association. - 0002-8282. ; 101:3, s. 487-491
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Journal article (peer-reviewed)abstract
- A dispute about the size of the aggregate labor supply elasticity has been fortified by a contentious aggregation theory used by real business cycle theorists. The replacement of that aggregation theory with one more congenial to microeconomic observations opens possibilities for an accord about the aggregate labor supply elasticity. The new aggregation theory drops features to which empirical microeconomists objected and replaces them with life-cycle choices. Whether the new aggregation theory ultimately indicates a small or large macro labor supply elasticity will depend on how shocks and government institutions interact to put workers at interior solutions for career length.
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| 8. |
- Ljungqvist, Lars, et al.
(author)
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A life-cycle model of trans-Atlantic employment experiences
- 2017
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In: Review of Economic Dynamics. - : Elsevier. - 1094-2025. ; 25, s. 320-349
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Journal article (peer-reviewed)abstract
- To understand trans-Atlantic employment experiences since World War II, we build an overlapping generations model with two types of workers (high school and college graduates) whose different skill acquisition technologies affect their career decisions. Search frictions affect short-run employment outcomes. The model focuses on labor supply responses near beginnings and ends of lives and on whether unemployment and early retirements are financed by personal savings or public benefit programs. Higher minimum wages in Europe explain why youth unemployment has risen more there than in the U.S. Turbulence, in the form of higher risks of human capital depreciation after involuntary job destructions, causes long-term unemployment in Europe, mostly among older workers, but leaves U.S. unemployment unaffected. The losses of skill interact with workers' subsequent decisions to invest in human capital in ways that generate the age-dependent increases in autocovariances of income shocks observed by Moffitt and Gottschalk (1995).
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| 9. |
- Ljungqvist, Lars, et al.
(author)
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A supply-side explanation of European unemployment
- 1996
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In: Economic Perspectives. - : Federal Reserve Bank of Chicago. ; 20:5, s. 2-15
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Journal article (other academic/artistic)abstract
- This article offers a supply-side explanation of striking patterns in unemployment rates and duration of unemployment in European countries, compared with other member countries of the OECD (Organization for Economic Cooperation and Development). The rise in long-term unemployment in Europe is attributed to the adverse incentive effects of generous welfare programs in times of economic turbulence.
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| 10. |
- Ljungqvist, Lars, et al.
(author)
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Career length : Effects of curvature of earnings profiles, earnings shocks, taxes, and social security
- 2014
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In: Review of Economic Dynamics. - : Elsevier. - 1094-2025. ; 17:1, s. 1-20
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Journal article (peer-reviewed)abstract
- The same high labor supply elasticity that characterizes a representative family model with indivisible labor and employment lotteries also emerges without lotteries when self-insuring individuals choose interior solutions for their career lengths. Off corners, the more elastic is an earnings profile to accumulated working time, the longer is a worker's career. Negative (positive) unanticipated earnings shocks reduce (increase) the career length of a worker holding positive assets, while the effects are the opposite for a worker with negative assets. By inducing a worker to retire at an official retirement age, government provided social security can attenuate responses of career lengths to earnings profile slopes, earnings shocks, and taxes. © 2013 Elsevier Inc.
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