We analyze the impact of contract enforcement problems on the emergence of (involuntary) unemployment. In an experimental labor market where the trading parties can form long-term relationships, we compare a work environment where contracts are implicit in the sense that effort is observable, but not verifiable to a situation where contracts are “complete” and effort is enforced exogenously. In...

*Bureau of Employment Security, Program Division. 1 Issues in Social Security, a report to the House Committee on Ways and Means by the Committee's Social Security Technical Staff (79th Cong., 1st sess.), 1946, p. 388. O N E FEATURE of the Sta te unemployment insurance laws in this country about which there has been very little disagreement is the principle of r e lating weekly benefits to pas ...

An increase in unemployment compensation is commonly argued to raise unemployment in a shirking model of efficiency wages. This prediction is based on the assumption of a uniform benefit level. However, 32q13if differential benefits for shirkers and non-shirkers exist, higher unemployment compensation for non-shirkers will reduce unemployment. In the long-run, this effect is amplified. Therefor...

We present a picture of the labor market, one with large flows of jobs and workers, and matching. We develop a consistent approach to the interaction among those flows and the stocks of unemployed workers and vacant jobs, and to the determination of wages. We estimate the matching function, using both aggregate data and data from manufacturing and find evidence of a stable matching process in t...

The Longitudinal Database of Quarterly Census of Employment and Wages (QCEW) links quarterly reports of employment and total wages of all nonfarm establishments covered by State Unemployment Insurance. QCEW uses two types of linkage: deterministic and probabilistic. Deterministic linkage is performed by SESA IDs – a combination of state FIPS code, Unemployment Insurance Number, and Reported Uni...

Real and Nominal Wage Rigidity in a Model of Equal-Treatment Contracting Following insights by Bewley (1999a), this paper analyses a model with downward rigidities in which firms cannot pay discriminate based on a year of entry to a firm, and develops an equilibrium model of wages and unemployment. We solve for the dynamics of wages and unemployment under conditions of downward wage rigidity, w...

Since 2010, and in line with austerity measures, public employment public-sector compensations to employees have been significantly reduced most Euro Area member states particularly Spain Greece. At the same time, unemployment these two economies was greatly increasing. In a dynamic stochastic general equilibrium (DSGE) model, we demonstrate that cuts wages are more damaging terms of output los...