Strong and widely accepted evidence shows that the natural rate of unemployment varies over time with substantial amplitude. The frictions in the labor market that account for positive normal levels of unemployment are not simple and mechanical. Instead, as a rich modern body of theory demonstrates, the natural rate of unemployment is an equilibrium in which the volumes of job-seeking by worker...

Recent evidence shows that the returns to labor and the skill premium both increase in developing countries after trade liberalization, despite the low skill content of their exports. The author explains this apparent puzzle by arguing that trade increases technology transfers from industrial to developing countries and that the transfer technology is biased in favor of skilled labor. The relat...

This paper presents a theoretical analysis of optimal minimum wage policy in a perfectly competitive labor market. Introducing a minimum wage is desirable if the government values redistribution toward low wage workers. This result remains true in the presence of optimal nonlinear taxes and transfers. In that context, a minimum wage effectively rations low skilled labor which is subsidized by t...

The literature about economic and social impacts of Bt cotton adoption on farm households in developing countries is growing. Yet, there is still uncertainty about wider implications of this technology for rural development, including effects for landless rural laborers. Bt-related yield advantages may lead to intensified production and higher demand for labor. Building on farm survey data coll...

This paper characterizes the optimal redistributive taxation when individuals are heterogeneous in two exogenous dimensions: their skills and their values of non-market activities. Search-matching frictions on the labor markets create unemployment. Wages, labor demand and participation are endogenous. The government only observes wage levels. Under a Maximin objective, if the elasticity of part...

China’s college admission rose from one million in 1998 to seven million in 2009, and associated with the expansion is the declining college premium for young workers. However, the college premium for senior workers increased in the same period. We show that the rising demand for skilled workers is the driving force. To explain this, we build a general equilibrium theory that considers two dime...

This paper econometrically analyzes the relationship between public spending and gendered urban employment in China for the period 1999-2009. Proponents of gender-sensitive public policies suggest that spending on healthcare and education may increase long-run growth and women’s relative employment via the expansion of paid care work (increasing labor demand) and reductions in unpaid labor (inc...

Building upon a continuous-time model of search with Nash bargaining in a stationary environment, we analyze the effect of changes in minimum wages on labor market outcomes and welfare. While minimum wage increases may or may not lead to increases in unemployment in our model, they can be welfare-improving to labor market participants on both the supply and demand sides of the labor market. We ...

Child Care Assistance: Are Subsidies or Tax Credits Better? We evaluate price subsidies and tax credits for child care. We focus on partnered women’s labor supply, household income and welfare, demand for formal and informal child care and government expenditure. Using Australian data, we estimate a joint, discrete structural model of labor supply and child care demand. We introduce two methodo...

factor demand behavior such as energy demand has an important role in the economic analysis. this issue is a major concern in the developing countries (e.g. iran) which are benefited from vast energy resources. in this paper, the third generation of factor demand models is used to analyze the behavior of capital adjustment in the iranian manufacturing industries. the dataset covers the two-digi...