Publication selection bias represents one of the most serious challenges to the integrity of empirical economics. We develop Heckman regression methods to solve this potentially persistent problem and apply these meta-regression methods to seventy five empirical estimates from the efficiency-wage literature. Although many researchers find mixed or ambiguous support for the efficiency wage hypot...

We consider a frictional labor market in which firms want to insure their senior employees against income fluctuations and, at the same time, want to recruit new employees to fill their vacant positions. Firms can commit to a wage schedule, i.e. a schedule that specifies the wage paid by the firm to its employees as function of their tenure and other observables. However, firms cannot commit to...

Labor Market Institutions, Wages, and Investment Labor market institutions, via their effect on the wage structure, affect the investment decisions of firms in labor markets with frictions. This observation helps explain rising wage inequality in the US, but a relatively stable wage structure in Europe in the 1980s. These different trends are the result of different investment decisions by firm...

How Do Layoff Costs Affect Employment? General equilibrium analyses of layoff costs have had mixed messages on the implications for employment. This paper brings out the economic forces at work and explains the disparate results. Specifically, we show that positive employment effects of layoff costs come through reducing labor reallocation, whereas negative effects come through reducing the pri...

The divergences developed within the euro area represent the main threat to the existence of the single currency and to the stability of the EU as a whole. Without proper automatic stabilisers, a monetary union can only deliver suboptimal results and may not even be sustainable. In the recent years, common unemployment insurance has been examined as one of the possible ways to improve the funct...

This paper explains the narrowing of gender gaps in wages and market hours in recent decades by the growth of the service economy. We propose a model with three sectors: goods, services and home production. Women have a comparative advantage in the production of services in the market and at home. The growth of the services sector, in turn driven by structural transformation and marketization o...

Why Does Unemployment Hurt the Employed? Evidence from the Life Satisfaction Gap between the Public and Private Sectors Simon Luechinger, Stephan Meier, and Alois Stutzer Abstract: High rates of unemployment entail substantial costs to the working population in terms of reduced subjective well‐being. This paper studies the importance of individual economic security, in particular, job securit...

Usually housing is viewed in the context of consumption resulting from other economic drivers such as income and employment. Here, we study how two key local economic measures, the gross metropolitan product (GMP) and unemployment rate, respond to shocks in home value appreciation, home sales, and new construction, respectively. Our analysis relies upon a large panel of 158 metropolitan statist...