This paper examines the importance of workers’ outside options in the wage determination. In a model of search and bargaining, holding the marginal product constant, a worker’s wage is determined by a weighted average of the wages in alternate jobs, turning the wage formation into a social interaction problem. I develop a search and bargaining model with heterogeneous workers and propose novel ...

The economic reality of the 1990s in Europe forced the labour markets to become more flexible. Using a consistent comparative dataset for 14 European countries, the European Community Household Panel (ECHP), we explore the evolution and the cross-national differences in earnings mobility across Europe between 1994 and 2001 from three angles: first, the evolution of short-term inequality and its...

Wage Inequality and Job Insecurity among Permanent and Contract Workers in India: Evidence from Organized Manufacturing Industries Since the early 1990s, the employment structure of organised manufacturing industries in India has undergone substantial changes with the steep rise in the use of contract workers in place of permanent workers. This process has led to increased wage inequality, disc...

IZA DP No. 11178 NOVEMBER 2017 Sorting out Neighbourhood Effects Using Sibling Data Previous research has reported evidence of intergenerational transmission of both neighbourhood status and social and economic outcomes later in life; parents influence where their children live as adults and how well they do later in life in terms of their income. However, interactions between the individual, t...

Social Mixing as a Cure for Negative Neighbourhood Effects: Evidence Based Policy or Urban Myth? In this paper, we review the evidence base for social mixing in neighbourhoods, which is used as a strategy to tackle assumed negative neighbourhood effects. We discuss in detail the theoretical links between neighbourhood characteristics, and outcomes of individuals living in concentrations of pove...

This paper presents a model of the labor market in which unemployed workers are uncertain about their relative ability to find a job. Unsuccessful search induces individuals to revise their beliefs downwards. Once self-confidence is sufficiently low, workers become discouraged and give up on search. This non-stationarity gives rise to structural flows from unemployment to non-participation in e...

Have Employment Relationships in the United States Become Less Stable? There has been considerable debate as to whether job stability has declined in the United States. This paper uses data from the Survey of Income and Program Participation (SIPP) to examine the incidence of labor market turnover between 1986 and 1993. Specifically, we calculate oneand two-year separation rates and then analyz...

APrIl 2017 IZA DP No. 10694 Incorporating Neighbourhood Choice in a Model of Neighbourhood Effects on Income Studies of neighbourhood effects often attempt to identify causal effects of neighbourhood characteristics on individual outcomes, such as income, education, employment, and health. However, selection looms large in this line of research and it has been repeatedly argued that estimates o...