Wage hikes affect production costs and hence are usually analysed as supply shocks. There is, however, a long-standing debate about demand effects of wage variations. In this paper, we bring together these two arguments in a Kaldorian model with group specific saving rates and a production technology that allows for redistribution between workers and entrepreneurs following a wage hike. We ther...

The focus of this paper is on the implications of income uncertainty for the optimal labor supply. The meaningful distinction between Knightian uncertainty, which is often attributed to Frank Knight (1921), and risk is allowed. Agents are both uncertainty averse and risk averse. The labor-leisure and the labor-leisure-saving choices are studied under Knightian uncertainty in one-period and two-...

Creating Jobs Through Public Subsidies: An Empirical Analysis This paper analyses the impact of government grants on labour demand using plant level data for manufacturing industry in Ireland. Our data consists of a large sample of plants and their complete grant history. We provide evidence that additional employment is created over and above the level that would have prevailed in the absence ...

High rates of self-employment among ethnic minorities in England and Wales are investigated using a framework in which the self-employment decision is influenced by ethnic-specific attributes as well as sectoral earnings differentials. As expected, differences in an individual’s predicted earnings in paid and self-employment are strongly correlated with self-employment decisions. Individuals wi...

Stature and Life-Time Labor Market Outcomes: Accounting for Unobserved Differences We use twin data matched to register-based individual information on earnings and employment to examine the effect of height on life-time labor market outcomes. The use of twin data allows us to remove otherwise unobserved ability and other differences. The twin pair difference estimates from instrumental variabl...

Firms and Early Retirement: Offers That One Does Not Refuse According to the Hutchens (1999) model, early retirement is not explained as a result of maximizing expected individual utility but rather as a demand-side phenomenon arising from a firm’s profit-maximizing behaviour. Firms enter into contracts with their employees that include clauses about early retirement. In response to demand or t...

This paper modelles job search mechanism at individual level by a determinstic-stochastic approach in a economy with perfect competion and rational agents. Each single unit, firm or worker, is analyzed over time; aggregate dynamics comes directly from the micro-structure of the economy. We show that the unemployment as well as vacancy rate converge in the long run to an ergodic distribution who...

Using an administrative data set containing daily information on individual workers’ employment histories, we investigate how workers’ labour market transitions are affected by international outsourcing. In order to do so, we estimate hazard rate models for match separations, as well as for worker flows from employment to another job, to unemployment, and to nonparticipation. Outsourcing is fou...

Structural Labor Market Changes in France France posted remarkable gains in employment in the second half of the 1990s, suggesting that, beyond cyclical factors, structural unemployment may have changed in the period. We provide a novel methodology to separate structural from cyclical labor market changes and apply it to French household level data from 1990 to 2000. We show that the equilibriu...

Employment Dynamics and the Structure of Labor Adjustment Costs In this paper we document the patterns of employment adjustment at the micro-level. We find clear evidence of lumpy adjustment consistent with the presence of non-convexities in the adjustment technology inaction is pervasive, action spells are short-lived, extreme adjustment episodes occur and are responsible for a non-trivial sha...