Pareto-improving optimal capital and labor taxes

We show a standard model where the optimal tax reform is to cut labor taxes and leave capital taxes very high in the short and medium run. Only in the very long run would capital taxes be zero. Our model is a version of Chamley??s, with heterogeneous agents, without lump sum transfers, an upper bound on capital taxes, and a focus on Pareto improving plans. For our calibration labor taxes should be low for the first ten to twenty years, while capital taxes should be at their maximum. This policy ensures that all agents benefit from the tax reform and that capital grows quickly after when the reform begins. Therefore, the long run optimal tax mix is the opposite from the short and medium run tax mix. The initial labor tax cut is financed by deficits that lead to a positive long run level of government debt, reversing the standard prediction that government accumulates savings in models with optimal capital taxes. If labor supply is somewhat elastic benefits from tax reform are high and they can be shifted entirely to capitalists or workers by varying the length of the transition. With inelastic labor supply there is an increasing part of the equilibrium frontier, this means that the scope for benefitting the workers is limited and the total benefits from reforming taxes are much lower.

The Timing of labor demand

We examine the timing of firms' operations in a formal model of labor demand. Merging a variety of data sets from Portugal from 1995-2004, we describe temporal patterns of firms' demand for labor and estimate production-functions and relative labor-demand equations. The results demonstrate the existence of substitution of employment across times of the day/week and show that legislated penalties for work at irregular hours induce firms to alter their operating schedules. The results suggest a role for such penalties in an unregulated labor market, such as the United States, in which unusually large fractions of work are performed at night and on weekends.

A General model of bilateral migration agreements

Unilateral migration policies impose externalities on other countries. In order to try to internalize these externalities, countries sign bilateral migration agreements. One element of these agreements is the emphasis on enforcing migration policies: immigrant-receiving countries agree to allow more immigrants from their emigrant-sending partner if they cooperate in enforcing their migration policy at the border. I present a simple theoretical model that justifies this behavior in a two-country setting with welfare maximizing governments. These governments establish migration quotas that need to be enforced at a cost. I prove that uncoordinated migration policies are inefficient. Both countries can improve welfare by exchanging a more "generous" migration quota for expenditure on enforcement policy. Contrary to what could be expected, this result does not depend on the enforcement technology that both countries employ.

The Macroeconomics of the labor market: three fundamental views

We distinguish and assess three fundamental views of the labor market regarding the movements in unempoyment: (i) the frictionless equilibrium view; (ii) the chain reaction theory, or prolonged adjustment view; and (iii) the hysteresis view. While the frictionless view implies a clear compartmentalization between the short- and long-run, the hysteresis view implies that all the short-run fluctuations automatically turn into long-run changes in the unemployment rate. We assert the problems faced by these conceptions in explaining the diversity of labor market experiences across the OECD labor markets. We argue that the prolonged adjustment view can overcome these problems since it implies that the short, medium, and long runs are interrelated, merging with one another along an intertemporal continuum.

Comparing the early research performance of PhD graduates in labor economics in Europe and the USA

This paper analyzes the early research performance of PhD graduates in labor economics, addressing the following questions: Are there major productivity differences between graduates from American and European institutions? If so, how relevant is the quality of the training received (i.e. ranking of institution and supervisor) and the research environment in the subsequent job placement institution? The population under study consists of labor economics PhD graduates who received their degree in the years 2000 to 2005 in Europe or the USA. Research productivity is evaluated alternatively as the number of publications or the quality-adjusted number of publications of an individual. When restricting the analysis to the number of publications, results suggest a higher productivity by graduates from European universities than from USA universities, but this difference vanishes when accounting for the quality of the publication. The results also indicate that graduates placed at American institutions, in particular top ones, are likely to publish more quality-adjusted articles than their European counterparts. This may be because, when hired, they already have several good acceptances or because of more focused research efforts and clearer career incentives.

Service offshoring and the skill composition of labor demand

This paper studies the effects of service offshoring on the skill composition of labor demand, using novel comparable data for nine Western European countries between 1990 and 2004. The empirical analysis delivers three main results. First, service offshoring is skill-biased, because it increases the demand for high and medium skilled labor and decreases the demand for low skilled labor. Second, the effects of service offshoring are similar to those of material offshoring, both qualitatively and quantitatively. Third, the economic magnitude of these effects is not large.

Oil price shocks and labor market fluctuations

We examine the impact of real oil price shocks on labor market flows in the U.S. We first use smooth transition regression (STR) models to investigate to what extent oil prices can be considered as a driving force of labor market fluctuations. Then we develop and calibrate a modified version of Pissarides' (2000) model with energy costs, which we simulate in response to shocks mimicking the behavior of the actual oil price shocks. We find that (i) these shocks are an important driving force of job market flows; (ii) the job finding probability is the main transmission mechanism of such shocks; and (iii) they bring a new amplification mechanism for the volatility and should thus be seen as complementary of labor productivity shocks. Overall we conclude that shocks in oil prices cannot be neglected in explaining cyclical labor adjustments in the U.S.

Immigrants'assimilation process in a segmented labor market

While much of the literature on immigrants' assimilation has focused on countries with a large tradition of receiving immigrants and with flexible labor markets, very little is known on how immigrants adjust to other types of host economies. With its severe dual labor market, and an unprecedented immigration boom, Spain presents a quite unique experience to analyze immigrations' assimilation process. Using data from the 2000 to 2008 Labor Force Survey, we find that immigrants are more occupationally mobile than natives, and that much of this greater flexibility is explained by immigrants' assimilation process soon after arrival. However, we find little evidence of convergence, especially among women and high skilled immigrants. This suggests that instead of integrating, immigrants occupationally segregate, providing evidence consistent with both imperfect substitutability and immigrants' human capital being under-valued. Additional evidence on the assimilation of earnings and the incidence of permanent employment by different skill levels also supports the hypothesis of segmented labor markets.

The Part-time pay penalty in a segmented labor market

This paper is the first to examine the implications of switching to PT work for women's subsequent earnings trajectories, distinguishing by their type of contract: permanent or fixedterm. Using a rich longitudinal Spanish data set from Social Security records of over 76,000 prime-aged women strongly attached to the Spanish labor market, we find that PT work aggravates the segmentation of the labor market insofar there is a PT pay penalty and this penalty is larger and more persistent in the case of women with fixed-term contracts. The paper discusses problems arising in empirical estimation (including a problem not discussed in the literature up to now: the differential measurement error of the LHS variable by PT status), and how to address them. It concludes with policy implications relevant for Continental Europe and its dual structure of employment protection.

Divergent Reactions to Globalization: Labor Unions and the Nafta and the EU Enlargement Process

The 1990s witnessed the launching of two ambitious trade regionalization plans, the Nafta and EU enlargement to Central and Eastern Europe. In contrast to previous projects for the creation or expansion of regional trade blocs, these two projects concerned states at dramatically different levels of economic development: The Nafta involved the very wealthy economies of Canada and the USA and the significantly poorer economy of Mexico, whereas EU enlargement involved the very wealthy economy of the 15 member-state European Union and the significantly poorer economies of former Communist states in Central and Eastern Europe. Ultimately, the Nafta and EU enlargement are responses to the challenges of globalization. Paradoxically, however, they have been met with radically different societal reactions in the wealthy partners that participated in the launching of these processes. This paper focuses on the reaction by labor unions on both sides of the Atlantic. I conclude that while labor relations and welfare institutions constrained the trade policy choices made by labor unions in the United States and Europe, they do not tell the whole story. It would seem that United States labor unions were more sensitive to the potential risks for workers associated to the liberalization of trade than were their European counterparts.

Bringing actors and violent conflict into forced migration literature. A model of the decision to return

Populations displaced as a result of mass violent conflict have become one of the most pressing humanitarian concerns of the last decades. They have also become one salient political issue as a perceived burden (in economic and security terms) and as an important piece in the shift towards a more interventionist paradigm in the international system, based on both humanitarian and security grounds. The saliency of these aspects has detracted attention from the analysis of the interactions between relocation processes and violent conflict. Violent conflict studies have also largely ignored those interactions as a result of the consideration of these processes as mere reaction movements determined by structural conditions. This article takes the view that individual’s agency is retained during such processes, and that it is consequential, calling for the need to introduce a micro perspective. Based on this, a model for the individual’s decision of return is presented. The model has the potential to account for the dynamics of return at both the individual and the aggregate level. And it further helps to grasp fundamental interconnections with violent conflict. Some relevant conclusions are derived for the case of Bosnia-Herzegovina and about the implications of the politicization of return.

Voces del pasado, ecos del presente. la Red de Trabajo Contra la Violencia Sobre las Mujeres en Tiempos de Guerra y su labor en la sociedad japonesa

Gracias al trabajo de las redes transnacionales de defensa los marcos legales internacionales se han adaptado a las nuevas dimensiones que han alcanzado los conflictos armados en los últimos veinte años. Esta investigación estudia el papel de la Violence Against Women in War Network, Japan y del Women's Active Museum on War and Peace, como ejemplos de cómo los actores no gubernamentales pueden sensibilizar y transformar las normas nacionales e internacionales, el comportamiento de los Estados, los organismos supraestatales y a la sociedad en la que desarrollan su labor

Optimal coexistence of long-term and short-term contracts in labor Markets

We consider a market where firms hire workers to run their projects and such projects differ in profitability. At any period, each firm needs two workers to successfully run its project: a junior agent, with no specific skills, and a senior worker, whose effort is not verifiable. Senior workers differ in ability and their competence is revealed after they have worked as juniors in the market. We study the length of the contractual relationships between firms and workers in an environment where the matching between firms and workers is the result of market interaction. We show that, despite in a one-firm-one-worker set-up long-term contracts are the optimal choice for firms, market forces often induce firms to use short-term contracts. Unless the market only consists of firms with very profitable projects, firms operating highly profitable projects offer short-term contracts to ensure the service of high-ability workers and those with less lucrative projects also use short-term contracts to save on the junior workers' wage. Intermediate firms may (or may not) hire workers through long-term contracts.

Deciding where to belong: gender differences in educational trajectories and migration in a rural Spanish town

From an anthropological perspective, formal post-secondary schooling is not an abstractentity with an intrinsic value that everyone finds desirable, but rather one alternative among many that young people evaluate from their different positions in the social field. The problem discussed in this paper is the diverging life trajectories that young men and women in a concrete rural context, at the end of the 20th century, shape for themselves at the ages of 14-16, a moment of decision created by national legislation regarding mandatory education (LGE, 1970, General Education Law, and LOGSE, 1990, General Organic Law of the Education System). Despite a strong cultural norm of equal inheritance divided among all children, male and female, and despite the equal educational opportunities provided by the Spanish State, different meanings of possession and use-rights over land and the resulting culturally accepted gendered division of work converge to orient men and women differently towards post-secondary schooling. Observation of the age, gender, and civil status structure of the population led to the preliminary query: Why do men and women, in this town, behave differently with respect to migration and marriage? The main hypothesis was that women’s longer school trajectories and resulting migration and men’s anchoring in the town and their higher rates of celibacy were not drastic changes in values, in the positional-relational sense of Bourdieu (1988, 2002), but the current outcome of previously existing dissimilar relations to property that produce dissimilar mobility. Through their schooling and work choices, young men and women, at very early ages, locate themselves in, or decide to belong to, different contexts that later reveal very different possibilities of finding marriage partners. This paper is based on an ethnographic study of a small rural town (302 inhabitants in 1950; 193 in 2000) near Leon. Although this paper deals with the situation in the final decades of the 20th century, we must also consider the first half of the century, where some elements that shape this situation have their roots. Fieldwork was carried out between 1988 and 2001, in periods of differing length and intensity. The social subjects discussed here are the domestic unit and its component members. They were studied in conjunction, analyzing the life-trajectory decisions of specific persons in the framework of the domestic unit and the relations among people and property which comprise it. The tried-and-true methods of ethnographic research –participant observation, interviews, and life-histories, etc.- were employed. Archival research was also important for producing demographic data. Demographic analysis, the analysis of the composition and transformation of domestic units, and the creation of life trajectories were among the principal techniques used. The theoretical analysis was oriented by Bourdieu’s (2002) framework of the social field, habitus, and difference.

Factor shares, the price markup, and the elasticity of substitution between capital and labor.

In a Walrasian labor market, the labor income share is constant under the assumptions of a Cobb-Douglas production function and perfect competition. Given the observed decline of the labor share in recent decades, this paper relaxes these assumptions, proposes a time-series calculation of the aggregate price mark-up reflecting the degree of imperfect competition in the product market, and provides estimates of the elasticity of substitution under such product market imperfections. We focus on Spain and the U.S. and show that the elasticity of substitution is above one in Spain and below one in the U.S. We also show that the price markup drives the elasticity of substitution away from one, upwards in Spain, downwards in the U.S. These results are used to explain the declining path of the labor income share, common to both economies, and their contrasted patterns in terms of capital deepening.