Wage rigidity and job creation

Recent research in macroeconomics emphasizes the role of wage rigidity in accounting for the volatility of unemployment fluctuations. We use worker-level datafrom the CPS to measure the sensitivity of wages of newly hired workers to changesin aggregate labor market conditions. The wage of new hires, unlike the aggregatewage, is volatile and responds almost one-to-one to changes in labor productivity.We conclude that there is little evidence for wage stickiness in the data. We alsoshow, however, that a little wage rigidity goes a long way in amplifying the responseof job creation to productivity shocks.

Combined audit report on the institutions under the control of the Iowa Department of Human Services including findings and recommendations and average cost per resident/patient information for the five years ended June 30, 2006

Combined audit report on the institutions under the control of the Iowa Department of Human Services including findings and recommendations and average cost per resident/patient information for the five years ended June 30, 2006

The political cost of reforms

This paper formalizes in a fully-rational model the popular idea that politiciansperceive an electoral cost in adopting costly reforms with future benefits and reconciles it with the evidence that reformist governments are not punished by voters.To do so, it proposes a model of elections where political ability is ex-ante unknownand investment in reforms is unobservable. On the one hand, elections improve accountability and allow to keep well-performing incumbents. On the other, politiciansmake too little reforms in an attempt to signal high ability and increase their reappointment probability. Although in a rational expectation equilibrium voters cannotbe fooled and hence reelection does not depend on reforms, the strategy of underinvesting in reforms is nonetheless sustained by out-of-equilibrium beliefs. Contrary tothe conventional wisdom, uncertainty makes reforms more politically viable and may,under some conditions, increase social welfare. The model is then used to study howpolitical rewards can be set so as to maximize social welfare and the desirability of imposing a one-term limit to governments. The predictions of this theory are consistentwith a number of empirical regularities on the determinants of reforms and reelection.They are also consistent with a new stylized fact documented in this paper: economicuncertainty is associated to more reforms in a panel of 20 OECD countries.

The return of the wage Phillips curve

The standard New Keynesian model with staggered wage settingis shown to imply a simple dynamic relation between wage inflationand unemployment. Under some assumptions, that relation takes aform similar to that found in empirical wage equations-starting fromPhillips' (1958) original work-and may thus be viewed as providingsome theoretical foundations to the latter. The structural wage equation derived here is shown to account reasonably well for the comovement of wage inflation and the unemployment rate in the U.S. economy, even under the strong assumption of a constant natural rate ofunemployment.

Metabolic cost of growth in very low-birth-weight infants.

Forty-eight measurements of energy expenditure were performed in 15 very low-birth-weight infants during the first 6 wk of life. Their mean birth weight and gestation age was 1223 g and 31 wk respectively. Their mean weight gain was 11.2 g/kg . d (range: -6.6 to +15.9 g/kg . d.). The mean energy expenditure increased from 170 kJ/kg . d (wk 1) to 252 kJ/kg . d (wk 6). There was a significant relationship between weight gain and energy expenditure (r = 0.58, P less than 0.001) and also between the net increase in body weight gain and the net increase in energy expenditure (r = 0.80, P less than 0.001). From the slopes of these regression lines, the metabolic cost of growth was found to be approximately 2.3 kJ/g of weight gain. Carbohydrate oxidation represented 80% of energy expenditure at the second wk and decreased to 65% the 6th wk, whereas lipid oxidation during the same period increased from 14 to 30% and the relative protein oxidation remained unchanged, covering 5-6% of the energy expended.

Wage determination in the Spanish industry

In this paper we estimate wage equations for the Spanish industryusing time series data on 85 industrial sectors, which allows us todistinguish between aggregate and sector specific effects in wagedetermination. Industry wages respond mainly to economy wide labourmarket conditions and to a much lesser extent to sector specificproductivity gains. The size of the insider effect has not remainedstable through the sample period. The estimated equations show a strongtransitory effect of unemployment on wages, which is in accordancewith the non--stationarity of the Spanish unemployment rate. Thishysteresis effect seems well accounted for by the sharp rise in theproportion of long term unemployment.

Compensating wage differentials and voluntary job changes: Evidence from West Germany

Does the labor market place wage premia on jobs that involve physical strain,job, insecurity or bad regulation of hours? This paper derives bounds on themonetary returns to these job disamenities in the West German labor market.We show that in a market with dispersion in both job characteristics andwages, the average wage change of workers who switch jobs voluntarily and optfor consuming more (less) disamenities,provides an upper (lower) bound on themarket return to the disamenity. Using longitudinal information from workersin the German Socio Economic Panel, we estimate an upper bound of 5% and alower bound of 3.5% for the market return to work strain in a job.

Can we afford to add chemotherapy to radiotherapy for glioblastoma multiforme? Cost-identification analysis of concomitant and adjuvant treatment with temozolomide until patient death.

BACKGROUND: Adding temozolomide (TMZ) to standard radiotherapy as a first-line therapy for glioma may increase costs to a disproportionate degree compared with the resulting survival benefits. METHODS: Forty-six consecutive patients (28 males and 18 females; median age, 52 years; age range, 24-70 years) received concomitant TMZ with radiotherapy for 6 weeks followed by adjuvant TMZ for 6 cycles, and they were followed until disease recurrence and then until death. The authors assessed the costs associated with the four phases of treatment from a hospital-centered perspective. RESULTS: Treatment was discontinued early in 3 patients, 9 patients, and 15 patients during concomitant TMZ, before adjuvant TMZ, and during adjuvant TMZ, respectively. Karnofsky index values varied between 85% (at the beginning of treatment) and 76% (at the end of treatment). The nature of care after disease recurrence was diverse. Overall survival ranged from 1.4 months to 64.3 months (median, 15.8 months) and was better if surgical debulking could be carried out before treatment. Global costs amounted to Euros 39,092 +/- Euros 21,948 (concomitant TMZ, Euros 14,539 +/- Euros 4998; adjuvant TMZ, Euros 13,651 +/- Euros 4320; follow-up, Euros 6363 +/- Euros 6917; and recurrence, Euros 12,344 +/- Euros 18,327), with 53% of these costs being related to the acquisition of TMZ; this represented an eightfold increase in cost compared with radiotherapy alone. CONCLUSIONS: TMZ may be an effective but costly adjuvant outpatient therapy for patients with glioblastoma multiforme. Definite cost-effectiveness/utility must be assessed in a randomized Phase III trial.

Caution, children crossing: Heterogeneity of victim's cost of care and negligence rule

The paper deals with a bilateral accident situation in which victims haveheterogeneous costs of care. With perfect information,efficient care bythe injurer raises with the victim's cost. When the injurer cannot observeat all the victim's type, and this fact can be verified by Courts, first-bestcannot be implemented with the use of a negligence rule based on thefirst-best levels of care. Second-best leads the injurer to intermediate care,and the two types of victims to choose the best response to it. This second-bestsolution can be easily implemented by a negligence rule with second-best as duecare. We explore imperfect observation of the victim's type, characterizing theoptimal solution and examining the different legal alternatives when Courts cannotverify the injurers' statements. Counterintuitively, we show that there is nodifference at all between the use by Courts of a rule of complete trust and arule of complete distrust towards the injurers' statements. We then relate thefindings of the model to existing rules and doctrines in Common Law and Civil Lawlegal systems.

Cost system design and cost management in the Spanish public sector

Cost systems have been shown to have developed considerably in recent years andactivity-based costing (ABC) has been shown to be a contribution to cost management,particularly in service businesses. The public sector is composed to a very great extentof service functions, yet considerably less has been reported of the use of ABC tosupport cost management in this sector.In Spain, cost systems are essential for city councils as they are obliged to calculate thecost of the services subject to taxation (eg. waste collection, etc). City councils musthave a cost system in place to calculate the cost of services, as they are legally requirednot to profit , from these services.This paper examines the development of systems to support cost management in theSpanish Public Sector. Through semi-structured interviews with 28 subjects within oneCity Council it contains a case study of cost management. The paper contains extractsfrom interviews and a number of factors are identified which contribute to thesuccessful development of the cost management system.Following the case study a number of other City Councils were identified where activity-based techniques had either failed or stalled. Based on the factors identified inthe single case study a further enquiry is reported. The paper includes a summary usingstatistical analysis which draws attention to change management, funding and politicalincentives as factors which had an influence on system success or failure.

Globalization and wage inequality in South and East Asia, and Latin America: A gender approach

In this paper we analyse the reasons behind the evolution of the gender gap and wage inequality in South and East Asian and Latin American countries. Health human capital improvements, the exposure to free market openness and equal treatment enforcement laws seem to be the main exogenous variables affecting women s economic condition. During the second globalization era (in the years 1975-2000) different combinations of these variables in South East Asian and Latin American countries have had as a result the diminution of the gender gap. The main exception to this rule according to our data is China where economic reforms have been simultaneous to the increase of gender differences and inequality between men and women.This result has further normative consequences for the measure of economic inequality. Theimprovement of women s condition has as a result the diminution of the dispersion of wages.Therefore in most of the countries analysed the consequence of the diminution of the gender gapduring the second global era is the decrease of wage inequality both measured with Gini and Theil indexes.

Real wage rigidities and the new Keynesian model

Most central banks perceive a trade-off between stabilizing inflation and stabilizing the gap between output and desired output. However, the standard new Keynesian framework implies no such trade-off. In that framework, stabilizing inflation is equivalent to stabilizing the welfare-relevant output gap. In this paper, we argue that this property of the new Keynesian framework, which we call the divine coincidence, is due to a special feature of the model: the absence of non trivial real imperfections.We focus on one such real imperfection, namely, real wage rigidities. When the baseline new Keynesian model is extended to allow for real wage rigidities, the divine coincidence disappears, and central banks indeed face a trade-off between stabilizing inflation and stabilizing the welfare-relevant output gap. We show that not only does the extended model have more realistic normative implications, but it also has appealing positive properties. In particular, it provides a natural interpretation for the dynamic inflation-unemployment relation found in the data.