Consumption Expenditures in Economic Impact Studies: An Application to University Students

This paper examines how appropriately to attribute economic impact to consumption expenditures. Consumption expenditures are often treated as either wholly endogenous or wholly exogenous, following a distinction from Input-Output analysis. For many applications, such as those focusing on the impacts of tourism or benefits systems, such binomial assumptions are not satisfactory. We argue that consumption is neither wholly endogenous nor wholly exogenous but that the degree of this distinction is rather an empirical matter. We set out a general model for the treatment of consumption expenditures and illustrate its application through the case of university students. We examine individual student groups and how the impacts of students at particular institutions. Furthermore we take into account the binding budget constraint of public expenditures (as is the case for devolved regions in the UK)and examine how this affects the impact attributed to students' consumption expenditures.

Patient and physician gender concordance in preventive care in university primary care settings.

OBJECTIVE: To assess the quality of preventive care according to physician and patient gender in a country with universal health care coverage. METHODS: We assessed a retrospective cohort study of 1001 randomly selected patients aged 50-80years followed over 2years (2005-2006) in 4 Swiss university primary care settings (Basel, Geneva, Lausanne, Zürich). We used indicators derived from RAND's Quality Assessment Tools and examined percentages of recommended preventive care. Results were adjusted using hierarchical multivariate logistic regression models. RESULTS: 1001 patients (44% women) were followed by 189 physicians (52% women). Female patients received less preventive care than male patients (65.2% vs. 72.1%, p<0.001). Female physicians provided significantly more preventive care than male physicians (p=0.01) to both female (66.7% vs. 63.6%) and male patients (73.4% vs. 70.7%). After multivariate adjustment, differences according to physician (p=0.02) and patient gender (p<0.001) remained statistically significant. Female physicians provided more recommended cancer screening than male physicians (78.4 vs. 71.9%, p=0.01). CONCLUSIONS: In Swiss university primary care settings, female patients receive less preventive care than male patients, with female physicians providing more preventive care than male physicians. Greater attention should be paid to female patients in preventive care and to why female physicians tend to provide better preventive care.

Matching and Sorting in a Global Economy

We develop a neoclassical trade model with heterogeneous factors of production. We consider a world with two factors, labor and .managers., each with a distribution of ability levels. Production combines a manager of some type with a group of workers. The output of a unit depends on the types of the two factors, with complementarity between them, while exhibiting diminishing returns to the number of workers. We examine the sorting of factors to sectors and the matching of factors within sectors, and we use the model to study the determinants of the trade pattern and the effects of trade on the wage and salary distributions. Finally, we extend the model to include search frictions and consider the distribution of employment rates.

Unemployment Risk and Wage Differentials

Workers in less secure jobs are often paid less than identical-looking workers in more secure jobs. We show that this lack of compensating differentials for unemployment risk can arise in equilibrium when all workers are identical and firms differ only in job security (i.e. the probability that the worker is not sent into unemployment). In a setting where workers search for new positions both on and off the job, the worker's marginal willingness to pay for job security is endogenous: it depends on the behavior of all firms in the labor market and increases with the rent the employing firm leaves to the worker. We solve for the labor market equilibrium, finding that wages increase with job security for at least all firms in the risky tail of the distribution of firm-level unemployment risk. Meanwhile, unemployment becomes persistent for low-wage and unemployed workers, a seeming pattern of 'unemployment scarring' created entirely by firm heterogeneity. Higher in the wage distribution, workers can take wage cuts to move to more stable employment.

The Spillover Effects of Monitoring: A Field Experiment.

We provide field experimental evidence of the effects of monitoring in a context where productivity is multi-dimensional and only one dimension is monitored and incentivised. We hire students to do a job for us. The job consists of identifying euro coins. We study the effects of monitoring and penalising mistakes on work quality, and evaluate spillovers on non- incentivised dimensions of productivity (punctuality and theft). We .nd that monitoring improves work quality only if incentives are large, but reduces punctuality substantially irrespectively of the size of incentives. Monitoring does not affect theft, with ten per cent of participants stealing overall. Our setting also allows us to disentangle between possible theoretical mechanisms driving the adverse effects of monitoring. Our .ndings are supportive of a reciprocity mechanism, whereby workers retaliate for being distrusted.

Overtime Working and Contract Efficiency

We present a wage-hours contract designed to minimize costly turnover given investments in specific training combined with firm and worker information asymmetries. It may be optimal for the parties to work ‘long hours’ remunerated at premium rates for guaranteed overtime hours. Based on British plant and machine operatives, we test three predictions. First, trained workers with longer tenure are more likely to work overtime. Second, hourly overtime pay exceeds the value of marginal product while the basic hourly wage is less than the value of marginal product. Third, the basic hourly wage is negatively related to the overtime premium.

Unemployment Risk and Wage Differentials

Workers in less-secure jobs are often paid less than identical-looking workers in more secure jobs. We show that this lack of compensating differentials for unemployment risk can arise in equilibrium when all workers are identical and firms differ only in job security (i.e. the probability that the worker is not sent into unemployment). In a setting where workers search for new positions both on and off the job, the worker’s marginal willingness to pay for job security is endogenous, increasing with the rent received by a worker in his job, and depending on the behavior of all firms in the labor market. We solve for the labor market equilibrium and find that wages increase with job security for at least all firms in the risky tail of the distribution of firm-level unemployment risk. Unemployment becomes persistent for low-wage and unemployed workers, a seeming pattern of ‘unemployment scarring’ created entirely by firm heterogeneity. Higher in the wage distribution, workers can take wage cuts to move to more stable employment.

Unemployment and Endogenous Reallocation over the Business Cycle

This paper studies unemployed workers’ decisions to change occupations, and their impact on fluctuations in aggregate unemployment and its underlying duration distribution. We develop an analytically and computationally tractable stochastic equilibrium model with heterogenous labor markets. In this model three different types of unemployment arise: search, rest and reallocation unemployment. We document new evidence on unemployed workers’ gross occupational mobility and use it to calibrate the model. We show that rest unemployment is the main driver of unemployment fluctuations over the business cycle and causes cyclical unemployment to be highly volatile. The resulting unemployment duration distribution generated by the model responds realistically to the business cycle, creating substantial longer-term unemployment in downturns. Finally, rest unemployment also makes our model simultaneously consistent with procyclical occupational mobility of the unemployed, countercyclical job separations into unemployment and a negatively-sloped Beveridge curve.

The Extent and Cyclicality of Career Changes: Evidence for the UK

Using quarterly data for the U.K. from 1993 through 2012, we document that in economic downturns a smaller fraction of unemployed workers change their career when starting a new job. Moreover, the proportion of total hires that involves a career change for the worker also drops in recessions. Together with a simultaneous drop in overall turnover, this implies that the number of career changes declines during recessions. These results indicate that recessions are times of subdued reallocation rather than of accelerated and involuntary structural transformation. We back this interpretation up with evidence on who changes careers, which industries and occupations they come from and go to, and at which wage gains.

Directed Search over the Life Cycle

We develop a life-cycle model of the labor market in which different worker-firm matches have different quality and the assignment of the right workers to the right firms is time consuming because of search and learning frictions. The rate at which workers move between unemployment, employment and across different firms is endogenous because search is directed and, hence, workers can choose whether to seek low-wage jobs that are easy to find or high-wage jobs that are hard to find. We calibrate our theory using data on labor market transitions aggregated across workers of different ages. We validate our theory by showing that it predicts quite well the pattern of labor market transitions for workers of different ages. Finally, we use our theory to decompose the age profiles of transition rates, wages and productivity into the effects of age variation in work-life expectancy, human capital and match quality.

The Extent and Cyclicality of Career Changes: Evidence for the UK

Using quarterly data for the U.K. from 1993 through 2012, we document that the extent of worker reallocation across occupations or industries (a career change, in the parlance of this paper) is high and procyclical. This holds true after controlling for workers' previous labour market status and for changes in the composition of who gets hired over the business cycle. Our evidence suggests that a large part of this reallocation reflect excess churning in the labour market. We also find that the majority of career changes come with wage increases. During the economic expansion wage increases were typically larger for those who change careers than for those who do not. During the recession this is not true for career changers who were hired from unemployment. Our evidence suggests that understanding career changes over the business cycle is important for explaining labour market ows and the cyclicality of wage growth.

A Theory of Wage Setting Behavior

Concerns for fairness, workers' morale and reciprocity infuence firms' wage setting policy. In this paper we formalize a theory of wage setting behavior in a simple and tractable model that explicitly considers these behavioral aspects. A worker is assumed to have reference-dependent preferences and displays loss aversion when evaluating the fairness of a wage contract. The theory establishes a wage-effort relationship that captures the worker's reference-dependent reciprocity, which in turn in uences the firm's optimal wage policy. The paper makes two key contributions: it identifies loss aversion as an explanation for a worker's asymmetric reciprocity; and it provides realistic and generalized microfoundation for downward wage rigidity. We further illustrate the implications of our theory for both wage setting and hiring behavior. Downward wage rigidity generates several implications for the outcome of the initial employment contract. The worker's reference wage, his extent of negative reciprocity and the firms expectations are key drivers of the propositions derived.

Unionisation, International Integration and Selection

We study how unionisation affects competitive selection between heterogeneous firms when wage negotiations can occur at the firm or at the profit-centre level. With productivity specific wages, an increase in union power has: (i) a selection-softening; (ii) a counter-competitive; (iii) a wage-inequality; and (iv) a variety effect. In a two-country asymmetric setting, stronger unions soften competition for domestic firms and toughen it for exporters. With profit-centre bargaining, we show how trade liberalisation can affect wage inequality among identical workers both across firms (via its effects on competitive selection) and within firms (via wage discrimination across destination markets).

Slowing Down

We extend the efficiency wage model of Shapiro and Stiglitz to account for the observation that workers’ effort has a tendency to fall when they approach the end of their employment contract. In particular, we find that the efficiency wage increases when the end of term approaches for a given rate of unemployment. We draw implications for the behavior of workers who are approaching retirement, temporary employment contracts, and the advance notice of impending job loss.

Fiscal multipliers in a two-sector search and matching model

This paper evaluates the effects of policy interventions on sectoral labour markets and the aggregate economy in a business cycle model with search and matching frictions. We extend the canonical model by including capital-skill complementarity in production, labour markets with skilled and unskilled workers and on-the-job-learning (OJL) within and across skill types. We first find that, the model does a good job at matching the cyclical properties of sectoral employment and the wage-skill premium. We next find that vacancy subsidies for skilled and unskilled jobs lead to output multipliers which are greater than unity with OJL and less than unity without OJL. In contrast, the positive output effects from cutting skilled and unskilled income taxes are close to zero. Finally, we find that the sectoral and aggregate effects of vacancy subsidies do not depend on whether they are financed via public debt or distorting taxes.