Endogenous labor market participation and the business cycle

Existing models of equilibrium unemployment with endogenous labor market participation are complex, generate procyclical unemployment rates and cannot match unemployment variability relative to GDP. We embed endogenous participation in a simple, tractable job market matching model, show analytically how variations in the participation rate are driven by the cross-sectional density of home productivity near the participation threshold, andhow this density translates into an extensive-margin labor supply elasticity. A calibration of the model to macro data not only matches employment and participation variabilities but also generates strongly countercyclical unemployment rates. With some wage rigidity the model also matches unemployment variations well. Furthermore, the labor supply elasticity implied by our calibration is consistent with microeconometric evidence for the US.

Giffen goods and market making

This paper shows that information effects per se are not responsible forthe Giffen goods anomaly affecting competitive traders demands in multi-asset, noisy rational expectations equilibrium models. The role thatinformation plays in traders strategies also matters. In a market withrisk averse, uninformed traders, informed agents havea dual motive for trading: speculation and market making. Whilespeculation entails using prices to assess the effect of private signalerror terms, market making requires employing them to disentangle noisetraders effects in traders aggregate orders. In a correlated environment,this complicates a trader s signal-extraction problem and maygenerate upward-sloping demand curves. Assuming either (i) that competitive,risk neutral market makers price the assets, or that (ii) the risktolerance coefficient of uninformed traders grows without bound, removesthe market making component from informed traders demands, rendering themwell behaved in prices.

Treating high blood pressure: is reaching the target more important than the means? No, the means are important.

All major antihypertensive drug classes i.e. diuretics, beta-blockers, calcium antagonists and blockers of the renin-angiotensin system have been shown to effectively lower blood pressure and hence to reduce cardiovascular outcomes in hypertensive patients. These drugs decrease cardiovascular complications in hypertension essentially because they reduce systemic blood pressure. Nevertheless, there is growing evidence that the extent of the benefits differed between drug classes suggesting that the various classes of antihypertensive agents are not equivalent in their ability to protect against target organ damages and cardiovascular and renal endpoints. More recently, evidence has also accumulated to demonstrate that even combination therapies are not equally effective in reducing the occurrence of cardiovascular complications in hypertension. These recent observations suggest that the means to lower blood pressure are as important as the achieved target blood pressure in the management of hypertensive patients.

Auctions of licences and market structure

This paper studies sequential auctions of licences to operate in amarket where those firms that obtain at least one licence then engage ina symmetric market game. I employ a new refinement of Nash equilibrium,the concept of {\sl Markovian recursively undominated equilibrium}.The unique solution satisfies the following properties: (i) when severalfirms own licences before the auction (incumbents), new entrants buylicences in each stage, and (ii) when there is no more than one incumbent,either the single firm preempts entry altogether or entry occurs inevery stage, depending on the parameter configuration.

Wage inequality in a frictional labor market

Wage inequality in the United States has grown substantially in thepast two decades. Standard supply-demand analysis in the empiricsof inequality (e.g.Katz and Murphy (1992)) indicates that we mayattribute some of this trend to an outward shift in the demand forhigh skilled labor. In this paper we examine a simple static channelin which the wage premium for skill may grow -increased firm entry.We consider a model of wage dispersion where there are two types ofworkers and homogeneous firms must set wages and preferences forwhat type of worker they would like to hire. We find that both thewage differential and the demand for high skill workers can increasewith the proportion of high skill workers -these high skill workerstherefore 'create' their own demand without exogenous factors. Inaddition, within group wage inequality can increase in step with thebetween group wage inequality. Simulations of the model are providedin order to compare the findings with empirical results.

The impact of generic reference pricing interventions in the statin market

The objective of this study was to evaluate the intended and unintended impact on pharmaceutical use and sales of three public financing reforms applied to the prescription of statins: a Spanish generic reference pricing (RP) system for lovastatin and simvastatin, and two competing policies introduced by the Andalusian Public Health Service (APHS) for all statins, first a maximum consumer price (MCP) and then a so called quality prescribing incentive for general practitioners (MCP plus PI).This study is designed as an observational, retrospective, interrupted time series analysis with comparison series (APHS and the rest of Spain) of 46 monthly drug use and sales ratios from January 2001 to October 2004 for each active ingredient in the group of statins.RP has been effective at reducing the volume of sales growth of the off-patent statins, yet its overall impact on sales of all statins has been relatively modest. The quantity and volume of sales impact heavily depends on regulatory RP details such as when the system is introduced, how often it is updated, and how the reference price is calculated.

The labor market effects of payroll taxes in a middle-income country: Evidence from Colombia

We use a panel of manufacturing plants from Colombia to analyze how the risein payroll tax rates over the 1980 s and 1990 s affected the labor market.Our estimates indicate that formal wages fall by between 1.4% and 2.3% as aresult of a 10% rise in payroll taxes. This 'less-than-full-shifting' islikely to be the result of weak linkages between benefits and taxes and thepresence of downward wage rigidities induced by a binding minimum wage inColombia. Because the costs of taxation are only partly shifted fromemployers to employees, employment should also fall. Our results indicatethat a 10% increase in payroll taxes lowered formal employment by between4% and 5%. In addition, we find less shifting and larger disemploymenteffects for production than non-production workers. These results suggestthat policies aimed at boosting the relative demand of low-skill workers byreducing social security taxes on those with low earnings may be effectivein a country like Colombia, especially if tax cuts are targeted to indirectbenefits.

The daily market for funds in Europe: Has something changed with the EMU?

This paper presents evidence that the existence of deposit and lending facilities combined with an averaging provision for the reserve requirement are powerful tools to stabilize the overnight rate. We reach this conclusion by comparing the behavior of this rate in Germany before and after thestart of Stage III of the EMU. The analysis of the German experience is useful because it allows us to isolate the effects on the overnight rate of these particular instruments of monetary policy. To show that this outcome is a general conclusion and not a particular result of the German market, we develop a theoretical model of reserve management which isable to reproduce our empirical findings.

Effects of employment protection and product market regulations on the Italian labor market

Labor market regulations have often being blamed for high and persistentunemployment in Europe, but evidence on their impact remains mixed. Morerecently, attention has turned to the impact of product market regulationson employment growth. This paper analyzes how labor and product marketregulations interact to affect turnover and employment. We present a matchingmodel which illustrates how barriers to entry in the product market mitigatethe impact of labor market deregulation. We, then, use the Italian SocialSecurity employer-employee panel to study the interaction between barriersto entry and dismissal costs. We exploit the fact that costs for unjustdismissals in Italy increased for firms below 15 employees relative to biggerfirms after 1990. We find that the increase in dismissal costs after 1990decreased accessions and separations in small relative to big firms,especially for women. Moreover, consistent with our model, we find evidencethat the increase in dismissal costs had smaller effects on turnover for womenin sectors faced with strict product market regulations.

Location models for ceding market share and shrinking services

New location models are presented here for exploring the reduction of facilities in aregion. The first of these models considers firms ceding market share to competitorsunder situations of financial exigency. The goal of this model is to cede the leastmarket share, i.e., retain as much of the customer base as possible while sheddingcostly outlets. The second model considers a firm essentially without competition thatmust shrink it services for economic reasons. This firm is assumed to close outlets sothat the degradation of service is limited. An example is offered within a competitiveenvironment to demonstrate the usefulness of this modeling approach.

The impact of firing costs on turnover and unemployment: Evidence from the Colombian labour market reform

Reductions in firing costs are often advocated as a way of increasingthe dynamism of labour markets in both developed and less developed countries. Evidence from Europe and the U.S. on the impact of firing costs has, however, been mixed. Moreover, legislative changes both in Europe and the U.S. have been limited. This paper, instead, examines the impact of the Colombian Labour Market Reform of 1990, which substantially reduced dismissal costs. I estimate the incidence of a reduction in firing costs on worker turnover by exploiting the temporal change in the Colombian labour legislation as well as the variability in coverage between formal and informal sector workers. Using a grouping estimator to control for common aggregate shocks and selection, I find that the exit hazard rates into and out of unemployment increased after the reform by over 1% for formal workers (covered by the legislation) relative to informal workers (uncovered). The increase of the hazards implies a net decrease in unemployment of a third of a percentage point, which accounts for about one quarter of the fall in unemployment during the period of study.

Trade, extent of the market and economic growth 1960-1996

We find that trade and domestic market size are robust determinants of economic growth overthe 1960-1996 period when trade openness is measured as the US dollar value of imports andexports relative to GDP in PPP US$ ('real openness'). When trade openness is measured asthe US dollar value of imports and exports relative to GDP in exchange rate US$ ('nominalopenness') however, trade and the size of domestic markets are often non-robust determinantsof growth. We argue that real openness is the more appropriate measure of trade and that ourempirical results should be seen as evidence in favor of the extent-of-the-market hypothesis.

The p63 target HBP1 is required for skin differentiation and stratification.

Genetic experiments established that p63 is crucial for the development and maintenance of pluristratified epithelia. In the RNA interference (RNAi) screening for targets of p63 in keratinocytes, we identified the transcription factor, High Mobility Group (HMG) box protein 1 (HBP1). HBP1 is an HMG-containing repressor transiently induced during differentiation of several cell lineages. We investigated the relationship between the two factors: using RNAi, overexpression, chromatin immunoprecipitations and transient transfections with reporter constructs, we established that HBP1 is directly repressed by p63. This was further confirmed in vivo by evaluating expression in p63 knockout mice and in transgenics expressing p63 in basal keratinocytes. Consistent with these findings, expression of HBP1 increases upon differentiation of primary keratinocytes and HaCaT cells in culture, and it is higher in the upper layers of human skin. Inactivation of HBP1 by RNAi prevents differentiation of keratinocytes and stratification of organotypic skin cultures. Finally, we analyzed the keratinocyte transcriptomes after HBP1 RNAi; in addition to repression of growth-promoting genes, unexpected activation of differentiation genes was uncovered, coexisting with repression of other genes involved in epithelial cornification. Our data indicate that suppression of HBP1 is part of the growth-promoting strategy of p63 in the lower layers of epidermis and that HBP1 temporally coordinates expression of genes involved in stratification, leading to the formation of the skin barrier.

Improved HIV-1 RNA quantitation by COBAS AmpliPrep/COBAS TaqMan HIV-1 Test, v2.0 using a novel dual-target approach.

BACKGROUND: HIV-1 RNA viral load is a key parameter for reliable treatment monitoring of HIV-1 infection. Accurate HIV-1 RNA quantitation can be impaired by primer and probe sequence polymorphisms as a result of tremendous genetic diversity and ongoing evolution of HIV-1. A novel dual HIV-1 target amplification approach was realized in the quantitative COBAS AmpliPrep/COBAS TaqMan HIV-1 Test, v2.0 (HIV-1 TaqMan test v2.0) to cope with the high genetic diversity of the virus. OBJECTIVES AND STUDY DESIGN: The performance of the new assay was evaluated for sensitivity, dynamic range, precision, subtype inclusivity, diagnostic and analytical specificity, interfering substances, and correlation with the COBAS AmpliPrep/COBAS TaqMan HIV-1 (HIV-1 TaqMan test v1.0) predecessor test in patients specimens. RESULTS: The new assay demonstrated a sensitivity of 20 copies/mL, a linear measuring range of 20-10,000,000 copies/mL, with a lower limit of quantitation of 20 copies/mL. HIV-1 Group M subtypes and HIV-1 Group O were quantified within +/-0.3 log(10) of the assigned titers. Specificity was 100% in 660 tested specimens, no cross reactivity was found for 15 pathogens nor any interference for endogenous substances or 29 drugs. Good comparability with the predecessor assay was demonstrated in 82 positive patient samples. In selected clinical samples 35/66 specimens were found underquantitated in the predecessor assay; all were quantitated correctly in the new assay. CONCLUSIONS: The dual-target approach for the HIV-1 TaqMan test v2.0 enables superior HIV-1 Group M subtype coverage including HIV-1 Group O detection. Correct quantitation of specimens underquantitated in the HIV-1 TaqMan test v1.0 test was demonstrated.