Asymmetry and duration dependence in Australian GDP and unemployment

The per iodic structure of business cycles suggests that significant asymmetries are present over different phases of the cycle. This paper uses markov regime-switching models with fixed and duration dependent transition probabilities to directly model expansions, contractions and durations in Australian GDP growth and unemployment growth. Evidence is found of significant asymmetry in growth rates across expansions and contractions for both series. GDP contractions exhibit duration dependence implying that as output recessions age the likelihood of switching into an expansion phase increases. Unemployment growth does not exhibit duration dependence in either phase. Evidence is also presented that non-linearities in unemployment growth are well explained by the asymmetries in the GDP growth cycle. The analysis suggests that recessions are periods of rapid and intense job destruction, that Australian unemployment tends to ratchet up in recessionary periods and, in contrast to US and UK studies, that shocks to Australian unemployment growth are more persistent in recessions than expansions. [E37 C5 C41].

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.

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.

The Ins and Outs of Unemployment: A Conditional Analysis

We analyze how unemployment, job finding and job separation rates react to neutral and investment-specific technology shocks. Neutral shocks increase unemployment and explain a substantial portion of unemployment volatility; investment-specific shocks expand employment and hours worked and mostly contribute to hours worked volatility. Movements in the job separation rates are responsible for the impact response of unemployment while job finding rates for movements along its adjustment path. Our evidence qualifies the conclusions by Hall (2005) and Shimer (2007) and warns against using search models with exogenous separation rates to analyze the effects of technology shocks.

The ins and outs of unemployment: An analysis conditional on technology shocks

We analyze how unemployment, job finding and job separation rates reactto neutral and investment-specific technology shocks. Neutral shocks increaseunemployment and explain a substantial portion of it volatility; investment-specificshocks expand employment and hours worked and contribute to hoursworked volatility. Movements in the job separation rates are responsible for theimpact response of unemployment while job finding rates for movements alongits adjustment path. The evidence warns against using models with exogenousseparation rates and challenges the conventional way of modelling technologyshocks in search and sticky price models.

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.

Government spending and unemployment : An empirical study on Sweden, 1994-2012

The aim of the study was to see if any relationship between government spending andunemployment could be empirically found. To test if government spending affectsunemployment, a statistical model was applied on data from Sweden. The data was quarterlydata from the year 1994 until 2012, unit-root test were conducted and the variables wheretransformed to its first-difference so ensure stationarity. This transformation changed thevariables to growth rates. This meant that the interpretation deviated a little from the originalgoal. Other studies reviewed indicate that when government spending increases and/or taxesdecreases output increases. Studies show that unemployment decreases when governmentspending/GDP ratio increases. Some studies also indicated that with an already largegovernment sector increasing the spending it could have negative effect on output. The modelwas a VAR-model with unemployment, output, interest rate, taxes and government spending.Also included in the model were a linear and three quarterly dummies. The model used 7lags. The result was not statistically significant for most lags but indicated that as governmentspending growth rate increases holding everything else constant unemployment growth rateincreases. The result for taxes was even less statistically significant and indicates norelationship with unemployment. Post-estimation test indicates that there were problems withnon-normality in the model. So the results should be interpreted with some scepticism.

Microeconomic instability and children's human capital accumulation: the effects of idiosyncratic shocks to father's income on child labor, school drop-outs and repetition rates in Brazil

This paper evaluates the long-run effects of economic instability. In particular, we study the impact of idiosyncratic shocks to father’s income on children’s human capital accumulation variables such as school drop-outs, repetition rates and domestic and non-domestic labor. Although, the problem of child labor in Brazil has declined greatly during the last decade, the number of children working is still substantial. The low levels of educational attainment in Brazil are also a main cause for concern. The large rotating panel data set used allows for the estimation of the impacts of changes in occupational and income status of fathers on changes in his child’s time allocation circumstances. The empirical analysis is restricted to families with fathers, mothers and at least one child between 10 and 15 years of age in the main Brazilian metropolitan areas during the 1982-1999 period. We perform logistic regressions controlling for child characteristics (gender, age, if he/she is behind in school for age), parents characteristics (grade attainment and income) and time and location variables. The main variables analyzed are dynamic proxies of impulses and responses, namely: shocks to household head’s income and unemployment status, on the one hand and child’s probability of dropping out of school, of repeating a grade and of start working, on the other. The findings suggest that father’s income has a significant positive correlation with child’s dropping out of school and of repeating a grade. The findings do not suggest a significant relationship between a father’s becoming unemployed and a child entering the non-domestic labor market. However, the results demonstrate a significant positive relationship between a father becoming unemployed and a child beginning to work in domestic labor. There was also a positive correlation between father becoming unemployed and a child dropping out and repeating a grade. Both gender and age were highly significant with boys and older children being more likely to work, drop-out and repeat grades.

Bilateral exchange rates and jobs

We study the labor market effects of realignment in fixed bilateral exchange rates, such as China's peg to the US dollar. We employ the open economy model by de Melo and Robinson to identify the core parameters of the real, trade side of the economy driving the unemployment effects of bilateral exchange rate realignment. A small open economy version of the model is explored analytically and a large multicountry version numerically. Analytics in the small open economy model show that unemployment effects of adjusting of a bilateral peg hinge on the fraction exported to and imported from the trading partner. A larger fraction exported to and a smaller fraction imported from the trading partner make it more likely that revaluation of a trading partner's currency has beneficial effects. Numerics in the large economy model show that Chinese revaluation can generate both positive and negative unemployment effects depending upon underlying parameter values. Adverse unemployment effects can go along with an improving trade balance.

Essays in dynamic optimal taxation: working experience, unemployment scarring and poverty

This thesis investigates the design of optimal tax systems in dynamic environments. The first essay characterizes the optimal tax system where wages depend on stochastic shocks and work experience. In addition to redistributive and efficiency motives, the taxation of inexperienced workers depends on a second-best requirement that encourages work experience, a social insurance motive and incentive effects. Calibrations using U.S. data yield higher expected optimal marginal income tax rates for experienced workers for most of the inexperienced workers. They confirm that the average marginal income tax rate increases (decreases) with age when shocks and work experience are substitutes (complements). Finally, more variability in experienced workers' earnings prospects leads to increasing tax rates since income taxation acts as a social insurance mechanism. In the second essay, the properties of an optimal tax system are investigated in a dynamic private information economy where labor market frictions create unemployment that destroys workers' human capital. A two-skill type model is considered where wages and employment are endogenous. I find that the optimal tax system distorts the first-period wages of all workers below their efficient levels which leads to more employment. The standard no-distortion-at-the-top result no longer holds due to the combination of private information and the destruction of human capital. I show this result analytically under the Maximin social welfare function and confirm it numerically for a general social welfare function. I also investigate the use of a training program and job creation subsidies. The final essay analyzes the optimal linear tax system when there is a population of individuals whose perceptions of savings are linked to their disposable income and their family background through family cultural transmission. Aside from the standard equity/efficiency trade-off, taxes account for the endogeneity of perceptions through two channels. First, taxing labor decreases income, which decreases the perception of savings through time. Second, taxation on savings corrects for the misperceptions of workers and thus savings and labor decisions. Numerical simulations confirm that behavioral issues push labor income taxes upward to finance saving subsidies. Government transfers to individuals are also decreased to finance those same subsidies.

Essays in dynamic optimal taxation: working experience, unemployment scarring and poverty

This thesis investigates the design of optimal tax systems in dynamic environments. The first essay characterizes the optimal tax system where wages depend on stochastic shocks and work experience. In addition to redistributive and efficiency motives, the taxation of inexperienced workers depends on a second-best requirement that encourages work experience, a social insurance motive and incentive effects. Calibrations using U.S. data yield higher expected optimal marginal income tax rates for experienced workers for most of the inexperienced workers. They confirm that the average marginal income tax rate increases (decreases) with age when shocks and work experience are substitutes (complements). Finally, more variability in experienced workers' earnings prospects leads to increasing tax rates since income taxation acts as a social insurance mechanism. In the second essay, the properties of an optimal tax system are investigated in a dynamic private information economy where labor market frictions create unemployment that destroys workers' human capital. A two-skill type model is considered where wages and employment are endogenous. I find that the optimal tax system distorts the first-period wages of all workers below their efficient levels which leads to more employment. The standard no-distortion-at-the-top result no longer holds due to the combination of private information and the destruction of human capital. I show this result analytically under the Maximin social welfare function and confirm it numerically for a general social welfare function. I also investigate the use of a training program and job creation subsidies. The final essay analyzes the optimal linear tax system when there is a population of individuals whose perceptions of savings are linked to their disposable income and their family background through family cultural transmission. Aside from the standard equity/efficiency trade-off, taxes account for the endogeneity of perceptions through two channels. First, taxing labor decreases income, which decreases the perception of savings through time. Second, taxation on savings corrects for the misperceptions of workers and thus savings and labor decisions. Numerical simulations confirm that behavioral issues push labor income taxes upward to finance saving subsidies. Government transfers to individuals are also decreased to finance those same subsidies.

Counting Crime: an explanation of falling crime rates

The current crime decrease is defying traditional criminological theories such as those espoused by Bonger (1916) who researched the relationship between crime and economic conditions and stated that when unemployment rises so does crime. In both the USA and the UK crime has dropped dramatically while unemployment has risen. Both the USA and the UK have been in a deep recession since 2008 but the crime rate has decreased dramatically in both countries. Over the past 20 years it has halved in England and Wales. So how do we explain this phenomenon? Crime is down across the West but more so in Britain (see Figure 1). In England and Wales crime has decreased by 8% in a single year (2013). Vandalism is down by 14% and burglaries and vehicle crime by 11%. The murder rate in the UK is at its lowest since 1978; in 2013, 540 people were killed. Some less serious offences are vanishing too; antisocial behaviour has fallen from just under 4million incidents in 2007-08 to 2.4million. (The Economist 20/4/13). According to the most recent annual results from the Crime Survey for England and Wales (CSEW), crime is at its lowest level since the survey began in 1981; the most recent annual figures from the survey, Latest figures from the CSEW show there were an estimated 7.3 million incidents of crime against households and resident adults (aged 16 and over) in England and Wales for the year ending March 2014. This represents a 14% decrease compared with the previous year’s survey, and is the lowest estimate since the survey began in 1981.

Brazilian multicentre study of common mental disorders in primary care: rates and related social and demographic factors

Mental health problems are common in primary health care, particularly anxiety and depression. This study aims to estimate the prevalence of common mental disorders and their associations with socio-demographic characteristics in primary care in Brazil (Family Health Strategy). It involved a multicenter cross-sectional study with patients from Rio de Janeiro, São Paulo, Fortaleza (Ceará State) and Porto Alegre (Rio Grande do Sul State), assessed using the General Health Questionnaire (GHQ-12) and the Hospital Anxiety and Depression Scale (HAD). The rate of mental disorders in patients from Rio de Janeiro, São Paulo, Fortaleza and Porto Alegre were found to be, respectively, 51.9%, 53.3%, 64.3% and 57.7% with significant differences between Porto Alegre and Fortaleza compared to Rio de Janeiro after adjusting for confounders. Prevalence proportions of mental problems were especially common for females, the unemployed, those with less education and those with lower incomes. In the context of the Brazilian government's moves towards developing primary health care and reorganizing mental health policies it is relevant to consider common mental disorders as a priority alongside other chronic health conditions.

Melatonin in maturation media fails to improve oocyte maturation, embryo development rates and DNA damage of bovine embryos

Melatonin (MEL) acts as a powerful scavenger of free radicals and direct gonadal responses to melatonin have been reported in the literature. Few studies, however, have evaluated the effect of MEL during in vitro maturation (IVM) on bovine embryos. This study tested the addition of MEL to maturation medium (MM) with no gonadotropins on nuclear maturation and embryo development rates and the incidence of DNA damage in resulting embryos. Cumulus-oocyte complexes were aspirated from abattoir ovaries and cultured in MM (TCM-199 medium supplemented with 10% fetal calf serum - FCS) at 39ºC and 5% CO2 in air. After 24 hours of culture in MM with 0.5 µg mL-1 FSH and 5.0 µg mL-1 LH; 10-9 M MEL) or 10-9 M MEL, 0.5 µg mL-1 FSH and 5.0 µg mL-1 LH, the oocytes were stained with Hoechst 33342 to evaluate nuclear maturation rate. After in vitro fertilization and embryo culture, development rates were evaluated and the blastocysts were assessed for DNA damage by Comet assay. There was no effect of melatonin added to the MM, alone or in combination with gonadotropins, on nuclear maturation, cleavage and blastocyst rates. These rates ranged between 88% to 90%, 85% to 88% and 42% to 46%, respectively. The extent of DNA damage in embryos was also not affected by MEL supplementation during IVM. The addition of 10-9 M MEL to the MM failed to improve nuclear maturation and embryo development rates and the incidence of DNA damage in resulting embryos, but was able to properly substitute for gonadotropins during IVM.

Deleterious effect of TRIS buffer on growth rates and pigment content of Gracilaria birdiae Plastino & E.C. Oliveira (Gracilariales, Rhodophyta)

This work evaluated the effects of Tris (hydroxymethyl)-aminomethane (TRIS) buffer and its interaction with nutrient concentration on the development of Gracilaria birdie, a common species on the Brazilian coast that has been exploited for agar production. Responses to different conditions were assessed through growth rates and pigment content (chlorophyll a, phycoerythrin, phycocyanin and allophycocyanin). Provasoli's nutrient solution with and without TRIS addition was tested at concentrations of 12.5, 25 and 50%. The pH was also monitored. G. birdiae grew better in the absence of TRIS and at low nutrient concentrations, 12.5 and 25% (growth rates of 10.8-11.3%.day-1). Higher contents of phycoerythrin and chlorophyll a were observed without TRIS at 12.5 and 25% (Phycoerythrin, 649.6-698.0 μg g-1 fresh biomass; Chlorophyll a, 156.0-168.6 μg g-1 fresh biomass). These findings highlight the deleterious effect of TRIS on growth and phycoerythrin and chlorophyll a content. They also demonstrate the importance of appropriate nutrient concentration for laboratory cultures, depending on the intrinsic characteristics of each species.