The Beveridge Curve

Blanchard, Olivier; Diamond, Peter A.

doi:10.2307/2534495

Cited by 856 publications

(669 citation statements)

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“…This assumption is admissible provided that the matching technology (described by the functional form of the matching function) can be considered independent of the inputs and output of the matching process. However, very often a negative time trend is found when estimating the search and matching function, thus casting doubt on the stability through time (Blanchard and Diamond (1989) for the United States, and Sunde (2001, 2004) for Germany). 10 It is admissible to use the matching function to analyze labor market policies, provided that these 6 See, for example, Krugman (1994) and Freeman (1995).…”

Section: Relation To the Literaturementioning

confidence: 99%

Comparing the effectiveness of employment subsidies

2011

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This paper provides a theoretical and quantitative analysis of various types of wellknown employment subsidies. Two important questions are addressed: (i) How should employment subsidies be targeted? (ii) How large should the subsidies be? We consider measures involving targeting workers with low incomes/abilities and targeting the unemployed. To make our analysis particularly useful to policy makers, we focus on policies that are "approximately welfare efficient," i.e. policies that (a) improve employment and welfare, (b) do not raise earnings inequality and (c) are self-financing. This criterion enables us to identify policies which satisfy these favorable properties and to determine the size of the subsidies required for this purpose. We construct a simple, dynamic model of hiring and separations, derived from microfoundations, and calibrate it with German data. The calibration shows that hiring vouchers targeted at the long-term unemployed and low-income/ability workers can be approximately welfare efficient, while low-wage subsidies do not satisfy this criterion. Even in terms of inequality reduction low-wage subsidies are outperformed by targeted hiring vouchers. Furthermore, hiring vouchers targeted at the long-term unemployed are more effective than hiring vouchers targeted at low-income/ability workers. These subsidy rankings also hold if the self-financing constraint is relaxed and the government spends a given additional amount on the subsidies.

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Section: Relation To the Literaturementioning

confidence: 99%

Comparing the effectiveness of employment subsidies

2011

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“…Similarly, the probability of becoming non-fertile is selected to reproduce an expected fertile life of 20 years. 7 Human Capital: Education, Experience, and Tenure In our model economy, human capital (labor productivity) depends on three factors: (a) formal education, which is fixed through the individual's life; (b) general experience, which accumulates with time working; and (c) specific tenure, which accumulates with time working within a job. We assume three educational types interpreted as high school or less, college dropouts and associate degrees, and complete college or more.…”

Section: Time and Demographic Parametersmentioning

confidence: 99%

A general equilibrium analysis of parental leave policies

Erosa

Fuster

Restuccia

2010

Review of Economic Dynamics

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An important feature of the U.S. labor market is that, even after controlling for measurable differences in education and experience, the average wage of women with children is 89 percent of the average wage of women without children. This "family gap" in wages accounts for almost half the gender gap in wages. Proponents of mandatory-leave policies argue that career interruptions associated with fertility have long-lasting effects on female employment and are costly in terms of human-capital losses for females. Despite the fact that mandatory leaves are widely applied in developed countries, their effects on the economy are not well understood. We develop and calibrate a general-equilibrium model of fertility and labor-market decisions to study the quantitative impact of such policies. We build on the Mortensen and Pissarides (1994) labor-market framework by introducing male and female workers, general and specific human-capital accumulation on the job, and temporary separations between the worker and a job. We find that: (i) the loss of specific human capital accounts for a small fraction of the wage gaps and (ii) mandatory-leave policies have substantial aggregate and redistributive effects on fertility, employment, and welfare. Interestingly, we find that the general-equilibrium effect of mandatory-leave policies is a reduction in the amount of time females spend at home with children.Keywords: Parental leaves, fertility, specific human capital, temporary separations. JEL Classification: J2,J3. † We are grateful to Ig Horstmann for comments and suggestions. We also thank seminar participants at several universities and conferences. All remaining errors are our own. We acknowledge the financial support of the BBVA foundation.

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“…is, in combination with movers from a bad to a good job who fill a vacancy (F,,,: upward mobility stream), described by a system of matching functions, specified as a Cobb-Douglas functions (which is in line with various empirical findings on the functional form of the matching function, see e.g., Diamond, 1989, andVan Ours, 1991) 3 F uebv = Cmb vb lWrrb (U, + BU,fb…”

Section: Matching Processmentioning

confidence: 71%