1,721,020 research outputs found
Labour demand and financial market imperfections
No full textThis paper analyses the cyclicality of labour demand and its sensitivity to the cycle in economies characterized by imperfections in capital markets. We show that, in such a case, labour demand depends on firms’ self-financing ability and is affected by changes in the interest rate. Endogenous borrowing constraints affect employment policies by inducing firms to risk averse behaviour, which may reduce their ex-ante willingness to hire. Consistently with recent empirical findings, the model predicts that the more constrained firms are financially fragile, the more the cyclical behaviour of their labour demand is pronounced. This means that, for a given realization of the shock, more leveraged firms adjust their employment level relatively more than more capitalized firms. Furthermore, firms with higher debt to own funds ratios are shown to be more sensitive to the cycle, i.e. to react more to marginal changes in the realization of the shock
Inefficiency spillovers in five OECD countries: an interindustry analysis
No full textEmpirical studies have widely demonstrated that real-world activities are rarely on their production frontier. Hence, an obvious concern arises towards the detection of inefficiencies affecting sectoral performances. The current literature and practice have widely explored the sources of inefficiency internal to decision-making units. This paper argues that a major role is played by external effects due to inefficiency spillovers propagating through interindustry transactions. In order to take this mechanism into account, the paper suggests assessing sectoral performances by a system approach that makes use of shadow prices of intermediate inputs. Our approach is able to disentangle sectoral inefficiencies into internal sectoral inefficiencies and inefficiencies imported from other sectors. The latter component is due to inefficiency spillovers that appear to be empirically relevant in all sectors of five OECD countries
International Political Spillovers: The Case of Labour Market Regulation
Full text linkThis paper explores how the political support for Labor Market Regulation (LMR) is affected by economic and political integration in a two-country overlapping generations model where countries behave strategically. We model LMR as wage regulation and analyze three institutional settings: Autarchy, Economic Union and Political Union. We show that, if the economy is dynamically efficient, the support for labor regulation is lower in the Economic Union - characterized by capital mobility - than in Autarchy. This decreases the welfare of the owners of the less mobile factor (labor) even in a setting where today workers are next period capitalists. A Political Union restores, under symmetry, the autarchic outcomes and welfare levels. The asymmetric case is also analyzed
Capital Markets Integration and Labor Market Institutions
No full textA major development in recent decades in industrialized countries is the decline in national savings rates. Over the same period, in many countries the labor's share of national income has declined and liberalizing labor market reforms have been implemented. This paper seeks to provide a unified account of these developments. We show that globalization, in the form of increased capital mobility, provides incentives to implement labor market reforms that raise the returns to capital and improve efficiency. Nevertheless, in a world where aggregate savings reflect life-cycle motives and are mainly performed out of labor income, the associated fall in the labor share reduces aggregate savings and the pace of capital accumulation
The Wage Curve, an Italian Perspective
No full textIn this paper we appraise the existence of a negative relationship between the wage level and the unemployment rate (the wage curve) across Italian regions, using data from the Bank of Italy’s Survey on Household Income and Wealth. The main advantage of this data-set is the availability of information on human capital characteristics of individuals (such as gender, age and education) and, more importantly, on hours worked. Our main finding is that, even though a wage curve exists in Italy, at least after the 1992-93 wage reforms, for annual and monthly wages, no such relationship exists for hourly wages. Consistently, after the reforms we find a negative elasticity of annual hours and months worked with respect to the unemployment rate
It’s wages, it’s hours, it’s the Italian wage curve
No full textUsing data from the Bank of Italy’s Household Survey we find that a wage curve exists in Italy after the 1992-93 wage reforms for annual and monthly wages but not for hourly wages. Consistently, after the reforms we find a negative elasticity of annual hours and months worked with respect to the unemployment rate
The Effects of Employment Protection and Product Market Regulations on the Italian Labor Market
No full textLabor market regulations have often been blamed for high and persistent unemployment in Europe, but evidence on their impact remains mixed. More recently, attention has turned to the impact of product market regulations on employment growth. This paper analyzes how labor and product market regulations interact to affect turnover and employment. We present a matching model which illustrates how barriers to entry in the product market mitigate the impact of labor market deregulation. We, then, use the Italian Social Security employeremployee panel to study the interaction between barriers to entry and dismissal costs. We exploit the fact that costs for unjust dismissals in Italy increased for firms below 15 employees relative to bigger firms after 1990. We find that the increase in dismissal costs after 1990 decreased accessions and separations in small relative to big firms, especially for women. Moreover, consistent with our model, we find evidence that the increase in dismissal costs had smaller effects on turnover for women in sectors faced with strict product market regulations
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