Institute for the Study of Labor

About: Institute for the Study of Labor is a nonprofit organization based out in Bonn, Germany. It is known for research contribution in the topics: Wage & Unemployment. The organization has 2039 authors who have published 13475 publications receiving 439376 citations.

How to Measure the Unobservable: A Panel Technique for the Analysis of TFP Convergence

Abstract: This paper proposes a fixed-effect panel methodology based on Islam (2000) to assess the existence of technology convergence across the Italian regions between 1963 and 1993. Our results find strong support to both the presence of TFP heterogeneity across Italian regions and to the hypothesis that TFP convergence has been a key factor in the process of aggregate regional convergence observed in Italy up to the midseventies. However, this period of TFP convergence has not generated a significant, persistent decrease in the degree of cross-region inequality in per capita income. Finally, our human capital measures has been found to be highly positively correlated with TFP levels. This evidence confirms one of the hypothesis of the Nelson and Phelps approach, namely that human capital is the main determinant of technological catch-up. Our results are robust to the use of different estimation procedure such as simple LSDV, Kiviet-corrected LSDV, and GMM a la Arellano and Bond (1991).

Benefit Duration, Unemployment Duration and Job Match Quality: A Regression-Discontinuity Approach

Abstract: The generosity of the Unemployment Insurance system (UI) plays a central role for the job search behavior of unemployed individuals. Standard search theory predicts that an increase in UI benefit generosity, either in terms of benefit duration or entitlement, has a negative impact on the job search activities of the unemployed increasing their unemployment duration. Despite the disincentive effect of UI on unemployment duration, UI benefit generosity may also increase job match quality by allowing individuals to wait for better job offers. In this paper we use a sharp discontinuity in the maximum duration of unemployment benefits in Germany, which increases from 12 months to 18 months at the age of 45, to identify the effect of extended benefit duration on unemployment duration and post-unemployment outcomes. We find a spike in the re-employment hazard for the unemployed workers with 12 months benefit duration, which occurs around benefit exhaustion. This leads to lower unemployment duration compared to their counterparts with 18 months benefit duration. However, we also show that those unemployed who obtain jobs close to and after the time when benefits are exhausted are significantly more likely to exit subsequent employment and receive lower wages compared to their counterparts with extended benefit duration.

The Social Impact of Globalization in the Developing Countries

Abstract: In this paper an ex-post measurable definition of globalization has been used, namely increasing trade openness and FDI. A general result is that the optimistic Heckscher-Ohlin/Stolper-Samuelson predictions do not apply, that is neither employment creation nor the decrease in within-country inequality are automatically assured by increasing trade and FDI. The other main findings of the paper are that: 1) the employment effect can be very diverse in different areas of the world, giving raise to concentration and marginalisation phenomena; 2) increasing trade and FDI do not emerge as the main culprits of increasing within-country income inequality in DCs, although some evidence emerges that import of capital goods may imply an increase in inequality via skill-biased technological change; 3) increasing trade seems to foster economic growth and absolute poverty alleviation, although some important counter-examples emerge.

Joint Estimation of Price-Cost Margins and Union Bargaining Power for Belgian Manufacturing

Abstract: This paper extends Hall's (1988) methodology to analyse imperfections in both the product and the labour market for firms in the Belgian manufacturing industry over the period 1988-1995. We investigate the heterogeneity in price-cost mark-up and workers' bargaining power parameters among 18 sectors within the manufacturing industry as well as the relationship between both parameters. Using a sample of more than 7 000 firms, our GMM results indicate that ignoring imperfection in the labour market leads to an underestimation in the price-cost margin evaluated at perfect competition in the labour market. These findings are confirmed in the sectoral analysis. Sectors with higher workers' bargaining power typically show higher price-cost margins.

Gross Worker and Job Flows in a Transition Economy: An Analysis of Estonia

Abstract: Estonia shows that intense restructuring after the opening of product and labor markets need not lead to massive increases in unemployment. The evidence suggests that flexibility in the labor market is vital in a transition's success, especially in a country undergoing rapid reform. With the transition in Estonia, worker flows increased greatly, driven by an increase in job flows. As the situation stabilized, the job and worker flows converged at rates similar to those observed in Western economies. In 1989, job reallocation accounted for only a small fraction of overall worker reallocation, which was less than 15 percent. By 1993, the worker reallocation rate exceeded 35 percent, more than two-thirds of it attributable to job reallocation. The dramatic increase in job flows was the result of increased separations, as jobs were eliminated. In 1992, early in the transition, the situation looked ominous but in only a couple of years new jobs and hires surged as well. By 1994, the hiring rate exceeded the separation rate, and jobs were being created faster than they were being eliminated. Increased job and worker reallocations did not affect all sectors or types of employee the same way. More jobs were eliminated in large state manufacturing firms and more jobs were created by smaller, private service and trade-oriented employers. Virtually all of the new jobs came from the private sector (although many jobs were eliminated there, too). The elimination of so many jobs accounted for about half the increase in direct job-to-job transitions (from less than 5 percent in 1989 to 15 percent in 1994). Opening product and labor markets in Estonia led to a remarkable surge in worker and job flows. Early in the transition so many jobs were eliminated that things looked ominous, but within a couple years small private firms led the surge in new jobs and hiring. This paper - a product of Poverty and Human Resources, Development Research Group - is part of a larger effort in the group to investigate labor markets. The study was funded by the Bank's Research Support Budget under research project Labor Market Adjustment in Estonia (RPO 679-71).