We discuss a class of copula-based ordered probit models with endogenous switching. Such models can be useful for the analysis of self-selection in subjective well-being equations in general, and job satisfaction in particular, where assignment of regressors may be endogenous rather than random, resulting from individual maximization of well-being. In an application to public and private sector...

Does Equal Pay Legislation Reduce Labour Market Inequality? This paper considers a labour market model of monopsonistic competition with taste-based discrimination against minority workers to study the effect of equal pay legislation on labour market inequality. When the taste for discrimination is small or competition is weak, the policy removes job segregation and the wage gap completely. How...

This paper considers the optimal design of unemployment insurance (UI) within an equilibrium matching framework when wages are determined by strategic bargaining. Unlike the Nash bargaining approach, reducing UI payments with duration is welfare increasing. A co-ordinated policy approach, however, one that chooses job creation subsidies and UI optimally, implies a much greater welfare gain than...

Workers’ Views of the Impact of Trade on Jobs Although public policy is influenced by the perception that workers worry about the impact of trade on their jobs, there is little empirical evidence on what shapes such views. This paper uses new data to examine how workers’ perceptions of the impact of trade are related to their career paths, job characteristics, and local labor market conditions....

This paper provides evidence on job flows and worker flows at the level of the employer. We ask whether firms grow by increasing hires, reducing separations, or both, and we develop a graphical approach to address this. We use a new dataset to estimate the relationship between job flows and worker flows at the employer level. We show that most employers are simultaneously hiring and facing sepa...

Regional Dependencies in Job Creation: An Efficiency Analysis for Western Germany This paper investigates the efficiency of the matching process between job seekers and vacancy posting firms in West-Germany, using variation across labor market regions and across time. The results of a stochastic frontier analysis shed new light on extent and regional differences of search frictions, on potentia...

We develop a general stochastic model of directed search on the job. Directed search allows us to focus on a Block Recursive Equilibrium (BRE) where agents’ value functions, policy functions and market tightness do not depend on the distribution of workers over wages and unemployment. We formally prove existence of a BRE under various specifications of workers’ preferences and contractual envir...

We study a 2-sided labor market with a set of heterogeneous firms and workers in an environment where jobs are secured by regulation. Without job security Kelso and Crawford have shown that stable outcomes and efficiency prevail when all workers are (weak) gross substitutes to each firm, in the sense that increases in other workers’ salaries can never cause a firm to withdraw an offer from a wo...

[preliminary] We compare two problems. One is the monotone Bayesian persuasion problem in which messages are monotone functions of state realizations. Another is the delegation problem with an extra assumption that extreme actions are always permitted. (E.g., an employee may need the employer’s permission to reduce the job involvement to part time, but no permission is needed to remain at full ...

This paper assesses theoretically and examines empirically the effects of time preferences on two types of career investments: work effort and on-the-job search activities. Whereas the former increases the probability of getting promoted, the latter affect the chance of receiving an outside job offer. The aim of this study is to test the exponential versus the hyperbolic discounting model withi...