Migration decision-making in developing economies is addressed from the perspective of status in the labor force (unemployed or unemployed) and traditional concerns with utility maximization are expanded to include the role of assets and access to capital markets. A dynamic model is formulated and the results reveal that the migration mechanism is efficient when workers have access to borrowing...

This study extends a bilateral gift exchange experiment by Clark et al. (2010) who investigate how feedback of information about wages paid in the market affects both employers’ wage setting and workers’ performance. We provide either quantitative or qualitative information on the average wage paid in all worker-employer-relationships, and we also study repeated relationships (fixedmatching). W...

I study managers' risk-taking behavior and how it is affected by equity-based compensation. I find that in response to an exogenous increase in takeover protection in Delaware during the mid-1990s, managers lower firm risk by 5%. I also find that the decrease in firm risk is concentrated among firms with low managerial equity-based incentives. In particular, firms with low CEO portfolio sensiti...

This paper proposes a generalized WS/PS model studying the impact of public spending on employment, in the presence of imperfect competition in labour and product markets. Public spending is shown to a¤ect …rms pro…t margins and …rms labour demand schedules. The model highlights a new channel by which …scal policy can improve employment. By reducing …rms’mark-up, public spending helps counterin...

This paper modifies the standard Mortensen-Pissarides job matching model in order to explain the cyclical behavior of vacancies and unemployment. The modifications include strategic wage bargaining (Hall and Milgrom, 2006) and convex labor adjustment costs. The results reveal that our model replicates the cyclical behavior of both variables remarkably well. First, we show that strategic wage ba...

The impact of a stronger work requirement for welfare recipients in a workfare program is studied in an efficiency wage model where a representative firm chooses its level of monitoring activities. A stricter workfare policy raises employment and monitoring activities. It typically increases profits and reduces the tax rate. The impact on the net wage is ambiguous. Utility levels of employed wo...

We conduct a laboratory experiment with agents working on and principals benefiting from a real effort task in which the agents’ performance can only be evaluated subjectively. Principals give subjective performance feedback to agents and agents have an opportunity to sanction principals. In contrast to existing models of reciprocity we find that agents tend to sanction whenever the feedback of...

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...

In this paper fiscal policy is examined for an open economy characterised by unemployment due to efficiency wages. We allow for capital and firm mobility in a model where the government chooses the level of wage, source-based capital and profit taxation. The taxing choices of governments are analyzed in scenarios which differ with respect to the constraints imposed on the set of available taxes...

This paper extends the now familiar Shapiro-Stiglitz (1984) model of labor market behavior to reconsider the controversial proposition that some forms of innovation have persistent displacement e ects. In particular, it nds that when distinctions between random production failures and reduced e ort level are di cult to draw, the adoption of new methods of production that compel more e ort, brea...