infonet-economy

This paper develops a model of equilibrium unemployment with (unobservable) endogenous on-the-job search and (partly unobservable) endogenous search behavior by firms. The model allows to analyze crowding-out of unemployed job seekers by endogenous on-the job search of employees, and the interaction of job search behavior and vacancy posting policies of firms. Moreover, it is shown that the neglect of endogenous but not observable behavior in the empirical literature on labor matching leads to systematically biased estimates of the matching elasticities, posing a caveat on the results of previous studies testing for constant returns of the matching function. The theoretical model presented allows to predict the direction of the bias. We propose a correction for the estimates of empirical matching functions that leads to unbiased estimates of the matching elasticities. The empirical implications of the theoretical model are tested and confirmed using German administrative data, and unbiased estimates of matching elasticities are presented.

This paper tests two hypotheses from the theory of elimination tournaments: (i) that uneven tournaments, where the contestants are ex ante heterogeneous, entail lower effort exertion; this is a prediction from agency theory that has not been tested empirically before; and (ii) whether incentives set through prizes matter for effort exertion; this assumption underlies any agency theory about elimination tournaments, and has been empirically tested in other contexts. The evidence obtained with data from professional tennis tournaments supports both the assumption that incentives matter, as well as the theoretical implications concerning uneven tournaments among heterogeneous contestants.

This paper tests two hypotheses from the theory of elimination tournaments: (i) that uneven tournaments, where the contestants are ex ante heterogeneous, entail lower effort exertion; this is a prediction from agency theory that has not been tested empirically before; and (ii)
whether incentives set through prizes matter for effort exertion; this assumption underlies any agency theory about elimination tournaments, and has been empirically tested in other contexts. The evidence obtained with data from professional tennis tournaments supports both the assumption that incentives matter, as well as the heoretical implications concerning uneven tournaments among heterogeneous contestants.

This paper investigates the causal effect of life expectancy on economic growth by explicitlyaccounting for the role of the demographic transition. We present a simple microfounded theory of the economic and demographic transition that predicts that improvements in life expectancy primarily mainly increase population before the demographic transition, but reduce population growth and foster human capital accumulation after the demographic transition. A sufficiently
high life expectancy is ultimately the trigger of the transition to sustained income growth. We provide evidence supporting these predictions using data on exogenous mortality reductions in the context of the epidemiological revolution.

This paper provides an approach to test whether greater heterogeneity of contestants leads to lower effort exertion in elimination tournaments, as predicted by conventional tournament models. This prediction is di±cult to test with real world data because effort is difficult to measure. Based on a simple behavioral model, testable implications are derived and an identification strategy is suggested that allows to test for an incentive effect of heterogeneity even when effort is unobservable. The application uses data from professional tennis tournaments and provides evidence that heterogeneity affects the incentives to exert effort.

This paper shows that conventional empirical estimates of matching functions are systematically biased, because unobservable and endogenous search behaviour, such as on-the-job search by workers or the use of different search channels by firms, is neglected. I propose an approach for recovering unbiased elasticities under different scenarios of competition for workers and jobs without the need for constructing proxies for unobserved stocks of searchers and vacancies. Using German administrative data, I estimate the biases affecting conventional studies and derive bias-corrected estimates of the matching elasticities under different scenarios.

This paper measures and decomposes the differences in earnings distributions between public sector and private sector employees in Germany for the years 1984-2000. Two decomposition methods are used: Oaxaca decomposition using quantile regression and the decomposition proposed by Machado and Mata (2002). Both indicate that the public sector wage premium is highest at the lower end of the wage distribution and then decreases monotonically as we move up the wage distribution. At the mean or the median, wages are lower in the public sector for men but higher for women. Separate analyses by work experience and educational groups reveal that the most experienced employees and those with basic schooling do best in the public sector. All these results are stable over the 80s and 90s.