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We examine the ability of six labor market models to account for the business cycle behavior of UK labor markets when embedded in a stochastic growth model. We assess the models in terms of their ability to mimic general business cycle correlations and volatility, their success at explaining the persistence of labor market fluctuations, and whether...
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This paper discuses some of the adverse effects that could be generated in terms of poverty and income distribution from the labour flexibilization in Colombia. Based on a partial equilibrium analysis for the urban labour market, it argues that successive reductions in the real wage may decrease unemployment but, at the expense of increases in pove...
In this paper, we reconcile the labor market search explanation of the business cycle with the Dunlop-Tarshis" observation. This out-come is obtained by extending Andolfatto's 19966 model to account for preferences who have the property that in an equilibrium with eecient risk-sharing the unemployment transition entails a welfare painful for the ho...
This paper considers new business start-up activity within a stochastic equilibrium model of unemployment. The resulting job creation process is both natural and tractable, and generates equilibrium unemployment and vacancy dynamics which match the volatility and persistence observed in the data. The insight is that the standard Diamond/Mortensen/P...
We explore the role of real wage dynamics in a New Keynesian business cycle model with search and matching frictions in the labor market. Both job creation and destruc-tion are endogenous. We show that the model generates counterfactual real wage and labor market dynamics. In particular, it fails to generate a Beveridge curve. That is, vacancies an...
Citations
... The prevalent idea for this phenomenon argues that changes in the business environment and working condition facing the industry occurred indeed during the economic expansion. For example, changes in the labor market and physical capital utilization (e.g., rapid incorporation of new inexperienced workers and accelerated working pace; Asfaw et al., 2011;Kossoris, 1943;Millard, Scott, & Sensier, 1997) led to a higher risk of injury among workers. As indicated by Nichols (1989), the work intensity and occupational accidents raised at the beginning of an economic upturn due to the lagged response of labor market to the increasing demand of workforce (Fernández-Muñiz et al., 2016), and the resultantly higher share of new or inexperienced workers in the total labor force could increase the probability of workplace injuries (Boone & van Ours, 2006;Kossoris, 1943). ...
Objective: This study explores the relationship between fluctuation in economic and industrial development and work-related fatalities of Chinese construction workers.
Methods: The data for work-related fatalities in housing and civil engineering in China from1996 to 2016 were tested for fluctuation and trends of both general economic and industry-specific indicators using the Engle-Granger cointegration analysis and the augmented Granger Causality test thewithmodifiedWald method.
Results: Both the long-run equilibriumassociations and short-run dynamic interactions between construction safety and macroeconomic development in China were determined. According to the estimates, fatalities in the construction industry appeared to be more significantly associated with changes in the gross output value of the industry, and the improvement in theworkers' efficiency also contributed to the decline of fatalities. It initially revealed that the changes in growth rate, instead of growth itself, had a more significant influence on construction safety in China, while a marginal decreasing trend of positive effects exerted by the growth can be expected with the gradual maturity of the industry.
Significance: The application of econometrical methods explored an untapped data source for gaining an insight into the underlying rules of occurrence of construction fatalities, thus strengthening the body of knowledge of construction safety by providing a new research perspective that some safety indicators can be treated as the macro-level socioeconomic index.
Practical applications: The findings reminded policymakers and practitioners to be aware of potential challenges from the slowing or even declining trend facing the industry in the near future, and offered a reference to relevant authorities for establishing a more targeted and effective governance strategy.
... where y is a stationary variable (first difference) and S is a dummy variable that defines the BC regime at which the economy is: S = 1 when the economy is in recession and S = 0 if it is in expansion. As Millard et al. (1997) argue, pro-cyclical asymmetry exists when µ 1 is statistically significant and negative, and vice versa. Similarly, there is evidence of dynamic asymmetry if the persistence of y varies over the regimes, which requires ρ 1 being statistically different from zero. ...
The aim of this paper is to evaluate the existence of asymmetries in mean and variance in the dynamics of the main Mexican macroeconomic variables over business cycle regimes. Following the lines of the classical business cycle approach, a battery of statistics and autoregressive models is applied. Our main results can be summarised as follows: 1) there is evidence of asymmetries both in mean and variance in the cases of investment and imports, 2) industrial production, employment, unemployment rate and nominal interest rate exhibit asymmetries in mean only, and 3) exports, inflation rate and real exchange rate show asymmetries in variance only. One implication of these results is that linear models may be inappropriate to model these variables while nonlinear models may be useful to deal with their characteristics and dynamics.
... It also now takes longer before the full impact of a change in growth on unemployment becomes apparent. Okun (1962), Kydland and Prescott (1982), Christiano and Eichenbaum (1992), Kydland (199�) and Millard et al. (1997). 3 One quarter is the time lag that gives the highest correlation between the variables in the period 1981:1�2009:4. ...
... where y is a stationary variable (first difference) and S is a dummy variable that defines the BC regime at which the economy is: S = 1 when the economy is in recession and S = 0 if it is in expansion. As Millard et al. (1997) argue, pro-cyclical asymmetry exists when µ 1 is statistically significant and negative, and vice versa. Similarly, there is evidence of dynamic asymmetry if the persistence of y varies over the regimes, which requires ρ 1 being statistically different from zero. ...
The aim of this paper is to evaluate the existence of asymmetries in mean and variance in the dynamics of the main Mexican macroeconomic variables over business cycle regimes. Following the lines of the classical business cycle approach, a battery of statistics and autoregressive models is applied. Our main results can be summarised as follows: 1) there is evidence of asymmetries both in mean and variance in the cases of investment and imports, 2) industrial production, employment, unemployment rate and nominal interest rate exhibit asymmetries in mean only, and 3) exports, inflation rate and real exchange rate show asymmetries in variance only. One implication of these results is that linear models may be inappropriate to model these variables while nonlinear models may be useful to deal with their characteristics and dynamics.
... Also, since laying off redundant workforce, re-hiring and (re-)training are costly exercises, businesses may be inclined to wait some time to see how the situation evolves. This may be seen as one of the reasons why the unemployment rate is conventionally considered a lagged variable (Millard, Scott and Sensier, 1997). ...
The paper deals with the possible impact of the 2008-2009 financial and economic crisis on the potential output in the Czech Republic. Given the general difficulty in sketching out all the consequences of the crisis itself, the article is primarily focused on the labour market, which is regarded as an important driving force in terms of potential output fall or its growth slowdown. First, principal reasons why the potential output could have been hit by the 2008-2009 crisis are discussed in detail. The paper then analyzes a number of transmission mechanisms through which potential output could be generally impacted by severe recessions. Further, the output gap of the Czech Republic is estimated and a potential output development is drawn up. Finally, an approximate impact of the crisis on the potential product through the labour market is demonstrated. The results show that the potential output in the Czech Republic has been partially and temporarily affected in volume. This is specifically due to an adverse long-term unemployment and, to a much lesser extent, employment behaviour, in both cases seemingly in relation to the recent crisis. Likewise, Okun´s law has been found to be relatively weak in the case of the Czech economy, thus further supporting the "hysteresis explanation". However, such a drop in potential output will likely not persist in the long run, provided that appropriate economic policies - in particular aiming at re-integration of long-term unemployed/discouraged workers and an increase in the employment and participation rates ' are implemented.
... It is generally accepted that labor market variables are affected by movements in the business cycle. In particular, Millard et al. (1997) found that growth in total working hours is positive in times of economic expansion and negative during recessions. Handy (1997) also indicated that general changes in the structure of the economy, such as the move from an industrial to a postindustrial knowledge-based economy, can also have an impact on working hours. ...
... Therefore, the variable UN-EMP denotes the annual unemployment rate, and CPI represents the consumer price level. With regard to UNEMP representing economic conditions, Millard et al. (1997) found that the growth in total workings hours is positive in times of economic expansion and negative during recessions. Fuess (2006) further indicated that a growing economy means more work overall, especially for the lowest earners. ...
This paper investigates how the relationship between income and working hours in Taiwan has changed over time. By using the
official individual sample in the Manpower Utilization Surveys from DGBAS during 1981–2006, this study concludes that higher
earners worked fewer hours as the economy is expanding and the price level increases in Taiwan; however, higher earners lose
their time privileges as the economy relies on the service sector more than before. Furthermore, with regard to gender differences,
it is found that higher earners still have time advantages relative to lower earners over time for male, but not so for female.
... Elles portent sur la p eriode allant du premier trimestre 1970 au dernier trimestre 2005. A n de purger les s eries des episodes exog enes, tels que la r euni cation allemande, on proc ede comme Millard, Scott et Sensier (1997). Les s eries brutes sont prises en taux de croissance, lorsque ce taux n'est pas compris entre 3% et 3%, on remplace l'observation par la moyenne des taux de croissance des p eriodes les plus proches. ...
The Economic and Monetary Union (EMU), though highly integrated on goods and financial markets, is characterized by a strong and persistant heterogeneity of inflation and business cycle differentials among participating countries. This dissertation proposes several explanations to this puzzle. We propose an evaluation of the cost of these heterogeneities, analyze the relative contribution of possible sources and question the ability of fiscal policies to reduce these asymmetries. To do this, we lay out and estimate New Open Economy Macroeconomics models of monetary unions taking into account various sources of asymmetric diffusion of shocks. In the first chapter, we investigate the role of home biais in consumption and production (equivalent to trade costs) when financial markets are imperfectly integrated. We show that (i) welfare gains related to the reduction of structural asymmetries are important, equivalent to an average 60% increase in permanent consumption for a constant labor effort and (ii) that trade integration may account for the persistance or the increase of asymmetries in the diffusion of macroeconomic shocks. In the second chapter, we ask whether fiscal policies may reduce these asymmetries. From a theoretical point of view, we confirm that fiscal policies are the appropriate tool to stabilize the consequences of asymmetric shocks. From an empirical point of view, we evaluate the cost related to restrictions applied to fiscal policies, such as the Stability and Growth Pact. These restrictions limit the possibility to stabilize shocks, which is costly. Our estimations suggest that fiscal policies do not stabilize asymmetric shocks. The last chapter analyzes the case of the asymmetric diffusion of symmetric shocks in a three-country model of an open monetary union. Asymmetries in the diffusion are related to asymmetries in the degrees of nominal rigidities or in the extra-zone trade openness. As in the first chapter, our results challenge the theoretical conclusions according to which a better commercial integration or a better integration of production processes systematically reduce asymmetries.
... A number of papers have considered cross-correlations among variables to determine whether such variables are countercyclical or procyclical (e.g. Blackburn and Ravn, 1992; Millard, Scott and Sensier, 1997; Andreou et al., 2000). A common technique is to de-trend the data via the Hodrick–Precott (HP) filter before examining comovement between variables (Hodrick and Prescott, 1997). ...
This paper examines whether indicators of consumer and business confidence can predict movements in GDP over the business cycle for four European economies. The empirical methodology used to investigate the properties of the data comprises cross-correlation statistics, implementing an approach developed by den Haan ["Journal of Monetary Economics" (2000) , Vol. 46, pp. 3-30]. The predictive power of confidence indicators is also examined, investigating whether they can predict discrete events, namely economic downturns, and whether they can quantitatively forecast point estimates of economic activity. The results indicate that both consumer and business confidence indicators are procyclical and generally play a significant role in predicting downturns. Copyright Blackwell Publishing Ltd and the Department of Economics, University of Oxford 2007.
... vanovic, 2006). An alternative is that during periods of lower activity, it is cheaper to adopt new technologies (Caballero and Hammour, 1996) or to fill a job vacancy (Burgess, 1992). Mortensen and Pissarides (1994) note that jobs are destroyed as soon as their value is negative, but it takes time for potential matches with positive value to form. Millard et al. (1997) investigate the performance of some of these models above at fitting the persistence of unemployment in response to shocks during recessions and booms. We provide two main contributions to this theoretical literature. First, our new business cycle fact puts forward a new challenge to these models. Second, we propose a simple new model t ...
Early studies of business cycles argued that contractions in economic activity were briefer (shorter) and more violent (rapid) than expansions. This paper systematically investigates this claim and in the process discovers a robust new business cycle fact: contractions in employment are briefer and more violent than expansions but we cannot reject the null of equal brevity and violence for expansions and contractions in output. The difference arises because employment typically lags output around peaks but they coincide in their troughs. We discuss the performance of existing business cycle models in accounting for this fact, and conclude that none can fully account for it. We then show that a business cycle model with asymmetric adjustment costs on employment and a choice of when to scrap old technologies can account for the business cycle fact both qualitatively and quantitatively.
... 1 Our reason for modifying the Adolfatto-Merz approach is that their models have di¢ culty in explaining the volatility and cyclical properties of unemployment and vacancies. This problem was documented in U.K. data by Millard, Scott and Sensier [18] and in U.S. data by Shimer [25] who points out that when search models are closed with a Nash bargaining solution, they deliver counterfactual labor market predictions. We are not the only people currently working on the problem of combining search with an RBC model and closely related papers include those by Blanchard and Galí [4], Costain and Reiter [5], Gertler and Trigari [8], den Haan, Ramey Watson [6], Fujita and Ramey [7], Hall [12] and Veracierto [27]. ...
This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this paper draws the following conclusions from the literature. Firstly, different patent policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.
