Litigation Costs and Returns to Experience

By Paul Oyer and Scott Schaefer

American Economic Review, June 2002

We develop a model linking maximum damage awards available to plaintiffs in wrongful termination lawsuits, workers' propensity to sue as a function of experience, and returns to experience. Using Equal Employment Opportunity Commission data on protected-w...

Testing Intertemporal Substitution, Implicit Contracts, and Hours Restriction Models of the Labor Market Using Micro Data

By John C. Ham and Kevin T. Reilly

American Economic Review, September 2002

We present new tests of three theories of the labor market: intertemporal substitution, hours restrictions, and implicit contracts. The intertemporal substitution test we implement is an exclusion test robust to many specification errors and we consistent...

Reservation Wages: An Analysis of the Effects of Reservations on Employment of American Indian Men

By J. Gitter and Patricia B. Reagan

American Economic Review, September 2002

Modern Theory of Unemployment Fluctuations: Empirics and Policy Applications

By Robert E. Hall

American Economic Review, May 2003

Strong and widely accepted evidence shows that the natural rate of unemployment varies over time with substantial amplitude. The frictions in the labor market that account for positive normal levels of unemployment are not simple and mechanical. Instead, ...

Optimal Labor-Market Policy in Recessions

By Philip Jung and Keith Kuester

American Economic Journal: Macroeconomics, April 2015

Within a search and matching model with risk-averse workers, endogenous hiring and separation, and unobservable search effort, we show how to decentralize the constrained-efficient allocation by a combination of a production tax and three labor-market pol...

Unemployment and Labor Market Rigidities: Europe versus North America

[Symposium: European Unemployment]

By Stephen Nickell

Journal of Economic Perspectives, Summer 1997

The received wisdom tells us that the rigidity and inflexibility of European job markets relative to that in the United States is the reason why Europe has high unemployment. This paper argues that this broad brush analysis is simply too vague to be usefu...

Can Hiring Quotas Work? The Effect of the Nitaqat Program on the Saudi Private Sector

By Jennifer R. Peck

American Economic Journal: Economic Policy, May 2017

This paper studies the effects of quota-based labor regulations on firms in the context of Saudi Arabia's Nitaqat program, which imposed quotas for Saudi hiring at private firms. I use a comprehensive firm-level administrative dataset and exploit kinks in...

A Successful Accident: Recollections and Speculations about the CEA

[Symposium: Fifty Years of the Council of Economic Advisers]

By Herbert Stein

Journal of Economic Perspectives, Summer 1996

As originally conceived, the President's Council of Economic Advisers would have a unique relation with the president, using Keynesian analysis to advise him on maintaining full employment. After fifty years, the Council has evolved into being a useful co...

Mexican Immigrant Employment Outcomes over the Business Cycle

By Pia M. Orrenius and Madeline Zavodny

American Economic Review, May 2010

Contracts as Reference Points—Experimental Evidence

By Ernst Fehr, Oliver Hart, and Christian Zehnder

American Economic Review, April 2011

Hart and John Moore (2008) introduce new behavioral assumptions that can explain long-term contracts and the employment relation. We examine experimentally their idea that contracts serve as reference points. The evidence confirms the prediction that ther...

Contract Form, Wage Flexibility, and Employment

By Thomas Lemieux, W. Bentley MacLeod, and Daniel Parent

American Economic Review, May 2012

We begin with two uncontroversial hypotheses - firm productivity is expensive to measure and employment entails relationship-specific investments. These assumptions imply that firms would optimally choose fixed-wage contracts, and complement these with bo...

Time to Ditch the NAIRU

[Symposium: The Natural Rate of Unemployment]

By James K. Galbraith

Journal of Economic Perspectives, Winter 1997

The concept of a natural rate of unemployment, or nonaccelerating inflation rate of unemployment (NAIRU), remains controversial after twenty-five years. This essay presents a brief for no-confidence, in four parts. First, the theoretical case for the natu...

Unemployment Insurance: Strengthening the Relationship between Theory and Policy

[Symposium: American Employment]

By Walter Nicholson and Karen Needels

Journal of Economic Perspectives, Summer 2006

Ever since the U.S. federal-state system of unemployment insurance was founded in the 1930s, it has provided partial, temporary replacement of wages to eligible workers who lose jobs -- through no fault of their own -- (as determined by state-level regula...

Retrospectives: An Early Supply-Side-Demand-Side Controversy: Petty, Law, Cantillon

By John Berdell

Journal of Economic Perspectives, Fall 2010

Early modern Europe in the late seventeenth and early eighteenth centuries witnessed an unprecedented increase in the rate of economic growth, and governments entertained a wide range of proposals aimed at developing and harnessing foreign trade and emerg...

The Determinants of Equilibrium Unemployment

By Eran Yashiv

American Economic Review, December 2000

The paper takes the search and matching model of the aggregate labor market to the data. It tests the model's empirical validity and employs structural estimation to generate a characterization of the optimal behavior of firms and workers. The model is ap...

Aggregate and Idiosyncratic Risk in a Frictional Labor Market

By Leena Rudanko

American Economic Review, October 2011

This paper develops a tractable extension of a Mortensen-Pissarides style matching model that allows for risk averse workers with limited ability to smooth consumption. I show that this leads to a form of equilibrium wage rigidity, as the inability of wor...

Product Market Regulation and Market Work: A Benchmark Analysis

By Lei Fang and Richard Rogerson

American Economic Journal: Macroeconomics, April 2011

Recent empirical work finds a negative correlation between product market regulation and aggregate employment. We examine the effect of product market regulations on hours worked in a benchmark model of time allocation. Product market regulations affect m...

Interest Rate Pass-Through: Mortgage Rates, Household Consumption, and Voluntary Deleveraging

By Marco Di Maggio, Amir Kermani, Benjamin J. Keys, Tomasz Piskorski, Rodney Ramcharan, Amit Seru, and Vincent Yao

American Economic Review, November 2017

Exploiting variation in the timing of resets of adjustable-rate mortgages (ARMs), we find that a sizable decline in mortgage payments (up to 50 percent) induces a significant increase in car purchases (up to 35 percent). This effect is attenuated by vol...

The Employment Consequences of Wrongful-Discharge Laws: Large, Small, or None at All?

By David H. Autor, John J. Donohue, and Stewart J. Schwab

American Economic Review, May 2004

What We Know and Do Not Know about the Natural Rate of Unemployment

[Symposium: The Natural Rate of Unemployment]

By Olivier Blanchard and Lawrence F. Katz

Journal of Economic Perspectives, Winter 1997

Over the past three decades, much research has attempted to identify the determinants of the natural rate of unemployment. The authors reach two main conclusions about this body of work. First, there has been considerable theoretical progress over the pas...