Documents Tinbergen Institute, Amsterdam 10 results

"We analyze the redistributional (dis)advantages of a minimum wage over income taxation in competitive labor markets, without imposing assumptions on the (in)efficiency of labor rationing. Compared to a distributionally equivalent tax change, a minimum-wage increase raises involuntary unemployment, but also raises skill formation as some individuals avoid unemployment. A minimum wage is an appropriate instrument for redistribution if and only if the public revenue gains from additional skill formation outweigh both the public revenue losses from additional unemployment and the utility losses of inefficient labor rationing. We show that this critically depends on how labor rationing is distributed among workers. A necessary condition for the desirability of a minimum-wage increase is that the public revenue gains from higher skill formation outweigh the revenue losses from higher unemployment. We write this condition in terms of measurable sufficient statistics. Our empirical analysis suggests that a minimum-wage increase is undesirable in nearly all OECD countries. A reduction in the minimum wage, along with tax adjustments that keep net incomes constant, would yield a Pareto improvement."

"Using data for 28 European countries for the 2008-2012 period, we examine whether employed individuals are affected by the economic crisis. We provide robust evidence that unfavourable macroeconomic conditions are negatively associated with the life satisfaction of employees. In addition, we find that higher levels of regional unemployment and inflation are predominantly associated with lower levels of life satisfaction for employees who are in a bad financial situation or who expect that their future financial situation will be worse. By contrast, employed people who do well financially and who have good prospects are not affected by the crisis."

"This paper is dating from 1995, when it has been presented at the Ragnar Frisch Centennial Memorial Conference in Oslo. It has never been published before. In this paper for the first time the Cantril ladder question data have been employed in the way which later has become known as happiness economics. After two introductory sections 1and 2, Section 3 explains the Leyden School methodology to estimate financial satisfaction or in traditional terms a (cardinal) welfare function of money. In Section 4 the Cantril ladder question is employed to estimate a function of satisfaction with life as a whole. It is found that well-being is quadratic in the number of children, leading to an optimum number of children, given income and given the fact of a one-breadwinner- or two- breadwinners-family. In Section 5 the effects of children on financial satisfaction and on satisfaction with life as a whole are compared. With respect to financial satisfaction it is found that the more children there are the smaller financial satisfaction. Comparison of the two effects makes it possible to distinguish between the monetary cost associated with having children and the non-monetary benefits caused by having children. Part of this paper is based on Plug and Van Praag (1995)."

"Since the end of the Great Recession in mid-2009, the unemployment rate has recovered slowly, falling by only one percentage point from its peak. We find that the lackluster labor market recovery can be traced in large part to weakness in aggregate demand; only a small part seems attributable to increases in labor market frictions. This continued labor market weakness has led to the highest level of long-term unemployment in the U.S. in the postwar period, and a blurring of the distinction between unemployment and nonparticipation. We show that flows from nonparticipation to unemployment are important for understanding the recent evolution of the duration distribution of unemployment. Simulations that account for these flows suggest that the U.S. labor market is unlikely to be subject to high levels of structural long-term unemployment after aggregate demand recovers."

"A recent literature documents that manufacturing employment growth in developing countries has been sluggish over the past decades, and that deindustrialization has often set in at historically low levels of income. However, there is little evidence on which kind of jobs are disappearing prematurely, and some debate on whether the phenomenon is structural or transitory. In this article, I use a new data set on manufacturing employment by occupation to document four stylized facts about `premature deindustrialization': first, it is mostly unskilled jobs that have disappeared, and also the wage premium of workers with little formal education in manufacturing relative to other industries has declined. Second, the disappearing jobs have been among the most formal–both relative to other industries, and to the manufacturing average. Third, premature deindustrialization has been driven by occupations which are intensive in tasks that are vulnerable to an increasing adoption of ICT. Fourth, the phenomenon pertains most clearly to middle income countries, as low income countries have been spared from premature job losses. Overall, the employment patterns are consistent with a pervasive shift of the `automation frontier' separating tasks that are automated from those which are not, and suggest a structural decrease in the ability of manufacturing to employ unskilled labor productively."