Kvalitativa koncept FL4 - EC7210

Question 1

Vilka typer av arbetsmarknadsmodeller finnd det enligt FL4 ?

Answer 1

Walrasien models = flexibla löner som sätts så de clearar marknaden. Dessa är orealistiska enligt henne.

Efficiency-wage models = Företag sätter löner som är högre än eq för att attrahera bättre arbetare, promota produktivitet.

Contracting/Wage bargaining models = modeller med fack, insider outsiders.

Search and matching modeller = Flow och matching teknik.
Arbete byts och säljs på en marknad. Processen är decentraliserad och okoordinerad och kostsam i form av tid.

Question 2

Hur ser en matching process it?

Answer 2

En framgångsrik matchning genererat economic rent. Både arbetstagaren och arbetsgivaren tjänar alltså på detta!

The matching process is characterized by a matching function where inputs (unemployment workers and vacancies) are mapped into output (successful matches).

The matching function in the pissareids model is a device that allows us to model the complex search process without making heterogeneities and frictions explicit.”

Question 3

Vilka är de olika “value functions” som finns i Pissarides modellen?

Answer 3

En arbetare kan antingen ha ett jobb eller inte. Ett företag kan antingen utlysa en tjenst eller inte.

V_E(t) = the value to a worker of being employed at time t

V_U(t) = the value to a worker of being unemployed at time t.

V_F(t) = the value to a firm of filling job at time t

V_V(t) = the value to a firm of a vacant job at time t.

Question 4

Hur bestäms antalet tjänster och lönen i Pissarides modellen?

Answer 4

Firms and workers compare the values associated with different states and act accordingly.
Wages are set when a match is formed. h
This results in a Job creation condition and a Wage curve.

Question 5

Hur uppstår arbetslöshet i Pissaridesmodellen?

Answer 5

Unemployment occurs because of negative shocks that break up existing matches.

A match lasts until a firm-specific negative shock causes job separation. This Shock may reflect changes in technology or demand.

The idiosyncratic shocks hit filled jobs at Possion rate λ.

The worker-firm pairs that are hit by shocks are randomly selected.

Question 6

Vad är labour market tightness i Pisseridesmodellen?

Answer 6

θ = v/u
v, number of vacancies as a share of labour force.
u = unemployment rate.

Labour market tightness measures the relative number of traders in the market.

Question 7

Vad är uttrycken för de anal personer som lämnar respektive entrar arbetskraften vid ett litet tidsitervall Δt?

Answer 7

The mean number of workers who enter unemployment during Δt:
λ(1-u)LΔt

The mean number of workers who exit from unemployment during Δt:
mLΔt

där m är matchingfunktionen och λ är the rate at which job-specific shocks occur.

Question 8

Vad är uttrycket för Beveridge kurvan och vad säger den?

Answer 8

u = λ/(λ+θq(θ))

Detta är i steady state så förändringen i arbetslösheten är alltså 0 här. Nivån av arbetslöshet bestäms av ekvationen.
Unemployment persistsin the steady state on account of firm-specific shock causin job separation and hence flow intp unemployment.

The Beveridge Curve implies that for a given λ & θ there is a unique equilibrium unemployment rate

λ is exogenously given but θ is endogenously determined.

Question 9

Hur beter sig företagen i Pisseridesmodellen?

Answer 9

Each firm has one job (vacancy) that it seeks to fill by searching for workers in the market.

When the job is filled, the firm produces output p > 0, sold in competitive markets.

When the job if vacant, the firm faces a fixed search cost p·c > 0 per unit of time.

The number of jobs, v, is endogenous and determined by profit maximisation.
When each firm only has one vacancy, this corresponds to all profit opportunities from new jobs being exploited, so that V_V= 0

Equilibrium labour market tightness ensures that the expected profit from a filled job equals the expected cost of hiring a worker

Question 10

Hur beter sig arbetarna i Pissarides modellen?

Answer 10

The labour force is fixed and each worker’s search intensity is given.

When employed, the worker earns the real wage w, determined in wage bargaining with the hiring firm.

When unemployed, the worker searches for employment and enjoys the real return z, notably comprising unemployment benefits.

Question 11

Hur bestäms lönen i pissarids modellen?

Answer 11

In equilibrium, a successful match j generates economic rents that are shared in wage bargaining between the firm and worker.

The bargained wage,wj, maximises the weighted product of the worker’s and the firm’s net return from the job match.

Question 12

Vilket maximeringsproblem är det båda partera möter?

Answer 12

Formally, the two parties face the following maximisation

max_wj: (VEj−VU)^β(VFj−VV)^(1−β)

för att lösa detta tar man först logaritmen. Man logtransformerar alltså, vilket gör det enklare. man får då.

max_wj: βln(VEj−VU) + (1−β) ln(VFj−VV)

Question 13

Vad är ekvationen för wage setting curve i Pissarides modellen?

Answer 13

w= (1−β)z+βp(1 +cθ)

c är en kostnad, z: real returns to unemployment (bidrag osv), β är arbetarnas förhandlingsstyrka och p är value of output associated with one job.

Question 14

Vad är job-creation condition i Pissarides modellen?

Answer 14

p − w − (r+λ)pc/q(θ) = 0

This corresponds to a marginal condition for the demand for labour.

Question 15

Vad kan sägas om EQ i Pissarides modellen?

Answer 15

The steady-state equilibrium is a triple, (u,θ,w) that satisfies the Beveridge curve, the job-creation condition and the wage curve.

The unique equilibrium can be illustrated in two diagrams: one in the θ-w-plane and one in the u-v-plane.

Question 16

Givet EQ ekvationerna i Pissarides modellen,

w= (1−β)z+βp(1 +cθ),

p − w − (r+λ)pc/q(θ) = 0,

u = λ/(λ+θq(θ)),

Vad händer om p ökar?

Answer 16

Intuition: Higher p makes job creation more profitable. Workers ask for higher wages but the JC-shift dominates. θ and v increase, and u decreases

Figure 1:
• JC shifts up/to the right.
• WC shifts up/to the left.
• May show that sinceβ <1 JC shifts more than WC.
• Conclusion: w increases and θ increases.

Figure 2:
• The higher θ from Diagram 1 implies that JC rotates counterclockwise.
• Conclusion: v increases and u decreases

Question 17

Givet EQ ekvationerna i Pissarides modellen,

w= (1−β)z+βp(1 +cθ),

p − w − (r+λ)pc/q(θ) = 0,

u = λ/(λ+θq(θ)),

Vad händer om z ökar?

Answer 17

Intuition: Higher z makes unemployment relatively less costly and workers ask for higher wages. θ and v decrease, and u increases.

Figure 1:
• JC unaffected.
• WC shifts up/to the left.
• Conclusion: w increases and θ decreases.

Figure 2:
• The lower θ from Diagram 1 implies that JC rotates clockwise.
• Conclusion: v decreases and u increases

Question 18

Vad kan man säga om Pissarides modellen beträffande efficiency?

Answer 18

• The interests of the employed and the unemployed diverge. (de med job föredrar högre löner medan d som är utan jobb bara vill ha jobb. )
• Wages set at the firm level, where the employed are represented. (Det är de med jobb som bestämmer lönen, lönen kan vara för hög för de arbetslösa. Insider-outsider.)
• Not all gains from trade are exploited in the decentralised equilibrium.
• Equilibrium may thus be inefficient.

Question 19

Varför antar man att Vv = 0?

Answer 19

Artikeln = “In equlibrium all profit opportunities from new jobs are exploited, driving rents fram vacant jobs to zero. Therefore the equlibrium condition for the supply of vacant jobs is V = 0”

”The number of jobs, v , is endogenous and determined by profit maximisation. When each firm only has one vacancy, this corresponds to all profit opportunities from new jobs being exploited, so that VV = 0.”

If firms exploit all oportunities and profit max, then Vv = 0.

Question 20

Wrighte down and the SS value functions of workers and firms in the different states of the model.

Answer 20

rVV = -pc+θq(θ)(VF-VV)

rVF = p - w - λVF

rVE = w + λ(VU - VE)

rVU = Z + θq(θ)(VE - VU)

Question 21

Interperate rVV = -pc+θq(θ)(VF-VV)

Answer 21

The valute of vacany

RHS gives the search cost plus the change of filling the vacancy times the value of the state changing.

Question 22

Interoperate rVF = p - w - λVF

Answer 22

RHS is the revenue from production minus the wage minus the probability of match…. times the state blala

Question 23

Varför är matchningsprocessen kostsam i Pissaridesmodellen?

Answer 23

Matching in the labour market between those seeking employment with vacant jobs is costly because there exists various types of heterogeneities in the labour market:

Firms offering employment can’t see skills or productivity levels of those seeking employment (principal agent?). Information imperfections

Location problem, i.e the best workers for a specific job might be residing in a city long away from where the firm or the company operates.

Timing, vacant job at right time the worker is available.

Its a time consuming process for both firms and workers to seek each others. This time could be used for other activities.