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MICROECONOMETRIC ANALYSIS OF EUROPEAN LABOUR MARKET PROBLEMS

Objective


With respect to the stimulation programme for economic science, research was carried out in 4 main areas.

Establishment of labour demand and adjustment:
Work has been carried out on the estimation of mark ups of price over marginal cost.
A new approach has been applied to measuring mark ups. It uses the definition of marginal cost, as the increase in input costs arising from a change in output, to estimate the mark up from industry time series data. The approach has been extended to consider movements in the mark up over the business cycle. It was found that mark ups are procyclical.

The CIG Wage Supplementation Scheme:
Research was conducted on the way recent developments in labour market legislation in Italy have affected companies' hiring and firing practices resulting in an understanding of how employers react to hiring and firing restrictions and how different structure of the costs of varying employment.
Data collected on share contracts has resulted in information on firm's aims and motivation in adopting labour contracts characterized by profit sharing.
Euler equation models have been developed which incorporate a generalized method of moments (GMM) estimation technique in the presence of sample selection bias, providing a general procedure for taking into account selectivity bias in panel data estimation.

Household labour supply in Ireland:
Empirical work on union nonunion wage differentials, led to the publication of the first major microeconometric study of the effects of unions on the wage distribution in Ireland. A second project, on female labour supply in farm households, had also been carried out.

Individual's adjustment to unemployment:
The labour force participation of married German women was analysed, focusing in particular on how this participation is affected by the husband experiencing unemployment. Also a simple 2 period theoretical model of the labour supply decision of women married to men who become unemployed was developed. British microdata on the employed used to model the determinants of the duration of employment.
There have been rapid advances over the past decade in the microeconometric analysis of labour market problems, but application of these methods has as yet been largely in the context of the United States and Great Britain. The objectives of this proposed joint research programme, which brings together one British, one Irish and two Italian institutions, is (i) to bring together labour market researchers using novel microeconometric methods among a wider group of economists; and (ii) to increase familiarity with these methods among a wider group of economists; and (iii) to link together four related pieces of microeconometric research on British, Irish and Italian labour market problems.

Coordinator

Queen Mary and Westfield College
Address
Mile End Road
E1 4NS London
United Kingdom

Participants (3)

Istituto Universitario Europeo
Italy
Address
Via Dei Roccettini 5
50016 Fiesole Firenze
UNIVERSITA DEGLI STUDI DI BRESCIA
Italy
Address
Piazza Del Mercato 15
Brescia
UNIVERSITY COLLEGE CORK, NATIONAL UNIVERSITY OF IRELAND, CORK
Ireland
Address
Western Road, Presentation Buildings
30 Cork