One of the arguments against migrant labor is that it has negative ef- fect on the employment of domestic labor. The question is now if the immigration has also negative effects on the other ...variables of the econ- omy. To examine these effects we develop an optimal growth model with migration and unemployment and then we analyze these effects, restricting our analysis to the steady state. We introduce a simplify- ing hypothesis concerning the skill level of human capital. We assume that the average skill level of domestic employed labor differs from the average skill level of migrant labor, but the two kinds of labor grow at the same constant rate. We prove that the immigration process could have both positive and negative effects on consumption, human capital and physical capital, depending on the skill level of the migrant labor. The numerical simulations confirm our theoretical results.
We estimate the spatially heterogeneous effects of the coronavirus disease 2019 pandemic on labor market dynamics in Germany until December 2021. While initially slightly stronger in rural regions ...and large agglomerations, adverse effects quickly become more pronounced and persistent in large agglomerations compared to all other region types. We ascribe the larger impact of the pandemic in large agglomerations to two factors. First, a combination of a higher share of skilled workers and jobs suitable for working from home is positively related to an increased inflow rate into unemployment. We argue that local spillover effects from reduced product market demand in large cities caused by changes in behavior such as working from home or online shopping are a possible explanation. Second, some of our results suggest that a lower outflow rate out of unemployment is associated with a higher precrisis unemployment rate in large agglomerations. This might reflect the less favorable composition of unemployment in large cities, which reduces the probability of transitions into employment during crises.
We investigate state‐dependent effects of fiscal multipliers and allow for endogenous sample splitting to determine whether the U.S. economy is in a slack state. When the endogenized slack state is ...estimated as the period of the unemployment rate higher than about 12%, the estimated cumulative multipliers are significantly larger during slack periods than nonslack periods and are above unity. We also examine the possibility of time‐varying regimes of slackness and find that our empirical results are robust under a more flexible framework. Our estimation results point out the importance of the heterogenous effects of fiscal policy and shed light on the prospect of fiscal policy in response to economic shocks from the current COVID‐19 pandemic. (JEL C32, E62, H20, H62)
Current research links the shadow economy (SE) and the unemployment rate either indirectly or by means of a preliminary estimate. This article establishes and empirically implements a methodology for ...estimating the size of the SE as a direct function of the tax and unemployment rates. This link is found to be extremely relevant in countries with high unemployment rates (such as Greece and Spain) and less relevant in countries with moderate unemployment rates (such as Germany and Italy). Unemployment's contribution to the SE is shown to be significant, especially in the years following the economic downturn of 2008. The calculation of the variance and distribution of these estimates is another significant contribution. The common criticism that SE estimates are unreliable is addressed by calculating the variance and the distribution of the estimates, and the large size of the SE in Greece and Spain is once again confirmed.
Water diversion for environmental purposes threatens many agricultural communities. This paper focuses on the water-agriculture-environment nexus in the Murrumbidgee River Basin, Australia, and ...attempts to explain how reduced water allocation to agriculture aimed at protecting the environment in turn impacted the wider economy and the community. Predictably reduced water allocation saw declines in agriculture production and employment. Despite this, paradoxically, the basin unemployment rate declined and basin median household income increased. To understand and interpret this, we first analyze available labour, economic and hydrology data, and then develop a simple dynamic model to interpret the observed pattern of basin employment and unemployment. Data analysis revealed the likely causes behind the paradox as (a) out-migration of people from the basin, and (b) absorption of the labour force in the fast growing non-agricultural sectors of the diversified basin economy. The model simulations reinforced this interpretation. Further model simulations under alternative realities of out-migration and sectoral transformation indicated that basins embedded in faster growing national economies, and are more diversified to begin with, are likely to be more conducive to agriculture sector reform (e.g., reduced water allocation) and environmental regeneration. This is a sobering message for other regions experiencing environmental degradation due to extensive agricultural development.
•Employment paradox in the Murrumbidgee basin is explored.•Sectoral transformation and out-migration facilitated basin community's adaptation to water reallocation.•The impact of reallocation of water to agriculture is reduced in a diversified economy.
The modern definition of unemployment emerged in the late 1930s from research conducted at the Works Progress Administration and the Census Bureau. According to this definition, people who are not ...working but actively searching for work are counted as unemployed. This concept was first used in the Enumerative Check Census, a follow-up sample for the 1937 Census of Unemployment, and continued with the Monthly Report on the Labor Force survey, begun in December 1939 by the Works Progress Administration. A similar definition is now used to measure unemployment around the world. PUBLICATION ABSTRACT
PurposeThis study examines the impact of firm-specific information and macroeconomic variables on market overreaction of US and Chinese winner and loser portfolio before and during ...COVID-19.Design/methodology/approachThe firm-specific information includes firm size, volume, volatility, return of asset (ROA), return of equity (ROE), earning per share (EPS) and quick ratio while the macroeconomic variables are export rate, import rate, real GDP, nominal GDP, FDI, IPI and unemployment rate. Besides, one-third of the top performance stocks are categorized as winner portfolio while one-third of lowest performance stocks are categorized as loser portfolio. This study uses AECR to indicate stock return and measure market overreaction. GAECR is used to determine contrarian profit. The data range of pre-COVID-19 is from 1-Jan-2015 to 31-Dec-2019 while the period of COVID-19 is from 1-Jan-2020 to 31-Dec-2020.FindingsIn pre-COVID-19, firm-specific information (volatility, ROA, ROE and EPS) and macroeconomic variables are found to be correlated to stock return in US and Chinese portfolios except Chinese winner portfolio. Nonetheless, the impact of firm-specific information has vanished and macroeconomic variables are significant to stock return in COVID-19. It shows that investors rely on the economic indicators to trade in turbulent period due to emergence of COVID-19 as a disruption in market. Furthermore, US and Chinese portfolios are overreacted during COVID-19. Chinese loser portfolio has higher tendency of overreaction than US loser portfolio while US winner portfolio has higher tendency of overreaction than Chinese winner portfolio.Originality/valueThe results of this study assists academician, practitioners and investors on understanding and create awareness to the existence of market overreaction and the determinants that can cause the phenomenon.
•COVID-19 affected data collection for the Current Population Survey (CPS).•Between March-June 2020 the nonresponse rate increased by 58 percent.•Between March-June 2020, the size of entering cohorts ...declined by 37 percent.•We generated a counterfactual group of “missing” respondents for April-August 2020.•The official unemployment rate was 0.5 to 0.7 percentage points too low.•The official labor force participation rate was 0.4 to 0.8 percentage points too high.
The COVID-19 pandemic significantly affected data collection for the nation's primary source of household-level labor force data, the Current Population Survey (CPS). In the first four months of the pandemic period (March-June 2020) the average month-over-month nonresponse rate increased by 58 percent, while the size of newly entering cohorts declined by 37 percent relative to the prior 15 months. Together, these factors reduced the overall sample size of the CPS by around 16 percent. We hypothesize that these changes, and significant associated shifts in the demographic composition of the sample, were caused by the cessation of in-person interviewing. Geographic variation in nonresponse over this period does not appear related to variation in COVID case rates across metro areas or states. Using this change in interview method as a natural experiment, we compare labor market outcomes of those who entered the survey before and after the start of the COVID pandemic and find that the change in how individuals were recruited into the survey affected estimates of unemployment and labor force participation. In an exercise generating a counterfactual group of “missing” respondents, we estimate that, between April and August of 2020, the average unemployment rate was 0.5 to 0.7 percentage points higher, and the labor force participation rate was 0.4 to 0.8 percentage points lower than estimates using the actual sample of respondents. One implication of these results is that web-based surveys, which are increasingly relied on in empirical labor market studies, may fail to reach important subpopulations of the labor market and that reweighting is unlikely to address the selection on outcomes we document.
The core personal consumption expenditure (PCE) price index, the Federal Reserve’s preferred inflation gauge, rose to 5.2 percent on January 2022, which is the highest rate of increase since 40 years ...ago. Our estimates show that the annualized quarterly core PCE prices could reach 5.45% in the second quarter of 2022 and are as high as 8.57% in a longer time horizon unless corrected with restrictive monetary policies. Thus, the inflation shock since COVID-19 is not transitory, but it is persistent. As economists expect the Federal Reserve to tighten the money supply in March 2022, the insufficient policy responses may be attributed to a failure to incorporate a unique macroeconomic shock to unemployment during the pandemic. We propose a modified vector autoregression (VAR) model to examine structural shocks after COVID-19, and our proposed model performs well in forecasting future price levels in times of a pandemic.
PDF
