Akiomi Kitagawa

Long gestation in an overlapping generations economy: endogenous cycles and indeterminacy of equilibria

Abstract This paper presents a simple overlapping generations model of endogenous business cycles, in which cycles emerge as a result of long gestation of investment. The key mechanism to generate cycles in this model can be regarded as a “linearity”, rather than non-linearities resulting from non-convexities in technology or preference, asymmetric information in financial markets, multi-sectors of production, or the existence of paper assets, which have played a crucial role in the previous literature. Moreover, if the return on investment technology is sufficiently low, the economy has indeterminate equilibria, each of which converges to a distinct n -period cycle.

Money‐Hoarding as a Behaviour Towards Uninsured Idiosyncratic Risk

This paper explores the implications of the presence of uninsured idiosyncratic risks for the hoarding of intrinsically useless fiat money in an overlapping‐generations model. It is shown that: (a) monetary equilibria exist in almost all cases; (b) the valuation of money is not necessarily Pareto‐improving since the non‐monetary steady state may Pareto‐dominate the monetary one; and (c) the accelerating inflation may, moreover, reduce the long‐run capital stock. JEL Classification Number: E41.

Risky storage and the value of money

Abstract This paper investigates the valuation of fiat money in a Wallacian overlapping generations economy with idiosyncratic storage risk. Unlike Wallaces own result, the value of money can be positive independent of the rate of population growth.

Flatter Wage Profiles and Reduced Lifetime Employment: A Simple Formalization

This chapter explores the implications of possible bankruptcies of firms for their own wage schemes and the structure of labor market, using a two-period general equilibrium model. The bankruptcy risk flattens a wage profile of each firm, weakening its incentive effect, thereby making room for efficiency wage to be used as a supplementary incentive device. The use of the efficiency wage, in turn, stratifies the labor market into the primary one, in which job rationing is observed, and the secondary one, in which job rationing is not observed. Substantial utility differential emerges between those who have luckily found a job in the primary market and those who have not, although there is no difference in their innate abilities. This differential widens, as bankruptcies become more likely. Moreover, the dual structure of the labor market and the entry decisions of firms render the employment size in the primary market too small to attain a social optimum.

Duration Dependence of Job-Finding Rates in Japan

This chapter examines the negative duration dependence of the job-finding probability in Japan by using officially collected data on individuals from the Labour Force Survey for the period 2003 to 2012. Because the survey has limited information on unemployment duration, a survival analysis is difficult to apply. We try to resolve this problem by adopting the bivariate probit estimation. We use information on the labor market status of the previous year to construct a proxy variable for the long-term unemployment experience. This variable is used to estimate the job-finding rate. A long-term unemployment equation is simultaneously estimated to deal with the problem of unobserved heterogeneity. After controlling for unobserved individual heterogeneity of workers by using a bivariate probit specification, we find that long-term unemployment has a negative impact on the job-finding probability for both men and women. This confirms the fact that the job-finding probability has a negative duration dependence on unemployment in the Japanese labor market. On average, unemployment for a year or more reduces the job-finding probability by about 0.075 (roughly by half).

Testing the Dual Structure of the Japanese Labor Market

This chapter empirically investigates the dual structure of the Japanese labor market by considering employment status as an expression of duality. The data are obtained from a series of micro surveys on employment, conducted in the Tokyo metropolitan area during 2002–2014. The first half of this chapter focuses on empirical arguments about the contrasting properties of wage profiles between regular and non-regular workers , and the flattening of wage profiles of the former. The second half examines the employment status sluggishness , which is defined by the effect of the employment status of the previous job on the current one. In addition, we examine the possibility that the probabilities of a worker’s allocation to a certain sector are determined at their time of entry into the labor market. These so-called first-job effects are defined by the effect of the employment status of the initial job on the current one. The estimated results reveal several facts regarding the new phase of the Japanese dual labor market . (1) While regular workers’ wages rise with years of tenure and external experience, only the latter influences non-regular workers’ wages. (2) The wage increases based on experience are of a similar magnitude across employment statuses, except for female regular workers; firm-size and educational-background premiums exist only in the regular workers’ wages. (3) The slopes of regular workers’ wage-tenure profiles have remained stable for more than 10 years since the early 2000s. (4) The quantitative impact of the first-job effects is not very substantial. The serially dependent structure of employment status has a greater influence on the rising labor market segmentation .

Ranking and Long-Term Unemployment in a Model with Efficiency Wages

This chapter considers the long-run consequences of ranking job applicants on the basis of their unemployment durations by using a general equilibrium model, in which the wages paid by firms not only motivate their employees but also induce jobless workers to preserve their employability. Ranking and long-term unemployment become actual when the cost of establishing a new firm is so large that firms cannot pay high wages to their employees. By subsidizing newly established firms, the government can guide the economy to a more efficient equilibrium, in which every job seeker can find a new job by experiencing one period of unemployment, and thus firms’ distaste for the long-term unemployed is effectively nullified.

Who Benefits from a Better Education Environment

Using an overlapping generations model, this note shows that an improvement in the efficiency of human capital production decreases the net income of the young household while increasing that of the old. Without compensating redistribution, it deteriorates lifetime utilities of all generations except for the initial old households.