Stephen R. G. Jones

The Relationship Between Unemployment Spells and Reservation Wages as a Test of Search Theory

The theory of stationary job search predicts that, controlling for other factors that affect the probability of leaving unemployment, duration and reservation wages are likely to be positively associated. The paper tests this prediction for British cross-sectional data from 1982 using an estimating equation implied by search theory. Simultaneity is crucial in the evaluation of this prediction, with single-equation and instrumental-variable estimates differing markedly. Perhaps surprisingly, given the extreme paucity of both job interviews and offers in the sample, the main finding is that reservation wages play a significant role in the determination of duration.

Minimum wage legislation in a dual labor market

The paper studies the equilibrium effects of minimum wage legislation in an economy with coexisting primary, and secondary labor markets. Owing to difficulties in monitoring, relative wages and the threat of job loss play a functional role in eliciting effort from primary sector workers. Minimum wage laws hence affect the primary wage and employment level, even if the law only binds in the secondary labor market. Furthermore, interaction between the two sectors can also alter the secondary outcome, relative to the standard analysis, and has implications for participation decisions and for the level of unemployment.

Unemployment and Nonemployment: Heterogeneities in Labor Market States

The determination of how to distinguish between unemployment and nonparticipation is important and controversial. The conventional approach employs a priori reasoning together with self-reported current behavior. This paper employs an evidence-based classification of labor force status using information about the consequences of the behavior of the nonemployed. We find that marginal attachmentdefined as desiring work, although not searchingis a distinct labor market state, lying between those who do not desire work and the unemployed. Furthermore, important heterogeneities exist within these nonemployment states. Two subsets of nonparticipantsboth engaged in waitingdisplay behavior similar to the unemployed.

A Dynamic Model of Union Membership and Employment

This paper incorporates the ideas that a union maximizes an intertemporal objective function, that it recognizes some link between present wage and employment levels and future membership, and that it has an interest in the level of membership attained. The authors model membership decisions with stochastic demand and a differential layoff rate for union and nonunion workers. Membership dynamics are behavioral in that membership increases when the utility of being a member exceeds the utility of not being a member. The model permits a variety of possible relationships between employment and membership in the adjustment to steady state. Copyright 1994 by The London School of Economics and Political Science.

Mandatory Notice and Unemployment

We use newly available data from the Ontario Ministry of Labour to estimate the effects of advance notification of permanent layoff on unemployment durations. While notice is strongly negatively correlated with unemployment in the raw data, most of this effect disappears when we control for personal characteristics and when we correct for endogeneity of notice by using only its cross-firm variation to identify its effects. Overall, while short notice intervals can have a substantial effect on the probability of experiencing a short unemployment spell, we find that even very long notice intervals have little impact on long-term unemployment.

The Role of Negotiators in Union-Firm Bargaining

Differences between the objectives of union leaders and those of the rank and file have traditionally been thought the result of political processes or irrationality. This paper shows that such differences will naturally arise as part of a rational bargaining strategy, since delegation of authority to a negotiator permits the union members to achieve advantageous commitment. This use of negotiators leads to revised interpretation of many popular theories of wage and employment determination, such as the efficient bargain and the right-to-manage models, and has implications for the interpretation of econometric modeling of union behavior.

Cyclical and Seasonal Properties of Canadian Gross Flows of Labour

Although net monthly changes in unemployment and employment are relatively small, the level of gross flows among the three conventional labor force states, Employment, Unemployment, and Not-in-the-Labor-Force, tends to be very large. This paper reviews Canadian evidence on monthly gross flows of labor for the period since 1976. It analyzes both seasonal and cyclical components of these flows and presents comparison with international evidence. It also discusses how these results bear on a number of important policy questions.

The Measurement of Labor Force Dynamics with Longitudinal Data: The Labour Market Activity Survey Filter

This article explores the measurement of labor force dynamics using longitudinal data, focusing in particular on the Canadian Labour Market Activity Survey (LMAS), which represents a potential advance in longitudinal data collection because it measures aspects of dynamics not available in existing panel data such as the Panel Study of Income Dynamics and the National Longitudinal Survey. We examine the implications of the LMAS questionnaire structure-the LMAS filter-for the study of labor market dynamics and undertake simulations to provide a quantitative assessment of the importance of this filter for labor force spells and transitions between labor force states.

Union membership and employment dynamics

Abstract This note examines the behavior of a monopoly union that cares about its future membership and recognizes the dynamic dependence of membership on employment. A characterization is given both of the steady state and of the interdependent employment and membership dynamics out of that steady state.

The effect of outsiders on union contracts

Abstract A recent proposal for incorporating the insider-outsider distinction into the static monopoly union model results in implausible comparative-static properties. This paper presents an alternative formulation that rehabilitates the monopoly union model.