Are Good Industrial Relations Good for the Economy?

Using international data, we investigate whether the quality of industrial relations matters for the macro economy. We measure industrial relations inversely by strikes Ð which proxy we cross-check with an industrial relations reputation indicator Ð and our macro performance indicator is the unemployment rate. Independent of the role of other institutions, good industrial relations do seem to matter: greater strike volume is associated with higher unemployment. But these results apply in cross section. Holding country effects constant, the sign of the strikes coefficient is abruptly reversed. Although it does not seem to be the case that the line of causation runs from unemployment to strikes once we control for the endogeneity of strikes, it is also the case that support for the strikes proxy for industrial relations quality is much eroded.strikes, industrial relations quality, unemployment, labor market institutions, cross-country data

Is Portugal really so arteriosclerotic? Results from a cross-country analysis of labor adjustment

Reputation indexes of employment protection have proven popular constructs in studies of the covariation of labor market institutions and macroeconomic outcomes. Portugal occupies an unenviable rank order in such measures of the stringency of employment protection. We critique this reputation in two ways: first, by offering a modicum of 'corrective' institutional detail on the nature of employment protection in Portugal; and, second, and more substantively, by offering a detailed analysis of the process of labor djustment in Portugal, benchmarked to other-country experience. The latter exercise – based on a two- and one-stage error correction model – reveals Portugal to have a very high speed of adjustment to deviations from the long-run employment-output equilibrium – a result that is clearly at odds with its allegedly sclerotic labor market. More in accord with received wisdom is the very smooth labor adjustment mechanism characterizing the United Kingdom. The most notable feature of the German results is the deterioration in that country's speed of adjustment in recent years. The Spanish case is distinguished by its erratic path of long-run adjustment. --

Worker directors: a German product that didn't export?

Despite its lack of attractiveness to other countries, the German system of quasiparity codetermination at company level has held up remarkably well. We recount the theoretical arguments for and against codetermination and survey the empirical evidence on the effects of the institution, tracing the three phases of a still sparse literature. Recent findings hold out the prospect that good corporate governance might include employee representation by virtue of the monitoring function and the reduction in agency costs, while yet cautioning that the optimal level of representation is likely below parity. And although the German system may be better than its reputation among foreigners, it might have to adapt to globalization and the availability of alternative forms of corporate governance in the EU. -- Trotz seiner geringen Attraktivität für andere Länder hat sich das deutsche System der quasi-paritätischen Unternehmensmitbestimmung als bemerkenswert stabil erwiesen. Wir erörtern die theoretischen Argumente für und gegen Mitbestimmung und bieten einen Überblick über die empirische Evidenz zu den Auswirkungen dieser Institution, wobei wir drei Phasen einer eher spärlichen Literatur nachzeichnen. Jüngere Erkenntnisse deuten darauf hin, dass zu einer guten Corporate Governance auch die Beteiligung der Arbeitnehmer (aufgrund ihrer Überwachungsfunktion und der Verringerung von Agency-Kosten) gehören könnte, wobei jedoch das optimale Ausmaß der Mitbestimmung unter 50 Prozent liegen dürfte. Auch wenn das deutsche System besser sein mag als sein Ruf im Ausland, muss es sich wohl an die Globalisierung und die Verfügbarkeit alternativer Unternehmensformen in der EU anpassen.codetermination,worker directors,board-level employee representation,firm performance,Germany

Unemployment Duration: Competing and Defective Risks

This paper examines the determinants of unemployment duration in the framework of a competing risks model, where the destination states are employment and inactivity. The major innovation is the use of a split-population approach to accommodate the presence of defective risks in the context of the competing risks model. Certain of the regressors that affect the conditional hazards are allowed to influence defective risks. Unobserved individual heterogeneity among the susceptible populations is also controlled for. Access to unemployment benefits and age are accorded special emphasis because of their influence on defective risks and escape rates.

How Does the Unemployment Insurance System Shape the Time Profile of Jobless Duration?

This paper examines the effects of unemployment insurance on escape rates from unemployment using data from the 1998 Displaced Worker Survey. Transitions from unemployment to employment are modeled using a flexible representation of the baseline hazard function and allowing for discrete changes through time in the effects of unemployment insurance benefits, as well as those of the other covariates. The impact of unemployment insurance is also modeled using a time-varying benefits measure, namely, time to exhaustion of benefits. Potential biases stemming from reverse causation and unobserved individual heterogeneity are accommodated. Both approaches render transparent the major disincentive effects of access to benefits on re-employment rates while also providing evidence of time-varying effects of other regressors.

Simulating conical intersection dynamics in the condensed phase with hybrid quantum master equations

We present a framework for simulating relaxation dynamics through a conical intersection of an open quantum system that combines methods to approximate the motion of degrees of freedom with disparate time and energy scales. In the vicinity of a conical intersection, a few degrees of freedom render the nuclear dynamics nonadiabatic with respect to the electronic degrees of freedom. We treat these strongly coupled modes by evolving their wavepacket dynamics in the absence of additional coupling exactly. The remaining weakly coupled nuclear degrees of freedom are partitioned into modes that are fast relative to the nonadiabatic coupling and those that are slow. The fast degrees of freedom can be traced out and treated with second-order perturbation theory in the form of the time-convolutionless master equation. The slow degrees of freedom are assumed to be frozen over the ultrafast relaxation, and treated as sources of static disorder. In this way, we adopt the recently developed frozen-mode extension to second-order quantum master equations. We benchmark this approach to numerically exact results in models of pyrazine internal conversion and rhodopsin photoisomerization. We use this framework to study the dependence of the quantum yield on the reorganization energy and the characteristic timescale of the bath, in a two-mode model of photoisomerization. We find that the yield is monotonically increasing with reorganization energy for a Markovian bath, but monotonically decreasing with reorganization energy for a non-Markovian bath. This reflects the subtle interplay between dissipation and decoherence in conical intersection dynamics in the condensed phase

What Have We Learned About The Employment Effects of Severance Pay? Further Iterations of Lazear et al.

In this study we examine the contribution of severance pay to employment and unemployment development using data on industrialized OECD countries. Our starting point is Lazear’s (1990) dictum that severance payment requirements adversely impact the labor market. We extend his sample period and add to his parsimonious specification a variety of fixed and time-varying labor market institutions. While the positive effect of severance pay on unemployment garners some support, there is no real indication of adverse effects for (the three) other employment outcomes identified here. Moreover, with the possible exception of collective bargaining coordination, the role of institutions is also more muted than suggested in the literature.

Does the Quality of Industrial Relations Matter for the Macro Economy? A Cross-Country Analysis Using Strikes Data

Using international data, we investigate whether the quality of industrial relations matters for the macro economy. We measure industrial relations inversely by strikes – which proxy we cross-check with an industrial relations reputation indicator – and our macro performance outcome is the unemployment rate. Independent of the role of other institutions, good industrial relations do seem to matter: greater strike volume is associated with higher unemployment. Holding country effects constant, however, the sign of the variable is reversed. This fixed-effects result likely picks up a direct effect of strikes, namely, their tendency to rise when striking becomes more attractive to the union.strike rate/volume, quality of labor relations, labor market institutions, unemployment

Six Ways to Leave Unemployment

This paper uses a unique Portuguese data set to examine the effect of unemployment benefit receipt and maximum duration of benefits on escape rates from unemployment. The focus is on the time profile of transitions out of unemployment. The novel aspect of the study resides in its identification of six destination states, namely, open-ended employment, fixed-term contracts, part-time work, government-provided jobs, self employment, and labor force withdrawal. Strong evidence of disincentive effects of the unemployment benefit system is reported. This result obtains both in general and for the various destination states, among which some marked behavioral differences are detected.