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We show that the effects of taxes on labor supply are shaped by interactions between adjustment costs for workers and hours constraints set by firms. We develop a model in which firms post job offers characterized by an hours requirement and workers pay search costs to find jobs. We present evidence supporting three predictions of this model by analyzing bunching at kinks using Danish tax records. First, larger kinks generate larger taxable income elasticities. Second, kinks that apply to a larger group of workers generate larger elasticities. Third, the distribution of job offers is tailored to match workers' aggregate tax preferences in equilibrium. Our results suggest that macro elasticities may be substantially larger than the estimates obtained using standard microeconometric methods.

We investigate the effect of studying abroad on international labour market mobility later in life for university graduates. We exploit the introduction and expansion of the European ERASMUS student exchange programme as an instrument for studying abroad. We find that studying abroad increases an individual's probability of working in a foreign country by about 15 percentage points. We investigate heterogeneity in returns according to parental education and the student's financial situation. Furthermore, we suggest mechanisms through which the effect of studying abroad may operate.

Using 1980–2000 Census data to study the impact of source country characteristics on married adult immigrants' labor supply assimilation profiles, we find that immigrant women from countries with high female labor supply persistently work more than those from low-femalesupply countries. While both groups of women work less than comparable natives on arrival, women from high-female-participation countries eventually close the gap with natives entirely, and women from low-femalelabor supply countries eliminate most of it. Men's labor supply is unaffected by source country female participation, suggesting that the findings on women reflect notions of gender roles.

Recent work emphasizes a slowing of wage inequality growth over the last 15 years. This \"revisionist\" literature views the 1980s surge in wage inequality as an \"episodic\" event caused by institutional forces and argues that \"modest\" inequality growth in the 1990s is inconsistent with a key role for skill-biased technical change. This paper reconsiders this revisionist view, focusing on a marked change in the evolution of the US wage structure over the past 15 years and divergent trends in upper- and lower-tail wage inequality. This analysis offers unambiguous evidence that demand shifts are likely to be a key component of any cogent explanation for the changing US wage structure. Quantity and price changes covary positively throughout the earnings distribution both in the 1980s when the wage structure was spreading monotonically, and in the 1990s, when it was polarizing. The paper concludes that the changing distribution of job task demands, spurred directly by advancing information technology and indirectly by its impact on outsourcing, goes some distance toward interpreting the recent polarization of the wage structure.

\"One of the most dramatic economic transformations of the past century has been the entry of women into the labor force. While many theories explain why this change took place, we investigate the process of transition itself. We argue that local information transmission generates changes in participation that are geographically heterogeneous, locally correlated, and smooth in the aggregate, just like those observed in our data. In our model, women learn about the effects of maternal employment on children by observing nearby employed women. When few women participate in the labor force, data are scarce and participation rises slowly. As information accumulates in some regions, the effects of maternal employment become less uncertain and more women in that region participate. Learning accelerates, labor force participation rises faster, and regional participation rates diverge. Eventually, information diffuses throughout the economy, beliefs converge to the truth, participation flattens out, and regions become more similar again. To investigate the empirical relevance of our theory, we use a new county-level data set to compare our calibrated model to the time series and geographic patterns of participation.\" (Author's abstract, IAB-Doku). Die Untersuchung enthält quantitative Daten. Forschungsmethode: empirisch-quantitativ; empirisch; Längsschnitt; historisch. Die Untersuchung bezieht sich auf den Zeitraum 1940 bis 2005.

The majority of labor transactions throughout much of history and a significant fraction of such transactions in many developing countries today are \"coercive,\" in the sense that force or the threat of force plays a central role in convincing workers to accept employment or its terms. We propose a tractable principal-agent model of coercion, based on the idea that coercive activities by employers, or \"guns,\" affect the participation constraint of workers. We show that coercion and effort are complements, so that coercion increases effort, but coercion always reduces utilitarian social welfare. Better outside options for workers reduce coercion because of the complementarity between coercion and effort: workers with a better outside option exert lower effort in equilibrium and thus are coerced less. Greater demand for labor increases coercion because it increases equilibrium effort. We investigate the interaction between outside options, market prices, and other economic variables by embedding the (coercive) principal-agent relationship in a general equilibrium setup, and studying when and how labor scarcity encourages coercion. General (market) equilibrium interactions working through the price of output lead to a positive relationship between labor scarcity and coercion along the lines of ideas suggested by Domar, while interactions those working through the outside option lead to a negative relationship similar to ideas advanced in neo-Malthusian historical analyses of the decline of feudalism. In net, a decline in available labor increases coercion in general equilibrium if and only if its direct (partial equilibrium) effect is to increase the price of output by more than it increases outside options. Our model also suggests that markets in slaves make slaves worse off, conditional on enslavement, and that coercion is more viable in industries that do not require relationship-specific investment by workers.

This paper empirically studies the effects of service offshoring on white-collar employment, using data for more than 100 US occupations over the period 1997-2006. A model of firm behaviour based on separability allows derivation of the labour demand elasticity with respect to service offshoring for each occupation. Estimation is performed with quasi-maximum likelihood, to account for high degrees of censoring in the employment variable. The estimated elasticities are then related to proxies for the skill level and the degree of tradability of the occupations. Results suggest that service offshoring is skill-biased, because it increases employment in more skilled occupations relative to less skilled occupations. At a given skill level, however, service offshoring penalizes tradable occupations relative to non-tradable occupations. Reprinted by permission of Blackwell Publishers

This article is a revised version of the lecture Christopher A. Pissarides delivered in Stockholm, Sweden, on December 8, 2010, when he received the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. Although there were many attempts to derive an equilibrium wage distribution for markets with search frictions, this paper takes a different approach to labor market equilibrium, that could be better described by the term matching. The idea is that the job search underlying unemployment in the official definitions is not about looking for a good wage, but about looking for a good job match. The financial crisis of 2008 has thrown open the question of the interaction between capital and labor markets. Equilibrium matching models are built on the assumption of perfect capital markets.

With the fall of the Berlin Wall, ethnic Germans living in eastern Europe and the former Soviet Union were given the opportunity to migrate to Germany. Within 15 years, 2.8 million individuals had done so. Upon arrival, these immigrants were exogenously allocated to different regions to ensure an even distribution across the country. Their inflow can therefore be seen as a quasi-experiment of immigration. I analyze the effect of these inflows on skill-specific employment rates and wages. The results indicate a displacement effect of 3.1 unemployed workers for every 10 immigrants that find a job, but no effect on relative wages.

In contrast to previous efforts to model an individual's movement from wage work into entrepreneurship, we consider that individuals might transition incrementally by retaining their wage job while entering into self-employment. We show that these hybrid entrepreneurs represent a significant share of all entrepreneurial activity. Theoretical arguments are proposed to suggest why hybrid entrants are distinct from self-employment entrants, and why hybrid entry may facilitate subsequent entry into full self-employment. We demonstrate that there are significant theoretical and empirical consequences for this group and our understanding of self-employment entry and labor market dynamics. Using matched employee-employer data over eight years, we test the model on a population of Swedish wage earners in the knowledge-intensive sector.