Essays on Earnings Instability: The Impact of Search Effectiveness, Labour Market Policy Instruments, and Globalisation
type: CreativeWork
description: Chapter 1: We study the link between market thickness, labour market flexibility and wage dynamics. We consider an economy with two sectors; a risk-free sector that employs workers only, and a risky sector with matching frictions that employs both workers and employers. Workers are risk-averse, whereas employers are risk-neutral. In the risky sector, complete contracts are unavailable due to informational reasons; hence flexible self-enforcing contracts are the only means to share risk. We show that shifts out of stable employment into flexible employment engendered by improvements in search effectiveness increases the average real wage and wage volatility in the risky sector while raising the (expected) real wages and worker welfare in the whole economy. Furthermore, depending on parameter values, it may also increase economy-wide real wage volatility. Therefore, our model can explain the transitory variation in workers' earnings observed after the 1970s, even for job stayers. Chapter 2: We study the relationship between unemployment insurance, employment creation and protection, and wage dynamics. We consider a labour market in which risk-averse workers and risk-neutral employers must match for production to occur. Contracts are incomplete; therefore self-enforcing contracts are the only means to share risk. We jointly analyse the impact of financing and spending aspects of labour market policies on the welfare of the parties and wage volatility. On the financing side, we show that either ring tax or hiring tax strictly dominate payroll tax in terms of efficiency gains and may increase the employers' welfare. On the spending side, even though unemployment payment increases workers' welfare, it does so by increasing wage volatility and decreasing employers' welfare. On the other hand, hiring payment may increase the employers' welfare without causing any change in workers' welfare. While unemployment payment redistributes income between unemployed and employed work…
abstract: Chapter 1: We study the link between market thickness, labour market flexibility and wage dynamics. We consider an economy with two sectors; a risk-free sector that employs workers only, and a risky sector with matching frictions that employs both workers and employers. Workers are risk-averse, whereas employers are risk-neutral. In the risky sector, complete contracts are unavailable due to informational reasons; hence flexible self-enforcing contracts are the only means to share risk. We show that shifts out of stable employment into flexible employment engendered by improvements in search effectiveness increases the average real wage and wage volatility in the risky sector while raising the (expected) real wages and worker welfare in the whole economy. Furthermore, depending on parameter values, it may also increase economy-wide real wage volatility. Therefore, our model can explain the transitory variation in workers' earnings observed after the 1970s, even for job stayers. Chapter 2: We study the relationship between unemployment insurance, employment creation and protection, and wage dynamics. We consider a labour market in which risk-averse workers and risk-neutral employers must match for production to occur. Contracts are incomplete; therefore self-enforcing contracts are the only means to share risk. We jointly analyse the impact of financing and spending aspects of labour market policies on the welfare of the parties and wage volatility. On the financing side, we show that either ring tax or hiring tax strictly dominate payroll tax in terms of efficiency gains and may increase the employers' welfare. On the spending side, even though unemployment payment increases workers' welfare, it does so by increasing wage volatility and decreasing employers' welfare. On the other hand, hiring payment may increase the employers' welfare without causing any change in workers' welfare. While unemployment payment redistributes income between unemployed and employed work…
author: Avcioglu, Sahin
license: https://researchspace.auckland.ac.nz/docs/uoa-docs/rights.htm
date published: 2017
date modified: 2026-07-24T01:04:52Z
provider: University of Auckland
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: ResearchSpace@Auckland

PropertyValue
property ID: Handle
value: https://hdl.handle.net/2292/34508