The paper develops a tractable econometric model of optimal migration, focusing on expected income as the main economic influence on migration. The model improves on previous work in two respects: it covers optimal sequences of location decisions (rather than a single once-for-all choice), and it allows for many alternative location choices. The model is estimated using panel data from the NLSY on white males with a high school education. Our main conclusion is that interstate migration decisions are influenced to a substantial extent by income prospects. The results suggest that the link between income and migration decisions is driven both by geographic differences in mean wages and by a tendency to move in search of a better locational match when the income realization in the current location is unfavorable.2 See Greenwood [1997] and Lucas [1997] for surveys.3 Holt (1996) estimated a dynamic discrete choice model of migration, but his framework modeled the move/stay decision and not the location-specific flows. Similarly, Tunali (2000) gives a detailed econometric analysis of the move/stay decision using microdata for Turkey, but his model does not distinguish between alternative destinations. Dahl (2002) allows for many alternative destinations (the set of States in the U.S.), but he considers only a single lifetime migration decision. Gallin (2004) models net migration in a given location as a response to expected future wages in that location, but he does not model the individual decision problem. Gemici (2007) extends our framework and considers family migration decisions, but defines locations as census regions.
Attrition, screening, and signalling models of strategic bargaining are characterized in terms of their predictions about the incidence, mean duration, and settlement rates of strikes and the terms of wage settlements. These predictions are compared with the general features observed in empirical studies of strikes in Canada and the United States. Conclusions are drawn about the types of models capable of generating these features, and about the conformity of the models to the evidence. Methods are described for computing the numerical examples used to illustrate the models.
The paper analyzes repeated contract negotiations involving the same buyer and seller where the contracts are linked because the buyer has persistent (but not fully permanent) private information. (The main application is labor contracts, where the employer has private information about the value of labor services sold by the union). The size of the surplus being divided is specified as a two-state Markov chain with transitions that are synchronized with contract negotiation dates. Equilibrium involves information cycles triggered by the success or failure of aggressive demands made by the seller. A successful demand induces the seller to again make an aggressive demand in the next negotiation, because the buyer's acceptance reveals that the current surplus is large, and because there is persistence in the Markov chain generating the surplus. Rejection of an aggressive demand, on the other hand, leads the seller to be pessimistic about the size of the surplus in the next contract, so the seller makes a "soft" offer that is sure to be accepted. Then, several contracts later, the Markov chain has made enough transitions to make the seller optimistic enough to again make an aggressive demand, and the result of this demand re-starts the information cycle. An interesting feature of this cycle is that the soft price is not constant, but declines as the cycle continues, so as to offset the buyer's option value of re-starting the cycle when the current state is bad. An explicit mapping is given for the relationship between the basic parameters and the equilibrium prices and quantities; in particular, there is a closed-form solution for the threshold belief that makes the seller indifferent between hard and soft offers.
The Lagos-Wright model a monetary model in which pairwise meetings alternate in time with a centralized meeting has been extensively analyzed, but always using particular trading protocols. Here, trading protocols are replaced by two alternative notions of implementability: one that allows only individual defections and one that also allows cooperative defections in meetings. It is shown that the rst-best allocation is implementable under the stricter notion without taxation if people are su ciently patient. And, if people are free to skip the centralized meeting, then lump-sum taxation used to pay interest on money does not enlarge the set of implementable allocations. (100 words)
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