We analyze a network‐formation model where agents belong to different communities. Both individual benefits and costs depend on direct as well as indirect connections. Benefits of an indirect connection decrease with distance in the network, while the cost of a link depends on the type of agents involved. Two agents from the same community always face a low linking cost, while the cost of forming a relationship between two agents from different communities diminishes with the rate of exposure of each of them to the other community. We find that socialization among the same type of agent can be weak even if the cost of maintaining links within one's own type is very low. Our model also suggests that policies aimed at reducing segregation are socially desirable only if they reduce the within‐community cost differential by a sufficiently large amount.
{"title":"Segregation in Friendship Networks","authors":"Joan de Martí, Y. Zenou","doi":"10.1111/sjoe.12178","DOIUrl":"https://doi.org/10.1111/sjoe.12178","url":null,"abstract":"We analyze a network‐formation model where agents belong to different communities. Both individual benefits and costs depend on direct as well as indirect connections. Benefits of an indirect connection decrease with distance in the network, while the cost of a link depends on the type of agents involved. Two agents from the same community always face a low linking cost, while the cost of forming a relationship between two agents from different communities diminishes with the rate of exposure of each of them to the other community. We find that socialization among the same type of agent can be weak even if the cost of maintaining links within one's own type is very low. Our model also suggests that policies aimed at reducing segregation are socially desirable only if they reduce the within‐community cost differential by a sufficiently large amount.","PeriodicalId":11754,"journal":{"name":"ERN: Other Macroeconomics: Aggregative Models (Topic)","volume":"131 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2017-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73463948","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Many studies on informal employment have identified significant differences in wages and other aspects between workers engaged in formal and informal employment in China. However, whether informal employment is the result of a segmented labour market or a competitive labour market remains unclear. In this study, we empirically examined this issue and found that the informal labour market in China is both a segmented and a competitive labour market, with nearly half of workers in informal employment entering involuntarily in 2006. However, entry barriers are not observed for 2010.
{"title":"Is Informal Employment a Result of Market Segmentation? Evidence from China","authors":"Jiro Nemoto, Hong Zuo","doi":"10.1111/1467-8462.12228","DOIUrl":"https://doi.org/10.1111/1467-8462.12228","url":null,"abstract":"Many studies on informal employment have identified significant differences in wages and other aspects between workers engaged in formal and informal employment in China. However, whether informal employment is the result of a segmented labour market or a competitive labour market remains unclear. In this study, we empirically examined this issue and found that the informal labour market in China is both a segmented and a competitive labour market, with nearly half of workers in informal employment entering involuntarily in 2006. However, entry barriers are not observed for 2010.","PeriodicalId":11754,"journal":{"name":"ERN: Other Macroeconomics: Aggregative Models (Topic)","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2017-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76278417","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article considers the issue of data cleaning. We use state-level data on internet search activity in the United States to illustrate several common data cleaning tasks, including frequency conversion and data scaling as well as methods for handling sampling uncertainty and accommodating structural breaks and outliers. We emphasise that data cleaning relies on informed judgement and so it is important to maintain transparency through careful documentation of data cleaning procedures.
{"title":"An Introduction to Data Cleaning Using Internet Search Data","authors":"Matthew Greenwood‐Nimmo, Kalvinder K. Shields","doi":"10.1111/1467-8462.12235","DOIUrl":"https://doi.org/10.1111/1467-8462.12235","url":null,"abstract":"This article considers the issue of data cleaning. We use state-level data on internet search activity in the United States to illustrate several common data cleaning tasks, including frequency conversion and data scaling as well as methods for handling sampling uncertainty and accommodating structural breaks and outliers. We emphasise that data cleaning relies on informed judgement and so it is important to maintain transparency through careful documentation of data cleaning procedures.","PeriodicalId":11754,"journal":{"name":"ERN: Other Macroeconomics: Aggregative Models (Topic)","volume":"2015 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2017-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86849227","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Exit rates from unemployment and re‐employment wages decline over a period of unemployment, after controlling for worker observable characteristics. We study the role of unobserved heterogeneity in an economy with asymmetric information and directed search. We show that the unique equilibrium is separating and that skilled workers have more job opportunities and higher wages. The composition of the unemployed varies with the duration of unemployment, so average exit rates and wages fall with time. The separating equilibrium relies on performance‐related pay schemes and the ability of firms to commit to renting an input that is complementary to worker skills.
{"title":"Unobserved Heterogeneity, Exit Rates, and Re‐Employment Wages","authors":"J. Fernández-Blanco, Pedro Gomes","doi":"10.1111/sjoe.12173","DOIUrl":"https://doi.org/10.1111/sjoe.12173","url":null,"abstract":"Exit rates from unemployment and re‐employment wages decline over a period of unemployment, after controlling for worker observable characteristics. We study the role of unobserved heterogeneity in an economy with asymmetric information and directed search. We show that the unique equilibrium is separating and that skilled workers have more job opportunities and higher wages. The composition of the unemployed varies with the duration of unemployment, so average exit rates and wages fall with time. The separating equilibrium relies on performance‐related pay schemes and the ability of firms to commit to renting an input that is complementary to worker skills.","PeriodicalId":11754,"journal":{"name":"ERN: Other Macroeconomics: Aggregative Models (Topic)","volume":"68 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2017-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80183668","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study whether pessimism and optimism about the future by forward looking agents provides a rationale for social security. We first distinguish between an agent’s true and pessimistic preferences and then analyze whether this agent’s level of saving depends on the pessimism parameter ( π ) and how welfare measured by the agent’s true preferences depends on π . Next, we examine whether it is possible for pessimism to increase the agent’s true utility and then show that this kind of pessimism does not provide a rationale for social security. Moving on to optimism, we study the need for a pay-as-you-go (PAYG) social security system when the agent is optimistic about the generosity of the PAYG system. This optimism is modeled with a parameter ( ω ). In this setting, we first study the impact that an increase in ω has on the agent’s saving and then examine whether this agent’s welfare increases or decreases in ω . Finally, we show that this kind of optimism does not justify the presence of the PAYG social security system.
{"title":"On Pessimism and Optimism by Forward Looking Agents and the Need for Social Security","authors":"A. Batabyal, P. Nijkamp","doi":"10.2139/ssrn.2893187","DOIUrl":"https://doi.org/10.2139/ssrn.2893187","url":null,"abstract":"We study whether pessimism and optimism about the future by forward looking agents provides a rationale for social security. We first distinguish between an agent’s true and pessimistic preferences and then analyze whether this agent’s level of saving depends on the pessimism parameter ( π ) and how welfare measured by the agent’s true preferences depends on π . Next, we examine whether it is possible for pessimism to increase the agent’s true utility and then show that this kind of pessimism does not provide a rationale for social security. Moving on to optimism, we study the need for a pay-as-you-go (PAYG) social security system when the agent is optimistic about the generosity of the PAYG system. This optimism is modeled with a parameter ( ω ). In this setting, we first study the impact that an increase in ω has on the agent’s saving and then examine whether this agent’s welfare increases or decreases in ω . Finally, we show that this kind of optimism does not justify the presence of the PAYG social security system.","PeriodicalId":11754,"journal":{"name":"ERN: Other Macroeconomics: Aggregative Models (Topic)","volume":"10 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2017-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77284121","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We analyse the optimal location choice of a monopolistic firm that operates two arbitrarily located platforms on a two‐sided market. By extending the traditional Hotelling framework, we show that the optimal platform locations are equivalent to the one‐sided benchmark if both sides are either restricted to single‐ or multi‐homing. In the mixed case (one side single‐homes, the other one multi‐homes), the optimal platform locations are in line with the respective symmetric case. If the monopolist is restricted to choosing the same location on either side of the market, the optimal locations are determined by the relative profitability of the market sides.
{"title":"Monopolistic Location Choice in a Two‐Sided Hotelling Model","authors":"Enrico Böhme, Christopher Müller","doi":"10.1111/boer.12078","DOIUrl":"https://doi.org/10.1111/boer.12078","url":null,"abstract":"We analyse the optimal location choice of a monopolistic firm that operates two arbitrarily located platforms on a two‐sided market. By extending the traditional Hotelling framework, we show that the optimal platform locations are equivalent to the one‐sided benchmark if both sides are either restricted to single‐ or multi‐homing. In the mixed case (one side single‐homes, the other one multi‐homes), the optimal platform locations are in line with the respective symmetric case. If the monopolist is restricted to choosing the same location on either side of the market, the optimal locations are determined by the relative profitability of the market sides.","PeriodicalId":11754,"journal":{"name":"ERN: Other Macroeconomics: Aggregative Models (Topic)","volume":"30 4 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86359700","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The relation between micro theory and macro theory is necessarily one between the parts of something and the whole of that thing. This simple recognition entails numerous analytical complexities which contemporary macro theories do more to conceal than to reveal, mostly out of a concern with constructing theories that are analytically tractable. I don’t deny the value of analytical tractability, but I also think that from time to time it is good to probe whether some of the analytical fictions invoked in the name of tractability might be overcome thorough some alternative scheme of analysis. In this paper I seek to sketch some contours of a possible bypass. In doing this, I follow up on three joint efforts (Lewis and Wagner 2017), Veetil and Wagner (2015), Caton and Wagner (2015) along with my earlier effort (Wagner 2012a) to treat a macro economy as an ecology of plans. This paper also seeks to extend George Shackle (1972, 1974) and Ludwig Lachman (1956, 1977) by working within a diachronic and non-equilibrium analytical motif.
微观理论和宏观理论之间的关系必然是某事物的部分和整体之间的关系。这种简单的认识需要许多分析上的复杂性，而当代宏观理论更多地隐藏而不是揭示这些复杂性，主要是出于对构建分析上易于处理的理论的关注。我不否认分析可追溯性的价值，但我也认为，时不时地探究一下，是否一些以可追溯性之名所唤起的分析虚构，可以通过其他分析方案加以克服，这是有益的。在本文中，我试图勾勒出可能的旁路的一些轮廓。在此过程中，我跟进了三项共同努力(Lewis and Wagner 2017)， Veetil and Wagner (2015)， Caton and Wagner(2015)以及我早期的努力(Wagner 2012a)，将宏观经济视为计划的生态。本文还试图通过在历时性和非平衡分析主题中工作来扩展George Shackle(1972, 1974)和Ludwig Lachman(1956, 1977)。
{"title":"Macro Theory within a Diachronic, Non-Equilibrium Motif","authors":"R. Wagner","doi":"10.2139/ssrn.2871728","DOIUrl":"https://doi.org/10.2139/ssrn.2871728","url":null,"abstract":"The relation between micro theory and macro theory is necessarily one between the parts of something and the whole of that thing. This simple recognition entails numerous analytical complexities which contemporary macro theories do more to conceal than to reveal, mostly out of a concern with constructing theories that are analytically tractable. I don’t deny the value of analytical tractability, but I also think that from time to time it is good to probe whether some of the analytical fictions invoked in the name of tractability might be overcome thorough some alternative scheme of analysis. In this paper I seek to sketch some contours of a possible bypass. In doing this, I follow up on three joint efforts (Lewis and Wagner 2017), Veetil and Wagner (2015), Caton and Wagner (2015) along with my earlier effort (Wagner 2012a) to treat a macro economy as an ecology of plans. This paper also seeks to extend George Shackle (1972, 1974) and Ludwig Lachman (1956, 1977) by working within a diachronic and non-equilibrium analytical motif.","PeriodicalId":11754,"journal":{"name":"ERN: Other Macroeconomics: Aggregative Models (Topic)","volume":"4 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-11-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79411330","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this note we develop principles for forecasting economies viewed as evolving networks formed by individuals acting on the basis of their psychology and social position following Markey-Towler (2016). We review the basic formal apparatus required to understand economies as such before using results derived thereon to understand the determinants of the likelihoods that certain development paths will or will not be taken. We develop a view by which we can allow for radical uncertainty - “black swan” events - and maintain an ability to forecast. We make use of the qualitative view of the likelihood of certain development paths thus obtained to inform our quantitative estimations for the dynamics of meso-populations within the econometric framework developed by Foster et al. (1999) for modelling in the presence of evolutionary change. We obtain thus a procedure for forecasting complex economic systems.
{"title":"Principles of Forecasting in Complex Economic Systems","authors":"B. Markey-Towler","doi":"10.2139/ssrn.2907197","DOIUrl":"https://doi.org/10.2139/ssrn.2907197","url":null,"abstract":"In this note we develop principles for forecasting economies viewed as evolving networks formed by individuals acting on the basis of their psychology and social position following Markey-Towler (2016). We review the basic formal apparatus required to understand economies as such before using results derived thereon to understand the determinants of the likelihoods that certain development paths will or will not be taken. We develop a view by which we can allow for radical uncertainty - “black swan” events - and maintain an ability to forecast. We make use of the qualitative view of the likelihood of certain development paths thus obtained to inform our quantitative estimations for the dynamics of meso-populations within the econometric framework developed by Foster et al. (1999) for modelling in the presence of evolutionary change. We obtain thus a procedure for forecasting complex economic systems.","PeriodicalId":11754,"journal":{"name":"ERN: Other Macroeconomics: Aggregative Models (Topic)","volume":"35 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-11-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81105127","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Uncertainty about the appropriate choice among nested models is a central concern for optimal policy when policy prescriptions from those models differ. The standard procedure is to specify a prior over the parameter space ignoring the special status of some sub-models, e.g. those resulting from zero restrictions. This is especially problematic if a model's generalization could be either true progress or the latest fad found to fit the data. We propose a procedure that ensures that the specified set of sub-models is not discarded too easily and thus receives no weight in determining optimal policy. We find that optimal policy based on our procedure leads to substantial welfare gains compared to the standard practice.
{"title":"Nested Models and Model Uncertainty","authors":"Alexander Kriwoluzky, C. Stoltenberg","doi":"10.1111/sjoe.12134","DOIUrl":"https://doi.org/10.1111/sjoe.12134","url":null,"abstract":"Uncertainty about the appropriate choice among nested models is a central concern for optimal policy when policy prescriptions from those models differ. The standard procedure is to specify a prior over the parameter space ignoring the special status of some sub-models, e.g. those resulting from zero restrictions. This is especially problematic if a model's generalization could be either true progress or the latest fad found to fit the data. We propose a procedure that ensures that the specified set of sub-models is not discarded too easily and thus receives no weight in determining optimal policy. We find that optimal policy based on our procedure leads to substantial welfare gains compared to the standard practice.","PeriodicalId":11754,"journal":{"name":"ERN: Other Macroeconomics: Aggregative Models (Topic)","volume":"54 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90688302","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The disbalance of Supply and Demand is typically considered as the driving force of the markets. However, the measurement or estimation of Supply and Demand at price different from the execution price is not possible even after the transaction. An approach in which Supply and Demand are always matched, but the rate $I=dv/dt$ (number of units traded per unit time) of their matching varies, is proposed. The state of the system is determined not by a price $p$, but by a probability distribution defined as the square of a wavefunction $psi(p)$. The equilibrium state $psi^{[H]}$ is postulated to be the one giving maximal $I$ and obtained from maximizing the matching rate functional $ / $, i.e. solving the dynamic equation of the form "future price tend to the value maximizing the number of shares traded per unit time". An application of the theory in a quasi--stationary case is demonstrated. This transition from Supply and Demand concept to Liquidity Deficit concept, described by the matching rate $I$, allows to operate only with observable variables, and have a theory applicable to practical problems.
{"title":"Market Dynamics. On Supply and Demand Concepts","authors":"V. Malyshkin","doi":"10.2139/ssrn.2733002","DOIUrl":"https://doi.org/10.2139/ssrn.2733002","url":null,"abstract":"The disbalance of Supply and Demand is typically considered as the driving force of the markets. However, the measurement or estimation of Supply and Demand at price different from the execution price is not possible even after the transaction. An approach in which Supply and Demand are always matched, but the rate $I=dv/dt$ (number of units traded per unit time) of their matching varies, is proposed. The state of the system is determined not by a price $p$, but by a probability distribution defined as the square of a wavefunction $psi(p)$. The equilibrium state $psi^{[H]}$ is postulated to be the one giving maximal $I$ and obtained from maximizing the matching rate functional $ / $, i.e. solving the dynamic equation of the form \"future price tend to the value maximizing the number of shares traded per unit time\". An application of the theory in a quasi--stationary case is demonstrated. This transition from Supply and Demand concept to Liquidity Deficit concept, described by the matching rate $I$, allows to operate only with observable variables, and have a theory applicable to practical problems.","PeriodicalId":11754,"journal":{"name":"ERN: Other Macroeconomics: Aggregative Models (Topic)","volume":"96 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-02-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85891678","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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