Research

Abstract:  We build a dynamic Ricardian model of trade with search frictions. The model generates an endogenous network of firm-to-firm trade relationships and price bargaining within and across relationships. Following a foreign shock, firms sourcing inputs from abroad have three options: absorb the shock, renegotiate with their current supplier or switch to a supplier in another country. The size of these adjustment margins depends on the interplay between Ricardian comparative advantages, search frictions and firms' individual characteristics. We exploit French firm-to-firm trade data to estimate the model structurally and quantify the relative importance of these adjustment margins at sector-country level.

Abstract: We use administrative data on individual balance sheets in Denmark to document how an individual's financial position affects job search behavior. We look at the effect of wealth at the entry into unemployment on the exit rate from unemployment as well as the effect on the subsequent match quality. The detailed data allows us not only to distinguish between liquid and illiquid parts, but also to decompose each of them into assets and liabilities. The decomposition of wealth into these four components is key to understanding how wealth affects job finding rates. In particular, we show that liquid assets reduce the probability of becoming re-employed, but we do not see an effect of liquid liabilities or the illiquid wealth components, while interest payments speed up re-employment. The results on subsequent match quality in form of job duration and wages are mixed.

Abstract: A large fraction of the eligible unemployed workers do not claim for unemployment insurance (UI) and, among claimants, many do not register immediately upon layoff. To model both the selection into UI and the distribution of the duration until registration, this article provides a job search model with endogenous take-up. Estimating our model using French administrative data, we find substantial heterogeneity in both search and claiming frictions. If half of the sample faces high claiming frictions, many have good employment prospects and exit unemployment quickly. The burden of the claiming difficulties is thus concentrated on 10% of the sample that suffers both from claiming and job search frictions. For that reason, the alleviation of the complexity of the claiming process is likely to have very heterogenous effects but little effect on aggregate unemployment duration. Additionally we show that accounting for the endogeneity of take-up is important to measure the unemployment duration elasticities with respect to UI benefits.

Abstract: A large fraction of the eligible workers does not claim for unemployment benefits. The existing literature, focusing on the determinants of take-up (TU), has shown that it is sensitive to both the costs and the benefits of claiming. This paper shows that variation in TU behavior can be used to compute the claiming costs and to determine the workers' value of unemployment insurance (UI). Using Austrian data and exploiting a quasi-experimental setting, we first estimate how eligibility for severance payments and extended unemployment benefits affect TU. Using a simple model, we show that these estimates can be used to derive bounds on a monetary equivalent of the UI value and to derive the ratio of TU costs to utility gains from UI. Among claimants, we estimate that the median UI value is above 2.5 monthly wages but that the median TU cost represents more than half of the utility gains. For the non-claimants, our results point towards large costs of collecting benefits, 40% above the utility gains. Finally, we look at how the UI values and the claiming costs vary with observable characteristics.