Publications

PUBLISHED ARTICLES

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Photo: Sarah Goldberg

Chemin, M and Wasmer, E. (2009). ‘The employment effects of 35-hour workweek regulation in France: using Alsace-Moselle local laws to build a diff-in-diff’, Journal of Labor Economics October 2009, Vol. 27, No. 4: 487-524 (lead article).

France's 1998 implementation of the 35-hour workweek has been one of the greatest regulatory shocks on labor markets. Few studies evaluate the impact of this regulation because of a lack of identification strategies. For historical reasons due to the way Alsace-Moselle was returned to France in 1918, the implementation of France's 35-hour workweek was less stringent in that region than in the rest of the country, which is confirmed by double and triple differences. Yet it shows no significant difference in employment with the rest of France, which casts doubt on the effectiveness of this regulation.

Wasmer, E. (2008). ‘Analyse économique du marché du logement locatif’, Revue Economique, special issue Law and Economics, Vol. 58, 2007/6, pages 1247-1264

Chemin, Matthieu and Etienne Wasmer. (2008). 'Regional difference-in-differences in France using the German annexation of Alsace-Moselle in 1870-1918', NBER International Macro Annuals, eds. Frankel and Pissarides, University of Chicago Press.

In this paper, we describe the historical context of local laws in Alsace-Moselle, a region of France under the control of Germany between 1870 and 1918. We provide three examples of labor policies that can be evaluated thanks to this experience: welfare laws, regulation of working time and absenteism, as well as preliminary investigations of the e¤ect of those policies. We conclude in proposing additional examples of policy evaluations that could be based on a similar strategy.

Cahuc, P., Marque, F. and Wasmer, E. (2008). 'Intrafirm wage bargaining in matching models: macroeconomic implications and resolution methods with multiple labor inputs', International Economic Review, Vol. 49, No. 3, August 2008, pages 943-972.

This paper provides a synthetic model of the labor market equilibrium with search frictions in a dynamic framework where wage bargaining is influenced by within-firm strategic interactions à la Stole and Zwiebel, with explicit closed form solutions. Accounting for the heterogeneity of labor and different bargaining power of workers drastically change the results compared to the homogeneous labor case. With heterogeneous labor, higher relative bargaining power for some groups may lead to overemployment relative to other groups, such other groups being underemployed if they have a lower relative bargaining power. The overemployment results do not necessarily hold at the macroeconomic level. Finally, the hold-up problem between capital owners and employees does not necessarily lead to underinvestment in physical capital as is usually the case. Actually, strategic overemployment can induce over-investment when employees substitutable to capital have strong bargaining power.

Wasmer, E. (2007). 'Links between Labor Supply and Unemployment: Theory and Empirics', Journal of Population Economics. Springer, vol. 22(3), pages 773-802, July. (revised version 04/2006 PDF)

A flow model of labor market participation is used to describe how various exogenous variations jointly affect unemployment and participation and provides short-run identification restrictions of a structural VAR. In some countries, fast rising female participation may have had a moderate short and medium run impact on unemployment rates. A variance decomposition exercise indicates that, in Continental Europe, participation is driven in the short run by unemployment shocks, while in the US, it is driven by participation shocks (demography, immigration). Unemployment in Europe is driven by participation shocks while in the US, it is driven by unemployment shocks. 

Wasmer, E. (2006). ''Interpreting Europe-US Labor Market Differences : the Specificity of Human Capital Investments', American Economic Review, June, Volume 96(3), pp 811-831.

 We first demonstrate an important property of human capital investments : they depend on the aggregate state of labor markets. In particular, frictions and slackness of the labor market raise the returns to specific human capital investments relative to general investments, a property absent from Becker's seminal contribution in frictionless labor markets.
We then build a macroeconomic model where in equilibrium emerge different regimes. In the G-regime, workers invest in general skills. This occurs in (and is consistent with) high turnover labor markets and in the absence of employment protection. In the S-regime in contrast, workers invest in skills specific to their job and this regimes appears under more stringent employment protection. Low job turnover is both a cause and a consequence of specific investments in human capital.
Using those insights, the paper re-interprets Europe-US differences in arguing that the US are closer to the G-regime and Continental Europe to the S-regime. This conjecture provides, among other things, a rationale for differences in labor mobility and reallocation costs. In a S-regime, mobility costs are high and transitions between steady-states have especially strong adverse effects. On the other hand, in the steady-state, workers in the S-regimes are very productive. Each regime has thus its own coherence, although the European type incurs higher transition costs when macroeconomic conditions change.

Wasmer, E. et Zenou, Y. (2006). 'Does Space Affect Search? A Theory of Local Unemployment', Labour Economics: An International Journal, Vol 13, pp. 143-165.

Assuming that job search efficiency decreases with distance to jobs, workers' location in a city depends on spatial elements such as commuting costs and land prices and on labour elements such as wages and the matching technology. In the absence of moving costs, we show that there exists a unique equilibrium in which employed and unemployed workers are perfectly segregated but move at each employment transition. We investigate the interactions between the land and the labour market equilibrium and show under which condition they are interdependent. When relocation costs become positive, a new area appears in which both the employed and the unemployed co-exist and are not mobile. We demonstrate that the size of this area goes continuously to zero when moving costs vanish. Finally, we endogeneize search effort, show that it negatively depends on distance to jobs and that long and short-term unemployed workers coexist and locate in different areas of the city.

Garibaldi, P. and Wasmer, E. (2005). 'Labor Market Flows and Equilibrium Search Unemployment', Journal of the European Economic Association, Vol 3(2), June, pp. 851-882.

The sustainability of Welfare States requires high employment/high participation to raise the tax base and avoid distortions. To analyze labor market participation decisions in a world with market frictions, we propose and solve a three-state macro model of the labor market. We show that workers' decisions of participating are determined by two margins, the entry and the exit margin, the difference between the two reflecting an employment-hoarding effect. On the positive point of view, our model rationalizes the existence of most labor market flows and of 'marginally attached workers' and a calibration improves the usual representations of labor markets. On the normative point of view, we show how the existence of two margins affects the effects of employment policy, notably of payroll taxes and unemployment benefits.

Rosèn, A. and Wasmer, E. (2005). 'Higher Education Levels, Firm's Outside Option and the Wage Structure',LABOUR 19 (4), December, pp. 621-654.

Wasmer, E. et Weil, P. (2004). 'The Macroeconomics of Credit and Labor Market Imperfections',American Economic Review, September, 94(4), pp 944-963.

Garibaldi P. et Wasmer, E. (2004), 'Raising Female Employment: Reflections and Policy Tools',Journal of the European Economic Association, P&P, 2 (2-3), 320-330.

Wasmer, E. (2004). 'Labour Supply Dynamics, Unemployment and Human Capital Investments',
Louvain Economic Review, pp. 461-482, vol. 70(4).

Carcillo, S. and Wasmer, E. (2003). 'Discrimination and Bilateral Human Capital Investments Decisions',
Annales d'Economie et Statistiques, special issue on Discrimination, Vol. 71-72, pp 317-345.

Thisse, J., Wasmer, E. and Zenou, Y. (2003). 'Ségrégation Urbaine, Logement et Marchés du Travail',
Revue Française d'Economie, no 4, pp 85-123. (Report or DP/WP).

Wasmer, E. and Zenou, Y. (2002). 'Does City Structure Affect Job Search and Welfare?',
Journal of Urban Economics, 51, pp. 515-541. (Link to ScienceDirect)

Wasmer, E. and Weil, P. (2002). 'Financial Fragility, Business Creation and Job Destruction',
Louvain Economic Review, 68 (1-2), pp. 181-200.

Cahuc, P. et Wasmer, E. (2001). 'Does Intrafirm Bargaining matters in the Large Firm's Matching Model'.
Macroeconomic Dynamics, 2001, Vol. 5, pp. 742-747. (Link to MacroDyn)

Wasmer, E. (2001). 'Measuring human capital in the labor market: the supply of experience in 8 OECD countries',
European Economic Review P&P, 45, pp. 861-874.(Link to Science Direct)

Wasmer, E. and Weil, P. (2001). "Credit Markets and Unemployment in the Short Run and in the Long Run",
International Economic Journal, 15(1), pp. 1-20.

Desgranges G. et Wasmer, E. (2000). 'Appariements sur le Marché du Logement.' Annales d'Economie et de Statistiques, Vol. 58, April-June, pp. 253-287.

Wasmer, E. (1999). 'Competition for Jobs in a Growing Economy and the Emergence of Dualism in Employment',
The Economic Journal, July 1999, Vol. 109, no 457, pp. 349-371. (Link to Jstor)

Wasmer, E. (1999). 'Changements de composition dans l'offre de travail. Implications pour les salaires et le chômage' Economie et Prévision, April-September, 138-39, pp 77-87. 

IN PROGRESS OR SUBMITTED

• Wasmer, E. (2004). 'Housing Regulation, Statistical Discrimination, and the Recourse to Agencies', prepared for the invited session Interactions Between Urban Housing and Labor Markets at the 2005 meeting of the American Economic Association, organized by David Neumark. (WP/DP)
• Garibaldi, P. and Wasmer, E. (2005). 'Equilibrium Employment and Labor Markets Imperfections: Matching vs. Participation costs', mimeo UQAM. (PDF)
• Lamo, A. , Messina, J. and Wasmer, E. (2006). 'Are Specific Skills an Obstacle to Labor Market Adjustment? Theory and an Application to the EU Enlargement', European Central Bank, working paper 585 and CEPR discussion paper 5503. (Reuters coverage)
• IZA Wasmer, E. (2004). 'The Economics of Prozac (Do Employees Really Gain from Employment Protection?)', mimeo and IZA dp. 2460.
• Phaneuf, L. and Wasmer, E. (2005). 'Une étude économétrique de l'Impact des Dépenses Publiques et des Prélèvements Fiscaux sur l'Activité Économique au Québec et au Canada'. Rapport de Projet. 
• Wasmer, E. (2004). 'The Rising Returns to Experience and the Supply of Experience in the Labor Market.'.

SHORTER OR COLLECTIVE VOLUMES

 Cahier numéro 27 de l'association En temps réel: Pour une réforme radicale du droit du logement: une analyse économique

Opening conference / conférence d'ouverture, Association d'Economie Sociale, Nancy, 7-8 Septembre 2006: Droit et économie du logement

Publiés / published:

• Wasmer, E., P. Fredriksson, A. Lamo, J. Messina and G. Peri., (2005), 'The Macroeconomics of Education', report of the Fondazione R. DeBenedetti, Oxford Univ. Press (144 pages).
• C. Pissarides, P. Garibaldi, C. Olivetti, B. Petrongolo and E. Wasmer, E. (2004). "Women in the labor force: How well is Europe doing?'', 56 pages, first half of T. Boeri, D. del Boca and C. Pissarides (eds.), (forthcoming), European Women at Work, Oxford University Press. (DP/WP)
• Wasmer, E. (2004). 'Short-Run Effects of Enlargement', Panel contribution, collective volume, ECB-CEPR conference What explains the pattern of labour supply in Europe?, Edward Elgar Publishing. (Pre-print)
• Introduction of special issue (2004), Discrimination and Unequal Outcome, Annales d'Economie et de Statistiques, avec Yves Zenou, IUI, pp 1-15.
• Wasmer, E. (2003). 'Inciter à la reprise d'activité', pp. 126-218, in Des Idées pour la Croissance, Economica and Michel Didier, Rexecode, eds.
• Thisse, J., Wasmer, E. and Zenou, Y. (2002). 'Ségrégation Urbaine, Logement et Marchés du Travail', Rapport sur