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Bazin, S. and J.P. Martin, 1991, “The Impact of the Minimum Wage on Warnings and Employment in France,” OECD Economic Studies, No. 16, pp. 199–221.
Benhayoun, G., 1994, “The Impact of Minimum Wages on Youth Employment in France Revisited: A Note on the Robustness of the Relationship,” International Journal of Manpower, No. 15, pp. 82–85.
Coe, D., and D.J. Snower, 1996, “Policy Complementarities: The Case for Fundamental Labor Market Reform,” IMF Working Paper No. 96/93 (Washington: International Monetary Fund).
Confais, E., and P.A. Muet, 1994, “Les Rigidités du Marché du Travail” in Le Chômage Persistent en Europe (Paris: Oservatoire Français des Conjonctures Economiques).
Cotis, J.P., R. Meary, and N. Sobczak, 1996, “Le Chômage d’Equilibre en France: Une Evaluation,” Direction de la Prévision, Document de Travail No. 96-14.
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Prepared by Ousmane Doré.
Lagged unemployment is used to avoid a simultaneity bias.
Staiger D, J.H. Stock, and M.W. Watson: The NAIRU, Unemployment and Monetary Policy, Journal of Economic Perspectives, Winter 1997, p.46, and Setterfield, M. and D. Gordon and L. Osberg: Searching for the Will o’ the Wisp: and Empirical Study of the NAIRU in Canada, European Economic Review 36, 1992, p. 119-136.
Tobin, J. The Wage-Price Mechanism:Overview of the Conference, in O.Eckstein (ed.) The Econometrics of Price Determination Conference, Washington, 1972.
Inflation in France has been following pretty closely a random walk, which makes lagged inflation the optimal it-step ahead forecast in the Wiener-Kolmogorov sense, for any k.
Details on the solution can be found in SM/95/141. A caveat: there sufficient differences between this specification and the one in SM/95/141 to avoid any direct comparison of the estimation results.
Data comes from the quarterly data bases of the OECD and WEFA. Rates of changes are computed as year-on-year. Estimation is by restricted two-stage least squares with correction for first-order autocorrelation by Fair’s method.
This is especially true of the filtered variables. The model has also been estimated with two alternative methods hoping for better efficiency: Generalized Instrumental Variables, and Three-Stage Least Squares. The estimates of individual parameters from the first method are broadly comparable to the ones in the Table and are nor reported. Estimates from Three-Stage least Squares are somewhat unstable, suggesting a flat likelihood function.
The F-test on zero coefficients for dummy variables capturing differences in the intercept and slope parameters of the two regression has marginal significance on the order of 95 percent.
Following this line of thought, it could be claimed that the data generation process itself—and not a particular estimation method or specification—is likely to frustrate any attempt to fine-tune the NAIRU estimate, based on the information set used here. This situation contrasts sharply with that in the United States or even in the Netherlands, which are in a more advanced cyclical position.
Asymptotic standard errors for nonlinear functions of the parameters can be obtained by taking a first-order Taylor expansion of that function and assuming asymptotic normality. Standard errors are then computed using estimated first derivatives. There are reservations on the robustness of this approach. As a crude proxy for a more rigorous procedure, the NAIRU has been recomputed with parameters values that are increased (or decreased) uniformly by one standard deviation. The calculated values span an implausibly large interval.
For a discussion, see SM/97/235.
A situation in which recipients remain perpetually on welfare rolls because they have no incentives to take jobs, given the small income differentials between work and inactivity.
Dossiers de la Dares, No. 8–9, November 1996.
Some 41 percent of recipients are lodged free of charge with their families; others pay rent in subsidized state housing or receive a housing allowance.
The international comparison of minimum wages is a daunting task, because the real level of the minimum wages by itself may be not be the appropriate indicator in comparisons between countries with differing productivity.
See Kingdom of the Netherlands—Netherlands: Selected Issues Paper (SM/97/139).
For example, the Rapport Pericard estimated that the monthly budgetary cost for a person under the contrat-initiative-emploi was about FF 3,519 and FF 4,218 for a worker under the contrat-emploi-solidarité, considerably more than the public contribution to training schemes (FF 1,500 for the apprenticeship contract and FF 2,500 for the qualification contract), see OECD, 1997.
Prior to 1993, the unemployment insurance scheme distributed a basic and end-of-entitlement benefits, and also an exceptional benefit, both of which were replaced by a single degressive benefit (the allocation unique degressive).
Distributional issues are best dealt with in other ways. See OECD Employment Outlook, 1994, 1995, 1996, where it is recommended that more weight be placed on the market-clearing role of wages, while pursuing equity objectives through other policy instruments.
The policy complementarity proposition has been made by Coe and Snower (1997), who argue that labor market reform measures are more likely to succeed if pushed through in tandem with other reforms than if implemented in isolation.
An important feature of the reform also included measures to reintegrate the long-term unemployed via “individual action plans” (IHP) based on intensified counseling and job brokering, with efforts graduated according to the length of the unemployment spell. IHP procedures, which are mandatory after two years (six months for youth under age 25), start with an interview in which advice on the availability of active labor market policies is provided and the individual’s employment problems are assessed, leading to an agreement on suitable measures to be taken.
A bond in the form of a bank guarantee must be provided by establishments operating as temporary employment agencies.