This thesis presents three essays, each seeking to deepen our understanding of labour markets. The first essay studies the response of real wages and hours of new hires to the business cycle during the UK’s Great Recession. The second essay analysis in how far the assumption of rational expectations in the Mortensen-Pissarides model is required for the economy to converge to an equilibrium. In particular, it asks if it is possible for economic agents to use simple linear forecast rules and still ensure convergence to the rational expectations equilibrium. The final essay seeks to determine whether labour income shares at the sectoral level are constant across countries, as is usually assumed in the literature, and whether this assumption quantitatively matters. Therefore, it takes the input-output structures across countries into account, and conducts a development accounting exercise. Real wages and hours in the Great Recession: Evidence from firms and their entry-level jobs Using employer-employee panel data, I provide novel facts on how real wages and working hours within jobs responded to the UK’s Great Recession. In contrast to previous studies, my data enables me to address the cyclical composition of jobs. I show that firms were able to respond to the Great Recession with substantial real wage cuts and by recruiting more part-time workers. A one percentage point increase in the unemployment rate led to an average decline in real hourly wages of 2.8 per cent for new hires and 2.6 per cent for job stayers. Hours of new hires in entry-level jobs were also substantially procyclical, while job-stayer hours were nearly constant. My findings suggest that models assuming rigid labour costs of new hires are not helpful for understanding the behaviour of unemployment over the business cycle. Unemployment and econometric learning I apply well-known results of the econometric learning literature to the Mortensen-Pissarides real business cycle model. Agents can always learn the unique rational expectations equilibrium (REE), for all possible well-defined sets of parameter values, by using the minimum-state-variable solution to the model and decreasing gain learning. From this perspective, the assumption of rational expectations in the model could be seen as reasonable. But using a parametrisation with UK data, simulations show that the speed of convergence to the REE is slow. This type of learning dampens the cyclical response of unemployment to small structural shocks. Measuring sectoral income shares: Accounting for input-output structures across countries I use input-output tables to measure the labour income shares of the goods and the services sector for a large cross-section of mostly developed countries. I present two novel findings: sectoral labour income shares significantly increase with the level of development, and within-country differences between these income shares are uncorrelated with the level of development. These cross-country differences are not caused by variation in the input-output structure or final demand, but originate at the production-side of the economy. I measure sectoral total factor productivity using a development accounting framework to assess the quantitative importance of my findings. The goods sector of less developed countries is relatively less productive than the services sector; assuming that the values of the sectoral labour income shares across countries are identical to their corresponding U.S. values leads to an underestimation of productivity differences across countries. All findings are robust to different adjustments for the labour income of the self-employed.

This thesis adopts a new operational method to measure and investigate the relationship among cost efficiency, market competition and profitability in major Asian economies by using an unbalanced panel data sample of 278 commercial banks during the financial upheaval period of 2005-2012 before and after the global financial crisis. Firstly, we estimate the cost efficiency by employing different stochastic frontier analysis (SFA) models, which include the equity capital to indicate loss-absorbing capacity and risk preference and cross-country differences to be additional environmental variables. It is generally agreed that cross-country differences influence the frontier technology in the international comparison of banks performance. In this case, we implement the international comparison under SFA models with and without incorporating these cross-country heterogeneities. And the empirical results suggest that cross-country differences are significant sources to measure banks cost efficiency and evaluate banks performance. Secondly, we measure the market competition by investigating a range of approaches: the traditional Structure-Conduct-Performance approach, Lerner index, and new empirical industrial organization Panzar-Rosse approach. And we find that the SCP-Lerner approach may fail to identify the strength of competition and may not always unambiguously distinguish between the market power and the efficiency explanations of market concentration. Finally, following the approach of Boone, we measure the intensity of competition in two ways: the profit elasticity and the relative profit difference (calculated by cost efficiency score and shadow return on equity capital). Then we implement a quadratic quantile regression to compute the integral areas and standard errors for the Boone visual test and Wald test to reflect the relative intensity of competition for different competitive regimes over time. Our findings show that competition of banking industries become more intense in 9 Asian economies in the wake of the financial crisis and that two advanced economies (Singapore and Taiwan Province of China) and two remarkable emerging economies (China and India) play the significantly leading role in this intensifying competition process.

Since 2008 Europe has been in crisis, a financial and debt crisis that spread from the U.S. to all European countries. This thesis aims to provide evidence on the consequences of the crisis for individuals’ labour market outcomes across different countries and regions of Europe and to analyse how the recession has differentially affected sub-groups of the European population. Through the analysis of the longitudinal component of the European Union Statistics on Income and Living Conditions (EU-SILC) dataset, the project sheds light on the labour market trajectories of more than 20,000 Europeans across 11 European countries and 41 regions, before and during the 2008 financial crisis (2005-2012). Sequence and cluster analysis are used to investigate the heterogeneity of individual labour market trajectories across countries and time, while multilevel models are used to study regional labour markets during the years in crisis. The concept of transitional labour markets, as well as theories of labour market segmentation, job competition and job mobility, provide the theoretical framework for this research. The empirical findings show that during the financial crisis, labour market trajectories appear more turbulent and fragmented for the already disadvantaged sub-groups, namely women, younger workers and low educated workers. Furthermore, during the Great recession, an increase in unemployment among men confirms the sectoral profile of the crisis, which hit harder the male-dominated sectors of construction and industry. At the same time, a decrease in inactivity among women is consistent with the added worker effect, according to which women in periods of economic hardship are pushed towards labour market activity in order to contribute to the household income. Countries with weak economies and underperforming labour markets prior to the crisis, such as Greece and Italy, unsurprisingly experienced a deep and persistent crisis, while countries with stronger economies and more inclusive labour markets, such as Denmark and Sweden, managed to survive the crisis with less social harm. The institutional context of the countries offering high chances of employment even during the financial crisis, such as the Nordic countries, lies on the flexicurity of their labour markets. Indeed, flexible labour markets with the use of reduced working-time schemes, i.e. part-time forms of employment, contained unemployment during the financial shock. However, we need to be cautious about flexibility without security or partial deregulation of the markets, implemented in southern European countries, because during the crisis such policies led to further labour market segmentation and thus an increase in employment inequalities. Finally, the region of residence matters in employment outcomes, almost as much as the country of residence. In fact, from the regional analysis of individual employment outcomes during the years of the crisis, an uneven distribution of labour is detected even within the national borders. Summing up, the European crisis should be considered as the sum of national and regional crises.

<p>The overarching theme of this research is about environmental microplastic pollution, and how much various entities are willing to sacrifice economically to obtain a cleaner environment. To gauge such willingness, this research utilizes various economic measures that have been widely used, albeit with novel modifications. The focus of this research is on stated preferences about microplastic pollution. The topic of microplastics is still very novel, and market players on the demand side or on the supply side have yet to provide products that deal with this new pollutant. This lack has necessitated the need for stated preference research. This research delves into this novel environmental problem from various viewpoints.</p> <p> Chapter 1 of this research is about how much the US adult population is willing to sacrifice to obtain an environment that is less impacted by microplastic pollution. The results show that US adults in general possess a willingness to obtain an environment free from microplastics. However, a sizable minority of US adults do not show such willingness as well. Such results remained true even when information about microplastic pollution were provided to all respondents before preference elicitation. </p> <p> Chapter 2 investigates how much consumers in different countries will diverge about their willingness to pay for seafood that has less microplastic contamination. The countries chosen differed widely in their seafood consumption habits. Thus, it was hypothesized that such differences will lead to contrasts in their willingness to pay for less contaminated seafood. The hypothesis was found to be true but not in the way that was expected. The results show that frequent consumers of seafood had less willingness to pay when compared to others, although in whole all consumers showed willingness to avoid microplastics in their seafood. </p> <p> Chapter 3 makes use of the same data as Chapter 2 but looks at possible reasons for the disparity in responses besides factors explored in Chapter 2. Chapter 3 focuses on the cultural differences to explain the differences in behavior. To do so, it utilizes the Value-Belief-Norm theory widely employed in past research but modifies it to account for a form of hypothetical bias. The research delves into the relationships between many factors of interest that affect environmentally friendly consumption behavior and the findings show that a certain cultural tendency is central to such behavior, at least for microplastics. </p> <p> The research has done its best to research into the economic relationship between microplastic contamination of the environment and how much various individuals are willing to sacrifice to obtain an environment that is less impacted by such pollution. The findings here show that there is room for improvement in the way the microplastic pollution problem is being handled. However, in all settings the results show that a sizable majority want to be less impacted by microplastic pollution, a key takeaway for all interested parties.</p>

This doctoral thesis consists of five self-contained essays.Common themes that unify the essays are the conditions for innovative engagements and the effort to endogenize innovations into the explanation of profitability, productivity and growthin manufacturing and service production. The purpose is to explore the importance of innovation in explaining heterogeneity in the performance of firms. The traditional analysis of the relationship between research and developmentand productivity is extended and developed by using, on the onehand, firm-level data not previously available and, on theother, a modern state-of-the-art econometric framework. Essay I. Methods and results are reviewed and stylized facts presented regarding the return on innovation. The limitations of the data and methods used in mainstream literature are discussed. A set of firm-level observations recently made available and a multiple knowledge production function analysis have been used to clarify the role of innovation in explaining performance heterogeneity among manufacturing firms inSweden. Essay II. The relationships between innovation and productivity among manufacturing firms in Finland, Norway and Sweden are studied. The main purpose is to investigate the contributions of firm-level innovation in creating the large observed differences in aggregated productivity growth between Norway on the one hand and Finland and Sweden on the other. Essay III. The focus of this essay is threefold. One, since innovation has been found to be a major contributor to productivity growth in manufacturing, we seek to find whether there is any evidence for the notion that service industrie shave a lower propensity to be innovative or that they are less efficient in deriving benefits from innovations. Second, we consider what real productivity growth does, and what the measurement methods do to produce the reported weak growthrates in services. Third, given that intermediate services have been found to be one of the fastest growing input factors inmanufacturing, largely reflecting the replacement of internally provided activities by externally produced outputs, we examine what the impact of outsourcing is on productivity growth in manufacturing. The essay brings a comparative perspective to these issues by analyzing the firm-level data on innovativeactivities and economic performance in knowledge-intensive manufacturing and service firms in Sweden. Essay IV.This essay investigates the sensitivity of estimated relationships between innovation and firm performance. The essay compares the sensitivity of results with regards to different types of models, estimation methods, measures of firm performance, classification of firms, type of innovations and data sources. The analyses are performed on both the level and growth rate of firm performance, and theinfluence of outliers is explored. Essay V. The role of capital structure and external financing in innovation and production is studied. Results from different model specifications are explored. A preferred dynamic model with flexible adjustment is used for an inter-country and an intra-country comparison of the determinants of the optimal mix between debt and equity as wellas the rate of change towards an optimal capital structure. / <p>QC 20100526</p>