@article{ChierchiaPrzyrembelLesemannetal., author = {Chierchia, Gabriele and Przyrembel, Marisa and Lesemann, Franca Parianen and Bosworth, Steven and Snower, Dennis and Singer, Tania}, title = {Navigating Motivation: A Semantic and Subjective Atlas of 7 Motives}, series = {Frontiers in Psychology}, volume = {11}, journal = {Frontiers in Psychology}, publisher = {Frontiers Media S.A.}, issn = {1664-1078}, doi = {10.3389/fpsyg.2020.568064}, abstract = {Research from psychology, neurobiology and behavioral economics indicates that a binary view of motivation, based on approach and avoidance, may be too reductive. Instead, a literature review suggests that at least seven distinct motives are likely to affect human decisions: "consumption/resource seeking," "care," "affiliation," "achievement," "status-power," "threat approach" (or anger), and "threat avoidance" (or fear). To explore the conceptual distinctness and relatedness of these motives, we conducted a semantic categorization task. Here, participants were to assign provided words to one of the motives. By applying principal component analysis to the categorization assignments we represent the semantic inter-relations of these motives on a two-dimensional space, a "semantic atlas." This atlas suggests that, while care and affiliation are conceptually close, affiliation is closer to threat avoidance (or fear); opposite to these motives we find achievement, consumption and power, with the latter lying closer to threat approach (or anger). In a second study, we asked participants to rate how well the motive-specific words obtained in the first study described their currently experienced feelings. We find that semantically close motives are also more likely to be experienced together, that is, we replicate most of the semantic relations in the "subjective atlas." We discuss our findings in comparison to other multi-dimensional models of motivation, which show clear similarities. In addition to these motivational atlases, we provide a database of motive-specific words, together with the valence and arousal scores. These can be used for future research on the influence of motives on decision making.}, subject = {-}, language = {en} } @techreport{FleurbaeyKanburSnower, type = {Working Paper}, author = {Fleurbaey, Marc and Kanbur, Ravi and Snower, Dennis}, title = {Efficiency and Equity in a Society-Economy Integrated Model}, edition = {CESifo Working Paper No. 9259}, pages = {56}, abstract = {A model that only focuses on economics relations, and in which efficiency and equity are defined in terms of resource allocation may miss an important part of the picture. We propose an integrated model that embeds economic activities in a larger game of social interactions, and define comprehensive notions of efficiency and equity. Social interactions provide additional sources of inefficiencies and inequalities, including through the mere lack of coordination between the regulation mechanisms of the economics sphere and the social sphere. Remedies may require more than market solutions and redistribution of resources. In particular, social norms are likely to play an important role.}, language = {en} } @article{SnowerBosworth, author = {Snower, Dennis and Bosworth, Steven}, title = {Economic, Social and Political Fragmentation: Linking Knowledge-Biased Growth, Identity, Populism and Protectionism}, series = {European Journal of Political Economy}, volume = {67}, journal = {European Journal of Political Economy}, number = {101965}, doi = {10.1016/j.ejpoleco.2020.101965}, abstract = {This paper examines how economic fragmentation (widening inequality of skills, income and education) gives rise to social fragmentation (via incompatible social identities), generating political fragmentation (via incompatible economic policies). We consider three value-driven identities: individualism, focused on status concerns, communitarianism, focused on social affiliations, and multi-affiliatedness, encompassing both objectives. Under endogenous identity formation high-skill people are drawn to individualism, the lower-skilled to communitarianism, and those of intermediate skill to multi-affiliatedness. Skill- and education-biased growth leads to increasing social polarisation, expanding the individualistic and communitarian groups at the expense of multi-affiliates. This expands the political constituency for closed policies (such as protectionism, immigration controls and nationalism), even when these policies reduce everyone's living standards. Our analysis thereby helps explain the economic and social underpinnings of populism.}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {Economics Nears a New Paradigm}, series = {Evonomics}, journal = {Evonomics}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {Wie sich echter Wohlstand messen l{\"a}ss}, series = {Makronom}, journal = {Makronom}, abstract = {An vielen Orten auf der Welt erleben wir, wie sich das Gef{\"u}hl von Machtlosigkeit und sozialer Entfremdung breit macht - wirtschaftlicher und sozialer Wohlstand sind nicht mehr miteinander im Einklang, sie sind entkoppelt. Daher braucht es ein neues Verst{\"a}ndnis von Wohlstand.}, language = {de} } @techreport{LimadeMirandaSnower, type = {Working Paper}, author = {Lima de Miranda, Katharina and Snower, Dennis}, title = {The Societal Responses to COVID-19: Evidence from the G7 Countries}, pages = {29}, abstract = {This paper provides a new picture of how countries have responded to the COVID-19 pandemic by examining the effects of the pandemic in terms of normative foundations for societal wellbeing. Social prosperity depends primarily on the functioning of four domains: the economy, the state, civil society and the environment. We use the Recoupling Dashboard—composed of four main indexes: Solidarity (S), Agency (A), GDP (material Gain, G) and Environmental sustainability (E) —to uncover the divergent experiences of countries in 2020. This paper focuses on the G7 countries—Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States—as the first step towards a wider appraisal. In all countries under review we see a sharp drop in GDP due to the pandemic and a corresponding drop in CO2 emissions. The uniformity of response in the economic and environmental domains stands in sharp contrast to the diversity of social responses to the challenge of cooperation that the coronavirus posed. The only clear pattern that emerges from cross-country comparisons is that Inward Solidarity, important for social cohesion in close social networks, and Outward Solidarity, important for the will to cooperate with other nations and cultures, have drifted apart in all G7 countries except Japan. Otherwise the movements in solidarity are highly idiosyncratic. In addition, the responses of Agency to the pandemic are diverse and are not noticeably correlated with the changes in Solidarity. The discrepancies in the social responses to the pandemic may be expected to have potentially important implications for how these countries fare during the pandemic and how well they come out of this crisis.}, language = {en} } @techreport{Snower, type = {Working Paper}, author = {Snower, Dennis}, title = {Capitalism Recoupled}, edition = {Centre for Economic Policy Research DP16302}, abstract = {This paper examines major forces that have decoupled economic and business prosperity from social prosperity and explores how recoupling can be promoted. Economists have specified well-known conditions under which free market enterprise with shareholder value maximization is efficient. These conditions are systematically violated by three forces {\^a}?? globalization, technological advance and financialization (GTF) {\^a}?? that have weakened the connections between economies and societies over the past four decades. Consequently, the recoupling process requires abandoning the default premise of economic decision making that social progress follows financial performance. For business, it calls for a move from shareholder to stakeholder value. For government, it calls for setting legal obligations, targets and incentives to ensure that stakeholder value is compatible with a rigorously defined concept of "societal and planetary value.}, language = {en} } @techreport{SnowerTwomey, type = {Working Paper}, author = {Snower, Dennis and Twomey, Paul}, title = {Humanistic Digital Governance}, edition = {Centre for Economic Policy Research DP15634}, abstract = {We identify an important feature of current digital governance systems: "third-party funded digital barter": consumers of digital services get many digital services for free (or underpriced) and in return have personal information about themselves collected for free. In addition, the digital consumers receive advertising and other forms of influence from the third parties that fund the digital services. The interests of the third-party funders are not well-aligned with the interests of the digital consumers. This fundamental flaw of current digital governance systems is responsible for an array of serious problems, including inequities, inefficiencies, manipulation of digital consumers, as well as dangers to social cohesion and democracy. We present four policy guidelines that aim to correct this flaw by shifting control of personal data from the data aggregators and their third-party funders to the digital consumers. The proposals cover "official data" that require official authentication, "privy data" that is either generated by the data subjects about themselves or by a second parties, and "collective data." The proposals put each of these data types under the individual or collective control of the data subjects. There are also proposals to mitigate asymmetries of information and market power.}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {We must chart a new course for digital governance}, series = {Die Zeit}, journal = {Die Zeit}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {V{\"o}llig falsche Richtung}, series = {Die Zeit}, journal = {Die Zeit}, language = {de} } @article{Snower, author = {Snower, Dennis}, title = {Das Digitale braucht neue Spielregeln}, series = {Tagesspiegel}, journal = {Tagesspiegel}, language = {de} } @article{Snower, author = {Snower, Dennis}, title = {Wir leben in einer großen, M{\"u}ll produzierenden Illusion}, series = {Die Zeit}, journal = {Die Zeit}, language = {de} } @article{SnowerKelly, author = {Snower, Dennis and Kelly, Colm}, title = {Recoupling Shareholders, Stakeholders and Society}, series = {Global Solutions Journal}, volume = {2021}, journal = {Global Solutions Journal}, number = {7}, pages = {12 -- 18}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {Don't save the economy. Change the economy}, series = {Politico}, journal = {Politico}, number = {19}, language = {en} } @techreport{Snower, type = {Working Paper}, author = {Snower, Dennis}, title = {The socioeconomics of pandemics policy}, edition = {GLOBAL ECONOMY \& DEVELOPMENT WORKING PAPER 138 | April 2020}, pages = {21}, abstract = {In response to the COVID-19 pandemic, governments around the world have provided a massive fiscal and monetary stimulus. While this policy is welcome in the short run, it does not address the underlying problem in the medium and long run. The reason is that the pandemic has not given rise to a generalized shortfall in aggregate demand. Rather, it has generated a Great Economic Mismatch, characterized by deficient demand for things requiring close physical interactions among people and deficient supply of things compatible with social distancing, where appropriate. Expansive macroeconomic policy can stimulate aggregate demand, but when social distancing is enforced, it will not stimulate production and consumption whenever this demand is satisfied through physically interactive activities. To overcome the Great Economic Mismatch, "readaptation policies" are called for. In the medium run, these policies promote a redirection of resources to activities compatible with social distancing; in the long run, these policies make economies more resilient to unforeseen shocks that generate a Great Economic Mismatch. Once the pandemic is over, a more profound rethinking of decisionmaking—in public policy, business and civil society—is called for. First, decisionmakers will need to supplement the current focus on economic efficiency with greater emphasis on economic resilience. Second, economic policies and business strategies will need to focus less on incentives for selfish individuals and more on the mobilization of people's prosocial motives. Finally, to encourage people around the world to cooperate globally in tackling global problems, policymakers at local, national and global levels will need to encourage people around the world to cooperate globally in tackling global problems, with the aid of two powerful tools that humans throughout history have used to coordinate their efforts: identity-shaping narratives and institutions of multi-level governance.}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {Awakening in the post-pandemic world}, series = {Future Development Blog - Brookings Institution}, journal = {Future Development Blog - Brookings Institution}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {The real economic fallout from Covid-19}, series = {Project Syndicate}, journal = {Project Syndicate}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {Die M{\"a}rkte haben versagt}, series = {Zeit Online}, journal = {Zeit Online}, language = {de} } @article{Snower, author = {Snower, Dennis}, title = {To ease the health-wealth trade-off, reallocate digital property rights}, series = {VoxEU}, volume = {2020}, journal = {VoxEU}, number = {June}, editor = {Vox, CEPR}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {Niedrige Zinsen sind der Grundstein f{\"u}r die n{\"a}chste Finanzkrise}, series = {Welt}, journal = {Welt}, language = {de} } @article{Snower, author = {Snower, Dennis}, title = {Was wirklich z{\"a}hlt}, series = {Die Zeit}, journal = {Die Zeit}, language = {de} } @article{SnowerBosworthSinger, author = {Snower, Dennis and Bosworth, Steven J. and Singer, Tania}, title = {Cooperation, Motivation and Social Balance}, series = {Journal of Economic Behavior \& Organization}, volume = {126}, journal = {Journal of Economic Behavior \& Organization}, number = {June 2016}, doi = {10.1016/j.jebo.2015.12.005}, pages = {72 -- 94}, abstract = {This paper examines the reflexive interplay between individual decisions and social forces to analyze the evolution of cooperation in the presence of "multi-directedness," whereby people's preferences depend on their psychological motives. People have access to multiple, discrete motives. Different motives may be activated by different social settings. Inter-individual differences in dispositional types affect the responsiveness of people's motives to their social settings. The evolution of these dispositional types is driven by changes in the frequencies of social settings. In this context, economic policies can influence economic decisions not merely by modifying incentives operating through given preferences, but also by influencing people's motives (thereby changing their preferences) and by changing the distribution of dispositional types in the population (thereby changing their motivational responsiveness to social settings).}, language = {en} } @article{SnowerAhrens, author = {Snower, Dennis and Ahrens, Steffen}, title = {Envy, Guilt, and the Phillips Curve}, series = {Journal of Economic Behavior \& Organization}, volume = {99}, journal = {Journal of Economic Behavior \& Organization}, number = {C}, pages = {69 -- 84}, abstract = {We incorporate inequity aversion into an otherwise standard New Keynesian dynamic equilibrium model with Calvo wage contracts and positive inflation. Workers with relatively low incomes experience envy, whereas those with relatively high incomes experience guilt. The former seek to raise their income, and the latter seek to reduce it. The greater the inflation rate, the greater the degree of wage dispersion under Calvo wage contracts, and thus the greater the degree of envy and guilt experienced by the workers. Since the envy effect is stronger than the guilt effect, according to the available empirical evidence, a rise in the inflation rate leads workers to supply more labor over the contract period, generating a significant positive long-run relation between inflation and output (and employment), for low inflation rates. This Phillips curve relation, together with an inefficient zero-inflation steady state, provides a rationale for a positive long-run inflation rate. Given standard calibrations, optimal monetary policy is associated with a long-run inflation rate around 2 percent.}, language = {en} } @article{SnowerGraham, author = {Snower, Dennis and Graham, Liam}, title = {Hyperbolic Discounting and Positive Optimal Inflation}, series = {Macroeconomic Dynamics}, volume = {17}, journal = {Macroeconomic Dynamics}, number = {3}, doi = {10.1017/S1365100511000393}, pages = {591 -- 620}, abstract = {The Friedman rule states that steady-state welfare is maximized when there is deflation at the real rate of interest. Recent work by Khan, King, and Wolman [Review of Economic Studies 10 (4), 825-860] uses a richer model but still finds deflation optimal. In an otherwise standard New Keynesian model we show that, if households have hyperbolic discounting, small positive rates of inflation can be optimal. In our baseline calibration, the optimal rate of inflation is 2.1\% and remains positive across a wide range of calibrations.}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {A new societal contract}, series = {Economics: The Open-Access, Open-Assessment E-Journal}, volume = {2019-37}, journal = {Economics: The Open-Access, Open-Assessment E-Journal}, number = {13}, doi = {10.5018/economics-ejournal.ja.2019-37}, pages = {1 -- 13}, abstract = {This paper argues that the traditional social contract that underlies the free market economy has run its course and needs to be replaced by a new contract, based on a new conception of the "empowering economy." Whereas different social contracts are relevant to different societies, all these contracts have some features in common, addressing some basic human needs that are common to all. These are needs that every thriving society must satisfy. In the presence of current global problems - such as climate change and financial crises - satisfying these needs can also generate the popular approval for multilateral agreements to tackle these problems. The paper identifies three inconvenient truths for the existing social contract: (i) economic performance involves more than material prosperity, (ii) free markets naturally generate inequality, and (iii) human progress rests primarily on cooperation. In response, the paper proposes a new social contract that can be promoted through three policy approaches: (1) policy that focuses not just on material prosperity, but also on personal empowerment and social solidarity, (2) automatic stabilizers that reduce inequalities of economic power and (3) policy that develops the human capabilities of cooperation.}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {Toward Global Paradigm Change: Beyond the Crisis of the Liberal World Order}, series = {Economics: The Open-Access, Open-Assessment E-Journal}, volume = {13}, journal = {Economics: The Open-Access, Open-Assessment E-Journal}, number = {25}, doi = {10.5018/economics-ejournal.ja.2019-25}, pages = {19 -- 25}, abstract = {This paper may be summarized by the following points. First, the crisis of the liberal world order arises from a misalignment of our social, economic and political domains of activity, along with a resulting destabilization of our physical environment. The integration of the global economy has generated problems that extend beyond our current bounds of social and political cooperation. Second, extending our social cooperation - on which basis our political cooperation can be extended as well - requires the creation of the appropriate moral narratives. These narratives must guide business strategies, public policies and civic activities. Third, these narratives must be supplemented by multilevel governance structures that address challenges at the scale - micro, meso and macro - at which these challenges arise. Finally, past human experience in developing moral narratives, supported by multilevel governance structures, suggests guidelines for a future form of multilateralism that enables us to meet this challenge.}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {The G20 at a crossroads: the future of global governance}, series = {Economics: The Open-Access, Open-Assessment E-Journal}, volume = {12}, journal = {Economics: The Open-Access, Open-Assessment E-Journal}, number = {21}, pages = {1 -- 12}, language = {en} } @article{Snower, author = {Snower, Dennis}, title = {Beyond capital and wealth}, series = {Economics: The Open-Access, Open-Assessment E-Journal}, volume = {12}, journal = {Economics: The Open-Access, Open-Assessment E-Journal}, number = {21}, doi = {10.5018/economics-ejournal.ja.2018-21}, pages = {1 -- 10}, abstract = {The world is economically integrated, but socially fragmented. Thus economic progress can become decoupled from social progress. As long as social progress is closely linked to and flows from economic progress, it is appropriate for government to focus attention on economic policy to promote economic growth. Indeed, for at least the first four decades of the postwar period, there are good reasons to believe that this was broadly the case for most developed economies. Then, starting in the 1980s and accelerating after the financial crisis of 2008, we argue that social progress in these countries became progressively decoupled from economic progress. The result has been the phenomenon of misery in the midst of plenty: despite continued economic growth, we witness rising dissatisfaction among large segments of the public, declining trust in most public and private institutions, rising nationalism and populism, rising discontent with globalization, increasing unwillingness to accept migrants and refugees, and growing ethnic and religious conflicts. This paper argues that the prevailing thinking about government policy is an outgrowth of the Age of Coupling. In the Age of Decoupling, however, a radically different approach to government policy is required, one that focuses not just on material wellbeing and its distribution, but also on promoting people's sense of empowerment and social solidarity.}, language = {en} } @article{SnowerBrownMerkl, author = {Snower, Dennis and Brown, Alessio and Merkl, Christian}, title = {Globalization and the Welfare State}, series = {Journal of Economic Literature}, volume = {47}, journal = {Journal of Economic Literature}, doi = {10.1257/jel.47.1.136}, pages = {136 -- 158}, language = {en} } @article{BrownMerklSnower, author = {Brown, Alessio and Merkl, Christian and Snower, Dennis}, title = {In Incentive Theory of Matching}, series = {Macroeconomic Dynamics}, volume = {19}, journal = {Macroeconomic Dynamics}, number = {3}, doi = {10.1017/S1365100513000527}, pages = {643 -- 668}, abstract = {This paper presents a theory explaining the labor market matching process through microeconomic incentives. There are heterogeneous variations in the characteristics of workers and jobs,and firms face adjustment costs in responding to these variations. Matches and separations are described through firms' job offer and firing decisions and workers' job acceptance and quit decisions. This approach obviates the need for a matching function. On this theoretical basis, we argue that the matching function is vulnerable to the Lucas critique. Our calibrated model for the U.S. economy can account for important empirical regularities that the conventional matching model cannot.}, language = {en} } @techreport{BartkeBosworthSnoweretal., type = {Working Paper}, author = {Bartke, Simon and Bosworth, Steven J. and Snower, Dennis and Chierchia, Gabriele}, title = {The Influence of Induced Care and Anger Motives on Behavior, Beliefs and Perceptions in a Public Goods Game}, pages = {35}, abstract = {This study analyzes the stability of preferences through the lens of psychological motives. We report the results of a public goods experiment in which subjects were induced with the motives of Care and Anger through autobiographical recall. Subjects' preferences, beliefs, and perceptions under each motive are compared with those of subjects experiencing a neutral autobiographical recall condition. We find that Care elicits significantly higher contributions than Anger, with Control treatment contributions in between. This is primarily driven by changes in conditional contribution schedules (measuring preferences) across treatments, though higher beliefs explain part of the effect that Care has on giving. These results are robust to checking for comprehension of the game's incentives. We also observe concomitant differences in attention to own and other's payoffs (using mouse tracking) as well as perceptions of the game's incentive structure (harmony) - particularly for subjects motivated by Anger. We interpret our findings as suggesting that people have access to multiple preferences that depend on how they perceive the decision context.}, language = {en} } @article{SnowerAhrensPirschel, author = {Snower, Dennis and Ahrens, Steffen and Pirschel, Inske}, title = {A Theory of Price Adjustment under Loss Aversion}, series = {Journal of Economic Behavior \& Organization}, volume = {134}, journal = {Journal of Economic Behavior \& Organization}, doi = {10.1016/j.jebo.2016.12.008}, pages = {78 -- 95}, abstract = {We present a new partial equilibrium theory of price adjustment, based on consumer loss aversion. In line with prospect theory, the consumers' perceived utility losses from price increases are weighted more heavily than the perceived utility gains from price decreases of equal magnitude. Price changes are evaluated relative to an endogenous reference price, which depends on the consumers' rational price expectations from the recent past. By implication, demand responses are more elastic for price increases than for price decreases and thus firms face a downward-sloping demand curve that is kinked at the consumers' reference price. Firms adjust their prices flexibly in response to variations in this demand curve, in the context of an otherwise standard dynamic neoclassical model of monopolistic competition. The resulting theory of price adjustment is starkly at variance with past theories. We find that - in line with the empirical evidence - prices are more sluggish upwards than downwards in response to temporary demand shocks, while they are more sluggish downwards than upwards in response to permanent demand shocks. The degree of these asymmetries, in turn, depends on the size of the shock.}, language = {en} } @techreport{SnowerBosworth, type = {Working Paper}, author = {Snower, Dennis and Bosworth, Steven J.}, title = {Identity-Driven Cooperation versus Competition}, pages = {8}, abstract = {This paper seeks to extend the domain of identity economics by exploring motivational foundations of in-group cooperation and out-group competition. On this basis, we explore the reflexive interaction between individual economic decisions and social identities in response to technological change in market economies. Our analysis explores how technological change falling on marketable goods and services, rather than non-market caring relationships, leads to a restructuring of identities, which increases the scope of individualism and promotes positional competition at the expense of caring activities. Since positional competition generates negative externalities while caring activities create positive ones, these developments have important welfare implications}, language = {en} } @article{SnowerAkerlof, author = {Snower, Dennis and Akerlof, George A.}, title = {Bread and Bullets}, series = {Elsevier Journal of Economic Behavior \& Organization}, volume = {126}, journal = {Elsevier Journal of Economic Behavior \& Organization}, number = {June 2016}, doi = {10.1016/j.jebo.2015.10.021}, pages = {58 -- 71}, abstract = {Standard economics omits the role of narratives (the stories that people tell themselves and others) when they make all kinds of decisions. Narratives play a role in understanding the environment; focusing attention; predicting events; motivating action; assigning social roles and identities; defining power relations; and establishing and conveying social norms. This paper describes the role narratives play in decision making, as it also juxtaposes this description against the backdrop of the Bolshevik-spawned narrative that played a critical role in the history of Russia and the Soviet Union in the 20th Century.}, language = {en} } @article{SnowerMerkl, author = {Snower, Dennis and Merkl, Christian}, title = {The Caring Hand that Cripples: The East German Labor Market after Reunification}, series = {American Economic Review}, volume = {96}, journal = {American Economic Review}, number = {2}, pages = {375 -- 382}, abstract = {The East German labour market has hardly made any progress since German reunification, despite massive migration flows and support from the West. We argue that East Germany is in trouble precisely because of the support it has received. This paper explores the phenomenon of 'the caring hand that cripples,' arising from bargaining by proxy, the adoption of the West German welfare system and the associated employment persistence. Even the steady decrease of labour cost (normalized by productivity) since the beginning of the 1990s did not help to kick start the East. We suggest that labour force participants fell into 'traps,' concerning low skills, ageing of the workforce, labour-saving capital and skills, capital underutilization, and unemployment arising from the decline of the tradeable sector}, language = {en} } @article{BrownMerklSnower, author = {Brown, Alessio and Merkl, Christian and Snower, Dennis}, title = {The Minimum Wage from a Two-Sided Perspective}, series = {Economics Letters}, volume = {124}, journal = {Economics Letters}, number = {3}, doi = {10.1016/j.econlet.2014.06.020}, pages = {389 -- 391}, abstract = {This paper sheds new light on the effects of the minimum wage on employment from a two-sided theoretical perspective, in which firms' job offer and workers' job acceptance decisions are disentangled. Minimum wages reduce job offer incentives and increase job acceptance incentives. We show that sufficiently low minimum wages may do no harm to employment, since their job-offer disincentives are countervailed by their job-acceptance incentives.}, language = {en} } @article{LechthalerSnower, author = {Lechthaler, Wolfgang and Snower, Dennis}, title = {Institutions and Training Inequality}, series = {European Journal of Political Economy}, volume = {28}, journal = {European Journal of Political Economy}, number = {1}, doi = {10.1016/j.ejpoleco.2011.09.004}, pages = {88 -- 104}, abstract = {We analyze the interaction among important institutional variables in the labor market (firing costs, minimum wages and unemployment benefits) in determining firm-provided training. We find that the institutional interactions - specifically, their degree of complementarity and substitutability - depends on employees' abilities. On this account, the institutional interactions influence skills inequality. We derive how the influence of one of the institutional variables above is affected by other institutional variables with respect to inequality skills arising from firm-provided training. We derive several striking results, such as: (a) the minimum wage and unemployment benefits generate increasing skills inequality whereas firing costs generate diminishing skills inequality; (b) unemployment benefits and firing costs are complements in their effects on skills disequalization, (c) firing costs and the minimum wage are complements in their effects on skills equalization, and (d) unemployment benefits and the minimum wage are substitution in their effects on skills inequality.}, language = {en} } @article{BrownOrszagSnower, author = {Brown, Alessio and Orszag, J. Michael and Snower, Dennis}, title = {Unemployment Accounts and Employment Incentives}, series = {European Journal of Political Economy}, volume = {24}, journal = {European Journal of Political Economy}, number = {3}, doi = {10.1016/j.ejpoleco.2008.06.006}, pages = {587 -- 604}, abstract = {We explore the far-reaching implications of replacing current unemployment benefit (UB) systems by an unemployment accounts (UAs) system. Under the UAs system, employed people are required to make ongoing contributions to their UAs and the balances in these accounts are available to them during periods of unemployment. The government is able to undertake balanced-budget interpersonal redistributions among the UAs. At the end of their working lives, people could transfer the remaining balances on their UAs into their pensions. We present an analytical framework to analyse the incentive effects of UAs and calibrate our model for the high high-unemployment countries of Europe. Our results suggest that this policy reform would significantly change people's employment incentives and could achieve reductions in unemployment without reducing the level of support to the unemployed.}, language = {en} } @article{LechthalerSnower, author = {Lechthaler, Wolfgang and Snower, Dennis}, title = {Minimum Wages and Training}, series = {Labour Economics}, volume = {15}, journal = {Labour Economics}, number = {6}, doi = {10.1016/j.labeco.2007.11.005}, pages = {1223 -- 1237}, abstract = {The paper analyzes the influence of minimum wages on firms' incentive to train their employees. We show that this influence rests on two countervailing effects: minimum wages (i) augment wage compression and thereby raise firms' incentives to train and (ii) reduce the profitability of employees, raise the firing rate and thereby reduce training. Our analysis shows that the relative strength of these two effects depends on the employees' ability levels. Our striking result is that minimum wages give rise to skills inequality: a rise in the minimum wage leads to less training for low-ability workers and more training for those of higher ability. In short, minimum wages create a "low-skill trap." We indicate that this effect may be important empirically. Finally, including workers' incentives to train themselves makes no major difference to our results.}, language = {en} } @article{BrownKohlbrecherMerkletal., author = {Brown, Alessio J. G. and Kohlbrecher, Britta and Merkl, Christian and Snower, Dennis}, title = {The effects of productivity and benefits on unemployment: Breaking the link}, series = {Economic Modelling}, journal = {Economic Modelling}, doi = {10.1016/j.econmod.2020.02.037}, abstract = {In the standard macroeconomic search and matching model of the labor market, there is a tight link between the quantitative effects of (i) aggregate productivity shocks on unemployment and (ii) unemployment benefits on unemployment. This tight link is at odds with the empirical literature. We show that a two-sided model of labor market search where the household and firm decisions are decomposed into job offers, job acceptances, firing, and quits can break this link. In such a model, unemployment benefits affect households' behavior directly, without having to run via the bargained wage. A calibration of the model based on U.S. JOLTS data generates both a solid amplification of productivity shocks and a moderate effect of benefits on unemployment. Our analysis shows the importance of investigating the effects of policies on the households' work incentives and the firms' employment incentives within the search process.}, language = {en} } @article{LimadeMirandaSnower, author = {Lima de Miranda, Katharina and Snower, Dennis}, title = {Recoupling Economic and Social Prosperity}, series = {Global Perspectives}, volume = {1}, journal = {Global Perspectives}, number = {1}, issn = {2575-7350}, doi = {10.1525/001c.11867}, pages = {1 -- 30}, abstract = {This paper explores a new theoretical and empirical approach to the assessment of human well-being, relevant to current challenges of social fragmentation in the presence of globalization and technological advance. We present two indexes of well-being — solidarity (S) and agency (A) — to be considered alongside the standard indexes of material gain (G) and environmental sustainability (E). The four indexes —SAGE— form a balanced dashboard for evaluating well-being. The solidarity index covers the needs of humans as social creatures, living in societies that generate a sense of social belonging. The agency index involves people's need to influence their fate through their own efforts. While "economic prosperity" (material gain) is conventionally measured through GDP per capita, "social prosperity" can be measured through our solidarity and agency indexes, alongside environmental sustainability that is measured through the Environmental Performance Index. The SAGE dashboard is meant to provide a "sage" approach to assessing well-being, since it aims to denote sagacity in the pursuit and satisfaction of fundamental human needs and purposes. Many of the prominent challenges of the 21st century, including the dissatisfaction of population groups who feel left behind by globalization and technological advance, may be viewed in terms of a "decoupling" of economic prosperity from social prosperity.We present a theoretical model that provides a new perspective on the welfare effects of globalization and automation. The dashboard is meant to provide an empirical basis for mobilizing action in government, business, and civil society to promote a recoupling of economic and social prosperity.}, language = {en} }