Using Canadian data, I investigate the relationships among sectoral mobility, unemployment spells, and total unemployment. Recent North American evidence suggests that incidence shifts toward high wage-high tenure workers may increase equilibrium unemployment through decreasing sectoral mobility and increasing spells. Using a multiple spell transition model, I find that, while shifts toward such workers may have these effects, composition changes that lead to higher mobility can also increase unemployment. A further investigation into the relative roles of mobility and spell lengths in driving total unemployment indicates that the influence of the former is comparatively small.

Two-person repeated games with no discounting are considered where there is uncertainty about the type of the players. If there is a possibility that a player is an automaton committed to a particular pure or mixed stage -game action, then this provides a lower bound on the Nash equilibrium payoffs to a normal type of this player. The lower bound is the best available and is robust to the existence of other types. The results are extended to the case of two-sided uncertainty. This work extends Schmidt (1993) who analysed the restricted class of conflicting interest games.

We examine long-term wage contracts between a risk-neutral firm and a risk-averse worker when both can costlessly renege and buy or sell labour at a random spot market wage. A self-enforcing contract is one in which neither party ever has an incentive to renege. In the optimum self-enforcing contract, wages are sticky: they are less variable than spot market wages and positively serially correlated. They are updated by a simple rule: around each spot wage is a time invariant interval, and the contract wage changes each period by the smallest amount necessary to bring it into the current interval.

This paper considers a class of two-player dynamic games in which each player controls a one-dimensional action variable, interpreted as a level of cooperation. The dynamics are due to an irreversibility constraint: neither player can ever reduce his cooperation level. Payoffs are decreasing in one's own action, increasing in one's opponent's action. We characterize efficient symmetric equilibrium action paths; actions rise gradually over time and converge, when payoffs are smooth, to a level strictly below the one-shot efficient level, no matter how little discounting takes place. The analysis is extended to incorporate sequential moves and asymmetric equilibria. Copyright 2002, Wiley-Blackwell.

We show that, in repeated common interest games without discounting, strong ‘perturbation implies efficiency’ results require that the perturbations must include strategies that are ‘draconian’ in the sense that they are prepared to punish to the maximum extent possible. Moreover, there is a draconian strategy whose presence in the perturbations guarantees that any equilibrium is efficient. We also argue that the results of Anderlini and Sabourian (1995) using perturbation strategies that are cooperative (and hence nondraconian) are not due to computability per se but to the further restrictions they impose on allowable beliefs.

The authors consider a repeated game between two long-run players, one of whom is relatively patient. Each player has a small amount of uncertainty about the other's strategy. Given a weak assumption about the support of this uncertainty, the more patient player obtains (in any Nash equilibrium) approximately the highest payoff consistent with the individual rationality of the other player, if the latter is patient enough. If the less patient player is relatively impatient, any Nash equilibrium gives the more patient player at least the Stackelberg payoff: this generalizes K. M. Schmidt's (1993) result, which applies only to games of conflicting interests.

It is well known that unless worker-firm match quality is controlled for, reduced-form estimates of returns to firm tenure will be biased. In this paper, we show that there is a further pervasive source of bias, namely, the comovement of firm employment and firm wages. We argue that firm-year fixed effects must be used to eliminate this bias. Estimates from two large-panel data sets from Germany and Portugal show that the bias is empirically important. Finally, we show that the results extend to tenure correlates used in macroeconomics, such as the minimum unemployment rate since joining the firm.