Espen Rasmus Moen

The Journal of human resources Doi: https://doi.org/10.3368/jhr.58.3.1219-10604R1

Partner selection is a vital feature of human behavior with important consequences for individuals, families, and society. We use the term hypergamy to describe a phenomenon whereby there is a tendency for husbands to be of higher rank within the male earnings capacity distribution than their wives are within the female distribution. Such patterns are difficult to verify empirically because earnings are both a cause and an effect of the mating process. Using parental earnings rank as a predetermined measure of earnings capacity to solve the simultaneity problem, we show that hypergamy is an important feature of today’s mating patterns in one of the most gender-equal societies in the world, namely Norway. Through its influence on household specialization, we argue that hypergamy may explain parts of the remaining gender wage gap.

The Scandinavian Journal of Economics 122(3) Doi: https://doi.org/10.1111/sjoe.12356

In this paper, we study price dispersion in the Norwegian retail market for 766 products across 4,297 stores over 60 months. Price dispersion for homogeneous products is significant and persistent, with a coefficient of variation of 37 percent for the median product. Price dispersion differs between product categories and over time. Store heterogeneity accounts for 30 percent of the observed variation in prices for the median product–month, and for around 50 percent for the sample as a whole. Price dispersion is still prevalent after correcting for store heterogeneity.

Journal of the European Economic Association Doi: https://doi.org/10.1093/jeea/jvz069

Housing transactions by moving homeowners take two steps—buying a new house and selling the old one. This paper argues that the transaction sequence decisions of moving homeowners have important effects on the housing market. Moving homeowners prefer to buy first whenever there are more buyers than sellers in the market. However, this congests the buyer side of the market and increases the buyer–seller ratio, further strengthening the incentives of other moving owners to buy first. This endogenous strategic complementarity leads to multiple steady state equilibria and large fluctuations, which are broadly consistent with stylized facts about the housing cycle.

Labour Economics 50(March) p. 144-155 Doi: https://doi.org/10.1016/j.labeco.2017.06.003

A key lesson from the Great Recession is that firms’ leverage and access to finance are important for hiring and firing decisions. It is now empirically established that bank lending is correlated with employment losses when credit conditions deteriorate. We provide further evidence of this and make causal inferences on the effect of leverage on job losses drawing on a new firm-level dataset that we assembled on employment and financial positions of European firms. Yet, in the Diamond Mortensen Pissarides (DMP) model there is no role for finance. All projects that display positive net present values are realized and financial markets are assumed to be perfect. What if financial markets are not perfect? Does a different access to finance influence the firm’s hiring and firing decisions? The paper uses the concept of limited pledgeability proposed by Holmstrom and Tirole to integrate financial imperfections and labor market imperfections. A negative shock wipes out the firm’s physical capital and leads to job destruction unless internal cash was accumulated by firms. If firms hold liquid assets they may thus protect their search capital, defined as the cost of attracting and hiring workers. The paper explores the trade-off between size and precautionary cash holdings in both partial and general equilibrium. We find that if labor market frictions disappear, so does the motive for firms to hold liquidity. This suggests a fundamental complementarity between labor market frictions and holding of liquid assets by firms.

Journal of Public Economics 145 p. 211-225 Doi: https://doi.org/10.1016/j.jpubeco.2016.11.003

All OECD countries have either legally mandated severance pay or compensations imposed by industry-level bargaining in case of employer initiated job separations. The paper shows that mandatory severance is optimal in presence of wage deferrals induced by workers' moral hazard. We also establish a link between optimal severance and efficiency of the legal system and characterize the effects of shifting the burden of proof from the employer to the worker. Quantitatively, the welfare effects of suboptimal severance payments vary in general equilibrium between 1 and 3 %. The model accounts also for two neglected features of the legislation. The first is the discretion of judges in declaring the nature, economic vs. disciplinary, of the layoff. The second feature regards the relationship between severance and tenure. Our theory gives necessary conditions under which optimal severance is increasing with tenure, as generally observed.

Journal of Economic Theory 167 p. 53-74 Doi: https://doi.org/10.1016/j.jet.2016.09.007

We experimentally investigate buyer and seller behavior in small markets with two kinds of frictions. First, a subset of buyers may have (severely) limited information about prices, and choose a seller at random. Second, sellers may not be able to serve all potential customers. Such capacity constraints can lead to coordination frictions where some sellers and buyers may not be able to trade. Theory predicts very different equilibrium outcomes when we vary the set-up along these two dimensions. In particular, it implies that a higher number of informed buyers will lead to lower prices when sellers do not face capacity constraints, while prices may actually increase if sellers are capacity constrained, as shown by Lester (2011). In the experiment, the differences between the constrained and non-constrained case are confirmed; prices fall when sellers are not capacity constrained but either do not fall by much or even increase when they are not. We find that prices are quite close to the predicted equilibrium values except in treatments where unconstrained sellers face a large fraction of informed buyers. However, introducing noise into the theoretical decision making process produces a pattern of deviations that fits well with the observed ones.

Journal of Economic Theory 169 p. 551-602 Doi: https://doi.org/10.1016/j.jet.2017.03.003

This paper proposes an explicit model of spillovers through labor flows in a framework with search frictions. Firms can choose to innovate or to imitate by hiring a worker from a firm that has already innovated. We show that if innovating firms can commit to long-term wage contracts with their workers, productivity spillovers are fully internalized. If firms cannot commit to long-term wage contracts, there is too little innovation and too much imitation in equilibrium. Our model is tractable and allows us to analyze welfare effects of various policies in the limited commitment case. We find that subsidizing innovation and taxing imitation improves welfare. Moreover, allowing innovating firms to charge different forms of fees or rent out workers to imitating firms may also improve welfare. By contrast, non-pecuniary measures that reduce the efficiency of the search process, always reduce welfare.

Finance in Society: An Anthology in Honour of Thore Johnsen p. 389-406

Review of economic dynamics 19 p. 88-107 Doi: https://doi.org/10.1016/j.red.2015.10.001

The paper proposes a model of on-the-job search and industry dynamics in which search is directed. Firms permanently di er in productivity levels, their production function features constant returns to scale, and search costs are convex in search intensity. Wages are determined in a competitive manner, as rms advertise wage contracts (expected discounted incomes) so as to balance wage costs and search costs (queue length). Firms are assumed to sort out their coordination problems with their employees in such a way that the on-the-job search behavior of workers maximizes the match surplus. Our model has several novel features. First, it is close in spirit to the competitive model, with a tractable and unique equilibrium, and is therefore useful for empirical testing. Second, on-the-job search is an e cient response to rm heterogeneities and convex search costs. Third, the equilibrium leans towards a job ladder, where unemployed workers apply to low-productivity rms o ering low wages, and then gradually move on to more productive, higher-paying rms. With a continuum of rm types, the job ladder i strict, in the sense that there is a one-to-one correspondence between the productivity of the current employer and that of the rms she searches for. The paper also contributes methodologically, as the existence proof requires a version of Schauder's xed point theorem that is not commonly used by economists. Finally, our model o ers di erent implications for the dynamics of job-to-job transitions than existing models of random search.

Samfunnsøkonomen p. 18-32

Journal of the European Economic Association 11(6) p. 1404-1431 Doi: https://doi.org/10.1111/jeea.12066

Australian Economic Papers 51(3) p. 134-146 Doi: https://doi.org/10.1111/j.1467-8454.2012.00428.x

Review of Economic Studies 78(2) p. 733-761 Doi: https://doi.org/10.1093/restud/rdq011

Labour Economics 18(2) p. 180-193 Doi: https://doi.org/10.1016/j.labeco.2010.10.002

We examine the origins and outcome of entrepreneurship on the basis of exceptionally comprehensive Norwegian matched worker–firm–owner data. In contrast to most existing studies, our notion of entrepreneurship not only comprises self-employment, but also employment in partly self-owned limited liability companies. Based on this extended entrepreneurship concept, we find that entrepreneurship tends to be profitable. It also raises income variability, but the most successful quartile gains much more than the least successful quartile loses. Key determinants of the decision to become an entrepreneur are occupational qualifications, family resources, gender, and work environments. Individual unemployment encourages, while aggregate unemployment discourages, entrepreneurship.

Journal of Monetary Economics 57(6) p. 623-636 Doi: https://doi.org/10.1016/j.jmoneco.2010.05.015

The American Economic Review 100(3) p. 1261-1268 Doi: https://doi.org/10.1257/aer.100.3.1261

The American Economic Review 100(2) p. 343-347

Competition and Welfare: The Norwegian Experience, Lars Sørgaard (ed)

International Journal of Industrial Organization 24(2) p. 269-285

This paper explores how the government's choice of renewal policy in public procurement programs can be used as a mechanism to provide firms with incentives to supply quality. A public service is produced by several firms. The firms participate in a tournament where they are ranked according to the quality of their services, and rewarded in terms of contract renewals. We analyse the firms' incentives to produce high-quality services, and find that they are maximised if 50% of the contracts are renewed. The optimal renewal policy trades off incentive provision (which requires that a relatively large fraction of the firms are replaced each period) against the entry costs of new firms. (c) 2005 Elsevier B.V. All rights reserved.

Journal of the European Economic Association 4 p. 1165-1192

We analyze the optimal (efficiency) wage contract when output is contractible but firms neither observe the workers' effort nor their match-specific productivity. Firms offer wage contracts that optimally trade off effort and wage costs. As a result, employed workers enjoy rents, which in turn creates unemployment. Nonetheless, the incentive power of the equilibrium wage contract is constrained efficient in the absence of taxes and unemployment benefits. We also show that more high-powered incentive contracts tend to be associated with higher equilibrium unemployment rates.

The Scandinavian Journal of Economics 107(2) p. 279-298

It is well known in personnel economics that firms may improve the quality of their workforce by offering performance pay. We analyze an equilibrium model where worker productivity is private information and show that the firms' gain from worker self-selection may not be matched by a corresponding social gain. In particular, the equilibrium incentive contracts are excessively high-powered, thereby inducing the more productive workers to exert too much effort and increasing agency costs stemming from the misallocation of effort.

? 71(4) p. 1143-1162

International Economic Review 44 p. 779-799

Economic Journal 113(487) p. 525-538

Journal of Economics 76(2) p. 22-22

Økonomisk forum 55(5) p. 29-34

Nordic Journal of Political Economy (NOPEC) 27(1) p. 3-12

Journal of Labor Economics vol 17 p. 694-723

Sosialøkonomen

Sosialøkonomen

Markeder, ressurser og fordeling

Economica 65 p. 491-505