Faculty

Report examines impact of mass layoffs on workers’ long-term earnings

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From the UConn Advance:

For workers losing jobs due to mass layoffs in the current economic downturn, the bad news is that more people than ever are looking for work right now, making it the toughest job market in at least two decades.

But for those lucky enough to find another job, there is more bad news: they will likely suffer lower wages for many years compared to similar workers who are not laid off.

A new study (pdf) from UConn and the Connecticut Department of Labor shows how the business cycle plays a determining role in the extent of wage losses for workers let go in mass layoffs and plant closings.

The study finds that for workers losing jobs during a recession, the damage to their earnings can linger for years. By contrast, for workers who lose jobs as part of a mass layoff or plant closure in more favorable times, long-term earnings losses are negligible.

Kenneth Couch (IDEAS), an associate professor of economics in the College of Liberal Arts and Sciences, teamed up with researchers at the Connecticut Department of Labor, economist Nicholas Jolly (MA, PhD) and analyst Dana Placzek, for the study.

Read more in the UConn Advance

Recent PhD to publish in Games and Economic Behavior

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Recent graduate Nicholas Shunda (IDEAS), advised by Vicki Knoblauch (IDEAS), will publish the paper “Auctions with a Buy Price: The Case of Reference-Dependent Preferences” in the journal Games and Economic Behavior. The paper contributes to a theoretical literature on rationales for the hybrid selling mechanism known as an auction with a buy price. In an auction with a buy price, a seller provides bidders with an option to forgo the auction and transact at a fixed price. The most well-known example of an auction with a buy price is eBay’s “Buy-It-Now” feature. The paper demonstrates that sellers can enhance revenues by adding a buy price to their auctions if bidders evaluate auction and purchase outcomes on the bases of surplus and comparison to a reference point depending upon the auction’s reserve and buy price. In contrast to alternative explanations for auctions with buy prices, such as risk aversion and impatience, which predict bidding behavior that is independent of the auction’s parameters, bidders with reference-dependent preferences submit bids that vary directly with the existence and size of the auction’s reserve and buy prices, behavior extensively documented in laboratory and field experimental auctions.

Biplab Ghosh defends thesis, heads to Gustavus Adolphus College

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Biplab Ghosh recently defended his thesis under the advisorship of Prof. Dharmapala. His research interests lie in financial economics. His dissertation comprised three chapters, the first one tackles the theory that information asymmetry among investors leads to higher asset price volatility for firms. Testing this empirically, he finds that this is indeed the case, especially for small and illiquid firms, and those with a low book-to-market ratio. In the second chapter, he finds that higher firm level asset volatility leads to lower leverage. This can be viewed as a consequence of undiversified managers trying to reduce their own risk. And in the final chapter, he tries to explain the reason for the higher return of firms with high asymmetric information. It appears to originate with news about future cash flows rather than changes in the discount rate.

Ghosh will soon join Gustavus Adolphus College, a liberal arts college in Saint Peter, an hour from Minneapolis with about 2500 students. He will be teaching mostly finance courses in the College’s Department of Economics and Management.

CLAS faculty snapshot features Prof. Ross

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Stephen Ross (IDEAS) studies urban economics and how economic forces affect the lives of people in disadvantaged groups. One area he has studied closely is discrimination in mortgage lending. Another, which he began to track several years ago, is the subprime mortgage market. He saw a significant increase in risk in lending practices from 2004 to 2005 and 2006, when evidence mounted that risky loans were likely to lead to foreclosures.

Listen to the podcast of this snapshot.

Bill Lott to become interim department head

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Bill Lott will become Interim Head of the Department of Economics as of July 1, 2009. Dennis Heffley (IDEAS), who has served as Department Head for the past four years, recently announced that he would be stepping down from the position on June 30th and returning to full-time teaching and research. Jeremy Teitelbaum, Dean of the College of Liberal Arts and Sciences, subsequently announced that he would be appointing an Interim Head until a full search could take place.

Professor Lott is the Department’s senior member, having just completed his 40th year of service at UConn. Bill completed his PhD at North Carolina State University under the tutelage of prominent econometrician T. Dudley
Wallace, who later joined the Economics faculty at Duke. Lott regularly teaches Econometrics at the graduate level, as well as undergraduate courses in Mathematical Economics, Information Technology for Economists, and
Money & Banking. He and his colleague, Susan Randolph, have recently teamed up to conduct an analysis of the dispersion and growth of income inequality in Connecticut (see pdf). A follow-up paper on this subject is scheduled to appear in the Summer 2009 issue of The Connecticut Economy.

James Boudreau defends thesis, heads to University of Texas Pan American

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James Boudreau (IDEAS) defended his dissertation on Friday, May 1st 2009, the title of which is “Essays on the Analysis and Implications of Two-Sided Matching Markets.” In his work, performed with adviser Vicki Knoblauch (IDEAS), he uses both theory and simulation techniques to investigate the functioning of matching markets. These are markets such as the marriage market or the labor market in which partnerships are typically intended as long-term, so participants are especially concerned with who they end up with. His contributions include results on how preference characteristics can help or hinder both centralized and decentralized matching mechanisms, and how individual incentives in matching markets can influence macroeconomic phenomena such as unemployment and growth.

James, a Connecticut native, has been a UConn student since the Fall of 1999, receiving his BA, MA, and now his PhD in economics. During his PhD studies he has also been an instructor, teaching classes in both microeconomics and macroeconomics at the introductory and intermediate levels.

Unfortunately for us, James’ time at UConn has finally ended, but fortunately for him his experience with the world of economics has only just begun. Next Fall James will begin a tenure-track position as an Assistant Professor of Economics at the University of Texas Pan American. We wish him all the best.

Prof. Segerson nominated to National Research Council Board

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Professor Kathleen Segerson (IDEAS) has been invited to serve a 3-year term on the National Research Council’s (NRC) Board on Agriculture and Natural Resources. The National Research Council is the research arm of the National Academy of Sciences (NAS). Its mission is to improve government decision making and public policy, increase public education and understanding, and promote the acquisition and dissemination of knowledge in matters involving science, engineering, technology, and health. The NRC commissions and publishes major reports on topics of broad interest, which are written by panels of experts in related fields. The BANR is the major program unit of the NRC responsible for organizing and overseeing studies on issues of agricultural production and related matters of natural resource development, including forestry, fisheries, wildlife, and land and water use. The Board is responsible for planning new studies, conducting oversight on projects carried out by its subsidiary committees, and making an annual appraisal of accomplishment and potential new initiatives.

Prof. Segerson was also recently inducted as the Philip E. Austin Chair of Economics. For pictures of the ceremony, see here

Prof. Dharmapala publishes chapter on the impact of taxes on dividends and corporate financial policy

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Dhammika Dharmapala (IDEAS) recently published a chapter in a book on tax policy lessons from the 2000s, edited by Alan Viard at the American Enterprise Institute.

In his chapter, Dharmapala finds that the 2003 dividend tax cut triggered a large and immediate increase in dividend payments by firms. The biggest increases occurred in firms whose stockholders were most affected by the tax cut. Dharmapala documents an investment shift following the cut, in which Americans moved their investments out of foreign firms whose dividends did not qualify for the cut and into foreign firms whose dividends did qualify. He concludes that the shareholder-level approach taken by the reform “may be less effective in a financially integrated world economy than measures directed specifically at U.S. firms.”

Additional information about this book is available at the American Enterprise Institute.

UConn hosted RePEc Author Service has now 20,000 registered authors

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The RePEc Author Service, managed by Prof. Christian Zimmermann (IDEAS) and, since 2005, hosted by the College of Liberal Arts and Sciences at UConn, has reached a major milestone with its 20,000th registered author. This service allows economists to create an online profile of their works to be used by other services such as IDEAS (also hosted by CLAS). It also allows authors to obtain monthly updates on the online popularity and newly discovered citations of their works.

To put things in perspective, the largest association in economics is the American Economic Association, which has 18,000 members, including many outside the United States. The RePEc Author Service has authors in all US states and 119 countries.

Prof. Matschke granted tenure and promoted to Associate Professor

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Prof. Xenia Matschke (IDEAS), assistant professor of economics, has been promoted to associate professor with tenure at the recent April 21 meeting of the UConn Board of Trustees. Her promotion and tenure come into effect August 23, 2009.

Professor Matschke, a native of Germany, joined the UConn Department of Economics in the fall of 2004. She received her Ph.D. in Economics from the University of Wisconsin-Madison and currently teaches microeconomics and international trade both at the undergraduate and graduate level at UConn. She and her husband Gautam Tripathi (IDEAS), who is an associate professor at the Department of Economics, live in Mansfield together with their two sons, ages 2 and 7.

In her research, Professor Matschke mainly focuses on questions of trade policy determination, although she has also worked in other areas of economics. Her research has been published in leading economics journals, such as the American Economic Review and the Journal of International Economics. In her 2006 piece in the American Economic Review, she and a coauthor find evidence that labor market considerations, and in particular labor lobby interests, play a significant role in shaping U.S. trade policy. While probably not surprising to the economic layman, these findings contradict previous work that claimed that trade policy is primarily shaped by capital owner interests and that the inclusion of labor market variables does not help us better understand trade protection at the industry level.