6th Tinbergen Institute Conference: Friction and Policy

Organizers: Bas Jacobs (Erasmus University Rotterdam) and Pieter Gautier (VU Amsterdam)

This conference was held December 16-17, 2011 at the Amsterdam Museum

Under what conditions do markets function efficiently?

In the presence of frictions, markets often (but not always) do not generate the socially efficient outcome. However, asymmetric information between the private and public sector prevents the government from designing efficient policies. In both labor and public economics advances have been made to understand and quantify the welfare losses due to search and information frictions. Public policies (e.g. taxes, subsidies) generally cause inefficiencies and can both exacerbate or reduce existing market frictions.

In this conference we brought together a broad set of high quality papers crossing the borders between the fields of labor economics and public finance. The topics of the Conference included sorting/allocation of workers, measurement of frictions and distortions, human capital formation, optimal design of policies including minimum wages, employment protection, UI benefits and income redistribution.

The following papers were presented:

• Robin Boadway (Queens) – Optimal Income Taxation and the Labour Market: An Overview
• Nicola Pavoni (EUI) – Optimal Income Taxation with Asset Accumulation
• Pieter Gautier (VU Amsterdam)- Simultaneous Search and Network Efficiency
• Etienne Lehmann (CREST) – Labor Earnings Respond Differently to Income-Tax and to Payroll-Tax Reforms
• Jan Eeckhout (UCL) – Assortative Matching in Large Firms
• Coen Teulings (CPB) – Sorting and the output loss due to search frictions
• Guido Menzio (UPenn) – Optimal Insurance of Search Risk
• Arnaud Chéron (Lemans) – Life Cycle Equilibrium Unemployment
• Laurence Jacquet (NHH Bergen) – Optimal Redistributive Taxation with both Extensive and Intensive Responses
• Henrik Kleven (LSE) – Responses to Notches: Evidence from Pakistani Tax Records
• Pascal Michaillat (LSE) – Optimal Unemployment Insurance over the Business Cycle
• Guy Laroque (UCL) – Optimal Taxation and Retirement in a Stationary Economy
• Mike Golosov (Princeton University) – Optimal Dynamic Taxes
• Björn Brügemann (VU Amsterdam) – Welfare Effects of Short-Time Compensation
• Jim Albrecht and Susan Vroman (Georgetown) – Public Sector Employment in an Equilibrium Search and Matching Model
• Emmanuel Fahri (Harvard) – Insurance and Taxation over the Life Cycle
• Bas Jacobs (EUR/TI) – Optimal minimum wages and optimal redistribution in competitive labor markets with endogenous skill formation