Dennis Snower - Academia.edu (original) (raw)
Papers by Dennis Snower
Social Science Research Network, Oct 20, 2004
RePEc: Research Papers in Economics, Dec 1, 1995
European Economic Review, Feb 1, 1987
Social Science Research Network, 2002
Social Science Research Network, 2002
Kiel Policy Briefs, Sep 1, 2021
We present a theory of nominal wage adjustment based on worker loss aversion, along the lines of ... more We present a theory of nominal wage adjustment based on worker loss aversion, along the lines of prospect theory. Wage changes are evaluated relative to an endogenous reference wage, which depends on the workers’ rational wage expectations from the recent past. By implication, firms face an upward-sloping labor supply curve that is convexly kinked at the workers’ reference wage. Firms adjust wages flexibly in response to variations in labor demand, incorporating the endogenous response of the reference wage. The resulting theory of wage adjustment is starkly at variance with past theories. In line with the empirical evidence, we find that (1) wages are completely rigid in response to small labor demand shocks, (2) wages are downward rigid but upward flexible for medium-sized labor demand shocks, and (3) wages are relatively downward sluggish for large shocks.
SSRN Electronic Journal, 2021
IZA DP No. 14509 JUNE 2021 Capitalism Recoupled* This paper examines major forces that have decou... more IZA DP No. 14509 JUNE 2021 Capitalism Recoupled* 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 – globalization, technological advance and financialization (GTF) – 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.” JEL Classifi...
Over the course of this election, Donald Trump’s campaign slogan has been to ‘make America great ... more Over the course of this election, Donald Trump’s campaign slogan has been to ‘make America great again’, and he has largely blamed other countries and immigrants for reducing the country’s agency and power. Why have so many Americans seized on this rhetoric? Dennis J. Snower argues that the government has failed to help many Americans to acquire new skills in the face of technological change – something that other OECD countries are far more focused on. It is this policy failure, he writes, which has helped Donald Trump to gain the support of many of those who feel left behind.
The world is economically integrated, but socially fragmented. Thus economic progress can become ... more The world is economically integrated, but socially fragmented. Thus economic progress can become decoupled from social progress. The G20 has traditionally focused on economic policy issues - economic growth and financial stability. This is appropriate as long as social progress is closely tied to economic progress, for then the achievement of material prosperity will promote human flourishing. But when economic and social progress becomes decoupled - as we commonly observe through growing income disparities, growing disempowerment and disintegrating social affiliations - then an exclusive preoccupation with economic policy issues is unlikely to quell the widespread public discontent. On this account, it is appropriate for the G20 objectives to be broadened to include resilient, inclusive and sustainable prosperity. These objectives must be attained with regard to more than material needs; they must also address the human needs for empowerment and solidarity. This wider conception of...
CESifo: Economics of Education (Topic), 2020
We identify an important feature of current digital governance systems: “third-party funded digit... more 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 authent...
SSRN Electronic Journal, 2021
Theory and Decision
This paper provides evidence for the following novel insights: (1) People’s economic decisions de... more This paper provides evidence for the following novel insights: (1) People’s economic decisions depend on their psychological motives, which are shaped predictably by the social context. (2) In particular, the social context influences people’s other-regarding preferences, their beliefs and their perceptions. (3) The influence of the social context on psychological motives can be measured experimentally by priming two antagonistic motives—care and anger—in one player towards another by means of an observance or a violation of a fairness norm. Using a mediation approach, we find that the care motive leads to higher levels of cooperation which are driven by more optimistic beliefs, a different perception of the game as well as by a shift towards more pro-social preferences.
Any opinions expressed here are those of the author(s) and not those of the institute. Research d... more Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit company supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper shou...
This Discussion Paper is issued within the framework of IZA’s research area The Welfare State and... more This Discussion Paper is issued within the framework of IZA’s research area The Welfare State and Labor Markets. Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by the Deutsche Post AG. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research result...
This Discussion Paper is issued within the framework of IZA’s research area Welfare State and Lab... more This Discussion Paper is issued within the framework of IZA’s research area Welfare State and Labor Market. Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by the Deutsche Post AG. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and...
Social Science Research Network, Oct 20, 2004
RePEc: Research Papers in Economics, Dec 1, 1995
European Economic Review, Feb 1, 1987
Social Science Research Network, 2002
Social Science Research Network, 2002
Kiel Policy Briefs, Sep 1, 2021
We present a theory of nominal wage adjustment based on worker loss aversion, along the lines of ... more We present a theory of nominal wage adjustment based on worker loss aversion, along the lines of prospect theory. Wage changes are evaluated relative to an endogenous reference wage, which depends on the workers’ rational wage expectations from the recent past. By implication, firms face an upward-sloping labor supply curve that is convexly kinked at the workers’ reference wage. Firms adjust wages flexibly in response to variations in labor demand, incorporating the endogenous response of the reference wage. The resulting theory of wage adjustment is starkly at variance with past theories. In line with the empirical evidence, we find that (1) wages are completely rigid in response to small labor demand shocks, (2) wages are downward rigid but upward flexible for medium-sized labor demand shocks, and (3) wages are relatively downward sluggish for large shocks.
SSRN Electronic Journal, 2021
IZA DP No. 14509 JUNE 2021 Capitalism Recoupled* This paper examines major forces that have decou... more IZA DP No. 14509 JUNE 2021 Capitalism Recoupled* 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 – globalization, technological advance and financialization (GTF) – 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.” JEL Classifi...
Over the course of this election, Donald Trump’s campaign slogan has been to ‘make America great ... more Over the course of this election, Donald Trump’s campaign slogan has been to ‘make America great again’, and he has largely blamed other countries and immigrants for reducing the country’s agency and power. Why have so many Americans seized on this rhetoric? Dennis J. Snower argues that the government has failed to help many Americans to acquire new skills in the face of technological change – something that other OECD countries are far more focused on. It is this policy failure, he writes, which has helped Donald Trump to gain the support of many of those who feel left behind.
The world is economically integrated, but socially fragmented. Thus economic progress can become ... more The world is economically integrated, but socially fragmented. Thus economic progress can become decoupled from social progress. The G20 has traditionally focused on economic policy issues - economic growth and financial stability. This is appropriate as long as social progress is closely tied to economic progress, for then the achievement of material prosperity will promote human flourishing. But when economic and social progress becomes decoupled - as we commonly observe through growing income disparities, growing disempowerment and disintegrating social affiliations - then an exclusive preoccupation with economic policy issues is unlikely to quell the widespread public discontent. On this account, it is appropriate for the G20 objectives to be broadened to include resilient, inclusive and sustainable prosperity. These objectives must be attained with regard to more than material needs; they must also address the human needs for empowerment and solidarity. This wider conception of...
CESifo: Economics of Education (Topic), 2020
We identify an important feature of current digital governance systems: “third-party funded digit... more 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 authent...
SSRN Electronic Journal, 2021
Theory and Decision
This paper provides evidence for the following novel insights: (1) People’s economic decisions de... more This paper provides evidence for the following novel insights: (1) People’s economic decisions depend on their psychological motives, which are shaped predictably by the social context. (2) In particular, the social context influences people’s other-regarding preferences, their beliefs and their perceptions. (3) The influence of the social context on psychological motives can be measured experimentally by priming two antagonistic motives—care and anger—in one player towards another by means of an observance or a violation of a fairness norm. Using a mediation approach, we find that the care motive leads to higher levels of cooperation which are driven by more optimistic beliefs, a different perception of the game as well as by a shift towards more pro-social preferences.
Any opinions expressed here are those of the author(s) and not those of the institute. Research d... more Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit company supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper shou...
This Discussion Paper is issued within the framework of IZA’s research area The Welfare State and... more This Discussion Paper is issued within the framework of IZA’s research area The Welfare State and Labor Markets. Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by the Deutsche Post AG. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research result...
This Discussion Paper is issued within the framework of IZA’s research area Welfare State and Lab... more This Discussion Paper is issued within the framework of IZA’s research area Welfare State and Labor Market. Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by the Deutsche Post AG. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and...