[cid:image002.png@01CEBF6B.D0B28790] VIENNA JOINT ECONOMICS SEMINAR INVITATION R E M I N D E R The University of Vienna and the Department of Economics and Finance at the Institute for Advanced Studies cordially invite you to the following Vienna Joint Economics Seminar <http://www.ihs.ac.at/vienna/resources/Economics/Papers/20130226_Paper_Zimmermann.pdf> Thursday, April 30, 2015 University of Vienna, Oskar-Morgenstern-Platz 1, 1090 Vienna, HS 9, 1st floor 4:00 pm Erik Eyster<http://www.lse.ac.uk/economics/people/facultyPages/ErikEyster.aspx> and Etienne Wasmer<http://econ.sciences-po.fr/etienne-wasmer> LSE Sciences Po, Paris Preferences for Fair Prices, Cursed Inferences, and the Nonneutrality of Money (Erik Eyster) This paper explains the nonneutrality of money from two assumptions: (1) consumers dislike paying prices that exceed some fair markup on firms' marginal costs; and (2) consumers underinfer marginal costs from available information. After an increase in money supply, consumers underappreciate the increase in nominal marginal costs and hence partially misattribute higher prices to higher markups; they perceive transactions as less fair, which increases the price elasticity of their demand for goods; firms respond by reducing markups; in equilibrium, output increases. By raising perceived markups, increased money supply inflicts a psychological cost on consumers that can offset the benefit of increased output. Spatial search strategies of job seekers and the role of unemployment insurance (Etienne Wasmer) Job search is an activity involving costs and returns. But, because individuals and jobs are scattered across space, it is also a spatially oriented activity. In particular, job acceptance depends on commute distance. Searching within a range of acceptable commute distances is costly: search costs combine effort and money, the latter part depending on the size of the prospection area. Under liquidity constraints of the job seekers, job search efficiency may be itself constrained. We first provide a simple theoretical setup to discuss those questions: job search is represented by draws in a bivariate distribution of wages and commute distances; individuals choose their range of search and the intensity of search within the range. We then exploit an administrative social security dataset covering all newly unemployed workers in Austria. It contains information on the current residence, the previous workplace and the subsequent workplace for those re-hired. We observe fairly high dispersion in the change of commuting distance and wage and evidence of a reservation frontier. We also see that newly unemployed workers seem to initially target their job search from the same workplace as they used to be employed. As the unemployment spell gets longer, they tend to accept lower wages and progressively enlarge their radius of search, ending up with a job farther away from their previous workplace (but not necessarily farther away from their residence). We finally extend the model to two types of unemployed workers and to partially directed job search to replicate these facts. We calibrate it and explore the effect of unemployment insurance on job search strategies. paper jointly with Elisa Guglielminetti, Rafael Lalive and Philippe Ruh We are looking forward to seeing you! 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