Essays
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Architecture of Markets - Fligstein, Neil
Markets are socially constructed arenas where repeated exchanges occur between buyers and sellers under a set of formal and informal rules governing relations among competitors, suppliers, and customers. These arenas operate according to local understandings and rules that guide interaction, facilitate trade, define what products are produced, indeed constitute the products themselves, and provide stability for buyers, sellers, and producers. Marketplaces are also dependent on governments, laws, and cultural understandings supporting market activity. Our essay provides a brief exposition of this perspective. Then, it considers cutting‐edge work on three topics: (i) the formation of markets and prices, (ii) the organization of capitalism in different societies, and (iii) financialization and globalization. We suggest that in the future, path breaking research will: (i) explore the sociology of consumption, (ii) combine insights from the sociology of markets and from studies of the role of economic thought in constructing markets, and (iii) investigate national and transnational regulations. -
How Do Labor Market Networks Work? - Rubineau, Brian
The informal seeking and sharing of job opportunity information via contacts are the dominant mechanisms for both the supply and demand sides of the labor market. Despite many decades of scholarly scrutiny, we have established little certainty about the mechanisms through which labor market networks operate. Much of this uncertainty results from single‐perspective investigations of a fundamentally triadic process. Network‐mediated job search is not merely a version of the classic two‐way matching problem with some additional network factors but is rather a three‐way matching problem with three distinct agentic decision makers: the job seeker, the job screener, and the social contact acting as a connector. This essay summarizes what is currently known about the operation and consequences of labor market networks, their mechanisms, and their contextual dependencies. We show how the perspective of a triad of actors presents new opportunities for resolving current contradictory empirical findings and areas of ongoing debate. Progress on this topic requires both careful causal research isolating mechanisms affecting a particular actor and integrative research on how these mechanisms interact among the triad of actors. -
Labor Market Instability, Labor Market Entry, and Early Career Development - Gebel, Michael
Many young people experience episodes of unemployment and precarious employment such as insecure temporary jobs and skill‐inadequate jobs during their school‐to‐work transition period. This essay summarizes key theoretical ideas and main previous empirical findings on the determinants and career consequences of having such a nonoptimal start into the working life. Then, this essay highlights cutting‐edge research that has advanced our knowledge by providing more detailed insights into the individual‐level career dynamics as well as the macro‐level institutional and structural determinants of cross‐country differences. This article concludes with a discussion of five key issues for future research. First, there is need for a better understanding of the institutional and structural influences on the career consequences of having a nonoptimal labor market entry. Second, the experiences during the economic crisis of 2008/2009 and its aftermath ask for a better understanding of why some countries performed better than other countries in protecting youths from that severe crisis. Third, a more detailed analysis of different forms of nonemployment and precarious employment is required in order to account for the strong variation of labor market experiences of youths. Fourth, to fully assess not only the risks but also the chances of taking up temporary jobs and skill‐inadequate jobs at labor market entry, we have to complement the standard “upward comparison” to regular employment with a “downward comparison” to the alternative of nonemployment. Finally, this entry calls for an interdisciplinary and integrative approach analysing not only the work career consequences of bad labor market starts but also the social, economic, psychological, health, and familial consequences. -
Modeling Coal and Natural Gas Markets - Holz, Franziska
Coal and natural gas market modeling has seen an impressive upsurge in the last decade. After a long period with a focus on optimization models, complementarity models have been developed since the 1980s and seen a renaissance after 2000. Such models are also called equilibrium models as they allow representing a market game and its equilibrium solution. First versions of complementarity models of the coal and natural gas markets were used to analyze the market structure of the international commodity trade. While they confirmed an oligopolistic market structure in the European natural gas market, the global coal market has been found to be competitive. Moreover, infrastructure analyses are carried out with such models that allow detecting bottlenecks and, in multiperiod models, computing cost‐efficient capacity expansions. Other recent advances besides multiperiod modeling are the modeling of multilevel games and stochastic models. Emerging topics are related to computational methods and a better understanding of both energy sectors. Among the challenges to the modeling community are the ongoing shortcomings of publicly available data and an improved understanding of the mathematical modeling and solution approaches by economists. Finally, both sectors are subject to a climate policy constraint which may well lead to a considerable shift in the importance as well as in regional consumption patterns of coal and natural gas and, hence, require improved modeling analysis. -
Search and Learning in Markets - Kircher, Philipp
Search is a process of learning and discovery. Consumers search for goods that fit their requirements and budgets, and workers search for jobs commensurate to their skills. Learning can vary by domain—whether a person learns about herself, about the other market participants, about the fit between both, or about the conditions in the larger economic environment; and it can span several domains at the same time. While the search process has traditionally been modeled as a black box where it simply takes time to locate the desired opportunity, recent work and future research will break up this process to be more explicit about the source of the problem. This has been missing partly because it is easier to model environments where everyone and everything is identical. Once it is acknowledged that people, firms and goods are different, that they learn over time about their type, and that the differences interact in important ways, new avenues for research open up. While much of existing work has focused on quantity (i.e., number of jobs found), future work is likely to focus more on the quality (i.e., how valuable is this job to society). This essay discusses which elements might shape the research in this area, and highlights the new lessons that are likely to emerge from this work.