an assessment of labour s record on income inequality and poverty we document the evolution of average incomes poverty and inequality over the period of labour government from 1997 to 2010 comparing these trends with those seen over other periods in recent history we also relate these changes to labour s stated distributional objectives which we argue were clear in relation to the bottom of the income distribution and absolutely explicit in relation to child poverty but much less clear in relation to inequality more generally it is thus perhaps no surprise that we observe substantial falls in child and pensioner poverty alongside increases in overall income inequality with the latter largely driven by growth in top incomes we also use micro simulation techniques to demonstrate the crucial importance of direct tax and benefit reforms in driving the changes observed over this period copyright 2013 oxford university press

evaluating income streams a decision analysis approach most important decision problems virtually all capital investiments and planning situations involve risky cash flows with uncertainties that are resolved over time in most of these problems the decision maker has access to financial markets and may borrow and lend to smooth consumption over time yet because of the difficulty of incorporating these borrowing and lending decisions into the evaluation models these opportunities are rarely explicitly modeled in decision and risk analyses of these investments in this paper we study the errors induced by failing to account for these borrowing and lending decisions and we develop extensions to the standard decision and risk analysis procedures that given certain market and preference assumptions take these borrowing and lending opportunities into account without overburdening the evaluation models

trading mechanisms and stock returns an empirical investigation this paper examines the effects of the mechanism by which securities are traded on their price behavior we compare the behavior of open to open and close to close returns on nyse stocks given the differences in execution methods applied in the opening and closing transactions opening returns are found to exhibit greater dispersion greater deviations from normality and a more negative and significant autocorrelation pattern than closing returns we study the effects of the bid ask spread and the price adjustment process on the estimated return variances and covariances and discuss the associated biases we conclude that the trading mechanism has a significant effect on stock price behavior

margin regulation and stock market volatility using daily and monthly stock returns we find no convincing evidence that federal reserve margin requirements have served to dampen stock market volatility the contrary conclusion expressed in recent papers by hardouvelis 1988a b is traced to flaws in his test design we do detect the expected negative relation between margin requirements and the amount of margin credit outstanding we also confirm the recent finding by schwert 1988 that changes in margin requirements by the fed have tended to follow rather than lead changes in market volatility after 55 years stock market margin requirements are again a source of controversy the securities and exchange act of 1934 transferred to the federal reserve system the authority exercised previously by the new york stock exchange and other private sector exchanges to set the minimum margins i e down payments that securities brokers and dealers subsequently expanded to all lenders must require of customers purchasing common stocks on credit the transfer of authority reflected the view widely held at the time that the low initial margins set by the exchanges had fueled the stock market boom of the 1920 s and that the frenzied liquidation of shares in response to margin calls had accelerated the crash in october 1929 supposedly dragging the economy down with it congress hoped that timely raising of margin requirements by the monetary authorities might dampen speculative excesses before they raged out of control or in today s terms that margin controls might reduce market volatility what the federal reserve has done since then with its margin setting authority can be seen from figure 1 which shows the time paths both of margins and one measure of market volatility from october 1934 to december 1987 margin requirements were set initially at 45 percent raised to 55 percent during the boomlet of 1936 and then cut back to a low of 40 percent after the sharp stockmarket break in the autumn of 1937 the requirement stayed at that level for the remainder of the 30 s and most of the war years but was stepped up sharply as the war drew to a close reaching 100 percent i e all cash no borrowing for most of 1946 changes were frequent over the next two and a half decades

using regional variation in wages to measure the effects of the federal minimum wage the imposition of a national minimum wage standard provides a natural experiment in which the treatment effect varies across states depending on the fraction of workers initially earning less than the new minimum the author exploits this fact to evaluate the effect of the april 1990 increase in the federal minimum wage on teenagers wages employment and school enrollment comparisons of grouped and individual state data confirm that the rise in the minimum wage increased teenagers wages there is no evidence of corresponding losses in teenage employment or changes in teenage school enrollment

rational asset price movements without news this paper argues that an important part of movements in asset prices may be caused by neither external news nor irrationality but by the revelation of information by the trading process itself two models are developed that illustrate this general idea one model is based on investor uncertainty about the quality of other investors information the other is based on dispersion of information and small costs to trading the analysis is used to suggest a possible rational explanation of the october 1987 crash copyright 1993 by american economic association

volume volatility and new york stock exchange trading halts trading halts increase rather than reduce both volume and volatility volume volatility in the first full trading day after a trading halt is 230 percent 50 to 115 percent higher than following pseudohalts nonhalt control periods matched on time of day duration and absolute net of market returns these results are robust over different halt types and news categories higher posthalt volume is observed into the third day while higher posthalt volatility decays within hours the extent of media coverage is a partial determinant of volume and volatility following both halts and pseudohalts but a separate halt effect remains after controlling for the media effect in the wake of the 1987 market break a number of commentators including the presidential task force on market mechanisms recommended the establishment of circuit breaker mechanisms the primary argument supporting circuit breakers both price limits and trading halts is that nontrading periods provide an opportunity for normal information transmission in times of market duress proponents of circuit breakers claim that during major price changes there can be a breakdown in the transmission of information between the trading floor and market participants therefore the primary function of a circuit breaker should be to reinform participants greenwald and stein 1988 p 17 by lowering informational asymmetries between traders halts could permit the orderly emergence of a new consensus price but would informative trading halts succeed many academics are openly suspicious of any kind of market interference and assume that trading halts are guilty until proven innocent grossman 1990 p 3 for example argues that the closing of markets merely prevents consenting adults from carrying out their desires on the floor of the stock exchange not only do halts impose a liquidity cost on traders but studies suggest that information will not be as

consumer habituation this paper examines how consumers willingness to pay for goods is determined by past patterns of consumption the central result is atheorem of interior maximum which states that willingness to pay for a good is maximized at a moderate level of habitual consumption the theorem is derived from a simple model of adaptive behavior that involves a shifting s shaped value function the detailed analysis of the impact of consumption frequency and intensity on willingness to pay reveals an unsuspected implication of diminishing sensitivity even as it leads to a formalization of consumer habituation patterns including sensitization habituation and response recovery upon withdrawal that matches and integrates the most robust empirical regularities attendant on nonassociative learning in neurobiology and behavioral psychology an examination of the implications for demand dynamics and pricing highlights deterministic recurrent and transient patterns of consumption at higher price points

the switch from continuous to call auction trading in response to a large intraday price movement some european exchanges e g euronext frankfurt and madrid make use of a mechanism to moderate price volatility that was proposed by madhavan 1992 as preferable to a trading halt in times of market stress it consists of a temporary switch from continuous to call auction trading in an individual security whenever its price moves beyond predetermined limits this article studies whether this mechanism sharpens the information content of prices dampens volatility and normalizes trading volume and intensity taking intraday data for the madrid order driven continuous market i find post switch improvements in the information content of prices and reductions in volatility especially for thinly traded stocks trading volume and intensity peaked around auctions but soon returned to preevent levels

minimum wage impacts on han minority workers wage distribution and inequality in urban china abstract this paper examines the distributional impacts of the minimum wage on the urban wages of han minority workers and the implications for urban inequality county level minimum wage data is combined with recent proprietary household survey data representative of china s ethnically diverse areas the identification strategy relies on an unconditional quantile regression framework that takes into account policy endogeneity using an instrument variable approach the findings show that minimum wages lead to wage compression along the bottom and middle parts of the urban wage distribution the minimum wage effects are larger for lower skilled workers located in ethnic minority counties or that belong to an ethnic minority group counterfactual analysis further shows that minimum wages help to significantly reduce aggregate urban wage inequality increasing minimum wages from a counterfactual benchmark to their observed levels an average increase of 26 reduces the gini coefficient of wages by 10 12

public information arrival we develop a measure of public information flow to financial markets and use it to document the patterns of information arrival with an emphasis on the intraday flows the measure is the number of news releases by reuter s news service per unit of time we find that public information arrival is nonconstant displaying seasonalities and distinct intraday patterns next we relate our measure of public information to aggregate measures of intraday market activity our results suggest a positive moderate relationship between public information and trading volume but an insignificant relationship with price volatility

gender inequalities in regional development perrons d 1995 gender inequalities in regional development reg studies 29 465 476 gender inequality is a universal phenomenon but there are cross national and regional variations in its extent different degrees of gender inequality in employment in the european union are identified and explained in terms of a synthesis of ideas drawn from the literature on welfare regimes and regulation theory the structure and degree of involvement of women in paid employment also varies within and between regions and these regional variations in gender inequality require further explanation a number of approaches drawing on historical explanations gender contracts and forms and degrees of patriarchy are examined although these approaches reject the idea of economic determinism the evolution of the regional economic structures especially in relation to gender inequality in employment seems to play an important role recently there has been a widening of regional inequalities in the uk associated with the dev

comparing the new earnings survey nes and the labour force survey lfs an analysis of the differences between the data sets and their implications for the pattern of geographical pay in the uk ma a roberts e elliott r f bell d and scott a 2006 comparing the new earnings survey nes and the labour force survey lfs an analysis of the differences between the data sets and their implications for the pattern of geographical pay in the uk regional studies 40 645 665 the labour force survey lfs and the new earnings survey nes are the most widely used data sets for analysing pay in britain the paper details the key differences between the two and assesses the impact of their use for studying geographical wage differences the pattern observed is sensitive to the differences in data sets to differences in the sample populations the questions asked about pay and working hours and how hourly pay is measured recommendations are made on which data set should be used for what purposes as well as comments on the expected improvements that will result from the introduction of the annual survey of hours and earnings ashe ma a roberts e elliott r f bell d et scott a 2006

order flow and liquidity around nyse trading halts we study order f low and liquidity around nyse trading halts we find that market and limit order submissions and cancellations increase significantly during trading halts that a large proportion of the limit order book at the reopen is composed of orders submitted during the halt and that the market clearing price at the reopen is a good predictor of future prices depth near the quotes is unusually low around trading halts though specialists and0or f loor traders appear to provide additional liquidity at these times finally specialists appear to spread the quote prior to imbalance halts to convey information to market participants the costs and benef its associated with new york stock exchange trading halts are the subject of continuous debate the stated purpose of trading halts is to allow investors a chance to react to new information and to facilitate the orderly emergence of a new equilibrium price see e g nyse 1999 however little is known about the extent or nature of investor reactions to trading halts furthermore it is unclear whether these reactions support or confound attempts to reach a new equilibrium price to address these issues we use nonpublic nyse data on all superdot electronic orders to analyze the effects of trading halts on order f low spreads and the limit order book we also examine the relationships between the limit order book and the reopening price and between liquidity and post halt volatility information on order f low is an important missing element in the ongoing debate about the usefulness of trading halts one argument against trading halts is that they impede price formation because trading aggregates information that is distributed across market participants however submissions and cancellations of orders during a halt may provide an alternative source of information that combined with published indications of possible reopening prices may assist with price formation an argument in favor of trading halts is that when traders are given an opportunity to cancel orders

a theory of rational addiction we develop a theory of rational addiction in which rationality means a consistent plan to maximize utility over time strong addiction to a good requires a big effect of past consumption of the good on current consumption such powerful complementarities cause some steady states to be unstable they are an important part of our analysis because even small deviations from the consumption at an unstable steady state can lead to large cumulative rises over time in addictive consumption or to rapid falls in consumption to abstention our theory also implies that cold turkey is used to end strong addictions that addicts often go on binges that addicts respond more to permanent than to temporary changes in prices of addictive goods and that anxiety and tensions can precipitate an addiction

price knowledge in household demand for utility services a household s decision to acquire price knowledge is endogenous in the demand for utility services and may affect elasticities and consumption levels a simultaneous equation model with endogenous switching is developed to evaluate the effects of price knowledge and other sources of heterogeneity results indicate informed households were more responsive to average and marginal price signals informed households also use less water but this is due to heterogeneity rather than price knowledge controlling for heterogeneity price knowledge actually increases monthly water usage the implications of accounting for differences in price knowledge in utility demand modeling and demand management policy are discussed

program trading and intraday volatility program trading and intraday changes in the s p 500 index are correlated future prices and to a lesser extent cash prices lead program trades index arbitrage trades are followed by an immediate change in the cash index which ultimately reverses slightly no reversal follows nonarbitrage trades the cumulative index changes associated with buy and sell trades and with arbitrage and nonarbitrage trades all are similar price decompositions suggest that the results are not due to microstructure effects program trades in this 1989 1990 sample do not seem to have created major short term liquidity problems the results are stable within the sample many practitioners regulators and public commentators have expressed concerns about potential destabilizing effects of program trading they argue that program trades especially index arbitrage programs increase intraday volatility and decrease

day of the week and intraday effects in stock returns abstract this study examines day of the week effects using hourly values of the dow jones industrial average we find that over the 1963 1983 period the weekend effect has sifted from characterizing active trading on monday to characterizing the non trading weekend over the early part of our sample period negative returns characterize each hour of trading on monday while the return from friday close to monday open is positive in the most recent subperiod monday average hourly returns after noon are all positive and the weekend effect is due to negative average returns from friday close to monday open

stock market structure and volatility the procedure for opening stocks on the nyse appears to affect price volatility an analytical framework for assessing the magnitude of the structurally induced volatility is presented the ratio of variance of open to open returns to closeto close returns is shown to be consistently greater than one for nyse common stocks during the period 1982 through 1986 tbe greater volatility at the open is not attributable to the way in which public information is released since both the opento open return and the close to close return span the same period of time instead the greater volatility appears to be attributable to private information revealed in trading and to temporaryprice deviations induced by specialist and other traders the implied cost of immediacy at the open is significantly higher than at the close other empirical evidence in this article documents the volume of trading at the open the time delays between the exchange opening and the first transaction in a stock the difference in daytime volatility versus overnight volatility and the extent to which volatility is related to trading volume

expo power utility a flexible form for absolute and relative risk aversion a new utility function which i call expo power is proposed that exhibits decreasing constant or increasing absolute risk aversion and decreasing or increasing relative risk aversion depending on parameter values numerical analysis suggests that the expo power function performs well in incorporating these risk preference structures and that arbitrary risk preference specifications may lead to biased risk response estimates

trading structure and overnight information a natural experiment from the tel aviv stock exchange abstract a unique data set from the tel aviv stock exchange tase is used to study the effect of trading mechanisms on stock return volatility the tase represents a natural experiment which allows separation of the overnight information effect from the trading mechanism effect the data span a time period in which the order of the trading mechanisms a sequential continuous mechanism and a call auction was switched since overnight information should impact opening prices equally across periods this affords an unparalleled opportunity to examine the trading mechanism effect without the confounding effect of the non trading period this paper finds that the null that opening variances equal closing variances cannot be rejected for either period further the tests cannot reject null that the ratio of opening to closing return variances is equal across periods this suggests that the trading mechanisms on the tase do not differ in their effect upon return volatility

valuing risky projects option pricing theory and decision analysis in the academic literature and professional practice there are a number of alternative and apparently competing methods for valuing risky projects in this paper we compare and contrast three different approaches risk adjusted discount rate analysis option pricing analysis and decision analysis focusing on the last two we show that in contrast to some of the claims made in the real options literature when both option pricing and decision analysis methods are correctly applied they must give consistent results we also explore ways in which option pricing and decision analysis methods can be profitably integrated in particular we show how option pricing techniques can be used to simplify decision analysis when some risks can be hedged by trading and conversely how decision analysis techniques can be used to extend option pricing techniques to problems with incomplete securities markets

opening prices on the new york stock exchange abstract the prices of opening transactions on the new york stock exchange are determined quite differently from prices of subsequent transactions this paper tests the null hypothesis that opening prices are as representative of contemporaneous equilibrium stock values as subsequent intra day transactions prices with one possible exception there is no basis for rejecting this hypothesis despite the very different trading mechanisms used in opening trades and intra day trades

how does the call market method affect price efficiency evidence from the singapore stock market abstract on august 21 2000 the singapore exchange sgx adopted the call market method to open and close the market while the remainder of the day s trading continued to rely on the continuous auction method the call method significantly improved the price discovery process and market quality a positive spillover effect is observed from the opening and closing calls day end price manipulation also declined after the introduction of the call market method however the beneficial impact from the call market method is asymmetric benefiting liquid stocks more than illiquid stocks

the dependence between hourly prices and trading volume this study provides evidence on joint characteristics of hourly common stock trading vol ume and returns on the new york stock exchange average volume traded shows signifi cant differences across trading hours of the day and across days of the week average returns differ across hours ofthe day and to some extent across days ofthe week there is a strong contemporaneous relation between trading volume and returns and also a rela tion between trading volume and returns lagged up to four hours furthermore the trading volume returns relation is steeper for positive returns than for nonpositive returns

your money or your life a prescriptive model for health safety and consumption decisions in this paper we develop a conceptual framework and model for valuing risks to an individual s health and life and to support decision making about investments in health quality of life and safety our treatment of health risks in the model builds on the popular quality adjusted life year qaly framework that balances health quality and length of life issues we extend this framework to consider financial concerns as well as health quality and length of life our model considers uncertainty in income and health and incorporates the decision maker s ability to adjust consumption over time in response to changes in expectations about health and income we use this model to study the optimal tradeoffs between financial gains or losses and improvements or reductions in health or longevity and apply it in two example medical decision problems

introduction to nber symposium on the october 1987 crash the stock market crash of october 1987 led to a boom in conferences commissions and studies of the stock market in almost each case the participants would try to understand the events of october 1987 by a detailed analysis or description of events during the particular days of high volatility of course to us economists there was nothing qualitatively unusual about october 19 1987 the stock market moved and we have no model that succeeds in explaining the magnitude or sources of daily stock market volatility for that day or any other day when asked by the national bureau of economic research to organize yet another conference on this subject i decided that it was time to put these events in a historical perspective and try to understand them in the context of longer time periods and broader models the papers collected in this symposium issue admirably succeed in broadening our understanding of market volatility and consequently deepening our understanding of the events of a few important days to develop some perspective for the papers in the symposium and impose my own prejudices on the reader it is useful to partition the sources of stock price movement 1 first the price of equity can change for purely informational reasons related to the market receiving news that changes its perception of the payoff stream to holding equity e g the expected dividends or volatility of the dividend may change sec

spikes and spill overs the impact of the national minimum wage on the wage distribution in a low wage sector the uk national minimum wage nmw has had a minimal impact on uk wage inequality because it has been set at a modest level and because aggregate evidence suggests very small spill over effects but the small spill over effects might be because of the small numbers of workers affected and widespread anticipation of the introduction of the nmw might make the impact effect appear very small this paper investigates these issues using data collected from care homes where the nmw affected 40 of workers but we still find no evidence of large spill over effects and very small amounts of anticipation of the nmw

life cycle preferences over consumption and health when is cost effectiveness analysis equivalent to cost benefit analysis this paper studies life cycle preferences over consumption and health status we show that cost effectiveness analysis is consistent with cost benefit analysis if the lifetime utility function is additive over time multiplicative in the utility of consumption and the utility of health status and if the utility of consumption is constant over time we derive the conditions under which the lifetime utility function takes this form both under expected utility theory and under rank dependent utility theory which is currently the most important nonexpected utility theory if cost effectiveness analysis is consistent with cost benefit analysis it is possible to derive tractable expressions for the willingness to pay for quality adjusted life years qalys the willingness to pay for qalys depends on wealth remaining life expectancy health status and the possibilities for intertemporal substitution of consumption

the potential impact of the minimum wage in rural areas this article explores the extent to which the potential impact of the national minimum wage might differ in rural areas using pre 1999 data from the british household panel survey a number of dimensions of the policy s potential impact in rural areas are considered in particular the number of workers affected their typical characteristics and the effects on pay inequality and household income distribution the results show that for the majority of rural areas that are accessible to urban labour markets the impact is likely to be broadly similar in contrast the potential impacts and particularly the distributional effects of the national minimum wage are found to be greatest in remoter rural areas

illicit drug use and labour market achievement evidence from the uk this study using data from the british crime survey bcs examines the effect of drug use on occupational achievement it starts by attempting to overcome the identification problem that results from the limited set of drug use questions presented in the bcs taking this into account and allowing for the endogeneity of drug use in equations for unemployment and labour market outcomes that a mild positive association with soft drugs and occupational achievement is observed that diminishes with age this relationship holds for males but not for females in contrast it is also found that past use of hard drugs significantly increases the likelihood of current unemployment although it appears to be unrelated to occupational success conditional on achieving employment

preferences for consumption streams scale invariance correlation aversion and delay aversion under mortality risk lifetime financial decisions often require a decision analyst to elicit a decision maker s preferences for consumption streams in assessing such preferences the analyst might look for a set of reasonable conditions to check when selecting a utility form we provide such a set of conditions and show that they lead to the multiplicative expo power mep utility form some of our conditions involve trade offs under certainty and others relate to choices under uncertainty in the deterministic setting we invoke increasingness continuous differentiability mutual preferential independence and preferential scale invariance in the uncertainty setting we invoke componentwise risk aversion a utility independence condition and correlation aversion we apply the mep utility in a life cycle consumption planning problem under mortality risk in this context we find that the correlation averse mep utility is more realistic than and as tractable as the popular correlation neutral additive power and additive exponential utilities we show that the correlation averse decision maker prefers to consume more in life and leave less behind in death in addition we demonstrate that the correlation averse decision maker is more averse to delaying consumption in the face of mortality risk

survival versus consumption we develop an indirect method to estimate utility and willingness to pay wtp for reductions in the risk of death at various ages using a life cycle model of consumption we assume that an individual sets his consumption level each year so as to maximize his expected lifetime utility alternative assumptions about opportunities for borrowing and annuities characterize two polar types of societies in our robinson crusoe case an individual must be entirely self sufficient and annuities are not available in our perfect markets case an individual can borrow against future earnings and purchase actuarially fair annuities we show that under these assumptions wtp is the sum of livelihood discounted expected future earnings and consumer surplus to illustrate our methods we derive wtp for an average financially independent american man under plausible assumptions the model is calibrated to 1978 earnings e g 18 000 per year for men aged 45 54 with at least some income in the robinson crusoe case wtp increases from 500 000 at age 20 to a peak of 1 250 000 at age 40 and declines to 630 000 at age 60 in the perfect markets case age variations are less pronounced wtp is 1 050 000 at age 20 peaks at 1 070 000 at age 25 and declines to 600 000 at age 60 these results suggest that individuals value risks to their lives at several times the pro rata share of their future earnings

rational habit formation abstract this paper discusses consumer demand under rational habit formation if consumer tastes change endogenously through habit stocks depending on past consumption the rational consumer will make allowance of the future habit forming effects of current consumption a model with rational habit formation is made formally equivalent to an intertemporal consumer model without habit formation by redefining the cost of consumption and wealth the cost of consumption is obtained by adding the cost of future induced consumption to the rental price of the commodity the extended wealth concept is obtained by subtracting the cost of the initial stocks of habits and the cost of future physically necessary consumption from wealth the paper also investigates the implication of rational habit formation for constructing one period cost of living indices

the duration of the smoking habit i introduction most smokers smoke out of habit once the habit is ended many of smoking s most harmful effects decline rather quickly preventing and ending cigarette addiction is therefore the straightest path toward preventing the health damage done by cigarette smoking consequently the related questions of why people start smoking and why they quit are central to formulating and evaluating effective antismoking policies duration or hazard models are designed to measure the probability of transition between states and are thus ideal for investigating the structural determinants of the transition between addiction and non addiction nevertheless most previous work in the economics literature uses the aggregate smoking participation rate defined as the percentage of people who currently smoke or an individual s probability of participation rather than a hazard rate to measure the attractiveness of habitual smoking this paper models the hazard rates of both starting and quitting the cigarette smoking habit the starting hazard rate is the probability that an individual will start smoking in a given time period conditional on being a nonsmoker until then the quitting hazard rate is the probability of quitting smoking in a given time period conditional on being a smoker since the starting date both of these rates should rise and fall in response to changes in the attractiveness of smoking the two rates will respond differently to different stimuli since the starting hazard reflects the point of view of nonsmokers and the quitting hazard reflects the point of view of smokers hazard or duration models possess several advantages over smoking participation models most obviously smoking participation rates cannot directly distinguish between increased starting rates and decreased quitting rates but the hazard models can also in a participation rate model it is difficult to control for the effect of the duration of the habit whereas duration models are designed specifically to allow for and measure the dependence of the hazard rate on duration another advantage is that the participation rate at any one time will oversample the number of long term smokers relative to those who had a short term habit whereas a duration model is designed to avoid this source of bias one drawback however is that because of their inherent panel nature the data requirements of duration models are somewhat more difficult to satisfy as shall be seen the only previous work in the economics literature that estimates the hazard rate of starting smoking is douglas and hariharan 1994 my paper improves upon douglas and hariharan in at least three important ways first it estimates the hazard rate of quitting smoking as well as that of starting second it takes into account variation in state level regulation third its time varying covariate model allows hazard rates to respond dynamically to changes in cigarette price regulation and information variables the use of time varying covariates is important because it brings the empirical model into much closer accord with theory the decision whether or not to start or quit smoking is an ongoing decision made one day at a time on the basis of current information the hazard of starting is greatest when the cost of the habit appears lowest and its benefit appears highest this comparison of cost and benefit changes through time as price information income and life cycle variables change while douglas and hariharan 1994 used price information from the potential smoker s most vulnerable age on the theory that its marginal effect is greatest at that time the model used in this paper allows each individual s hazard rate to respond to changes in price and public information as they occur the leading theoretical model of the decision to smoke is the rational addiction model of becker and murphy 1988 which assumes that consumers of addictive goods begin smoking only after fully weighing the costs and benefits of the habit

regional evidence on the effect of the national minimum wage on the gender pay gap robinson h 2005 regional evidence on the effect of the national minimum wage on the gender pay gap regional studies 39 855 872 this paper provides evidence on employment rates and the extent of the change in the gender wage gap across regions around the introduction of the national minimum wage nmw the variation in the proportions of low paid workers across britain provides a quasi natural experiment with which to try and measure the effect of the introduction of the nmw all things being equal if women are over represented amongst the low paid and the proportion of low paid workers varies across regions one might expect to see the introduction of the nmw narrowing the overall gender pay gap by varying degrees across the country using difference in differences type estimation on labour force survey data it is concluded that there is variation in the limited narrowing of the overall gender pay gap across regions consistent with regional differences in the incidence and magnitude of low pay

an examination of stock market return volatility during overnight and intraday periods 1964 1989 this paper examines the variance of hourly market returns during 1964 89 results indicate that return volatility falls from the opening hour until early afternoon and rises thereafter and is significantly greater for intraday versus overnight periods market variance is also shown to change significantly over time rising after nasdaq began in 1971 rising after trading in stock options began in 1973 falling after fixed commissions were eliminated in 1975 rising after trading in stock index futures was introduced in 1982 and falling after margin requirements for stock index futures became larger in 1988 copyright 1990 by american finance association

trading and returns under periodic market closures this paper studies how market closures affect investors trading policies and the resulting return generating process it shows that closures generate rich patterns of time variation in trading and returns including those consistent with empirical findings 1 u shaped patterns in the mean and volatility of returns over trading periods 2 higher trading activity around the close and open 3 more volatile open to open returns than close to close returns 4 higher returns over trading periods than over nontrading periods 5 more volatile returns over trading periods than over nontrading periods it also shows that closures can make prices more informative about future payoffs we model a competitive stock market with periodic closures in which investors trade for both allocational and informational reasons we use the model to study how market closures intrinsically affect investors trading behavior and the return generating process the purpose of this analysis is to increase our understanding of the time variation in security trading and returns that are associated with regular market closures such as the intraday and intraweek patterns in stock returns volatility and trading volume we consider a stock market in which the exogenous information flow is homogeneous over time and the market closes periodically when the market is open investors trade the stock either to rebalance their overall portfolio of assets which also includes other illiquid assets or to speculate on future stock payoffs using their private information in particular investors adjust their asset portfolio by trading the stock in order to hedge the risk of illiquid assets we refer to these trades as hedging trades and those motivated by private information as speculative trades when the market is closed hong is from the graduate school of business stanford university and wang is from the sloan school of management massachusetts institute of technology and nber the authors thank jennifer huang for programming assistance and an anonymous referee for many valuable suggestions they also thank glenn ellison john heaton craig holden andrew lo steve slezak jeremy stein rene stulz the editor the nber asset pricing lunch group and par

a transaction data study of weekly and intradaily patterns in stock returns abstract weekly and intradaily patterns in common stock prices are examined using transaction data for large firms negative monday close to close returns accrue between the friday close and the monday open for smaller firms they accrue primarily during the monday trading day for all firms significant weekday differences in intraday returns accrue during the first 45 minutes after the market opens on monday mornings prices drop while on the other weekday mornings they rise otherwise the pattern of intraday returns is similar on all weekdays most notable is an increase in prices on the last trade of the day

price formation on stock exchanges the evolution of trading within the day prior analyses of prices of the nyse and other exchanges find that transitory price volatility is greater at the open of trading than at the close we extend this line of research by using 40 years of hourly dow jones 65 composite price index data to estimate transitory volatility throughout the trading day our results indicate that transitory volatility steadily declines during the trading day we find a similar intraday decline in transitory volatility for a 2 1 2 year sample of the individual firms in the dow jones 30 industrials index the results are consistent with the hypothesis that trading aids price formation and do not support the argument that particular trading mechanisms are the source of greater volatility at the open of trading article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the labor market impact of state level anti discrimination laws 1940 1960 by the time congress passed the 1964 civil rights act 98 of non southern blacks 40 of all blacks already resided in states with fair employment laws prohibiting labor market discrimination using census data from the integrated public use microdata series the author assesses the impact of fair employment legislation on black workers relative income unemployment labor force participation migration and occupational and industrial distributions in general the fair employment laws adopted in the 1940s appear to have had larger effects than those adopted in the 1950s and the laws had considerably smaller effects on the labor market outcomes of black men than on those of black women

habit formation from correlation aversion making plans about how much to consume and how much to invest in risky assets over an uncertain lifetime is a fundamental economic challenge the leading models of this planning problem use either additive or habit forming preferences for the most part these models assume an individual is either correlation neutral or correlation seeking in consumption respectively in this paper we introduce two habit forming correlation averse preference models with these preferences we find closed form solutions to the classic consumption and portfolio planning problem our solutions recommend that a correlation averse decision maker follow a habit in their consumption plans while such habits traditionally have been associated with correlation seeking preferences our model leads to consumption habits from correlation averse preferences

modelling round the clock price discovery for cross listed stocks using state space methods u s trading in non u s stocks has grown dramatically around the clock these stocks trade in the home market in the u s market and potentially in both markets simultaneously we develop a general methodology based on a state space model to study 24 hour price discovery in a multiple markets setting as opposed to the standard variance ratio approach this model deals naturally with 1 simultaneous quotes in an overlap 2 missing observations in a nonoverlap 3 noise due to transitory microstructure effects and 4 contemporaneous correlation in returns due to market wide factors we apply our model to dutch stocks cross listed in the united states our findings suggest a minor role for the new york stock exchange in price discovery for dutch shares in spite of its nontrivial and growing market share

stock market microstructure and return volatility evidence from italy abstract this paper studies the impact of the stock market microstructure on return volatility and on the value discovery process in the milan stock exchange the primary trading mechanism employed by this exchange is a call market which is usually preceded and followed by trading in a continuous market we find that the opening transaction in the continuous market has the highest volatility and that opening the market with the call transaction seems to produce relatively lower volatility in the closing transaction investors correct perceived errors or noise in the prices set at the call the implications of the results for market design are examined