educational attainment industrial structure and male earnings through the 1980s between 1979 and 1989 men s average earnings declined and the percentage of men with low earnings increased much of the decline in mean earnings and the increased incidence of low earnings can be accounted for by changes in the returns to education experience and industry of employment changes that we attribute to demand side factors such as changes in technology shifts in industrial employment patterns had a relatively small effect on mean earnings and low earnings rates however their effects were larger among blacks than among whites and hispanics we also find that educational upgrading over the decade kept mean earnings from falling even further and helped to hold down the growth of low earnings especially among blacks

accuracy of response in labor market surveys evidence and implications this paper examines the extent of response errors in labor market survey data and explores the implications of such errors for economic analysis explicitly examined are responses to questions on industry occupation union status hours worked and wages analyses are based on two sources 1 a special supplement to the january 1977 current population survey that obtained data from workers and their employers and 2 an exact match of workers and their employers interviewed in the employment opportunity pilot project survey the dual nature of these surveys provides a basis for analyzing the effect of response error on a variety of economic analyses including the trade off between wages and risk the wage impact of unionism and the sensitivity of wage determination models to alternative responses to earnings questions

effects of industry growth and decline on gender and education wage gaps in the 1980s the w e upjohn institute for employment research the uc institute for labor and employment

the value of cooperatives in rural electrification the electricity sectors of many developing countries underwent substantial reforms during the 1980s and 1990s driven by global agendas of privatization and liberalization however rural electrification offered little by way of market incentives for profit seeking private companies and was often neglected as a consequence delivery models for rural electrification need to change this paper will review the experiences of various rural electrification delivery models that have been established in developing countries including concessionary models dealership approaches and the strengthening of small and medium sized energy businesses it will use examples from the usa bangladesh and nepal together with a detailed case study of a nepali rural electric cooperative to explore the role that local cooperatives can play in extending electricity access it is shown that although there is no magic bullet solution to deliver rural electrification if offered appropriate financial and institutional support socially orientated cooperative businesses can be a willing efficient and effective means of extending and managing rural electricity services it is expected that this paper will be of particular value to policy makers donors project planners and implementers currently working in the field of rural electrification

what went wrong the erosion of relative earnings and employment among young black men in the 1980s this paper shows a widening in black white earnings and employment gaps among young men from the mid 1970s through the 1980s earnings gaps increased most among college graduates and in the midwest while gaps in employment population rates grew most among dropouts we attribute the differential widening to shifts in demand for subgroups due to shifting industry and regional employment the falling real minimum wage and deunionization the growing supply of black to white workers that was marked among college graduates and to increased crime among dropouts the different factors affecting subgroups highlight the economic diversity of black americans

spot and futures prices of nonstorable commodities under rational expectations the paper examines the effect of the presence of a commodity futures market upon the price formation process in a stochastic rational expectations framework an optimizing model with price uncertainty and risk aversion is used in order to solve equilibrium distributions of prices for nonstorable commodities the existence of futures trading does not affect the degree of short term spot price fluctuations however if the commodity market disturbance that originates from stochastic consumption demand is serially dependent then the long term price variation is smaller with a futures market than without it futures prices fluctuate less variably over time than spot and expected prices finally there exists a futures intervention rule whereby the authority can stabilize spot prices and raise the overall welfare of society

wage losses for displaced workers many studies have shown that displaced workers experience substantial wage reductions that are strongly related to their predisplacement job tenure and experience this paper is an assessment of whether firm closures or downturns in more broadly defined labor markets drive the extreme wage losses of high tenure high experience displaced workers i show that the relatively high wage losses of high experience displaced workers are primarily due to their heightened sensitivity to downturns in their state industry and occupation however the large wage losses of high tenure displaced workers are not explained by their sensitivity to these local downturns one interpretation of these facts is that firm specialization is linked primarily to firm specific experience but not to general labor market experience

on decomposing the wage gap a critical comment on blinder s method many studies have found that the impact of schooling on earnings is greater for females than for males despite the fact that females tend to earn less both absolutely and controlling for personal characteristics this study investigates possible

welfare payments and other economic determinants of female migration this article investigates the effects of welfare payments wages and unemployment on women s probability of interstate migration in the united states it also investigates if the income attraction of locations varies with recency of labor market experience welfare gains increase the probability of interstate migration welfare effects are largest for single mothers with small children and stronger among women with no recent labor market experience the welfare effects albeit small are larger than the wage effects the wage effects are weaker among women with no recent work experience ethnic specific analyses suggest differences in migration behavior among anglos african americans and puerto ricans

industry specific capital and the wage profile evidence from the national longitudinal survey of youth and the panel study of income dynamics using data from the national longitudinal survey of youth 1979 96 and the panel study of income dynamics 1981 91 i seek to determine whether there is any net positive return to tenure with the current employer once we control for industry specific capital including total experience in the industry as an additional explanatory variable i show that the return to seniority is markedly reduced using gls while it virtually disappears using iv gls at both the one digit and three digit levels therefore it seems that what matters most for the wage profile in terms of human capital is industry specificity not firm specificity

the determination of spot and futures prices with storable commodities this paper analyzes the effects of futures trading in a market for a storable commodity in which producers and speculators are assumed to be risk averse and specifications of the aggregate supply and inventory demand functions are derived from explicit optimization a critical aspect is how the parameters of these functions change with the introduction of the future market as it is through these induced parameter changes that the futures market exerts its influence on the spot price the effects of the futures market on both the long run average spot price and its variance are analyzed while we are unable to draw any definitive conclusions on this issue we find that in all cases considered the futures market stabilizes the spot price as well as lowering its long run mean for many years now the question of the effects of futures trading on the stability of spot prices has been extensively debated this topic has been discussed at various levels for example farmers and agricultural interest groups have claimed that futures trading destabilizes spot prices thereby imposing welfare losses on the economy in the united states congress has decided that futures trading can cause price destabilization and has subjected futures trading to the regulation of the commodity futures trading commission at a more analytical level economists have been investigating the issue both empirically and more recently theoretically as well

unemployment through the filter of memory this paper uses data from the annual work experience survey to construct a new unemployment series based on respondents recollection of unemployment over the previous year it is argued that the ratio of this new series to the official series computed from the monthly current population survey provides an index of the salience or painfulness of unemployment over the past two decades this ratio has declined secularly about 30 percent of this decrease is due to shifts in the composition of unemployment toward demographic groups with low ratios of remembered to currently reported unemployment the remainder is due to a secular decline in salience for younger and older people

information diversity and market behavior the paper addresses two major issues raised by information diversity in a speculative market first we analyze what property of an investor s information leads to an expected speculative profit and show that independence is more important than accuracy second we consider whether the market price must become fully efficient in the sense that every investor s information is accurately discounted when traders use it rationally as an information source we prove that for any information structure there is a unique equilibrium weighting of investor beliefs at which the price is fully efficient and also every trader s expected profit is zero except for special structures however this equilibrium need not be attained in finite time much of modern capital market theory depends heavily on the assumption that investors know the expected values variances and covariances of asset returns although the assumption of homogeneous expectations is a conventional one and necessary for many theoretical results it is not one which can be offered with much confidence real world investors have access to differing information and may also disagree on the correct interpretation of widely held information when asset returns are assumed to be governed by a known probability distribution many features of trading in real world markets are eliminated from consideration there is no role for information gathering and no way for an investor to profit from having superior information indeed this term has no real meaning since all relevant information is contained in the known returns distribution speculative trading is also hard to explain without divergence of opinion a speculator who thought the market price impounded all available information would never trade against it with heterogeneous information we lose some of the neat results of standard capital market theory but new questions can be addressed about how information diversity among investors affects the markets in which they participate one issue concerns the impact of informational differences on investor profits investors who are better informed than others or are better able to evaluate widely held information should be able to earn higher returns all effort devoted to security analysis and market research depends on the belief that this is so but what makes one investor s information superior to another s beyond the circular observation that those investors with consistent profits must be better informed than those with losses do investors with inferior information however measured continually lose money until they are squeezed out of the market or can an

the cartelization of local governments intergovernmental competition can enhance efficiency centralization of government expenditures inhibits intergovernmental competition because it makes governments more homogeneous and so cartelizes local governments cartelization reduces tiebout competition and limits benchmark competition in which one government s performance can be compared with neighboring governments measuring fiscal centralization as the ratio of local to state and local government expenditures within the state the evidence shows that more fiscal decentralization is associated with higher levels of state per capita income cartelization of local governments negatively impacts income

the need for competition between decentralized governance approaches for data exchange in smart electricity grids fiscal federalism vs polycentric governance abstract the institutional framework of the electricity sector is challenged by digitalization with smart metering data on energy consumption and production becomes available information management shall secure the efficient exchange of this data e g from smart metering in smart grids currently national as well as regional governance approaches for information management systems are being developed we discuss how the scale and scope of an information management system has an influence on the level of innovation in the process of the data exchange we define information management as a club good and apply the insights from the theory of fiscal federalism we conclude that neither of the extremes of national central and decentralized governance approaches for information management will be optimal rather we identify the need of polycentric governance approaches that compete with each other to define the optimal degree of decentralization

inter industry mobility and the cyclical upgrading of labor we investigate whether a market clearing model is consistent with industry employment and wage patterns related to the cyclical upgrading of labor we demonstrate that roy s 1951 market clearing

the impact of schooling and industrial restructuring on recent trends in wage inequality in the united states sufficient evidence now exists to confirm a strong rising trend in wage inequality in the united states since at least the mid 1970s still elusive is a definitive explanation for this tendency in the pursuit of one researchers have now begun to turn their attention to two factors 1 on the supply side an apparent rapid growth in the rates of return to education and 2 on the demand side an acceleration in industrial restructuring in particular the shift in employment from goods production to services in this connection the decline in unionization and the expanded exposure of the manufacturing sector to international competition have received renewed consideration this paper contends that it is precisely the increasing returns to schooling in both goods and services in combination with the shift in employment between the two that is responsible for the recent growth in wage dispersion

decentralisation as an incentive scheme recent changes have introduced more decentralization in a number of traditionally centralized countries 1 in the case of france it is sometimes claimed that the 1982 1983 reform of subcentral government is of historical importance although the principles of that reform are not contested any more by the new majority elected in 1986 opinions still differ on a number of policy issues some of the issues are presented in this introductory section but the main purpose of this paper is not to expose or discuss in detail the problems of decentralization in france as argued in the second part of the introductory section the theoretical framework in which the policy issues of decentralization are usually discussed by economists is somewhat unsatisfactory in particular when applied to unitary states such as britain or france the bulk of the paper is devoted to the exploration of a different approach to decentralization it is not purported however that this approach could completely replace the more traditional one consequently when in the concluding section we return briefly to the policy issues identified here this is to be read as a preliminary attempt to evaluate the relevance of the reasoning developed in the paper

futures trading and volatility in the gnma market futures markets for agricultural commodities have existed for well over 100 years recently there has been a major expansion of futures trading into nontraditional areas particularly interest bearing securities and foreign currenciesthe so called financial futures the introduction of exchange traded futures contracts for treasury bills gnma pass through certificates and other securities has created new hedging arbitrage and speculative opportunities for the investors issuers and dealers who are active in the cash markets for these securities futures trading has also opened these markets to participation by new classes of traders particularly private and smaller institutional investors through the process of arbitrage a financial futures market will be closely linked to the cash market for the underlying securities an important concern of the regulatory authorities is what effect opening a futures market is likely to have on an existing cash market the purpose of this paper is to analyze the impact of futures trading in government national mortgage association gnma passthrough certificates on price volatility in the cash market for these securities there are several major ways in which opening futures trading can increase efficiency and smooth price variations in a cash market most importantly futures provide a mechanism for those who buy and sell the actual security or commodity to hedge themselves against unfavorable price changes through the futures market risk can be spread across a large number of investors and transferred away from those hedging spot positions to professional speculators who are more willing and able to bear it this risk transfer may substantially improve the functioning of the spot market because it reduces the need to incorporate risk premia in cash market transactions to compensate for the risk of price fluctuations second futures market may increase the informational efficiency of a cash market since futures prices are determined in a unified highly visible market by traders who specialize in gathering and evaluating information the futures market is expected to be an efficient market in the sense that prices will reflect the best estimate of true future values given the information currently available if anything an informationally efficient futures market should lead to more efficient pricing in the cash market the importance of both of these effects will depend upon the structure of the existing cash market the more developed and integrated is the cash market the

male female wage differentials and policy responses without implicating them for any of the contents of the paper i am grateful to the following for helpful discussions or comments andrea beller university of illinois david bloom harvard and columnbia glen cain university of wisconsin ron ehrenberg cornell victor fuchs stanford bob gregory australian national university jonathan leonard university of california berkeley roberta robb brock university and paul weiler harvard financial support of the humanities and social sciences committee of the research board of the universitu of toronto is eratefullu acknowlede ed

incumbent behavior vote seeking tax setting and yardstick competition this paper develops a model of the political economy of tax setting in a multijurisdictional world where voters choices and incumbent behavior are determined simultaneously voters are assumed to make comparisons between jurisdictions to overcome political agency problems this forces incumbents into a yardstick competition in which they care about what other incumbents are doing we provide a theoretical framework and empirical evidence using u s state data from 1960 to 1988 the results are encouraging to the view that vote seeking and tax setting are tied together through the nexus of yardstick competition

an analysis of sample attrition in panel data the michigan panel study of income dynamics by 1989 the michigan panel study on income dynamics psid had experienced approximately 50 percent sample loss from cumulative attrition from its initial 1968 membership we study the effect of this attrition on the unconditional distributions of several socioeconomic variables and on the estimates of several sets of regression coefficients we provide a statistical framework for conducting tests for attrition bias that draws a sharp distinction between selection on unobservables and on observables and that shows that weighted least squares can generate consistent parameter estimates when selection is based on observables even when they are endogenous our empirical analysis shows that attrition is highly selective and is concentrated among lower socioeconomic status individuals we also show that attrition is concentrated among those with more unstable earnings marriage and migration histories nevertheless we find that these variables explain very little of the attrition in the sample and that the selection that occurs is moderated by regression to the mean effects from selection on transitory components that fade over time consequently despite the large amount of attrition we find no strong evidence that attrition has seriously distorted the representativeness of the psid through 1989 and considerable evidence that its cross sectional representativeness has remained roughly intact

the impact of fiscal decentralization on economics performance in high income oecd nations an institutional approach this paper examines the impact of public sector decentralization on per capita income controlling for differences in institutional arrangements among countries panel data regressions on a sample of observations from 20 high income oecd nations spanning the years 1972 to 2005 indicate that decentralization is positively related to income the empirical analysis shows that institutions consistent with economic freedom enhance the positive income effects of decentralization thus the impact of public sector decentralization is dependent upon a nation s institutional environment

exit voice and mimicking behavior evidence from swiss cantons previous empirical literature hasshown that in order to overcome agencyproblems voters make inter jurisdictionalcomparisons of fiscal performance whenmaking electoral decisions incumbents therefore anticipate voters feedback by copying fiscal policy decisionsfrom neighbors this paper argues thatfiscal autonomy exit as well as directlegislation voice enrich politicalcompetition reducing thus the influence of electoral competition onfiscal decisions consequently policymimicking does not matter in circumstancesof direct legislation and fiscal autonomywhere the impact of voters on the politicalagenda is particularly strong based onpanel data between 1980 and 1998 we findencouraging evidence supporting ourtheoretical arguments

long term wage fluctuations with industry specific human capital exploiting long term interindustry demand shifts this article provides evidence that 1 industry level wages do not respond to industry demand conditions 2 at the industry level the employment of young workers responds more to demand shifts than does the employment of experienced workers and 3 the postdisplacement wages of displaced workers are strongly affected by demand in their predisplacement industries these findings are consistent with a model in which worker s investments in industry specific skills pose a barrier to interindustry labor mobility and wages do not respond to spot labor market conditions

self governance polycentrism and federalism recurring themes in vincent ostrom s scholarly oeuvre abstract this paper addresses vincent ostrom s treatment of self governance polycentrism and federalism through which he has generated a coherent vision of political economy after examining some ontological and epistemological presuppositions that are central to his work the rest of the paper explores four topical areas 1 his examination of knowledge belief and the requisites for good civic practice 2 his conceptualization of a polycentric public economy 3 his articulation of the problem of public administration through his conceptualization of a municipal services industry 4 his treatment of federalism as a compound republic rather than simply a form of administrative decentralization

testing for long horizon uip using ppp based exchange rate expectations abstract this paper revisits the uncovered interest parity relation it supplements existing work in two ways it focuses on long instead of short term interest rates and related to that employs exchange rate expectations derived from purchasing power parity ppp instead of actual outcomes among the major floating currencies over the period 1975 1997 the paper cannot support the notion of further increases in uip validation beyond that associated with the wave of financial market liberalization and deregulation in the early 1980s

industrial shifts skills levels and the labor market for white and black males in this paper we estimate the effects of industrial shifts in the 1970s and 1980s on the wages and employment of black and white males we use micro census data for 52 msa s and estimate effects separately by age and education group the results show that industrial shifts did reduce demand for blacks and for less skilled males in the 1970s and 1980s demand shifts away from manufacturing in particular reduced employment and wages for black and white males while the magnitudes of these effects are fairly small for many groups they can account for one third to one half of the employment decline for less educated young blacks in the 1970s these results imply fairly large effects on the earnings of less skilled males in the 1980s as well authors

swimming upstream trends in the gender wage differential in the 1980s using michigan panel study of income dynamics data for 1979 and 1988 we analyze how a falling gender wage gap occurred despite changes in wage structure unfavorable to low wage workers the decrease is traced to gender specific factors which more than counterbalanced changes in measured and unmeasured prices working against women supply shifts net of demand were unfavorable for women generally and hurt high skilled more than middle and low skilled women by analyzing wages we find support for the notion of a gender twist in supply and demand having its largest negative effect on high skilled women

real effects of futures speculation asymptotically rational expectations to what extent does the diversity in the forecasting ability of futures speculators simply result in transfers of wealth among themselves and to what extent does it affect the allocation of resources on the basis of bayesian analysis it is assumed that the variance of forecast errors between the subjective and objective expectations of the subsequent price differs among groups two major conclusions are as follows 1 if given our parameter estimates the forecast error variance of the amateur speculators is less than six times that of the professionals then the existence of futures markets will lower the expected price to consumers increase expected output and lower the variance of the price 2 since small speculators lose to the professionals the relative variance of the forecast error of the amateurs to the professionals exceeds their relative weights as measured by the ratio of numbers to average risk aversion