efficient resource allocation on the basis of priorities many institutions allocate resources by non market mechanisms based on priorities in this paper we introduce a model of resource allocation on the basis of priorities and address the following questions is it possible to allocate resources on the basis of any priority structure if yes when can we do this pareto efficiently without creating incentives for manipulation and consistently across different groups of agents and resource levels we adopt a basic indivisible objects model with a finite number of object types and a finite quota of goods of each type some interesting examples are the determination of access to education allocation of graduate houses offices or tasks agents are assumed to have strict preferences over object types and remaining unassigned an assignment is an allocation of the objects to the agents such that every agent receives at most one object a rule associates an assignment to each preference profile we formalize a priority structure to be a collection of strict priority rankings of individuals indexed by the object types where i a j would be read as i has higher priority for object a than j we assume that the priority structure is exogenously fixed and allow the preferences of the agents to vary a rule is said to violate a priority of i for a if there is a preference profile under which i envies j who is assigned a and publication information econometrica 70 6 november 2002 2489 2497 the copyright to this article is held by the econometric society http www econometricsociety org it may be downloaded printed and reproduced only for personal or classroom use absolutely no downloading or copying may be done for or on behalf of any for profit commercial firm or other commercial purpose without the explicit permission of the econometric society for this purpose contact julie p gordon executive director of the society at jpg northwestern edu i would like to thank faruk gul wolfgang pesendorfer the co editor the four anonymous referees and the participants of the micro theory lunch seminar in princeton university for their comments and suggestions

strategy proof assignment on the full preference domain we consider the problem of efficiently allocating several indivisible objects between agents who are to receive at most one object and whose preferences are private information we examine this standard assignment problem from the perspective of mechanism design giving up the usual assumption of linear preferences and instead using a full preference domain with indifferences permitted we characterize two classes of mechanisms i bi polar serially dictatorial rules by essential single valuedness pareto indifference strategy proofness and non bossiness and ii all selections from bi polar serially dictatorial rules by single valuedness efficiency strategy proofness and weak non bossiness we compare the outcomes from the bi polar serially dictatorial rules with the outcomes obtained using a market based approach namely the core of the market we show that all strongly efficient outcomes in the core can be generated using serially dictatorial rules moreover we argue that serially dictatorial rules have an advantage over the market based approach in that they yield strongly efficient solutions for all preference profiles making it possible to use randomization to restore equity when preferences are private information this type of ex ante equity cannot be implemented using the market based approach

income distribution and macroeconomics this paper analyzes the role of wealth distribution in macroeconomics through investment in human capital it is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital the initial distribution of wealth affects aggregate output and investment both in the short and in the long run as there are multiple steady states this paper therefore provides an additional explanation for the persistent differences in per capita output across countries furthermore the paper shows that cross country differences in macroeconomic adjustment to aggregate shocks can be attributed among other factors to differences in wealth and income distribution across countries

political equilibrium income distribution and growth this paper analyzes the impact of income distribution on growth when investment in human capital is the source of growth and individuals vote over the degree of redistribution in the economy the model has three main features first very different patterns of income distribution are conducive to high growth at different levels of per capita income second growth is associated with an externality whereby investment in human capital by one group increases the productivity of other groups thus potentially enabling them to invest in human capital third the initial pattern of income distribution and the resulting political equilibrium are crucial in determining whether the transmission of this externality is promoted in which case growth is enhanced or prevented in which case growth is stopped using a non overlapping generations model with voting i derive several empirical implications in particular the model implies an inverted u relation between levels of inequality and levels of income in cross sections but not necessarily in time series a result that seems consistent with a number of empirical studies

talent growth and income distribution a model with heterogeneous individuals and bequests between generations is constructed to analyze income distribution and educational choice the introduction of an imperfection in the credit market is shown to influence the allocation of talent both ability and bequest are of relevance in deciding whether or not to invest in education with learning by doing between generations the allocation of talent affects not only the level of production but also the growth rate copyright 1993 by the editors of the scandinavian journal of economics

do immigrant inflows lead to native outflows we use 1980 and 1990 census data for 119 larger metropolitan statistical areas to examine the effect of skill group specific immigrant inflows on the location decisions of natives in the same skill group and on the overall distribution of human capital to control for unobserved skill group specific demand factors our models include lagged mobility flows of natives over the 1970 80 period we also estimate instrumental variables models that use the fraction of mexican immigrants in 1970 to predict skill group specific relative immigrant inflows over the 1980s despite wide variation across cities in the size and relative skill composition of immigrant population changes we find no evidence of selective out migration by natives we conclude that immigrant inflows exert a direct effect on the relative skill composition of cities cities that have received relatively unskilled immigrant flows have experienced proportional rises in the size of their unskilled populations this abstract was borrowed from another version of this item

network effects and the dynamics of migration and inequality theory and evidence from mexico international migration is costly and initially only the middle class of the wealth distribution may have both the means and incentives to migrate which can increase inequality in the sending community however the migration networks formed lower the costs for future migrants which can in turn lower inequality this paper shows both theoretically and empirically that wealth has a nonlinear effect on migration and then examines the empirical evidence for an inverse u shaped relationship between emigration and inequality in rural sending communities in mexico after instrumenting we find that the overall impact of migration is to reduce inequality across communities with relatively high levels of past migration we also find some suggestive evidence for an inverse u shaped relationship among communities with a wider range of migration experiences

wealth as a determinant of comparative advantage abstract this paper shows that a country s wealth can be an important determinant of comparative advantage when access to credit differs across sectors of the economy wealthier nations exhibit a comparative advantage toward goods produced in sectors facing more severe financial imperfections these sectors are typically populated by small firms empirically this paper documents that these sectors are also labor intensive consequently this theory partially offsets traditional sources of comparative advantage and offers an explanation for trefler s missing trade mystery and the leontief paradox furthermore the theory makes the relation between trade and income distribution endogenous

strategyproof assignment by hierarchical exchange we give a characterization of the set of group strategyproof pareto optimal and reallocation proof allocation rules for the assignment problem where individuals are assigned at most one indivisible object without any medium of exchange although there are no property rights in the model the rules satisfying the above criteria imitate a trading procedure with individual endowments in which individuals exchange objects from their hierarchically determined endowment sets in an iterative manner in particular these assignment rules generalize gale s top trading cycle procedure the classical rule for the model in which each individual owns an indivisible good

native internal migration and the labor market impact of immigration this paper presents a theoretical and empirical study of how immigration influences the joint determination of the wage structure and internal migration behavior for native born workers in local labor markets using data from the 1960 2000 decennial censuses the study shows that immigration is associated with lower in migration rates higher out migration rates and a decline in the growth rate of the native workforce the native migration response attenuates the measured impact of immigration on wages in a local labor market by 40 to 60 per cent depending on whether the labor market is defined at the state or metropolitan area level

rethinking the area approach immigrants and the labor market in california abstract a framework that uses a constant elasticity of substitution ces production function with skill differentiation and integrated national labor markets has predictions for the employment effect of immigrants at the local level the employment rather than wage response to immigration by skill in a state reveals the production substitutability complementarity between native and immigrant labor this in turn reveals the degree to which immigrants stimulate or depress the demand for native labor to estimate this elasticity i use a novel instrument based on demographic characteristics of total central american migrants or of the mexican population to predict immigration by skill level within california looking at immigration to california between 1960 and 2005 these estimates support the assumption of a nationally integrated labor market by skill and they support the hypothesis that natives and immigrants in the same education experience group are not perfectly substitutable this explains the counter intuitive fact that there is a zero correlation between immigration and wage and employment outcomes of natives in the state

public education and intergenerational economic mobility this paper examines the role of public education in determining intergenerational economic mobility it considers a model in which education is free and admission to schools is competitive the results indicate that for mobility to increase during the process of development the share of resources devoted to public education needs to be large enough to offset the relative advantage of having educated parents in academic attainment

coalitional strategy proof house allocation abstract we consider house allocation without endowments we show that there is a unique maximal domain including all strict preferences on which efficiency and coalitional strategy proofness are compatible a preference relation belongs to the unique maximal domain if it is a strict descending ranking of houses to a certain house and indifference holds over it and the remaining houses we also show that on this domain mixed dictator pairwise exchange rules are the only rules satisfying efficiency and coalitional strategy proofness journal of economic literature classification numbers c78 d63 d71

keeping one step ahead of the joneses status the distribution of wealth and long run growth assuming that the utility of each agent depends on its relative wealth position in the society this chapter constructs an endogenous growth model it is shown that even if the subjective discount rates differ across agents there exists a unique balanced growth equilibrium in which each agent owns a positive share of the world wealth it is also shown that if the agents are identical then an increase in savings incentives always raises the long run growth rate but if they are heterogeneous then an increase in savings incentives may lower the long run growth rate

do immigrant outflows lead to native inflows an empirical analysis of the migratory responses to us state immigration legislation i estimate the impact on internal migration for 52 different demographic groups of the recent influx of state omnibus immigration laws targeting undocumented immigrants in the united states i find evidence that while the demographic groups pinpointed as having higher percentages of undocumented immigrants certainly experience population and employment outflows from states implementing these immigration laws there is a lack of associated inflows for those demographic groups identified by economic theory as being probable substitutes for undocumented immigrants several segments designated as probable substitutes actually experience an adverse effect on population and employment this finding provides rigorous empirical backing to existing anecdotal evidence of the same cross state migratory phenomenon resulting in clear policy implications in relation to the ongoing debate over immigration

random matching under dichotomous preferences we consider bilateral matching problems where each person views those on the other side of the market as either acceptable or unacceptable an acceptable mate is preferred to remaining single and the latter to an unacceptable mate all acceptable mates are welfare wise identical using randomization many efficient and fair matching methods define strategyproof revelation mechanisms randomly selecting a priority ordering of the participants is a simple example equalizing as much as possible the probability of getting an acceptable mate across all participants stands out for its normative and incentives properties the profile of probabilities is lorenz dominant and the revelation mechanism is group strategyproof for each side of the market our results apply to the random assignment problem as well

top trading with fixed tie breaking in markets with indivisible goods abstract we study markets with indivisible goods where monetary compensations are not possible each individual is endowed with an object and a preference relation over all objects when preferences are strict gale s top trading cycles algorithm finds the unique core allocation when preferences are not necessarily strict we use an exogenous profile of tie breakers to resolve any ties in individuals preferences and apply gale s top trading cycles algorithm for the resulting profile of strict preferences we provide a foundation of these simple extensions of gale s top trading cycles algorithm from strict preferences to weak preferences we show that gale s top trading cycles algorithm with fixed tie breaking is characterized by individual rationality strategy proofness weak efficiency non bossiness and consistency our result supports the common practice in applications to break ties in weak preferences using some fixed exogenous criteria and then to use a good and simple rule for the resulting strict preferences

incentive compatibility in a market with indivisible goods abstract in a market in which each trader s initial endowment is one unit of an indivisible good there exists an incentive compatible procedure for reaching a competitive allocation this contrasts with some recent results for similar problems

immigration and inequality immigration is often viewed as a proximate cause of the rising wage gap between highand low skilled workers nevertheless there is controversy over the appropriate theoretical and empirical framework for measuring the presumed effect and over the precise magnitudes involved this paper offers an overview and synthesis of existing knowledge on the relationship between immigration and inequality focusing on evidence from cross city comparisons in the u s while some researchers have claimed that a cross city research design is inherently flawed i argue that the evidence from cross city comparisons is remarkably consistent with recent findings based on aggregate time series data in particular cross city and aggregate time series comparisons provide support for three key conclusions 1 workers with below high school education are perfect substitutes for those with a high school education 2 high school equivalent and college equivalent workers are imperfect substitutes with an elasticity of substitution on the order of 2 3 within education groups immigrants and natives are imperfect substitutes together these results imply that the average impacts of recent immigrant inflows on the relative wages of u s natives are small the effects on overall wage inequality including natives and immigrants are larger reflecting the concentration of immigrants in the tails of the skill distribution and higher residual inequality among immigrants than natives even so immigration accounts for a small share 5 of the increase in u s wage inequality between 1980 and 2000

risk bearing and the theory of income distribution this paper develops the stochastic theory of distribution with a dynamic model which focuses on the role of incomplete insurance in generating inequality unlike previous work our approach takes explicit account of the reason for market incompleteness in modeling agents behaviour in particular the amount of risk borne is endogenous using a model of growth with altruism in which agents are risk averse and there is moral hazard we show that lineage wealth follows a markov process which converges globally to an ergodic distribution this also represents the long run population distribution of wealth we discuss the role of particular assumptions such as availability of production loans and unboundedness of utility in yielding the qualitative properties of the distribution of wealth the choice of occupation and the prevention of poverty traps