computer use and earnings in britain this paper estimates various models of the effect of computer use on earnings using recent ncds data the cross section estimates are large and significant while the standard fixed effects estimates are small or insignificant the panel estimates change considerably once we allow the coefficients to differ across individuals conditional on assumptions about when individuals use computers conventional panel estimates may not identify the crucial parameters and alternative methods are needed we conclude that there was a substantial premium associated with computer use for some individuals in the uk

wages sorting on skill and the racial composition of jobs wages for black and white workers are substantially lower in occupations with a high density of black employees following standard controls such correlations can exist absent discrimination or as a result of discrimination in wage level equations partial correlations fall sharply after controlling for occupational skills longitudinal estimates accounting for worker heterogeneity indicate little wage change associated with changes in racial composition results support a quality sorting rather than discrimination explanation with racial density serving as an index of unmeasured skills discrimination reflected in racial wage gaps occurs within occupations or across occupations in a manner uncorrelated with racial composition

if not computers then what returns to computer use in the uk revisited in recent years much attention has been paid to the effect on wages of skill biased technology especially the use of computers although empirical studies have shown a positive relationship between computer use and earnings doubts have been cast on whether this is a causal relationship or merely represents unobserved other factors which are themselves positively linked to computer usage this study provides evidence that computers themselves raise wages although their impact on wages falls as other controls are included in the regression it still remains significant whilst the effect of another proxy for unobserved factors becomes insignificant furthermore improvements in computer use have an additional impact on earnings supporting the productivity interpretation

the market value of outstanding government debt 1919 1975 abstract several new series on the market value of outstanding government debt are reported and their methods of construction described the new series on federal debt are compared with other existing estimates and are shown to be markedly superior to them

the use of inputs by the federal reserve system reply in our 1983 paper we offered evidence that the law of demand operates inside the federal reserve in particular the fed faces a requirement that it return all revenues in excess of operating expenses to the treasury and this constraint lowers the price of amenities in terms of foregone profits the monetary authority accordingly buys more of the wage and nonwage perquisites of office than otherwise because we treated amenities as a monotone transformation of federal reserve system employment our theory suggested that the fed would pad its operating expenses by increasing the number of employees on its payroll moreover given that expansionary open market operations raise the interest income earned by the fed on its securities portfolio bureaucratic incentives would impart an inflationary bias to monetary policy in subsequent tests of the theory we found a positive and significant ceteris paribus relationship between changes in the monetary base and the size of the fed this result suggested that one motivation for expansions in the money supply is to finance the growth in the fed s bureaucracy we also found evidence that employment causes money in the sense of christopher sims 1972 but not the reverse and that the growth in fed employment over time does not appear to have been due to the fact that more people are required to manage larger money stocks in their comments john boyd and john strong suggest that there are methodological and empirical problems with our paper both comments focus primarily on the causality tests but each raises other issues designed to cast doubt on the strength of our results in what follows we discuss the main points raised by our critics i causality

the labour market in the new information economy the extension of information and communication technologies to economic activity is changing the labour market in important ways this article shows that computerization and use of the internet are associated with greater hours worked as well as higher wages that it occupations are rapidly increasing their share of employment that job search and recruitment are moving rapidly to the web with consequences for matching employers and employees and possibly most important of all that trade unions have begun to use the internet as a tool for servicing members and carrying their message to the public raising the possibility of a major change in the nature of the union movement

skill biased technological change and rising wage inequality some problems and puzzles the recent rise in wage inequality is usually attributed to skill biased technical change sbtc associated with new computer technologies we review the evidence for this hypothesis focusing on the implications of sbtc for overall wage inequality and for changes in wage differentials between groups a key problem for the sbtc hypothesis is that wage inequality stabilized in the 1990s despite continuing advances in computer technology sbtc also fails to explain the evolution of other dimensions of wage inequality including the gender and racial wage gaps and the age gradient in the return to education

the market value of u s government debt monthly 1942 1980 abstract the market value of outstanding united states treasury debt is calculated on a monthly basis using price and par value data from the treasury bulletin separate series for treasury bills bonds certificates of indebtedness notes and total treasury debt are presented along with estimates of privately held treasury debt and gross federal debt the calculated market value series is compared to par value and an existing annual market value series

tax reform and automatic stabilization an income tax provides implicit insurance by dampening the variability of disposable income and consumption using an empirical framework derived from the consumption insurance literature and data from the panel study of income dynamics we examine the effect of federal income tax reforms of the 1980 s on automatic stabilization of consumption overall erta and tra86 reduced consumption stability by about 50 percent recently increased eitc generosity restored or enhanced consumption insurance the welfare cost of moving to the post tra86 system is sizable for relatively risk averse households facing large income risk but is much more modest for the typical household jel h21

returns to foreign languages of native workers in the european union most of the literature on returns to languages is concerned with immigrants the authors study which uses the european community household panel survey for the period 1994 2001 infers returns to non native languages by native workers in nine countries of the european union the study differs from other studies that deal with the same issue in three respects first instead of using a dummy for each language they use the ratio of the population not proficient in a given country s national language and compare the results with the more traditional approach using dummies second they correct for time independent measurement errors in self reporting and find that the resulting iv estimates are much larger than those obtained by ols they also suggest that there is little room for time persistent errors and heterogeneity and that therefore their estimates should suffer ostensibly little from unobserved ability biases finally they estimate iv quantile regressions to illustrate how returns to languages vary at different points of the distribution of earnings

inflationary bias of the federal reserve system a bureaucratic perspective abstract the federal reserve system does not receive a budget from congress but instead finances its operation from interest payments on its government security portfolio this peculiar financing arrangement provides the foundation for a bureaucratic model of federal reserve official behavior the empirical section tests the bureaucratic model by analysing the fed s expenditure record since 1947 and its policy actions during periods of constitutional revision

rent seeking over time the continuity of capture recently in this journal skaggs and wasserkrug 1983 presented a model of bureau monitoring and related it to federal reserve behavior central to their argument was that bureau constituencies may pressure congressmen in maintaining the monitoring status quo if competition is to be expected between self interested parties for the property rights associated with regulation and regulatory commissions then bureau monitoring or lack of it should have value the capture of a commission by others is made more costly when information on a bureau s activities is restricted in general the issues surrounding bureau monitoring bring out the dynamic nature of the capture theory of regulation once captured commissions must remain captured if benefits are to accrue to rent seekers over time empirical support for the capture perspective however only relates personal characteristics of the appointed regulators commissioners to characteristics preferred by the regulated to reveal the dynamic nature of capture one must also account for the continuity of commission membership a captured regulatory body can only remain captured if there is a continuity of desirable characteristics by compiling characteristics of appointed members previous studies have examined the output of the appointment process that resulted from competition for positions on regulatory boards however the lack of synchronization between appointments to federal regulatory commissions and presidential elections suggests that the distribution of influence among self interested groups in the selection process may vary over time thus continuous successful capture is more easily achieved if appointees remain on boards for full terms and if possible land reappointments but the process is complicated further because regulators

evidence on new technologies and wage inequality in france using individual data from the french labour force survey and the complementary survey on working conditions for 1998 we analyse earnings inequalities along the wage distribution between workers using novel information and communication technologies ict at their job and those not using them we estimate quantile regressions with technological dummies and carry out a decomposition analysis both at the aggregate level and by occupations at the aggregate level most of the wage gap between both populations is explained by the divergence in their labour characteristics in jobs where ict are not very diffused the technological premium is larger than in jobs characterized by a large presence of novel technologies whereas in the former type of jobs the technological premium is mainly justified by a divergence in the labour market characteristics between ict users and nonusers in positions characterized by a wide presence of novel technologies the technological premium responds rather to a divergence in

the use of inputs by the federal reserve system comment in a recent article in this review 1983 william shughart and robert tollison s t argue that an important motivation for expansion of the money supply is to finance the growth of the fed s bureaucracy specifically that the level of fed employment is a determinant of the nominal monetary base using a public choice framework they present a money supply equation which yields a positive and statistically significant relationship between the monetary base and the total employment of the federal reserve system while this conclusion is certainly interesting the analysis suffers from a number of important conceptual empirical and methodological problems shughart tollison point out that the revenue side of the federal reserve s budget is closely linked to its monetary policy operations through open market purchases of securities the fed generates a stream of interest payments because monitoring of this income stream is difficult and costly congress has elected to impose the constraint that excess revenues be returned to the treasury as a result the fed pays its current operating expenses out of this current interest income and then turns over the remainder to the treasury because the central bank cannot retain the profits it generates s t argue that the fed will exhibit a form of expense preference behavior in purchasing more amenities than are justified by costminimizing money production in particular by expanding fed employment in addition since expansionary monetary policy increases opportunities for this profit amenities tradeoff fed policies are likely to have a built in inflationary bias to test this hypothesis s t develop a regression model that estimates the monetary base as a function of fed employment real gnp a number of financial variables and linear and nonlinear time trend variables using annual time series data from 1915 to 1981 they find that the employment variable is a significant determinant of the money supply with their model explaining about 95 percent of the variation in the monetary base to check that employment causes monetary expansion and not the other way around s t employ the test of causality developed by c w j granger 1969 and christopher sims 1972 this test estimates two sided

can the mortensen pissarides model with productivity changes explain u s wage inequality this article examines whether the mortensen pissarides matching model with productivity changes can explain the time pattern of wage inequality the main finding is that the model produces counterfactual results the main source of failure seems to be the exogenous matching function and or the exogenous surplus share neither of which allows firms to use wage policies to direct workers searches

monetary policy theory and practice in respect of the theory of monetary policy i am reminded of the comment that jacob viner made many years ago at a meeting of the american economic association about alfred marshall s economics what is new is highly unlikely at this late date also to be true and significant 1 consequently i shall restrict my remarks on theory to trying to summarize what i regard as the present intellectual position

evidence on the validity of cross sectional and longitudinal labor market data this article investigates error properties of survey reports of labor market variables we use the panel study of income dynamics psid validation study a two wave panel survey of workers employed by a large firm that shared its detailed payroll records individuals reports of annual earnings are fairly accurate errors are negatively related to true earnings reducing bias due to measurement error when earnings are used as an independent variable biases are moderately larger for changes in earnings earnings per hour are less reliably reported than annual earnings biases in estimating earnings functions are relatively small but those in labor supply functions may be important

government borrowing and monetary accommodation this paper re examines the relationship between treasury borrowing and monetary growth examined previously with annual data by barro niskanen and hamburger and zwick our analysis based on quarterly data produces evidence of a positive and significant impact of total treasury borrowing upon the growth of the monetary base for the 1954 i 1961 ii and 1961 iii 1974 iv periods but an insignificant coefficient for the barro expenditure variable when the coefficient instability during the 1961 iii 1980 iv period is corrected by a dummy variable technique thy debt coefficient is positive and significant and remains stable for this two decade period

employment transitions and computer use of older workers in our work we study the role of information and communication technology ict skills and their utilization in the retirement decision we provide empirical evidence based on italian panel data in favour of the hypothesis that ceteris paribus better educated male employees with ict know how retire later such effect is stronger the longer the time horizon considered and its magnitude is remarkably larger than the one observed in us and germany in previous studies we also document that ict do not play a crucial role in the retirement decision of women our results are robust to the estimation strategy adopted

computer use and wages evidence from taiwan we find a significant positive relationship between computer use and wages using taiwan microdata controlling for endogeneity of computer use with simultaneous equations suggests that although ols estimates are biased upward workplace computer use increases productivity d 2003 elsevier b v all rights reserved

bureaucracy altruisme and monetary policy a note from a forecasting perspective sets over the period 1916 1987 their structured critique is consistent with the earlier work of strong 1984 boyd 1984 allen mccrickard cartwright and delorme 1988 mester 1994 and others in general all question the findings of toma 1982 shughart and tollison 1983 boyes mounts and sowell 1988 and others that bureaucratic effects and institutional incentives have had a significant impact on the development and conduct of monetary policy an underlying issue in this debate is whether variables proxying bureaucratic or institutional effects emanating from the incentives contained in the structure

social contacts and occupational choice social contacts help workers to find jobs but those jobs need not be in the occupations where workers are most productive hence social contacts can generate mismatch between a worker s occupational choice and his comparative productive advantage thus economies with dense social networks can exhibit apparently low labor force quality and as a result low returns to firms investment and depressed aggregate productivity we employ us and european data for the 1990 s to test the key prediction that social contacts distort workers occupational choices in a direction that reduces their apparent productivity we find that the use of social contacts helps find jobs one to two months sooner but leads to individual wage discounts of 5 to 7 and produces negative externalities on aggregate productivity

information in online labour markets online labour markets are virtual platforms that solve information problems to enable gains from trade in remote labour services they make employers and workers aware of each other and allow them to communicate contract and produce remotely recent research suggests however that organizing production to include remote work remains challenging because employers and workers in these markets continue to lack information that is less easily communicated employers appear unable to accurately anticipate the full costs and benefits to them of using the market prior to entry and continue to have difficulty evaluating worker applications even when experienced in these markets information is particularly incomplete when wage arbitrage opportunity is greatest

computers skills and wages computer technology is most prominently used by skilled high wage workers this suggests that computer use requires skills to take full advantage of the possibilities which are particularly present among relatively skilled workers this article develops a simple technology adoption model showing that the decision to adopt computer technology depends on i the tasks to be performed ii the level of skill or education and iii the level of wages applying this model to british data it is shown that the effect of wages and particular tasks on computer adoption is larger than the effect of skills on adoption the estimates suggest that in britain computer use is likely to be a matter of cost efficiency and not so much of workers skills

relative wage movements and the distribution of consumption we analyze how relative wage movements among birth cohorts and education groups affected the distribution of household consumption and economic welfare our empirical work draws on the best available cross sectional data sets to construct synthetic panel data on u s consumption labor supply and wages during the 1980s we find that low frequency movements in the cohort education structure of pretax hourly wages among men drove large changes in the distribution of household consumption the results constitute a spectacular failure of between group consumption insurance a failure not explained by existing theories of informationally constrained optimal consumption behavior a welfare analysis indicates that the cost of between group consumption variability is larger than the cost of aggregate consumption variability by two orders of magnitude

testing efficient risk sharing with heterogeneous risk preferences previous papers have tested e cient risk sharing under the assumption of identical risk preferences in this paper we show that if in the data households have heterogeneous risk preferences the tests proposed in the past reject e ciency even if households share risk e ciently to address this issue we propose a method that enables one to test e ciency even when households have difierent preferences for risk the method is composed of three tests the flrst one can be used to determine whether in the data under investigation households have homogeneous risk preferences the second and third test can be used to evaluate e cient risk sharing when the hypothesis of homogeneous risk preferences is rejected we use this method to test e cient risk sharing in rural india using the flrst test we strongly reject the hypothesis of identical risk preferences we then test e ciency with and without the assumption of preference homogeneity in the flrst case we reject e cient risk sharing at the village and caste level in the second case we still reject e ciency at the village level but we cannot reject this hypothesis at the caste level this flnding suggests that the relevant risk sharing unit in rural india is the caste and not the village

returning to the returns to computer use this paper re examines the returns to computer use using a new matched workplace employee data from canada we control for potential selection using instrumental variables results suggest that it is not merely the employee having a computer on his desk but rather having complementary computer skills that causes wages to increase this abstract was borrowed from another version of this item

information technology and the changing workplace in canada firm level evidence recent advances in information and communication technology ict have had dramatic effects on both individual and workplace performance use of computers and the internet as general purpose technologies has spread rapidly across all sectors of the economy transforming business organization increasing competition and fostering innovation understanding the influence of ict on the dynamics of the workplace requires information on both demand and supply sides of the labor market but it is only recently that the study of both sides of the market has become feasible using linked employer employee data in this article we investigate the effects of new technology on firm productivity using the rich canadian workplace and employee survey for the period 1999 2003 we apply a mixed regression model which includes both firm and employee characteristics as well as their interactions with computer use our model allows us to control for unobserved heterogeneity at higher levels along many dimensions our findings indicate that computer use by employees has a positive and significant effect on the productivity of firms that the effect has not lost its momentum and that spillover effects are not significant moreover human capital enhances the effect of computer use on productivity but organizational changes do not interact with computer use in our sample period copyright 2011 the author 2011 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

computerisation and wage dispersion an analytical reinterpretation the rich countries have recently seen a dramatic rise in income inequality all the more surprising because the long term trend had been toward equality this paper examines one of the leading explanations computerisation in the workplace i offer a theory of computers impact on white collar work which goes far toward explaining the timing form and locus of recent labour market changes the theory looks at the bureaucratic and organisational applications of computers that have been first largest and most influential they have two effects on firms demand for labour at different skill levels

levels of computer self efficacy computer use and earnings in china abstract levels of self efficacy in computer use were found to be positively related to computer use at work among a sample of workers in shanghai the simultaneous estimation of computer use and earnings indicated that an earnings premium for computer use accrues only to females not to males

what happens when agent t gets a computer the labor market impact of cost efficient computer adoption this paper offers a model of how computer technology has changed the labor market demonstrating that wage differentials between computer users and non users are consistent with computers first being introduced in high wage jobs following cost efficiency furthermore skill upgrading occurs following a reemphasis on non routine tasks after adoption the model also reveals that neither differences in computer skills nor complementary skills are needed to explain wage differentials between users and non users skill upgrading and the changing organization and intensity of work finally the predicted effects on the wage structure are consistent with empirical evidence

risk sharing between and within families this paper uses the panel study of income dynamics to test whether risk sharing is complete between or within american families the tests accommodate a wide variety in the configuration and availability of family data the test results reject inter as well as intra family full risk sharing even assuming that leisure is endogenous or that leisure and consumption are nonseparable

historical considerations property rights and budgets a comment on the use of inputs by the federal reserve when considered in an alternative historical setting with a property right perspective the extended public choice model found in amcd offers strong confirmation for the s t view of monetary authority behavior

general education vocational education and labor market outcomes over the life cycle policy proposals promoting vocational education focus on the school to work transition but with technological change gains in youth employment may be offset by less adaptability and diminished employment later in life to test for this tradeoff we employ a difference in differences approach that compares employment rates across different ages for people with general and vocational education using microdata for 11 countries from ials we find strong and robust support for such a tradeoff especially in countries emphasizing apprenticeship programs german microcensus data and austrian administrative data confirm the results for within occupational group analysis and for exogenous variation from plant closures respectively

on testing for full insurance using consumer expenditure survey data in a recent issue of this journal mace 1991 presented empirical evidence in support of the hypothesis that u s households engage in full risk sharing the data used were taken from the u s consumer expenditure survey cex for the years 1980 84 full insurance implies that household level consumption should be perfectly correlated with aggregate consumption but uncorrelated with householdlevel changes in income mace s surprising result was that at least for one functional specification household level income changes whether measured directly by changes in reported income or proxied by employment change dummies seemed to have no statistically significant effect on consumption this comment demonstrates that this result was due to measurement error in key variables

what can explain the apparent lack of international consumption risk sharing recent research in international business cycles finds that international consumption comovements do not match the risk sharing predictions of standard complete markets models in this paper i ask whether two different types of explanations can help explain this result 1 nonseparabilities between tradables and nontradable leisure or goods and 2 the effects of capital market restrictions on consumption risk sharing i find that risk sharing cannot be resolved by either explanation alone however when i allow for both nonseparabilities and certain market restrictions risk sharing among unrestricted countries cannot be rejected this evidence suggests that a combination of these two effects may be necessary to explain consumption risk sharing across countries

deficits and money growth in the united states a comment joines 1985 argues that the federal reserve accommodates war induced deficit spending but not non war induced deficit spending using a first difference form of a reaction function to obtain a stationary time series of the monetary base we find that the federal reserve has accommodated federal government deficit spending in the post world war ii period

the influence of elections on federal reserve behavior a political business cycle is tested in a monetary reaction function positive evidence is a result of the 1930s and 1940s and not post war elections in addition there is no evidence of such a cycle in a rational expectations model

technology and the labour market the assessment this article reviews the evidence on how technology will affect labour markets in advanced democracies over the next 10 15 years in addition to assessing evidence on the impact of technology on the aggregate number of jobs we take a wider view to consider how the digital revolution will affect the quality and composition of jobs how and where we work and whether labour is supplied as part of a larger firm or as a self employed micro entrepreneur this assessment further aims to situate the papers covered in this issue of the oxford review of policy within the broader literature

asset pricing puzzles and incomplete markets the representative agent theory of asset pricing is modified to incorporate heterogeneous agents and incomplete markets the model features two types of agents who differ up to a nontradable idiosyncratic component in their endowment processes numerical solutions indicate that individuals are able to diversify a substantial portion of their idiosyncratic income risk through riskless borrowing and lending alone restrictions on the variability of intertemporal marginal rates of substitution hansen and jagannathan 1991 are used to argue that incomplete markets as modeled here cannot account for the properties of asset returns that are anomalous from the perspective of representative agent theory a large literature in financial economics has investigated the extent to which variants of the lucas 1978 general equilibrium theory of asset pricing can account for the joint behavior of aggregate u s consumption and asset returns by and large this literature has concluded that a theory based upon frictionless arrow debreu markets and or a representative agent makes strongly counterfactual predictions regarding even the simple unconditional properties of this relationship mehra and prescott 1985 for instance show that the theory drastically underpredicts the average excess rate of return on u s stocks the so called equity premium puzzle weil 1989 points out as did mehra and prescott that the magnitude of the average risk free rate is far below that predicted by the theory this has been dubbed the risk free rate puzzle numerous authors including grossman melino and shiller 1987 and backus gregory and zin 1989 show that the theory cannot account for term premia inherent in the yield curve hodrick 1987 surveys a large literature which documents the theory s shortcomings in accounting for excess expected returns in foreign exchange markets the notion that the representative agent model cannot account for excess returns across a wide array of asset markets can be made more precise by using tools developed by hansen and jagannathan 1991 and shiller 1982

intertemporal substitution in labor supply evidence from micro data the sensitivity of the supply of labor to intertemporal variation in the wage is an important issue in macroeconomics the analysis of social security and pensions and the study of life cycle patterns of work this paper explores two approaches to the measurement of intertemporal substitution that have appeared in the literature the first approach is to use consumption to control for wealth and unobserved expectations about future wages in the labor supply equation the second approach is to estimate a first difference equation for hours in which labor supply from the previous period serves as a control for wealth and wage expectations the results indicate that intertemporal substitution elasticity for married men is positive but small

risk and insurance in village india comment the protection of poor households in high risk agrarian economies from shocks to their incomes has often been seen as a compelling motive for various forms of policy intervention including transfers of cash or food credit subsidies and public employment schemes for a survey see lipton and ravallion 1995 the desirability of such safety net policies clearly depends on how well pre existing risk sharing arrangements work while it is commonly thought that without effective policy intervention rural households are vulnerable to village wide shocks such as adverse prices or poor rains it is less clear to what extent risk sharing institutions within the village mitigate the effects of idiosyncratic income risk stemming for instance from ill health or localized crop damage 2 several recent papers have used household level data to implement tests of risk sharing that might inform such concerns 3 these tests are based on the proposition that with perfect risk sharing consumption at the household level should be insured against idiosyncratic risks and thus depend solely on the realization of the aggregate risk wilson 1968 diamond 1967 townsend 1994 tests this implication of perfect intra village risk sharing using longitudinal household data on consumptions and incomes for three villages in india he reports that the full insurance hypothesis provides a surprisingly good benchmark in that household consumptions co move and do not appear to be much influenced by contemporaneous own income our aim here is to examine the robustness of this potentially important finding we have two main concerns the first is that the specification townsend adopts potentially biases his test towards the null hypothesis of full insurance because it yields inconsistent estimates of the key test parameter under a plausible alternative we therefore estimate a different specification that generates consistent estimates under both the null and the alternative our second concern is that a particular form of measurement error in the consumption data townsend uses may have further biased his results toward the null hypothesis of full insurance to address this concern we use an instrumental variables procedure when we implement the test of consumption insurance with townsend s consumption data we also re estimate the test equations with a measure of consumption derived from the same underlying primary data by an alternate method finally townsend reports 1discussions with robert townsend stimulated our interest in this investigation the staff of the

the use of inputs by the federal reserve system an extended model recently it has been argued that bureaucratic incentives play an important role in the formulation of policy and the inflationary bias of the federal reserve system shughart and tollison 1983 hereafter s t 1 in particular s t maintain that the fed can retain profits denominated in amenities but not in dollars as a result of the congressional constraint that excess profits be returned to the treasury this constraint provides bureaucratic incentives for the fed to purchase more amenities than a for profit organization and ex plains s t 1983 291 in part the fed s apparent inflationary bias expansionary monetary policy then enlarges the fed s profit amenities choices and allows it to pursue its goal of bureaucratic enhancement s t assume that the dollar value of these amenities is a monotonic transformation of fed employment using this public choice framework they develop a model in which the monetary base is a function of a number of variables including employment in the federal reserve system sysemp

the use of inputs by the federal reserve system comment in a recent issue of this review 1983 william shughart and robert tollison s t hypothesize that the fed pursues a bureaucratic objective which results in an inflationary bias in monetary policy they test this hypothesis empirically and conclude that it is supported by the data this comment however shows that their statistical procedures are flawed and when corrected provide little support for the inflationary bias theory the data actually suggest a different but not very interesting or surprising interpretation

decreasing relative risk aversion risk sharing and the permanent income hypothesis this article develops a method for testing the risk sharing hypothesis rsh against various versions of the permanent income hypothesis pih while allowing for heterogeneity in risk preferences across households using 1 year and longer differences in household total nondurable consumption data from indian villages we find evidence that favors the rsh over the pih at the village level

the effects of human resource management on small firms productivity and employees wages this paper analyses whether employees and firms differently benefit from particular human resource hr practices the focus is on small firms that may be badly informed on the impact of hr practices on firm performance in this study on dutch pharmacies it is found that firms do not reward employees skills according to their contribution to firms productivity as 1 employees are over rewarded for their sector specific skills and under rewarded for the productivity enhancing effect of their computer skills and 2 employees work experience positively affects their wages but does not have real productivity effects moreover it is found that training employees in case of vacancy problems seems to be an adequate hr practice since it increases productivity without affecting the average wage level the opposite holds for offering higher wages to newly recruited employees furthermore we find that only the employees benefit from performance evaluation interviews whereas employing many employees by tem

the sensitivity of consumption to transitory income estimates from panel data on households we investigate the stochastic relation between income and consumption specifically consumption of food within a panel of about 2 000 households our major findings are 1 consumption responds much more strongly to permanent than to transitory movements of income 2 the response to transitory income is nonetheless clearly positive 3 a simple test independent of our model of consumption rejects a central implication of the pure life cycle permanent income hypothesis the observed covariation of income and consumption is compatible with pure life cycle permanent income behavior on the part of80 percent of families and simple proportionality of consumption and income among the remaining 20 percent as a general matter our findings support the view that families respond differently to different sources of income variations in particular temporary income tax policies have smaller effects on consumption than do other more permanent changes in income of the same magnitude this abstract was borrowed from another version of this item

testing for full insurance using exogenous information we strongly reject the full insurance hypothesis using testing variables that are not decision variables for the households under investigation we find that households are not insured against changes in the unemployment rate associated with the household head s occupational category using this exogenous information we also investigate the appropriateness of exogeneity assumptions on idiosyncratic variables that have been used as testing variables in the full insurance literature it is shown that several exogeneity assumptions made in the existing literature are potentially problematic

a microeconometric comparison of household behavior between countries this article reviews the methodological issues associated with estimating and testing competitive markets with panel data and applies it to an important new arena international economics we investigate differences in housing consumption and male labor supply across households in germany and the united states with data from the german socio economic panel and the panel study of income dynamics observations are treated as equilibrium outcomes generated by a set of competitive markets that accommodate varying degrees of integration after controlling for differences in the sample populations and aggregate shocks we find that the estimated structural parameters are surprisingly similar across these two countries

full insurance in the presence of aggregate uncertainty this paper tests implications of full consumption insurance the object is to determine how much mileage can be obtained from a model with complete markets with such features as private information or liquidity constraints omitted the implication exploited is that individual consumption responds to aggregate risk but not to idiosyncratic risk the test involves regressing the change in household consumption onto the change in aggregate consumption and other right hand side variables such as the change in household income and change in employment status all variables other than the change in aggregate consumption are predicted to be insignificant in explaining the change in household consumption with observations on consumption and income for 10 695 households from the consumer expenditure survey the results are mixed the results for one specification exponential utility are mostly consistent with full consumption insurance the results for the other specification power utility are not

make money surfing the web the impact of internet use on the earnings of u s workers much research on the digital divide presumes that adults who do not use the internet are economically disadvantaged yet little research has tested this premise after discussing several mechanisms that might produce differences in earnings growth between workers who do and do not use the internet we use data from the current population survey to examine the impact of internet use on changes in earnings over 13 month intervals at the end of the internet boom our analyses reveal robustly significant positive associations between web use and earnings growth indicating that some skills and behaviors associated with internet use were rewarded by the labor market consistent with human capital theory current use at work had the strongest effect on earnings in contrast to economic theory which has led economists to focus exclusively on effects of contemporaneous workplace technology use workers who used the internet only at home also did better suggesting that users may have benefited from superior

household choices in equilibrium this paper is an empirical investigation of equilibrium restrictions on household consumption and male labor supply it exploits a simple factor structure rationalized by two assumptions that household allocations are pareto optimal and that the labor market is competitive the paper estimates household preferences and tests how well this parsimonious factor structure represents panel data on married couples and time series data on asset returns most of the estimates are roughly comparable to those found in previous work no evidence against the simple factor representation is found and the intertemporal capital asset pricing model is not rejected copyright 1990 by the econometric society

a simple test of consumption insurance are consumers effectively insured against idiosyncratic shocks to income or wealth either by formal institutions such as charities private insurance and government programs or by informal mechanisms such as gifts and loans from relatives friends and neighbors under full insurance consumption growth should be cross sectionally independent of idiosyncratic variables that are exogenous to consumers this proposition is tested by cross sectional regressions of consumption growth on a variety of exogenous variables full insurance is rejected for long illness and involuntary job loss but not for spells of unemployment loss of work due to strike and an involuntary move

the personal computer and entrepreneurship in contrast to the large and rapidly growing literature on information technology it investments and firm productivity we know very little about the role of personal computers in business creation using matched data from the 19972001 computer and internet usage supplements to subsequent outgoing rotation group files from the current population survey cps i explore the relationship between computer ownership and entrepreneurship trends over the past two decades provide some evidence of a positive relationship between home computers and entrepreneurship rates but the evidence is not clear in contrast an analysis of the relationship between computer ownership and entrepreneurship at the individual level provides evidence that individuals who had access to a home computer are substantially more likely to become entrepreneurs over the following 1215 months probit and bivariate probit regressions also provide evidence of a strong positive relationship between computer ownership and entrepreneurship among women but only limited evidence for men further estimates from the cps indicate that entrepreneurs who had prior access to home computers create a large variety of types of businesses and not only those in the it industry

skill biased technological change and wage inequality evidence from a plant retooling1 one of the most popular explanations for the increased wage inequality that has occurred since the late 1970s is that technological change has resulted in a downward shift in the demand for low skill workers this pattern is also alleged to account for the growth in racial inequality in wages over the same period this article reports on a case study of the retooling of a food processing plant a unique longitudinal multimethod design reveals the nature of the technological change the changes in job requirements and the mechanisms by which the changes affect the wage distribution for hourly production workers this research finds that indeed the retooling resulted in greater wage dispersion and that the changes have also been associated with greater racial inequality in wages however contrary to the claims of advocates of the skill bias hypothesis organizational and human resources factors strongly mediated the impact of the changing technology absent these high road organizational choices th

home computer use and the development of human capital this paper uses a regression discontinuity design to estimate the effect of home computers on child and adolescent outcomes by exploiting a voucher program in romania our main results indicate that home computers have both positive and negative effects on the development of human capital children who won a voucher to purchase a computer had significantly lower school grades but show improved computer skills there is also some evidence that winning a voucher increased cognitive skills as measured by raven s progressive matrices we do not find much evidence for an effect on non cognitive outcomes parental rules regarding homework and computer use attenuate the effects of computer ownership suggesting that parental monitoring and supervision may be important mediating factors

factors affecting monetary policy in an era of inflation abstract a money supply reaction function is developed and estimated within the context of an is lm framework to test the responsiveness of the federal reserve to the government budget restraint and certain parameters of the model the results reveal that a large portion of the recent expansion of the monetary base may be attributed to increases in government debt and provide an essential first step in quantifying the inflationary impact of deficits the monetary base is also expanded in response to increases in inflationary expectations and previous increases in the monetary base but is not statistically correlated to changes in the unemployment rate or potential national income or to rises in interest rates caused by sources other than higher inflationary expectations previous monetary policy or the treasury borrowing requirement

deficits and money growth in the united states 1872 1983 abstract this paper reports empirical evidence on the relation between government budget deficits and the growth of high powered money in the united states high powered money growth appears to be positively related to war spending during periods when such spending is a substantial fraction of gnp there is little evidence that the growth of high powered money is related to the non war government deficit measured either in cash or in real terms after controlling for the level of overall economic activity

the returns to computer use revisited have pencils changed the wage structure too are the large measured wage differentials for on the job computer use a true return to computer skills or do they just reflect that higher wage workers use computers on their jobs we examine this issue with three large cross sectional surveys from germany first we confirm that the estimated wage differential associated with computer use in germany is very similar to the u s differential second we also measure large differentials for on the job use of calculators telephones pens or pencils or for those who work while sitting down we argue that these findings cast some doubt on the literal interpretation of the computer use wage differential as reflecting true returns to computer use or skill

the diffusion of computers and the distribution of wages abstract when the costs are decreasing workers adopt technology at the point where the costs equal the increased productivity output per worker increases immediately while productivity benefits increase only gradually if costs continue to fall as a result workers in computer adopting labor market groups experience an immediate fall in wages due to increased supply on the other hand adopting workers experience wage increases with some delay this model explains why increased computer use does not immediately lead to higher wage inequality more specifically the results of the model are shown to be consistent with the question why within group wage inequality among skilled workers as a result of computer technology adoption in the united states increased in the 1970s while between group wage inequality and within group wage inequality among the unskilled did not start to increase until the 1980s the model also predicts that the more compressed german wage structure leads to a lagged diffusion of computer technology along with smaller changes in wage inequality our empirical analysis suggests that this is consistent with the actual developments in germany since the 1980s finally the theoretical predictions seem to be of the right magnitude to explain the empirical quantities observed in the data

testing whether unemployment represents intertemporal labour supply behaviour in the lucas rapping 1969 model of the labour market fluctuations in unemployment represent individuals optimally adjusting their labour supply behaviour in response to fluctuations in wage rates over the business cycle in this paper i propose and implement a misspecification test of the lucas rapping treatment of unemployment as labour supply behaviour using panel data this test extends previous such work with micro data by simultaneously allowing for intertemporal substitution uncertainty and endogenous unemployment using the standard specification of intertemporal labour supply behaviour i find strong evidence against this interpretation of unemployment there are two possible interpretations of the test results the first is that it is necessary to turn to alternative models of the labour market in which unemployed workers are off a supply function the second is that the test results indicate the necessity of moving to more complex models of intertemporal substitution however given current econometric techniques and data sets these alternative models of intertemporal substitution will be extremely difficult to test

the role of food stamps in consumption stabilization although the food stamp program is the largest universal entitlement program in the social safety net little is known about its stabilizing role in household income and consumption using data from the panel study of income dynamics spanning 1980 99 we estimate the volatility of income with and without food stamps coupled with a variance decomposition of consumption among families at high ex ante risk of food stamp participation food stamps reduced income volatility by about 12 percent and food consumption volatility by about 14 percent there was however a marked decline in consumption smoothing benefits of the program in the early 1990s relative to the 1980s

estimation of a labour supply model with censoring due to unemployment and underemployment this study proposes and implements a method of labour supply estimation which is appropriate when the sample contains unemployed and underemployed workers the estimation method consists of excluding unemployed and underemployed workers from the sample and then using to avoid selection bias an extension of heckman s approach to the case where two correlated selection rules generate the sample hausman s specification test is then used to determine whether ignoring constrained workers has led to biases in traditional labour supply estimates and the empirical results suggest that previous estimates of several important parameters are biased since the biases go in the direction that would be predicted by the hypothesis that the unemployed and underemployed are constrained the results support this hypothesis

emulation inequality and work hours was thorsten veblen right we investigate the manner in which a desire to emulate the rich influences individuals allocation of time between labour and leisure greater inequality inducing longer work hours as a result data on work hours in ten countries over the period 1963 98 show that greater inequality is indeed associated longer work hours these veblen effects are large and the estimates are robust using country fixed effects and other specifications because consumption inequality is a public bad a social welfare optimum cannot be implemented by a flat tax on consumption but may be accomplished by more complicated progressive consumption taxes at the close of the nineteenth century thorsten veblen proposed what he termed pecuniary emulation as the foundation of a theory of consumption spending he maintained is driven by relative status considerations that is by the desire to be a particular type of person as much as bythedesire to enjoytheconsumer goodsper se the joneses with whom one had to keep up were not the neighbours but the rich theirleveloflivingbecamethenever attainableobjectiveinaconsumptionarmsrace among the less well to do in the theory of the leisure class he wrote the motive is emulation the stimulus of an invidious comparison especially in any community in which class distinctions are quite vague all canons and reputability and decency and all standards of consumption are traced back by insensible gradations to the usages and thoughts of the highest social and pecuniary class the wealthy leisure class 1934 p 81 while valued by some economists as capturing common sense aspects of consumption as a form of status seeking veblen s view of social preferences was soon eclipsed by the simpler and more tractable neoclassical theory of the consumer relegated to the underworld of economics veblen s ideas have nonetheless resonated over the ensuing years in the writing of duesenberry 1949 leibenstein 1950 and galbraith 1958 at the middle of the past century and schor 1998