intergenerational equity and sustainability abstract this paper explores the limitations of conventional economic analysis of intergenerational problems and examines some of the alternatives suggested in the literature it is argued that proper consideration of future generations has at least three requirements first when future costs and benefits are considered it should be taken into account that they are to be enjoyed by different generations second the sustainability requirement should be adopted this represents an equity commitment to the future and implies the recognition that future generations have the right to nondeteriorated ecological and economic capacity the paper studies the ways in which the recognition of these rights might be incorporated into economic evaluation and management third an appropriate institutional network to enforce the recognition of these rights in decision making processes should be constituted its design and necessary functions are also analyzed

economic viability and small scale fisheries a review abstract globally over 90 of all fishing vessels and about 22 million fishers are considered small scale despite their high numbers small scale fisheries are often understudied they are usually economically and politically marginalized and therefore vulnerable to large scale threats e g globalized markets to support this sector and contribute to its sustainability we argue that it is fundamental to understand how economically viable small scale fisheries are hence the main objective of this article is to critically review and describe the current discourse on the economic viability of small scale fisheries we find that currently economic viability is mainly equated with financial viability where profitability is the goal in consideration of socio economic aspects the maintenance of nonnegative net benefits to society is often not considered in current notions of economic viability while these shortcomings have been acknowledged in some of the existing literature our review shows that they have not yet been addressed comprehensively we therefore conclude that it is necessary to develop or expand current methods to better take into account social aspects when assessing the economic viability of small scale fisheries this would help find solutions to make these fisheries less vulnerable and better equipped to face large scale processes of change

making future generations count comment on remembering the future abstract prager and shertzer prager m h and shertzer k w 2006 this volume remembering the future a commentary on intergenerational discounting a new intuitive approach ecological economics made three points on our intergenerational discounting approach presented in sumaila and walters sumaila u r and walters c 2005 intergenerational discounting a new intuitive approach ecological economics 52 135 142 we comment on each of these in this short response to their comments

linear adjustment costs and seasonal labor demand evidence from retail trade firms standard models of dynamic labor demand rely on the presence of adjustment costs to explain the observed smoothness in employment patterns although the costs are often difficult to quantify the experience rating feature of the u s unemployment insurance ui system provides a measurable linear cost of adjustment using a unique data set with administrative data on over 8000 firms i estimate the effect of a ui induced linear adjustment cost on seasonal labor demand in retail trade i find strong support for the large role of adjustment costs in reducing the employment response of firms to seasonal fluctuations in demand

altruism and the demand for environmental quality this paper asks whether individuals consider the value that future generations will receive from environmental quality when deciding what level of environmental protection to provide using data on life expectancy i develop two tests for altruism towards future generations one a test for strong altruism asks whether individual motives are purely altruistic when deciding to provide environmental quality the second a test for weak altruism combines an individual s concern for both self interest and the interest of future generations using data from a washington post survey on environmental attitudes to implement the test i find evidence of weak altruism

reconciling sustainability and discounting in cost benefit analysis a methodological proposal abstract the incorporation of the intergenerational equity objective has rendered the traditional cost benefit analysis cba approach obsolete for the evaluation of projects presenting an important number of environmental externalities and for those whose impacts extend throughout a long period of time based on the assumption that applying a discount rate rewards current consumption and therefore that it is only possible to introduce a certain intergenerational equity in a cost benefit analysis in this work we propose an approach to discounting based on a different rationale for tangible and intangible effects we designed two indicators of environmental profitability a the intergenerational transfer amount ita which quantifies in monetary units what the current generation is willing to pass on future generations when an environmental restoration project is carried out and b the critical environmental rate cer measures the implicit environmental profitability these concepts were tested through an empirical case study pertaining to the assessment of an erosion control project in the southeast of spain the results yield traditional profitability indicators that are higher and probably closer to the real values set by the contemporary society the information provided by the environmental profitability indicators proposed renders more transparency to the quantification of the levels of intergenerational equity applied thereby facilitating the difficult reconciliation of the cba technique with the objective of sustainability

markups aggregation and inventory adjustment in this paper i suggest a unified explanation for two puzzles in the inventory literature first estimates of inventory speeds of adjustment in aggregate data are very small relative to the apparent rapid reaction of stocks to unanticipated variations in sales second estimates of inventory speeds of adjustment in firm level data are significantly higher than in aggregate data the paper develops a multisector model where inventories are held to avoid stockouts and price markups vary along the business cycle the omission of countercyclical markup variations from inventory targets introduces a downward bias in estimates of adjustment speeds obtained from partial adjustment models when the cyclicality of markups differs across sectors this downward bias is shown to be more severe with aggregate rather than firm level data similar results apply not only to inventories but also to labor and prices montercarlo simulations of a calibrated version of the model suggest that these biases are quantitatively significant

employment and wage strategies of the firm over a business cycle abstract by using control theory we analyze the behaviour of a firm which expects a demand cycle and occupies a monopsonistic position on the labour market consequently the relative wage rate is used as a tool for regulating the flow of applicants and the rate of quits of employees the dynamic wage policy is governed by the demand trend but the marginal propensity of workers to quit and the level of hiring costs are also relevant factors in setting the wage rate the recession period is characterized by a relative wage decrease associated with voluntary quits rather than firing however the wage rate starts increasing when demand is still declining and labour hoarded

on prices and economic power explaining recent changes in intersectoral relations in the indian economy two contrasting views about the relationship between agriculture and industry and in particular about the optimal level of the terms of trade between these two sectors are identified and first set in the context of the political economy of contemporary india methodological issues relating to the correct measurement of intersectoral price shifts are taken up and it is shown that these have considerable bearing on current controversies it is argued in particular that single factor explanations of the behaviour of the terms of trade lack credibility and that these have to be analysed in the context of wider issues of growth and imbalance in developing economies

tax incidence analysis of developing countries an alternative view misleading conclusions can be drawn from studies of tax incidence that ignore the special features of developing countries incorporating these features can sometimes reverse the incidence pattern of taxes relative to what is often taken to be conventional wisdom even where patterns are not reversed quantitative differences can be substantial the newer views of incidence have implications for tax restructuring options being considered in several developing countries the proposed restructuring may appear to lead only to a more regressive tax system because of improper incidence analysis copyright 1991 by oxford university press

adaptive strategies of the firm through a business cycle abstract the paper examines the behaviour of a profit maximizing firm which forecasts a recession and which has at its disposal to regulate its level of equipment and its level of employment three control variables investment recruitment firing the selling price being held constant it shows that i the expectation of a recession by a firm is enough to launch a real recession in the demand for production factors equipment and recruitment ii by comparison with a situation in which the firm may manipulate the selling price price rigidities imply the occurrence of excess capacity in addition they do not allow the firm to delay firing and induce a stronger irregularity in recruitment and firing and iii depending on the characteristics of the firm and of the environment a unique model is compatible with a whole variety of behavioural patterns

buffer stocks and labor demand further evidence this paper presents estimates of a multivariate flexible accelerator model of labor demand hours and the number of production workers which shows that stocks of finished goods unfilled orders and materials inventories have significant impacts upon labor demand univariate time series models are used to capture expectations of the determinants of desired stocks new orders real wages and real raw materials prices and these magnitudes are found to follow a random walk without drift expected new orders and errors in forecasting new orders are found to have an important impact upon labor inputs real wage forecasting errors are found to be important for hours demand

determination of employment with wage and price speculation the purpose of this paper is to investigate whether aggregate fluctuations in employment may be explained within a market clearing framework as intertemporal substitution in labor supply and demand an intertemporal substitution model for the firm is derived this model is estimated with a lucas rapping type supply equation empirical results with finnish data lend support to the intertemporal substitution model particularly concerning the demand function specification on the other hand the results for the supply equation are somewhat mixed being rather sensitive to the dynamic specification

general equilibrium analysis of black and white markets a computational approach abstract this paper explores the inter relationship between black and white markets and presents a formulation in which equilibrium conditions hold separately for each type of market for each product with linking conditions across market types using a traditional goods and factor general equilibrium model the simultaneous operation of price controls on white markets and surveillance with penalties for those caught trading on black markets is modelled a numerical example of such an economy is presented using data for india and equilibria under coexistence are reported

unionism mio the cyclical behavior of the labor tv rket in u s manufacturing t he traditional view of market dynamics implies that when demand varies intertemporal variation in quantities exchanged increases as prices become less flexible this reasoning leads to the proposition that wage and price rigidities are important contributors to cyclical fluctuations in output fischer 1977a and gray 1978 based formal macro models on this principle although this view is common it has little empirical support the coexistence of union and nonunion establishments engaged in similar activities contains potential for testing its merits economists have long maintained that in the short run union wages are less flexible than nonunion wages dunlop 1950 rees 1951 this difference should produce larger fluctuations in union employment and hours empirical studies have generally supported the union wage rigidity hypothesis lewis 1963 ashenfelter johnson and pencavel 1972 and hendricks 1981 2 but until recently lack of data precluded analysis of hours and employment definitive answers to the important questions concerning unions influence on cyclical behavior require yet unavailable information matching the behavior of firms and characteristics of workers but data from modem surveys have allowed considerable progress nevertheless it remains a challenge to determine how much of differences observed in the stability of labor utilization are attributable to differences in the stability of demand medoff 1979 and raisian 1979 report that cyclical variation of employment and hours is indeed greater for union labor but despite attempts to allay suspicion that their finding arises primarily from concentration of union members in cyclically sensitive industries both studies leave room for doubt raisian estimated functions relating an individual s wage and weeks worked in a year to a proxy for excess demand that year s unemployment rate in the worker s industry the technique is attractive but raisian s data included workers from the entire economy and the industries were broad aggregates thus differences in the union and nonunion groups compositions may play a large role medoff who confined his study to production workers in manufacturing and used data allowing finer partitions investigated the importance of composition more thoroughly but he did not estimate relationships between adjustments in employment or hours and a measure of demand furthermore his focus was principally on the composition of manhours adjustments rather than their size in this paper i combine the strongest features of the medoff and raisian studies in further examination of the influence of unionism on cyclical fluctuations using current population surveys u s department of commerce 1978 from may of 1973 75 my analysis covers production workers in manufacturing during a period of rising inflation and unemployment the heart of the analysis is a measure of residual employment that quantifies by three digit industry and year shortrun excess demand for labor i construct this variable from employment time series and use it to estimate union nonunion differences in the cyclical responses of unemployment hourly wage rates and hours worked the results are consistent with the view that increasing rigidity in wages amplifies cyclical fluctuations in the utilization of labor the wage regressions add further to the literature s already strong support for the union wage rigidity hypothesis the employment status and hours regressions imply that the sensitivities of employment received for publication august 12 1981 revision accepted for publication february 11 1983 federal reserve bank of dallas this paper is based on my ph d dissertation which was completed at ucla with financial assistance from the rand corporation and the department of labor comments by referees and by participants of labor workshops at ucla and the university of chicago as well as the computation assistance of brian mckee are gratefully acknowledged i am responsible for any remaining errors the views expressed should not be attributed to the federal reserve bank of dallas or the federal reserve system one study is gordon 1982 who concludes page 41 that macroeconomic instability in the united states has been aggravated by the unusually sluggish behavior of nominal wages in the postwar era 2see also johnson 1975 parsley 1980 and moore and raisian 1980

time preference in global warming calculations a proposal for a unified index abstract many aspects of the calculation of the impacts of greenhouse gas ghg emissions and the costs and benefits of possible response options are highly sensitive to the way in which time preference is incorporated into the computations the intergovernmental panel on climate change ipcc used global warming potentials gwps to standardize inputs of different gases with differing radiative forcings and atmospheric lifetimes in the results emphasized by the ipcc s second assessment report a 100 year time horizon and no discounting is used and this has been adopted by the kyoto protocol for use in the first commitment period 2008 2012 here an alternative unified index is proposed that assigns explicit weights to the interests of different generations in contrast to discounting including the zero discount rate used by the ipcc the generationally weighted index forces policy makers to face the moral assumptions that underlie their choices related to global warming

a dynamic model of investment and capacity utilization this paper develops a dynamic optimizing model of a firm with quasi fixed factors subject to adjustment costs the utilization rates of the quasi fixed factors are chosen optimally by the firm and the rates of investment in the quasi fixed factors are based on the shadow prices of these factors in the spirit of tobin s q theory of investment capital investment is shown to be negatively related to capital utilization along the path to the steady state however in response to unanticipated demand shocks capital utilization and investment are positively related

intergenerational discounting a new intuitive approach abstract this paper proposes a new intergenerational discounting approach for computing net benefits from the use of environmental resources the approach explicitly incorporates the perspectives of both the current and future generations as argued for by pigou pigou a c 1920 the economics of welfare 1952 4th edition london macmillan and ramsey ramsey f p 1928 a mathematical theory of saving econ j 38 543 559 and required by most national and international laws related to the use of these resources an equation for use in the calculation of net discounted benefits is developed which provides a middle position whereby both the reality of personal discounting and that of social discounting are included in a social welfare function

reconciling sustainability systems theory and discounting abstract most definitions of sustainability imply that a system is to be maintained at a certain level held within certain limits into the indefinite future sustainability denies run away growth but it also avoids any decline or destruction this sustainability path is hard to reconcile with the renewal cycle that can be observed in many natural systems developing according to their intrinsic mechanisms and in social systems responding to internal and external pressures systems are parts of hierarchies where systems of higher levels are made up of subsystems from lower levels renewal in components is an important factor of adaptation and evolution if a system is sustained for too long it borrows from the sustainability of a supersystem and rests upon lack of sustainability in subsystems therefore by sustaining certain systems beyond their renewal cycle we decrease the sustainability of larger higher level systems for example schumpeter s theory of creative destruction posits that in a capitalist economy the collapse and renewal of firms and industries is necessary to sustain the vitality of the larger economic system however if the capitalist economic system relies on endless growth then sustaining it for too long will inevitably borrow from the sustainability of the global ecosystem this could prove catastrophic for humans and other species to reconcile sustainability with hierarchy theory we must decide which hierarchical level in a system we want to sustain indefinitely and accept that lower level subsystems must have shorter life spans in economic analysis inter temporal discount rates essentially tell us how long we should care about sustaining any given system economists distinguish between discount rates for individuals based on personal time preference lower discount rates for firms based on the opportunity cost of capital and even lower discount rates for society for issues affecting even higher level systems such as global climate change many economists question the suitability of discounting future values at all we argue that to reconcile sustainability with inter temporal discounting discount rates should be determined by the hierarchical level of the system being analyzed

discounting of long term costs what would future generations prefer us to do decisions with intergenerational consequences may leave future generations worse off i e not be pareto optimal if costs and benefits are not discounted correctly we point out that this happens if the conventional social discount rate is applied to intergenerational costs with that rate the justification of intergenerational costs benefits of a project are invested and the proceeds can cover future costs leads to an inconsistency over the long term eventually the supposed benefits of any project become larger than the entire gnp the conventional approach commits an error by treating the time preference component of the discount rate as if it represented creation of wealth while it really involves only redistribution the time horizon of the redistribution is limited by the duration of market transactions especially loans thus we recommend a two step discounting procedure with the conventional social discount rate for the short term about 30 years and the growth rate of the economy for the long term data for gnp per capita growth in the us the uk france germany japan and the soviet union since the industrial revolution combined with data for net economic welfare per capita suggest an intergenerational discount rate in the range of 1 to 2 for practical application the rate at which costs and benefits will grow over time is just as important as the discount rate only the difference between these two rates matters for many environmental costs these rates may be close to each other during the next few generations this implies that some of the uncertainty in the prediction of rates cancels and one can treat the problem as if the effective rate were close to zero the consequence for costs such as global warming or nuclear power can be very significant the valuation can increase by more than an order of magnitude compared to values based on conventional discounting

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

ethics economics and environmental management individuals derive utility from their access to resources provided by the biosphere through the satisfaction of a number of needs and necessities these needs however cannot often be met simultaneously since they compete with each other this conflict is not just relevant at an individual or even intragenerational level indeed it implies a number of uncertainties and irreversibilities into the future which should not be left to oblivion from an extended anthropocentric ethical position in which only human beings have immanent value and are therefore subjects of moral consideration the identification of economic values can be of great use to allocate resources and make decisions on the environment economic analysis provides a number of decision tools than can be used to optimise efficiency and equity the purpose of this paper is to reflect on some of the ethical constraints to the ability of conventional economic valuation techniques to inform decision making processes affecting the environment it will be argued that depending on the stage of development some environmental and natural assets might well be seen as a common heritage either from a natural or a cultural viewpoint rather than just a pool of economic resources that could be used to satisfy basic needs and depleted or transformed accordingly whether directly or indirectly furthermore this boundary is not static the same environmental asset will be demanded as a resource at lower stages of development both individual and socially and as a part of the common heritage at a later stage again individual and socially in the former the use of conventional methods to value environmental goods and services will be warranted whereas this would not be the case in the latter we will also stress upon the fact that this is something quite different from the approach taken in social project appraisal where the introduction of efficiency prices and distributive factors also provides a move from individual to social welfare maximization but without breaking away from the market logic

controls and the intersectoral terms of trade the indian case sectors the indian economy is substantially insulated from outside market forces and the direction of movement of the intersectoral terms of trade has therefore been regarded as having special policy importance industry is equated with the urban modern sector agriculture with the rural traditional sector while the debate on the north south terms of trade following singer i 950 and prebisch i 964 has prompted discussion of international trade arrangements between developing and developed economies the debate on the intersectoral trade seems to have played a comparable role in india 2 if growth as with singerprebisch causes a deterioration in the terms of trade of the traditional sector then policy measures to offset the associated redistributive effects are seen in india as justified these can take the form of subsidies to agriculture maintenance of the current tax free status of agriculture and other measures equally since extensive redistribution through tax transfer schemes is administratively infeasible an improvement in the agricultural industrial terms of trade in favour of agriculture is often seen as a substitute for other redistributive measures poverty is concentrated in rural areas and manipulating the terms of trade in favour of agriculture through price controls subsidies and the like is a widely supported policy stance in this paper we argue that existing statistical studies of the intersectoral terms of trade in india are misleading since they typically focus on the terms of trade at controlled prices price and other controls in india are so extensive that black market rather than controlled prices should clearly enter any assessment of changes in the intersectoral terms of trade we also argue that the problem with these studies is analytically deeper than simply whether black market or controlled drices should be used because of

intertemporal preferences and intergenerational equity considerations in optimal resource harvesting abstract optimal resource harvesting decisions are reexamined in light of a distinction between personal discount rates reflecting individuals rate of time preference and generational discount rates reflecting considerations of equity for future generations the discount rates have partially counteracting effects upon the optimal harvesting decisions and upon the optimal distribution of benefits in any one period for instance it is the generational discount rate that determines the potential for economically optimal extinction of a renewable resource by distinguishing the two discount rates it is possible to give each generation equal consideration while still allowing for individual impatience

time discounting and the overexploitation of coral reefs the incentive to overexploit a fishery resource is thought to exist if the resource owner s discount rate is sufficiently higher than the biological productivity of the targeted fish stock coral reef fisheries are extensively overexploited worldwide but the discount rates of reef fishers are largely unknown and there is little information about how discount rates relate to the exploitation status of fisheries we address these two research gaps for 48 small scale reef fisheries around the world we use a life history based method to derive fishery level intrinsic growth rates and then apply fisheries economics theory to investigate the compatibility of 2 different discount rates official and private with the exploitation status of reef fisheries we find that official discount rates that are normally used for policy making appear to be too low to fully reflect the short term outlook of reef fishers instead our inferred annual average private discount rate of 107 for fishers may better reflect the general overexploited state of reef fisheries our results indicate that in order to improve the chances of success fisheries policies which affect local fishers may need to be evaluated using private discount rates rather than the currently used official discount rates

low discount rates and insignificant environmental values abstract difference between the discount rate on consumption and the rate of return on investment is often taken to prevent the former s being used as a social discount rate yet techniques have long been known for incorporating both these rates in a shadow price of investment funds assumptions about the proportion of investment revenues saved and reinvested are crucial in determining whether a low discount rate favours or discriminates against long term environmental values even a moderate saving rate may make the shadow price of funds indefinitely large the conceptually correct discount rate then becomes the growth rate of investment funds and the relative value of environmental effects becomes zero stochastic variation in rate of return makes this result more likely such an outcome may be avoided by setting reinvestment to zero or assuming convergence of rates of return and discount but no firm justification exists for these stratagems however various reasonable assumptions about environmental costs especially that they embody an investment element or require adequate compensation to be paid may make such costs indefinite also and therefore capable of standing against indefinite values of investible funds

climate change and the planetary trust abstract three models for thinking about our responsibilities with respect to climate change are compared and evaluated one is concerned with maximizing the present discounted value of consumption the second views climate change through the lens of the tragedy of the commons both of these approaches are found to rest on implausible assumptions a third model based on the conception of a fiduciary trust is found to be more credible and not to require overly burdensome policies

excess labour and the business cycle a comparative study of japan germany the united kingdom and the united states against the background of firm specific human capital theory this paper investigates empirically the relative propensity of manufacturing industries in japan germany the united kingdom and the united states to hold excess labour over the business cycle both stock and utilization dimensions of the labour input are integrated into the study throughout discussion is linked to earlier research that has analysed the relative international performance of the japanese labour market

remembering the future a commentary on intergenerational discounting a new intuitive approach sumaila and walters 2005 described a new approach to valuing benefit streams in resource economics in contrast to conventional methods their intergenerational discounting recognizes two categories of benefits those accruing to present stakeholders and those accruing to future generations the new method has clear application whenever alternative management strategies for natural resources are compared in the metric of net present value npv the intergenerational approach provides a sensible way to integrate economics into policy considerations to us it seems far more reasonable than the conventional discounting approach in which future benefits become of negligible value after a few generations that aspect of conventional discounting is troublesome tomany resource biologists policy analysts andeconomists to carry theargument further if onebelieves that amajor goal of economics is to quantify human preferences and the corresponding goal of resource economics is to quantify societal preferences it can be demonstrated by syllogism that the use of conventional discounting is logically inconsistent

inventories layoffs and the short run demand for labor this paper presents a theoretical and empirical analysis of the short run employment layoff and inventory strategies of firms on average more than two thirds of all layoffs in american manufacturing end in a rehire by the employer of origin martin feldstein 1975 david lilien 1980 these temporary layoffs have recently accounted for about half of all ongoing employer initiated spells of unemployment in that sector see table 1 and have led to a revised interpretation both of the involuntary nature of these separations costas azariadis 1975 feldstein 1976 martin baily 1977 and of the durability of employment relationships evidently a significant proportion of unemployed workers know that the conditions that generated their separations are temporary and so they expect to be recalled within some reasonable time the point of departure for this paper is in interpreting these findings as evidence of a privately and socially efficient stock of excess capacity held against contingent future demands that is as an inventory of a productive input this view leads to empirically refutable hypotheses regarding both the role of temporary layoffs and the circumstances under which they will be important in particular both excess capacity idle resources and inventories are devices by which firms may economize on the costs of rapid adjustments when faced with unstable market conditions george stigler 1939 in such an environment the demands for layoffs and for other buffer stocks are jointly determined elements of long run technology the choice among alternative stocks will depend on relative profitabilities and firms may choose to hold stocks of inputs as a substitute for inventory accumulation especially if the costs of varying capacity or of storage are important this reasoning implies that i the structure of short run employment and layoff decisions will vary across firms and industries and ii differences in these structures will be systematically related to the role of inventories in firms dynamic strategies some perspective is warranted at least since charles holt et al 1960 economists have recognized the production smoothing role of inventories and the necessity of predicting future demand in making current decisions david belsley 1969 gerald childs 1967 michael ward 1978 similarly one of the contributions of recent work on implicit labor contracts is in viewing the exchange of labor services as a bilateral and durable commitment both these lines of analysis are concerned with the methods firms use to respond to fluctuating demand yet the underlying interrelated nature of employment and inventory decisions has rarely been recognized roger miller 1968 m ishaq nadiri and sherwin rosen 1973 r g crawford 1979 robert hall 1972 this paper aims to provide a framework for evaluating these decisions and in so doing to explain some interesting features of observed labor markets the notion of substitution between inventories of human and physical capital suggests a more disaggregated look at the data table 2 shows the importance of temporary layoffs in the distribution of unemployment among manufacturing industries it reports layoff and total unemployment rates for twelve representative industries over the period 197376 and average layoff rates and recall frequencies for 1958 76 among all 21 twodigit manufacturing industries the correlation between layoff and rehire rates is 6 and the table illustrates this evidently industries with larger than normal layoff rates also tend to have larger rehire frequencies from firm initiated spells of unemployment this university of chicago i am indebted to gary becker robert cotterman sherwin rosen jose scheinkman michael ward finis welch the managing editor and an anonymous referee for discussions and comments at various stages the usual disclaimer applies

on employer specific information and internal labor markets the human capital literature of which becker s 2 paper is the seminal work stresses the productivity enhancing effects of schooling and on the job training later work by spence 21 and others emphasizes the fact that it is difficult for employers to ascertain the productivity of potential employees and suggests that activities such as schooling may provide employers with signals as to workers productivities in the signalling literature it is assumed that information generated concerning an individual s abilities is general in that it is known to all potential employers yet the information that an employer gathers concerning his workers abilities is not likely to be completely transferable to other employers as a consequence as rosen 18 249 points out there are limitations on the ability of the price system to achieve efficient assignments if the price system is incomplete there is a role for entrepreneurial activity of assembling an optimal work force this paper analyzes the employment relations that arise when employers information concerning new workers abilities is incomplete until after a period of employment the acquisition of such employer specific information is shown to lead to what has been referred to in the literature as internal labor markets internal labor markets as identified by dunlop 5 32 are the complex of rules which determine the movement of workers among job classifications within administrative units these movements may be transfers promotions demotions or layoffs to the exterior labor markets doeringer and piore 3 emphasize skill specificity and on the job training as the key factors in the emergence of the internal labor market along similar lines williamson wachter and harris 22 point out that job idiosyncracy can result in employment relations with attributes like those of internal labor markets by way of contrast this paper emphasizes the role of employer specific information in generating internal labor markets the theory provides an explanation as to why employers dismiss current employees at the same time that new employees are hired evidence that dismissal rates are not insignificant is presented in section iv the theory also provides a new rationale for long term em

intergenerational equity discounting and the role of cost benefit analysis in evaluating global climate policy when public policies with impacts far into the future are being debated the question inevitably is raised whether cost benefit analysis which discounts future costs and benefits is not biased against future generations and whether if such discounting is appropriate at all a lower rate should be used to avoid such bias the debate on global climate change is no exception this paper sketches and analyses the welfare foundations of cost benefit analysis and from this perspective analyses the role of cost benefit analysis in the climate policy debate particularly with reference to intergenerational effects the paper concludes that the cost benefit criterion cannot provide a definitive basis for deciding whether we should commit to a longer term programme to moderate climate change the issues of intergenerational equity are not that global climate change will significantly lower the gnp of future generations but relate to the possibility of science fiction like changes in the planet that will produce catastrophic effects in the future and the typical way in which the cost benefit problem is posed obscures the basic choices that we should be evaluating

fisheries instrument choice under uncertainty this paper uses data from an actual fishery to construct a tractable dynamic model to compare expected profit and its variance optimal stock size optimal harvest rate and optimal fishing effort under different management regimes under uncertainty the results provide a comparison of instrument choice between a total harvest control and a total effort control under uncertainty an original method to evaluate the tradeoffs between profits and other criteria in a dynamic context and insights regarding the relative merits of catch and effort controls in fisheries management

equilibrium adjustment with endogenous information and inventories the paper analyzes the interaction of information acquisition and inventory flexibility with industry adjustment to imperfectly perceived cost and demand disturbances improved information about disturbances reduces the extent to which disturbances are unperceived and dampens the use of inventories reduced inventory flexibility induces firms to devote more resources to acquiring information about disturbances the analysis demonstrates how equilibrium price and output adjustment depend endogenously on the degree of inventory flexibility and other structural parameters influencing the acquisition of information in this paper we analyze how endogenous information acquisition and inventory flexibility influence price and output adjustment in a competitive industry we focus on the potential substitutability of information acquisition for inventory flexibility when disturbances are imperfectly perceived by individual firms the analysis highlights the general issue of how market adjustment depends on structural parameters that influence agents incentives to acquire information there are several reasons why information acquisition may play a role in market adjustment first the rapid development of information technology has enabled firms to gather and process data relevant to production and sales decisions from a greater number of external and internal sources this trend has reduced the costs of forecasting and monitoring factors influencing production and demand conditions for the individual firm relative to those of its competitors as well as for the industry as a whole in particular it has permitted quicker awareness of changing customer demand as well as greater control of the flow of inputs and intermediate goods during the production process this implies that the resources devoted to information acquisition and processing have come to play an important role in firm decisions 2 second improved information about demand and cost conditions may affect the function of inventories inventory adjustment allows a firm s production costs to be smoothed in response to anticipated movements in demand and costs and to be buffered against unanticipated disturbances see ashley and orr 1985 thus

cultural bequest values for ecosystem service flows among indigenous fishers a discrete choice experiment validated with mixed methods perhaps the most understudied ecosystem services are related to socio cultural values tied to non material benefits arising from human ecosystem relationships bequest values linked to natural ecosystems can be particularly significant for indigenous communities whose livelihoods and cultures are tied to ecosystems here we apply a discrete choice experiment dce to determine indigenous fishers preferences and willingness to pay for bequest gains from management actions in a locally managed marine area in madagascar and use our results to estimate an implicit discount rate we validate our results using a unique rating and ranking game and other mixed methods we find that bequest is highly valued and important respondents were willing to pay a substantial portion of their income to protect ecosystems for future generations through all of our inquiries bequest emerged as the highest priority even when respondents were forced to make trade offs among other livelihood supporting ecosystem services this study is among a relative few to quantify bequest values and apply a dce to model trade offs value ecosystem service flows and estimate discount rates in a developing country our results directly inform coastal management in madagascar and elsewhere by providing information on the socio cultural value of bequest in comparison to other ecosystem service benefits

on recalls layoffs variable hours and labor adjustment costs abstract the paper analyzes the employment policy of a firm that can vary both hours and the level of employment the analysis differs from previous work in the adjustment cost literature in that the firm is able to change its employment not only through hires layoffs and quits but also by recalls of employees who were previously laid off thus we introduce the possibility of the firm inventorying the labor input it is shown that this labor inventory potential is necessary if the firm is to ever lay off workers further it is demonstrated that linear rather than strictly convex adjustment costs are then required if the firm is to always recall employees who were previously laid off prior to hiring new workers

time perspective and climate change policy the tendency to foreshorten time units as we peer further into the future provides an explanation for hyperbolic discounting at an inter generational time scale we study implications of hyperbolic discounting for climate change policy when the probability of a climate induced catastrophe depends on the stock of greenhouse gasses we characterize the set of markov perfect equilibria mpe of the inter generational game amongst a succession of policymakers each policymaker reflects her generation s preferences including its hyperbolic discounting for a binary action game we compare the mpe set to a restricted commitment benchmark we compare the associated constant equivalent discount rates and the willingness to pay to control climate change with assumptions and recommendations in the stern review on climate change ymy picture of the world is drawn in perspectivey i apply my perspective not merely to space but also to time ramsey

increasing marginal returns and the danger of collapse of commercially valuable fish stocks abstract on the basis of data from the north sea herring fishery we discuss the consequences of increasing marginal returns on the exploitation of renewable resources we show that high but still reasonable discount rates can cause extinction to be optimal even in the ideal case of a sole owner and a resource with a high growth rate in the case of lower discount rates optimal cyclical policies can periodically drive the resource to levels approaching safe minimum standards we discuss the sustainability intergenerational equity social risk aversion and theoretical issues raised by increasing marginal returns