investment horizon risk and compensation in the banking industry this paper examines the relation between the investment horizon of banks and their ceo compensation and its consequences for risk and performance we find that banks with short term investment intensity pay more cash bonus exhibit higher risk and perform more poorly than banks with longer term investment intensity this evidence is broadly consistent with the view that short term means of compensation encouraged a short term investment focus which in turn led to both higher risk and resulted in poorer performance culminating in the sub prime crisis the inverse risk performance relation suggests pay schemes were incongruent with shareholders interest moreover pay arrangements used in banks prior to the subprime crisis exposed banks to the ex post settling up problem the clawback problem

bertrand edgeworth oligopoly in large markets the relation between perfectly competitive and monopolistically competitive equilibria is analysed for a bertrand edgeworth model of a single market in which capacity constrained firms choose prices as strategies the market always has a nash equilibrium in pure or mixed strategies as the number of firms increases the corresponding equilibria converge in distribution to a perfectly competitive price this result provides a justification for perfect competition that is based on an explicit account of price formation however monopoly prices persist with a positive but vanishing probability regularity or well defined inverse demand functions are not required

limits of exact equilibria for capacity constrained sellers with costly search abstract this paper studies finite versions of competitive matching models in which sellers announce prices and buyers understand the relationship between price and probability of trade two equilibrium concepts are studied for finite games subgame perfect equilibrium and rational expectations equilibrium it is shown that the distribution of prices offered by sellers under both equilibrium concepts converges weakly to the same competitive equilibrium distribution of prices furthermore the payoffs that sellers face in both kinds of equilibrium have the market utility property in the limit journal of economic literature classification numbers c78 d41 d45

agricultural research bias in nicaragua the case of beans abstract the government of nicaragua has favored export crops in agricultural research although an improvement in the production technology of staples eaten by the poor could produce large and equitable benefits in society the government of nicaragua has underinvested in agricultural research on staples in this article we review nicaragua s bean research and show how it has paled relative to export crops even during the sandinista years bean research stagnated and showed urban biases in the conclusion we explain why research on beans did not produce good results

the gains from self ownership and the expansion of women s rights throughout history wives have been the property of their husbands only in the past two centuries has this institution broken down in the world s most developed regions in america and england the doctrine of coverture restricted women s choices in virtually every aspect of their lives until the beginning of the 20th century a married woman a feme covert could not make contracts buy and sell property sue or be sued or draft wills joel p bishop 1875 john c wells 1878 john f kelly 1882 her husband owned any wages she earned and he controlled any property she brought to the marriage a husband also could control his wife s economic activities outside the home such as limiting a particular shopkeeper from selling to his wife marylynn salmon 1986 even in the rare case of divorce the children of the marriage fell under the father s custody today the doctrine of coverture is extinct in most developed countries women now control rights to themselves and the products of their labor no formal restrictions remain on a woman s ability to own or convey title to land or other forms of real property women are able to contract freely and enforce their contractual rights no formal restrictions remain on a woman s capacity to sue or be sued in tort rape is no longer a crime against a husband s property interest in his wife but a crime in which the woman is the sole victim no formal restrictions limit a woman s ability to alienate her labor and own the wages she earns whether married or single women today have practically all the rights of their male counterparts we use a property rights analysis to explain the demise of coverture in the united states we characterize the modern property rights structure to human beings as a system in which all adults are self owners men and women have essentially equal rights and are able to contract fully inside and outside of marriage so marriage is a share contract douglas w allen 1992 coverture in contrast to self ownership is characterized as a principal agent system in which the man husband legally owned his wife and her flow of value under coverture a wife was an agent severely constrained by the system of property rights which denied her the right to freely choose human capital investments and consumption as well as to capture the full returns from her actions the husband s economic ownership was imperfect however allowing the woman to deviate from the man s directives human ownership regimes are important because they affect incentives to acquire and develop human capital t w schultz 1968 stanley engerman 1973 in particular we argue that economic growth with attendant increases in wealth and specialized markets leads geddes department of policy analysis and management cornell university 107 mvr hall ithaca ny 14853 and hoover institution e mail rrg24 cornell edu lueck montana state university and university of virginia school of law e mail lueck virginia edu geddes was supported by the earhart foundation lueck was supported as john m olin faculty fellow at the yale law school cynthia powell hui ping chao and mary godfrey provided research assistance we have also benefited from comments from doug allen lee alston ian ayres david barker parantap basu gary becker mary beth combs lee craig joe ferrie andy hanssen gillian hamilton shawn kantor dean lillard robin lumsdaine steve margolis joel mokyr bart moore lee redding glen whitman paul zak two anonymous referees and participants in numerous seminars and conferences 1 while married women s property belonged to their husbands most single women were dependents of their male relatives although a single woman legally had the same property rights as a man powerful norms and private restrictions severely limited the rights of divorcees spinsters and widows mary beth norton 1980 2 we recognize a potential divergence between economic and purely legal rights because enforcement costs limit the application of legal doctrine yoram barzel 1977 here however we treat economic and legal rights as virtually synonymous since coverture codified customs and norms and because coverture s restrictions extended beyond the family into markets and society

education and contraceptive choice a conditional demand framework a multiperiod model of fertility and contraceptive choice which considers unobserved differential preferences for the timing of births is formulated conventional and conditional demand equations for contraceptives are derived from the model and the relationships in each between female education birth intentions and the level of contraceptive efficiency are compared demand equations derived from the model conditioned on birth intentions were shown to be superior to conventional demand equations in testing some of the assumptions pertaining to the technology of contraceptives embedded in the utility maximization framework a weak test of the hypothesis that education lowers the fixed costs of information associated with new technologies as exemplified by the oral contraceptive was shown to be obtainable only from consistent estimates of conditional contraceptive choice demand parameters as a consequence of the dual technological attributes of contraceptive methods if education affects both the costs of children and preference orderings over the spacing of births the education contraceptive use association conditional on the number of intended children cannot be used to make welfare comparisons across households the log linear model in which contraceptives were categorized on the basis of their cost characteristics and simulatenous equations techniques were used to obtain estimates of the conditional demand equations for contraceptives based on data from the national fertility survey 1970 estimates indicated that the education of the wife among households with identical fertility plans was significantly and positively associated with the adoption of the newer birth control methods in 1970 with quantitiative affects significantly greater than those indicated in reduced form and inconsistently estimated conditional equations appearing in a priori studies the results support the hypothesis that the relative magnitudes of fixed and variable contraceptive costs influence contraceptive decisions with the value of the wifes time an important component of the former and suggest that women with higher levels of education are more likely to use traditional contraceptive methods

an analysis of the relation between the stewardship and valuation roles of earnings in this paper we seek a deeper understanding of how accounting information is used for valuation and incentive contracting purposes we explore linkages between weights on earnings in compensation contracts and in stock price formation a distinction between the valuation and incentive contracting roles of earnings in paul 1992 produces the null hypothesis that valuation earnings coefficients vecs and compensation earnings coefficients cecs are unrelated our empirical analyses of the relations between earnings and both stock prices and executive compensation data at the firm and industry levels over the period 1971 2000 rejects paul s 1992 hypothesis of no relation we also document an increasing weight over time on other public performance information captured by stock returns in the determination of cash compensation specifically we find that the incentive coefficient on returns is significantly higher in the second of two equal sample subperiods relative to the incentive coefficient on earnings

changes in the value relevance of earnings and book values over the past forty years this paper investigates systematic changes in the value relevance of earnings and book values over time we report three primary findings first contrary to claims in the professional literature the combined value relevance of earnings and book values has not declined over the past forty years and in fact appears to have increased slightly second while the incremental value relevance of bottom line earnings has declined it has been replaced by increasing value relevance of book values finally much of the shift in value relevance fiom earnings to book values can be explained by the increasing frequency and magnitude of one time items the increasing frequency of negative earnings and changes in average firm size and intangible intensity across time

incentives and the efficiency of public sector outsourcing contracts abstract outsourcing the provision of traditionally publicly provided services has become commonplace in most industrialized nations despite its prevalence there still is no consensus in the academic literature on the magnitude and determinants of expected cost savings to the government nor the sources of those savings this article considers the arguments for and against outsourcing and then examines the empirical evidence pertaining to whether any observed savings occur and whether they persist over time in addition we examine the existing evidence for the redistribution hypothesis and the quality shading hypothesis which critics have used to argue that outsourcing lowers government expenditure by lowering wages and conditions and or lower quality services finally we consider the impact of contract design on outsourcing outcomes while the power of incentives is a strong theme in economics recent work has suggested that high powered incentives may be suboptimal for many public sector services because they may crowd out intrinsic motivation particularly in instances where agents are highly motivated we discuss the implications of this insight for the efficiency of public sector outsourcing

egalitarianism and the returns to education during the great transformation of american education secondary school education greatly expanded in the united states from 1910 to 1940 setting its schooling attainment apart from that of all other countries barely 10 percent of youth were high school graduates in 1910 but by the mid 1930s the median youth had a high school diploma in some regions by the 1930s enrollment and graduation rates rose to levels that were as high as they would be two decades later the issue addressed here concerns the economic impact of the large increase in the supply of educated labor evidence is presented concerning the sharp decline in the wage premium to ordinary white collar workers with the expansion of the high school large numbers of americans competed for positions in the coveted white collar sector although the return to a year of high school remained considerable on the eve of world war ii egalitarianism had evened the playing field for a substantial segment of americans

investments holdup and the form of market contracts the authors analyze incomplete contracts to induce efficient investment with exogenous switching costs fixed price contracts are efficient generate some rigidity in prices are renegotiated intermittently by possibly small amounts and when inflation is positive generate asymmetric responses to shocks all consistent with evidence on prices and wages with two sided specific investments efficiency requires prices to have sufficient escalator clauses to avoid renegotiation as observed in many long term contracts a third case with one sided specific investments can generate take or pay contracts and explain why firms sometimes pay for specific investments that appear to benefit employees directly

social norms and the law an economic approach by social norm norm for short i shall mean a rule that is neither promulgated by an official source such as a court or a legislature nor enforced by the threat of legal sanctions yet is regularly complied with otherwise it wouldn t be a rule the rules of etiquette including norms of proper dress and table manners the rules of grammar and customary law in prepolitical societies and private associations are all examples of norms in my sense a full understanding of law requires consideration of norms law is older than political society which means that it originates as a set of norms as it remains in the case of public international law because there is no world government even in societies that have strong governments norms are both a source of law and often a cheap and effective substitute for law and sometimes they are an antagonist to law the incentives for obeying law are clear enough but what about the incentives for obeying norms the answer to this question will help toward an understanding of the relation between law and norms there are four incentives for obeying norms i some norms are self enforcing the incentive to obey comes from the fact that obedience confers private benefits because they are constitutive of advantageous transactions if you don t speak the language you can t make yourself understood if you don t play chess by the rules you re not playing it at all so if you enjoy playing chess you will not cheat unless the net expected gain is great 2 this point bears on the norms governing judicial behavior of judges not those norms backed by law such as the rule against taking bribes but those subtler norms that adjure the judge to lay aside personal or partisan sympathies disregard public blame or praise follow precedent rather than his own values in short adhere to the traditional rule of law virtues compliance with these norms is far from uniform because there are incentives to deviate and the costs of deviation are small but why is there any compliance the answer is that the private costs of compliance are low because the law backed rules of judicial behavior make it difficult for the judge to profit from partiality while the private benefits are substantial because the rule of law norms are the constitutive rules of the practice of judging if you don t obey them you re not playing the judicial game law school and the judiciary teach the game to new lawyers while judicial selection procedures select for persons who want to play the judicial game rather than some other game such as partisan politics even when judicial appointments are elective rather than appointive or when appointments are based on patronage or ideology rather than merit self selection is present in the decision to seek or accept appointment ii some norms are enforced by the emotions a point vital to understanding the emergence of law the honor code of the old south see jack k williams 1980 will illustrate the code which required a man to challenge to a duel any man who infringed his dignity was a survival of a revenge based system of law more precisely pre law before there were governments what is now called law was u s court of appeals for the seventh circuit and university of chicago law school 1111 e 60th st chicago il 60637 i thank gary becker dan kahan lawrence lessig martha nussbaum eric posner eric rasmusen cass sunstein and yuval tal for many helpful comments on a previous draft i do not require however that it be internalized as a preference as in the definition of norm in gary becker 1996 p 225 2 these are examples of compensated norm imposed constraints becker 1996 p 228 not only must the judge not take bribes but he must not sit in cases in which he or his relatives might derive a pecuniary benefit from his decision

determinants of child mortality health and nutrition in a developing country abstract child health and nutrition status are important determinants of adult productivities and earnings and thus are an important channel of intergenerational socioeconomic mobility building upon economic models of household behavior we investigate the determinants of child mortality and health and nutrition status in regions defined by the degree of urbanization in the developing country of nicaragua and offer some policy suggestions our estimates suggest that determinants differ significantly across regions income is not an important factor there is an inverse relation with number of siblings and there are positive associations with calorie intake schooling except in the relatively low income rural areas the availability of refrigeration and the quality of sewage systems

a switching regression model for wage determinants in the public and private sectors of a developing country governments in less developed countries face severe budgetary constraints given that public sector employment is a large part of modern sector employment the government wage bill h as come under increased scrutiny the central question is how do gove rnment wages compare with those in the private sector in this paper the authors develop and estimate a model to answer this question an important aspect of this model is the endogenous treatment of sector choice the estimation results full information maximum likelihood sound a strong warning against the use of ordinary least squares est imates that are based on sector specific samples data are from the i vory coast copyright 1988 by mit press

the demand for education for home production this paper analyzes a type of education thus far ignored in the literature non credit adult education to enhance home production skills in the analysis we test whether such education behaves as an investment in home productivity and also compare the differences between demands for home productivity enhancing education and labor market enhancing education results on four adult cohorts indicate that both types of schooling have investment components although there are also significant differences in the two demand functions results also indicate that the two types of education are complementary rather than substitute activities

optimal wage taxation when human capital and employment are endogenous this paper studies how optimal wage tax conclusions from the classic two period life cycle model of human capital accumulation are affected by endogenizing the number of taxpaying workers in the absence of a corrective policy young individuals underinvest in human capital from a social perspective because tax premiums for transfers to nonworkers are not actuarially adjusted downward for human capital attainment a combination of wage taxes and wage subsidies can restore proper price signals numerical simulations suggest that even modest employment elasticities can be sufficient to substantially impact the magnitudes and even the signs of optimal wage tax rates jel h21 h3 j24

competitive search equilibrium in this paper i construct an equilibrium for markets with frictions which is competitive in the sense that all agents are price takers and maximize utility subject to a set of market parameters i show that the equilibrium allocation is socially optimal i also show how the competitive search equilibrium can be achieved if employers with vacancies can advertise publicly the wages they pay

education and freedom of choice evidence from arranged marriages in vietnam abstractusing household data from vietnam we provide evidence on the effects of education on freedom of spouse choice we use war disruptions and spatial indicators of schooling supply as instruments the point estimates indicate that a year of additional schooling reduces the probability of an arranged marriage by about 14 percentage points for an individual with eight years of schooling we also estimate bounds on the effect of education on arranged marriage when exclusion restrictions are violated locally the lower bound is six to seven percentage points the impact of education is strong for women but significantly weaker for men

the impact of credit on peasant productivity and differentiation in nicaragua abstract an endogenous switching regressions framework is used to structure and identify the impact of credit on small farm food production in nicaragua the results which emerge weakly support the hypothesis that credit had a positive impact on production and could be expected to reduce the pattern of structurally unbalanced growth in nicaraguan agriculture however the estimated impact is of a form which implies a process of differentiation and unequal growth in the peasant sector in the wake of the new opportunities afforded by credit

productivity gains from geographic concentration of human capital evidence from the cities abstract based on recent theoretical developments the argument is made that the average level of human capital is a local public good cities with higher average levels of human capital should therefore have higher wages and higher land rents after conditioning on the characteristics of individual workers and dwellings this prediction is supported by data for standard metropolitan statistical areas smsas in the united states where the smsa average levels of formal education and work experience are used as proxies for the average level of human capital the alternative explanations of omitted smsa variables and self selection are evaluated an estimate of the effect of an additional year of average education on total factor productivity is computed

efficient estimation of structural hedonic systems when a product or job is not homogeneous but instead embodies several different characteristics it is difficult to use price information about the product to learn anything about the structure of the supply and demand for the embodied characteristics s rosen 1974 highlighted this problem and suggested that the estimated slope of the price characteristic relation the marginal price could be used instead of standard prices in otherwise standard estimation of the supply and demand system however recently brown and h rosen 1982 brown 1983 and mendelsohn 1985 have pointed out that this method is applicable only when the marginal price depends on variables not found in the supply and demand equations in this paper we show that since the hedonic system matches consumers with high demand for the characteristic to firms with low costs of producing it exogenous variables from the supply equation are not valid instruments in the demand equation and vice versa therefore even when the brown rosen mendelsohn brm condition holds estimation of the identified system by standard simultaneous equations techniques will produce inconsistent estimates we then show that the system can be identified despite the absence of the standard instruments and develop an efficient estimator for the identified system since cross equation constraints make estimation of hedonic systems particularly vulnerable to specification error we also consider some specification tests in this section we consider a simple model with only one characteristic the extension to several characteristics is straightforward the basic model developed by rosen can be described as follows firms with different technologies produce products which provide consumers with varying levels of some characteristic z each consumer buys one unit of the good the product is such that an amount of z from two units of the good provides less utility than the same amount of z embodied in a single unit e g acceleration in a car safety in a job consumers

life expectancy and human capital investments evidence from maternal mortality declines longer life expectancy should encourage human capital accumulation since a longer time horizon increases the value of investments that pay out over time previous work has been unable to determine the empirical importance of this life expectancy effect due to the difficulty of isolating it from other effects of health on education we examine a sudden drop in maternal mortality risk in sri lanka between 1946 and 1953 which creates a sharp increase in life expectancy for school age girls without contemporaneous effects on health and which also allows for the use of boys as a control group using additional geographic variation we find that the 70 reduction in maternal mortality risk over the sample period increased female life expectancy at age 15 by 4 1 female literacy by 2 5 and female years of education by 4 0 authors

the consumption value of schooling an empirical estimate of one aspect the purpose of this paper is to demonstrate by example that human capital is more than just a capital good in the strictest sense of the term certain forms of human capital have consumption value in addition to the value of the increased stream offuture monetary and nonmonetary benefits a methodfor empirically estimating the consumption value of schooling as a vehicle to avoid the vietnam war draft is presented

factors associated with the year end decline in working capital working capital is an important indicator of firm operational efficiency all else being equal lower levels signal greater efficiency managers are thus likely to be motivated to report lower levels of working capital at times of greater external attention we find that working capital levels decrease in the fourth fiscal quarter significantly more than expected conditional on seasonal changes in economic activity the decrease subsequently reverses in the following first fiscal quarter evidence indicates that firms manage down year end working capital through transactions that increase year end operating cash flow and that firms spread this activity over all working capital accounts finally the temporary decrease in year end working capital is correlated with compensation benchmarks and analysts annual cash flow forecasts the temporary drop is also more pronounced for firms with industry dominance this paper was accepted by mary barth accounting

an analysis of the use of accounting and market measures of performance in executive compensation contracts prior research has provided useful insights into the structure of compensation plans and their incentive effects however one important limitation of these studies is the virtual absence of any cross sectional analyses of the attributes of compensation contracts 2 this absence is related in part to the problems associated with controlling for other factors that affect compensation that is compensation contracts are

the incremental information content of earnings working capital from operation and cash flow prior studies have documented the information content of earnings for share prices but have not provided conclusive evidence on the incremental information content of working capital and cash flows from operations these studies assume linear relations between abnormal returns and accounting information in this paper i extend prior research by allowing for nonlinear relations between returns and each of three performance variables earnings working capital from operations wcfo and cash flows freeman and tse 1992a document a nonlinear relation between abnormal returns and unexpected earnings they argue that as the absolute value of unexpected earnings increases the persistence of earnings declines brooks and buckmaster 1976 and freeman ohlson

the relation between earnings based measures in firm debt contracts and ceo pay sensitivity to earnings abstract i investigate how implicit incentives provided by earnings based debt covenants affect the structure of ceo compensation contracts this provides a new and unique view of how the ceo s incentives are shaped by not only his compensation contract but also debt contracts i find when debt contracts contain an earnings based covenant the ceo s pay sensitivity to earnings is muted additionally i find some evidence that pay sensitivity to earnings varies with earnings based covenant slack this study provides evidence consistent with shareholders rebalancing the ceo s earnings incentives in the presence of earnings based covenants thereby tilting incentives away from earnings performance

who is behavioral cognitive ability and anomalous preferences in this paper we ask whether variation in preference anomalies is related to variation in cognitive ability evidence from a new laboratory study of chilean high school students with similar schooling backgrounds shows that small stakes risk aversion and short run discounting are less common among those with higher standardized test scores the relationship with test scores survives controls for parental education and wealth we find some evidence that elementary school gpa is predictive of preferences measured at the end of high school two laboratory interventions provide suggestive evidence of a possible causal impact of cognitive resources on expressed preferences jel j24 d14 c91

gender differences in education in a dynamic household bargaining model in this paper we explore the issue of gender differences in education in the context of a two sex overlapping generations model where men and women of each generation bargain over consumpt ion number of children and investment in education of their children conditional on gender and parents are altruistic toward their children we show that the difference in the education levels of boys and girls implied by our model is smaller than the one that would result from a pure investment model also we show that as long as the time cost associated with bearing children is positive women bear the entire time cost associated with child rearing we use our model to estimate the cost to a woman of having a child the estimate we obtain using cross country data suggests that such cost amounts to about 5 of the working lifetime of a woman

the impact of stakeholder power on corporate reputation a cross country corporate governance perspective corporate reputation has roots in national beliefs about the role of the business corporation in society these beliefs are constructed in accordance with the preferences of powerful stakeholders building on a stakeholder power approach to corporate governance we investigate whether differences in the legal rights and protections of shareholders creditors and workers across countries affect the general public s reputation assessments of business corporations using a sample of 593 of the largest publicly traded companies in the world from 32 countries during 2007 to 2011 we find that in societies where shareholders enjoy a high degree of legal rights the impact of stock market returns on corporate reputation becomes more positive likewise the negative relationship between earnings volatility and reputation becomes greater when creditor rights are stronger contrary to expectations we found no evidence of an interaction effect between labor rights and corporate social performance on corporate repu

the use of accounting and security price measures of performance in managerial compensation contracts a discussion abstract it is commonly observed that the compensation paid to senior level executives depends on both accounting and security price measures of performance the articles by kim and suh bushman and indjejikian and sloan which i have been invited to discuss examine the issue of how much weight to place on these two measures in the contract the first two papers analyze the role that earnings can play in removing the noise in stock price in a rational expectations pricing model the sloan paper analytically and empirically examines the role that earnings can play in removing macroeconomic factors from stock price

do husbands and wives pool their resources evidence from the united kingdom child benefit common preference models of family behavior imply income pooling a restriction on family demand functions such that only the sum of husband s income and wife s income affects the allocation of goods and time testing the pooling hypothesis is difficult because most family income sources are not exogenous to the allocations being analyzed in this paper we present an alternative test based on a natural experiment a policy change in the united kingdom that transferred a substantial child allowance to wives in the late 1970s using family expenditure survey data we find strong evidence that a shift toward greater expenditures on women s clothing and children s clothing relative to men s clothing coincided with this income redistribution

an empirical investigation of the relative performance evaluation hypothesis the principal agent framework has become a widely used paradigm in accounting and economics for analyzing issues in performance evaluation management control and the design of incentive systems while recent work in experimental economics has begun to examine empirically some of the underlying assumptions and implications of agency theory see baiman and lewis 1989 and kirby forthcoming few precise hypotheses have been tested using real world or naturally occurring data one exception has been the empirical investigation of the relative performance evaluation rpe hypothesis agency theory suggests that there are benefits associated with evaluating agents on the basis of their relative performances when the agents performances are affected by a common shock term e g see diamond and verrecchia 1982 and holmstrom 1979 1982 specifically a relative performance based contract can remove the common shock term from an agent s performance which enables a better evaluation of the agent s actions

schooling and economic well being the role of nonmarket effects standard estimates of the economic value of additional schooling based on earnings differences associated with differences in the level of schooling attained cover only a portion of the total effects of education that are valued by citizens we first identify a catalog of nonmarketed effects many of which have been recently studied by economists and then propose a procedure for estimating a willingness to pay value for these effects using empirical estimates of the magnitude of a selection of these effects found in the literature we calculate willingness to pay values using our proposed procedure these illustrative calculations suggest that standard estimates of the benefit of incremental schooling substantially understate the full value of such investments

the quiet revolution that transformed women s employment education and family the modern economic role of women emerged in four phases the first three were evolutionary the last was revolutionary phase i occurred from the late nineteenth century to the 1920s phase ii was from 1930 to 1950 phase iii extended from 1950 to the late 1970s and phase iv the quiet revolution began in the late 1970s and is still ongoing three aspects of women s choices distinguish the evolutionary from the revolutionary phases horizon identity and decision making the evolutionary phases are apparent in time series data on labor force participation the revolutionary phase is discernible using time series evidence on women s more predictable attachment to the workplace greater identity with career and better ability to make joint decisions with their spouses each of these series has a sharp break or inflection point signifying social and economic change these changes moreover coincide by birth cohort or period the relationship between the development of modern labor economics and the reality of women s changing economic role is explored the paper concludes by assessing whether the revolution has stalled or is being reversed women who graduated college in the early 1980s did not opt out but recent cohorts are too young to evaluate this abstract was borrowed from another version of this item

the bargaining family revisited we suggest a family bargaining model where human capital investment decisions are made non cooperatively in a first stage while day to day allocation of time is determined later through nash bargaining but with non cooperative behaviour as the fall back one finding is that overinvestment in education may be even more of a problem in such a semi cooperative model than in a fully non cooperative one even though both the semi cooperative model and the fully non cooperative model predict overinvestment in education policy conclusions that follow from the two models are distinctly different jel classification d13 j24 les auteurs suggerent un modele de famille qui marchande ou les decisions d investissement en capital humain sont prises de maniere non cooperative dans un premier temps alors que l allocation du temps au jour le jour est determinee plus tard par un marchandage a la nash mais avec un comportement noncooperatif comme choix de second ordre on decouvre que le surinvestissement dans l education peut etre encore plus problematique dans un tel modele de semi cooperation que dans un modele de non cooperation meme si les deux modeles prevoient un surinves chtissement dans l education les conclusions au plan de la politique publique qui decoulent de ces deux modeles sont fort differentes

the demarcation of land and the role of coordinating property institutions we use a natural experiment in nineteenth century ohio to analyze the economic effects of two dominant land demarcation regimes metes and bounds mb and the rectangular system rs mb is decentralized with plot shapes alignment and sizes defined individually rs is a centralized grid of uniform square plots that does not vary with topography we find large initial net benefits in land values from the rs and also that these effects persist into the twenty first century these findings reveal the importance of transaction costs and networks in affecting property rights land values markets and economic growth

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

thou shalt not covet prohibitions temptation and moral values abstract this paper proposes a theory of the relationship between prohibitions and temptation in the presence of self control problems moral values may increase individual material welfare and utility by serving as a self commitment device the model investigates the relationship between morality and temptation the individual gains from morality the interaction between external sanctions and moral self punishment and the spread and strength of individually optimal moral values the empirical analysis based on survey data for a large set of countries documents a hump shaped pattern of morality in social class which supports the theoretical predictions of the model

ability tracking school competition and the distribution of educational benefits abstract to study the effects of ability grouping on school competition we develop a theoretical and computational model of tracking in public and private schools we examine tracking s consequences for the allocation of students of differing abilities and income within and between public and private schools private schools tend to attract the most able and wealthiest students and rarely track in equilibrium public sector schools can maximize attendance by tracking students public schools retain a greater proportion of higher ability students by tracking but lose more wealthy lower ability students to the private sector consequently socioeconomic status is a predictor of track assignment in public schools for the entire population public sector tracking has small aggregate effects on achievement and welfare but results in significant redistribution from lower to higher ability students

determinants of smallholder commercial tree cultivation abstract this article contains a discussion of how output prices tenure information credit technology government policies and labor availability affect smallholder commercial tree cultivation output prices play the key role in smallholder commercial tree cultivation even in the face of insecure tenure output prices however are a necessary but not a sufficient condition to induce smallholders to undertake commercial fuelwood cultivation

gender and ethnicity differentials in school attainment and labor market earnings in ecuador summary indigenous people in ecuador are most likely to be disadvantaged and live in poverty this paper reports on the findings of an econometric analysis which explores the extent to which lower educational attainment and labor market discrimination contribute to these disparities the analysis utilizes a proportional hazard regression model to examine which factors raise the probability of early school departure it also employs a classic regression model to explore the relationship between low educational attainment and earnings together with an oaxaca decomposition which parses out the extent to which earning differentials can be attributed to differences in human capital or to discrimination

enforced standards versus evolution by general acceptance a comparative study of e commerce privacy disclosure and practice in the united states and the united kingdom we present data on privacy practices in e commerce under the european union s formal regulatory regime prevailing in the united kingdom and compare it with the data from a previous study of u s practices that evolved in the absence of government laws or enforcement the codification by the e u law and the enforcement by the u k government improves neither the disclosure nor the practice of e commerce privacy relative to the united states regulation in the united kingdom also appears to stifle development of a market for web assurance services both u s and u k consumers continue to be vulnerable to a small number of e commerce web sites that spam their customers ignoring the latter s expressed or implied preferences these results raise important questions about finding a balance between enforced standards and conventions in financial reporting in the second half of the 20th century financial reporting has been characterized by both a preference for legislated standards and a lack of faith in its evolution as a body of social conventions evidence on whether this faith in standards over conventions is justified remains to be marshaled

the institutional framework and economic development the compound growth rates of per capita output and farrell type efficiency measures for 115 market economies over the period 1960 80 were compared with measures of political civil and economic liberty it was found that the institutional framework has significant and large effects on the efficiency and growth rate of economies politically open societies which subscribe to the rule of law to private property and to the market allocation of resources grow at three times the rate and are two and one half times as efficient as societies in which these freedoms are abridged

competing premarital investments this paper studies premarital parental investments in children s wealth where spousal wealth is a public good in marriage by investing in their children s wealth parents increase the wealth of their children and the quality of the spouses that their children can marry in large marriage markets the hedonic return to investment internalizes all the external benefits of premarital investment in wealth so that the competitive equilibrium is efficient marriage market competition also increases investments in small marriage markets relative to no competition but equilibrium investments are not efficient

the economic consequences of brain drain of the best and brightest microeconomic evidence from five countries this article presents results of innovative surveys that tracked academic high achievers from five countries to wherever they moved in the world to directly measure at the micro level the channels through which high skilled emigration affects sending countries there are high levels of emigration and of return and the income gains to the best and brightest from migrating are an order of magnitude greater than any other effect most high skilled migrants from poorer countries remit but involvement in trade and foreign direct investment is rare fiscal costs vary widely but are much less than the benefits to the migrants themselves two narratives drive discussions of the development impact of high skilled migration the first is the idea of a brain drain whereby the departure of doctors teachers engineers scientists and other highly skilled workers decimates the human capital and fiscal revenues of sending countries bhagwati and hamada 1974 such fears lead to calls for policies to restrict the flow of highly skilled workers such as demands that developed countries stop recruiting doctors from developing nations and efforts by developing nations to restrict the ease of their highly skilled individuals migrating 1 contrasting with this is the view of a highly educated diaspora as a potent force for developing the local economy through remittances trade foreign direct investment fdi and knowledge transfers with the experience of india and china in setting up technology firms as a result of diaspora working in silicon valley a prominent example saxenian 2002 economists have also emphasised that the possibility of migrating may spur human capital accumulation potentially leading to a net increase in the education levels of those in the home country 2

women s liberation what s in it for men the nineteenth century witnessed dramatic improvements in the legal rights of married women given that these changes took place long before women gained the right to vote they amounted to a voluntary renouncement of power by men in this paper we investigate men s incentives for sharing power with women in our model women s legal rights set the marital bargaining power of husbands and wives we show that men face a tradeoff between the rights they want for their own wives namely none and the rights of other women in the economy men prefer other men s wives to have rights because men care about their own daughters and because an expansion of women s rights increases educational investments in children we show that men may agree to relinquish some of their power once technological change increases the importance of human capital we corroborate our argument with historical evidence on the expansion of women s rights in england and the united states

social closure surnames and crime this paper studies the effect of social closure on crime and tax evasion rates using disaggregated data for italian municipalities we propose an original and innovative measure of social closure based on the diversity of surname distribution which reflects a community s history of migration and inbreeding we find that all else equal communities with a history of social closure have lower crime rates and higher tax evasion rates than more open communities the effect of social closure is likely to be causal it is relevant in magnitude statistically significant and robust to changes in the set of included controls in the specific measures of dependent and independent variables in the specification of the regression equation and in the possible sample splits our findings are consistent with the idea that social closure strengthens social sanctions and social control thus leading to more cooperative outcomes in local interactions but it reduces cooperation on a larger scale

human capital accumulation and the expansion of women s economic rights abstractbetween 1850 and 1920 most u s states enacted laws expanding the rights of married women to own and control their separate property and to own their market earnings the economic approach to property rights implies that as married women gain economic rights the incentive to invest in girls human capital will rise this prediction is tested by examining the impact of these legal changes on girls school attendance rates relative to boys state level census data are used to examine the effects of these changes on school attendance among all school aged children integrated public use microdata series data are used to examine their effect on school attendance among children ages 15 19 who are just beyond compulsory schooling ages consistent with hypothesized effects the empirical analysis shows that expanding women s economic rights resulted in higher relative rates of school attendance by girls and had the largest effect on the 15 19 age group

paying for good neighbours estimating the value of an implied educated community by definition spillovers across households in residential communities mean that people incur costs from living in neighbourhoods where a high proportion of households suffer deprivation regardless of their own economic circumstances to verify the existence of intracommunity spillovers this paper shows that home owners in england and wales are prepared to pay a substantial premium to avoid educationally poor neighbourhoods an increase of 1 per cent in the proportion of higher educated residents in a community relative to the regional mean increases prices by 0 24 per cent one interpretation of this educational elasticity is that it estimates the social benefits of education in the local community a hedonic approach is used paying careful attention to the endogeneity of neighbourhood characteristics in a property price model

health and wage a simultaneous equation model with multiple discrete indicators in this article we propose all econometric approach for estimating the simultaneouls effects of health and wages in a structural equations framework in the theoretical works of grossmana 1972a 1972b health is viewed as anl elldogen1oulsly determined capital stock the demand for health should rise with the wage rate as the rate of return to health investment increases with wage onl the other hand better health should raise market productivity and hence wages since health capital is an abstract theoretical concept it can hardly be measured quantitatively however most population surveys include various health indicators these indicators are usually discrete variables in the empirical work of grossman and benham 1974 these qualitative indicators are treated as continuous variables and two stage least squares estimation techniques are used this specification raises various econometric problems see e g goldberger 1964 pp 248 255 domencich and mcfadden 1975 and nerlove and press 1973 a satisfactory specification should take into account the discrete nature of the indicators our specification generalizes the dummy variables simultaneous equations system of heckman 1978 the measurement models of joreskog and goldberger 1975 and is closely related to the models of muthe n 1976 1979 muthen studies full information maximum likelihood procedures for estimation except for very simple cases this does not generally yield feasible or tractable procedures in this article we introduce a tractable procedure for statistical estimation and testing this specification and the estimation procedure is then applied to study the joint dependence of health and wages another departure of our approach from others is that we will test and correct the possible incompatibility of the various health capital indicators in the population surveys one may have subjective health indicators such as self evaluation of health which may reflect different populations perception of health we propose a statistical procedure for testing measurement compatibility and if required for correcting this problem this article is divided into two parts initially we describe the model specification estimation and statistical tests in a general simultaneous equation model with multiple discrete indicators in the second part of the paper we consider specification of a simultaneous equation model for health and wages the model

parental altruism and child lead exposure inferences from the demand for chelation therapy we use parents decisions to treat their children s body burdens of lead to infer parental ex ante willingness to pay for reduced burdens willingness to pay is estimated with a data set containing 256 observations the data were originally gathered to assess the impact of children s body lead burdens upon their intellectual and behavioral development our results indicate that parental ex ante willingness to pay for a 1 percent reduction in child body lead burden exceeds the estimated ex post savings in medical treatment and compensatory education costs caused by the same reduction

multidimensional welfare distributions empirical application to household panel data from vietnam this article explores the empirical application of theoretical multidimensional welfare distribution analysis techniques to real household welfare distributions the article operationalizes recent conceptual developments in multidimensional distribution theory and assesses their usefulness for the measurement of multidimensional household inequality the results strongly highlight the importance of bringing nonmonetary aspects of household welfare into the forefront of inequality analysis agreement over the various approaches to the measurement of multidimensional inequality entails however nontrivial decisions that may limit the practical usefulness of these measures we suggest that the use of multidimensional inequality ranges and the application of restrictive dominance criteria to multidimensional welfare distributions may open significant scope for further developments in the empirical analysis of multidimensional inequality

the relevance of standard estimates of rates of return to schooling for education policy a critical assessment abstract this paper examines the accuracy and usefulness of estimated rates of return to schooling based on the standard human capital model of becker and mincer regarding accuracy it investigates whether failure to account for differences in ability and school quality lead to significant biases estimates using ghanaian data confirm this possibility even when accurate estimated rates of return to additional years of schooling may have limited policy implications more useful for governments are rates of return to investments in school quality the paper uses data on cognitive skills to estimate rates of return to three types of school quality improvements

ownership risk investment and the use of natural resources the effect of insecure ownership on ordinary investment and natural resource use is examined insecure ownership is postulated to depend on the type of government regime in power and the prevalence of political violence or instability the political determinants of economy wide investment are estimated from cross country data and the results are used to form an index of ownership security when introduced into empirical models of natural resource use this index has a significant and quantitatively important effect on the use of forests and petroleum contrary to conventional wisdom ownership risk slows resource use in some circumstances

women work and weil being in the middle east an outline of the relevant literature there is now an extensive literature on the role of women in economic development and the impact of development on their lives this article concentrates on the economic literature and discusses its importance for policies aimed at working women in the middle east it identifies the important strands and places the discussion within the wider context of women in the labour market in both developing and developed countries the general conclusion is that we are very far from having sufficient knowledge to implement effective policy or even to evaluate existing policies

women s liberation as a financial innovation in one of the greatest extensions of property rights in human history common law countries began giving rights to married women in the 1850s before this women s liberation the doctrine of coverture strongly incentivized parents of daughters to hold real estate rather than financial assets such as money stocks or bonds we exploit the staggered nature of coverture s demise across u s states to show that women s rights led to shifts in household portfolios a positive shock to the supply of credit and a reallocation of labor toward nonagriculture and capital intensive industries investor protection thus deepened financial markets aiding industrialization

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

accounting earnings and top executive compensation abstract this paper investigates the role of accounting earnings in top executive compensation contracts it provides evidence in support of the hypothesis that earnings based incentives help shield executives from market wide factors in stock prices the paper demonstrates that earnings reflect firm specific changes in value but are less sensitive to market wide movements in equity values as a result the inclusion of earnings based performance measures in executive compensation contracts helps shield executives from fluctuations in firm value that are beyond their control the hypothesis is shown to explain cross sectional variation in the use of earnings based incentives

the relation between earnings and cash flows abstract a model of earnings cash flows and accruals is developed assuming a random walk sales process variable and fixed costs and that the only accruals are accounts receivable and payable and inventory the model implies earnings better predict future operating cash flows than current operating cash flows and the difference varies with the operating cash cycle also the model is used to predict serial and cross correlations of each firm s series the implications and predictions are tested on a 1337 firm sample over 1963 1992 both earnings and cash flow forecast implications and correlation predictions are generally consistent with the data

incentive contracting and value relevance of earnings and cash flows accounting performance measures such as earnings and cash flows are useful for both valuation and performance evaluation purposes however little evidence exists on whether there is any association between these two roles in this study we provide large sample empirical evidence that the value relevance of earnings explains a significant amount of the cross sectional variation in the pay sensitivity of earnings and the incremental value relevance of cash flows explains variation in the marginal pay sensitivity of cash flows we document that while both value relevance and compensation weight on earnings decline from the subperiod of 1993 to 1997 to the subperiod of 1998 to 2003 both value relevance and compensation weight on cash flows increase from the earlier subperiod to the later subperiod overall our results provide additional evidence that value relevance of a performance measure plays a significant role in its use for performance evaluation

on the existence of pure and mixed strategy nash equilibria in discontinuous games a game is better reply secure if for every nonequilibrium strategy x and every payoff vector limit u resulting from strategies approaching x some player i has a strategy yielding a payoff strictly above u i even if the others deviate slightly from x if strategy spaces are compact and convex payoffs are quasiconcave in the owner s strategy and the game is better reply secure then a pure strategy nash equilibrium exists better reply security holds in many economic games it also permits new results on the existence of symmetric and mixed strategy nash equilibria

food policy and class transformation in revolutionary nicaragua 1979 1986 abstract state grain policy in nicaragua has represented both a short run intervention in food production and a longer run strategy of class transformation the emphasis given peasant production of corn and beans has depended on both considerations and has varied over the seven years of the revolutionary process a class analysis of this policy reveals changing responses by the fsln to external and internal political and economic conditions recent measures point to an acceptance of petty commodity grain production which may or may not be compatible with socialist agricultural development

property rights over marital transfers in developing countries the extent to which women possess property rights is shaped in large part by transfers received at the time of marriage focusing on dowry we develop a simple model of the marriage market with intra household bargaining in order to understand the incentives for brides parents to allocate the rights over the dowry between their daughter and her groom in doing so we clarify and formalize the dual role of dowry as a pre mortem bequest and as a market clearing price identified in the literature we use the model to shed light on the intriguing observation that in contrast to other rights women s rights over the dowry tend to deteriorate with development we show how marriage payments are utilized even when they are inefficient and how the marriage market mitigates changes in other dimensions of women s rights even to the point where women are worse off following a strengthening of such rights we also generate predictions for when marital transfers will disappear and highlight the importance of female human capital for the welfare of women

hedonic prices and implicit markets estimating demand and supply functions for differentiated products in choosing the level of quality to purchase the buyer of a differentiated product also chooses a point on the marginal price schedule for that product hence in general the demand functions for product characteristics cannot be consistently estimated by ordinary least squares market equilibrium results in a matching of characteristics of demanders and suppliers this matching restricts the use of buyer and seller characteristics as instruments when estimating demand and supply functions for product characteristics the paper develops these issues a stochastic structure for hedonic equilibrium models is then proposed identification results are presented and estimation procedures are outlined

cost and income based measures of human capital human capital is increasingly believed to play an important role in the growth process however adequately measuring its stock remains controversial in this paper three general approaches to measurement are identified cost based income based and educational stock based this survey focuses on the first two approaches and provides a critical review of the theories and their applications to data from a range of countries particular emphasis is placed upon the work of jorgenson and fraumeni 1989 1992 and some new results for new zealand based upon their approach are also presented

priceless the nonpecuniary benefits of schooling copyright 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 by the american economic association permission to make digital or hard copies of part or all of american economic association publications for personal or classroom use is granted without fee provided that copies are not distributed for profit or direct commercial advantage and that copies show this notice on the first page or initial screen of a display along with the full citation including the name of the author copyrights for components of this work owned by others than aea must be honored abstracting with credit is permitted the author has the right to republish post on servers redistribute to lists and use any component of this work in other works for others to do so requires prior specific permission and or a fee permissions may be requested from the american economic association administrative office by going to the contact us form and choosing copyright permissions request from the menu copyright 2016 aea

social norms and the enforcement of laws we examine the interplay between social norms and the enforcement of laws agents choose a behavior e g tax evasion production of low quality products corruption harassing behavior substance abuse etc and then are randomly matched with another agent there are complementarities in behaviors so that an agent s payoff decreases with the mismatch between her behavior and her partner s and with overall negative externalities created by the behavior of others a law is an upper bound cap on behavior a law breaker when detected pays a fine and has her behavior forced down to the level of the law equilibrium law breaking depends on social norms because detection relies at least in part on whistle blowing law abiding agents have an incentive to whistle blow on a law breaking partner because this reduces the mismatch with their partners behaviors as well as the negative externalities when laws are in conflict with norms and many agents are breaking the law each agent anticipates little whistle blowing and is more likely to also break the law tighter laws banning more behaviors greater fines and better public enforcement all have counteracting effects reducing behavior among law abiding individuals but increasing it among law breakers we show that laws that are in strong conflict with prevailing social norms may backfire whereas gradual tightening of laws can be more effective in influencing social norms and behavior