assessing market dominance abstract we propose a new measure to assess market dominance contrary to concentration measures such as the herfindahl hirschman index that characterizes the concentration of an industry our dominance measure suggests an approach that classifies when an individual firm has a dominant position in our measure the criterion for dominance is relaxed as the intensity of existing competition increases or as entry barriers are lowered we apply the dominance measure to a number of well known competition cases

sheepskin effects in the returns to education some previous discussions have dismissed screening theories of education partly on the ground that diploma years of education do not confer especially large earnings gains similarly most empirical research on earnings functions has assumed an absence of sheepskin effects we report evidence however of substantial and statistically significant sheepskin effects although this suggests that the previous dismissals of the screening hypothesis were premature our evidence of sheepskin effects is amenable to nonscreening interpretations also according to screening theories of education individuals with more schooling tend to earn more not because or at least not solely because schooling makes them more productive but rather because it credentiates them as more productive a frequently cited article by layard and psacharopoulos 1974 however dismissed the importance of the screening hypothesis on the grounds that several of its refutable predictions were not supported by available evidence one of these was the sheepskin prediction that wages will rise faster with extra years of education when the extra year also conveys a certificate after surveying a number of studies layard and psacharopoulous henceforth lp concluded that rates of return to dropouts are as high as to those who complete a course which refutes the sheepskin version of the screening hypothesis since publication of the lp paper an undergraduate labor economics textbook has cited lp s analysis of sheepskin effects as telling criticism of the screening hypothesis a prominent proponent of the screening hypothesis riley 1979 has accepted lp s summary of the empirical evidence but responded that some versions of the screening hypothesis do not imply sheepskin effects in the meantime the ongoing flood of empirical research on earnings functions typically has continued to treat the natural logarithm of the wage rate as a linear or occasionally quadratic function of years of education with no allowance for discontinuities in diploma years 2 the estimated rates of return used by lp were based on data that did not disaggregate dropouts earnings by how many years of school they had completed lp acknowledged we would have preferred to show the earnings gain associated with each year of the course including the year when it was successfully completed this note presents a reanalysis of sheepskin effects based on the type of data lp wished they had the results contain very strong evidence of sheepskin effects after all the next section describes our analysis and the following section summarizes and discusses our

a bayesian model of voting in juries abstract we model voting in juries as a game of incomplete information allowing jurors to receive a continuum of signals we characterize the unique symmetric equilibrium of the game and give a condition under which no asymmetric equilibria exist under unanimity rule we offer a condition under which unanimity rule exhibits a bias toward convicting the innocent regardless of the size of the jury and give an example showing that this bias can be reversed we prove a jury theorem for our general model as the size of the jury increases the probability of a mistaken judgment goes to zero for every voting rule except unanimity rule for unanimity rule the probability of making a mistake is bounded strictly above zero if and only if there do not exist arbitrarily strong signals of innocence our results explain the asymptotic inefficiency of unanimity rule in finite models and establishes the possibility of asymptotic efficiency a property that could emerge only in a continuous model journal of economic literature classification numbers c72 d72

a theory of voting equilibria a voting equilibrium arises when the voters in an electorate acting in accordance with both their preferences for the candidates and their perceptions of the relative chances of various pairs of candidates being in contention for victory generate an election result that justifies their perceptions voting equilibria always exist and the set of equilibria can vary substantially with the choice of voting system we compare equilibria under the plurality rule approval voting and the borda system we consider a candidate positioning game and find that the plurality rule imposes little restriction on the position of the winning candidate in three candidate races while approval voting leads to a winner positioned at the median of the voter distribution we contrast campaign activities intended to influence voter preferences with activities meant to influence only perceptions of candidate viability

gender differences in overeducation a test of the theory of differential overqualification there is little question that substantial labormarket differences exist between men and women among the most researched difference is the male female wage gap many different theories are used to explain why men earn more than women one possible reason is based on the limited geographic mobility of married women robert frank 1978 family mobility is a joint decision in which the needs of the husband and wife are balanced to maximize family welfare job motivated relocations are generally made to benefit the primary earner in the family this leads to a constrained job search for the secondary earner as he or she must search for a job in a limited geographic area since the husband is still the primary wage earner in many families the job search of the wife may suffer individuals who are tied to a certain area are labeled tied stayers while secondary earners who move for the benefit of the family are labeled tied movers jacob mincer 1978 the wages of a tied stayer or tied mover may not be substantially lower if the family lives in or moves to a large city if a large labor market has more vacancies the wife may locate a wage offer near the maximum she would find with a nationwide job search however being a tied stayer or tied mover can lower the wife s wage if the family lives in or moves to a small community a small labor market will reduce the likelihood of her finding a job that utilizes her skills as a result she may accept a job for which she is overqualified and thus earn a lower wage this hypothesized relationship between the likelihood of being overqualified and smsa size is termed differential overqualification frank 1978 and haim ofek and yesook merrill 1994 provide support for the theory of differential overqualification by finding that the malefemale wage gap is greater in smaller smsa s while the results are consistent with the existence of differential overqualification they may also result from other situations as well firms in small labor markets may use their monopsony power to keep wages down 2 local demand shocks are found to be a major source of wage variation both across and within local labor markets robert topel 1986 since large labor markets are generally more diversified a demand shock can have a substantial impact on immobile workers in small labor markets another reason for examining differential overqualification involves the assumption that there are more vacancies in large labor markets while there is little doubt that more vacancies exist in large labor markets there are also likely to be more people searching for jobs in large labor markets if the greater number of vacancies is offset by the larger number of searchers it is unclear whether women will be more likely to be overqualified in small labor markets instead of relying on wages to determine if differential overqualification exists we consider an explicit form of overqualification based on education

a nonequilibrium analysis of unanimity rule majority rule and pareto i introduction voting theory is important for understanding economics as well as politics international organizations vote on trade regulations legislatures vote on minimum wage and governments vote on the provision of public goods voting also affects industrial organization for instance limited partnerships may vote on the allocation of resources to various units and shareholders may vote on investment decisions carrera and richmond 1988 what voting rule best achieves pareto optimal outcomes in such cases in the absence of transactions costs it is widely believed that unanimity rule is the best voting rule for promoting pareto efficiency berggren 1996 buchanan and tullock 1962 mueller 2003 buchanan 1967 writes it is evident that unanimous consent is the political counterpart of the pareto criterion for optimality p 285 traditionally viewed unanimity rule guarantees more efficient outcomes than majority rule because unanimity rule only passes proposals that make everyone better off other voting rules like majority rule can pass proposals that make some individuals worse off one of the assumptions that is either explicit or implicit in the these studies is the assumption of rational proposals we define a proposal as rational if it helps maximize the proposer s utility at the end of the game in our analysis proposals are not rational instead they are generated either randomly or sincerely in a single dimensional voting model and evaluated by the pareto criterion or pareto optimality this produces two striking results with regard to pareto optimality first if proposal generation is random then majority rule is usually more likely to select a pareto optimal outcome than unanimity rule second if individuals propose their ideal points then majority rule always selects pareto optimal outcomes at least as well as unanimity rule considering all possible proposals as done in our random generation models has a long tradition in social choice literature arrow 1951 caplin and nalebuff 1988 niemi and weisberg 1968 riker 1982 sen 1979 it also has the advantage of modeling certain types of incomplete information modeling votes where bills are introduced for reasons other than making them pass see stewart 2001 pp 338 41 modeling exogenously generated proposals and for allowing mistakes by the proposer such foundational work should be of interest to those who relate unanimity rule to pareto principles in the study of public goods cornes and sandler 1996 lindahl 1967 political parties aldrich 1995 and legislative institutions colomer 2001 niou and ordeshook 1985 tsebelis 2002 to name a few ii previous studies perhaps the first in depth study of the relationship between unanimity rule and a pareto principle was buchanan and tullock s calculus of consent 1962 buchanan and tullock argued that if decision making costs were negligible unanimity rule would always be the most desirable k majority rule simply because it preserved the pareto principle p 88 although the exact pareto principle they had in mind is not entirely clear it seems that buchanan and tullock were arguing for the criteria of accepting a change from the status quo only if it lead to a pareto improvement otherwise the status quo should be preferred pp 92 93 sen 1979 p 25 1 mueller 2003 pp 138 and 140 41 further compared unanimity rule to majority rule and concluded that unanimity rule typically performs better in terms of the pareto criterion to illustrate his reasoning mueller describes a community voting on both the purchase of a new firehouse and the taxes needed to pay for it in a single bill if the decision was made under unanimity rule the distribution of taxes would be redefined until the firehouse benefited all otherwise the bill would not pass if the decision was made under majority rule a majority might distribute the taxes on a minority such that members of the majority would be net gainers and members of the minority would be net losers

unanimous rules in the laboratory we study the information aggregation properties of unanimous voting rules in the laboratory in line with theoretical predictions we find that majority rule with veto power dominates unanimity rule we also find that the strategic voting model is a fairly good predictor of subject behavior finally we exploit a framing effect to study how the presence of less sophisticated agents affects veto s welfare properties

wage changes and intrafirm job mobility over the business cycle two case studies despite the many reasons to expect sluggish wage adjustment recent evidence suggests that real wages are quite procyclical growing more rapidly during economic expansions than during recessions and that this wage procyclicality pertains even to workers who stay with the same employer one possible explanation for these findings is the old hypothesis that a portion of firms cyclical adjustment of labor costs is achieved not by changing the wages paid in particular jobs but by changing the quality of labor assigned to those jobs the authors analysis of interwar personnel data from the ford motor company and the a m byers company supports that hypothesis the authors recognize that case studies of only two firms cannot be definitive but they conclude that cyclicality in workers job assignments deserves further attention

downward nominal and real wage rigidity survey evidence from european firms downward nominal and real wage rigidity it has been well established that the wages of individual workers react little especially downwards to shocks that hit their employer this paper presents new evidence from a unique survey of firms across europe on the prevalence of downward wage rigidity in both real and nominal terms we analyse which firm level and institutional factors are associated with wage rigidity our results indicate that it is related to workforce composition at the establishment level in a manner that is consistent with related theoretical models e g efficiency wage theory insider outsider theory we also find that wage rigidity depends on the labour market institutional environment collective bargaining coverage is positively related with downward real wage rigidity measured on the basis of wage indexation downward nominal wage rigidity is positively associated with the extent of permanent contracts and this effect is stronger in countries with stricter employment protection regulations

an econometric analysis of the european commission s merger decisions abstract using a sample of 96 mergers notified to the european commission and logit regression techniques we analyse the commission s decision process we find that the probability of a phase 2 investigation and of a prohibition of the merger increases with the parties market shares the probabilities increase also when the commission finds high entry barriers or that the post merger market structure is conducive to collusion we do not find significant effects of political variables such as the nationality of the merging firms

the unanimous voting rule is not the political equivalent to market exchange the unanimous voting rule is often viewed as analogous to voluntary market ex change this paper demonstrates that when third party pecuniary effects exist this analogy breaks down because unlike markets unanimous voting requires compensation for these ef fects thus efficient market outcomes typically will be rejected by the unanimous voting rule even when transactions costs are low enough to make compensation feasible the political outcome under unanimity will differ from the market outcome the distributional effects of unanimity provide the incentive for people to substitute rent seeking behavior for productive activity and reduce the incentive for productive change providing additional reasons why a less than unanimous voting rule may be optimal when resources are to be allocated politically

disability job mismatch earnings and job satisfaction in australia we examine the relationship between disability job mismatch earnings and job satisfaction using panel estimation on data from the household income and labour dynamics in australia hilda survey 2001 08 while we do not find any relationship between work limiting disability and overskilling it appears that there is a positive relationship between work limiting disability and overeducation which is consistent with disability onset leading to downward occupational movement at least in relative terms we find a negative correlation between work limiting disability and both earnings and job satisfaction however there is only evidence of a causal relationship in terms of the latter where the impact of disability is found to be multifaceted

the incidence of and returns to overeducation in the uk the 1991 wave of the british household panel survey is used to examine the extent of and the returns to overeducation in the uk about 11 of the workers are overeducated while another 9 are undereducated for their job the results show that the allocation of female workers is more efficient than the allocation of males the probability of being overeducated decreases with work experience but increases with tenure overeducated workers earn less while undereducated workers earn more than correctly allocated workers both the hypothesis that productivity is fully embodied and the hypothesis that productivity is completely job determined are rejected by the data it is found that there are substantial wage gains obtainable from a more efficient allocation of skills over jobs

quantifying the effects from horizontal mergers in european competition policy this paper starts from a recent case to study how merger analysis in europe may be potentially improved starting from the geographic market definition in the merger decision we formulate and estimate an oligopoly model with differentiated products based on the estimates we compare several alternative market power tests a hypothetical market power test an actual market power test and a comparative market power test our comparison of these alternative tests illustrates that the recently introduced empirical techniques need not be in conflict with traditional policy practices in europe but should be seen as a natural extension of commonly accepted principles furthermore we emphasize the importance of our dynamic comparative market power test in the european context according to this test the relevant point of comparison when assessing a merger is not the status quo but rather a relevant alternative merger scenario that is likely to happen in the event the merger is rejected in a european context the choice is often to accept a sequence of regionally based mergers or rather a sequence of pan european mergers finally we also emphasize the importance of constructing confidence intervals when computing the predicted merger effects especially if one is interested in testing the hypothesis that a merger has no effects

information aggregation and turnout in proportional representation a laboratory experiment abstract this paper documents a laboratory experiment that analyzes voter participation in common interest proportional representation pr elections comparing this with majority rule consistent with theoretical predictions poorly informed voters in either system abstain from voting thereby shifting weight to those who are better informed a dilution problem makes mistakes especially costly under pr so abstention is higher in pr in contrast with private interest environments and welfare is lower deviations from nash equilibrium predictions can be accommodated by a logit version of quantal response equilibrium qre which allows for voter mistakes

fiscal policy and financial market movements abstract this paper estimates fiscal policy reaction function in order to investigate the links between financial market movements and fiscal policy outcomes an increase in asset prices affects in a positive and significant manner primary balances with the response reflecting both an increase in government revenues and a fall in government spending the most important impact on fiscal balances is due to changes in residential property prices changes in equity and commercial property prices are also important determinants of fiscal balances our findings suggest that the steepening of the slope of the yield curve contributes to expenditure based fiscal discipline

educational mismatch and promotions to managerial positions a test of the career mobility theory abstractcareer mobility theory suggests that given a certain occupation schooling improves upward mobility in terms of promotion and wage growth we are the first to test the implications of this theory for over and undereducation by means of direct information about promotions to managerial positions using german administrative data entailing an employer reported and hence objective measure of educational requirements we show that overeducated workers are indeed more likely to be promoted and that this career mobility advantage is more pronounced in the early stages of their working lives by contrast undereducated workers are less likely to be promoted to managerial positions moreover in terms of wage growth while overeducated workers benefit more undereducated workers benefit less from promotions than their well matched educational peers altogether these findings strongly support the career mobility theory furthermore by differentiating between internal and external promotions we prov

the economics of market dominance in this collection of essays industrial economists offer an in depth examination of dominant firms in competitive markets and the actions of authorities against such firms the volume opens with an essay by the editors which outlines the development of policy in different countries and gives an account of the main issues in the debate the contributors interpret recent policy developments in the united states britain and europe employ new aspects of oligopoly theory to challenge conventional wisdom about the detection of collusive pricing and defend profitability measurement as a useful tool for monopoly investigations other essays discuss the relevance of the new industrial economics and the persistence of monopoly firms

measuring over education previous work on over education has assumed homogeneity of workers and jobs relaxing these assumptions we find that over educated workers have lower education credentials than matched graduates among the over educated graduates we distinguish between the apparently over educated workers who have similar unobserved skills as matched graduates and the genuinely over educated workers who have a much lower skill endowment over education is associated with a pay penalty of 5 11 for apparently over educated workers compared with matched graduates and of 22 26 for the genuinely over educated over education originates from the lack of skills of graduates this should be taken into consideration in the current debate on the future of higher education in the uk

cyclical productivity and the workweek of capital standard specifications of the production function assume that an increase in labor given the stock of physical capital will reduce the capital labor ratio since the stock of physical capital is quasi fixed the elasticity of output with respect to labor should be less than 1 as long as there are constant returns to scale however empirical studies of productivity typically find short run increasing returns to labor but the effective stock of capital should not be regarded as fixed if when labor increases it goes onto a previously inoperative shift labor that works the late shift will have at least as much capital as labor working days hence for increases in labor that are accompanied by increases in the workweek of capital there is no presumption of diminishing marginal product of labor this paper describes briefly a data set that provides a direct measure of the workweek of capital and then investigates its role in cyclical productivity it finds that much of the apparent cyclicality of total factor productivity is accounted for by variation in the workweek of capital

cyclical factor utilization abstract we introduce procyclical labor and capital utilization as well as costs of rapidly increasing employment into a business cycle model plausible variations in factor utilization enable us to explain observed variability of real gnp with considerably smaller economy wide disturbances the costs of adjustment create very interesting and realistic lead and lag relationships employment does not peak until a full quarter after output workweeks effort capital utilization and productivity all sharply lead the business cycle

wage posting evidence from job ads recent studies of search theory examine how employers use a wage setting mechanism either by bargaining or through the posting of a non negotiable wage offer in a job ad to facilitate search we contribute to this literature by examining wage posting in job ads in the us the uk and slovenia despite considerable differences in the incidence of wage posting employers in all three markets are less likely to post a wage offer when searching for skilled workers the decision on whether or not to post a wage offer is only weakly related to the outcomes of employers search des etudes recentes de la theorie de la recherche d employes examinent comment les employeurs utilisent le mecanisme de determination des salaires soit par marchandage soit en mentionnant une offre de salaire non negociable dans l annonce de l offre d emploi pour faciliter le processus de recherche on examine les salaires mentionnes dans les annonces d offre d emplois aux etats unis au royaume uni et en slovenie malgre des differences considerables dans l incidence de l annonce du salaire les employeurs dans ces trois marches sont moins susceptibles d annoncer un salaire quand ils cherchent des travailleurs qualifies la decision d annoncer un salaire ou non est seulement faiblement reliee aux resultats de la recherche des employeurs

minority voting rights can maximize majority welfare i use condorcet s information aggregation model to show that sometimes the best possible decision procedure for the majority allows the minority to enforce its favored outcome even when overruled by a majority special voting power gives the minority an incentive to participate meaningfully and more participation means more information is aggregated which makes the majority better off this result can be understood as a mathematical corroboration of lani guinier s arguments that voting procedures can be designed to encourage minority participation benefitting everyone

mismatch in the spanish labor market overeducation the objective of this article is to explain the job match which is assessed by comparing attained education and job required education as reported by workers we frame our empirical work according to the occupational mobility theory using a cross section of workers from a representative survey of the spanish labor force we consider overeducated workers to be those who report that the level of education their jobs require is below the level of education they have attained our results indicate that overeducated workers have less experience decreased on thejob training and higher turnover than other comparable workers we also observe an improvement in the job match over age and mobility

labor hoarding and the business cycle the puzzle of procyclical labor productivity occupies an important position in the debate over real business cycle theory real business cycle proponents attribute it to procyclical technology shocks opponents to labor hoarding retention during recessions of workers not needed for current production thus downwardly biasing productivity measurements this paper uses a model featuring heterogeneous industries to illustrate that the conventional presumption of countercyclical aggregate labor hoarding generating procyclical productivity measurements is not necessarily well grounded in theory copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the impact of surplus schooling on productivity and earnings this article examines the impact of surplus schooling on individual productivity and earnings it proposes a model that divides workers education into two components education that is required and thus fully utilized in the job and education that exceeds the amount required and thus may be underutilized in the job the model is tested with data from the 1969 1973 and 1977 quality of working life surveys quinn and staines 1979 required schooling for each occupation is derived from estimates by job incumbents and by the dictionary of occupational titles the results show thqt surplus or underutilized education is rewarded at a lower rate than required education with the actual return dependent on the type of job

voting behavior and information aggregation in elections with private information we analyze two candidate elections in which voters are uncertain about the realization of a state variable that affects the utility of all voters each voter has noisy private information about the state variable we show that the fraction of voters whose vote depends on their private information goes to zero as the size of the electorate goes to infinity nevertheless elections fully aggregate information in the sense that the chosen candidate would not change if all private information were common knowledge equilibrium voting behavior is to a large extent determined by the electoral rule i e if a candidate is required to get at least x percent of the vote in order to win the election then in equilibrium this candidate gets very close to x percent of the vote with probability close to one finally if the distribution from which preferences are drawn is uncertain then elections will generally not satisfy full information equivalence and the fraction of voters who take informative action does not converge to zero

divided majority and information aggregation theory and experiment this paper studies theoretically and experimentally the properties of plurality and approval voting when a majority gets divided by information imperfections the majority faces two challenges aggregating information to select the best majority candidate and coordinating to defeat the minority candidate under plurality the majority cannot achieve both goals at once under approval voting it can welfare is strictly higher because some voters approve of both majority alternatives in the laboratory we find i strong evidence of strategic voting and ii superiority of approval voting over plurality finally subject behavior suggests the need to study equilibria in asymmetric strategies

does education expansion increase intergenerational mobility education expansion may lead to over education where the social connections of parents may exert more significant influence on the return to education of children with the assumption of a positive correlation between return on human capital and parental income in the presence of over education we show that i the expansion of education may cause horizontal inequity in education opportunities and inefficiency in human capital accumulation ii the positive correlation between return on human capital and parental income causes a more persistent intergenerational immobility iii an expansion of education especially higher education leads to more persistent intergenerational immobility

organizational costs sticky equilibria and critical levels of concentration jn the thirty years since joe bain s seminal i study 1951 many economists have attempted to determine whether or not there exists a critical level of market concentration at which a discontinuity occurs in the relation between industry concentration and profitability in this paper we develop and test a more general model based on organizational costs which posits the existence of two critical levels of market concentration one at which an existing cooperative equilibrium will break down as concentration declines and one at which a cooperative equilibrium will become attainable as concentration increases we show that the standard model of the critical level of concentration can be regarded as a special case of our more general model and also that the more general model attains a statistically superior fit in section ii we briefly review some of the previous literature in this area we develop our model in section iii and specify and estimate it in sections iv and v in sections vi and vii we summarize and interpret our results and present some policy implications of our findings

promotions and wage growth this article presents evidence that internal mobility defined as a promotion or other position change is an important source of wage growth it accounts for approximately 15 of wage growth over the life cycle for white and black men but less for women the incidence of promotions and other position changes appears tied to the wage level better paid workers are more likely to be promoted the life cycle incidence of internal mobility looks similar to that for conventionally defined job mobility most moves are made early in the career mobility declines both with time in position and with experience

the changing labor market position of canadian immigrants this paper uses pooled 1971 1981 and 1986 canadian census data to evaluate the extent to which 1 the earnings of canadian immigrants at the time of immigration fall short of the earnings of comparable canadian born individuals and 2 immigrants earnings grow more rapidly over time than those of the canadian born variations in the labour market assimilation of immigrants according to their gender and country of origin are also analysed the results suggest that recent immigrant cohorts have had more difficulty being assimilated into the canadian labour market than earlier ones an apparent consequence of recent changes in canadian immigration policy labour market discrimination against visible minorities and the prolonged recession of the early 1980s summary in fre excerpt

ability matters effects of youth labor market opportunities on long term labor market outcomes utilizing registry data on cognitive ability tests for all norwegian males born between 1962 and 1973 i study whether labor market conditions at the age of graduation have differential effects on earnings and employment for different ability groups i find that low ability males are more vulnerable to local business cycles at the expected time of labor market entry in particular i demonstrate that low ability males suffer larger long term earnings losses than the rest of the population this article is protected by copyright all rights reserved

university quality and labour market outcomes this paper uses proxies for university quality derived from the research assessment exercise and the teaching quality assurance agency to assess the impact of university quality on the labour market outcomes of a cohort of uk graduates the impacts on job quality and earnings were mainly limited to graduates in particular disciplines or those obtaining poor degrees from good universities the results suggest that after controlling for pre entry qualifications labour market outcomes for most graduates depended more on the subject studied and degree classification awarded than on the university attended

manipulated electorates and information aggregation we study information aggregation with a biased election organizer who recruits voters at some cost voters are symmetric ex ante and prefer policy a in state a and policy b in state b but the organizer prefers policy a regardless of the state each recruited voter observes a private signal that is imperfectly informative about the unknown state but does not learn the size of the electorate in contrast to existing results for large elections there are equilibria in which information aggregation fails as the voter recruitment cost disappears a perfectly informed organizer can ensure that policy a is implemented independent of the state by appropriately choosing the number of recruited voters in each state

deliberation preference uncertainty and voting rules a deliberative committee is a group of at least two individuals who first debate about what alternative to choose prior to these same individuals voting to determine the choice we argue first that uncertainty about individuals private preferences is necessary for full information sharing and second demonstrate in a very general setting that the condition under which unanimity can support full information revelation in debate amounts to it being common knowledge that all committee members invariably share identical preferences over the alternatives it follows that if ever there exists an equilibrium with fully revealing debate under unanimity rule there exists an equilibrium with fully revealing debate under any voting rule moreover the converse is not true of majority rule if there is uncertainty about individuals preferences

get rid of unanimity rule the superiority of majority rules with veto power we study unanimous decision making under incomplete information we argue that unanimous decision rules are not all equivalent we show that majority rules with veto power are i pareto superior to commonly used unanimous rules and ii ex ante efficient in a broad class of situations

cohort effects in promotions and wages evidence from sweden and the united states abstract this paper studies the long term effects of the business cycle on workers future promotions and wages using the swedish employer employee matched data we find that a cohort of workers entering the labor market during a boom gets promoted faster and reaches higher ranks this procyclical promotion cohort effect persists even after controlling for workers initial jobs and explains at least half of the wage cohort effects that previous studies have focused on we repeat the same analyses using personnel records from a single u s company and obtain the same qualitative results

horizontal mismatch between employment and field of education evidence from a systematic literature review this paper provides a systematic review of the growing literature on the poor match between employees field degree and the job requirements also referred to as horizontal mismatch we identify the different definitions used in the literature and find that each measure of horizontal mismatch yields substantially different incidence rates we discuss the validity of the different measures and conclude that a more uniform definition of horizontal mismatch is needed the likelihood of horizontal mismatch is among other things determined by the extent to which employees possess general skills as opposed to occupation specific skills and it appears to be more frequently present among older workers compared to well matched employees horizontally mismatched workers generally incur a wage penalty are less satisfied with their jobs and are more likely to regret their study programme the ensuing findings offer guidance to prevent horizontal mismatch as well as a roadmap for future research

factor hoarding and the propagation of business cycles shocks this paper analyzes the role of variable capital utilization rates in propagating shocks over the business cycle to this end we formulate and estimate an equilibrium business cycle model in which cyclical capital utilization rates are viewed as a form of factor hoarding we find that variable capital utilization rates substantially magnify and propagate the impact of shocks to agents environments the strength of these propagation effects is evident in the dynamic response functions of various economy wide aggregates to shocks in agents environments in the statistics that we construct to summarize the strength of the propagation mechanisms in the model and in the volatility of exogenous technology shocks needed to explain the observed variability in aggregate u s output other authors have argued that standard real business cycle rbc models fail to account for certain features of the data because they do not embody quantitatively important propagation mechanisms these features include the observed positive serial correlation in the growth rate of output the shape of the spectrum of the growth rate of real output and the correlation between the forecastable component of real output and various other economic aggregates allowing for variable capital utilization rates substantially improves the ability of the model to account for these features of the data

voting and vetoing the consequences of veto power in committees is analyzed using the appro ach of noncooperative bargaining theory it is first shown that in equilibrium nonveto players do not share in the benefits gained by the decision making of the committee that is in every equilibrium outcome of the bargaining game nonveto players earn zero some measures for reducing the excessive power of veto members in committees are analyzed specifically i study the effects of imposing a deadline on negotiations and of expanding the committee by increasing the number of nonveto players quantitative results are given for the case of the un security council

the social and political consequences of overeducation this study employs national survey data to estimate the extent of overeducation in the u s labor force and its impact on a variety of worker attitudes estimates are made of the extent of overeducation and its distribution among different categories of workers according to sex race age and class background the effects of overeducation are examined in four areas of worker attitudes job satisfaction political leftism political alienation and stratification ideology evidence is found of significant effects of overeducation on job satisfaction and several aspects of stratification ideology the magnitude of these effects is small however and they are concentrated almost exclusively among very highly overeducated workers no evidence is found of generalized political effects of overeducation either in the form of increased political leftism or in the form of increased political alienation these findings fail to support the common prediction of major political repercussions of overeducation and suggest the likelihood of alternative forms of adaptation among overeducated workers

the effects of macroeconomic conditions at graduation on overeducation this article shows that unfavorable economic conditions at graduation decrease the likelihood of a good job worker match over a worker s subsequent career mismatch is quantified in terms of overeducation by both industry and occupation the german socio economic panel and region level unemployment rates from 1994 to 2012 are used instrumental variables estimates account for endogenous graduation timing a single percentage point increase in regional unemployment causes an increase in the probability of overeducation of 1 6 1 7 percentage points for university graduates effects for technical tertiary education and apprenticeship graduates are smaller labor market entry conditions affect workers for up to 9 years after graduation jel j23 j22 e32 i23

real wage cyclicality of job stayers within company job movers and between company job movers using the british new earnings survey panel data nespd for the period 1975 to 2001 we estimate the wage cyclicality of job stayers those remaining within single jobs in a given company within company job movers and between company job movers we also examine how the proportion of internal and external job moves varies over the business cycle we find that the wages of internal movers are slightly more procyclical and wages of external movers considerably more procyclical than those of stayers notwithstanding a decomposition shows that in britain wage cyclicality arises almost entirely from the procyclicality of wages for job stayers with across and within firm mobility playing a lesser role thus there is little evidence for rigid wage models that imply that employers use changes in job titles as a means of adjusting wages to the business cycle we also show that the distinctions between private and public sectors and between workers covered and uncovered by collective agreements have important impacts on the wage estimates of both stayers and movers

the cyclicality of real wages within employer employee matches using data from the panel study of income dynamics the author examines the cyclicality of wages within employer employee matches for the years 1970 91 recent research on wage cyclicality has suggested that wages are very procyclical tending to rise and fall with economic upturns and downturns even for workers who remain with the same employer the author finds however that the evidence for wage procyclicality within the matches he examines is rather weak except for the small group of workers who were paid by piece rate or commissions despite having acyclical wage rates men who were paid hourly had earnings movements that were very procyclical salaries exhibited little cyclicality but salaried workers who had income sources from bonuses commissions or overtime had procyclical earnings the results suggest that the increasing prevalence of incentive based pay will increase the procyclicality of wages within matches

interpreting panel data on job tenure tenure responses in the panel study of income dynamics psid and the national longitudinal surveys are often inconsistent with calendar time these inconsistencies pose special problems in the psid because job changes cannot be identified directly so researchers must infer them from error ridden tenure data we use alternative rules for partitioning psid data into jobs and then estimate several wage and mobility models to assess the sensitivity of parameter estimates to the partitioning method we also assess the importance of replacing raw tenure data with imputed measures that are internally consistent

the internal economics of the firm evidence from personnel data we analyze twenty years of personnel data from one firm the hierarchical structure is quite simple and stable career movements suggest that the employee s rate of learning and the firm s learning about ability are important there are promotion fast tracks exit rates vary little with tenure or salary the firm has personnel policies like those described in the internal labor markets literature although several theoretical preconditions for ilms such as ports of entry and exit are lacking job levels are important to compensation but there is also substantial individual variation in pay within levels our companion paper in this issue explores the wage policy of this firm

the relationship between unions and job satisfaction this paper examines the assoication between canadian unions and their member attitudes data on job satisfaction indicate that unionized workers in canada are less happy with the quality of their jobs than non union workers the former however are more satisfied with their financial compensation and job security than non members

optimal mismatch and promotions i introduction a substantial proportion of workers are employed in jobs for which they appear to be either overqualified or underqualified for instance using data from the panel study of income dynamics sicherman 1991 finds that 40 percent of his sample are overeducated and another 16 percent are undereducated rumberger 1987 reports similar values using data from the quality of employment surveys other studies which find substantial education mismatch include duncan and hoffman 1981 verdugo and verdugo 1989 and hersch 1991 and evidence that a single firm hires both under and overqualified workers is presented here this paper provides an explanation for why firms hire both overqualified and underqualified workers firms hire overqualified workers because these workers require less training for their initial positions such workers also form a pool from which promotions are made which lowers hiring costs for higher level positions within the firm workers accept positions for which they are overqualified to enhance their probability of promotion and because of search and mobility costs but if they fail to be promoted to a position that better matches their qualifications they are more likely to quit firms hire underqualified workers despite their longer training requirement since such workers are less likely to quit and provide continuity of the labor force over time thus contrary to job matching arguments that would explain these hires as a result of imperfect information hiring of seemingly mismatched workers is optimal and these matches are made with perfect information the model developed in this paper yields three testable hypotheses 1 training time for entry level jobs is inversely related to overqualification at the time of hire 2 workers who are overqualified on their current job are those who have failed to be promoted to a job which better matches their qualifications and such workers are more likely to quit and 3 workers overqualified at time of hire are more likely to be promoted to test these hypotheses i use new data collected for this purpose previous empirical research such as that cited above was restricted by data availability to examining only the match between education and the worker s current job thus the quality of the match with the worker s initial job and the match between worker qualifications other than education has gone unexplored however various worker characteristics in addition to education are often substituted for each other in determining a worker s qualification for a job thus i examine additional qualifications including the match between the worker s experience level of previous job and use of skills information on the match between the worker s qualifications and those required for the initial job with the employer is particularly important since entry level qualifications determine training time for the initial job as well as the likelihood of promotion further individual specific training time for the initial job is necessary but typically not available since data sets providing information on training such as the panel study of income dynamics and quality of employment surveys request information on training time for the average worker and not for the individual worker the data set reveals several interesting statistics qualification mismatch at hire is fairly common for this firm 29 percent of the sample report themselves overqualified for their first job with the firm while 13 percent report themselves as underqualified lateral intra firm mobility is common and occurs far more frequently than promotions workers in the sample average 1 3 promotions but four different jobs with the employer this suggests that the job matching process occurs not only by turnover but through intrafirm mobility consistent with the assumptions and implications of the model the empirical results indicate that workers who are overqualified at hire receive less training and more promotions and that workers overqualified for their current job are more likely to quit

establishment size job satisfaction and the structure of work this paper empirically investigates a the relationship between establishment size and the degree of flexibility in the work environment and b the extent to which establishment size differences in workers satisfaction with their jobs can be accounted for by differences in their work environment the main findings are that large establishments do organize production in a less flexible fashion than do smaller establishments and that observed lower levels of job satisfaction in larger establishments net of wage and fringe benefit effects can largely be explained by the inflexibility in the work environment

graduate overeducation as a sheepskin effect evidence from northern ireland this article examines the nature of graduate overeducation amongst a group of applicants to a graduate conversion programme it was found that while a substantial proportion of earnings differentials were associated with a mismatch between individual skill levels and job requirements wage gaps were still likely to occur should such mismatches be eliminated the evidence suggests that graduate wage levels are heavily related to sheepskin effects associated with the attainment of jobs with graduate level entry requirements these sheepskin effects suggest that the process of job categorization is arbitrary in nature with stated job requirements somewhat independent of actual skill requirements the analysis suggests that graduate overeduction is better understood within the context of both skill and categorization mismatches as opposed to skill matches alone

necessary and sufficient conditions in merger control the use of hhi and threshold value this article considers two coarse measures applicable to antitrust policy one of market concentration the herfindahl hirschman index hhi and one of market dominance threshold value calculations of threshold value are compared to hhi values to determine when thresholds might be of specific use in merger cases many scenarios which satisfy the threshold conditions indicating a dominant firm exists are consistent with high hhi numbers such that current us department of justice and european commission guidelines based on hhis for merger concerns will have been met it is suggested as a rule of thumb that hhis be used as necessary conditions and threshold value be considered sufficient conditions for further case review

double penalty in returns to education informality and educational mismatch in the colombian labour market abstractthis article examines the returns to education taking into consideration the existence of educational mismatches in the formal and informal employment of a developing country results show that the returns of surplus required and deficit years of schooling are different in the two sectors moreover they suggest that these returns vary along the wage distribution and that the pattern of variation differs for formal and informal workers in particular informal workers face not only lower returns to their education but suffer a second penalty associated with educational mismatches that puts them at a greater disadvantage compare to their formal counterparts

the swing voter s curse in the laboratory this paper reports the first laboratory study of the swing voter s curse and provides insights on the larger theoretical and empirical literature on pivotal voter models our experiment controls for different information levels of voters as well as the size of the electorate the distribution of preferences and other theoretically relevant parameters the design varies the share of partisan voters and the prior belief about a payoff relevant state of the world our results support the equilibrium predictions of the feddersen pesendorfer model and clearly reject the notion that voters in the laboratory use naive decision theoretic strategies the voters act as if they are aware of the swing voter s curse and adjust their behavior to compensate while the compensation is not complete and there is some heterogeneity in individual behavior we find that aggregate outcomes such as efficiency turnout and margin of victory closely track the theoretical predictions

committee design with endogenous information this paper is concerned with the arrangements for collective decision making in a world where agents must be motivated to acquire information the analysis identifies some basic forces shaping the design of panels of decision makers referees managers jurors etc in situations where decision makers are useful only in so far as they expend some effort to gain information about the alternatives at hand these situations are common one being the refereeing process where an editor requires the opinions of a number of experts who must read the paper acquire information in order to give an opinion as to publication analogously in committees which screen applicants to a programme the committee members must gain information about the applicant s qualifications and likelihood of success in order to evaluate whether to admit him her finally in trial juries it is important that jurors pay attention to the evidence in order to make an informed judgement 1 we focus on environments where information is a public good in the sense that the social benefits of one decision maker acquiring information exceed the private benefits a good mechanism in this environment must not only aggregate information efficiently but also induce the decision makers to acquire information we analyse the design of voting mechanisms our problem is to choose two parameters which determine both the incentive to acquire information and the efficiency with which information is aggregated the first parameter is the size of the decision making unit the number of committee members the second is the plurality required to overturn the status quo the voting rule our main result is this a voting rule that requires a large plurality in the extreme unanimity to upset the status quo can be optimal only if the information available to each committee member is sufficiently accurate when individual information is noisy the drawback

would rational voters acquire costly information abstract we analyze an election in which voters are uncertain about which of two alternatives is better for them voters can acquire some costly information about the alternatives in agreement with downs s rational ignorance hypothesis individual investment in political information declines to zero as the number of voters increases however if the marginal cost of information is near zero for nearly irrelevant information there is a sequence of equilibria such that the election outcome is likely to correspond to the interests of the majority for arbitrarily large numbers of voters thus rationally ignorant voters are consistent with a well informed electorate

overeducation undereducation and asymmetric information in occupational mobility due to short term asymmetric information overeducated and undereducated workers are shown to have different optimal strategies in seeking upward occupational mobility into their next positions undereducated workers typically have other human capital strengths but these strengths are not marketable to outsiders overeducated workers typically have other human capital weaknesses that are not apparent to outsiders while their excess schooling is marketable in labour markets with dynamic asymmetric information this article presents empirical evidence showing that job tenure increases the probability of upward occupational mobility more if individuals are undereducated moreover the probability of finding upward occupational mobility is increased by overeducated workers engaging in firm switching this article also validates prior empirical studies finding overeducated workers more likely to self report engaging in firm switching activities and more likely to experience upward occupational mobility than o

a comparison of the cyclical behavior of union and nonunion wages in the united states this paper presents an extensive analysis of the behavior of union and nonunion wages over the business cycle using quasi panels developed from the current population survey in an attempt to resolve or reconcile competing claims about the cyclical behavior of union and nonunion wages union wages were roughly as procyclical as nonunion wages were prior to the early 1980s substantial reductions in union wage procyclicality since then are associated with reductions in the procyclical exercise of bargaining power

contracts job experience and cyclical labor market adjustments longitudinal estimates of the variability of individual wages hours and weeks worked over the course of changing demand states are provided for all workers generally and for workers of varied levels of job experience emphasis is placed on that part of job experience represented as years on current job a commonly used proxy for the magnitude of firm specific skills interpretation of resulting estimates in the context of the labor market contracting literature is attempted generally significant procyclical patterns are found for real weekly wages weekly hours and weeks worked the extent of weekly wage variability is much greater than is generally suggested in the literature furthermore workers with greater tenure exhibit greater cyclical wage and hours variability and less weeks variability finally empirical distinctions are drawn separately for white collar and blue collar as well as union and nonunion workers

task assignment over the business cycle in this article i evaluate the hypothesis that firms respond to negative demand shocks by assigning workers to tasks that require less skill than the tasks they normally carry out using changes in employment in state industry cells as a measure of demand conditions facing individual firms i provide evidence in favor of the hypothesis furthermore the skill requirements of the tasks carried out by workers are procyclical the results are consistent with a specific capital model where employers move workers between tasks so that layoffs are concentrated on workers with low levels of firm specific human capital

overeducation in the labor market this article examines the reasons for the observed discrepancy between workers actual and required levels of schooling and the resulting differences in returns to schooling overeducated workers are found to be younger and to have lower amounts of on the job training than workers with the required level of schooling they also have higher rates of firm and occupational mobility characterized by movement of higher level occupations the findings suggest that overeducation can be explained by the trade off between schooling and other components of human capital and by the mobility patterns of overeducated workers

overeducation in the labour market abstract this paper presents a review of the literature on overeducation the paper assesses the consistency of overeducation within the context of a number of theoretical frameworks including human capital theory hct and assignment theory the analysis goes on to discuss the various measurement controversies associated with the study of overeducation in order to provide an assessment of the extent to which the impacts of the phenomenon represent an economic reality as opposed to a statistical artefact after reviewing the literature it is concluded that the impacts of overeducation are likely to be non trivial and that the phenomenon may potentially be costly to individuals and firms as well as the economy more generally the existence of overeducation also raises some doubts with respect to the validity of some of the central assumptions and predictions of hct that are unlikely to be fully explained by gaps in the standard wage equation framework

the impact of surplus schooling on earnings some additional findings this paper examines the impact of overeducation or surplus schooling on earnings overeducated workers are defined as those with educational attainments substantially above the mean for their specific occupations two models are estimated using data from the 1980 census though our models data and measure of overeducation are different from those used by rumberger 1987 our results are similar our results show that overeducated workers often earn less than their adequately educated and undereducated counterparts

i m too clever for this job a bivariate probit analysis on overeducation and job satisfaction in australia using data from the first wave of the household income and labour dynamics in australia data set this article establishes an empirical relationship between overeducation and workplace satisfaction for australian adult males in the labour force in a departure from much of the existing literature both univariate and bivariate probit models are used to account for potential unobserved heterogeneity we find that estimates in the univariate probit models are positively biased for three of the six measures of workplace satisfaction studied this suggests that consideration should be given to the use of bivariate models when studying the determinants of workplace satisfaction and overeducation results show although levels of satisfaction remain high that across all measures of workplace satisfaction overeducated workers are less satisfied compared to their nonovereducated counterparts this intimates that satisfaction levels should be viewed from a relative rather than an absolute perspective pleasure in the job puts perfection in the work aristotle 384bc 322bc

implicit contracts a survey 7mplicit contracts resolve the distribution of uncertainty and utilization of specific human capital between risk averse workers and less risk averse firms incomplete contracts are required to yield involuntary layoffs in contract markets otherwise contracts are efficient and pareto optimal by construction there is a close relation between contract theory and neoclassical labor market theory contracts smooth consumption but increase the volatility of labor supply and labor utilization to demand disturbances because contractural insurance eliminates the income effects of socially diversifiable risks this result is similar to the intertemporal substitution hypothesis however the price mechanism in a contract is substantially different contracts embody a nonlinear two part pricing scheme the lump sum part allocates the income consumption consequences of risks and the marginal pricing part allocates production and labor utilization this implicit pricing mechanism is in all respects flexible though the observed average hourly wage combines both parts and may give the outward appearanceof rigidity furthermore the observed average wage rate in a contract does not reflect marginal conditions necessary for structural econometric estimation indivisibilities appear necessary to account for the split between work sharing and layoffs contracts with private information are also considered in the nonlinear pricing context this abstract was borrowed from another version of this item

heterogeneous workers and occupations inequality unemployment and crowding out this article attempts to determine the factors behind the cyclical behavior of the skill premium using the current population survey outgoing rotation group the premium is found uncorrelated with contemporaneous output and lags the business cycle to account for this observation the article develops a framework that features search frictions agents are either high or low educated and firms post two types of vacancies the complex which can be matched with the high educated and the simple which can be matched with the high and the low educated on the job search for a complex occupation is undertaken by the high educated in simple occupations an aggregate technological shock induces firms to increase their posting of simple and complex vacancies as complex vacancies are more costly to create than simple ones the increase in the former lags that of the latter as the number of complex vacancies increases with a lag on the job search intensity increases on the expense of the hours of work of the high educated in simple occupations on the other hand the total hours of the high educated in complex occupations increases this lagged cyclical increase in the labor input of the high educated in complex occupations causes the skill premium to increase with a lag as well

strategic voting over strategic proposals prior research on strategic voting has reached the conclusion that unanimity rule is uniquely bad it results in destruction of information and hence makes voters worse off we show that this conclusion depends critically on the assumption that the issue being voted on is exogenous that is independent of the voting rule used we depart from the existing literature by endogenizing the proposal that is put to a vote and establish that under many circumstances unanimity rule makes voters better off moreover in some cases unanimity rule also makes the proposer better off even when he has diametrically opposing preferences in this case unanimity is the pareto dominant voting rule voters prefer unanimity rule because it induces the proposing individual to make a more attractive proposal the proposing individual prefers unanimity rule because the acceptance probabilities for moderate proposals are higher we apply our results to jury trials and debt restructuring

overeducation undereducation and the british labour market this paper addresses the issue of overeducation and undereducation using for the first time a british dataset which contains explicit information on the level of required education to enter a job across the generality of occupations three key issues within the overeducation literature are addressed first what determines the existence of over and undereducation and to what extent are over and undereducation substitutes for experience tenure and training second to what extent are over and undereducation temporary or permanent phenomena third what are the returns to over and undereducation and do certain stylized facts discovered for the us and a number of european countries hold for britain

quantitative overeducation and cooperative game theory abstract overeducation is an empirical phenomenon in two dimensions qualitative and quantitative quantitative overeducation addresses a firm s decision to train more employees than needed one explanation for this decision is modeled in this article that of classical bargaining power the main idea is that after investing in human capital the employer uses employees outside the firm to raise the bargaining power when he negotiates with the employees within the firm on how to share the profit of the firm to model this we use cooperative game theory for the first time the labor market is modeled by a coalition structure and the payoffs are determined by the value casajus 2009

the swing voter s curse the authors analyze two candidate elections in which some voters are uncertain about the realization of a state variable that affects the utility of all voters they demonstrate the existence of a swing voter s curse less informed indifferent voters strictly prefer to abstain rather than vote for either candidate even when voting is costless the swing voter s curse leads to the equilibrium result that a substantial fraction of the electorate will abstain even though all abstainers strictly prefer voting for one candidate over voting for another copyright 1996 by american economic association

the role of spatial and skill mismatches explaining long term unemployment in paris in the paris region one can observe simultaneously the coexistence of a large and dynamic job pool with long lasting periods of unemployment this paradox reveals the importance of skill and spati

dynamic collective choice with endogenous status quo we analyze a bargaining situation in which preferences evolve over time and the previous agreement becomes the next status quo the endogeneity of the status quo exacerbates the players conflict of interest players disagree more often than under exogenous status quo this leads to inefficiencies and status quo inertia under certain conditions the negotiations can come to a complete gridlock players never reach an agreement gridlock can occur between players with arbitrarily similar preferences provided they are sufficiently patient in legislative settings our model predicts polarization and explains why legislators may fail to react promptly to economic shocks

aggregating information by voting the wisdom of the experts versus the wisdom of the masses this article analyzes participation and information aggregation in a common value election with continuous private signals in equilibrium some citizens ignore their private information and abstain from voting in deference to those with higher quality signals even as the number of highly informed peers grows large however citizens with only moderate expertise continue voting so that voter participation remains at realistic levels e g 50 to 60 percent for simple examples the precise level of voter turnout along with the margin of victory are determined by the distribution of expertise improving a voter s information makes her more willing to vote consistent with a growing body of empirical evidence but makes her peers more willing to abstain providing a new explanation for various empirical patterns of voting equilibrium participation is optimal even though the marginal voter may have very little e g below average expertise and even though nonvoters information is not utilized copyright oxford university press

education and training an american perspective america is a country worried about its excess of life s necessities while many other countries are concerned about satisfying minimum daily nutritional needs we worry about overeating or improper diet so too while others fight illiteracy we discuss overeducation or misdirected schooling this is not a paper about cholesterol but about a system or lack of one which makes the school leaving decision almost entirely that of the student and which places so great an emphasis on college education as a means of achievement college and university will be used interchangeably hereafter that among the 1985 high school graduating class 58 per cent went on to further education cohany 1986