credit constraints and the phenomenon of child labor abstract this paper develops an overlapping generations general equilibrium model where inefficient child labor arises due to credit constraints it derives a positive relationship between inequality in the distribution of income and the incidence of child labor looking at policy implications it shows how trade sanctions against countries using child labor may fail to reduce the incidence of child labor it discusses some alternative policies to reduce the incidence of child labor

the transition to market economies in an endogenous growth model with altruistic agents this paper considers an endogenous transition from a self sufficient traditional economy to a market economy and its consequences on fertility and growth the transition can occur if private intergenerational transfers are unable to secure old age consumption as adequately as savings on capital markets otherwise individuals stay in the traditional economy unless the mass production technology in the market economy is sufficiently more advanced than individually accessible technologies markets emerge only if per capita output exceeds a certain level given a fixed cost of forming markets the transition reduces fertility and promotes growth under plausible restrictions jel classification e20 j13 o10

financial intermediary coalitions abstract in this article an environment in which the investment opportunities of agents are private information is studied and it is shown that financial intermediaries arise endogenously within that environment it is established that financial intermediaries are part of an efficient arrangement in the sense that they are needed to support the authors private information core allocations these intermediaries which are coalitions of agents exhibit the following characteristics in equilibrium they borrow from and lend to large groups of agents they produce information about investment projects and they issue claims that have different state contingent payoffs than claims issued by ultimate borrowers

the gender gap fertility and growth changes in fertility have long been recognized as important correlates of economic growth with the relationship between the level of fertility and the level of income per capita being one of the strongest observable correlations in cross country data this paper examines the linkages between fertility and growth theory the structure of the model is presented in sections on production couples decision making system dynamics and steady state equilibria the first component of the model is that increases in capital per worker raise womens relative wages since capital is more complementary to womens labor input than to mens the second component is that increasing womens relative wages reduces fertility by raising the cost of children more than household income finally lower fertility raises the level of capital per worker a positive feedback loop generates demographic transition a rapid decline in fertility accompanied by accelerated output growth

investment in human capital and gender wage differences evidence from the nlsy this paper uses data from the national longitudinal survey of youth nlsy to investigate gender differences in returns to various forms of human capital since the nlsy includes relatively detailed information regarding on and off the job training we place special emphasis on measuring gender differences in the incidence of and returns to formal post school training also considered is the role of nonhuman capital factors such as industry and occupation in explaining the wage gap it is found that about 60 of the gender wage gap in the sample is explained by mean differences in individual characteristics and market circumstances this suggests a smaller role for discrimination in explaining the wage gap than previous research has found the research indicates that training does not affect the gender wage gap also it is found that there is no statistically significant difference in the rate of return to other measures of human capital for women versus men our research suggests that the largest factor

financial intermediation and endogenous growth an endogenous growth model with multiple assets is developed agents who face random future liquidity needs accumulate capital and a liquid but unproductive asset the effects of introducing financial intermediation into this environment are considered conditions are provided under which the introduction of intermediaries shifts the composition of savings toward capital causing intermediation to be growth promoting in addition intermediaries generally reduce socially unnecessary capital liquidation again tending to promote growth

economic development and the division of production between households and markets a model is presented in which scale economies give market production a cost advantage over household production but in which market production is limited by the extent of the market the production process is viewed as a series of stages each further refining and specializing the product of the previous stage as processing proceeds the number of intermediate goods increases and markets thin out firms specialize in the early stages of production and house holds in the later stages as an economy grows production shifts out of households and into the market several other changes associated with economic development are also accounted for

do women prefer women s work a new methodology is implemented to determine whether job characteristics can explain why women are concentrated in low paying female dominated occupations extensive information on jobs and labour market histories are collected from the 1982 national longitudinal survey youth cohort for women and men characterized by substantial labour market attachment significant differences in nonpecuniary job characteristics between the male and female samples are found to exist nevertheless we find no evidence that women differentially favour those job characteristics commonly associated with women s work

the economics of child labor if child labor as a mass phenomenon occurs not because of parental selfishness but because of the parents concern for the household s survival the popular argument for banning child labor loses much of its force however this assumption about parental decision making coupled with the assumption of substitutability in production between child and adult labor could result in multiple equilibria in the labor market with one equilibrium where children work and another where adult wage is high and children do not work the paper establishes this result and discusses its policy implications copyright 1998 by american economic association

learning a mixed strategy equilibrium in the laboratory abstract this paper examines a laboratory game with no pure strategy equilibrium and one mixed strategy equilibrium a simple adaptive model describes players strategy adjustments reasonably well as long as predictable adjustments are not easily exploited by others consistent with theory these adjustments do not lead players to equilibrium when predictable adjustments are made more easily exploited players deviate from adaptive adjustments in order to avoid exploitation and exploit others these deviations cause players to converge more strongly to equilibrium these results confirm both the predictive power of adaptive models in some settings and the instability of mixed strategy equilibria

bose einstein dynamics and adaptive contracting in the motion picture industry audiences discover what films they like and spread the word information feedback produces bose einstein dynamics in the motion picture box office revenue distribution information cascades generate box office hits and flops the revenue distribution evolves recursively over the run as a mixture of the opening and a stochastic competition among films the motion picture run is decentralized adaptive and self organizing semistationary admission prices local information and contingency rich contracts match the film rental price and the supply of theatrical engagements to demand copyright 1996 by royal economic society

on the existence of predatory pricing an experimental study of reputation and entry deterrence in the chain store game a single monopolist plays a sequence of eight periods against a series of different entrants there are two types of monopolists weak monopolists whose single period best response is to acquiesce after entry and strong monopolists whose dominant strategy is to fight entry data show high levels of predatory pricing defined as weak monopolists fighting all entrants in early periods both with and without experimenter induced strong monopolists we reject a number of predictions of the asymmetric information sequential equilibrium model of kreps and wilson 1982 and find important deviations from more general sequential equilibrium models as well

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

child labor cause consequence and cure with remarks on international labor standards although the literature on child labor is enormous it lacks a common theoretical foundation in this paper analytical survey of this field is provided keeping in mind that this is an area where the primary reason for theorizing is ultimately to influence policy overall it is noted that the literature on child labor is an illustration of abundance and anarchy although empirical writings on child labor are numerous they are not usually founded on theory it is argued that there is much that can be done in curbing the issue of child labor several theories were studied in this paper including collaborative intervention such efforts include public action which alters the economic environment such that the parents of their own accord prefer to withdraw the child from labor force another strategy involves the government a legal intervention is enforcing a total ban on the subject although such interventions have good intentions some of them may not be feasible in general it is better to take economy wide measures against child labor and if there is to be a sector specific ban it should be based on the working conditions of that sector rather than the destination of the goods

is child labor inefficient we build a model of child labor and study its implications for welfare we assume that there is a trade off between child labor and the accumulation of human capital even if parents are altruistic and child labor is socially inefficient it may arise in equilibrium because parents fail to fully internalize its negative effects this occurs when bequests are zero or when capital markets are imperfect we also study the effects of a simple ban on child labor and derive conditions under which it may be pareto improving in general equilibrium we show that the implications of child labor for fertility are ambiguous

trends in earnings differentials by gender 1971 1981 this paper clarifies trends in relative earnings by sex over the decade 1971 1981 and decomposes these trends to determine which factors contributed to a decline and which to an increase our analyses are based upon data from the annual demographic files of the current population survey for 1972 and 1982 this study is unique in that it estimates earnings functions in each year which are corrected for selectivity bias it is found that such a correction markedly raises the progress of white women relative to men among blacks the impact of the selectivity bias correction was to substantially lower the relative earnings increase of women however the coefficients on the selectivity variable were not significant the findings suggest declining sex role specialization and discrimination as conventionally measured over the decade on the other hand contrary to expectations the total effect of variables reflecting the sex composition of the individuals occupation worked to widen the sex differential over the period the sex differential was also adversely affected by a decline in the relative return to education especially for whites authors modified

the policy analysis of child labor a comparative study the policy analysis of child labour c grootaert h a patrinos modelling the determinants of child labour c grootaert child labour in cote d ivoire k cartwright child labour in urban bolivia k cartwright h a patrinos child labour in the philippines c sakellariou a lall policies to reduce child labour c grootaert h a patrinos

learning in common value auctions some initial observations abstract inexperienced bidders in first price common value auctions suffer from a winner s curse losing money on average with experience bidders approximate the nash equilibrium the mechanisms underlying this adjustment are 1 a market selection effect as the most aggressive bidders are less likely to return for subsequent sessions and 2 players who lose money bid less experiential learning and those who would have lost money had they won the auction with the high bidder s signal bid less observational learning

fertility and wage rates in an overlapping generations model two conflicting conclusions exist about the relationship between fertility and wage rates in steady state equilibria in the literature while malthus and others predict a positive relation barro and becker find a negative relation using several specifications of utility functions this paper shows that whether bequests are operative or non operative plays a critical role in determining the relation specifically it is shown that fertility and wage rates

financial development growth and the distribution of income a paradigm is presented in which both the extent of financial intermediation and the rate of economic growth are endogenously determined financial intermediation promotes growth because it allows a higher rate of return to be earned on capital and growth in turn provides the means to implement costly financial structures thus financial intermediation and economic growth are inextricably linked in accord with the goldsmith mckinnon shaw view on economic development the model also generates a development cycle reminiscent of the kuznet hypothesis in particular in the transition from a primitive slow growing economy to a developed fast growing one a nation passes through a stage in which the distribution of wealth across the rich and poor widens

intergenerational trade longevity and economic growth we develop an overlapping generations model of endogenous growth in which human capital is the engine of growth and the generations are linked through material and emotional interdependencies within the family parents invest in their children to achieve both old age support care and emotional gratification and material support from children is determined through self enforcing implicit contracts we show that optimal intergenerational trade can then lead to maximization of growth opportunities our model produces a theory of the demographic transition linking longevity fertility and economic growth we also show that while population aging may raise the growth rate an increase in young age longevity is likely to produce a greater increase in the growth rate and a reduction in the fertility rate in a growth equilibrium these predictions and the model s implications concerning the behavior of private savings during the takeoff period appear consistent with empirical evidence

the old age security hypothesis revisited abstract children s altruism toward parents is allowed in a two overlapping generations model with endogenous fertility parents raise children because when retired they expect gifts from their children who are essentially a capital good individuals behavior between generations is examined by analyzing a nash equilibrium which is then compared with a social planner s optimal allocation the pay as you go public pension program is viewed as the optimal gifts from the optimal allocation when the latter is implemented the effect on fertility of the introduction of a capital market is also analyzed the validity of the old age security hypothesis is shown to depend on the parameters of utility and cost functions

education achievement in segregated school systems the effects of separate but equal educational achievement in segregated school systems was considerably lower in the black schools than in the white schools economic historians have argued that the racial achievement gap reflected the discriminatory funding of the black schools this paper assesses counterfactually the historical effects of a separate but equal policy of educational finance using cross sectional data from 1930 and 1940 i estimate race specific educational production functions eliminating race differences in inputs supplied by school boards explains 40 50 percent of the racial achievement gap depending on how achievement is measured the remainder appears to reflect the impact of family background on achievement of which the most important effect was adult black illiteracy a legacy of slavery and educational backwardness in the late 19th century the paper also shows how school boards marginal valuation of black achievement can be recovered from the production function estimates compared to preferences that would have led them to voluntarily practice equality southern school boards judged black achievement to be worth roughly half the value they placed on white achievement this abstract was borrowed from another version of this item

inexperienced and experienced players in an oligopolistic market game with minimal information we consider an oligopolistic market game in which the players are competing firms in the same market of a homogeneous consumption good the consumer side is represented by a fixed demand function the firms decide how much to produce of a perishable consumption good and they decide upon a number of information signals to be sent into the population in order to attract customers due to the minimal information provided the players do not have a well specified model of their environment given a simple mode of adaptive behavior which we showed in a previous paper explained the data relatively well our main objective here is to analyze whether experienced players behave differently to inexperienced players copyright 1999 by oxford university press

the intriguing relation between adult minimum wage and child labor because most parents send their children to work when compelled by poverty one would expect a rise in adult wage to lower child labor however if the rise in wage is achieved by a minimum wage law its impact can be intriguing it can for instance cause some adults to be unemployed and send their children to work which in turn displaces more adult labor and sends more children to work the paper solves this process and predicts the incidence of child labor it shows that for appropriate parametric configurations child labor may fall or rise as the adult minimum wage is raised

social security and endogenous growth abstract this paper examines the effects of social security on the steady state growth of per capita income in an endogenous growth model in which agents care about their own consumption the number of children and the welfare of each child it shows that an unfunded program may simulate growth by reducing fertility and increasing the ratio of human capital investment per child to per family income when bequests are positive also it may cause faster growth than funded programs especially when receipts from funded programs are independent of contributions when voluntary saving is positive funded social security is neutral if receipts are linked to contributions and most likely depresses growth if receipts are independent of contributions

pay as you go public pensions with endogenous fertility abstract veall s 1986 model of public pensions is generalized to allow for endogenous fertility we show that gifts to the old which can be viewed as social security contributions are always positive in the steady state an optimal stationary allocation is sustainable if savings are zero and fertility is exogenous however the optimal allocation is in general not sustainable in particular if a government enforces a social security plan setting the pension level at the optimal gifts and individuals optimize under the pension constraint the resulting sustainable outcome is in general different from either the optimal or nash outcome

population technology and growth from malthusian stagnation to the demographic transition and beyond this paper develops a unied growth model that captures the historical evolution of population technology and output it encompasses theendogenous transitionbetween three regimes that have characterized economic development the economy evolves from amalthusianregime wheretechnologicalprogressis slow andpopulationgrowthprevents anysustainedriseinincomepercapita intoapost malthusianregime wheretechnological progress rises and population growth absorbs only part of output growth ultimately a demographic transition reverses the positive relationship between income and population growth andtheeconomyentersamoderngrowthregimewithreducedpopulationgrowth

first price common value auctions bidder behavior and the winner s curse first price common value auctions bidder behavior and the winners curse john h kagel dan levin raymond c battalio and donald j meyer experimental auction markets are characterized by a strong winner s curse in early auction periods as high bidders consistently lose money failing to account for the adverse selection problem inherent in winning the auction with experience and bankruptcy on the part of the worst offenders subjects earn positive average profits but these are far below nash equilibrium predictions as a sizable minority of bids exceed the expected value of the item conditional on having the highest estimate of value individual bidding behavior is explored to identify the mechanism whereby market outcomes no longer display the worst effects of the winner s curse i introduction numerous occurrences of the winner s curse have been reported in bidding for items of uncertain value resulting in below normal or even negative average profits for bidders the winner s curse results from bidders failure to account for the adverse selection problem inherent in winning auctions for items of uncertain value capen clapp and campbell 1971 claim that the winner s curse resulted in low profits for oil companies in the 1960s in bidding on offshore oil and gas leases regarding corporate takeovers and mergers roll 1986 proposes a hubris hypothesis acquiring firms generally fall prey to the winner s curse paying too much on average for their targets he claims that from the samples he has observed the hubris hypothesis explains merger data as well as tax factors synergy or inefficient target management cassing and douglas 1980 find that many baseball players in the free agency market have been overpaid on account of the winner s curse and dessauer 1981 reports a similar finding of overbidding in auctions for the book publishing rights based on these occurrences it appears that many agents are not fully cognizant of the intricacies involved with bidding on alternatives that have uncertain worth the winner s curse results from the fact that although bidders may hold unbiased estimates of the auctioned item s value this estimate can be overly optimistic given that participants bids are influenced by their estimates of value in other words the winner s curse results from an adverse selection problem that bidders fail to account for fully in submitting their bids the existence of a winner s curse implies a breakdown of rational expectations on the bidder s part as discussed by milgrom 1981 and identifies a market that is out of equilibrium a winner s curse need not result from bidding on items with uncertain value provided proper adjustments are made one adjustment to the adverse selection problem is to deflate the expected value of the item and hence the bid before any action is taken for example cox and isaac 1984 show that agents who maximize expected utility will revise their expectations downward and submit bids that are strictly less than the expected value conditional on the event of winning when agents behave in this fashion a winner s curse does not result in the sense of bidders paying more on average than the items are worth this paper focuses on sealed bid auctions for objects of uncertain value a market institution for which theoretical predictions and empirical evidence concerning a winner s curse are mixed current theoretical development excludes the possibility of bidders paying more on average than the items are worth yet some empirical evidence in the sale of oil tracts as seen in capen clapp and campbell 1971 lohrenz and dougherty 1983 and mead moseidjord and sorenson 1983 suggests that the winner s curse may be present a series of experiments is designed and conducted in order to answer the following empirical research questions does the winner s curse exist in this auction framework and if it does what is its duration its relation to agent experience in the market and its breadth of impact across agents

child labor and the interaction between the quantity and quality of children this article analyzes the impacts of child labor on the interaction between the quantity and quality of children in the spirit of becker and lewis it shows that without child labor the quantity of children can be a normal good so that it increases with parental income under some fairly standard formulations however the correlation between fertility and parental income becomes negative when the role of child labor is considered the model also implies that fertility increases with the wage rate of child labor moreover it suggests that government intervention not only directly affects the supply of child labor but also influences parents decisions on fertility which indirectly determines children s labor market participations

cropping pattern mechanization child labor and fertility behavior in a farming economy rural egypt tractor and the use of mechanical irrigation is increasing in the countryside the significant policy issue is the role of government in encouraging or discouraging continued labor saving mechanization present policy substantially encourages mechanization diesel oil is available at prices considerably lower than those in many other countries village banks provide farmers with equipment loans at rates below commercial levels machinery is imported at favorable foreign exchange rates and is exempted from import duties the most telling impact of these policies has been on the rapidly growing use of tractors and irrigation pumps both of which are believed to displace labor especially that of children this article addresses the question of whether such changes have indeed had the desired effect on child employment and family size recent developments in the egyptian agricultural sector also reveal significant changes in crop patterns these favor fruit and vegeta