the impact of possible climate catastrophes on global warming policy abstract recent studies on global warming have introduced the inherent uncertainties associated with the costs and benefits of climate policies and have often shown that abatement policies are likely to be less aggressive or postponed in comparison to those resulting from traditional cost benefit analyses cba yet those studies have failed to include the possibility of sudden climate catastrophes the aim of this paper is to account simultaneously for possible continuous and discrete damages resulting from global warming and to analyse their implications on the optimal path of abatement policies our approach is related to the new literature on investment under uncertainty and relies on some recent developments of the real option in which we incorporated negative jumps climate catastrophes in the stochastic process corresponding to the net benefits associated with the abatement policies the impacts of continuous and discrete climatic risks can therefore be considered separately our numerical applications lead to two main conclusions i gradual continuous uncertainty in the global warming process is likely to delay the adoption of abatement policies as found in previous studies with respect to the standard cba however ii the possibility of climate catastrophes accelerates the implementation of these policies as their net discounted benefits increase significantly

industry characteristics and interest group formation an empirical study the role of interest groups in the political process has been the subject of much analysis in both political science and economics however few studies have examined directly the factors which influence the variation in interest group formation across industrial sectors and between countries using data on 75 industrial sectors in 10 countries we examine the way in which variations in interest group formation are explained by variations in industrial and political characteristics in cross sectional empirical relationships we test for the significance of a variety of industry and political variables our results indicate that industry characteristics such as the proportion of total demand purchased by households and the concentration ratio are related to variations in interest group formation we discuss the implications that our results have for recent theoretical work on the effect of interest groups on economic policy

nonrenewable resources with switching costs abstract this paper considers a firm s decision to commence or to suspend extraction of a nonrenewable resource when there are start up or shut down costs for a given level of reserves the critical price that would cause an inactive mine to be opened exceeds the price that would induce an active mine to be closed as one would expect greater switching costs cause firms to be less inclined to change status this impact can be substantial even for modest switching costs possible implications of switching costs are considered including the potential for firms to abandon mines with economically valuable remaining reserves

a real options approach to the valuation of a forestry investment abstract the theory of real options is used to model the optimal tree harvesting decision the value of the option to harvest is estimated using a dynamic programming approach and a general numerical solution technique suitable for any type of stochastic process for prices the conditions under which the optimal harvest time is independent of price are examined in addition the impact of assuming future lumber prices are mean reverting is considered it is found that option value and optimal cutting time are significantly different under the mean reversion assumption compared to geometric brownian motion

the tree cutting problem in a stochastic environment the case of age dependent growth abstract harvest policies are derived for growing biological assets e g forests livestock subject to stochastic age dependent growth and price uncertainty the task posed is analyzed as a continuous time optimal stopping problem for diffusion processes both single and ongoing rotation problems are considered qualitative comparative static and numerical results are provided

racial disparities in job finding and offered wages abstractthe extent to which discrimination can explain racial wage gaps is one of the most divisive issues in the social sciences using a newly available data set this paper develops a simple empirical test that under plausible but not innocuous conditions provides a lower bound on the extent of discrimination in the labor market taken at face value our estimates imply that differential treatment accounts for at least one third of the black white wage gap we argue that the patterns in our data are most naturally rationalized through a search matching model in which employers statistically discriminate on the basis of race when hiring unemployed workers but learn about their marginal product over time

state and prospect of public choice a european view the victory of public choice may not yet have arrived and the share of european contributions may still be small it has nevertheless been argued that there is a great future in public choice three especially promising areas have been indicated by way of example the theory of economic policy politico economic models and international political economy

white discrimination in provision of black education plantations and towns abstract we present a model of public provision of education for blacks in two discriminatory regimes white plantation controlled and white yeoman town controlled we show that the ability to migrate to a non discriminating district constrains the ability of both types of regimes to discriminate the model produces time series of educational outcomes for whites and blacks that mimic the behavior seen in post reconstruction south carolina to the onset of the civil rights act it also fits the post world war ii black white income differentials

taste based or statistical discrimination the economics of discrimination returns to its roots we briefly review the evolution of empirical work on discrimination we discuss why traditional regression based approaches neither convincingly measure market discrimination nor disentangle the relative importance of animus versus statistical discrimination in explaining such discrimination as exists we describe the development of modern correspondence studies we argue that these studies have the promise to credibly identify the presence of discrimination if not its magnitude can inform us about the underlying mechanism generating discrimination and can also point to avenues for new theoretical and empirical work on discrimination we discuss two articles with exemplary applications of these new methods at least since becker 1957 economists have been deeply interested in the presence of discrimination in markets in the 1970s and into the 1980s there was an active debate in the literature about whether discrimination was better described by becker s taste based discrimination model or by arrow and phelps statistical discrimination model that debate gave way to a theoretical literature that advanced each model separately and to an empirical literature focused on documenting the presence of disparities and the effects of policies designed to counteract discrimination only recently has the literature returned to the question of whether taste based or statistical discrimination is a more appropriate description of the phenomenon the two articles that follow are good examples of the move towards an understanding of the mechanisms underlying discrimination in this article we attempt to place the literature s recent direction into context and to show how it is a natural place for economists studying discrimination to arrive given where we began in the economics of discrimination becker explored ways in which individual tastes for discrimination might interact in a market setting to produce discriminatory outcomes for market participants becker described three models each considering a different source of discriminatory tastes employers co workers and customers the economics of discrimination included deep insights about discrimination becker clarified the distinction between individual tastes for discrimination and market discrimination he clarified the difference between segregation and market discrimination and he showed how the market might produce incentives for those with discriminatory tastes to avoid interaction with those towards whom they harbour animus 1

the epidemiology of corporate pac formation 1975 1984 abstract most work on corporate political action committees pacs accounts for their formation or activity level in terms of market concentration and collective action dilemmas subsidiary concerns include the effects of regulatory burden and the firm s internal organization however these cross sectional designs yield little insight into the dynamics of the process results of logit and event history analyses of panel data on 119 u s firms from 1975 1984 show that changes in corporate profitability pac formation by other firms in a firm s board of directors interlock network and the degree of managerial dominance of corporate governance also affect the likelihood that a firm will form a pac analyses also reveal important differences in pac formation dynamics across different types of firms particularly in their response to pac formation by linked firms

paying for progress conditional grants and the desegregation of southern schools this paper examines how a large conditional grants program influenced school desegregation in the american south exploiting newly collected archival data and quasi experimental variation in potential per pupil federal grants we show that school districts with more at risk in 1966 were more likely to desegregate just enough to receive their funds although the program did not raise the exposure of blacks to whites like later court orders districts with larger grants at risk in 1966 were less likely to be under court order through 1970 suggesting that tying federal funds to nondiscrimination reduced the burden of desegregation on federal courts i introduction because the u s constitution reserves powers not explicitly delegated to the federal government to the states conditional grants are key levers for federal policymakers seeking to affect a broad range of state and local policies states must implement federally approved speed limits and drinking ages to receive highway funding universities must provide gender parity in athletic offerings to receive research funding and states can lose funding if they do not comply with the clean air act more recently states and school districts have risked losing federal grants for failure to comply with the accountability requirements of the no child left behind act in this paper we examine whether the threat

the labor market effects of sex and race discrimination laws westudytheeffectsofstatesexandracediscriminationlawsthatwerepassedprior to federal antidiscrimination legislation state sex discrimination laws targeted discrimination in pay only because an equal pay constraint raises the relative price of female labor we would expect the relative employment of females to decline we find robust evidence that state equal pay laws for women reduced relative employment of both black women and white women we also find some evidence of positive effects of race discrimination laws on earnings of blacks relative to whites although no evidence of employment effects jel j15 j16 j18 j23 i introduction public policies to narrow the gaps in labor market outcomes between men and women and between whites and minorities have a long and controversial history two pieces of federal legislation stand out as perhaps the most significant such policies the first was the equal pay act of 1963 which requires equal pay for equal work noting some exceptions but explicitly prohibiting a worker s sex as one of them the second was title vii of the civilrightsactof1964 makingitillegaltodiscriminate in hiring discharge compensation and so on on the basis of race color religion sex or national origin two other important landmarks in the evolution of these policies at the federal level were amendments to title vii embodied in the equal employment opportunity act eeoa of 1972 which expanded coverage and increased the enforcement powers of the equal employment opportunity commission eeoc and executive orders 10925 1961 11246 1965 and 11375 1967 which laid the groundwork for affirmative action although the phrase has its origins in title vii 1

coordinating on lower prices pharmaceutical pricing under political pressure we investigate the effects of political activity on pharmaceutical prices focusing on the health care reform period in the early 1990s we characterize firms based on their vulnerability to future price regulation and find that the more vulnerable firms were more likely to take various actions to forestall regulation most notably coordinating on a specific percentage price increase during 1993 since moderating price increases could have averted regulation the coordination appears to be the industry s response to a collective action problem

forest conservation in costa rica when nonuse benefits are uncertain but rising stochastic dynamic programming is used to investigate optimal holding of primary tropical forest in humid costa rica when future nonuse benefits of forest conservation are uncertain and increasing the quasi option value of maintaining primary forests is included as a component of investment in natural capital although the impact of uncertainty on conservation incentives is substantial our results indicate that a rising trend in future benefits and compensation by the international community for beneficial spillovers are more important factors in determining optimal holdings of forest stocks without compensatory payments however further deforestation may be warranted

rent seeking and market structure comment if the firms in an industry are to be successful in raising money to influence government two conditions must be met 1 there must be sufficient rents available from government decisions regarding that industry to make such expenditures worthwhile and 2 the industry must be sufficiently concentrated to avoid a free rider problem in fund raising this argument though seemingly intuitively appealing has been under recent empirical attack this paper seeks to restore the parapets

discrimination and the unemployment durations of white and black males in this study we develop a model to decompose the longer unemployment duration of blacks into discriminatory and non discriminatory components by extending becker s theory of discrimination to job search theory the discriminatory component is seen to be the result of two separate effects first a white treatment advantage shortens the unemployment duration of whites because they receive more frequent and higher wage offers than would prevail in the absence of discrimination for working alongside blacks second a black treatment disadvantage lengthens the jobless spell of blacks because blacks receive lower wage offers than would prevail without discrimination as discriminating employers extract quasi rents from their labour we estimate our model using date from the cps displaced workers survey the results show that 3 81 of the 4 58 weeks longer unemployment spell for blacks is due to discrimination with 3 11 weeks resulting from the white treatment advantage and 0 7 weeks emanating from the black

on estimating the option value of preserving a wilderness area in this paper option pricing theory is used to analyse whether or not to preserve a wilderness area a numerical approach is demonstrated that can be applied to any generalized stochastic process the impact of assuming that amenity value follows a logistic process rather than geometric brownian motion is considered the calculation of critical levels for amenity value necessary to justify preserving a wilderness area such as the killarney provincial park in ontario or the headwaters forest in california is demonstrated the impact of changing the assumed growth and volatility of amenity value is also examined jel classifcation d81 q26 ce memoire utilise la theorie de la tarification d une option pour analyser si on doit preserver un espace naturel on utilise une approche numerique qui peut etre appliquee a tout processus stochastique generalise on examine l impact de possibilites que le profil de la valeur de la ressource dans la temps suive un processus logistique plutot qu un pattern geometrique de type brownien le texte montre le calcul des niveaux critiques de la valeur de la ressource qui seraient necessaires pour justifier la preservation d une espace naturel comme le parc provincial killarney en ontario ou les forets headwaters en californie l impact de postulats differents quant a la croissance et a la volatilite de la valeur de la ressource est examine

from dark to light skin color and wages among african americans this paper develops and tests a theory referred to as preference for whiteness which predicts that the interracial white black and intraracial wage gap widens as the skin shade of the black worker darkens using data drawn from the multi city study of urban inequality and the national survey of black americans we report evidence largely consistent with the theory moreover we decompose the estimated interracial and intraracial wage gaps and find that favorable treatment of lighter skinned workers is a major source of interracial and intraracial wage differences as predicted by the theory

race and employment outcomes evidence from nba coaches we study the impact of management diversity on employment outcomes using data on nba head coaches that includes information on the race of each coach and his supervisor we find that a supervisor is more likely to hire a coach of his own race we also find that black coaches are less likely to be rehired to a second job within three years than their white counterparts and that a head coach s race affects the quality of the opportunities he is offered these findings are stronger for first time coaches than experienced coaches suggesting that observable information on performance mitigates bias jel j0 j4 j7

the economic progress of black women 1940 1980 occupational distribution and relative wages this paper uses census data on women s wages and occupations from the years 1940 80 to examine long term trends in black women s relative economic status the paper links black women s increased relative wages after 1940 to their entry especially after 1960 into occupations and industries in which they were previously unrepresented most notably factory jobs and clerical work the authors find little evidence that convergence in the characteristics of black and white women increasingly similar education for example is responsible for black women s increased relative wages and occupational status and conclude that black women s improved economic status after 1940 was largely due to decreases in racial discrimination by occupation and industry they also find that in the south racial discrimination had greater adverse effects on black women and began to decrease later than in the rest of the country

trade protection and the role of campaign contributions in u s food and tobacco industries to exert political pressure an organization must be capable of obtaining contributions from its members for lobbying activities for this reason past studies analyzing the determinants of political outcomes such as tariffs such as caves 1976 lavergne 1983 saunders 1980 salamon and siegfried 1977 ray 1981a 1981b have used an industry s structural characteristics such as the number of firms and the sales concentration ratio to account for political activity more recently baldwin 1989 among other economists has advocated the study of more direct indicators of lobbying such as political funding levels and the number of employees supported by private interests the importance of lobbying activity in determining the levels of trade protection depends upon the responsiveness of government to such activity bhagwati 1989 distinguishes two types of government behavior passive behavior and self willed behavior under the first type policymakers maximize political support and will be more likely to respond to lobbying activity 1 however if behavior is driven by self willed principles then policymakers will make choices that reflect the needs of their constituents and will be less susceptible to special interest group pressures viewed from the perspective of an industry that is willing to spend resources in order to influence political outcomes contributions to political candidates can have a facilitative and or a persuasive role 2 under a facilitative role campaign contributions are merely a transaction cost for granting access and enabling the industry to inform politicians about the industry s needs in this case the industry structural characteristics are what lend political weight under a persuasive role campaign contributions are independently effective in influencing political outcomes regardless of the industry s structural attributes combining the latter role with the passive government behavior discussed above gives rise to models of exchange and political investment as in the work of peltzman 1976 concern over identifying the determinants of trade barriers and the role of campaign contributions in particular follow from three considerations the first consideration is efficiency if institutional arrangements encourage lobbying as a means of influencing policy choices then a significant waste of resources may occur through competition in the political arena 3 lobbying therefore may result in a decline of overall economic efficiency the second consideration is the dominance of special interests over social concerns the arguments for protection often include protection of jobs and unfair competition which may differ from the factors that drive the policy decisions such as the strength of special interest lobbying the third consideration is redistributional justice a significant redistribution of wealth may occur as trade barriers increase prices and domestic industry profits at the expense of domestic consumers the objectives of this article are twofold the first objective is to explain the variation of the level of trade barriers tariffs and import quota tariff equivalents these will be explained in terms of industry structure characteristics number of firms seller concentration and geographic dispersion comparative disadvantage and lobbying activities using data from the u s food and tobacco manufacturing industries for the empirical analysis the second objective is to ascertain the role and importance of lobbying activities in determining the levels of trade barriers a novel feature of this article is that it incorporates more direct measures of lobbying activity such as the contributions of political action committees pacs associated with the industries affected by the trade barriers it also emphasizes the need to consider contributions and protection together in order to capture the exchange between political investments and income transfers as shown in snyder 1990

contributions to federal election campaigns by government contractors the author develops a theoretical model that determines whether or not a firm sponsors a political action committee and if it does the quantity of funds that the political action committee will disburse the firm is assumed to face supply and demand schedules for political action committee receipts whose positions depend on attributes of the firm such as firm size government sales intensity and market structure two related equations derived from the theoretical model a probit equation for political action committee sponsorship and a disbursements equation are estimated using pooled data on 226 government primarily defense contracting firms during the 1979 80 and 1981 82 election cycles copyright 1989 by blackwell publishing ltd

the impact of federal civil rights policy on black economic progress evidence from the equal employment opportunity act of 1972 the equal employment opportunity act eeoa of 1972 extended civil rights coverage to employers with 15 24 employees while leaving unaffected the civil rights protection for employees of larger firms in conjunction with pre existing state fair employment practice fep laws the eeoa provides a natural experiment in which the treatment and control groups are defined by differences across industries in the fraction of workers employed in the newly covered establishments and across states in the scope of the fep laws applying the treatment and control group methodology to current population survey data the author finds that there were large shifts in the employment and pay practices of the industries most affected by the amendment the timing of the relative gains and their concentration by industry and region provide evidence that the eeoa had a positive impact on the labor market status of african americans

induced discrimination and firm size information vs incentive effects this paper characterizes the differences in incentives to respond adversely to the civil rights act of 1991 cra91 across firm size i then empirically test the firm responses and compare them to the incentives i find that responses across firm size match the incentive differences thus firms appear to be rational as well as fully informed the most pronounced adverse response comes from large firms firms with more than 100 employees reversed a trend of increasing employment at a rate of 0 28 weeks worked per year prior to cra91 to a trend of decreasing employment at a rate of 0 21 weeks per year since this group employs 63 7 of the workforce this has a profound impact on opportunities for protected groups

the economics of movement success business responses to civil rights mobilization1 this article explores why movements are successful in obtaining concessions from economic actors while social movement theorists have suggested that economic actors weigh the costliness of protests the author considers the vulnerability of movement targets to both the cost of disruptions in routine transactions and the cost of conceding to movement demands by addressing the magnitude of these costs and their interaction the author derives an economic opportunity structure to predict the receptivity of economic actors to movement demands and the likely struggles among them over the decision to yield also this cost assessment approach reveals patterns of vulnerability across economic sectors to the costs of disruptive mobilization the author tests this analysis based on case studies of the responses of economic actors to civil rights mobilization in the 1960s in five southern localities these cases depict how the character of protest and variation in the configuration of business communities defined

on the formation of industry lobby groups abstract this paper provides a step towards a more complete theory of lobbying extending the menu auction model of grossman and helpman grossman g m helpman e 1994 american economic review 84 833 850 a new explanation is proposed for why more concentrated industries more easily overcome the free rider problem inherent in political collective action instead of focusing on transactions costs as olson olson m 1965 the logic of collective action harvard university press cambridge ma we show that more collusive industries with higher collusive profits have a greater incentive to form lobby groups and to contribute to industry lobbying moreover more polluting industries also have a greater incentive to form and contribute to a lobby group

market structure and campaign contributions does concentration matter a reply economic rents may be obtained through the process of market competition or be obtained by resorting to governmental protection rational firms choose the least costly alternative collusion to obtain governmental protection will be less costly the higher the concentration ceteris paribus however high concentration in itself is neither necessary nor sufficient to induce governmental protection

determinants of the increase in the number of interest groups in western democracies theoretical considerations and evidence from 21 oecd countries mancur olson s theory of institutionalsclerosis is based on the notion that thenumber of interest groups within a countryincreases with the duration of itspolitical stability the following paperargues that the increase in the number ofinterest groups over time could also be aconcomitant of economic development theoretically both explanations provetenable an empirical cross sectionalregression analysis using data from 21oecd countries finds no evidence for asignificant impact of the duration ofpolitical stability on the number ofinterest groups a significantly positiveeffect is however reported for the degreeof economic development

separate and unequal in the labor market human capital and the jim crow wage gap competing explanations for the long standing gap between black and white earnings attribute different weight to wage discrimination and human capital differences using new data on local school quality we find that human capital played a predominant role in determining 1940 wage and occupational status gaps in the south despite entrenched racial discrimination in civic life and the lack of federal employment protections the resulting wage gap coincides with the higher end of the range of estimates from the post civil rights era we estimate that truly separate but equal schools would have reduced wage inequality by 29 48

facilitating practices and the path dependence of collusion abstract this paper exploits major shifts in american antitrust policy during the 1930s to investigate the impact of facilitating practices on industrial profitability while the national industrial recovery act effectively legalized collusion in many industries this paper suggests only industries that adopted certain trade practices were able to overcome cartel enforcement problems consistent with previous theories of the path dependence of collusion the effects on price cost margins are found to have persisted after the act s repeal the government s pattern of granting facilitating practices is also investigated and is found to contravene the political rhetoric of the day antitrust policy implications are discussed

determining the impact of federal antidiscrimination policy on the economic status of blacks a study of south carolina this paper evaluates alternative explanations for the dramatic increase in black employment in south carolina manufacturing that occurred in the mid 1960s black progress in traditionally segregated sectors of manufacturing in operation at the time jim crow laws were passed cannot be attributed to tight labor markets the decline of agriculture or the growth of education of the black workforce the only plausible explanation is federal government civil rights and affirmative action policy for newer industries that entered the state on a large scale after world war ii the growth of skills among blacks accounts for black economic progress copyright 1989 by american economic association

optimal environmental management in the presence of irreversibilities abstract we consider an environment of a fixed size that can be converted to another use this conversion can be made in steps but it is irreversible the future benefits per unit from the original use and from the alternative use follow a diffusion process for a fairly general case we show that the value function must be the unique viscosity solution to the associated hamilton jacobi bellman equation we also exhibit several properties of the solution for the case of constant relative risk aversion between 0 and 1 and a log linear diffusion for the benefits journal of economic literature classification numbers c61 d90 q30

polluters and collective action theory and evidence 1 introductionthe seminal theory by olson 1965 predicts that industries with fewer firms have a greater ability to undertake collective action they organize cooperative political action more easily because greater concentration lowers the cost of political action 1 the empirical evidence is inconclusive however andres 1985 masters and keim 1985 heywood 1988 and humphries 1991 find positive effects of industry concentration on the probability of making political action committee pac contributions see also mckeown 1994 pittman 1976 finds that concentrated industries generate greater contribution levels grier munger and roberts 1991 find an inverted u shaped relationship between the level of pac formation and industry concentration with a maximum political participation rate occurring at a four firm concentration ratio around 0 45 esty and caves 1983 and zardkoohi 1985 report ambiguous effects of concentration on pac contributions 2in this paper we suggest an alternative perspective on firms ability to organize collective action which to our knowledge has been ignored so far the novel argument is that industries that face multiple regulations a greater number of policy issues find it easier to overcome collective action problems and sustain lobbying in particular we focus on the difference between firms in polluting and clean industry sectors using a simple repeated game framework similar to spagnolo 2000 we argue that firms in industries that are naturally polluting because of their input requirements and therefore incur pollution abatement costs will face an additional policy battle compared with other industries everything else equal 3 this enables such industries to sustain greater cooperation and lobbying this is because firms seeking to form a lobby group face a free riding problem due to a limited amount of enforcement power available to punish deviation and ensure cooperation firms that face multiple areas of regulation have an advantage in the formation of lobby groups because they have a greater amount of enforcement power available to reallocate between policy issues when joint lobbying gives large gains in environmental policy this surplus can be reallocated to trade policy for example free riding behavior on trade policy lobbying may more easily be disciplined the prediction that emerges from our theoretical model is that polluting industries are relatively less affected by the free riding problems involved in organizing political action and we thus expect the level of political contributions to be higher in these sectors 4we evaluate this prediction using a cross section data set of u s manufacturing industries our empirical model builds on a multiple equation model by gawande and bandyopadhyay 2000 who test the well established theory of grossman and helpman 1994 on the pattern of protection their theory takes lobby group formation as given we augment gawande and bandyopadhyay s model with an additional equation for environmental policy stringency 5 the empirical results lend support to our theory industry pac contributions and thus the level of lobby group cooperation are greater in industries with larger pollution abatement costs this result is robust to several measures of lobby group formation and environmental policy the present paper contributes to the recent literature on the formation of lobby groups in the area of pollution taxation damania and fredriksson 2000 argue that collusive industries may more easily form lobby groups that oppose such taxes using a related setup damania and fredriksson 2003 discuss the effect of exogenous trade liberalization on environmental policy formation when lobby group formation is endogenous pecorino 1998 and mitra 1999 discuss the formation of trade lobby groups 6 neither of these papers explore the relationship between collective action and the number of policy instruments however

optimal conservation extinction debt and the augmented quasi option value abstract optimal conversion defines rules that determine the rate at which land is irreversibly moved out of conservation into production what are the implications on these rules of allowing for a feedback between conversion decisions and the stochasticity of conservation benefits we address this question using the well known ecological mechanism of extinction debt as an illustration this yields a model with a controlled diffusion process at its core we solve this model using a real options approach which leads to the conventional conversion rule as a special case calibrating the model to a specific case costa rica we demonstrate the presence of an augmented quasi option value the size of this value depends on the strength of the feedback

when the levee breaks black migration and economic development in the american south abstract in the american south postbellum economic development may have been restricted in part by white landowners access to low wage black labor this paper examines the impact of the great mississippi flood of 1927 on black out migration and subsequent agricultural development flooded counties experienced an immediate and persistent out migration of black population over time landowners in flooded counties modernized agricultural production and increased its capital intensity relative to landowners in nearby similar non flooded counties landowners resisted black out migration however benefiting from the status quo system of labor intensive agricultural production jel j15 j43 n32 n52 n92 q54 r23

the southern wage gap human capital and the quality of education this suggests that school quality can play an important role in explaining the racial wage gap welch 28 and smith 19 both provide anecdotal evidence that relates the narrowing of school quality to the falling racial gap in earnings the rising rate of return for black workers on years of school documented by weiss and williamson 27 welch 28 and smith and welch 20 also is consistent with the improving quality of their education nevertheless school quality has not been incorporated into systematic statistical analysis of the racial wage gap this is the main focus of this paper i examine 15 southern states which had data on the segregated white and black school systems i have attempted to link the demonstrated lower quality of education during segregation in the south to the persistent southern wage gap in addition i have tried to

equity concern and the political economy of protection in new zealand a number of empirical models have found protection to be greatest for industries employing poorly skilled low paid workers this has caused some economists notably robert baldwin to suggest that equity concern by politicians in an alternative to the interest group hypothesis this paper reports the result of a test on new zealand data that shows that this equity concern is absent for industries with few employees or firms equity concern variables were only important for industries with many employees and firms this suggests that equity concern is selective and may be reconcilable with self interest motivations

species preservation and biodiversity value a real options approach abstract we evaluate biodiversity in a real options framework when the resources in use are substitutable we examine optimal conservation decisions given that a biodiversity loss is irreversible and that future use values are uncertain while species substitutability has been shown to reduce the value of diversity we show that the flexibility associated with substitutability is a source of value marginal species value is decreasing in the number of species but rising and convex in the value of the marginal species as we show in the two species homogenous model increased volatility raises biodiversity value and a positive correlation between species values both reduces the value of the pool of species and the value of biodiversity the role played by the correlation between the value of a species and the value of other species is reminiscent of the beta of a financial asset just like an asset with a negative beta derives additional value by providing insurance against fluctuations in the market portfolio a species whose value tends to move in the opposite direction as the species in use derives additional value from its higher probability to be available for substitution if the value of the species in use diminishes

optimal investment in ecological rehabilitation under climate change ecological rehabilitation is subject to a variety of risks affecting the likely return on investment we propose an options approach to allocating scarce conservation funds that explicitly allows for the irreversibility of investment and risks to investment payoffs the approach captures ecosystem dynamics from extinction debt as well as ecological and climatic risks at the project scale climatic risks are introduced through three channels the effects of climate change on species loss future rehabilitation benefits and frequency of catastrophic events our results suggest that allocating voluntary rehabilitation contracts on the basis of real options criteria increases cost efficiency and delivers greater value for money for the government when compared with the conventional cost effectiveness criterion as it is illustrated for the case of box gum grassy woodland rehabilitation in australia

market structure and political influence new data on political expenditures activity and success this paper utilizes new data to evaluate the determinants of the political influence of thirty five manufacturing industries on the u s congress during 1976 80 several measures of influence serve to distinguish between political activity and success seller concentration and geopolitical dispersion increase both activity and success but neither industry size nor leading firm size proves significant we test whether political expenditures facilitate obtaining the favors conferred on an industry by its market structure or by influence independent of that strurture statistical inference strongly confirms both roles

optimal forest rotation when stumpage prices follow a diffusion process a key assumption in the faustmann rule for financial maturity is that stumpage prices are constant over time timber price series however exhibit wide fluctuations over time which this paper models as a lognormal diffusion process comparing the diffusion results modeled here to the fixed price faustmann results show 1 the prescribed rotation length is generally longer 2 computed stand values are higher using the diffusion model with the greatest divergence occurring when a stand is about the midpoint of a rotation 3 as the stumpage price volatility increases the gain in computed npv increases though in a nonlinear fashion

black men s relative earnings are the gains illusory this study investigates the hypothesis that the increase in the median earnings of black men relative to those of white men after 1964 in the united states largely reflects the labor force withdrawal of high proportions of low wage black men who availed themselves of government transfers analyzing current population survey and social security administration data through 1985 the author finds little empirical support for three direct implications of the sample censoring hypothesis of the total measured gain in relative earnings between 1964 and 1985 from 531 to 663 or 13 2 percentage points he finds that only 14 or 1 8 percentage points can be attributed to sample selection

the power of the buckley and casson thesis the ability to manage institutional idiosyncrasies recent patterns of rapid internationalization in sectors characterized by strong public interest and both government and domestic capital constraints seem at first inconsistent with the drivers of internationalization identified by buckley and casson 1976 for manufacturing industries in the postwar era a more microanalytic perspective however identifies the ability to manage institutional idiosyncrasies as a firm level capability akin to research or advertising that can drive internalization across national borders and thereby internationalization these arguments are examined using evidence from the independent power production sector

a positive model of tax reform this paper is devoted to the explanation of tax policy from a behavioural theoretic point of view it for the first time brings together within a unified framework behavioural determinants of government expenditure taxation and tax reform administrative and compliance costs associated with taxation factors generally neglected in models of taxation as well as tax avoidance evasion deadweight losses and the costs that are involved in the tax reform process itself play a crucial role in the model the paper investigates how these factors influence the development of taxation and expenditure and the occurrence of tax reform

school quality and black white relative earnings a direct assessment the wage differential between black and white men fell from 40 percent in 1960 to 25 percent in 1980 it has been argued that this convergence reflects improvements in the relative quality of black schools to test this hypothesis we assembled data on pupil teacher ratios annual teacher pay and term length for black and white schools in the eighteen segregated states from 1915 to 1966 these data are linked to estimated returns to education for southern born men from different cohorts and states in 1960 1970 and 1980 improvements in the relative quality of black schools explain 20 percent of the narrowing of the black white earnings gap between 1960 and 1980

rent seeking and the welfare cost of trade barriers this paper estimates the potential social cost of trade barriers using the harberger and the tullock posner approaches for a sample of u s food and tobacco manufacturing industries in addition it tests the relationship between the computed welfare losses and special interest political activity pac contributions if all rents were dissipated through rent seeking the social cost of trade barriers would be about 12 5 percent of domestic consumption and would be particularly large for sugar and milk products where quotas are the main instrument of protection furthermore the results indicate that welfare losses are positively associated with industry lobbying but the strength of such association is strongly dependent on industry concentration

time to build option value and investment decisions abstract investment decisions and outlays are often made sequentially for example the rate at which construction proceeds is usually flexible and can be adjusted with the arrival of new information traditional discounted cash flow methods which treat the pattern of investment as fixed ignore this flexibility and understate the value of the project this paper uses contingent claims analysis to derive optimal decision rules and to value such investments we determine the effects of time to build opportunity cost and uncertainty on the investment decision for reasonable parameter values we show how a simple npv rule can lead to gross errors

the logic of private and collective action since mancur olson s logic of collective action 1965 it is impossible for political scientists to conceive of political participation without reference to his powerful argument linking numbers of participants public goods and participatory outcomes what is puzzling is the poor empirical support for this argument in the domain where it should work best namely explaining business political activity olson thought his arguments principally applicable to economic groups and for the empirical development of his arguments olson drew heavily on business interests the most active segment of the interest group community we explore these arguments with business political activities data by examining the statistical performance of various measures of market structure in determining business political activity and find little empirical support we do offer an alternative basis for business behavior lodged in both private and collective goods that preserves business rationality and also helps explain not only the amount of business political participation but the modes of business participation w hen we think about the paradox of participation one of the formative puzzles of modern political science we tend to think first of voting and citizen participation we think of the large numbers involved the small probability that an individual vote will be decisive and we conclude that no one will vote the puzzle then becomes why so many people do vote to find a solution we tend to plead some sort of diminished rationality such as the costs of voting are too low even to consider carefully or that they are outweighed by the norm of civic duty in this article we examine the paradox of participation in the principal context that olson 1965 considered it for the empirical development of his arguments olson drew heavily on business interests he observed that business was the most active segment of the interest group community and noted that for large numbers of participants seeking pubic goods the dominant choice is to do nothing he argued that business activity derived from multiple markets and related industries segmenting the larger business community into small groups in an oligopolistic market it is rational for the individual firm to participate in association with others or on its own a