the impact of the national minimum wage on the pay distribution employment and training britain s first ever national minimum wage nmw came into force in april 1999 covering some 5 of workers between 1999 and 2002 the nmw rose in line with the growth in average earnings but for 2003 6 the nmw will be ratcheted up relative to median pay the evidence shows that between 1998 and 2002 the bottom decile of the pay distribution experienced above average pay rises with no spillover effects further up the distribution there was no overall employment effect but a small negative impact in the care home sector the nmw boosts the probability and intensity of training

the new institutional economics this outstanding book presents new original contributions from some of the world s leading economists including ronald coase douglass c north masahiko aoki oliver e williamson and harold demsetz it demonstrates the extent and depth of the new institutional economics research programme which is having a worldwide impact on the economics profession

investigating the effects of store brand introduction on retailer demand and pricing behavior researchers have recently been interested in studying the drivers of store brand success as well as factors that motivate retailers to introduce store brands in this paper we study the effects of the introduction of a store brand into a particular product category specifically we are interested in the effect of store brand introduction on the demand as well as on the supply side on the demand side we investigate the changes in preferences for the national brands and price elasticities in the category on the supply side we study the effects of the new entrant on the interactions between the national brand manufacturers and the retailer introducing the store brand including how these interactions influence the retailer s pricing behavior in doing so we are also able to test whether the observed data are consistent with some of the commonly used assumptions regarding retailer pricing behavior for the demand specification we use a random coefficients logit model that allows for consumer heterogeneity the model parameters are estimated using aggregate data while explicitly accounting for endogeneity in retail prices our empirical results obtained from the oats product category based on store level data from a multistore retail chain indicate that the store brand introduction generates notable changes within the category the store brand introduction coincides with an increase in the retailer s margins for the national brand we find that the preferences for the national brand are relatively unaffected by the introduction of the store brand while consumers are in general more price sensitive in terms of elasticities than they were prior to store brand introduction a statistical test of the differences inmean price elasticities across stores and between the two regimes fails to reject the hypothesis of no change in these elasticities elasticities in specific stores however do increase after the store brand is introduced we also find that there is considerable heterogeneity in the preferences for the store brand on the supply side we test several forms of manufacturer retailer interactions to identify retailer pricing behavior most consistent with the data our results indicate that the data reject several commonly imposed forms of interactions in examining the nature of manufacturer interactions with the retailer we find that the manufacturer of the national brand appears to take a softer stance in its interactions with the retailer subsequent to store brand entry this finding is consistent with academic research and with articles in the popular press which suggest that the store brand enhances the retailer s bargaining ability vis a vis the manufacturers of the national brands we also provide results from a second product category frozen pasta that are largely consistent with those found in the oats category

the impossibility of a perfectly competitive labour market using the institutional theory of transaction costs i demonstrate that the assumptions of the competitive labour market model are internally contradictory and lead to the conclusion that on purely theoretical grounds a perfectly competitive labour market is a logical impossibility by extension the familiar diagram of wage determination by supply and demand is also a logical impossibility and the neoclassical labour demand curve is not a well defined construct the reason is that the perfectly competitive market model presumes zero transaction costs and with zero transaction costs all labour is hired as independent contractors implying that multi person firms the employment relationship and labour market disappear with positive transaction costs on the other hand employment contracts are incomplete and the labour supply curve to the firm is upward sloping again causing the labour demand curve to be ill defined as a result theory suggests that wage rates are always and everywhere an amalgam of an administered and bargained price

nonpecuniary benefits to farming implications for supply response to decoupled payments we develop a household model wherein farmers allocate labor to maximize utility from leisure consumption and nonpecuniary benefits from farming the model shows that farmers with decreasing marginal utility of income respond to higher decoupled payments by decreasing off farm labor and increasing farm labor resulting in greater agricultural output we then estimate the difference between farm and off farm returns to labor using data from three nationally representative farm household surveys the finding of a large on farm off farm wage differential provides compelling evidence of substantial nonpecuniary benefits from farming

the minimum wage as a redistributive tool most analyses of the minimum wage focus on its unintended employment consequences the goal of a minimum wage is not of course to reduce employment but to redistribute earnings to low paid workers under what conditions can a minimum accomplish this are those conditions met in economies which otherwise rely extensively on markets to set wages such as the united states which in i994 rejected mandating health benefits that would have effectively raised the minimum or the united kingdom where in i995 the labour party promised a national minimum upon election who pays for the redistribution who benefits the redistributive effects of a minimum wage depend on the labour market and redistributive system in which it operates on the level of the minimum and on its enforcement at best an effective minimum wage will shift the earnings distribution in favour of the low paid and buttress the bottom tiers of the distribution from erosion at worst minimum wages reduce the share of earnings going to the low paid by displacing many from employment neither outcome is certain so that enacting a minimum is a risky but potentially profitable investment in redistribution it is the balancing of risk against gain that makes a minimum so controversial until the i980s i99os competitive labour markets in the united states and united kingdom produced rising real earnings for the low paid and falling earnings inequality so the risk of enacting a national minimum united kingdom or of raising substantially the national minimum united states seemed unnecessary why interfere with the competitive market when it produces socially desirable trends in earnings albeit a bit slower than one might accomplish with a legislated minimum two decades of falling real wages for lower decile workers in the united states and of rising earnings inequality in the united kingdom1 have however put the minimum back in play the job market is not doing much for lower paid workers in the united kingdom virtually all social groups accept the need for some redistribution though they differ on the best way to accomplish such in the united states pressures for tax cuts can be interpreted as a way for employees to gain real wage increases unavailable through the market the consensus favouring redistribution through the earned income tax credit disappeared in the midi 990s rush to reduce federal budget deficits this paper takes as its operating premise the goal of redistributing earnings

multiperson tournaments an experimental examination modern hierarchical organizations like corporations must motivate agents to work hard given their pyramid structure it is not surprising that one commonly used motivator is the promotion tournament in such tournaments agents compete to advance to positions at higher organizational levels though these tournaments are common little research has empirically looked at the interface of organizational structure and tournament design this paper aims to take a step in filling this void by comparing the performance of various tournament designs using controlled laboratory techniques

labour markets social justice and economic efficiency in conventional economic theory a trade off supposedly exists between social justice and economic efficiency in reality market and other economic institutions are dominated by power relations so that the sponsorship of social justice is a productive factor neo liberal economic policies by lifting the constraints on the exercise of unequal power increased injustice and triggered a downward economic and social spiral reversing this requires a revolution in economic theory and policy focused on full employment the working of labour markets the organisation of work and household organisation social provision and self sufficiency in conventional economic theory the initial resource endowments of individuals are taken as given and although these may be unequal they are essentially external to the market labour markets are assumed to be more or less competitive and within them real wages reflect the quality of workers resource endowments mainly human capital and their personal efficiency and energy that these result in a wide dispersion of labour market rewards some of which may be insufficient to sustain a reasonable standard of life is a demonstration it is argued of how widely dispersed are individual resource endowments and capabilities hirsch and addison 1986 from this perspective any idea of social justice designed to reduce income inequalities risks damaging incentives and lowering overall economic well being this is the basis of okun s 1975 thesis that there exists an inverse trade off between social equality and economic efficiency that greater social income equality can only be purchased at the cost of lowering economic efficiency the alternative perspective explored in this special issue recognises the central import ance of relative power in determining outcomes this focuses attention on the external and internal forces structuring markets and how these differentially affect the incomes and opportunities of individuals from this perspective social justice requires the removal of the obstacles that inhibit individuals and groups from developing their potential and from deploying their resources to full advantage thus contrary to the orthodox view increasing

compensating differentials and self selection an application to lawyers this paper models individual choice between two types of jobs as dependent on the difference in potential earnings and on preferences for nonpecuniary the model leads to simultaneous estimation of earnings and job choice functions in a manner that takes account of self selection of individuals into the sector of highest utility an application to lawyers choosing between private and public interest law casts doubt on the notion that public interest lawyers are accepting substantially lower earnings by virtue of their choice an impression derived from estimation of earnings functions without accounting for self selection the estimation technique also takes proper account of the choice based nature of the sample which appears to be important

developing an understanding of meaningful work in economics the case for a heterodox economics of work the idea that work has meaning and is meaningful beyond its contribution to consumption has been largely absent from mainstream economics this paper gives reasons for why mainstream economics has neglected the idea of meaningful work it identifies the idea of the disutility of work the assumption of free choice on the part of workers and the use of a formal and individualistic method as key constraints on the ability of mainstream economics to incorporate the idea of meaningful work it also addresses the contribution of happiness economics and shows how it is unable to encompass the idea of meaningful work ideas on work from heterodox economics are then discussed these ideas provide essential insight and inspiration for the incorporation of the idea of meaningful work into the economics of work in all respects the paper seeks to contribute towards the development and promotion of a heterodox economics of work that has the goal of meaningful work at its centre

contract and exit decisions in finisher hog production finisher hog production in north america has shifted toward larger units and contract format since 1990 exit among independent growers has been high we develop a model showing that growers with any of three efficiency attributes lower innate hazard of exit variable costs or contract adoption costs are more likely to contract produce more and expend more on business protection using 2004 agricultural resource management survey data a recursive bivariate probit model confirms that contracting producers are less likely to exit specialization increases the probability of contracting education nonfarm income and older production facilities are significant in increasing expected exit

production technology option value the case of rbst in michigan agricultural producers are increasingly required to adjust production practices to satisfy retailer and ultimately consumer preferences this article highlights the option value that underlies decisions related to production technologies using the case of michigan dairy farmers and recombinant bovine somatotropin rbst welfare impacts were calculated for dairy producers when milk production systems which allowed the use of rbst were eliminated from the producer choice set those dairy producers using rbst just before its elimination realized a higher welfare loss than those not using the technology however significant welfare impacts were found for all dairy producers indicating that all producers valued the option to use this production technology

the development of the neoclassical tradition in labor economics this essay on labor economics examines neoclassical theory s rise to ascendancy following the second world war with a secondary focus on the relative decline but continued influence of institutionalist economic theory the authors describe the evolution of institutional and neoclassical theory from the late nineteenth to mid twentieth centuries examine some early intellectual debates between the two camps briefly describe the work of neoclassical labor economics pioneers and look at major developments over the past 30 years they argue that neoclassical economists increasing intellectual breadth and influence in public policy have led them to pay closer attention to issues that have long been of concern to institutionalists and neoinstitutionalists

ir theory built on the founders principles with empirical application to australia the authors identify 10 core principles of industrial relations ir theory and policy based on the writings of british ir founders beatrice webb and sidney webb and u s ir founder john commons these principles are then represented diagrammatically in an expanded ir version of the marshallian demand supply ds model the ds and ir models representing on one side the merits of abstraction and parsimony and on the other realism and complexity are applied to a case study an analysis and explanation of the reasons behind the formation of the australian ir system in the 1890s and its evolution to 2010 although the ds model captures important forces behind the shift from a centralized and unionized employment system in the early period to a significantly decentralized and deunionized system in the latter period the evidence indicates the extra structural and behavioral elements in the ir model are important for a full and accurate explanation

has the minimum wage policy been important for reducing poverty in brazil a decomposition analysis for the period from 2002 to 2013 abstract this study aims to analyze the contribution of the minimum wage valorization policy to the reduction in poverty that occurred in the first decade of the 21st century in brazil considering not only the incidence of poverty but also its intensity and severity a decomposition methodology was used to isolate the marginal contribution of the minimum wage in the observed changes taking into account the roles of setting the values of basic pension and social assistance benefits the beneficio de prestacao continuada or bpc in addition to setting the wage floor between 2002 and 2013 the minimum wage contributed to a 38 2 reduction in the proportion of impoverished people a 39 4 reduction in the intensity of poverty and 40 6 decrease in the severity of poverty our results also reveal geographic differences with the minimum wage being more important in the poorest regions

the theoretical foundation of industrial relations and its implications for labor economics and human resource management the author identifies the core principle that forms the theoretical and policy foundation for the field of industrial relations labor is embodied in human beings and is not a commodity and argues that the field s two central dependent variables are labor problems and the employment relationship next he uses this core principle along with complementary ideas from institutional economics to develop a theoretical framework that not only explains the nature of the employment relationship and labor problems but also reveals shortcomings in related theories from labor economics and human resource management finally this framework is used to derive the fundamental theorem of industrial relations demonstrate that optimal economic performance occurs in a mixed economy of imperfect labor markets and organizations and show that a certain amount of labor protectionism promotes economic efficiency and human welfare

labour market reform and the macroeconomic efficiency of the labour market in australia this paper assesses the effects of a decade and a half of labour market reform in australia on labour market flexibility at the macroeconomic level increased labour market flexibility is interpreted as reduced structural unemployment and enhanced efficiency of matching we use shifts in the beveridge curve as a measure of changes in labour market efficiency following solow r what is labour market flexibility what is it good for keynes lecture british academy london december 1997 time series analysis of unemployment vacancies and other relevant variables strongly suggests that changes in the efficiency of labour market matching over the period reflect the cyclical effects of hysteresis rather than the effects of labour market reform copyright 2004 oxford university press

on the nature and magnitude of cost economies in hog production in this article we assess the impact of farm size on production cost and evaluate the marginal costs and margins by considering that input prices may change with the scale of production by using french hog farm data we estimate a system of equations including a feed price function input demand functions and an output supply function based on a technology approximated by a combined generalized leontief quadratic form our results suggest that the marginal costs are over estimated when the adjustment of the feed unit prices to a change in farm size is not controlled for more specifically the cost economies for large farms enjoying the highest profits arise primarily from lower feed prices with technological scale economies having little impact in contrast farms with no hired labor exhibit technological scale economies and reach higher price cost margins compared to larger farms

the role of fairness in wage determination neoclassical wage theory is based on the premise that a worker s utility is based on his own wage and his own hours of work without reference to the wages and hours of others this article reviews anecdotal evidence that the wages of others are a powerful force in determining worker satisfaction such that utility goes down when the wages of others go up the resulting comparisons are a powerful force in determining wage structure but do not exclude ultimate effect of neoclassical wage determinants

measuring market power in the ready to eat cereal industry the ready to eat cereal industry is characterized by high concentration high price cost margins large advertising to sales ratios and numerous introductions of new products previous researchers have concluded that the ready to eat cereal industry is a classic example of an industry with nearly collusive pricing behavior and intense nonprice competition this paper empirically examines this conclusion in particular i estimate price cost margins but more importantly i am able empirically to separate these margins into three sources i that which is due to product differentiation ii that which is due to multi product firm pricing and iii that due to potential price collusion the results suggest that given the demand for different brands of cereal the first two effects explain most of the observed price cost margins i conclude that prices in the industry are consistent with noncollusive pricing behavior despite the high price cost margins leading firms are able to maintain a portfolio of differentiated products and influence the perceived product quality it is these two factors that lead to high price cost margins

a larger slice or a larger pie an empirical investigation of bargaining power in the distribution channel this research aims to provide insights into the determinants of channel profitability and the relative power in the channel by considering consumer demand and the interactions between manufacturers and retailers in an equilibrium model we use the nash bargaining solution to determine wholesale prices and thus how margins are split in the channel equilibrium margins are a function of demand primitives and of retailer and manufacturer bargaining power bargaining power is itself a function of exogenous retail and manufacturer characteristics the parties bargaining positions are determined endogenously from the estimated substitution patterns on the demand side the more they have to lose in a negotiation relative to an outside option the weaker the bargaining position we use the proposed bargaining model to investigate the role of the three main factors that have been blamed for the power shift from manufacturers to retailers in recent years firm size increases store brand introductions and service level differentiation in our empirical analysis of the german market for coffee we find that bargaining power varies among the different manufacturer retailer pairs this result suggests that bargaining power is not an inherent characteristic of a firm but rather depends on the negotiation partner we are able to confirm empirically previous theoretical findings that there can be cases where the slice of the pie that goes to one of the channel members may decrease but the overall pie increases and compensates for the smaller share of profits

a tale of two italian cities brand level milk demand and price competition abstractwe apply the blp random coefficient logit model demand model to fluid milk sales data from two north south italian cities turin and naples by virtue of their location and socioeconomic differences these cities provide a natural experiment for contrasting consumer choices and retail market power related to milk physical and marketing characteristics results reveal that regardless of location consumers negatively value price increases fat content and ultra high temperature uht treatment however location matters with respect to brand and type of milk purchased while in turin the higher income region demand for the leading manufacturers brands is the most price inelastic in naples consumers have the lowest price elasticities in case of cheaper milk often small manufacturer or private label brands unlike previous studies we do not find price elasticities for private labels to be consistently lower or markups to be higher compared to manufacturer brands indicating that private labe

the impact of the minimum wage if workers can adjust effort abstract in traditional models a binding minimum wage creates a excess supply of low skilled workers for minimum wage jobs employment falls and some jobs are reallocated from high to low rent workers this disequilibrium cannot persist competition to secure the property rights to now scarce jobs undoes most of the effects of the minimum wage workers who attach the highest value to the jobs are willing to work harder to keep them marginal workers are squeezed out of the market as high rent workers ratchet up effort level this process erodes the rent conferred by the minimum wage but also increases the value of marginal product which reduces the size of the employment effect the minimum wage confers more money income on low skilled workers and creates some distortion in the optimum combination of wage rate and effort level under plausible conditions the minimum wage has little effect on rent employment output and profits

expanding the behavioral foundations of labor economics the author examines critiques and suggests modifications to the psychological assumptions of the rational choice model of the human agent that underlies much of the theoretical work in modern neoclassical labor economics he analyzes the rational choice model in terms of three psychological constructs motivation cognition and emotion in the context of a five step model of the human behavioral process examples from the empirical and theoretical labor economics literature illustrate both problems with the current theory and new or improved insights and predictions that can be gained by incorporating additional psychological theories and concepts in economic analysis the author concludes that although the rational choice model is a powerful and productive conceptual device in many cases it cannot adequately explain behavior in the world of work and labor economic theory would be improved by a more interdisciplinary approach that integrates conceptual and empirical research from the behavioral sciences abstract courtesy jstor

modes of theorizing in strategic human resource management tests of universalistic contingency and configurational performance predictions the field of strategic human resource management shrm has been criticized for lacking a solid theoretical foundation this article documents that contrary to this criticism the shrm literature

convergence in industrial relations institutions the emerging anglo american model at the outset of the thatcher reagan era the employment and labor law systems across six anglo american countries could be divided into three pairings the wagner act model of the united states and canada the voluntarist system of collective bargaining and strong unions in the united kingdom and ireland and the highly centralized legalistic award systems of australia and new zealand the authors argue that there has been growing convergence in two major areas first of labor law toward a private ordering of employment relations in which terms and conditions of work and employment are primarily determined at the level of the enterprise and second of individual employment rights toward a basket of minimum standards that can then be improved upon by the parties the greatest similarity is found in canada the united kingdom new zealand and australia ireland retains a greater degree of public ordering while the united states diverges in favoring the interests of employers over those of employees and organized labor the authors explore reasons for the convergence

wage theory new deal labor policy and the great depression were government and unions to blame a growing number of economists blame the length and severity of the great depression on factors that rigidified wage rates raised production costs and interfered with the market allocation of labor the target of their critique is president franklin roosevelt s new deal labor program which they portray as creating a series of large negative supply shocks through encouragement of unions minimum wages unemployment insurance and other anticompetitive industrial relations practices the author uses a combination of institutional and keynesian theory to present the other side of the story drawing principally from the works of j r commons and j m keynes he develops both a spending and productivity rationale for stable wages during the great depression and demonstrates that the new deal s interventionist labor program was on balance necessary and beneficial he also highlights the neglected macroeconomic dimension of industrial relations theory and policy

the future of personnel economics personnel economics is defined as the application of microeconomic principles to human resources issues that are of concern to most businesses the field now about 20 years old arose for three reasons first those of us who were teaching standard labour economics to business students encountered a disinterested audience business students believe that labour supply and demand unemployment investment in education and other topics which are of primary concern to labour economists are almost irrelevant to their future business careers their boredom with what we had to sell signalled that a change in the product might be warranted second the issues studied by human resources specialists were of interest to economists but the approach taken by the non economist was unsatisfying it was loose unfocused and ad hoc and lacked the general rigorous framework to which economists have grown accustomed the economist s reaction was to enter an industry where it was believed rents existed third the technology of economics changed as a result of some breakthroughs particularly those dealing with agency and contract theory economists were better equipped to tackle problems that had evaded them in the past

measuring the importance of transaction costs in cattle marketing transaction cost economics recognizes that transactions do not occur in a frictionless economic environment information negotiation and monitoring costs arise in any transaction and can influence the vertical coordination outcome this paper demonstrates a method for measuring the influence of transaction costs on slaughter cattle marketing the paper focuses on the factors affecting the choice between liveweight live ring auction and deadweight direct to packer sales using tobit limited dependent variable analysis data from a survey of uk farmers are used to estimate the relative importance of various transaction costs and farm characteristic variables for the choice of marketing channel

why some jobs command wage premiums a test of career tournament and internal labor market hypotheses the wage premiums associated with jobs in a large organization were identified through comparing their pay to the prevailing wages in the relevant outside labor markets we then examined the characteristics of those jobs to investigate why some commanded larger premiums than others jobs at the tops of promotion ladders jobs requiring many organization specific skills and to a lesser extent jobs with access to influence commanded greater wage premiums wages above market rates appear important in supporting the internal labor market mechanisms associated with these jobs findings may clarify the factors compensation managers should consider when positioning wage rates examination of these issues is a potentially important bridge between the study of internal labor markets in organizational research and the study of wages in economics

a theory of dual labor markets with application to industrial policy discrimination and keynesian unemployment this paper develops a model of dual labor markets based on employers need to motivate workers in order to elicit effort from their workers employers may find it optimal to pay more than the going wage this changes fundamentally the character of labor markets the model is applied to a wide range of labor market phenomena it provides a coherent framework for understanding the claims of industrial policy advocates it also can provide the basis for a theory of occupational segregation and discrimination that will not be eroded by market forces finally the model provides the basis for a theory of involuntary unemployment

do minimum wages fight poverty i introduction one of the most compelling rationales for a national minimum wage floor is to raise the incomes of poor or near poor families with members in the workforce this general point however is often missed in the debates over the merits of a higher minimum wage in contrast to these oft stated distributional goals much of the focus in such debates has been on the employment effects of minimum wages especially among the teenage population in large part this focus is probably attributable to the extensive body of economic research on the effects of minimum wages on employment of low skilled workers however although negative employment effects represent a cost of minimum wages such costs do not necessarily imply that minimum wages constitute bad social policy in particular the employment losses associated with a higher minimum wage may be more than offset by positive effects on low income families especially if minimum wages are a significant factor in helping move families out of poverty 1 this is not to argue that research on employment effects of minimum wages is irrelevant but such research may be more important as a test of the theory of labor demand and as a method of learning how employers and individuals adjust to exogenous wage increases than as a method of assessing the wisdom of the policy in addition we do not mean to suggest that the short run effects of minimum wages on the incomes of poor families should be the sole criterion for evaluating such policies other studies have found evidence suggesting for example that minimum wage increases reduce school enrollment rates and training neumark and wascher 1996a hashimoto 1982 factors that may affect longer run earnings or earnings growth these deleterious longer run effects might offset the benefits of shorter run effects of minimum wages on family incomes nonetheless our perception is that potential increases in the incomes of poor families provide the main motivation for raising the minimum wage making it important to assess the evidence on whether minimum wage increases achieve this goal in this regard there are two questions that pertain to the influence of minimum wages on family incomes generally and on poverty in particular first there is the question of the effects of minimum wages on low wage workers that is do the wage gains received by employed workers more than offset the lost earnings suffered by those who lose or cannot find jobs 2 second there is the question of how minimum wages affect workers in different parts of the family income distribution because many roughly speaking a large minority of minimum wage workers are in relatively affluent families gramlich 1976 card and krueger 1995 burkhauser et al 1996 which workers gain and which lose will have an important influence on the effects of minimum wages on the distribution of family incomes in this article we present evidence on the effects of minimum wages on family incomes focusing in particular but not solely on the effectiveness of minimum wages in reducing poverty using matched march current population surveys cpss we estimate the effects of minimum wages on the probabilities of various transitions in the family income distribution such as transitions into and out of poverty given that federal changes in minimum wages may be confounded with other aggregate level shocks influencing family income we rely heavily on state level changes in minimum wages to identify minimum wage effects in a nutshell our empirical strategy is to compare rates of transition through the family income distribution in states in which minimum wages do and do not increase for example if poor families are more likely to escape from poverty when minimum wages increase in their states of residence we would infer that minimum wage hikes help families move out of poverty on the other hand if transitions in to poverty are more common when minimum wages increase we would infer that the disemployment effects of minimum wages play a dominant role among the low income population

estimating a continuous hedonic choice model with an application to demand for soft drinks using micro level scanner data i study empirically the consumer demand for soft drinks which is characterized by multiple product multiple unit purchasing behavior i develop a continuous hedonic choice model to investigate how consumers choose the best basket of products to satisfy various needs my model s embedded characteristics approach both helps to reduce the dimensionality problem in model estimation and generates flexible substitution patterns hence the model is useful in application to data with many product choices that are correlated with each other at the individual level the estimation results show that interesting substitutability and even a form of complementarity exist among soft drinks

the happy farmer the effect of nonpecuniary benefits on behavior i test empirically the relationship between farmers perceptions of the nonpecuniary benefits from farming with a variety of field behaviors such as disinvestment production diversification and off farm labor market participation results suggest that nonpecuniary benefits have an important influence on a wide range of farmer activities while costs and returns are clearly important i suggest that nonpecuniary benefits may make some choices more attractive than others which may be more rewarding financially

understanding organizational wage structures a resource dependence approach data on the salaries for high level administrative positions in 608 colleges and universities were used to examine the relative salaries for six positions controlling for other factors we found t

nonpecuniary rewards in the workplace demand estimates using quasi market data lack of explicit markets and associated data have impeded measurement of nonpecuniary rewards in the workplace most of the published literature employs hedonic models that permit estimation of market clearing prices but do not allow for identification of demand schedules in an alternative approach used successfully by environmental economists the author develops quasi market data and uses it to estimate demand for the nonpecuniary rewards associated with leadership in addition to price responsiveness individuals exhibit tastes for the amenities of leadership that differ substantially and in expected directions with their personal and professional characteristics copyright 1991 by mit press

minimum wages for ronald mcdonald monopsonies a theory of monopsonistic competition recent empirical work on the effects of minimum wages has called into question the conventional wisdom that minimum wages invariably reduce employment we develop a model of monopsonistic competition with free entry to analyse the effects of minimum wages and our predictions fit the empirical results closely under monopsonistic competition we find that a rise in the minimum wage raises employment per firm causes firm exit and may increase or reduce industry employment minimum wages increase welfare if they raise industry employment but welfare effects are ambiguous if employment falls

demand for carbonated soft drinks implications for obesity policy this article examines consumer choices of carbonated soft drinks csds and their implications for obesity policy demand in relation to product and consumer heterogeneity is estimated via a random coefficients logit model berry et al 1995 applied to quarterly scanner data for 26 brands in 20 us cities involving 40 000 consumers counterfactual experiments show that caloric taxes could be effective in decreasing caloric csd consumption though having little impact on obesity incidence

emotional arousal as a source of bounded rationality abstract this paper proposes an alternative psychological explanation for bounded rationality according to herbert simon bounded rationality arises from human cognitive limitations following the suggestion of institutional economist john r commons i argue that extremes in emotional arousal also contribute to bounded rationality this idea is formalized and developed using the yerkes dodson law from psychology examples from the popular press and the academic literatures of law management and economics are presented to illustrate the impact of this type of bounded rationality on human behavior

vertical relationships between manufacturers and retailers inference with limited data in this paper different models of vertical relationships between manufacturers and retailers in the supermarket industry are compared demand estimates are used to compute price cost margins for retailers and manufacturers under different supply models when wholesale prices are not observed the purpose is to identify the set of margins compatible with the margins obtained from estimates of cost and to select the model most consistent with the data among non nested competing models the models considered are 1 a simple linear pricing model 2 a vertically integrated model and 3 a variety of alternative strategic supply scenarios that allow for collusion non linear pricing and strategic behaviour with respect to private label products using data on yogurt sold in several stores in a large urban area of the u s the results imply that wholesale prices are close to marginal cost and that retailers have pricing power in the vertical chain this is consistent with non linear pricing by the manufacturers or high bargaining power of the retailers

milk by any other name consumer benefits from labeled milk this article uses revealed preferences of consumers to study the consumer benefits from rbst free and organic labeled milk the article specifies and estimates a quadratic aids demand system model for different milk types using u s supermarket scanner data the introduction of rbst free and organic milk is used to estimate consumer benefits that are decomposed into two components competitive and variety effects results show significant consumer benefits from organic milk and to a lesser extent from rbst free milk based on the findings we explore implications for present u s labeling standards th eu s food sector is going through rapid transformations in terms of new product introduction and innovations organic and genetically modified gm food products are leading the way in changing the landscape of available choices to consumers this rapid expansion of product space has taken place concomitantly with an increase in public policy concerns on issues of standardization labeling health risks and associated consumer welfare in this paper we explore these broader issues in the context of a specific product introduction the introduction of recombinant bovine somatotropin rbst free and organic milk in the u s market from a policy perspective understanding the market for organics and the various components of that demand i e what portion is for gm free and what is for other attributes of organics can help determine the value of creating a national standard and the potential welfare losses to consumers of weakening such a standard are consumers willing to pay extra for organic and rbst free milk if so how

how much do farmers value their independence a farmer s decision to contract or produce independently depends on the distribution of income and the nonpecuniary attributes associated with both business arrangements the benefits to growers from contracting such as risk reduction may be overestimated if the nonpecuniary benefits enjoyed by independent producers such as the right to make management decisions and own the commodity produced are not accounted for this study uses data from a u s national survey of hog producers to estimate 1 the difference in expected net returns between contracting and independent production 2 the premium a representative farmer would pay for the risk reduction provided by a contract and 3 the premium a farmer would pay for the nonpecuniary benefits associated with independent production results indicate that growers have a strong preference for autonomy with moderately risk averse growers being willing to pay more for the attributes of independent production than they would for the risk reducing benefits of a contract

the reemergence of segmented labor market theory according to dual labor market theory the labor market can be usefully described as consisting of two sectors a high wage primary sector with good working conditions stable employment and substantial returns to human capital variables such as education and experience and a low wage secondary sector with the opposite characteristics moreover primary jobs are rationed that is not all workers who are qualified for primary sector jobs and desire one can obtain one finally the sector of the labor market in which an individual is employed directly influences his or her tastes behavior patterns and cognitive abilities thus the dual labor market model or more generally segmented labor market models is simultaneously a description of the income distribution a claim about the absence of market clearing and a radical departure from the standard neoclassical assumption of fully rational actors and exogenously determined preferences while this last element is potentially the most interesting even its proponents fail to give it the attention it deserves and related work has not been incorporated into the segmented labor market model in this paper we therefore concentrate on the first two elements of the model segmented labor market theory was sufficiently popular in the late 1960 s and early 1970 s to be taken seriously by prominent mainstream labor economists however two influential and largely negative reviews glenn cain 1976 michael wachter 1974 portrayed the segmented labor market hypothesis as largely atheoretical and based at best on questionable statistical analysis it seems fair to say that even sympathetic mainstream critics felt that key insights from the segmented labor model could be incorporated into neoclassical analysis and that the remaining elements of the model did not form a sufficiently coherent theory to pose a challenge to the neoclassical model whatever the merits of this perception it is clear that advocates of the segmented labor market approach did not develop a formal theory which conformed to the standards of mainstream economists with some notable exceptions michael piore 1975 david gordon 1972 the work was atheoretical moreover the empirical methods used tended to fall outside the norm for example interviews observational studies and historical and institutional analysis advocates of the segmented labor market perspective mostly radical political economists chose instead to develop their own research program outside the mainstream the reemergence of segmented labor market theory is linked with the reversal of these two tendencies the theory has been pursued by economists using modern tools of imperfect information theory and state of the art econometrics as a result the approach has again attracted the attention of the mainstream even a few years ago it would have been a clairvoyant observer who predicted that lawrence summers would be working on a theoretical model of labor market duality with jeremy bulow 1986 that robert solow would count among his recent work a dual market model with ian mcdonald 1985 and that james heckman would publish an article in which he undertook an empirical test of a dual market model failed to reject the model and then devoted much of the rest of the article to attacking his and other tests of the dual labor market view see his article with v joseph hotz 1986 since the theoretical developments are largely associated with efficiency wage and departments of economics university of california berkeley ca 94720 and nber and boston university 270 bay state road boston ma 02215 and nber respectively this study was supported in part by nsf grant no ses 8606139 lang acknowledges support from a sloan faculty research fellowship dickens acknowledges support from the institute of industrial relations at berkeley

explaining the economic irrationality of farmers land use behaviour the role of productivist attitudes and non pecuniary benefits abstract although the physical conditions of a farm and farming system will to some extent predispose a farmer towards converting land to alternative agricultural uses such as forestry results presented in this paper suggest that differences in underlying farming motivations can also play an important role in explaining farmers decision making our findings suggest that even in the face of higher economic returns some farmers may be reluctant to convert land to forestry as to do so would not be in keeping with their productivist attitudes other farmers may fear losing the non pecuniary benefits derived from working the land we conclude that economic incentives alone are unlikely to encourage certain cohorts of farmers to consider alternative land uses such as farm forestry and that policy ought to be guided by a better understanding of the differing farming motivations of farm operators

theory and evidence on the political economy of the minimum wage this paper examines how closely the minimum wage has been set to the most popularly stated goals of minimun wage policy i first estimate these goals the minimum wage rate at which the relevant labor demand is unitary elastic maximizing the total earnings of minimum wage workers about 5 35 and the level that would lift a typical minimum wage worker s family out of poverty about 5 17 i can reject that the actual minimum wage policy has been driven by desire to achieve these goals and find that a simple interest group model best explains the historical path of the minimum wage rate

institutional economics and the minimum wage broadening the theoretical and policy debate debate among labor economists on the pros and cons of a minimum wage law has come to focus on whether labor markets are competitive or monopsonistic using principles and concepts of institutional economics the author argues that this perspective on minimum wages is too narrow in particular he uses institutional theory to develop four theoretical rationales for minimum wage legislation setting a floor on wages to offset imperfect competition and inequality of bargaining power promote macroeconomic stabilization and full employment contribute to long term efficiency and growth and incorporate labor market externalities and social costs of labor one revisionist implication is that a minimum wage under plausible conditions may increase economic efficiency even in a purely competitive labor market

internal labor markets firm specific human capital and heterogeneity antecedents of employee idiosyncratic deal requests a field study of 615 managers in 11 korean manufacturing firms extends theory regarding labor contracting to the study of idiosyncratic deals i deals despite i deals potential to benefit both employees and employers economic theory asserts that employers attempt to reduce individual contracting by use of internal labor markets ilms this study identifies limits to that assertion by identifying conditions under which i deals are sought despite employee participation in ilms furthermore we develop and test theory reconciling the roles of ilms and firm specific human capital in employee requests for i deals employee reports of ilm practices are negatively related to i deal requests whereas firm specific human capital is positively related to these requests in addition we find an interaction between the two such that the suppressive effects of ilm reports on i deal requests hold largely for workers with low firm specific human capital individuals with high firm specific human capital tend to seek i deals despite reported ilm practices i deal requests also increase with group level heterogeneity in firm specific human capital in all our findings suggest that ilms function as economic theory asserts for workers with limited firm specific human capital but they are less able to reduce i deal requests among workers with higher firm specific human capital

tv advertising spillovers and demand for private labels the case of carbonated soft drinks the expansion of private labels or store brands has transformed consumer choice sets and competition in retail markets prompting manufacturers to fight back with renewed pricing and product and promotion strategies to forestall further private label expansion this article examines the spillover effects of television advertising on brand level consumer demand for carbonated soft drinks csds including private labels using a random coefficients logit model with household purchasing and advertising viewing nielsen data as in previous work we find that although brand spillover effects significantly increase demand for csd brands in the same company and undermine demand facing other manufacturers csd brands surprisingly there are positive spillover effects on the demand for private label brands this indicates that brand advertising is persuasive with respect to manufacturers brands but complementary with respect to private labels further results show that eliminating television advertising for c

the firm s choice of hrm practices economics meets strategic human resource management the authors compare and contrast two theoretical approaches to explaining a firm s choice of human resource management hrm practices one from strategic human resource management shrm and the other from economics they present hrm frequency distributions depicting key empirical patterns that both theories must explain and then review and apply shrm theory to explain these patterns since no economic model has thus far explicitly considered firms choice of hrm practices the authors develop one based on standard microeconomic production theory the model yields a new theoretical construct the hrm demand curve and a new empirical estimating tool the hrm demand function together these provide an alternative explanation of hrm frequency distributions new insights on the limitations of shrm theory and the first alternative to the standard huselid type regression model using recent survey data on hrm practices at several hundred american firms the authors estimate representative hrm demand functions to illustrate the empirical implementation of the model they find that although both theoretical approaches have value the economic model seems superior in terms of generality logical coherence predictive ability and congruence with empirical data