can the human capital approach explain life cycle wage differentials between races and sexes i introduction the trends in gender and racial wage gaps have continued to receive the attention of researchers and policy makers due to their mounting social significance substantial literature concludes that after world war ii the black white pay gap shrank rapidly until the mid 1970s this trend was reversed in the 1980s card and dinardo 2002 couch and daly 2002 darity and myers 1998 o neill 1990 smith and welch 1989 1 in contrast the gender pay gap persisted for four decades after world war ii only in the 1980s did it start to narrow yet it showed only a little progress in the 1990s blau ferber and winkler 2002 goldin 1990 o neill 2003 although a large number of studies have been purported to investigate the sources of male female and black white pay gaps most have not addressed the issue of whether or not the individuals being observed have changed their economic status over their lifetimes the major problem is that longitudinal data are not available over a long enough period to determine the age earnings profiles 2 by using the national longitudinal survey of youth data 1979 cohort nlsy79 this paper examines gender and racial wage gaps among individuals of the same age in an effort to eliminate major life cycle differences while at the same time tracking the changes in the wage gaps over their life spans in particular we would like to provide answers to the following questions what factors can account for the narrowing widening gender wage gaps among blacks whites as they age can the observed life cycle wage gaps be attributed to different paths of postschool human capital accumulation since today s individuals regardless of race or sex have on average completed similar years of schooling among the youth cohort the observed disparity in wages between races and sexes may simply reflect the differences in the quality of schooling family background and postschool investment 3 given that school quality and family background are essentially fixed for an individual as he or she ages in order to address the questions above this paper attempts to further examine the differences in postschool human capital investment behavior among individuals past estimates of the structural parameters for the model of postschool human capital accumulation have however not been fruitful benporath 1970 brown 1976 haley 1976 heckman 1976a 1976b rosen 1976 the major reasons as heckman 1976b points out are that dynamic models are difficult to solve explicitly and that the proportion of time spent investing in on the job training cannot be measured directly moreover to fulfill the dynamic concepts of human capital accumulation longer period longitudinal data must be used to explore the life cycle view of individual wages 4 the lack of empirical investigation in relation to the continuous time dynamic model using panel data therefore leads us to develop an alternative empirical version for estimating the structural parameters of the wage function over a lifetime in other words the purpose of our study is to estimate a dynamic structural model based on the theory of optimal human capital accumulation in accordance with this theory of human capital the wage and its life path can be viewed as the outcome of an optimal path of human capital investment over an individual s life cycle instead of comparing the differences in the outcome of this optimization process i e wages we estimate the key parameters in determining the life cycle wage path as well as further empirically identifying the sources of the wage gap our empirical results first suggest that the male female wage gap mainly arises from gender difference in the marginal costs of human capital production as men in general spend more time in the labor market and gain more work experience than women they tend to have lower marginal costs in the process of human capital production

the effect of occupational segregation on the relative earnings of black males abstract an earnings model which incorporates racial differences in occupational attainment is employed to investigate sources of the earnings differential between black and white males our results suggest that occupational segregation of black men accounts for nearly half of the observed racial earnings differential

are ghettos good or bad spatial separation of racial and ethnic groups may theoretically have positive or negative effects on the economic performance of those groups we examine the effects of segregation on outcomes for blacks in schooling employment and single parenthood we find that blacks in more segregated areas have significantly worse outcomes than blacks in less segregated areas we control for the endogeneity of location choice using instruments based on political factors topographical features and residence before adulthood a one standard deviation decrease in segregation would eliminate one third of the black white differences in most of our outcomes

ethnicity neighborhoods and human capital externalities the socioeconomic performance of today s workers depends not only on parental skills but also on the average skills of the ethnic group in the parents generation or ethnic capital this paper investigates the link between the ethnic externality and ethnic neighborhoods the evidence indicates that residential segregation and the external effect of ethnicity are linked partly because ethnic capital summarizes the socioeconomic background of the neighborhood where the children were raised ethnicity has an external effect even among persons who grow up in the same neighborhood when children are exposed frequently to persons who share the same ethnic background copyright 1995 by american economic association

estimating the causal effect of water scarcity on the groundwater use efficiency of rice farming in south india abstract there is no consensus among researchers on the influence of scarcity on common pool resource use some suggest that scarcity leads to prudent use whereas others suggest that it will cause over extraction of resources this issue is particularly of interest for developing countries where natural resources are becoming scarce at an alarming rate this paper investigates the causal association between water scarcity and groundwater use efficiency in a rice based cropping system in south india where groundwater is increasingly becoming a scarce resource contextualization of the work is done under the premise of reported contradictions concerning the scarcity efficiency nexus using a two stage approach the causality is estimated first farm level groundwater use efficiency gwue scores are calculated using non parametric efficiency analysis and then these inefficiencies are linked to farm level scarcity indicators using the inverse probability weighting method our results showed a negative causal association between farm level water scarcity and gwue indicating the existence of competitive appropriation behavior in the face of scarcity hence policy measures to conserve groundwater should include supply enhancement to remove the threat of immediate scarcity on farm to avoid inefficient pumping in addition to demand management measures and improved governance

entrepreneurs perceived chances for success abstract entrepreneurs involved in planning or starting firms must engage in a continuing process of appraising prospects for success these assessments presumably bear upon the preparations they make as well as at some later point whether they decide to make major changes or even to discontinue the business in this study data from 2994 entrepreneurs who had recently become business owners were analyzed to determine their perceived changes of success although previous evidence on business survival led to the hypothesis that the entrepreneurs would only be cautiously optimistic this was not the case they perceived their prospects as very favorable with 81 seeing odds of 7 out of 10 or better and a remarkable 33 seeing odds of success of 10 out of 10 in considering the prospects for other businesses like their own they perceived odds which were significantly lower but still moderately favorable based upon previous research on factors associated with new business success it was hypothesized that those who were more likely to succeed based upon their personal backgrounds and the nature of their new firms would be more optimistic however this was not the case those who were poorly prepared were just as optimistic as those who were well prepared at this point shortly after having become business owners the assessment by entrepreneurs of their own likelihood of success was dramatically detached from past macro statistics from perceived prospects for peer businesses and from characteristics typically associated with higher performing new firms the psychological literature on post decisional bolstering suggests that decision makers in many settings tend to bolster or exaggerate the attractiveness of an option after it has been chosen this coupled with the tendency of entrepreneurs to believe that they can control their own destinies implies that the extreme optimism observed here is probably a typical occurrence for entrepreneurs the findings suggest that it is probably natural to experience feelings of entrepreneurial euphoria when first becoming a business owner with the available evidence it is difficult to judge whether this leads to inadequate preparations or an inability to diagnose problems and make adjustments after the business is started this extreme optimism probably does contribute to the heavy personal commitments observed here in which the median entrepreneur devoted more than 60 hours per week to the business the entrepreneur would seem well advised to form relationships with outsiders such as board members and professional advisors who can be objective and detached in diagnosing problems and assessing objectively the prospects for the business in its current form

a computable general equilibrium analysis of brexit barriers to trade and immigration restrictions this paper estimates the economic effects of different types of restrictions on trade and immigration in the uk after brexit regarding trade restrictions we focus on the increase in tariffs and ntbs with respect to the eu we also analyze a scenario in which the uk removes all tariffs on its trade to all its trading partners concerning immigration we run a 5 year cumulative annual reduction in net migrants by 87 000 workers following oecd estimations the study is conducted using a 21 sector 5 region uk reu us china row computable general equilibrium cge model which allows us to estimate the impact on gdp welfare wages and capital remuneration together with sectoral output and trade flows our estimates suggest that brexit would negatively affect the uk much more than the eu welfare reductions would be between 0 38 and 1 94 for the uk while they would be between 0 03 and 0 17 in the eu this is because the eu is a crucial trade partner for the uk which cannot be easily substituted through trade with other regions in the world restrictions on migrants would bring about additional reductions in the range between 0 55 and 0 35 of gdp depending on whether they affect skilled or unskilled workers respectively

types and patterns an experimental east west german comparison of cooperation and solidarity abstract in a study of public good and solidarity experiments conducted in eastern and western germany we found in both games that eastern subjects behave in a significantly more selfish manner than do western subjects besides that we found that many qualitative results of both data sets are similar since our experiments were conducted in two parts of one nation we present an unusually well controlled cross cultural study by avoiding difficulties that usually arise in multinational settings we conclude that cooperation and solidarity behavior seem to depend strongly on different culture specific norms resulting from opposing economic and social histories in the two parts of germany

race and human capital while human capital has been used with some success to analyze recent changes in racial income differences scholars have repeatedly pointed to a major empirical problem that appears to severely limit the historical relevanlce and scope of skill based theories as applied to racial questions the challenge they raise is legitimate put simply if measured skill disparities between the races narrowed throughout the twentieth century why did income ratios first begin to converge in the 1960 s in this paper i address this question relying on some unexploited census data by race on education literacy occupations and income using these data that begin with the 1890 census i present new estimates of agespecific relative income positions of black men for all postslavery birth cohorts in addition to reconciling the apparently inconsistent skill and income series these income ratios offer a very different historical record than many economists believe to have been the case to cite a prominent example gunnar myrdal s classic work 1944 saw the economic position of his contemporary black america not only as dismal but made even more so by its sense of hopelessness given the absence of any hint of progress or change while myrdal s pessimism is understandable it appears that even in his day seeds had long been sown that were already permanently altering and improving the relative economic status of black men

schooling choices and demographic cycles this paper examines the effect of demographic cycles on schooling choices and the timing of school completion utilizing data from the u s national longitudinal surveys of labor market experience and from the panel study of income dynamics we find that men and women born during the upswing of a demographic cycle obtain more schooling and take longer to finish a year of schooling than comparable individuals born during the downswing of a demographic cycle the patterns that we document are more complex than would be predicted by any of the theoretical models of educational responses to demographic cycles that have been presented in the literature excerpt

incentives to water conservation under scarcity comparing price and reward effects through stated preferences abstract focusing on two different european institutional contexts a stated preference approach is adopted to elicit the willingness to save water under three alternative incentive policies a water price increase monetary reward and symbolic prize in addition two water scarcity scenarios a critical and a regular scenario are devised to analyze how information on water scarcity moderates the effect of incentives empirical results show that users become sensitive to monetary incentives while they remain insensitive to non monetary ones when water is scarce batteries of pre tests on the sample and robustness checks on the results strengthen the reliability of our findings and partially circumvent concerns related to the use of a stated preference approach the study adds to the literature on the efficacy of economic incentives in the water sector and the role of local factors in explaining water users response

exogenous degradation in the commons field experimental evidence abstract this article presents the results from framed field economic experiments in rural colombia that aim to explore the behavioral responses of resource users to exogenous changes in the availability of a common pool resource in the first 10 rounds of the experiment all subjects played at a baseline with the same initial resource availability in the subsequent rounds the experimenters exogenously changed the resource size including mild and strong reductions in the resource size and rebounds to original size results show that subjects react to strong reductions in resource availability by increasing appropriation from the resource this behavior holds for intense and persistent as well as for progressive reductions in resource availability in addition subjects that experience a reduction in the resource availability followed by a rebound to the initial resource size appropriate more than those subjects who did not experience any change in the resource availability

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

does poverty negate the impact of social norms on cheating abstract cheating such as corruption and tax evasion is prevalent in the developing world therefore many interventions have been undertaken to reduce cheating in developing countries although some field evidence shows that poverty is correlated with cheating the causal effect of poverty on cheating in the field and the effectiveness of interventions for financially constrained people remain an open question we present results from a lab in the field experiment with low income rice farmers in thailand n 568 in which we first investigate the causal effect of poverty on cheating and second test whether poverty affects the effectiveness of a social norm intervention to reduce cheating we show poverty itself does not affect willingness to cheat however although a social norm reminder intervention reduced cheating when the population was richer after harvest it had no effect when the population was poorer before harvest our results suggest that the timing of interventions to change behavior might matter

intergroup conflict and intra group punishment in an experimental contest game we study how conflict in a contest game is influenced by rival parties being groups and by group members being able to punish each other our main motivation stems from the analysis of socio political conflict the relevant theoretical prediction in our setting is that conflict expenditures are independent of group size and independent of whether punishment is available or not we find first that our results contradict the independence of groupsize prediction conflict expenditures of groups are substantially larger than those of individuals and both are substantially above equilibrium towards the end of the experiment material losses in groups are 257 of the predicted level there is however substantial heterogeneity in the investment behaviour of individual group members second allowing group members to punish each other after individual contributions to the contest effort are revealed leads to even larger conflict expenditures now material losses are 869 of the equilibrium level and there is much less heterogeneity in individual group members investments these results contrast strongly with those from public goods experiments where punishment enhances efficiency and leads to higher material payoffs

racial segregation in the public schools and adult labor market outcomes the case of black americans residential segregation has played a central role in theories of minority entrepreneurship and in the diversification of the u s labor market racial diversity in public accommodations including schools has been an issue of continuous public policy debate at least since the u s supreme court s plessy versus ferguson decision 1896 this study applies theory from the literature on social capital to an examination of the role of racial segregation in the public schools of blacks during childhood on their adult likelihood to become self employed and their level of occupational status the model results indicate that after controlling for a number of individual household and metropolitan area factors lower rates of segregation during public schooling results in higher likelihood of wage salary employment and self employment among a cohort of black americans that attended public schools during the 1960s

an analysis of the effects of higher education on wage differentials between blacks and whites by gender in the united states previous analyses that have examined the effect to higher education on the wage differences between blacks and whites have largely been focussed on males and failed to provide quantitative estimates of the impact that higher education has on discrimination and the black white wage differential for both genders in 1980 in particular we find that equalizing the years of college completed by black and white males reduces the wage differential by 14 conversely equalizing the years of college completed by black and white females exacerbates wage inequality by increasing the wage advantage accruing to black females by nearly 24 hence the egalitarian policy mission of higher education in narrowing wage inequality between blacks and whites is complicated by the issue of gender

discrimination empirical evidence from the united states the study of discrimination received a major impetus in the 1960 s when increasing social attention focused upon race and gender differentials in market outcomes gary becker s the economics of discrimination 1957 strongly influenced empirical research by providing a definition of wage discrimination and suggesting a specific way in which it might operate during the following years new theories were developed and refined in an attempt to explain why there appears to be continued discrimination in spite of market forces presumably operating against it similarly a large amount of empirical work has been done to determine whether and how much discrimination actually exists and to a lesser extent to test the implications of the various theories even so the hope expressed by becker in the preface of the second edition 1971 that our understanding of discrimination would increase so rapidly that the materials in his book would become obsolete before another decade began has clearly not been fulfilled here we review what has been learned in the intervening years and suggest some fruitful directions for future research 1 the focus of this paper like that of most of the empirical research in this area is on determining the extent of discrimination rather than on testing alternative models of discrimination

initial conditions at emancipation the long run effect on black white wealth and earnings inequality abstract black white wealth inequality is much greater than black white earnings inequality in the united states the existing empirical literature has not been able to fully explain the wealth gap this paper investigates how much of current black white income and wealth inequality can be explained by initial conditions at emancipation and nearly 100 years of segregated schools a two sector model with group specific human capital accumulation and school expenditure differences can explain the path of black white convergence in earnings over the past 130 years the model also reproduces the fact that black white wealth ratios remain much lower than black white earnings ratios

measuring the extent of earnings discrimination an update ordinary least squares ols regression and data from the march 1990 current population survey are used to estimate yearly earnings averages for white males white females black males and black females in order to test for the possible existence or gender and or race discrimination earnings estimates are decomposed using the tradional oaxaca 1973 and blinder 1973 methodology in comparing these results with those from carlson and swartz 1988 using 1979 data we find that overall and unexplained residual differences have declined quite substantially but that they still favour white males we then incorporate an extension of the traditional methodology jackson and lindley 1989 which allows for testing for the significance of enexplained residuals and for jointly testing for the significance of residual effect components the constant and coefficient effects these results call into question the unambiguous conclusion that earnings differentials uniformly favour white males strong support is

central city crime and suburban economic growth this paper explores the relationship between inner city crime patterns and suburban income growth analysing data on 318 us counties for selected metropolitan statistical areas of 32 states within the united states from 1982 to 1997 the findings suggest that violent crime does seem to have a negative impact on close in suburbs with a less negative impact farther away from the central city becoming positive at some point while results are not as robust as we had hoped they are consistent with flight to further out suburbs rather than migration to different metropolitan areas in response to urban crime

money burning and rank egalitarianism with random dictators abstract this paper presents the results of an experiment in oxford where relative standing can be improved by randomly chosen dictators only by reducing burning the money of the coplayers at a cost to themselves almost 50 of the subjects engage in money burning and 75 of burners appear rank egalitarian

strategic reference point theory how can executives achieve a match between expected external environmental conditions and internal organizational capabilities that facilitates improved performance this paper argues that a firm s choice of reference points can help achieve strategic alignment capable of yielding improved performance and potentially even a sustainable competitive advantage building upon prospect theory and other relevant theoretical perspectives the strategic reference point srp matrix is developed a firm s srp consists of three dimensions internal capability external conditions and time a theory is developed which posits an optimal srp structure and propositions are offered which articulate the expected relationships between the srp strategic choice behavior and firm performance the paper closes with some suggestions for using strategic reference points in both research and practice

using survey questions to measure preferences lessons from an experimental validation in kenya can a short survey instrument reliably measure a range of fundamental economic preferences across diverse settings we focus on survey questions that systematically predict behavior in incentivized experimental tasks among german university students becker et al 2016 and were implemented among representative samples across the globe falk et al 2018 this paper presents results of an experimental validation conducted among low income individuals in nairobi kenya we find that quantitative survey measures hypothetical versions of experimental tasks of time preference attitude to risk and altruism are good predictors of choices in incentivized experiments suggesting these measures are broadly experimentally valid at the same time we find that qualitative questions self assessments do not correlate with the experimental measures of preferences in the kenyan sample thus caution is needed before treating self assessments as proxies of preferences in new contexts

caste discrimination in the indian urban labour market abstract this the pioneering quantitative analysis of caste in the indian urban labour market examines the age old problem of caste in the light of discrimination theory and government policy using a survey of workers in delhi the gross wage difference between scheduled untouchable and non scheduled caste is decomposed into its explained and discrimination components and from a model of occupation choice into wage and job discrimination discrimination is found to exist and to operate at least in part through the traditional mechanism viz assignment to jobs with the scheduled castes entering poorly paid dead end jobs it is assisted by methods of recruitment based on contacts prevalent in the manual occupation which also cause past discrimination to carry over to the present its practice serves the economic interests of those who exercise a taste for discrimination

resource scarcity and antisocial behavior abstract this paper examines whether exposure to persistent resource scarcity on the commons affects pastoralists readiness to engage in antisocial behavior towards their fellow commons users the region under study is divided into two areas according to exogenous variations in biomass production stemming from geological peculiarities we conducted a joy of destruction game with pastoralists from both areas and provide evidence for a positive relationship between antisocial behavior and long term exposure to scarcity antisocial behavior among villagers occurs twice as often in an area where resources are scarcer and competitive pressure is higher our results remain robust to the inclusion of various controls including beliefs socio demographics absolute and relative income and within group inequality if one interprets decreasing another participant s payoff below one s own as a tendency towards conflict behavior our results suggest a higher risk of conflict among resource users in areas of greater scarcity

slavery education and inequality abstract we investigate the effect of slavery on the current level of income inequality across us counties we find that a larger proportion of slaves over population in 1860 persistently increases inequality and in particular inequality across races we also show that a crucial channel of transmission from slavery to racial inequality is human capital accumulation i e current inequality is primarily influenced by slavery through the unequal educational attainment of blacks and whites finally we provide suggestive evidence that the underlying links run through the political exclusion of former slaves and the resulting negative influence on the local provision of education

black white earnings ratios the role of cohort size effects abstract while black white earning ratios have been rising over time across cohorts there is some evidence that they have been dropping over time within cohorts of recent entrants to the labor market this has coincided with the entry of the large baby boom cohorts into the labor market this paper examines the role of race differences in cohort size effects on black white earnings ratios for male high school graduates using current population survey data in larger cohorts the black white earnings ratio is lower at entry and falls as the cohort progresses through the career consistent with recent evidence

aspirations market offerings and the pursuit of entrepreneurial opportunities abstract in this paper we focus on two core questions 1 why do some people seek entrepreneurial opportunities 2 under what conditions is the pursuit of entrepreneurial opportunity most likely we attempt to answer these questions by creating a theoretical framework that considers the interaction between an individual s level of aspiration and their appraised value in the labor market we propose that when there is disequilibrium between the aspiration vector av of an individual and the perceived valuation of the market offering vector p mov an individual tends to pursue entrepreneurial opportunities in addition when hiring officers hr directors or other relevant parties involved in the hiring decision are biased or when existing organizations have limitations in reflecting an individual s av prospective entrepreneurs begin searching for new opportunities in society finally and in our view most crucially we consider the interaction between an individual s subjective consideration and his perceived assessment by the labor market a novel approach which we hope takes into account the complexity and richness of entrepreneurship we offer seven specific propositions that derive from the disequilibrium predicted by our framework

bank lending to new and growing enterprises abstract this paper confirms and expands on an earlier study churchill and lewis 1985 into the profitability of bank lending to small businesses those under 50 million in sales the earlier study found that bank lending to small companies was more costly than lending to large corporations due primarily to administrative costs and risk that were higher per dollar of loan than the interest differential charged it found however that the larger deposit balances left with the bank not only offset these costs but made lending to small firms 2 76 percentage points more profitable this suggested that small businesses should be able to continue to borrow from large banks in spite of the consolidation now taking place in the banking industry the research reported upon here addresses the issue left open by the initial study that possible different lending policies and account profitability exist for different size companies under 50 million in sales this issue was examined by looking at 116 individual account relationships representing both large and small borrowers taken as a group the bank relationships of these companies are comparable to those in the original study the return to the bank on it assets loans outstanding for companies under 50 million was much higher 3 34 versus 1 94 for larger companies the amount of deposits left by the borrower with the bank was 43 of loan dollars for the smaller companies versus 9 for the larger ones and the risk class assigned by the bank was essentially the same when comparisons were drawn by size for companies under 50 million in sales the main purpose of this study many similarities and only a few differences were obtained these were for the six size categories from under 500 000 to 25 million and over as follows first and most importantly loan relationships were profitable for small companies of all sizes and for all but those in the smallest category more profitable than loan relationships with large companies second and of almost equal importance essentially no differences that are significant to managers were found as between companies of different size the most important of differences were found as follows perceived risk to the bank assigned risk class of loans to companies in the largest category over 25 million was lower than for all others and was greater for companies in the 1 million to 2 9 million category non performing loan data provided some foundation for this deposits with the bank were lowest for companies in the smallest category increased with size until the largest category was encountered and then dropped off on the whole the study paints a very encouraging picture for the future availability of credit to small and growing businesses except for very young businesses primarily those just starting out banks treat small companies in a rather even handed manner and do no seem to discriminate with respect to size bank relationships with small companies of any size are in general more profitable than relationships with large companies deposits kept by small businesses are the key to this greater profitability but losses and administrative expenses do not seem to be unduly burdensome the major messages emerging from these studies are banks can view small businesses as a very attractive source of profit the owner manager can continue to receive bank financing as long as profit continues to be a motivator for banks the relationship between bankers and entrepreneurs need to be adversarial both sides can be winners

the human capital approach to black white earnings inequality some unsettled questions the persistence of earnings differences between blacks and whites in the united states has been a topic that has received a substantial amount of attention in both theoretical and empirical research in economics the differential in earnings typically is tied to racial differences in human capital accumulation this paper advances a systematic critique of the human capital approach to black white inequality inadequacies are identified in human capital theory as a general theory of inequality as well as a specific theory of racial inequality the critique suggests that a serious analysis of the black white earnings gap will require an entirely new approach to the study of racial income inequality

assimilation across the latino generations there is concern that hispanics have not mimicked the european immigrant experience of great generational advance jeffrey grogger and stephen trejo 2002 reasons for concern vary but a theme is that latino immigrants and their offspring are less committed to assimilation than europeans were discrimination adherence to spanish and frequent trips home due to proximity are said to be reasons i examine two aspects of generational mobility of hispanic and mexican men education and wages a major problem in studying this assimilation is ambiguity in defining generations and ethnicity across census and current population survey cps files generations are defined as follows 1st generation born outside the united states 2nd generation at least one parent born outside the united states 3rd generation or more both parents born in the united states while reference is made for convenience to the 3rd generation it includes all generations beyond the second since no distinction was made between the 2nd and subsequent generations in the 1980 and 1990 censuses or the march cps s until 1994 i use data from four decennial censuses between 1940 and 1970 four special cps supplements on language and immigration 1979 1983 1986 1988 to cover the 1980 s and four successive march cps s starting in 1994 to represent the 1990 s ethnicity is straightforward to define for the 1st and 2nd generation where place or birth or self reported ethnicity can be used to define hispanic ethnicity the problem is the 3rd generation where information available for hispanic descent and specific ethnicity differs across the censuses and cps s details of the rules adopted to define specific hispanic ethnicity are available in smith 2001

a measure of segregation based on social interactions we develop an index of segregation based on two premises 1 a measure of segregation should disaggregate to the level of individuals and 2 an individual is more segregated the more segregated are the agents with whom she interacts we present an index that satisfies 1 and 2 and that is based on agents social interactions the extent to which blacks interact with blacks whites with whites etc we use the index to measure school and residential segregation using detailed data on friendship networks we calculate levels of within school racial segregation in a sample of u s schools we also calculate residential segregation across major u s cities using block level data from the 2000 u s census

gender differences in the cost of displacement an empirical test of discrimination in the labor market there are two competing explanations of why women workers earn less than men with equivalent education work experience and job tenure the human capital explanation and the discrimination explanation the human capital explanation argues that sex differences in human capital investment which arise from sex differences in expectations surrounding labor force participation account for the wage differential women workers are expected to invest less in jobspecific human capital than otherwise comparable men workers because women expect to spend less time on the job furthermore even for men and women workers with equal ex post levels of job tenure and or work experience women have invested less in onthe job training because their a priori expectations of job tenure and or work experience were less than those of men who now have the same tenure and or experience therefore in this view women workers earn less than comparable men because they have invested less in specific human capital women earn less because they are less productive the sex wage differential is economically efficient the discrimination explanation argues that sex differences in labor market opportunities that is sex discrimination in the labor market account for the sex wage differential in this view women workers earn less than comparable men because they are the victims of sex discrimination in the labor market women do not earn less because they are less productive the sex wage differential is economically inefficient while the economic implications of these two explanations of the sex wage differential are enormously different both explanations are consistent with empirical studies simply because both resort to nonmeasurables to explain the sex wage differential empirical studies cannot measure directly either discrimination or job specific human capital therefore the problem with these two competing explanations of the sex wage differential is that neither has been empirically sorted from the other both explanations are consistent with data which show a wage differential by sex after controlling for education work experience and job tenure newly available data on displaced workers provide an opportunity to empirically disentangle these two competing explanations of the sex wage differential displaced workers are workers who have lost their jobs either because their workplaces have closed or because they were permanently laid off due to slack demand for the outputs of their firms displaced workers represent a special case of worker mobility unlike voluntary job movers that is workers who have voluntarily quit their prior jobs the job mobility of displaced workers is not the result of their own expectations that better jobs are available a worker who voluntarily changes jobs does so because there is another job which offers higher wages or other improvements in the conditions of employment the worker moves precisely because his or her productivity and wages is higher on the subsequent job the wage change is endogenous unlike workers who are fired or involuntarily laid off because their personal productivity is lower than that of other tdiscussants rebecca blank princeton university elyce rotella indiana university

does school quality explain the recent black white wage trend around 1980 the trend toward racial wage convergence essentially stopped i ask whether this break in the convergence trend can be explained by school quality department of education surveys provide earnings data for the high school class of 1972 in 1979 and the class of 1980 in 1986 both linked to data from the respondents high schools by several measures differences between schools attended by blacks and whites were already rather small in the 1970s furthermore i find that measurable school inputs generally have little effect on wages thus school quality explains little of the recent black white wage trend

is increasing inequality harmful experimental evidence abstract increasing inequality is commonly associated with social unrest and conflict between social classes this paper reports the results of a laboratory experiment to study the implications of greater inequality on the tendency to burn others income the experiment considers an environment where higher earnings in a real effort task are typically associated with higher effort and varies how fair and transparent this relationship is the findings indicate that greater inequality does not lead to more money burning itself rather it depends on whether the increase in inequality can be unequivocally attributed to exerted effort i e the fairness of the income generating process only if greater inequality can be the result of morally questionable activities subjects engage in substantially more money burning while most income burning aims at reducing inequality the fairness of inequality only plays a role in the extent of money burning but not so much for the qualitative burning patterns

in search of homo economicus behavioral experiments in 15 small scale societies we can summarize our results as follows first the canonical model is not supported in any society studied second there is considerably more behavioral variability across groups than had been found in previous cross cultural research and the canonical model fails in a wider variety of ways than in previous experiments third group level differences in economic organization and the degree of market integration explain a substantial portion of the behavioral variation across societies the higher the degree of market integration and the higher the payoffs to cooperation the greater the level of cooperation in experimental games fourth individual level economic and demographic variables do not explain behavior either within or across groups fifth behavior in the experiments is generally consistent with economic patterns of everyday life in these societies

characteristics of opportunities search of entrepreneurs versus executives sources interests general alertness abstract a recent article by low and macmillan 1988 suggests that at the current stage of entrepreneurship research empirical studies that are not theory driven and do not test hypotheses are no longer acceptable p 155 this paper is written in the spirit of this directive it starts with an explicit theory of entrepreneurship developed by israel kirzner and tests three hypotheses derived from the theory the theoretical thrust of the paper emphasizes the role of information and information seeking behavior as a central element of entrepreneurial behavior entrepreneurship is based on discovering of opportunities and resources to exploit them our interpretation of kirzner s theoretical works leads to the formation of hypotheses regarding the differences that should exist in the way entrepreneurs as opposed to managers seek this information these concern 1 differences in the manner in which entrepreneurs and corporate managers expose themselves to information 2 differences in the sources of information used and 3 differences in evaluating information cues in addition we test the hypotheses that success and experience will erode the above differences between entrepreneurs and corporate managers our sample involved 51 founders of companies in new jersey and 36 executives of a very large financial company a questionnaire was used to gather the data and scales were formed using principal component factor analysis with a varimax rotation differences were tested using univariate and multivariate statistical methods significant differences were found in five of the nine factors examined entrepreneurs spent significantly more time searching for information in their off hours and through nonverbal scanning they employed different sources than executives and paid special attention to risk cues about new opportunities executives on the other hand tended to focus on the economics of the opportunity these results are only partially consistent with a previous study comparing entrepreneurs and small companies managers suggesting a contextual contingency to the behaviors under study the most persistent finding was regarding the time and volume of search for information reinforcing the idea developed in the recent network theory of entrepreneurship that entrepreneurs are avid information gatherers and opportunistic learners but not necessarily or not uniquely in a verbal social networking manner finally with success and experience the differences become smaller it seems that success and experience reduce the need or desire of entrepreneurs to search for new opportunities no such effect was found with our executive sample

poverty and witch killing many observers have noted that poverty and violence go hand in hand there is a strong negative relationship between economic growth and crime across countries as well as across districts in india and a link between low income and the occurrence of civil war 1 yet existing studies are typically unable to resolve the key econometric identification issues of omitted variable bias and endogeneity to illustrate the unobserved quality of local government institutions may affect both income growth and crime rates and poverty could lead to violence if desperate people with nothing to lose commit more crimes but violence itself may in turn affect economic productivity this paper uses local rainfall variation to identify the impact of income shocks on murder in a rural tanzanian district 2 extreme rainfall resulting in drought or floods is exogenous and is associated with poor harvests and near famine conditions in the region and a large increase in the murder of witches there are twice as many witch murders in years of extreme rainfall as in other years the victims are nearly all elderly women typically killed by relatives these econometric results across 11 years in 67 villages provide novel evidence on the role of income shocks in causing violent crime and religious violence in particular and also provide insights into witchcraft an important social phenomenon in africa rarely studied by economists the view that economic conditions are a driving force behind witch murders is bolstered by the fact that most witch killing in tanzania takes place in poor rural areas largely dependent on rain fed agriculture and that most victims in our sample are from poor households however it is difficult to definitively disentangle this income shock theory from alternative socio cultural explanations the concentration of tanzanian witch murders in a region dominated by one particular ethnic group the sukuma and the especially high number of witch murders in villages where indigenous religious beliefs are strong both point to the important role of non economic factors economic theories and cultural theories are perhaps best viewed as complements the empirical findings demonstrate the power of economics to rationalize a phenomenon that has previously been understood almost solely through a socio cultural lens 3

racial wage inequality job segregation and devaluation across u s labor markets1 despite decades of research showing greater black white inequality in local areas where the black population is relatively large little is known about the mechanisms for this effect using a unique data set of individuals nested within jobs across labor markets this article tests two possible mechanisms for the black concentration effect on wage inequality job segregation and devaluation results show that black population size is associated with greater segregation of black workers into black dominated jobs on the other hand no evidence is found that the penalty for working in a black dominated job the devaluation effect increases as a function of black population size the article concludes that discrimination against workers especially exclusion from better paying jobs is an important mechanism for the effect of black population size on the racial wage gap

does school quality matter returns to education and the characteristics of public schools in the united states this paper estimates the effects of school quality measured by the pupil teacher ratio average term length and relative teacher pay on the rate of return to education for men born between 1920 and 1949 using earnings data from the 1980 census we find that men who were educated in states with higher quality schools have a higher return to additional years of schooling rates of return are also higher for individuals from states with better educated teachers and with a higher fraction of female teachers holding constant school quality measures however we find no evidence that parental income or education affects average state level rates of return

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

the moral costs of nastiness we introduce two variants of the one shot joy of destruction minigame mini jod two players are endowed with the same amount of money they simultaneously decide whether or not to reduce the payoff of the other player at an own cost in one treatment there was a probability that nature would destroy the opponent s money anyway we test whether this feature reduces the moral costs of being nasty and find that destruction rates rise significantly despite the absence of strategic reasons

black agricultural economists discussion the authors of these three papers have performed a valuable service by reviewing and analyzing the status of blacks who have chosen agricultural economics as their profession occupation the estimated number of black agricultural economists continues to be small relative to the total number 32 in 1970 41 in 1981 and 56 in 1983 during this period the estimated number of blacks holding ph d degrees has risen slightly from 17 54 in 1970 to 18 44 in 1981 and then to 25 45 in 1983 however the percentage of blacks with ph d degrees remains lower than the percentage for all agricultural economists which has exceeded 60 since 1976 strauss and tarr apparently data on the number of black female economists were not tabulated

community differences in business births and business growths abstract the published literature relating to the location of a business tends to support two different kinds of theories 1 that business locations are selected to minimize costs or 2 that decision makers select locations because of personal preferences this study attempts to find explanations as to why certain communities have grown faster than others and to provide a model for the location decision of a start up business we find a negative correlation of two entrepreneurship measures to environmental factors that are usually considered to be desirable i e health care and the environment climate and terrain recreation and low crime we find a weak correlation between community attitudes and the entrepreneurship measures we also find a positive correlation of entrepreneurship with a high number of college graduates a negative correlation when a high proportion of the population is over age 65 population mobility and low unemployment are also positively correlated with the measures but those factors seem at least as likely to be results as to be causes of business births and business growth we believe that start ups are vital for any community that wishes to grow therefore the location decision of start up businesses seems important we propose a model of the location decision of a start up a model that emphasizes the individuality of the decision maker and the specific success requirements of the business the driving force behind a start up can be a decision maker s desire for personal gain a problem that begs a solution or a solution that is looking for a problem in some cases the reason for starting a business will dictate its location in other cases success requirements of the business will dominate we believe that researchers can gain a true understanding of the location decision only by considering both the preference of the decision maker and the requirements of the specific business

employment and unemployment in the 1930s the great depression is to economics what the big bang is to physics as an event the depression is largely synonymous with the birth of modern macroeconomics and it continues to haunt successive generations of economists with respect to labor and labor markets these facts evidently include wage rigidity persistently high unemployment rates and long term joblessness traditionally aggregate time series have provided the econometric grist for distinguishing explanations of the great depression recent research on labor markets in the 1930s however has shifted attention from aggregate to disaggregate time series and towards microeconomic evidence this shift in focus is motivated by two factors first disaggregated data provide many more degrees of freedom than the decade or so of annual observations associated with the depression and thus may prove helpful in distinguishin g macroeconomic explanations second disaggregation has revealed aspects of economic behavior hidden in the time series that may be essential to their proper interpretation and in any case are worthy of study in their own right although the substantive findings of recent research are too new to judge their permanent significance i believe that the shift towards disaggregated analysis is an important contribution the paper begins by reviewing the conventional statistics of the united states labor market during the great depression and the paradigms to explain them it then turns to recent studies of employment and unemployment using disaggregated data of various types the paper concludes with discussions of

the effect on black white wage differences of differences in the quantity and quality of education using data from the national longitudinal survey of youth for the years 1979 88 the author examines the extent to which black white differences in educational attainment educational quality and unmeasured individual ability can explain black white wage differences an analysis that corrects for both selectivity and ability biases inherent in estimating the education wage relationship shows that the main source of the black white wage differential is the racial difference in the quality rather than quantity of schooling in fact the author concludes closing the racial gap in the basic skills learned in school could reduce the wage differential by two thirds

evidence on discrimination in employment codes of color codes of gender there is substantial racial and gender disparity in the american economy as we will demonstrate discriminatory treatment within the labor market is a major cause of this inequality the evidence is ubiquitous careful research studies that estimate wage and employment regressions help wanted advertisements audit and correspondence studies and discrimination suits that are often reported by the news media yet there appear to have been periods of substantial reductions in economic disparity and discrimination for example donohue and heckman provide evidence that racial discrimination declined during 1965 1975 1 gottschalk has produced statistical estimates that indicate that discrimination against black males dropped most sharply between 1965 and 1975 and that discrimination against women declined during the interval 1973 1994 2 but some unanswered questions remain why did the movement toward racial equality stagnate and eventually decline after the mid 1970s what factors are most responsible for the remaining gender inequality what is the role of the competitive process in the elimination or reproduction of discrimination in employment

missing gains from trade the theoretical result that there are gains from trade is a central tenet of international economics assuming perfect competition and no market failures trade acts like a technological improvement that expands the set of feasible allocations and enables pareto superior outcomes to be achieved a recent body of research has sought to quantify the magnitude of these welfare gains in a class of standard trade models that satisfy a constant elasticity gravity equation the welfare gains from trade can be computed using only aggregate data the open economy domestic trade share and the elasticity of trade with respect to variable trade costs see arkolakis costinot and rodriguez clare 2012 one of the main findings from this literature is that the welfare gains from trade are relatively modest for example in a study of 19 oecd countries eaton and kortum 2002 find that the welfare cost of moving to autarky ranges from 0 2 10 3 percent many extensions to this quantitative approach have been considered including the introduction of input output linkages e g caliendo and parro 2012 and multiple sectors e g ossa 2012 some of these extensions can substantially increase the predicted welfare gains from trade as surveyed in costinot and rodriguezclare forthcoming which reports a range of potential values for the welfare gains from trade in this paper we suggest a channel for welfare gains that the standard quantitative approach

vertical specialization and gains from trade multi stage production is widely recognized as an important feature of the modern global economy this feature has been incorporated into many state of the art quantitative trade models and has been shown to deliver significant additional gains from international trade

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

race and home ownership from the end of the civil war to the present we present new estimates of home ownership for black and white households from 1870 to 2007 black ownership increased by 46 percentage points whereas white ownership increased by 20 points remarkably 25 of the 26 point narrowing occurred between 1870 and 1910 part of this early convergence is accounted for by falling white ownership due to movement out of agriculture but most is accounted for by post emancipation gains among blacks after 1910 white and black households increased ownership but the racial gap barely changed we discuss the influence of residential segregation public policy and permanent income on the ownership gap

production of public safety are socioeconomic characteristics of local communities important factors this paper uses the translog cost function and cross section data from florida to investigate the importance of socioeconomic characteristics sec of local communities in the production of public safety the approach used is noteworthy in four respects 1 the underlying production function is specified as an agem production function 2 sec are treated as non purchased fixed inputs 3 two variables are used to proxy sec in estimation and 4 the paper test for the existence of endogenous quality differences in safety it is shown that exclusion of sec from the production cost function of safety leads to misspecification and hence they provide a misleading guide to policy

race and human capital comment according to human capital theory changes in the racial schooling gap are a key factor in the historical evolution of blackwhite male income ratios in a recent paper in this review 1984 james smith points out a basic paradox in the human capital explanation race differences in years of schooling have diminished sharply and continuously for male cohorts born in the twentieth century black white male income ratios however rose only slightly in the aggregate before 1960 after 1960 the ratios increased appreciably smith resolves the paradox by constructing new estimates of the racial schooling gap for cohorts stretching back to the civil war based on retrospective educational attainment data from the 1940 and subsequent censuses race differences in years of schooling widened among males born from 1886 to 1910 additionally the quality of black schooling fell relative to the quality of white schooling since these cohorts dominate the census occupation and income statistics until 1960 smith claims the relative constancy of black white income ratios until 1960 is consistent with the human capital model this comment challenges one of smith s conclusions the increase in the racial schooling gap is shown to be spurious scholars often interpret census attainment data as a measure of years of schooling but the data refer to highest grade completed historically the average black pupil took longer than a single school year to complete a grade retention alone would not bias the census attainment data most blacks born in the late nineteenth century however were educated in ungraded schools for them census attainment data measure years of schooling not grades the shift from ungraded to graded schools took place throughout the period of educational retrogression identified by smith it is the change from years to grades that causes black schooling levels to appear to lag behind white schooling levels consistent data show a continuously decreasing racial schooling gap whatever the merit of smith s explanation it cannot rest on census attainment data beginning in 1890 the u s bureau of the census reported school attendance rates for narrow age groups for example ages 5 to 9 1 i use these data to construct new estimates of average years of schooling in the following manner let p j proportion of children of age j at school a e minimum age at entering school and a l maximum age at leaving school i assume that a e 5 and a l 20 since attendance rates before age 5 or after age 20 were negligible for the period because data are unavailable for single years of age i also assume the agespecific attendance rates are equal to the average attendance rate for the relevant age 2 j a l group the sum ej a e p j estimates average years of schooling 3 empirically the number of students who skip a grade is less than the number who fail the grade hence average years of schooling should exceed average highest grade completed table 1 presents the cohort specific estimates of years of schooling according to my calculations the racial schooling gap fell from 3 8 years among 1886 90 cohorts to 2 5 years among 1906 10 cohorts according

race and human capital reply to arrive at a tenable interpretation of black history it is important to resolve the conflict between my measure retrospective years of schooling completed and robert margo s measure prospective accumulation across ages of cohort specific attendance rates my series reconciled the apparent inconsistency between the stagnant pre 1940 black white income ratios and what scholars had previously thought was a steady narrowing of racial education differences margo s series not only would restore that incon

gains from trade and the sovereign bond market abstract increasing international flows of goods services and financial assets have been shown to increase a country s welfare through various channels this paper studies how a country s access to a bond market affects its welfare gains from international trade we do so by incorporating a sovereign bond market into a simple armington 1969 s trade model while standard trade models suggest surprisingly small gains from trade our model implies that introducing channels through a sovereign bond market greatly magnifies the gains from trade key mechanisms in the model are confirmed by data and the results are found to be robust to a variety of considerations

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

still different after all these years solidarity behavior in east and west germany abstract using data from laboratory experiments we find that east germans show consistently less solidarity than west germans there has been no convergence in the 20 years after the reunification while it has recently been estimated that political values converge 20 to 40 years after the reunification alesina and fuchs schundeln 2007 we conclude from our findings that social behavior changes more slowly than political values we hypothesize that this is due to complementarities involved in individual social behavior and the necessity to coordinate on social norms on the society level

discrimination human capital and black white unemployment evidence from cities neither human capital theory nor the declining discrimination hypothesis can account for the failure of the black white employment gap to fall along with the wage gap however the weakness of the labor market since 1970 suggests that sustained employment discrimination in the context of restrictions on compensatory wage discrimination can explain these trends this hypothesis is assessed with a cross sectional model employing 1980 census summary data on smsas the innovative feature of this model is the use of complaints of job discrimination received by the equal employment opportunity commission as proxies for actual discrimination results support the contention that the forms of discrimination have undergone a compositional shift and that employment discrimination reduces the probability of black employment

the spatial mismatch hypothesis what has the evidence shown this paper reviews 20 years worth of empirical evidence on the spatial mismatch hypothesis after briefly surveying the relevant models from urban and labour economics and recent trends in employment and population suburbanisation the empirical evidence on spatial effects is examined this literature includes evidence on the effects of residential segregation residential suburbanisation and employment suburbanisation and direct measures of access such as travel times the most recent evidence suggests that spatial mismatch is relevant for explaining black white employment differences though the magnitudes of these effects remain unclear

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

explaining black white wage convergence 1940 1950 during the 1940s racial differences in wages narrowed at an unusually rapid pace using a decomposition technique different from that of previous studies the author shows that wage compression be

understanding black white wage differentials 1960 1990 understanding black white wage differentials 1960 1990 author s james j heckman thomas m lyons petra e todd source the american economic review vol 90 no 2 papers and proceedings of the one hundred twelfth annual meeting of the american economic association may 2000 pp 344 349 published by american economic association stable url http www jstor org stable 117248 accessed 16 08 2008 00 56

the role of human capital in earnings differences between black and white men d uring the past 50 years the earnings of black men have increased substantially both in absolute terms and relative to those of white men as shown in figure 1 in 1940 the black white weekly earnings ratio among men ages 25 34 was 49 percent by 1980 it had increased to 79 percent during the 1980s however the overall black white earnings gap did not narrow and at younger ages the gap actually widened although the 1980s is not the first decade since 1940 in which black men made little or no gains in relative earnings the 1950s was another the lack of progress in the 1980s is nevertheless puzzling and a source of concern this article examines the factors underlying the differential in earnings between black men and white men with a focus on the role of human capital since 1940 successive generations of black men entering the labor force have been increasingly more educated relative to white men both in terms of years of school completed and in the quality of schooling obtained as the education and income levels of black parents increased racial differences in the transmission of human capital in the home were also likely to have narrowed this convergence in educational differences combined with the migration of blacks out of the south contributed to the narrowing in the racial gap in earnings over the 1940 80 period particularly in the first half of the period but human capital factors education and migration were not the only source of convergence in black white differences in earnings the patterns of change in the earnings gap support the contention that declining labor market discrimination against blacks has also contributed to the rise in the black white earnings ratio moreover the acquisition of human capital itself has been strongly affected by societal and governmental discrimination since blacks were long provided with greatly inferior schooling resources

spite and development in a wide variety of settings spiteful preferences would constitute an obstacle to cooperation trade and thus economic development this paper shows that spiteful preferences the desire to reduce another s material payoff for the mere purpose of increasing one s relative payoff are surprisingly widespread in experiments conducted in one of the least developed regions in india uttar pradesh in a one shot trust game the authors find that a large majority of subjects punish cooperative behavior although such punishment clearly increases inequality and decreases the payoffs of both subjects in experiments to study coordination and to measure social preferences the findings reveal empirical patterns suggesting that the willingness to reduce another s material payoff either for the sake of achieving more equality or for the sake of being ahead is stronger among individuals belonging to high castes than among those belonging to low castes because extreme social hierarchies are typically accompanied by a culture that stresses status seeking it is plausible that the observed social preference patterns are at least partly shaped by this culture thus an exciting question for future research is the extent to which different institutions and cultures produce preferences that are conducive or detrimental to economic development

peddlers forever culture competition and discrimination contemporary economic theory has all but completed the burial of the idea that market discrimination explains racial wage differentials or differences in general pecuniary accomplishments across ethnic groups under competitive conditions we need only await the eulogy interment began with the failure of the model premised on employers taste for discrimination the preferences of employers for members of one group over another could not sustain wage differentials under competition if the individuals from each group were equally able although the initial argument was made under the assumptions of neoclassical perfect competition it was beaten back by the austrian process view of competition see israel kirzner 1973 a latent reservoir of alert entrepreneurs presumably would seize the profit opportunities generated by the discriminatory wage gap drive discriminating employers from the market and erode the wage differentials valiant efforts emerged subsequently to raise from the dead the idea that competition might eliminate market discrimination these efforts involved the development of market discrimination models under the states of affairs characteristic of neoclassical imperfect competition or so called statistical discrimination neither case precluded the possibility of ingenious entrepreneurship nor the entrepreneurial capacity to smell profits kirzner p 229 as a result in neither case could the existence of wage or earnings differentials be maintained by employer decisions in the first case the inventive entrepreneur could circumvent or bring down the barrier that was the source of the imperfection similarly in the second case the clever entrepreneur could devise new procedures for overcoming existing informational discrepancies that might exist about the abilities of the members of each of the ascriptively distinct groups see darity 1982 the application of the austrian process view of competition to the problem of racial and ethnic wage differences stripped market discrimination of its analytic significance however the empirical persistence of such wage differentials in the u s economy is well established the demise of the theory of market discrimination under competitive conditions has led to increasing use of the human capital explanation for differences in economic achievement across ascriptively distinct groups after many years and scores of statistical studies that revealed that convergence in observable human capital characteristics especially years of formal education did not lead to the anticipated abolition of black white wage gaps see williams 1984 there is now a shift underway that identifies the source of the alleged human capital differences as unobservable cultural differences between ascriptively distinct groups cultural variation is accorded primacy in explaining ethnic and racial differences in economic achievement in light of the death of the market discrimination explanation the culturalogical explanation is given added force by the observation that certain ethnic groups japanese and jewish americans to name but two have managed to succeed despite discrimination see barry chiswick 1983a b the themes of culture and competition thus are the focus of this essay we first provide substantive and historical critiques of the new cultural variant of the human capital theory second we argue that the existence of ongoing market discrimination can be revived by employing an alternative university of north carolina chapel hill nc 27514 and university of texas austin tx 78712 respectively we are grateful to art goldsmith bobbie horn steve steib and david swinton for helpful comments research support was provided by the southern center for public policy studies at clark college in atlanta

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

biased screening and discrimination in the labor market the traditional economic analysis of discrimination is based on gary becker s study of taste discrimination by employers employees and consumers more recent work by kenneth arrow 1972 1973 has attempted to interpret intergroup wage differences in an alternative framework as a rational reaction to uncertainty in labor markets his model of statistical discrimination demonstrates that when the screening process used to determine a worker s qualifications is costly and prior expectations of productivity differ across race or sex groups then wage differentials may arise between workers of identical productivity by implicitly assuming a perfect screening process arrow ignores a potentially important source of wage differentials namely the fact that the screening process might be a more reliable predictor of productivity for one group than for another our paper generalizes the arrow model in two ways first in contrast to arrow we assume that all groups have identical distributions of productivity secondly the screening process used by the firm to determine an applicant s productivity is biased in the sense that a members of various groups may pass the test in different proportions despite their identical productivity distributions and b the predictive power of the test might vary across groups our objective is to analyze the effects of these types of biases in the screening process on the wage differentials between different population groups

the division of labor coordination costs and knowledge this paper considers specialization and the division of labor a more extensive division of labor raises productivity because returns to the time spent on tasks are usually greater to workers who concentrate on a narrower range of skills the traditional discussion of the division of labor emphasizes the limitations to specialization imposed by the extent of the market we claim that the degree of specialization is more often determined by other considerations especially emphasized are various costs of coordinating specialized workers who perform complementary tasks and the amount of general knowledge available