human capital accumulation in a federation abstract more than half of the variation across u s school districts in real k 12 education expenditures per student is due to differences between rather than within states i study the welfare implications of redistribution of education expenditures by the federal government using an analytically tractable model of human capital accumulation with heterogeneous agents and endogenous state policies the net welfare effect of federal redistribution depends on a trade off between the positive effect of redistributing resources toward poorer states and the negative effect resulting from misallocation of population across states federal redistribution increases welfare in a calibrated version of the model

do better schools matter parental valuation of elementary education the evaluation of numerous school reforms requires an understanding of the value of better schools given the difficulty of calculating the relationship between school quality and student outcomes i turn to another method and use house prices to infer the value parents place on school quality i look within school districts at houses located on attendance district boundaries houses then differ only by the elementary school the child attends i thereby effectively remove the variation in neighborhoods taxes and school spending i find that parents are willing to pay 2 5 percent more for a 5 percent increase in test scores this finding is robust to a number of sensitivity checks

the information content of security prices a second look abstract beaver lambert and morse 1980 employ a regression of percentage change in prices on percentage change in earnings in which data are grouped by the dependent variable reverse regression offers a more intuitive and direct way to assess the information content of security prices the objective of beaver et al while grouping is asymptotically equivalent reverse regression is a more efficient way of examining the incremental explanatory power of lagged values of percentage change in price with respect to accounting earnings

school finance reform and private school enrollment evidence from california abstract abstract this paper uses the school finance reforms in california in the 1970s to examine whether the constraints such reforms impose on school districts lead to switching to private schools misspecifications of demand in previous work have led to understatement of reform effects an empirical model of schooling share equations is derived from a discrete choice framework large biases are shown to result from failure to account for heterogeneity of demanders and school district specific fixed effects simulations indicate that the changes in public provision potentially resulting from reform explain a sizeable portion of the growth in the private school share

fiscal shenanigans targeted federal health care funds and patient mortality we explore the effectiveness of matching grants when lower levels of government can expropriate some of the funds for other uses using data on the medicaid disproportionate share program we identify states that were most able to expropriate funds payments to public hospitals in these states were systematically diverted and had no significant impact on patient mortality payments that were not expropriated were associated with significant declines in patient mortality overall subsidies were an effective mechanism for improving outcomes for the poor but the impact was limited by the ability of state and local governments to divert the targeted funds

management ownership and market valuation an empirical analysis we investigate the relationship between management ownership and market valuation of the firm as measured by tobin s q in a 1980 cross section of 371 fortune 500 firms we find evidence of a significant nonmonotonic relationship tobin s q first increases then declines and finally rises slightly as ownership by the board of directors rises for older firms there is evidence that q is lower when the firm is run by a member of the founding family than when it is run by an officer unrelated to the founder

the information content of current cost income relative to dividends and historical cost income in september 1979 the financial accounting standards board fasb issued statement no 33 financial reporting and changing prices one of the items required by this statement is current cost income from continuing operations ccifco this item is considered by the fasb to be useful in assessing distributable income that is the amount of cash that may be distributed without reducing the operating capability of an enterprise sfas no 33 para 124 in essence a current cost income measure is claimed to remove the illusory inflation profit component and as such is potentially a better indicator of dividend paying ability evidence also exists that current dividends have information content which is consistent with the notion that they provide information on future income and dividends see for example pettit 1972 1976 griffin 1976 and aharony and swary 1980 however dividends are somewhat discretionary in which case ccifco may provide a basis for determining which dividend signals have implications for firm value and which do not since the accounting profession is currently in the process of assessing the desirability of continued disclosure of current cost information it

raiders or saviors the evidence on six controversial investors abstract carl icahn irwin jacobs carl lindner david murdock victor posner and the late charles bluhdorn are usually portrayed as corporate raiders the evidence here however shows that between 1977 and 1982 when it was first announced that they had purchased stock in a given firm stock prices on average increased significantly the investors activities in target firms for the two years following the initial stock purchase are likewise inconsistent with raiding we discuss two hypotheses that are consistent with the evidence first these investors improve the management of target firms second they are systematically able to identify under priced stocks

relying on the private sector the income distribution and public investments in the poor abstract what drives governments with similar revenues to provide very different amounts of goods with private sector substitutes education is a prime example i use exogenous shocks to brazilian municipalities revenue during 1995 2008 generated by non linearities in federal transfer laws to demonstrate two things first municipalities with higher income inequality or higher median income allocate less of a revenue shock to education and are less likely to expand public school enrollment they are more likely to invest in public infrastructure that is broadly enjoyed like parks and roads or to save the shock second i find no evidence that the quality of public education suffers as a result if anything unequal and high income areas are more likely to improve public school inputs and test scores following a revenue shock given their heavy use of private education i further provide evidence that an increase in public sector revenue lowers private school enrollment

why do households without children support local public schools linking house price capitalization to school spending while residents receive similar benefits from many local government programs only about one third of all households have children in public schools we argue that capitalization of school spending into house prices can encourage even childless residents to support spending on schools we identify a proxy for the extent of capitalization the supply of land available for new development and show that towns in massachusetts with little undeveloped land have larger changes in house prices in response to a plausibly exogenous spending shock towns with little available land also spend more on schools we extend these results using data from school districts in 46 states showing that per pupil spending is positively related to the percentage of developed land this positive correlation persists only in districts where the median resident is a homeowner and is stronger in districts with more elderly residents who do not use school services and have a shorter expected duration in their home our findings support models in which capitalization encourages the provision of durable local public goods and provides an additional reason why some elderly support local school spending

the flypaper effect what happens to a state s spending when it receives an unconditional grant from the federal government the standard theoretical analysis predicts that the increase in spending will be the same as that generated by an equivalent increase in local incomes or roughly 5 10 percent for most states in contrast numerous empirical analyses have found that spending increases by much more with some estimates near 100 percent this result is known as the flypaper effect since the money appears to stick where it hits the authors review this evidence as well as other studies that find similar behavior in firms

the rise of the states u s fiscal decentralization in the postwar period article i nfo article history one of the most dramatic changes in the fiscal federalism landscape during the postwar period has been the rapid growth in state budgets which almost tripled as a share of gdp and doubled as a share of government spending between 1952 and 2006 we argue that the greater role of states cannot be easily explained by changes in tiebout forces of fiscal competition such as mobility and voting patterns and are not accounted for by demographic or income trends rather we demonstrate that much of the growth in state budgets has been driven by changes in intergovernmental interactions restricted federal grants to states have increased and federal policy and legal constraints have also mandated or heavily incentivized state own source spending particularly in the areas of education health and public welfare these outside pressures moderate the forces of fiscal competition and must be taken into account when assessing the implications of observed revenue and spending patterns

the impact of local funding on the technical efficiency of oklahoma schools abstract the parameters of a stochastic production frontier and the determinants of x inefficiency are estimated simultaneously using a maximum likelihood estimator mle proposed by battese and coelli empirical eco 20 1995 325 the purpose is to test the effect of local control and funding on public school x inefficiency

education equity and intergenerational mobility quasi experimental evidence from court ordered school finance reforms starting from early seventies court ordered school finance reforms sfrs have fundamentally changed the landscape of primary and elementary education finance in the us this paper employs sfrs as quasi experiments to quantify the effects of education equity on intergenerational mobility within commuting zones first i use reduced form difference in difference analysis to show that 10 years of exposure to sfrs increases the average college attendance rate by about 5 2 for children with the lowest parent income the effect of exposure to sfrs decreases with parent income and increases with the duration of exposure second to directly model the causal pathways i construct a measure for education inequity based on the association between school district education expenditure and median family income using exposure to sfrs as the instrumental variable 2sls analysis suggests that one standard deviation reduction in education inequality will cause the average college attendance rate to increase by 2 2 for children at the lower end of the parent income spectrum placing the magnitudes of these effects in context i conclude that policies aimed at increasing education equity such as sfrs can substantially benefit poor children but they alone are not enough to overcome the high degree of existing inequalities key words public education finance intergenerational mobility school finance reforms quasi experiments

the effects of school spending on educational and economic outcomes evidence from school finance reforms since the coleman report many have questioned whether public school spending affects student outcomes the school finance reforms that began in the early 1970s and accelerated in the 1980s caused dramatic changes to the structure of k 12 education spending in the united states to study the effect of these school finance reform induced changes in public school spending on long run adult outcomes we link school spending and school finance reform data to detailed nationally representative data on children born between 1955 and 1985 and followed through 2011 we use the timing of the passage of court mandated reforms and their associated type of funding formula change as exogenous shifters of school spending and we compare the adult outcomes of cohorts that were differentially exposed to school finance reforms depending on place and year of birth event study and instrumental variable models reveal that a 10 increase in per pupil spending each year for all 12 years of public school leads to 0 31 more completed years of education about 7 higher wages and a 3 2 percentage point reduction in the annual incidence of adult poverty effects are much more pronounced for children from low income families exogenous spending increases were associated with notable improvements in measured school inputs including reductions in student to teacher ratios increases in teacher salaries and longer school years jel codes j10 i20 h7

immigration and spending on public education california 1970 2000 abstract the evolution of education spending in california has received plenty of attention from both academics and practitioners after this state s education finance reform in the 1970 s this paper quantifies the contribution of immigration to the relative decline in elementary and secondary public education spending per student in california in the period 1970 2000 a quantitative model of school choice and voting over public education is used to perform the counterfactual experiments of interest the model predicts that education spending per student in california would have been 24 higher in the year 2000 if u s immigration had been restricted to its 1970 level

effect of constraints on tiebout competition evidence from a school finance reform abstracteffect of constraints on tiebout competition evidence from a school finance reform regional studies michigan s school finance reform significantly increased state aid to low spending districts and placed restraints on the growth of spending in high spending districts it is noteworthy that there is no literature yet on the impact of such reforms on resource allocation by school districts this study begins to fill this gap it finds that the reform led the high spending districts to allocate a lower share of their total expenditure to support services and a higher share to instruction relative to the low spending districts to the extent that instructional expenditures are more productive and contribute to student achievement more than support services expenditures these results suggest that the reform led to a relative increase in productivity in the high spending districts

permanent versus transitory components of annual earnings and estimation error in earnings response coefficients abstract previous research has generally estimated unexpected earnings as the change relative to the previous year assuming that shocks to annual earnings are purely permanent in the presence of transitory components of annual earnings we predict that using earnings changes as a proxy for unexpected earnings causes earnings response coefficients to be understated and the estimation error to be negatively cross sectionally correlated with persistence the negative correlation causes the association between earnings response coefficients and persistence to be overstated we use the ima 1 1 model to capture transitory components of annual earnings and obtain results that are consistent with our predictions

integration of the sales force an empirical examination this article develops and tests a model of integration of a marketing function personal selling the model derived from transaction cost analysis as developed principally by williamson is formulated as a logistic function which is estimated with data from the electronic components industry as expected integration is associated with increasing levels of asset specificity difficulty of performance evaluation and the combination of these two factors contrary to the transaction cost model neither frequency of transactions nor interaction of specificity and environmental uncertainty is significantly related to integration the transaction cost model improves significantly upon the fit of a simple model relating integration to company size alone these results suggest that for studying transactions of this kind it is fruitful to view the firm as a governance structure

education finance reform and the distribution of education resources between 1971 and 1996 opponents of local funding for public schools successfully challenged the constitutionality of school finance systems in sixteen states using the variation across states in the timing of these cases the authors investigate the impact of reform on the distribution of school resources their results suggest that court ordered finance reform reduced within state inequality in spending by 19 to 34 percent successful litigation reduced inequality by raising spending in the poorest districts while leaving spending in the richest districts unchanged thereby increasing aggregate spending on education reform led states to fund additional spending through higher state taxes copyright 1998 by american economic association

the effect of rising income inequality on taxation and public expenditures evidence from u s municipalities and school districts 1970 2000 the income distribution in many developed countries widened dramatically from 1970 to 2000 some scholars argue that income inequality contributes to a host of social ills by undermining voters will ingness to support public expenditures in contrast we find that growing income inequality is associated with an expansion in government reven ues and expenditures on a wide range of services in u s municipalities and school districts results are robust to a number of model specifica tions including instrumental variables that address the endogeneity of the local income distribution our results are inconsistent with models pre dicting that heterogeneous societies provide lower levels of public goods public sector 3 two types of identification problems com plicate estimation of the empirical relationship between income inequality and public goods provision the cross country variation often used for this exercise suffers from omitted variable bias that is countries with high income inequality may also have other characteristics that could limit the size of the public sector cross state comparisons also suffer from endogenous household sorting if low or high income families migrate to states with high public expenditures the positive association observed in the litera ture between state public expenditures and income inequal ity may be spurious in this paper we examine the relationship between income inequality and government finances in municipali ties and school districts in the united states from 1970 to 2000 local government represents a large segment of the economy in fiscal year 2009 local governments disbursed more than 3 trillion for such important services as educa tion and public safety 4 our study has several advantages over existing empirical work first the large number of local governments in our data exhibit much greater variation in income inequality over time than do the small number of countries or states used in previous studies a large sample size allows us to separately control for changes in the top end or bottom end of the income distribution and for initial levels of inequal ity thus ruling out a mechanical association between tax revenues and rising income for the affluent second we develop an instrumental variable strategy to mitigate con cerns about potential reverse causality from the endogenous

accounting for changing prices the value relevance of historical cost price level and replacement cost accounting in mexico this paper investigates the value relevance of historical cost price level and replacement cost accounting using a sample of mexican firms from 1989 to 1995 it contributes to prior research by distinguishing between two distinct aspects of changing prices 1 the change in the general price level and 2 the change in the value of specific non monetary assets i select mexico to examine because it is unique in requiring and disclosing separately price level and replacement cost adjustments a sample of mexican firms also addresses a key reason cited for mixed results in previous assessments of the usefulness of price level and replacement cost accounting using united states data the effects of inflation are too weak to detect high rates of inflation in mexico ranging between 7 and 52 during the sample period mitigate that potential problem results indicate that replacement cost adjustments are relatively and incrementally relevant beyond historical cost and price level measures while price level adjustments are incrementally value relevant beyond historical measures

measuring energy use and co2 emission performances for apec economies abstract this study proposes environmental dea based models to measure energy use efficiency co2 emissions efficiency and an environmental economic efficiency eee for the asia pacific economic cooperation apec economies for the period of 2006 2010 in our models population and total primary energy consumption are the two inputs while gdp and co2 emissions represent the desirable and undesirable outputs respectively empirical results from 20 apec economies showed that australia brunei hong kong and singapore were identified as efficient countries for five consecutive years from 2006 to 2010 in terms of energy use efficiency as for co2 emission efficiency brunei hong kong and singapore were identified as efficient countries for the five consecutive years from 2006 to 2010 as far as eee is concerned most countries in apec exhibited higher economic efficiency than environmental efficiency moreover both energy use efficiency and co2 emission efficiency were found to be significantly related to the eee value p

evidence on income measurement properties of asr no 190 and sfas no 33 data a number of studies have tested the association between security returns or levels of market value and current cost accounting data as reported under sec accounting series release no 190 asr 190 and statement of financial accounting standards no 33 sfas 33 for example beaver griffin and landsman 1982 henceforth bgl beaver and landsman 1983 henceforth bl and olsen 1985 found no association while bublitz frecka and mckeown 1985 henceforth bfm and murdoch 1986 found a weak association 1 in this paper we estimate cross section regressions of security returns on historical cost net income and holding gains as was done previously but with several extensions first we define our variables in terms of realizations of returns income and holding gains rather than in terms of unexpected changes thus we

the value of school facility investments evidence from a dynamic regression discontinuity design author s cellini stephanie riegg ferreira fernando rothstein jesse abstract despite extensive public infrastructure spending surprisingly little is known about its economic return in this paper we estimate the value of school facility investments using housing markets standard models of local public goods imply that school districts should spend up to the point where marginal increases would have zero effect on local housing prices our research design isolates exogenous variation in investments by comparing school districts where referenda on bond issues targeted to fund capital expenditures passed and failed by narrow margins we extend this traditional regression discontinuity approach to identify the dynamic treatment effects of bond authorization on local housing prices student achievement and district composition our results indicate that california school districts underinvest in school facilities passing a referendum causes immediate sizable increases in home prices implying a willingness to pay on the part of marginal homebuyers of 1 50 or more for each 1 of capital spending these effects do not appear to be driven by changes in the income or racial composition of homeowners and the impact on test scores appears to explain only a small portion of the total housing price effect c 2010 by the president and fellows of harvard college and the massachusetts institute of technology

mental accounting of public funds the flypaper effect in the lab abstract we report evidence from a series of laboratory experiments that focus on mental accounting of public funds groups of three players decide upon how much to redistribute within the group we measure the preference to redistribute when transfers are made either out of individual accounts the players own money or out of a common account the group s money since the common account is dissolved after each round and paid out to individuals its size should not affect the decision to redistribute the experiment is designed to control for anchoring as a potential confounding effect we find that the size of the common account significantly affects redistribution behavior specifically the transfer increases in the size of the common account this effect is significantly more pronounced when the transfer is paid out of the common account instead of the individual account we interpret these findings as evidence for a flypaper effect due to mental accounting

housing markets and residential segregation impacts of the michigan school finance reform on inter and intra district sorting abstract local financing of public schools in the u s leads to a bundling of two distinct choices residential choice and school choice and has been argued to increase the degree of socioeconomic segregation across school districts a school finance reform aimed at equalization of school finances can in principle weaken this link between housing choice and choice of schools in this paper we study the impacts of the michigan school finance reform of 1994 proposal a on spatial segregation the reform was a state initiative intended to equalize per pupil expenditures between michigan school districts and reduce the role of local financing we find that proposal a led to a decline in neighborhood sorting within education markets as measured by changes in the value of housing stock and several socioeconomic indicators we also find that the reform affected the dispersion of incomes and educational attainment within school districts increasing within district heterogeneity in the lowest spending school districts while decreasing the same in the highest spending districts however there is a continued high demand for residence in the highest spending communities these findings are robust to various alternative definitions of education market and survive several sensitivity checks these spatial segregation patterns are not replicated in neighboring ohio that did not face similar school finance equalization

ends against the middle determining public service provision when there are private alternatives abstract public provision of a service coexists with private market provision the quality of public provision is determined by majority vote preferences are not single peaked owing to the presence of private alternatives we identify two cases in one majority voting equilibrium always exists and the median income voter is pivotal in the other a necessary condition for equilibrium indentifies the pivotal voter who must have income below the median when equilibrium exists a coalition of middle income households who consume the public alternative will be opposed by a coalition of rich and poor households with the rich choosing private consumption

econometric properties of alternative security return methods in recent years security price research has experienced a proliferation of research designs as a result there is a lack of interstudy comparability which is aggravated by the absence of a formal analysis of the properties of the alternative designs under various conditions the purpose here is to examine one important aspect of research design the choice of the security return measure in a simple but well defined setting of limited parameter uncertainty the analysis leads to the following results 1 with respect to raw returns versus residual returns it explicitly offers three potential rationales for residual returns as such the analysis provides a formal statement of the reasons for residual analyses to supplement the intuitive but less precise statements in the early literature 2 with respect to residual return versus difference in returns methods the analysis indicates the conditions under which a the residual approach dominates the difference in returns approach as judged by the statistical criteria examined b the converse holds and c the two methods possess the same econometric properties 3 the relative properties described in 2 are derived for a general model of nonzero covariation among returns and for two important special cases the zero beta model and the industry effects model

on cross sectional analysis in accounting research abstract this paper examines cross sectional analysis procedures common to many market based accounting research papers both the economic and econometric properties of levels and returns studies are discussed topics covered include the relations between the accounting studies and cash flow valuation models the role of expectations of accounting variables deflators spurious inference risk adjustment and its relation to growth size and leverage residual dependence dependence among explanatory variables and the effect of scale differences across firms major conclusions are that market value is the correct deflator in returns studies and that levels and returns studies are economically but not econometrically equivalent

firm size and the information content of prices with respect to earnings abstract beaver lambert and morse 1980 suggest that prices may be useful in forecasting future earnings we explore the information content of prices with respect to earnings by focusing on firm size and its relation to the predictive accuracy of price based earnings forecasts firm size proxies for the amount of information and for the number of traders and professional analysts processing the available information about an enterprise our empirical results are consistent with the hypothesis that price based earnings will outperform univariate time series forecasts by a greater margin for larger firms than for smaller firms

the relevance of the value relevance literature for financial accounting standard setting another view this paper explains that value relevance research assesses how well accounting amounts reflect information used by equity investors and provides insights into questions of interest to standard setters a primary focus of financial statements is equity investment other uses of financial statement information such as contracting do not diminish the importance of value relevance research value relevance questions can be addressed using extant valuation models value relevance studies address econometric issues that otherwise could limit inferences and can accommodate and be used to study the implications of accounting conservatism r 2001 elsevier science b v all rights reserved jel classification m41 m44 g12

competition and teacher pay i introduction recent policy initiatives are increasing the degree of competition in primary and secondary education the number of charter schools is growing at an astounding rate vouchers are available to eligible children in florida utah and a number of cities including washington d c kafer 2005 school districts throughout the country are experimenting with subcontracting campuses to private firms the increasing popularity of policies that foster school competition dovetails with a burgeoning literature on the effects of educational competition researchers have examined the effects of educational competition on academic outcomes average public school spending and school district efficiency l this research has largely ignored the effects of increased competition on teacher pay yet reductions in the market power of school districts could have a significant impact on teacher earnings if school districts behave as typical monopsonists or oligopsonists when hiring then a lack of competition suppresses wages and policies that are designed to enhance competition among schools could lead to higher teacher salaries ceteris paribus 2 alternatively if a school district s position as a monopolistic provider of education services generates economic rents there are few parties to whom those rents might be dissipated besides school district personnel if teachers have been able to appropriate a share of the economic rents generated by the market power of school districts then increased competition could lower teacher salaries 3 this study uses individual data on more than 335 000 teachers from 670 texas school districts to explore the empirical relationship between competition and teacher pay the analysis suggests that a lack of competition in the public school system has led to significant market power for texas school districts resulting in lower wages for most texas teachers but higher wages for teachers in relatively concentrated markets ii theoretical models the elementary and secondary education industry in the united states is often highly concentrated more than 30 of u s educational markets are served by a single public school district and there are many more that are served by only a handful of educational providers 4 the concentrated nature of education markets suggests two alternative models of teacher wage determination the first is a classic oligopsony model and the second is a rent sharing model an oligopsony model of teacher wage determination boal and ransom 1997 lay out a classic cournot model of oligopsony that can be directly applied to the educational labor market 5 firms school districts choose an employment level l sub i to maximize the firm s revenue function r sub i given the employment level of all other firms in the market l sub i 1 r sub i l sub i w l sub i l sub i l sub i the market wage is determined by the total employment of all firms the first order condition for each firm implies that it chooses l sub i such that 2 mrp sub i w w l sub i l epsilon sup 1 in this model the gap between the marginal revenue product of firm i mrp sub i and the wage rate w depends on the firm s employment share l sub i l and the inverse wage elasticity of labor supply for the market epsilon sup 1 6 assuming that firms have different marginal revenue products the employment weighted average across all the firms in the market is 3 summation over i mrp sub i w l sub i wl epsilon sup 1 summation over i l sub i l sup 2 the last term on the right hand side is the familiar herfindahl index of market concentration thus wages are a function of market concentration h the employment weighted average marginal revenue profit per worker bar

an empirical look at franchising as an organizational form franchise contracts are identified as a hybrid form of economic organization motives for the dominance of franchise arrangements are identified by examining the theoretical literature on franchising and related literatures on the theory of the firm firm growth managerial and employee selection a nd brand name capital empirical tests are performed on the incidence of franchise contracts across states for three industries in which f ranchising is prominent and data are readily available the results s uggest that both principal agent incentives and informational incenti ves favor the use of franchise arrangements copyright 1988 by the university of chicago

vocational training programs and youth labor market outcomes evidence from nepal abstract lack of skills is arguably one of the most important determinants of high levels of unemployment and poverty in response policymakers often initiate vocational training programs in effort to enhance skill formation among the youth using a regression discontinuity design we examine a large youth training intervention in nepal we find twelve months after the start of the training program that the intervention generated an increase in non farm employment of 10 percentage points itt estimates and up to 31 percentage points for program compliers late estimates we also detect sizeable gains in monthly earnings women who start self employment activities inside their homes largely drive these impacts we argue that low baseline educational levels and non farm employment levels and nepal s social and cultural norms towards women drive our large program impacts our results suggest that the program enables otherwise underemployed women to earn an income while staying at home close to household errands and in line with the socio cultural norms that prevent them from taking up employment outside the house

an empirical study on contractual heterogeneity within the firm the vertical integration franchise contracts mix this paper tests a discrete choice model on the mix of franchised and company owned outlets contractual heterogeneity within the firm this is often explained by the existing literature as due to heterogeneous characteristics of the outlets however correspondence between outlets and contracts characteristics is not often observed in reality an explanation is proposed which suggests that contract mixing is driven by the contractual choice of both principal and agents and that heterogeneous agents will choose contracts that match their characteristics this hypothesis is supported by econometric results based on outlet level microdata collected by means of a survey of uk firms

evaluating the efficiency and equity of federal fiscal equalization abstract theoretically federal transfers that make household location decisions efficient should ignore local cost differences subsidize positive externalities and offset differences in federal tax payments and local taxes levied on non residents but not local tax revenues from residents transfers that redistribute resources equitably across regions will likely target areas with individuals of low earnings potential or low real incomes applying these criteria empirically canadian equalization policy appears neither efficient nor equitable but exacerbates pre existing inefficiencies and underfunds minorities locational inefficiencies cost canada 0 41 of income annually and cause over funded provinces to have populations of 30 beyond their efficient long run levels

an approach to statistical inference in cross sectional models with security abnormal returns as dependent variable several recent event studies test hypotheses about the association between event related abnormal security returns and firm characteristics using a three step procedure first forecast model parameters are estimated usually parameters of a market model second prediction errors or residuals are computed over an event period third prediction errors are regressed cross sectionally on firm characteristics hypothesized to influence the impact of the event on share values results of these regressions are used to draw inferences about the relation between abnormal returns and firm characteristics researchers who employ three step procedures acknowledge that crosssectional ols regressions lead to valid inferences if the disturbances are iid normal in cross section see for example leftwich 1981 p 23 and lustgarten 1982 p 138 while sufficient assumptions to draw valid inferences from ols regressions are clear these assumptions are violated if there is cross correlation and cross sectional heteroscedasticity in the firm return processes from which the prediction errors are estimated assumptions about the processes generating these prediction

teacher pay and school productivity exploiting wage regulation abstract the impact of teacher pay on school productivity is a central concern for governments worldwide yet evidence is mixed in this paper we exploit a feature of teacher labour markets to determine the impact of teacher wages teacher wages are commonly set in a manner that results in flat wages across heterogeneous labour markets this creates an exogenous gap between the outside labour market and inside regulated wage for teachers we use the centralised wage regulation of teachers in england to examine the effect of pay on school performance we use data on over 3000 schools containing around 200 000 teachers who educate around half a million children per year we find that teachers respond to pay a ten percent shock to the wage gap between local labour market and teacher wages results in an average loss of around 2 in average school performance in the key exams taken at the end of compulsory schooling in england

are community nuisance fiscal zoning arrangements undermined by state property tax reforms evidence from nuclear power plants and school finance equalization the conventional view of fiscal zoning is that communities make land use accommodations only for nuisance entities that generate sufficient net fiscal benefits state reforms that redistribute property tax revenues have been accused of undermining these decisions ex post this paper tests this critique by examining communities with nuclear power plants sited before the school finance equalization reforms of the 1970s and 1980s hedonic regressions reveal these reforms to disproportionately reduce housing prices in nuclear plant communities but increase them among neighboring areas this pattern of interjurisdictional capitalization is consistent with the concerns raised by critics of these reforms jel h71 h73

the choice of organizational form the case of franchising abstract we examine companies that franchise some units and centrally operate own others the agency problems confronting these two organizational forms are analyzed testable hypotheses are developed the empirical results support the notion that owning versus franchising reflects a trade off among agency related problems the cost of monitoring store managers appears to be especially important in the own franchise decision the level of repeat business and initial investment requirements per unit also appear to be important

an empirical analysis of a firm s decision to franchise abstract hypotheses from monitoring and search cost explanations for the existence of franchising are discussed and tested the evidence offers strong support for the search theory somewhat weaker support for the monitoring shirking theory and no support for the monitoring cheating hypothesis

moral hazard competition and contract design empirical evidence from managerial franchised and entrepreneurial businesses in norway agency theory emphasizes the role of ownership control and incentives in encouraging managers to improve efficiency owners often tie managers to contracts that reduce conflict of interest between owners and managers the differences between alternative business ownership structures have been investigated according to theory we expect managers with an outcome dependent dealer contract to be more efficient than managers with a more integrated and less performance based employee dealer contract we also analyse how competitive pressure might reduce the moral hazard problem and therefore affect contract design berle and means the modern corporation and private property macmillan new york 1932 long ago stated that the market mechanism could constrain the agency problem even so this problem has scarcely been investigated empirically this paper also considers the contractual effect of potential monitoring costs education and relationship age in a model tested on data from 175 dealer contracts in a

efficiency equilibrium and exclusion when the poor chase the rich using a simple adverse selection model we characterize equilibrium when the rich chase the poor if communities are established by competitive entrepreneurs the equilibrium exists is unique and is efficient it involves either complete separation or complete pooling different income groups may rank these qualitative outcomes differently we show how restrictions imposed by a central government may alter the nature of equilibrium such restrictions may be explained as the choice of a low income majority altering the equilibrium to the pooling outcome which they prefer

the effect of state education finance reform on total local resources abstract both the federal government and the states use intergovernmental grants to try to change the composition of local spending across different programs as well as the distribution of resources across localities many states are now under court order to use state education grants to reduce local disparities in education spending while a substantial body of literature suggests that these court orders increase the level and progressivity of state education spending there is little evidence on their broader effects on the total resources available not just for schools in low income districts but for other programs across all localities we find that states finance the required increase in education spending in part by reducing their aid to localities for other programs particularly for wealthier areas thus while court ordered school finance equalizations do increase total state aid to localities for education they do so at the expense of drawing state intergovernmental aid away from programs like public welfare health hospitals and general services these findings provide insight into the effectiveness of using earmarked funds to achieve redistribution

the incremental information content of replacement cost earnings abstract the study explores the incremental explanatory power of replacement cost earnings variables derived from asr 190 data with respect to explaining cross sectional differences in security returns as such the study is a natural extension of previous research including analyses of the effect of security returns of asr 190 data at the time of disclosure investigations of cross sectional relationships between security returns and historical cost earnings and studies of multiple signals the basic finding is that pre holding gain net income provides no incremental explanatory powerm given knowledge of historical cost earnings however the converse does not hold taken together the findings are consistent with the contention that pre holding gain net income is a garbled version of historical cost earnings the basic finding is robust under several extensions of the initial research design the research design incorporates a two stage approach which permits a determination of the incremental explanatory power of collinear variables the findings are in contrast to those of a previous study by easman et al 1979 the nature of the difference in research design inducing the difference is identified potential reasons for the difference in findings are provided

local response to fiscal incentives in heterogeneous communities abstract i examine the impact of a property tax relief program in new york state that lowered the marginal cost of school expenditure to homeowners i find that a typical school district which received 20 of its revenue through the program in the school year 2001 2002 raised expenditure by 4 1 and local property taxes by 6 8 in response to the program i then examine how the preferences of various groups of local taxpayers affect educational spending by identifying systematic variation across districts in the response to fiscal incentives these results support the hypothesis that homeowners are more influential on local expenditure decisions than renters owners of second homes or owners of non residential property

the effects of spending on test pass rates evidence from michigan abstract this study uses data on standardized test scores from 1992 through 1998 at michigan schools to determine the effects of spending on student performance the years in the data set straddle 1994 when michigan dramatically changed the way that k 12 schools are funded and moved toward equalization of spending across schools focusing on pass rates for a fourth grade math tests the most complete and consistent data available for michigan i find that increases in spending have nontrivial statistically significant effects on math test pass rates and the effects are largest for schools with initially poor performance

evidence on the joint and marginal information content of inflation adjusted accounting income numbers one of the major issues debated in the accounting literature over the past decade has been whether to recognize the effects of inflation or general price level changes in accounting reports previous studies addressing this question have provided evidence on the magnitudes and on the information content of alternative inflation accounting solutions those studies essentially adopted either of two approaches i they compared the degree of association between abnormal security returns and a inflation adjusted accounting income numbers and currently reported accounting income numbers respectively or ii they compared the degree of association between systematic risk of securities and the two sets of accounting numbers the objective of this paper is to provide further evidence on the information content of inflation adjusted accounting numbers by adopting an experimental method that enables the testing of both the joint and marginal information content of inflation adjusted and historical cost accounting numbers the results indicate support for the joint

valuation and accounting for inflation and foreign exchange inflation and foreign exchange raise new issues with respect to accounting representations of equity value for example inflation creates an earnings illusion as an artifact of the mismatching of expenses based on allocations of historical costs with current revenues in determining earnings this mismatching distorts mappings of aggregate earnings and book values into equity value such that value relevant information is lost in this article we consider the consequences of inflation and foreign exchange accounting policies including those contained in accounting standards on the value relevance of bottom line accounting numbers policies are identified that achieve efficient accounting in the sense that aggregate comprehensive earnings and book values are sufficient for an accounting representation of equity value the linear relations that emerge provide predictions on capitalization coefficients that help explain results of empirical inquiries as well our analysis provides a theoretical foundation for policies contained in accounting standards that contributes to the resolution of controversies such as that concerning foreign exchange accounting

an analysis of the principal agent problem most analyses of the principal agent problem assume that the principal chooses an incentive scheme to maximize expected utility subject to the agent s utility being at a stationary point an important paper of mirrlees has shown that this approach is generally invalid we present an alternative procedure if the agent s preferences over income lotteries are independent of action we show that the optimal way of implementing an action by the agent can be found by solving a convex programming problem we use this to characterize the optimal incentive scheme and to analyze the determinants of the seriousness of an incentive problem

all school finance equalizations are not created equal school finance equalization has probably affected american schools more than any other reform of the last 30 years understanding it is a prerequisite for making optimal social investments in human capital yet it is poorly understood in this paper i explain why it differs from conventional redistribution because it is based on property values which are endogenous to schools productivity taste for education and the school finance system itself i characterize equalization schemes and show why some level down and others level up schemes that strongly level down have unintended consequences even poor districts can end up worse off i also show how school finance equalization affects property prices private school attendance and student achievement

heterogeneity stratification and growth macroeconomic implications of community structure and school finance this paper examines how socioeconomic stratification and alternative systems of education finance affect inequality and growth agents interact through local public goods or externalities school funding neighborhood effects and economywide linkages complementary skills knowledge spillovers sorting families into homogeneous communities often minimizes the costs of existing heterogeneity but mixing reduces heterogeneity faster integration therefore tends to slow down growth in the short run yet raise it in the long run a move to state funding of education presents society with a similar intertemporal trade off local and global complementarities play major roles in determining the efficient social and educational structures copyright 1996 by american economic association

the effect of increased funding on student achievement evidence from texas s small district adjustment abstract we leverage an obscure set of rules in texas s school funding formula granting some districts additional revenue as a function of size and sparsity we use variation from kinks and discontinuities in this formula to ask how districts spend additional discretionary funds and whether these improve student outcomes a 1000 annual increase in foundation funding or 10 increase in expenditures yields a 0 1 s d increase in reading scores and a near 0 08 increase in math in addition dropout rates decline graduation rates marginally increase as does college enrollment and to a smaller degree graduation these gains accrue in later grades and largely among poorer districts an analysis of budget allocations reveals that additional funding only marginally affects budget shares