market state and civil organizations in latin america beyond the debt crisis the context for rural development abstract the development strategy emerging in latin america implies a sharply redefined balance in the relative roles of the market the state and civil organizations market liberalization has been extensive and intense efforts have been undertaken to make the new rules credible the state has been divested of many productive and regulatory activities but descaling is a reflection of short run stabilization policies and signaling not of long term tendencies since an active state remains strongly in demand civil organizations are assuming active roles as alternative forms to produce and service members and as pressure groups agriculture has gained considerably from the policy reforms together with democratic representation and decentralization of governance this gives renewed opportunities for successful rural development initiatives

the impact of body weight on occupational mobility and career development this paper examines the relationship between individuals weight and their employment decisions over the life cycle i estimate a dynamic stochastic model of individuals annual joint decisions of occupation hours worked and schooling the model allows body weight to affect non monetary costs switching costs and distribution of wages for each occupation and also allows individuals employment decisions to affect body weight i use conditional density estimation to formulate the distributions of wages and body weight evolution i find that heavier individuals face higher switching costs when transitioning into white collar occupations earn lower returns to experience in white collar occupations and earn lower wages in socially intensive jobs simulating the model with estimated parameters decreased occupational mobility accounts for 10 percent of the obesity wage gap while contemporaneous wage penalties for body weight are small the cost over the life cycle is substantial an exogenous increase in initial body mass by 20 percent leads to a 10 percent decrease in wages over the life course

strategic price complexity in retail financial markets abstract there is mounting empirical evidence to suggest that the law of one price is violated in retail financial markets there is significant price dispersion even when products are homogeneous also despite the large number of firms in the market prices remain above marginal cost and may even rise as more firms enter in a non cooperative oligopoly pricing model i show that these anomalies arise when firms add complexity to their price structures complexity increases the market power of the firms because it prevents some consumers from becoming knowledgeable about prices in the market in the model as competition increases firms tend to add more complexity to their prices as a best response rather than make their disclosures more transparent because this may substantially decrease consumer surplus in these markets such practices have important welfare implications

the speed of employer learning the employer learning literature finds support for statistical discrimination on the basis of schooling how economically relevant statistical discrimination is depends on how fast employers learn about workers productive types this article is the first to estimate the speed of employer learning employers learn quickly initial expectation errors decline by 50 within 3 years this estimate places an upper bound on the contribution of signaling this bound varies with the speed of employer learning and with discount rate for a wide range of parameter values the contribution of signaling to the gains from schooling is less than 25

a flexible approach for estimating the effects of covariates on health expenditures our estimation strategy uses sequences of conditional probability functions similar to those used in discrete time hazard rate analyses to construct a discrete approximation to the density function of an outcome of interest conditional on exogenous explanatory variables once the conditional density function has been constructed we can examine expectations of arbitrary functions of the outcome of interest and evaluate how these expectations vary with observed exogenous covariates we demonstrate the features and precision of the conditional density estimation method and compare it to other commonly used methods through monte carlo experiments and an application to health expenditures using the rand health insurance experiment data overall we find that the approximate conditional density estimator provides accurate and precise estimates of derivatives of expected outcomes for a wide range of types of explanatory variables

beauty and the labor market the authors examine the impact of looks on earnings using interviewers ratings of respondents physical appearance plain people earn less than average looking people who earn less than the good looking the plainness penalty is 5 to 10 percent slightly larger than the beauty premium effects for men are at least as great as for women unattractive women have lower labor force participation rates and marry men with less human capital better looking people sort into occupations where beauty may be more productive but the impact of individuals looks is mostly independent of occupation suggesting the existence of pure employer discrimination copyright 1994 by american economic association

cautious risk takers investor preferences and demand for active management actively managed mutual funds have distinct return distributions from their passive benchmarks and our theoretical analysis using tail sensitive risk preferences suggests that active value and growth funds may serve to reduce downside risk and capture upside potential respectively furthermore tail sensitivity measures estimated from the empirical pricing kernel have significant explanatory power for active fund flows even after controlling for business cycles and market wide sentiment finally active funds unlike their passive counterparts have exposures to option strategies hedging downside risk or capturing upside potential

portfolio rebalancing and the turn of the year effect this paper finds that for the 1935 1986 period the market s risk return relation does not have a january seasonal the findings differ from those of other studies due to the use of value weighted rather than equally weighted portfolios inferences are sensitive to the weighting procedure because of the small firm return patterns in january in particular even in those januaries for which the market return is negative small firm returns are positive and they are more positive the higher is beta this is consistent with the portfolio rebalancing explanation of the turn of the year effect since at least 1926 the average return on small firms in january has been unusually high a phenomenon known as the turn of the year effect in this paper we present new evidence regarding the risk return characteristics of small firms in january we find that for small firms there is a positively sloped riskreturn relation in both up and down markets this pattern is difficult to reconcile with the belief that the high return on small firms in january is equilibrium compensation for risk bearing we show how these patterns in small firms returns have led others to conclude that the market s risk return relation has a january seasonal in particular rozeff and kinney 21 and tinic and west 22 23 among others using equally weighted portfolios formed on the basis of historical betas have found a steeper slope for the capm s risk return relation in january than in other months we demonstrate that this pattern exists only for small firms consequently statistical inferences about the risk return relation are heavily dependent upon whether equally weighted or value weighted portfolio returns are used in the estimation we show that for 1935 86 when monthly cross sectional regressions are estimated using value weighted portfolio returns there is no more of a statistically significant difference in the estimated return to risk bearing in january than in the other eleven months of the year the notion that there is a january seasonal in the capm s risk return relation for the us has rapidly become accepted knowledge for example corhay hawawini and michel 6 accept this conclusion and investigate whether other

the effect of work experience on female wages and labour supply this paper develops and implements a semiparametric estimator for investigating with panel data the importance of human capital and time nonseparable preferences to females when aggregate shocks are present it provides a set of conditions for making statistical inferences about agents expectations of their correlated future choices from a short panel under the assumption that observed allocations are pareto optimal a dynamic model of female labour supply and participation is estimated in which experience on the job raises future wages and time spent off the job in the past directly affects current utility or indirectly through productivity in the nonmarket sector

prepayment and the valuation of mortgage backed securities this paper puts forward a valuation framework for mortgage backed securities rather than imposing an optimal value minimizing call condition we assume that at each point in time there exists a probability of prepaying this conditional probability depends upon the prevailing state of the economy to implement our valuation procedure we use maximum likelihood techniques to estimate a prepayment function in light of recent aggregate gnma prepayment experience by integrating this empirical prepayment function into our valuation framework we provide a complete model to value mortgagebacked securities given an optimal value minimizing call policy a mortgage should never be called when its market value is less than its call price similarly a mortgage should be called if it is worth more than its call price however mortgagors often call their loans when the prevailing refinancing rate exceeds the contract rate on the loan dunn and mcconnell 1981 in addition some mortgagors do not call their loans when the loan s contract rate exceeds the prevailing refinancing rate the purpose of this paper is to put forward a valuation framework for mortgagebacked securities consistent with these stylized facts associated with mortgage prepayments the mortgagor s prepayment decision is integral to our valuation framework however we do not impose an optimal value minimizing call condition to price these securities rather we assume that at each point in time there exists a probability of prepaying this conditional probability depending upon the prevailing state of the economy by integrating this prepayment function into our valuation framework we provide a complete model to value mortgage backed securities to implement our valuation procedures we estimate a prepayment function given recent gnma prepayment experience we follow green and shoven 1986 by using a proportional hazards model to estimate the influence of various explanatory variables or covariates on the mortgagor s prepayment decision distinct from green and shoven we explicitly model the effects of seasoning as well as investigating the influence of interest cost savings from refinancing in addition we also consider the effects of lagged refinancing rates heterogeneity

behavioral biases of mutual fund investors we examine the effect of behavioral biases on the mutual fund choices of a large sample of us discount brokerage investors using new measures of attention to news tax awareness and fund level familiarity bias in addition to behavioral and demographic characteristics of earlier studies behaviorally biased investors typically make poor decisions about fund style and expenses trading frequency and timing resulting in poor performance furthermore trend chasing appears related to behavioral biases rather than to rationally inferring managerial skill from past performance factor analysis suggests that biased investors often conform to stereotypes that can be characterized as gambler smart overconfident narrow framer and mature

internal governance mechanisms and operational performance evidence from index mutual funds we provide new evidence linking board characteristics and performance using manually collected governance data from the mutual fund industry we find an inverse relation between board size and fund performance we also find evidence that organizational form plays an important role in determining operational performance overall the results are consistent with the notion that there may not be a single optimal board structure that is applicable to all funds that attempts to regulate board attributes should be considered with caution and that sponsor level factors are important board structure considerations the author 2009 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oxfordjournals org oxford university press

the impact of obesity on wages abstract previous studies of the relationship between body weight and wages have found mixed results this paper uses a larger data set and several regres sion strategies in an attempt to generate more consistent estimates of the effect of weight on wages differences across gender race and ethnicity are explored this paperjnds that weight lowers wages for white females ols esti mates indicate that a difference in weight of two standard deviations roughly 65 pounds is associated with a difference in wages of 9 percent in absolute value this is equivalent to the wage effect of roughly one and a half years of education or three years of work experience negative cor relations between weight and wages observed for other gender ethnic groups appear to be due to unobserved heterogeneity i introduction several previous studies have found among females a negative cor relation between body weight and wages there exist three broad categories of ex planations for this finding the first explanation is that obesity lowers wages for example by lowering productivity or because of workplace discrimination the sec ond is that low wages cause obesity this would be true if poorer people consume

reprint of investors distraction and strategic repricing decisions abstract in this paper i analyze investors reactions to changes in the expense ratios of equity mutual funds i show that investment flows response to fees cannot be fully explained by looking at investors performance sensitivity while performance sensitivity monotonically increases with past performance price sensitivity does not investors who buy top past performers seem to be distracted by the fund s previous return and pay relatively little attention to the expense ratios moreover price sensitivity increases with fund visibility while performance sensitivity decreases and while looking at data from 1986 to 2006 no discernible trend can be observed in the average performance sensitivity price sensitivity strongly increases due to the dramatic increase in the availability of mutual funds information for retail investors finally i show that investment companies strategically time their repricing decisions in order to exploit time variations in price and performance sensitivities and that fund governance quality affects the degree to which investment companies engage in this opportunistic behavior

gender discrimination estimation in a search model with matching and bargaining this article develops a search model of the labor market with matching bargaining and employers taste discrimination in which under necessary but standard distributional assumption it is possible to separately identify gender discrimination and unobserved productivity differences the equilibrium shows that both prejudiced and unprejudiced employers wage discriminate maximum likelihood estimates on cps data indicate that half of the employers are prejudiced average female productivity is 6 5 lower and two third of the gender earning differential may be explained by prejudice an affirmative action policy is implemented resulting in a redistribution of welfare from men to women at no cost for employers welfare

competition reach for yield and money market funds abstract do asset managers reach for yield because of competitive pressures in a low rate environment i propose a tournament model of money market funds mmfs to study this question when funds care about relative performance an increase in the risk premium leads funds with lower default costs to increase risk taking while funds with higher default costs decrease risk taking without changes in the premium lower risk free rates reduce the risk taking of all funds i show that these predictions are consistent with mmf risk taking during the 2002 2008 period and that rank based performance is a key determinant of money flows to mmfs

do tournaments have incentive effects much attention has been devoted to studying models of tournaments or situations in which an individual s payment depends only on his or her output or rank relative to that of other competitors academic interest derives from the fact that under certain sets of assumptions tournaments have desirable normative properties because of the incentive structures they provide our paper uses nonexperimental data to test whether tournaments actually elicit effort responses we focus on professional golf tournaments because information on the incentive structure prize distribution and measures of individual output players scores are both available we find strong support for the proposition that the level and structure of prizes in pga tournaments influence players performance

impawn rate optimisation in inventory financing a canonical vine copula based approach abstract in the inventory financing business an optimal impawn rate loan to value ratio can help the inventory financing providers ifps she maintain competitiveness in the inventory financing market however the literature has been silent on how ifps can optimise the business through the optimisation of the impawn rate this study examines the role of the optimal impawn rate in the inventory financing business the key to setting the optimal impawn rate is first evaluating default probability and then incorporating this into the profit function we use a data driven approach to explore the copula model in setting the optimal impawn rate through numerical analysis we find that the clayton canonical vine copula has a better performance for the prediction of default probability than the multivariate normal distribution mvn and can thus be used to evaluate default probability in addition we uncover that setting multiple impawn rates for different collaterals allows inventory financing to yield a higher profit further although the interest rate industrial impawn rate and optimal impawn rate have strong effects on inventory financing profit interestingly the relationship between them is marginally diminishing

costly search and mutual fund flows this paper studies the flows of funds into and out of equity mutual funds consumers base their fund purchase decisions on prior performance information but do so asymmetrically investing disproportionately more in funds that performed very well the prior period search costs seem to be an important determinant of fund flows high performance appears to be most salient for funds that exert higher marketing effort as measured by higher fees flows are directly related to the size of the fund s complex as well as the current media attention received by the fund which lower consumers search costs

eliminating race differences in school attainment and labor market success in this article we provide quantitative evidence on the effects of monetary incentive schemes designed to reduce racial differences in school attainment and earnings our analysis is based on the structural estimation of a dynamic model of schooling work and occupational choice decisions over the life cycle we consider two recent proposals that although not specifically targeted to blacks can be expected to have differential racial impacts one proposal suggested by robert reich provides a high school graduation bonus to youths from lower income families the other suggested by edmund phelps provides wage subsidies to low wage workers

moral hazard and nonmarket institutions dysfunctional crowding out or peer monitoring the authors examine a situation in which insurance is characterized by moral hazard when market insurance is provided supplementary mutual assistance between family and friends unobservable to market insurers will occur when nonmarket insurers have no better information than market insurers the mutual assistance not only crowds out market insurance but is also harmful and therefore dysfunctional alternatively when nonmarket insurers can observe each other s effort perfectly mutual assistance is beneficial these results point to the potential importance of peer monitoring mechanisms in mitigating moral hazard copyright 1991 by american economic association

managerial incentive problems a dynamic perspective the paper studies how a person s concern for a future career may influence his or her incentives to put in effort or make decisions on the job in the model the person s productive abilities are revealed over time through observations of performance there are no explicit output contingent contracts but since the wage in each period is based on expected output and expected output depends on assessed ability an implicit contract links today s performance to future wages an incentive problem arises from the person s ability and desire to influence the learning process and therefore the wage process by taking unobserved actions that affect today s performance the fundamental incongruity in preferences is between the individual s concern for human capital returns and the firm s concern for financial returns the two need be only weakly related it is shown that career motives can be beneficial as well as detrimental depending on how well the two kinds of capital returns are aligned it is well understood by now that informational externalities may place special demands on the organization of economic exchange simple price mediated markets will frequently fail in the presence of asymmetric information in that case more elaborate contractual arrangements have to be used as substitutes for the price system lately considerable effort has been devoted to the analysis of contracting under incomplete information with the objective to understand the range of economic institutions that emerge in response to the failure of the price system the analysis of moral hazard has played a prominent role in this development moral hazard problems arise when for some reason or another transacting parties cannot contract contingent on the delivery of the good for instance in buying labour services it may be that the amount of labour supplied is not directly observable precluding a simple exchange of wage for labour as a partial remedy to this problem an imperfect mutually observed signal about the supply of labour can be used as a proxy in the contract frequently output is taken as such a proxy the drawback is that output is often influenced by other factors than labour input which induce undesirable risk into the contract one is therefore faced with a tradeoff between allocating risk associated with incomplete observability and providing incentives for a proper supply of labour gaining insight into this tradeoff is important not only for understanding contracting in the small e g managerial incentive schemes but also because it is closely related to the fundamental tension between equity and efficiency in the society as a whole while our understanding of moral hazard has advanced a lot in past years it is clear that much work remains an important question that has received little attention until

ranking games and gambling when to quit when you re ahead it is common for rewards to be given on the basis of a rank ordering so that relative performance amongst a cohort is the criterion in this paper we formulate an equilibrium model in which an agent makes successive decisions on whether or not to gamble and is rewarded on the basis of a rank ordering of the final position amongst competing players one application of this model is to the behavior of mutual fund managers who are paid depending on funds under management which in turn are greatly influenced by annual or quarterly rank orderings our model deals with a situation in which fund managers can elect either to pick stocks or to use a market tracking strategy in equilibrium the distribution of the final position will have a negative skew we explore how this distribution depends on the number of players the probability of success when gambling the structure of the rewards and on information regarding the performance of other players

incentive fees who wins who loses 1987 incentive fees who wins who loses financial analysts journal vol 43 no 1 pp 27 38

obesity weight loss and employment prospects evidence from a randomized trial this study presents credible estimates for the causal effect of bmi growth on employment among the obese by exploring random assignment of a weight loss intervention based on monetary rewards i provide convincing evidence that weight loss positively affects the employment prospects of obese women but not of obese men consistent with this significant effects of weight loss on proxy variables for labor productivity are found only for obese women

a dynamic analysis of educational attainment occupational choices and job search this article examines career choices using a dynamic structural model that nests a job search model within a human capital model of occupational and educational choices wage growth occurs in the model because workers move between firms and occupations as they search for suitable job matches and because workers endogenously accumulate firm and occupation specific human capital simulations performed using the estimated model reveal that both self selection in occupational choices and mobility between firms account for a much larger share of total earnings and utility than the combined effects of firm and occupation specific human capital

the inequality of social capital and the reproduction of chronic poverty summary this paper draws on ethnographic research in tanzania to question ideas inherent to mainstream development policy that building social capital can be readily created used or substituted for other missing assets and thereby overcome poverty the poorest experience clusters of interlocking disadvantage that make it highly unlikely that they can draw on social capital to ameliorate their poverty or that increased association and participation at community level is necessarily beneficial to them moreover social relationships collective action and local institutions may structurally reproduce the exclusion of the poorest as such a politically neutral and undersocialized policy focus on strengthening associational life and public participation of the poor is unlikely to lead to their greater inclusion nor to significant poverty alleviation

brothers from different mothers how distribution fees change investment behavior abstract we ask whether loads affect investment flows in the us mutual fund industry we argue that sales fees make the investment decision partially irreversible under these circumstances investors await for a stronger signal of managerial ability before committing to a new fund this stronger signal can take the form of a particularly strong performance or a particularly long series of positive performance realizations looking at pairs of fund shares with the same portfolio but different sales fee arrangements we show that investment flows in share classes with front loads react disproportionally to good performances higher convexity in the flow performance relationship and react to performance realizations further back in time longer memory a counterfactual example of fund shares with back end loads allows us to rule out the hypothesis that this behavior is due to the incentive structure of brokers finally we show that these behavioral modifications induced by front loads have a negative and significant effect on investors timing ability

of tournaments and temptations an analysis of managerial incentives in the mutual fund industry we test the hypothesis that when their compensation is linked to relative performance managers of investment portfolios likely to end up as losers will manipulate fund risk differently than those managing portfolios likely to be winners an empirical investigation of the performance of 334 growth oriented mutual funds during 1976 to 1991 demonstrates that mid year losers tend to increase fund volatility in the latter part of an annual assessment period to a greater extent than mid year winners furthermore we show that this effect became stronger as industry growth and investor awareness of fund performance increased over time

window dressing by pension fund managers this paper takes a first look at investment strategies of managers of 769 pension funds with total assets of 129 billion at the end of 1989 the data show that managers of these funds tend to oversell stocks that have performed poorly relative sales of losers accelerate in the fourth quarter when funds portfolios are closely examined by the sponsors this result supports the view that fund managers window dress their portfolios to impress sponsors and suggests that managers are evaluated on their individual stock selections and not just aggregate portfolio performance this abstract was borrowed from another version of this item

will affirmative action policies eliminate negative stereotypes a key question concerning affirmative action is whether the labor market gains it brings to minorities can continue without it becoming a permanent fixture in the labor market the authors argue that this depends on how the policy affects employers beliefs about the productivity of minority workers they study the joint determination of employer beliefs and worker productivity in a model of statistical discrimination in job assignments the authors prove that even when identifiable groups are equally endowed ex ante affirmative action can bring about a situation in which employers correctly perceive the groups to be unequally productive ex post copyright 1993 by american economic association

portfolio performance evaluation old issues and new insights this article presents a model that provides insights about various measures of portfolio performance the model explores several criticisms of these measures these include the problem of identifying an appropriate benchmark portfolio the possibility of overestimating risk because of market timing ability and the failure of informed investors to earn positive risk adjusted returns because of increasing risk aversion the article argues that these need not be serious impediments to performance evaluation

payoff complementarities and financial fragility evidence from mutual fund outflows the paper provides empirical evidence that strategic complementarities among investors generate fragility in financial markets analyzing mutual fund data we find that consistent with a theoretical model funds with illiquid assets where complementarities are stronger exhibit stronger sensitivity of outflows to bad past performance than funds with liquid assets we also find that this pattern disappears in funds where the shareholder base is composed mostly of large investors we present further evidence that these results are not attributable to alternative explanations based on the informativeness of past performance or on clientele effects we analyze the implications for funds performance and policies

when cheaper is better fee determination in the market for equity mutual funds abstract in this paper we develop a model of the market for equity mutual funds that captures three key characteristics of this market first there is competition among funds second fund managers ability is not observed by investors before making their investment decisions third some investors do not make optimal use of all available information the main results of the paper are that 1 price competition is compatible with positive mark ups in equilibrium and 2 worse performing funds set fees that are greater or equal to those set by better performing funds these predictions are supported by available empirical evidence

the wages of bmi bayesian analysis of a skewed treatment response model with nonparametric endogeneity we generalize the specifications used in previous studies of the effect of body mass index bmi on earnings by allowing the potentially endogenous bmi variable to enter the log wage equation nonparametrically we introduce a bayesian posterior simulator for fitting our model that permits a nonparametric treatment of the endogenous bmi variable flexibly accommodates skew in the bmi distribution and whose implementation requires only gibbs steps using data from the 1970 british cohort study our results indicate the presence of nonlinearities in the relationships between bmi and log wages that differ across men and women and also suggest the importance of unobserved confounding for our sample of males copyright 2008 john wiley sons ltd

investor attrition and fund flows in mutual funds we explore the properties of equity mutual funds that experience a loss of assets after poor performance we document that both inflows and outflows are less sensitive to performance because performance sensitive investors leave or decide not to invest after bad performance consistent with the idea that attrition measures the sorting of performance sensitive investors we find that attrition has less of an impact on the fund s flow performance sensitivity for institutional funds where there is less dispersion in investor performance sensitivity also attrition has no effect on the flow performance sensitivity when attrition arises after good performance or investors invest for nonperformance reasons

structural change power politics and community organizations in africa challenging the patterns puzzles and paradoxes abstract this paper explores two phenomena shaping processes of local institutional and organizational change in rural africa the first is the complexity of institutional layering and dissonance in which local organizations and institutions in rural africa coexist the second is the paradox often found in state local relations in africa central governments encourage local communities to take on responsibilities which the center cannot manage should significant organizational strength emerge at the local level however central powers often move expeditiously to destroy it illustrative material comes primarily from kenya and zimbabwe and selectively from several other countries we ask what new structures are emerging and what old ones are being adapted to new functions we argue that local organizations are critical for addressing ecological decline and restoring the productivity and sustainability of rural africa both localities and national governments have much to gain if the capacities of local organizations can become themselves a valued resource in the resource scarce setting comprising much of rural africa

estimating a dynamic adverse selection model labour force experience and the changing gender earnings gap 1968 1997 this paper addresses two questions what accounts for the gender gap in labour market outcomes what are the driving forces behind the changes in the gender labour market outcomes over the period 1968 1997 it formulates a dynamic general equilibrium model of labour supply occupational sorting and human capital accumulation in which gender discrimination and an earnings gap arise endogenously it uses this model to quantify the driving forces behind the decline in the gender earnings gap and the increase in female labour force participation the proportion of women working in professional occupations and hours worked it finds that labour market experience is the most important factor explaining the gender earnings gap in addition statistical discrimination accounts for a large fraction of the observed gender earnings gap and its decline it also finds that a large increase in aggregate productivity in professional occupations plays a major role in the increase in female labourforce participation number of hours worked and the proportion of females working in professional occupations although of less importance demographic changes account for a substantial part of the increase in female labour force participation and hours worked whereas home production technology shocks do not

dynamic female labor supply the increase in female employment and participation rates is one of the most dramatic changes to have taken place in the economy during the last century however while the employment rate of married women more than doubled during the last 50 years that of unmarried women remained almost constant to empirically analyze these trends we estimate a female dynamic labor supply model using an extended version of eckstein and wolpin 1989 to compare the various explanations in the literature for the observed trends this dynamic model provides a much better fit to the life cycle employment pattern than a static version of the model and a standard static reduced form model heckman 1979 the main finding using the dynamic model is that the rise in education levels accounts for about 33 percent of the increase in female employment and the rise in wages and narrowing of the gender wage gap account for another 20 percent while about 40 percent remains unexplained by observed household characteristics we show that this unexplained portion can be empirically attributed to cohort specific changes in preferences or the costs of child rearing and household maintenance finally the decline in fertility and the increase in divorce rates account for only a small share of the increase in female employment rates

crossborder dividend taxation and the preferences of taxable and nontaxable investors evidence from canada abstract we consider how fund managers respond to the conflicting preferences of their investors we focus on the conflict between the taxable and retirement accounts of international funds which face different tradeoffs between dividends and capital gains in principle managers could resolve this conflict through dividend arbitrage but a proprietary database of dividend arbitrage transactions shows that in practice they cannot thus managers must resolve it through their investment policies we find robust evidence that managers with more retirement money favor the preferences of retirement investors and further evidence for this view in the difference between u s and canadian funds portfolio weights

investors distraction and strategic repricing decisions in this paper i analyze investors reactions to changes in the expense ratios of equity mutual funds i show that investment flows response to fees cannot be fully explained by looking at investors performance sensitivity while performance sensitivity monotonically increases with past performance price sensitivity does not investors who buy top past performers seem to be distracted by the fund s previous return and pay relatively little attention to the expense ratios moreover price sensitivity increases with fund visibility while performance sensitivity decreases and while looking at data from 1986 to 2006 no discernible trend can be observed in the average performance sensitivity price sensitivity strongly increases due to the dramatic increase in the availability of mutual funds information for retail investors finally i show that investment companies strategically time their repricing decisions in order to exploit time variations in price and performance sensitivities and that fund governance quality affects the degree to which investment companies engage in this opportunistic behavior

adverse risk incentives and the design of performance bases contracts this paper uses option pricing theory to value and analyze many performance based fee contracts that are currently in use a potential problem with some of these contracts is that they may induce portfolio managers to adversely alter the risk of the portfolios they manage the paper is prescriptive in that it presents conditions for contract parameters that provide proper risk incentives for classes of investment strategies for buy and hold and rebalancing strategies adverse risk incentives are avoided when the penalties for poor performance outweigh the rewards for good performance

the economics of private equity funds this article analyzes the economics of the private equity industry using a novel model and dataset we obtain data from a large investor in private equity funds with detailed records on 238 funds raised between 1993 and 2006 we build a model to estimate the expected revenue to managers as a function of their investor contracts and we test how this estimated revenue varies across the characteristics of our sample funds among our sample funds about two thirds of expected revenue comes from fixed revenue components that are not sensitive to performance we find sharp differences between venture capital vc and buyout bo funds bo managers build on their prior experience by increasing the size of their funds faster than vc managers do this leads to significantly higher revenue per partner and per professional in later bo funds the results suggest that the bo business is more scalable than the vc business and that past success has a differential impact on the terms of their future funds jel g10 g20 g24

are investors rational choices among index funds s p 500 index funds represent one of the simplest vehicles for examining rational behavior they hold virtually the same securities yet their returns differ by more than 2 percent per year although the relative returns of alternative s p 500 funds are easily predictable the relationship between cash flows and performance is weaker than rational behavior would lead us to expect we show that selecting funds based on low expenses or high past returns outperforms the portfolio of index funds selected by investors our results exemplify the fact that in a market where arbitrage is not possible dominated products can prosper

can changing economic factors explain the rise in obesity a growing literature examines the effects of economic variables on obesity typically focusing on only one or a few factors at a time we build a more comprehensive economic model of body weight combining the 1990 2010 behavioral risk factor surveillance system with 27 state level variables related to general economic conditions labor supply and the monetary or time costs of calorie intake physical activity and cigarette smoking controlling for demographic characteristics and state and year fixed effects changes in these economic variables collectively explain 37 of the rise in body mass index bmi 43 of the rise in obesity and 59 of the rise in class ii iii obesity quantile regressions also point to large effects among the heaviest individuals with half the rise in the 90th percentile of bmi explained by economic factors variables related to calorie intake particularly restaurant and supercenter warehouse club densities are the primary drivers of the results

demand curves and the pricing of money management one reason why funds charge different prices to their investors is that they face different demand curves one source of differentiation is asset retention performance sensitive investors migrate from worse to better prospects taking their performance sensitivity with them in the cross section we show that past attrition significantly influences the current pricing of retail but not institutional funds in time series we show that the repricing of retail funds after merging in new shareholders is predicted by the estimated effect on its demand curve this result is robust to other influences on repricing including asset and account size changes copyright 2002 oxford university press

performance incentive fees an agency theoretic approach this paper employs recent developments in agency theory to study the impact that com pensation contracts have on portfolio management investment decisions in a restricted mean variance world two types of incentive contracts for mutual fund managers are ana lyzed and compared the results show that the symmetric contract while not necessar ily eliminating agency costs dominates the bonus contract in aligning the manager s interests with those ofthe investor investment companies and by extension their managers control a large and increasing percentage ofthe aggregate wealth of their clients more investors are putting their money under the control of these advisers than ever before con sequently potential conflicts of interest arise between investment company own ers and their financial management advisers the securities and exchange com mission sec has been concerned with this issue for a number of years the agency has commissioned several studies to investigate the issue and has set forth certain rulings concerning the behavior of investment company advisers of par ticular importance has been the compensation arrangement between mutual fund management and the fund owners in fact the sec has issued specific guidelines regarding allowable fee schedules for managers these guidelines have ied to a policy debate concerning whether the sec has been too stringent or not stringent enough in regulating compensation for investment managers the present study takes a new approach to this problem in an attempt to resolve this debate the fiduciary relationship between mutual fund management and the inves tors they represent may be viewed as a principal agent relationship conse quently the methodology from the agency literature can be applied to study the impact of various compensation arrangements on the potential conflict of interest between these two groups

institutional and individual investors saving for old age this paper brings together the academic literature on individual and institutional investors in order to understand the nature of difficulties faced by them and set the background for the special issue this introductory article and the papers in the special issue contribute to the debate on how to support individuals in their savings commitments and investment decision making and whether and how institutional investors have fulfilled their role in supporting the development of the funded pension industry there are three main conclusions i individual investors are not ready for the role that has been assigned to them in the pension industry ii institutional investors are a long way short of establishing healthy relational contracts and trustworthy relationships with their clients and iii more effective regulation may be needed

discrimination and skill differences in an equilibrium search model in this paper we analyze an equilibrium search model with three sources for wage an d unemployment differentials among workers with the same observed human capital but differen t appearance race unobserved productivity skill search in tensities and discrimination becker 1957 due to an appearance based employer disutility factor because they affect the earnings distributions differently empirical identification of these potential sources for the explanation of wage an d unemployment differentials is possible we show that the structural parameters of the model including the firm s disutility from certain workers are identifiab le using standard labor market survey data we demonstrate identification using data from the national longitudinal survey of youth estimation of these parameters by matching moments from a sample of black and white high school graduate s implies a blacks have a 9 lower productivi ty level than whites b the disutility factor in employer s preferences is one third of the white s productivity level and c 50 of firms have a disutility factor in their utility toward blacks

changing customary marine resource management practice and institutions the case of sasi lola in the kei islands indonesia summary sasi the spatial and temporal closure of fields forests reefs and fishing grounds is a conspicuous feature of many moluccan societies despite increasing domestic and international awareness and praise of what is considered by many analysts to be an exemplary indigenous resource conservation tradition the practice is in decline in many parts of the thousand island province and in many villages has disappeared altogether this study examines the practice of managing trochus niloticus topshell harvests in ohoirenan a village on the eastern coast of kei besar in the district of southeast maluku trochus is one of the most important sources of cash income for kei villagers and until recently for the district government as well since 1987 trochus has been classified as a protected species in indonesia and regulations have been issued to regulate the cultivation harvest and transport of this and other protected species this article briefly introduces kei customary law and property relations followed by a description of sasi and its application to reef habitats and trochus harvests examining a territorial conflict between ohoirenan and a neighboring village and more recent contention arising from government eaorts to protect the species the article explores issues of society nature and state society relations as pertain to natural resource management in indonesia sasi continues to function as an exemplary common property resource cpr management institution in ohoirenan assuring equitable distribution of the benefits deriving from controlled extraction of a local resource but erratic and uneven enforcement of one size fits all centralized conservation policy and law combined with collusion and self interest on the part of various parties combine to threaten both the resource and the institutions that have successfully and sustainably managed it in this region within the context of a centralized state led natural resource management system the national species protection precludes the establishment of sensible mutually beneficial co management regimes that could serve the interests and employ the inherent knowledge and capabilities of local communities traders and government agents 2000 published by elsevier science ltd all rights reserved

tournament rewards and risk taking this article considers a lazear rosen tournament model where agents can influence both the spread of their output distribution risk taking and its mean the unique equilibrium induces excessive risk taking and a low level of effort by modifying the tournament to give the highest prize to the agent with the most moderate output a low level of risk taking and high level of effort can be sustained as an equilibrium the first result can be useful to understand the relative performance evaluation puzzle of executive compensation and the second result can be useful to understand puzzling workplace norms promoting mediocrity

a dynamic model of teacher labor supply the labor supply decisions of certified elementary and high school teachers are examined using data from a general longitudinal survey a significant decrease in the teaching participation rate tak

an estimable dynamic general equilibrium model of work schooling and occupational choice this paper develops and estimates a dynamic general equilibrium overlapping generations model of career decisions the model is fit to data on life cycle employment schooling and occupation decisions and on life cycle labor earnings within and between cohorts observed in the us between 1968 and 1993 based on the estimates of the model the impact of cohort size on skill prices and consequently on career decisions is assessed compared to a baseline case in which cohort size increased at a steady average rate and the fertility process was stationary it is found that the male baby bust generations born in the 1930s and 1940s faced higher skill prices by as much as 2 0 completed college at a higher rate by as much as 0 3 percentage points and worked more over the lifetime by as much as 0 1 years in contrast the males from the baby boom generations born in the 1950s and 1960s faced lower skill prices by as much as 1 5 completed college at a lower rate by as much as 1 0 percentage points and worked less over the lifetime by as much as 0 1 years the impact of cohort size is found to differ across gender due to the differential impact of fertility on the value of home production unlike males the female baby bust generations completed college at a lower rate by as much as 1 5 percentage points and worked less over the lifetime by as much as 0 5 years while the female baby boom generations completed college at a lower rate by as much as 1 5 percentage points and worked more over the lifetime by as much as 0 2 years a tuition subsidy experiment is also performed both in a general equilibrium setting in which skill prices are endogenous and in a partial equilibrium setting with fixed skill prices based on the estimated model a 1 increase in tuition is predicted to reduce college enrollment rates by 1 27 in partial equilibrium consistent with previous estimates and by 1 05 in the general equilibrium case thus for this policy experiment the partial equilibrium analysis of schooling choice would not differ significantly from the general equilibrium analysis

estimation risk and incentive contracts for portfolio managers the fiduciary relationship between portfolio managers and the investors they represent may be viewed as a principal agent relationship and therefore we have used the methodology from the agency literature in economics and finance to study the impact of existing compensation arrangements on the conflicts of interest between these two groups in this paper we employ the assumptions of the capital asset pricing model and of estimation risk concerning beta to develop a model in which portfolio managers can through effort choose the parameters of the beta distribution our model entails moral hazard because the investor cannot observe the manager s action given certain utility functions we show that the presence of estimation risk leads the manager to choose a lower beta portfolio than otherwise and that no first best optimal contract exists we also show that managerial divergent behavior is related to the divergence in risk preferences between the manager and the investor by making slightly more stringent assumptions about preferences we show that there exist some conditions under which the manager will provide more effort but also a riskier portfolio than the investor prefers finally we show that the investor will prefer a manager who is less risk averse than the investor

the political feasibility of rural poverty reduction abstract policies oriented at the reduction of rural poverty will only be introduced if politically feasible computable general equilibrium and multimarket models have been widely used to measure the complex economic and welfare effects of these policies based on the body of theoretical and empirical knowledge on the determinants of influence by groups in civil society and on the role of the state in policy making an index of the political feasibility of policy outcomes is constructed use of this index with data from india and ecuador allows to identify a number of promising avenues to politically feasible reforms in particular by choosing policies that induce the emergence of supportive coalitions dominated by the nonpoor the general equilibrium effects and the leakages of antipoverty instruments are key in inducing emergence of these coalitions

preference falsification policy continuity and collective conservatism through a model that distinguishes between privately held and publicly declared preferences and between private and public beliefs this paper explains why a society might c ling to its past choices all four variables are endogenous to the mo del following the introduction of a measure of collective conservati sm the paper turns to the determinants and consequences of feedback from society s choices to its members private beliefs and preference s the theory is applied to the persistence of india s caste system t o explain why the lowest castes have been among the system s most com mitted supporters copyright 1987 by royal economic society

intersectoral labor mobility and the growth of the service sector one of the most striking changes in the u s economy over the past 50 years has been the growth in the service sector between 1950 and 2000 service sector employment grew from 57 to 75 percent of total employment however over this time the real hourly wage in the service sector grew only slightly faster than in the goods sector in this paper we assess whether or not the essential constancy of the relative wage implies that individuals face small costs of switching sectors and we quantify the relative importance of labor supply and demand factors in the growth of the service sector we specify and estimate a two sector labor market equilibrium model that allows us to address these empirical issues in a unified framework our estimates imply that there are large mobility costs output in both sectors would have been double their current levels if these mobility costs had been zero in addition we find that demand side factors that is technological change and movements in product and capital prices were responsible for the growth of the service sector

state market civil institutions the case of eastern europe and the soviet republics abstract the transition tasks facing the countries of central and eastern europe are monumental the public sector will play a dominant role during the transition process available evidence suggests that orthodox prescriptions for public sector reform cannot be effectively implemented without an underlying constitution and a legal and regulatory infrastructure lri a well designed constitution and lri instill confidence and policy credibility with perfectly rational expectations and confidence in the constitution and lri the sequence of reforms matters little future reforms are perfectly anticipated today and agents act as though the reforms will occur with certainty short of such confidence reforms need to be simultaneously pursued on many fronts the most important activity is to redefine the role of the state setting a constitution that clearly defines and secures basic political civil and economic freedoms and designing an lri that creates a fertile environment for a vibrant market economy

occupational specificity of human capital we find that returns to occupational tenure are substantial everything else being constant 5 years of occupational tenure are associated with an increase in wages of 12 20 moreover when occupational experience is taken into account tenure with an industry or employer has relatively little importance in accounting for the wage one receives this finding is consistent with human capital being occupation specific

worker investments in safety workplace accidents and compensating wage differentials the theory of compensating wage differentials cwds assumes that firms supply and workers demand workplace safety predicting a positive relationship between accident risk and wages this article allows for safety provision by workers which predicts a countervailing negative relationship between individual risk and wages firms pay higher wages for higher safety related productivity using national longitudinal survey of youth panel data and data on fatal and nonfatal accidents our precise cwds imply a value of a statistical injury of 45 4 thousand and a value of a statistical life of 6 3 million in line with our model individual risk and wages are negatively correlated

government action social capital and development reviewing the evidence on synergy abstract instead of assuming a zero sum relationship between government involvement and private cooperative efforts the five preceding articles argue for the possibility of state society synergy that active government and mobilized communities can enhance each others developmental efforts this article draws on these articles to explore the forms and sources of state society synergy i argue that synergy usually combines complementarity with embeddedness and is most easily fostered in societies characterized by egalitarian social structures ard robust coherent state bureaucracies i also argue however that synergy is constructable even in the more adverse circumstances typical of third world countries

men women and competition an experimental test of behavior this study reports a series of experiments that examine outcomes when agents are able to choose between a payment scheme that rewards based on absolute performance i e piece rate and a scheme that rewards based on relative performance i e a tournament we test for the presence and persistence of gender differences in performance and the rate of entry into the tournament option and whether these differences are sensitive to the structure of the tournament rewards in the winner take all wta condition only the best performer in the tournament for each round received a payment 4 50 in the graduated tournament condition the same payment 4 50 was divided among the first second and third finishers in the tournament in the wta condition men showed significantly lower forecast errors than women in addition a clear sorting effect occurs in the wta condition in early rounds of the wta condition male entrants into the tournament show significantly lower forecast errors than female tournament entrants however the difference disappears over time after controlling for forecasting skill gender did not predict entry into the tournament for the wta condition however lower forecasting skill reduced the probability of entry in the graduated tournament the situation was reversed men entered the tournament at significantly higher rates even after controlling for skill forecasting skill had no impact on the decision to enter the tournament while the average male entrant to the tournament had lower forecast errors than the average female entrant the men entered at much higher rates as a consequence men were much more likely than women to enter the tournament too frequently

supersizing supercenters the impact of walmart supercenters on body mass index and obesity abstract researchers have linked the rise in obesity to technological progress reducing the opportunity cost of food consumption and increasing the opportunity cost of physical activity we examine this hypothesis in the context of walmart supercenters whose advancements in retail logistics have translated to substantial reductions in the prices of food and other consumer goods using data from the behavioral risk factor surveillance system matched with walmart supercenter entry dates and locations we examine the effects of supercenters on body mass index bmi and obesity we account for the endogeneity of walmart supercenter locations with an instrumental variables approach that exploits the unique geographical pattern of supercenter expansion around walmart s headquarters in bentonville arkansas an additional supercenter per 100 000 residents increases average bmi by 0 24 units and the obesity rate by 2 3 points these results imply that the proliferation of walmart supercenters explains 10 5 of the rise in obesity since the late 1980s but the resulting increase in medical expenditures offsets only a small portion of consumers savings from shopping at supercenters

incentive fees some problems and some solutions 1987 incentive fees some problems and some solutions financial analysts journal vol 43 no 1 pp 21 26

between state markets and households a neoinstitutional analysis of local organizations and institutions abstract the current and foreseeable trend toward a diminished role of the state in most economic activities including rural development activities offers new opportunities for local organizations and institutions lois at the same time many of the problems and shortcomings to which states and their activities have been vulnerable are also potentially applicable to lois to be successful in themselves as well as in fostering rural economic development rural lois and their activities must be carefully designed and appropriately integrated with markets other lois and the state this paper reviews the relevant literature on conditions for success and then goes on to derive from this review including some relevant experience some suggestions for policy and practice

liquidity and shadow banking using a unique dataset of the detailed portfolio holdings of us money market funds we study the behaviour of such funds in the context of the european sovereign debt crisis these important players in the shadow banking sector were particularly vulnerable to liquidity shocks before the introduction of minimum liquidity requirements we analyse the impact of these requirements and show that they have considerably increased the resilience of prime funds we also see that prime funds increase their liquidity to counter expected investors redemptions in crisis periods however liquidity does not shelter risky funds from lower inflows

does the buck stop here a comparison of withdrawals from money market mutual funds with floating and constant share prices recent reform proposals call for an elimination of the constant net asset value nav or buck in money market mutual funds to reduce the occurrence of runs outside the united states there are several countries that have money market mutual funds with and without constant navs using daily data on individual fund flows from these countries this paper evaluates whether the reliance on a constant nav is associated with higher fund redemptions the data suggest that funds with a constant nav experienced more negative net flows during the period of the run on the reserve primary fund even after controlling for measures of fund risk and risk aversion however i do not find convincing support for the hypothesis that the effect of sponsor strength on fund flows was stronger for constant nav money market funds