rational household labor supply traditionally household behavior is derived from the maximization of a unique utility function in this paper we propose an alternative approach in which the household is modeled as a two member collectivity taking pareto efficient decisions the consequences of this assumption are analyzed in a three good model in which only total consumption and each member s labor supply are observable if the agents are assumed egoistic i e they are only concerned with their own leisure and consumption it is possible to derive falsifiable conditions upon household labor supplies from both a parametric and nonparametric viewpoint if alternatively agents are altruistic restrictions obtain in the nonparametric context useful interpretation stems from the comparison with the characterization of aggregate demand for a private good economy

fixed costs and long lived investments abstract fixed costs models are difficult to analyze because they feature non degenerate time varying distributions of capital across firms if investments are sufficiently long lived however then the cross sectional distribution of capital holdings has virtually no bearing on the equilibrium and the aggregate behavior of fixed cost models is essentially identical to neoclassical models the findings are due to a near infinite elasticity of investment timing for long lived investments a feature shared by fixed cost models and neoclassical models irrelevance results found in numerical studies of fixed cost models are not parametric special cases but instead are fundamental properties of models with long lived investment goods

intra household allocation of time and money across siblings abstract how work and consumption are allocated within the family has important consequences for the welfare of individual household members using data on time use and assignable goods for individual siblings across india peru ethiopia and vietnam aged 5 17 i show that there is substantial within sibling variation in leisure as well as consumption allocations i then test whether there is evidence for favoritism in the joint allocation of leisure and consumption toward a particular gender i find that boys with a younger sister have substantially more relative leisure compared to girls with a younger sister in all four countries consumption allocations are relatively higher for older siblings of mixed gender sibling pairs irrespective of the sex of the child i reject that favoritism in consumption equals favoritism in leisure in three of the four countries finally i show suggestive evidence on the role of reward and preferences for allocations of time and money in the household

financial aid debt management and socioeconomic outcomes post college effects of merit based aid abstract prior research has demonstrated that financial aid can influence both college enrollments and completions but less is known about its post college consequences this study is the first to link college and financial aid information to credit bureau data later in life enabling us to examine the impacts of grant aid on homeownership neighborhood characteristics and credit outcomes we use a regression discontinuity rd strategy to identify causal effects of the wv promise scholarship a broad based state merit aid program up to 10 years after college entry the rd is imperfect because our sample is limited to college students and the scholarship program increased enrollment but there is little evidence of selection on observables at the threshold we find that scholarship recipients near the test score cutoff for eligibility are more likely to earn a graduate degree are more likely to own a home and live in higher income neighborhoods effects on annual earnings and credit outcomes are similarly positive but imprecise these positive effects are primarily due to substantial reductions in time to degree rather than to reduced student debt upon graduation

the costs of hiring skilled workers the shape of adjustment costs in factor demand has been a matter of controversy for quiet some time while some researchers assume quadratic adjustment costs i e that it becomes increasingly expensive to recruit workers in a given time period others believe that there are economies of scale in recruitment surprisingly there is hardly any evidence so far on the shape of hiring costs based on microeconomic data in this paper we estimate the functional form of hiring costs in the theoretical framework of a generalized model of monopsony using both parametric and nonparametric estimation techniques we find strong evidence in favor of diseconomies of scale in recruiting skilled workers our results indicate that the labor market is monopsonistic

income and outcomes a structural model of intrahousehold allocation there is evidence from several sources that one cannot treat many person households as a single decision maker if this is the case then factors such as the relative incomes of the household members may affect the final allocation decisions made by the household we develop a method of identifying how incomes affect outcomes given conventional family expenditure data the basic assumption we make is that household decision processes lead to efficient outcomes we apply our method to a sample of canadian couples with no children we find that the final allocations of expenditures on each partner depend significantly on their relative incomes and ages and on the level of lifetime wealth

firing costs and business cycle fluctuations this article considers a real business cycle model with establishment level dynamics and uses it to analyze the effects of firing taxes it finds that firing taxes can have significant consequences on business cycle fluctuations that the largest effects are on aggregate employment and that even relatively small firing taxes have substantial effects a significant contribution of the article is computational it describes how to use standard linear quadratic methods to solve for a stochastic equilibrium of an s s economy with tax distortions

constrained after college student loans and early career occupational choices abstract in the early 2000s a highly selective university introduced a no loans policy under which the loan component of financial aid awards was replaced with grants we use this natural experiment to identify the causal effect of student debt on employment outcomes in the standard life cycle model young people make optimal educational investment decisions if they are able to finance these investments by borrowing against future earnings the presence of debt has only income effects on investment decisions we find that debt causes graduates to choose substantially higher salary jobs and reduces the probability that students choose low paid public interest jobs we also find some evidence that debt affects students academic decisions during college our estimates suggest that recent college graduates are not life cycle agents two potential explanations are that young workers are credit constrained or that they are averse to holding debt we find suggestive evidence that debt reduces students donations to the institution in the years after they graduate and increases the likelihood that a graduate will default on a pledge made during her senior year we argue this result is more likely consistent with credit constraints than with debt aversion

building the stock of college educated labor half of college students drop out without completing a degree this paper establishes a causal link between college costs and degree completion i use quasi experimental methodology to analyze two state scholarship programs the programs increase the share of the exposed population with a college degree by three percentage points with stronger effects among women a cost benefit analysis indicates that the programs are socially efficient at rates of return to schooling as low as 5 percent even with the offer of free tuition many students continue to drop out suggesting tuition costs are not the only impediment to college completion

in search of labor demand we propose and estimate a novel specification of labor demand which encompasses search frictions and the role of entrepreneurs in new firm creation using city industry variation over four decades we estimate the wage elasticity of employment demand to be close to 1 at the industry city level and 0 3 at the city level we argue that the difference between these estimates reflects the congestion externalities predicted by the search literature our estimates also indicate that entrepreneurship should be treated as a scarce factor in the determination of labor demand we use our estimates to evaluate the impact of large changes in the minimum wage on employment

zero as a special price the true value of free products when faced with a choice of selecting one of several available products or possibly buying nothing according to standard theoretical perspectives people will choose the option with the highest cost benefit difference however we propose that decisions about free zero price products differ in that people do not simply subtract costs from benefits but instead they perceive the benefits associated with free products as higher we test this proposal by contrasting demand for two products across conditions that maintain the price difference between the goods but vary the prices such that the cheaper good in the set is priced at either a low positive or zero price in contrast with a standard cost benefit perspective in the zero price condition dramatically more participants choose the cheaper option whereas dramatically fewer participants choose the more expensive option thus people appear to act as if zero pricing of a good not only decreases its cost but also adds to its benefits after documenting this basic effect we propose and test several psychological antecedents of the effect including social norms mapping difficulty and affect affect emerges as the most likely account for the effect

partial adjustment without apology econometric partial adjustment models perform relatively well at the aggregate level however many kinds of microeconomic behavior involve discrete and occasional choices analyzing the classic employment adjustment problem we show how a generalized partial adjustment model tractably accommodates both observations by aggregating the actions of heterogeneous producers facing fixed adjustment costs aggregate disturbances cause changes in establishment level target employment and in the measure of establishments actively adjusting to their target whereas aggregate responses exhibit partial adjustment our framework also can be applied in general equilibrium settings with persistent idiosyncratic shocks without forfeiting the convenient use of linear solution methods

recovering individual preferences for non market goods a collective travel cost model traditional recreation demand models do not make a distinction between a household and an individual as the reference decision making unit thus assuming that a family maximizes a single utility function even if the family consists of different individuals such models ignore the possibility of family members divergent preferences for non market goods this study proposes a novel approach the collective travel cost model ctcm to eliciting individual preferences for a non market good such as a recreation site by using revealed preference data this approach accounts for the intra household resource allocation and the role of each household member s preferences we show that the collective travel cost model can be applied to estimating a recreation demand model that yields individual welfare estimates appropriate for policy analysis of non market goods such as the willingness to pay to access a recreation site we find that how resources are distributed within the household reflects significant differences in welfare measures

nonconvex factor adjustments in equilibrium business cycle models do nonlinearities matter recent empirical analysis has found nonlinearities to be important in understanding aggregated investment using an equilibrium business cycle model we search for aggregate nonlinearities arising from the introduction of nonconvex capital adjustment costs we find that while such costs lead to nontrivial nonlinearities in aggregate investment demand equilibrium investment is effectively unchanged our finding based on a model in which aggregate fluctuations arise through exogenous changes in total factor productivity is robust to the introduction of shocks to the relative price of investment goods

labor market volatility in the search and matching model the role of investment specific technology shocks abstract shocks to investment specific technology have been identified as a main source of u s aggregate output volatility in this paper we present a model with frictions in the labor market and explore the contribution of these shocks to the volatility of labor market variables namely unemployment vacancies tightness and the job finding rate thus our paper contributes to a recent body of literature assessing the ability of the search and matching model to account for the large volatility observed in labor market variables to this aim we solve a neoclassical economy with search and matching where neutral and investment specific technologies are subject to shocks the three key features of our model economy are i firms are large in the sense that they employ many workers ii adjusting capital and labor is costly iii wages are the outcome of an intra firm nash bargaining problem between the firm and its workers in our calibrated economy we find that shocks to investment specific technology explain 40 of the observed volatility in u s labor productivity moreover these shocks generate relative volatilities in vacancies and the workers job finding rate which match those observed in u s data relative volatilities in unemployment and labor market tightness are 55 and 75 of their empirical values respectively

fixed adjustment costs and aggregate fluctuations this paper studies the analytics of a canonical model of xed adjustment costs in the presence of idiosyncratic productivity shocks we provide a novel analytical characterization of the steady state and dynamics of aggregate outcomes implied by the model the dynamics are shown to have an intuitive partial adjustment representation these results are then used to derive a set of approximations to model outcomes in the presence of a small adjustment cost surprisingly these reveal that both aggregate steady state outcomes and aggregate dynamics are approximately neutral with respect to a small xed adjustment cost we show that this neutrality result emerges from a symmetry property in the distributional dynamics of the model and arises even in the absence of general equilibrium adjustment of prices a set of quantitative illustrations con rms these analytical results for parameterizations commonly used in the literature on employment adjustment

no toilet no bride intrahousehold bargaining in male skewed marriage markets in india abstract haryana state in india is characterized by widespread discrimination against women including a severe population level sex imbalance in this context an innovative social marketing campaign which targeted pro sanitation messages to households active in local marriage markets was implemented with the goal of increasing toilet ownership this paper estimates the impact of this program known colloquially as no toilet no bride on household level latrine ownership private sanitation coverage in haryana increased by 21 specifically among households with boys active on the marriage market this effect is larger and concentrated in marriage markets where women are relatively scarce and absent when women are relatively abundant which together suggest the program operated by successfully linking sanitation outcomes with marriage market competition induced by local scarcities of women due to male biased sex ratios

the effect of price shocks on undocumented students college attainment and completion we examine the effect of a price shock caused by the temporary removal of in state tuition benefits on the attainment of undocumented immigrants enrolled in a large urban college system using a difference in differences identification strategy the 113 one semester tuition increase led to an 8 decrease in reenrollment and a similarly sized reduction in credit accumulation for students who had been enrolled at least a year prior to the policy change the price hike caused them to leave college sooner but did not increase their probability of dropping out conversely students who entered college the semester prior to the policy change experienced lasting reductions in attainment including a 22 decrease in degree receipt compared to students with more college experience at the time of the price shock our results suggest that public subsidies that lower college prices can increase degree completion among resource constrained students who have made the decision to enroll in college with larger benefits accruing to those who are early in their college careers

multifaceted aid for low income students and college outcomes evidence from north carolina we study the evolution of a campus based aid program for low income students that began with grant heavy financial aid and later added a suite of nonfinancial supports we find little to no evidence that program eligibility during the early years 2004 2006 in which students received additional institutional grant aid and few nonfinancial supports improved postsecondary progress performance or completion in contrast program eligible students in more recent cohorts 2007 2010 when the program supplemented grant heavy aid with an array of nonfinancial supports were more likely to meet credit accumulation benchmarks toward timely graduation and earned higher grade point averages than their barely ineligible counterparts jel i21 i23 i24 j08

explaining investment dynamics in u s manufacturing a generalized s s approach we are grateful to olivier blanchard whitney newey james stock an editor three anonymousreferees and seminar participants at brown cepr champoussin chicago columbia econometric society meetings caracas and tokyo efcc harvard impa lse nber princeton rochester site toronto u de chile and yale for their comments financial support to caballero from the national science and sloan foundations and to engel from fondecyt grant 195 510 and the mellon foundation grant 9608 is gratefully acknowledged 2since plants entry is excluded from their sample these statistics are likely to represent lowerbounds on the degree of lumpiness in plants investment patterns 3we use the word project to emphasize the fact that the actual implementation of a projectmay cover more than a year observation realistic time to build aspects of investment are not incontradiction with the view that investment episodes are lumpy in nature 4 see chirinko 1994 for a survey of the empirical investment literature

optimal timing of college subsidies enrollment graduation and the skill premium abstract the large increase in the skill premium has led many policy makers to propose increasing college subsidies as a strategy to increase college enrollment and reduce inequality existing analyses typically assume that there is no distinction between enrollment and graduation but in fact more than 50 of college enrollees do not graduate this highlights the need to explicitly model the decision to drop out in assessing the effect of subsidies i build a general equilibrium model of education choice that features an explicit dropout decision calibrate it to match key features of the us economy and use it to evaluate the impact of college subsidies on the supply of college educated labor i show that moving to a system in which subsidies are back loaded i e higher for juniors and seniors than for freshmen and sophomores will increase the supply of college educated labor even holding total subsides constant in fact this effect is larger than what would be accomplished by a uniform 50 increase in subsidies

inefficiency of male and female labor supply in agricultural households evidence from uganda this article analyzes the efficiency of the intra household allocation of female and male labor inputs in agricultural production in a collective household model spouses optimal on farm labor supply is such that the marginal rate of technical substitution between male and female labor is equated over different crops using the uganda national household survey 2005 06 we test whether this condition holds by estimating production functions and controlling for endogeneity using a method proposed by gandhi navarro and rivers 2009 we find that women are less productive than men that there is more female labor input on low productivity parcels and that men are relatively more productive on female controlled plots compared with male controlled plots total farm output could be higher and pareto improvements could be possible if male labor was reallocated to female controlled plots and or female labor was reallocated to male controlled plots

the behavioral and distributional implications of aid for college subsidizing the cost of education is one of the most common and expensive activities of governments while primary and secondary schooling is available tuition free in the united states among post secondary students the direct cost of schooling is quite heterogeneous first tuition prices vary widely across schools during the 2000 2001 academic year college tuitions varied from zero at some community colleges to over 27 000 at ivy league institutions second institutions heavily discount these sticker prices for many students using detailed information on family finances and academic merit to engage in finely tuned price discrimination third the federal and state governments provide individual subsidies such as the pell grant and low interest stafford loan that are portable across institutions the standard model of human capital clearly predicts that such cost subsidies will raise the optimal level of schooling while the theoretical predictions are clear it is an empirical question how much a given dollar of subsidy affects behavior answering this empirical question is a challenge since eligibility for subsidies is certainly not random and in fact is likely to be correlated with many other determinants of schooling as a result estimates based on the cross sectional correlation of aid eligibility with schooling are subject to multiple sources of bias this paper examines work that has used quasi experimental methodology to isolate exogenous sources of variation in schooling costs in order to determine their effect on schooling decisions

school subsidies for the poor evaluating the mexican progresa poverty program abstract this paper evaluates how the progresa program which provides poor mothers in rural mexico with education grants has affected enrollment poor children who reside in communities randomly selected to participate in the initial phase of the progresa are compared to those who reside in other control communities pre program comparisons check the randomized design and double difference estimators of the program s effect on the treated are calculated by grade and sex probit models are also estimated for the probability that a child is enrolled controlling for additional characteristics of the child their parents local schools and community and for sample attrition to evaluate the sensitivity of the program estimates these estimates of program short run effects on enrollment are extrapolated to the lifetime schooling and the earnings of adults to approximate the internal rate of return on the public schooling subsidies as they increase expected private wages

is lumpy investment relevant for the business cycle the lumpiness of investment activity at the plant level is a well established fact previous research has suggested that such discrete and occasional adjustments have significant aggregate implications in particular it has been argued that changes in plants willingness to invest in response to aggregate shocks can at times generate large movements in total investment demand in this study i reassess these predictions in a general equilibrium environment specifically assuming nonconvex costs of capital adjustment i derive generalized s s adjustment rules yielding lumpy plant level investment within an otherwise standard equilibrium business cycle model in contrast to previous partial equilibrium analyses model results reveal that the aggregate effects of lumpy investment are negligible in general equilibrium households preference for relatively smooth consumption profiles offsets changes in aggregate investment demand implied by the introduction of lumpy plant level investment as a result

a fresh look at the rotten kid theorem and other household mysteries gary becker s rotten kid theorem asserts that if all family members receive gifts of money income from a benevolent household member then even if the household head does not precommit to an incentive plan for family members it will be in the interest of selfish family members to maximize total family income i show by examples that the rotten kid theorem is not true without assuming transferable utility i find a simple condition on utility functions that is necessary and sufficient for there to be the kind of transferable utility needed for a rotten kid theorem while restrictive these conditions still allow one to apply the strong conclusions of the rotten kid theorem in an interesting class of examples

the effects of male and female labor supply on commodity demands we examine the effects of male and female labor supply on household demands and present a simple and robust test for the separability of commodity demands from labor supply using data on individual households from six years of the uk fes we estimate a demand system for seven goods which includes hours and participation dummies as conditioning variables allowance is made for the possible endogeneity of these conditioning labor supply variables we find that separability is rejected furthermore we present evidence that ignoring the effects of labor supply leads to bias in the parameter estimates

choice and procrastination author s o donoghue ted rabin matthew abstract recent models of procrastination due to self control problems assume that a procrastinator considers just one option and is unaware of her self control problems we develop a model where a person chooses from a menu of options and is partially aware of her self control problems this menu model replicates earlier results and generates new ones a person might forego completing an attractive option because she plans to complete a more attractive but never to be completed option hence providing a non procrastinator additional options can induce procrastination and a person may procrastinate worse pursuing important goals than unimportant ones

microeconomic adjustment hazards and aggregate dynamics the basic premise of this paper is that understanding aggregate dynamics requires considering that agents are heterogeneous and that they do not adjust continuously to the shocks they perceive we provide a general characterization of lumpy behavior at the microeconomic level in terms of an adjustment hazard function which relates the probability that a unit adjusts to the deviation of its state variable from its moving target we characterize rich cross sectionally dependent aggregate dynamics generated by nonconstant hazards we present an example based on u s manufacturing employment and job flows and find that increasinghazard models outperform constant hazard partial adjustment models in describing aggregate employment dynamics

downward wage rigidities and optimal monetary policy in a monetary union this paper analyses the implications of heterogeneity in the type of downward wage rigidity nominal or real for optimal monetary policy in a monetary union with asymmetric wage adjustment costs indexation in one region of the union reduces optimal grease inflation in the presence of common productivity shocks large common shocks may have sizeable and persistent effects on the intra union terms of trade whereby the region characterized by downward real wage rigidity adjusts with a persistent loss of competitiveness in response to asymmetric productivity shocks there is no role for grease inflation because relative price changes facilitating the real wage changes dominate the adjustment mechanism

labor demand and the structure of adjustment costs this study examines the costs firms face in adjusting labor demand to exogenous shocks evidence on monthly plant level data shows that adjustment proceeds in jumps employment is unchanged in response to small shocks but moves instantaneously to a new equilibrium if the shocks are large results in the large literature that assumes smooth adjustment are due to aggregation of this nonlinear relation the finding has implications for cyclical changes in productivity for severance pay layoff and plant closing restrictions and for all other policies that affect the cost of adjusting employment copyright 1989 by american economic association

aggregate employment dynamics building from microeconomic evidence this paper studies quarterly employment flows of approximately 10 000 u s manufacturing establishments the authors use establishments hours week to construct measures of the deviation between desired and actual employment and use these as the establishments main state variables the main findings are 1 microeconomic adjustment functions are nonlinear with plants adjusting disproportionately to large shortages 2 adjustments are often either large or nil suggesting the presence of nonconvexities in the adjustment cost technologies 3 the bulk of average employment fluctuations is accounted for by aggregate rather than reallocation shocks and 4 microeconomic nonlinearities amplify the impact of large aggregate shocks copyright 1997 by american economic association

intra household resource allocation an inferential approach if household income is pooled and then allocated to maximize welfare then income under the control of mothers and fathers should have the same impact on demand with survey data on family health and nutrition in brazil the equality of parental income effects is rejected unearned income in the hands of a mother has a bigger effect on her family s health than income under the control of a father for child survival probabilities the effect is almost twenty times bigger the common preference or neoclassical model of the household is rejected if unearned income is measured with error and income is pooled then the ratio of maternal to paternal income effects should be the same equality of the ratios cannot be rejected there is also evidence for gender preference mothers prefer to devote resources to improving the nutritional status of their daughters fathers to sons

testing the neoclassical model of family labor supply and fertility the mcelroy horney nash bargaining model of family demand behavior relaxes the restriction that nonearned income of husband and wife has the identical effect on family labor supply and commodity demands this restriction of the neoclassical model offamily behavior is tested for the determination of husband and wife labor supply andfertility based on the 1981 socioeconomic survey of thailand the neoclassical restriction is rejected for female labor supply andfertility another unexplored limitation offamily demand studies due to the sample self selection of intact marriages is empirically treated through alternative estimation strategies in this case a more sharply focused theory of marital behavior is needed to identify family demand models

monetary policy with sectoral trade offs we formulate a two sector new keynesian economy that features sectoral heterogeneity along three main dimensions price stickiness consumption goods durability and the inter sectoral trade of input materials the combination of these factors deeply affects inter sectoral and intra sectoral stabilization in this context we examine the welfare properties of simple rules that adjust the policy rate in response to the output gap and alternative measures of final goods price inflation aggregating durable and non durable goods prices depending on the relative frequency of sectoral price setting may induce a severe bias due to factor demand linkages the cost of production in one sector is influenced by price setting in the other sector of the economy as a result measures of aggregate inflation that weigh sectoral price dynamics based on the relative degree of price rigidity do not allow the central bank to keep track of the effective speeds of sectoral price adjustment

weighting recent performance to improve college and labor market outcomes abstract there is a great deal of policy interest in reducing college dropout rates increasing graduation rates and improving labor market outcomes to this end individual colleges and state university systems use high school grade point averages and class rankings in an effort to offer admission and scholarships to students who are most likely to achieve long run success however a significant fraction of students exhibit steep positive or negative performance trends during high school this study shows that academic performance in later grades is given no greater weight in admissions but is the best predictor of college and labor market outcomes greatly exceeding prior grades and entrance exam scores placing greater weight on later grades and extending application deadlines to allow the consideration of 12th grade performance is shown to significantly alter which students are admitted to college and to improve their expected long run outcomes importantly weighting recent performance does not appear to affect college diversity evidence is presented that the predictive power of later grades is driven primarily by students who experience large negative performance trajectories during high school

the empirical content of nash bargained household behavior in households whose allocation decisions can be represented as nash bargained household decisions extrahousehold environmental parameters eeps serve as pure shifters of the threat points the comparative statics of changes in demands due to changes in these eeps are given these are incorporated into a comprehensive statement of the empirical content of nash bargained household behavior including a nash generalization of barten s 1966 fundamental matrix equation of the theory of consumer demand estimation and data requirements are discussed along with nested testing of the following structure the neoclassical model is nested in the nash bargained model which in turn is nested in an unrestricted model of household demands emphasized throughout is the enriched menu of explanatory variables for demand analysis provided by the nash model as well as the model s ability to jointly analyze i household formation and ii intrahousehold allocation decisions

cluster sample methods in applied econometrics inference methods that recognize the clustering of individual observations have been available for more than 25 years brent moulton 1990 caught the attention of economists when he demonstrated the serious biases that can result in estimating the effects of aggregate explanatory variables on individual specific response variables the source of the downward bias in the usual ordinary least squares ols standard errors is the presence of an unobserved state level effect in the error term more recently john pepper 2002 showed how accounting for multi level clustering can have dramatic effects on t statistics while adjusting for clustering is much more common than it was 10 years ago inference methods robust to cluster correlation are not used routinely across all relevant settings in this paper i provide an overview of applications of cluster sample methods both to cluster samples and to panel data sets

what inventories tell us about aggregate fluctuations a tractable approach to s s policies abstract we estimate a dsge model with s s inventory policies we find that i taking inventories into account can significantly improve the empirical fit of dsge models in matching the standard business cycle moments in addition to explaining inventory fluctuations ii s s inventory policies can significantly amplify aggregate output fluctuations in contrast to the findings of the recent general equilibrium inventory literature and iii aggregate demand shocks become more important than technology shocks in explaining the business cycle once inventories are incorporated into the model an independent contribution of our paper is that we develop a solution method for analytically solving s s inventory policies in general equilibrium models with heterogeneous firms and a large aggregate state space and we illustrate how standard log linearization methods can be used to solve various versions of our inventory model generate impulse response functions and estimate the model s deep structural parameters

adjustment costs and threshold effects in factor demand relationships abstractit has been recently argued that producers may not respond to every input price change in the way that a linear factor demand model would predict this lumpy response is due to adjustment costs that are inherent in the act of adjusting the mix of inputs applied in the underlying production technologies this study aims to provide a solid conceptual framework for these nonlinearities in factor demand relationships industry specific implications of convex and non convex adjustment costs for the linearity of the factor demand relationships as well as price and substitution elasticities are explored a two regime threshold system of factor demand equations is estimated for several manufacturing industries in the united states empirical results suggest significant threshold effects in the factor demand relationships in most nondurable goods sectors the size and the nature of thresholds depend upon industry characteristics including input composition and non convexity of underlying adjustment costs

on money and motivation a quasi experimental analysis of financial incentives for college achievement abstract programs linking college aid to academic achievement could work either by lowering the cost of college or by inducing additional student effort i examine the promise program in west virginia which offers free tuition to students who maintain a minimum gpa and course load using administrative data i exploit discontinuities in the eligibility formula and the timing of implementation to estimate causal effects i find robust and significant impacts on key academic outcomes impacts are concentrated around the annual requirements for scholarship renewal suggesting that the program works via incentives for academic achievement not simply by relaxing financial constraints

state dependent pricing and the general equilibrium dynamics of money and output economists have long suggested that nominal product prices are changed infrequently because of fixed costs in such a setting optimal price adjustment should depend on the state of the economy yet while widely discussed statedependent pricing has proved difficult to incorporate into macroeconomic models this paper develops a new tractable theoretical state dependent pricing framework we use it to study how optimal pricing depends on the persistence of monetary shocks the elasticities of labor supply and goods demand and the interest sensitivity of money demand

the effect of credit constraints on the college drop out decision a direct approach using a new panel study a serious difficulty in determining the importance of credit constraints in education arises because standard data sources do not provide a direct way of identifying which students are credit constrained this paper differentiates itself from previous work by taking a direct approach made possible by unique longitudinal data from the berea panel study the results from our study of berea college students suggest that while credit constraints likely play an important role in the drop out decisions of some students the large majority of attrition of students from low income families should be primarily attributed to reasons other than credit constraints jel i21 i22

what do we learn about consumer demand patterns from micro data the aim of this paper is to assess the importance of using micro level data in the econometric analysis of consumer demand to do this we utilize a time series of repeated cross sections covering some 4 000 households in each of 15 years employing a number of different aggregation procedures we conclude that aggregate data alone are unlikely to produce reliable estimates of structural price and income coefficients however once certain aggregation factors as well as trend and seasonal components are included an aggregate model is not necessarily outperformed across all demand equations in terms of forecasting ability jel d12 c52 c31 the purpose of this paper is to develop a complete consumer demand system based on a time series of individual household data and to use it to measure the biases introduced into the study of consumer de mand behavior when aggregate data are used in place of the appropriate microeco nomic data we assess the suitability of ag gregate data through the impact on income and price elasticities and by evaluating the ability of both micro and aggregate based models to forecast aggregate consumer de mand the biases introduced by the use of aggregate data depend upon the way that household characteristics interact with in come and price effects and on departures of demand systems from linearity we explore the structure of microeconomic demand sys tems and the role of household characteris tics in the behavior of consumer demand both for the light this may shed on the pattern of future demands and for the im plications this behavior has for issues of aggregation consumer demand patterns typically found in micro data sets vary considerably across households with different household characteristics and with different levels of income we model this variability by making intercept and slope parameters in the budget share equations of our demand sys tem depend on household characteristics and by allowing for nonlinear total log expenditure terms in fact in theory consistent demand systems it is total ex penditure rather than disposable income that is allocated across goods we find that this general framework leads to a well specified data coherent demand system which is a quadratic extension of the popu lar almost ideal model of angus s deaton and john muellbauer 1980 the micro level estimates are shown to be sensitive to the treatment of endogeneity of total expen diture and to the specification of interaction terms with household characteristics in ad dition this specification is also shown to possess many attractive features for the evaluation of aggregate models

affirmative action and the quality fit trade off this paper reviews the literature on affirmative action in undergraduate education and law schools focusing especially on the trade off between institutional quality and the fit between a school and a student we discuss the conditions under which affirmative action for underrepresented minorities urm could help or harm their educational outcomes we provide descriptive evidence on the extent of affirmative action in law schools as well as a critical review of the contentious literature on how affirmative action affects urm law school student performance our review then discusses affirmative action in undergraduate admissions focusing on the effects such admissions preferences have on college quality graduation rates college major and earnings we conclude by examining the evidence on percent plans as a replacement for affirmative action

born under a lucky star financial aid college completion labor supply and credit constraints financial aid can affect both college enrollment and graduation the effects on graduation can be driven by students being induced to enroll by financial aid students who would have enrolled anyway graduating as a result of the financial aid or both this study isolates the effect of financial aid on the second group by examining a change in aid that did not change enrollment i study a discontinuous change in the amount of aid available to students who meet the age cutoff for financial independence i find that additional aid causes some university seniors to graduate one year earlier abstract from author

plant level nonconvex output adjustment and aggregate fluctuations in most manufacturing industries plant level output is adjusted along three margins of capacity utilization shiftwork weekend work and closing temporarily down due to the discrete and lumpy nature of these margins only a fraction of plants adjust output in response to shocks in a business cycle model calibrated to establishment level observations these nonconvexities make aggregate output less volatile than when plants can adjust smoothly further the mass of adjusting plants is larger in downturns than in upturns leading to counter cyclical volatility of aggregate output and government policy being slightly more effective in recessions than in expansions

reducing income inequality in educational attainment experimental evidence on the impact of financial aid on college completion income inequality in educational attainment is a long standing concern and disparities in college completion have grown over time need based financial aid is commonly used to promote equality in college outcomes but its effectiveness has not been established and some are calling it into question a randomized experiment is used to estimate the impact of a private need based grant program on college persistence and degree completion among students from low income families attending 13 public universities across wisconsin results indicate that offering students additional grant aid increases the odds of bachelor s degree attainment over four years helping to diminish income inequality in higher education

training wages and sample selection estimating sharp bounds on treatment effects this paper empirically assesses the wage effects of the job corps program one of the largest federally funded job training programs in the u s even with the aid of a randomized experiment the impact of a training program on wages is difficult to study because of sample selection a pervasive problem in applied microeconometric research wage rates are only observed for those who are employed and employment status itself may be affected by the training program this paper develops an intuitive trimming procedure for bounding average treatment effects in the presence of sample selection in contrast to existing methods the procedure requires neither exclusion restrictions nor a bounded support for the outcome of interest identification results estimators and their asymptotic distribution are presented the bounds suggest that the program raised wages consistent with the notion that the job corps raises earnings by increasing human capital rather than solely through encouraging work the estimator is generally applicable to typical treatment evaluation problems in which there is nonrandom sample selection attrition copyright wiley blackwell