tourism and economic development evidence from mexico s coastline tourism is a fast growing services sector in developing countries this paper combines a rich collection of mexican microdata with a quantitative spatial equilibrium model and a new empirical strategy to study the long term economic consequences of tourism both locally and in the aggregate we find that tourism causes large and significant local economic gains relative to less touristic regions that are in part driven by significant positive spillovers on manufacturing in the aggregate however these local spillovers are largely offset by reductions in agglomeration economies among less touristic regions so that the national gains from trade in tourism are mainly driven by a classical market integration effect

marshall s scale economies using panel data this paper estimates plant level production functions for machinery and high tech industries that allow for scale externalities from other plants in the same industry locally and from the scale or diversity of local economic activity outside the own industry the paper finds that the count of other own industry plants representing a count of local information spillover sources has strong productivity effects in high tech but not machinery industries single plant firms both benefit more from and generate greater external benefits than corporate plants given their greater reliance on external environments on dynamic externalities high tech single plant firms benefit also from the scale of past own industry activity i find little evidence of economies from the diversity or scale of local economic activity outside the own industry

on the optimal design of place based policies a structural evaluation of eu regional transfers we quantify general equilibrium effects of place based policies in a multi region framework with population mobility trade and agglomeration economies using detailed data on eu transfers we infer the local effects of different transfer types on productivity income and transportation cost based on these estimates and the general equilibrium model we derive the spatial distribution of economic activity and the resulting aggregate welfare effects if i no transfers were paid and taxes set to zero ii transfers were distributed uniformly iii transfers were welfare optimally distributed characterizing the optimal distributions we reveal complementarities between transfer types and between transfers and local endowments

stochastic dominance and mean variance measures of profit and loss for business planning and investment in this paper we first extend the stochastic dominance sd theory by introducing the first three orders of both ascending sd asd and descending sd dsd to decisions in business planning and investment to risk averse and risk loving decision makers so that they can compare both return and loss we provide investors with more tools for empirical analysis with which they can identify the first order asd and dsd prospects and discern arbitrage opportunities that could increase his her utility as well as wealth and set up a zero dollar portfolio to make huge profit our tools also enable investors and business planners to identify the third order asd and dsd prospects and make better choices to complement the stochastic dominance approach we also introduce an improved mean variance criterion to decisions in business planning or investment on both return and loss for risk averse and riskloving investors we then illustrate the superiority of the present approaches with well known examples in the literature and discuss the relationship between the improved stochastic dominance and mean variance criteria

racial disparities in job finding and offered wages abstractthe extent to which discrimination can explain racial wage gaps is one of the most divisive issues in the social sciences using a newly available data set this paper develops a simple empirical test that under plausible but not innocuous conditions provides a lower bound on the extent of discrimination in the labor market taken at face value our estimates imply that differential treatment accounts for at least one third of the black white wage gap we argue that the patterns in our data are most naturally rationalized through a search matching model in which employers statistically discriminate on the basis of race when hiring unemployed workers but learn about their marginal product over time

changes in transportation infrastructure and commuting patterns in us metropolitan areas 1960 2000 population decentralization has been a salient feature of the landscape of most u s urban areas since 1950 nathaniel baum snow 2007 documents that the aggregate population of central cities of the 139 largest metropolitan areas henceforth msas declined by 17 percent between 1950 and 1990 while aggregate msa population growth was 72 percent during this period expansion of the highway network in urban areas accounts for about one third of the gap in central city and msa population growth rates while transport network expansions clearly generated urban population decentralization there is little evidence to date on how this decentralization manifested itself as changes in employment locations and commuting patterns in this paper i present evidence indicating that employment decentralization occurred apace with residential decentralization between 1960 and 2000 such that their relative spatial concentrations remained remarkably unchanged a byproduct has been that most commutes of msa residents no longer involve central cities at all central cities as defined by their geographies in 1960 were the origin and or destination of only 38 percent of commutes made by msa residents in 2000 down from 66 percent in 1960 using planned portions of the interstate highway system as a source of exogenous variation estimates reported in section iii indicate that urban highway construction played a pivotal role in generating this shift new highways primarily increased the number and fraction of commuting flows within suburban areas at the expense of commutes within central cities because within suburb commutes are longer than other types of commutes on average results are consistent with gilles duranton matthew turner s 2009 evidence that the elasticity of kilometers driven with respect to lane kilometers of highways in urban areas is one 1

hydropower water and renewable energy in turkey sources and policy abstract turkey s energy consumption has been growing much faster than its production it forces turkey to make a rapid action to supply energy demand from the viewpoint of primary energy sources petroleum and natural gas turkey is not a rich country but it has an abundant hydropower potential to be used for generation of electricity hydropower is the most important kind of renewable sustainable energy and a proven technology for electricity generation the aim of this paper is to discuss sources and policy of hydropower water and renewable energy in turkey and compares the hydropower application with europe

how successful was the new deal the microeconomic impact of new deal spending and lending policies in the 1930s the new deal during the 1930s was arguably the largest peace time expansion in federal government activity in american history until recently there had been very little quantitative testing of the microeconomic impact of the wide variety of new deal programs over the past decade scholars have developed new panel databases for counties cities and states and then used panel data methods on them to examine the impact of new deal spending and lending policies for the major new deal programs in most cases the identification of the effect comes from changes across time within the same geographic location after controlling for national shocks to the economy many of the studies also use instrumental variable methods to control for endogeneity the studies find that public works and relief spending had state income multipliers of around one increased consumption activity attracted internal migration reduced crime rates and lowered several types of mortality the farm programs typically aided large farm owners but eliminated opportunities for share croppers tenants and farm workers the home owners loan corporation s purchases and refinancing of troubled mortgages staved off drops in housing prices and home ownership rates at relatively low ex post cost to taxpayers the reconstruction finance corporation s loans to banks and railroads appear to have had little positive impact although the banks were aided when the rfc took ownership stakes

the impact of employment quotas on the economic lives of disadvantaged minorities in india abstract india has the world s biggest and arguably most aggressive employment based affirmative action policy for minorities this paper exploits the institutional features of a federally mandated employment quota policy to examine its causal impact on the economic lives of the two distinct minority groups scheduled castes and scheduled tribes my main finding is that a 1 percentage point increase in the employment quota for scheduled castes increases the likelihood of obtaining a salaried job by 0 6 percentage points for male scheduled caste members residing in the rural sector the employment quota policy has no impact for scheduled tribes contrary to popular notion i do not find evidence of elite capture among the scheduled castes the impact is concentrated among members who have completed less than secondary education consistent with the employment results i find that the policy improved the well being of scheduled castes members in rural areas who have completed less than secondary education finally the impact of the employment quota policy varies by state characteristics

the unequal geographic burden of federal taxation in the united states workers in cities offering above average wages cities with high productivity low quality of life or inefficient housing sectors pay 27 percent more in federal taxes than otherwise identical workers in cities offering below average wages according to simulation results taxes lower long run employment levels in high wage areas by 13 percent and land and housing prices by 21 and 5 percent causing locational inefficiencies costing 0 23 percent of income or 28 billion in 2008 employment is shifted from north to south and from urban to rural areas tax deductions index taxes partially to local cost of living improving locational efficiency

a tale of an unwanted outcome transfers and local endowments of trust and cooperation abstract transfers can do good however they can also result in massive failures this paper presents a model that highlights the ambiguous nature of the impact of transfers on local endowments of social capital it then describes an empirical investigation that illustrates that the receipt of eu structural funds causes a deterioration of the endowments of trust and cooperation in the subsidized regions

granger non causality tests between non renewable energy consumption and output in italy since 1861 the ir relevance of structural breaks abstract the present paper considers an italian dataset with an annual frequency from 1861 to 2000 it implements granger non causality tests between energy consumption and output contrasting methods allowing for structural change with those imposing parameter stability throughout the sample though some econometric details can differ results have clear policy implications energy conservation policies hasten an underlying tendency of the economy towards a more efficient use of fossil fuels the abandonment of traditional energy carriers was a positive change the challenge for renewable energy is to diversify among different sources and to overcome possible social acceptance problems

market externalities of large unemployment insurance extension programs we provide evidence that unemployment insurance affects equilibrium conditions in the labor market which creates significant market externalities we provide a framework for identification of such equilibrium effects and implement it using the regional extension benefit program rebp in austria which extended the duration of ui benefits for a large group of eligible workers in selected regions of austria we show that non eligible workers in rebp regions have higher job finding rates lower unemployment durations and a lower risk of long term unemployment we discuss the implications of our results for optimal ui policy jel e24 j64 j65 r23

anti discrimination or reverse discrimination the impact of changing demographics title vii and affirmative action on productivity this study estimates the changes over time in the relative productivities of minorities and females i find no significant evidence that the productivity of minorities or females decreased relative to that of white males as relative minority and female employment increased during the 1960s and 1970s this study also compares the impact of title vii and affirmative action and presents evidence that title vii litigation has played a significant role in increasing black employment this suggests that the employment of minorities and females has not entailed large efficiency costs and that title vii litigation has had some success in fighting racial discrimination the eeoc has sometimes been credited with opening up new pools of labor that corporations somehow contrived to ignore and occasionally with hastening the breakdown of traditional barriers to labor mobility but in the context of the market s endless search for efficiency these anomalies would have been eliminated anyway leaving only the question of whether they were worth the expenditures compelled by law affirmative action is a net cost to the economy and the true dynamic effects the opportunity cost of all this expense and effort the diminution of competition inefficiencies due to the employment and promotion of marginal labor and the consequent demoralization of good workers can only be a matter of conjecture although they are clearly the most important of all senator orrin hatch 1980

temporary protection and technology adoption evidence from the napoleonic blockade this paper uses a natural experiment to assess whether temporary protection from trade with industrial leaders can foster development of infant industries in follower countries using a new dataset compiled from primary sources i find that in the short run regions departements in the french empire which became better protected from trade with the british for exogenous reasons during the napoleonic wars 1803 15 increased capacity in a new technology mechanised cotton spinning to a larger extent than regions which remained more exposed to trade temporary protection had long term effects in particular by exploiting the fact that the post war location of the cotton industry was determined to a large extent by the historical accident of the wars i first show that the location of cotton spinning within france was persistent and firms located in regions with higher post war spinning capacity were more productive 30 years later second i find that after the restoration of peace exports of cotton goods from france increased substantially consistent with evolving comparative advantage in cottons third i show that as late as 1850 france and belgium both part of the french empire prior to 1815 had larger cotton spinning industries than other continental european countries which were not protected from british trade during the wars this suggests that adoption of the new technology was far from inevitable

unique equilibrium in a model of self fulfilling currency attacks even though self fulfilling currency attacks lead to multiple equilibria when fundamentals are common knowledge we demonstrate the uniqueness of equilibrium when speculators face a small amount of noise in their signals about the fundamentals this unique equilibrium depends not only on the fundamentals but also on financial variables such as the quantity of hot money in circulation and the costs of speculative trading in contrast to multiple equilibrium models our model allows analysis of policy proposals directed at curtailing currency attacks

gibrat s law for all cities two empirical regularities concerning the size distribution of cities have repeatedly been established zipf s law holds the upper tail is pareto and city growth is proportionate census 2000 data are used covering the entire size distribution not just the upper tail the nontruncated distribution is shown to be lognormal rather than pareto this provides a simple justification for the coexistence of proportionate growth and the resulting lognormal distribution an equilibrium theory of local externalities that can explain the empirical size distribution of cities is proposed the driving force is a random productivity process of local economies and the perfect mobility of workers

pay reference points and police performance several theories suggest that pay raises below a reference point will reduce job performance final offer arbitration for police unions provides a unique opportunity to examine these theories as the police officers either receive their requested wage or receive a lower one in the months after new jersey police officers lose in arbitration arrest rates and average sentence length decline and crime reports rise relative to when they win these declines in performance are larger when the awarded wage is further from the police union s demand the findings support the idea that considerations of fairness disappointment and more generally reference points affect workplace behavior

where does an industry locate abstract this paper presents an econometric model of industrial location and estimates the model for two industries in brazil based on a comprehensive data set the model predicts which cities will or will not have the industry and for these cities with the industry what the scale of operation will be the parameters estimated in a full information context represent the technology of production supply of entrepreneurs and equilibrating error in markets the results are strong and very suggestive and the explanatory power of the model is relatively high the results are used to simulate the impact of industry subsidies on locational patterns

does temporary affirmative action produce persistent effects a study of black and female employment in law enforcement abstract this paper exploits variation in the timing and outcomes of employment discrimination lawsuits against u s law enforcement agencies to estimate the cumulative and persistent employment effects of temporary externally imposed affirmative action aa we find that aa increased black employment at all ranks by 4 5 to 6 2 percentage points relative to national trends we also find no erosion of these employment gains in the fifteen years following aa termination although black employment growth was significantly lower in departments after aa ended than in departments whose plans continued for women in contrast we find only marginal employment gains at lower ranks

do investors like to diversify a study of markowitz preferences we study rankings of completely and partially diversified portfolios and also of specialized assets when investors follow so called markowitz preferences it turns out that diversification strategies for markowitz investors are more complex than in the case of risk averse and risk inclined investors whose investment strategies have been extensively investigated in the literature in particular we observe that for markowitz investors preferences toward risk vary depending on their sensitivities toward gains and losses for example it turns out that unlike in the case of risk averse and risk inclined investors markowitz investors might prefer investing their entire wealth in just one asset this finding helps us to better understand some financial anomalies and puzzles such as the well known diversification puzzle which notes that some investors tend to concentrate on investing in only a few assets instead of choosing the seemingly more attractive complete diversification

wealth dynamics in a bond economy with heterogeneous beliefs two types of agents have diverse beliefs about the law of motion for an exogenous endowment one knows the true process and the other learns about it via bayes theorem financial market structure affects the dynamics of the wealth distribution when markets are complete the learning agent loses wealth as in blume and easley 2006 the absence of markets for some arrow securities alters the direction in which wealth is transferred when the only traded asset is a risk free bond the learning agent accumulates wealth both agents survive and the more knowledgeable agent is driven to his debt limit

do special economic zones induce developmental spillovers evidence from india s states abstract do special economic zones induce local development research drawing on the case of china s special economic zones suggests that subnational polities can target the location of export zones in order to catalyze local and regional socioeconomic development since 2006 a number of indian states have pushed forward similar zones in the face of accusations of land grabbing arguing that the zones will be engines for improvement in exports employment and infrastructure i argue that local development spillovers are an important albeit previously understudied dimension by which to evaluate the effects of special economic zones i then present the first systematic analysis of the developmental effects of india s sezs leveraging an original dataset on their locations together with 2001 and 2011 census data containing a host of social and economic developmental variables the findings show these sezs have failed to bring about local socioeconomic development to explain this absence of developmental spillovers i provide a theoretical framework based on the crucial role of political economy incentive structures facing local politicians i outline the mechanism through which indian state politicians use state owned development corporations for rent capture undermining the potential effectiveness of sezs and leading to their developmental failures the combination of available means for extracting rents and the limited political constraints on such rent extraction leads to a lack of developmental spillovers this framework can also help to explain the difference in the effects of sezs in india and in china these findings have theoretical importance for understanding the conditions under which subnational polities can use export zones and other export policies to catalyze development and practical implications for understanding the mixed pattern of sez success across the world

the economics of density evidence from the berlin wall this paper develops a quantitative model of internal city structure that features agglomeration and dispersion forces and an arbitrary number of heterogeneous city blocks the model remains tractable and amenable to empirical analysis because of stochastic shocks to commuting decisions which yield a gravity equation for commuting flows to structurally estimate agglomeration and dispersion forces we use data on thousands of city blocks in berlin for 1936 1986 and 2006 and exogenous variation from the city s division and reunification we estimate substantial and highly localized production and residential externalities we show that the model with the estimated agglomeration parameters can account both qualitatively and quantitatively for the observed changes in city structure we show how our quantitative framework can be used to undertake counterfactuals for changes in the organization of economic activity within cities in response for example to changes in the transport network

industrial policy evaluation in the presence of spillovers the shortage of studies on spatial spillovers of capital subsidy policies is rather surprising considering that such policies are usually designed to generate spatial externalities we propose a new framework that allows positive agglomeration effects to be contrasted with the negative cross sectional substitution and the crowding out effect the global evaluation of the att and the spillover parameters shifts the spotlight from the policy effect on subsidised firms to the global effect of capital subsidy policies on the targeted territory the empirical evaluation of a policy in italy mainly directed towards small and medium sized firms shows that the impact on investments turnover and employment is positive and large but is negative on tfp however the employment growth is partially determined to the detriment of the untreated firms

explaining the decline of the u s saving rate the role of health expenditure between 1980 and 2007 the u s personal saving rate declined from 11 percent to 3 percent in this paper we provide evidence that most of the decline can be explained by rising health expenditures we rst employ reduced form methods and exogenous variation in medical expenses generated by fda drug approvals to document that a 1 percentage point increase in health expenditure generated a decline in the saving rate that is between 0 73 and 0 89 percentage points using this result we calculate that the rise in health expenditure explains about 90 percent of the drop in the saving rate we then develop and estimate a model of consumption saving and health decisions to evaluate which mechanisms are behind the decline using the estimated model we document that the rise in medical expenses and drop in the saving rate are driven mainly by progress in health technology during the years 1995 2010 by the reduction in co payment rates in the period 1986 1994 and by improvements in income processes for the years 1980 1985

local economic development agglomeration economies and the big push 100 years of evidence from the tennessee valley authority we study the long run eects of one of the most ambitious place based economic development policies in u s history the tennessee valley authority using a rich panel dataset of counties we conduct an evaluation of the dynamic eects of the tva on local economies in the seventy years following the program s inception we nd that the tva led to short run gains in agricultural employment that were eventually reversed while impacts on manufacturing employment continued to intensify well after the program s subsidies had lapsed a pattern consistent with the presence of strong agglomeration economies in the manufacturing sector economists have long cautioned that the local gains created by place based policies may be oset by losses elsewhere yielding ambiguous eects on the u s as a whole building on the framework in glaeser and gottlieb 2008 we develop a novel approach to assessing the aggregate consequences of shifting the spatial distribution of manufacturing employment our ndings suggest the aggregate productivity gains associated with relocating manufacturing activity to the tva region were probably minimal

affirmative action and the utilization of minority and women owned businesses in highway procurement i introduction affirmative action programs in public procurement are among the more important government programs intended to advance self employment opportunities for minorities and women in 2002 6 75 of federal procurement dollars were awarded to disadvantaged business enterprises dbes through the small business administration and preferential treatment for minority firms is a common feature of many state and local government agencies recent court decisions and state measures have reduced the scope of and in some settings eliminated affirmative action programs based on race or gender which has given renewed importance to understanding the role of affirmative action in the success of self employed minorities and women the use of affirmative action is particularly widespread in the highway procurement industry since the late 1970s and early 1980s most states have employed affirmative action to award contracts to minority owned firms and since 1982 the federal highway administration fhwa has required states use affirmative action in awarding projects using federal funds in 1998 states awarded 14 6 billion of construction and repair contracts using federal funds of which 1 9 billion was awarded to firms owned by minorities and women as blanchflower and wainright 2005 note in the intervening years states have increasingly been able to use race neutral measures to meet goals which has had an adverse effect on utilization of minority owned firms understanding the effects of affirmative action in this industry is made important by the significance of the public sector according to the 2002 census of industries 72 6 of the revenue earned by firms in the highway street and bridge construction industry was from government owned projects as a result changes in public procurement policy will have a strong effect on firms in the highway construction industry despite the importance of affirmative action in this industry our understanding of the effects of these programs is limited states generally use percentage goals for the participation of minority owned subcontractors by prime contractors past research has established the response of dbe utilization to large episodic changes in affirmative action such as the elimination by certain states or cities of affirmative action programs blanchflower and wainright 2005 however little evidence exists regarding the intensive margin of affirmative action in public procurement that is as participation goals are raised or lowered what is the response of the utilization of dbes generally and minority and women owned firms specifically higher dbe goals do not necessarily raise the utilization of firms owned by minorities and women for two reasons first the dbe goal may not be binding in which case the marginal effect of small changes to the goal would be zero second goals for the utilization of dbes are often not perfectly enforced for instance a contractor facing a requirement to subcontract a fraction of a contract to dbes can skirt this requirement by documenting a good faith effort to employ firms owned by minorities and women the goal of this paper is to provide new evidence regarding the effectiveness of affirmative action programs in highway procurement at increasing purchases from firms owned by minorities and women two sources of variation are employed to answer this question the first is variation in dbe goals across states over time and the second is variation across projects within a state i begin by examining state level data regarding affirmative action goals and dbe utilization over the entire history of the fhwa s affirmative action program i utilize changes in affirmative action goals over time within states to identify the effect of affirmative action intensity on the level of dbe purchases i find that increasing goals for the utilization of dbe goals substantially raise the utilization of minority owned business enterprises mbes

the enduring impact of the american dust bowl short and long run adjustments to environmental catastrophe the 1930 s american dust bowl was an environmental catastrophe that greatly eroded sections of the plains analyzing new data collected to identify low medium and high erosion counties the dust bowl is estimated to have immediately substantially and persistently reduced agricultural land values and revenues during the depression and through at least the 1950 s there was limited reallocation of farmland from activities that became relatively less productive agricultural adjustments such as reallocating land from crops to livestock recovered only 14 to 28 of the initial agricultural cost the economy adjusted predominately through migration rather than through capital inows and increased industry

nature versus nurture the environment s persistent influence through the modernization of american agriculture technological innovation in agriculture was substantial during the 20th century is modern technological control of the environment replacing a primitive dependency on natural advantages and disadvantages or has agricultural production remained persistently dependent on the environment this paper estimates how the 20th century modernization of united states plains agriculture changed the impact of environmental characteristics on agricultural land values despite substantial technological innovation and rising land values from 1945 to 2002 counties environmental characteristics largely maintained influence on land values environmental change has become no less costly as technological innovation has not reduced the importance of natural advantages or disadvantages

barbed wire property rights and agricultural development this paper examines the impact on agricultural development of the introduction of barbed wire fencing to the american plains in the late nineteenth century without a fence farmers risked uncompensated damage by others livestock from 1880 to 1900 the introduction and near universal adoption of barbed wire greatly reduced the cost of fences relative to the predominant wooden fences especially in counties with the least woodland over that period counties with the least woodland experienced substantial relative increases in settlement land improvement land values and the productivity and production share of crops most in need of protection this increase in agricultural development appears partly to reflect farmers increased ability to protect their land from encroachment states inability to protect this full bundle of property rights on the frontier beyond providing formal land titles might have otherwise restricted agricultural development

a case for incomplete markets we propose a new welfare criterion that allows us to rank alternative financial market structures in the presence of belief heterogeneity we analyze economies with complete and incomplete financial markets and or restricted trading possibilities in the form of borrowing limits or transaction costs we describe circumstances under which various restrictions on financial markets are desirable according to our welfare criterion

trade liberalization and regional dynamics abstract we study the evolution of trade liberalization s effects on brazilian local labor markets regions facing larger tariff cuts experienced prolonged declines in formal sector employment and

learning the ropes general experience task specific experience and the output of police officers abstract we estimate the role that law enforcement officer experience has on the probability of punishment using a unique data set of tickets issued by the idaho state police linked to human resource records all else equal officers issue fewer tickets earlier in their career than later in their career quasi exogenous shocks to an officer s task specific experience generated by law changes cause a temporary reduction in the frequency with which a subset of troopers use those laws creating disparities in the likelihood that individual citizens are cited for law violations the reduction in ticketing in response to a law change is largest for newer troopers and law changes later in a trooper s career have a smaller effect on his use of that law

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

do place based tax incentives create jobs abstract in this paper we evaluate the effectiveness of place based payroll taxes in stimulating local employment by exploiting a unique policy setting in norway where a system of geographically differentiated payroll taxes was suddenly abolished due to an eu regulation the reform was enforced independently of the regional labor market developments creating arguably exogenous variation in the payroll tax rates that firms in different local labor markets faced over time we find evidence of partial shifting of payroll tax increases on to worker wages as well as a significant decline in local employment these findings suggest that in settings with some degrees of wage rigidity place based payroll tax incentives can be effective in stimulating local employment

does affirmative action reduce gender discrimination and enhance efficiency new experimental evidence we investigate experimentally the impact of quota policies on gender discrimination in hiring decisions by testing whether affirmative action increases female employment we also ask whether firm performance is affected by such policies our experiment consists of three treatments in the baseline no quota treatment groups of two employers and six potential job candidates are formed employers have to hire two workers based on information on candidate characteristics including gender and years and subject of study the second low penalty treatment is identical to the baseline except there is a quota such that at least half of the employees hired must be women if this quota is not respected the firm has to pay a penalty the last high penalty treatment is the same as the low penalty treatment except that the penalty is significantly higher we find that women are ranked unfavorably in the absence of a quota and the introduction of a quota significantly reduces gender discrimination firm performance is not affected by the introduction of quotas

black white wage convergence the role of public sector wages and employment this paper assesses the relative contribution of the public and private sectors through their employment and wages to the black white wage convergence that occurred in the u s economy over the 1

oaxaca blinder as a reweighting estimator the classic regression based estimator of counterfactual means studied by ronald oaxaca 1973 and alan blinder 1973 is shown to constitute a propensity score reweighting estimator based upon a linear model for the conditional odds of being treated

zipf s law for cities an explanation zipf s law is a very tight constraint on the class of admissible models of local growth it says that for most countries the size distribution of cities strikingly fits a power law the number of cities with populations greater than s is proportional to 1 s suppose that at least in the upper tail all cities follow some proportional growth process this appears to be verified empirically this automatically leads their distribution to converge to zipf s law

affirmative action as earnings redistribution the targeting of compliance reviews affirmative action may be broadly conceived of as pursuing either the goal of reducing discrimination or that of redistributing jobs and earnings i attempt to infer the ends of affirmative action policy by analyzing the historical record of enforcement optimal enforcement strategies are developed for both the antidiscrimination and the earnings redistribution models and then compared with new data on the actual targeting of affirmative action compliance reviews during the late 1970s i find that establishments with very low proportions of minority or female workers are not significantly more likely to be reviewed but that white collar intensive establishments are more likely to be reviewed this indicates the shortcomings of the antidiscrimination model in explaining the ofccp s behavior and suggests the potential usefulness of the earnings redistribution model

prospect theory and mean variance analysis the experimental results of prospect theory pt reveal suggest that investors make decisions based on change of wealth rather than total wealth that preferences are s shaped with a risk seeking segment and that probabilities are subjectively distorted this article shows that while pt s findings are in sharp contradiction to the foundations of mean variance mv analysis counterintuitively when diversification between assets is allowed the mv and pt efficient sets almost coincide thus one can employ the mv optimization algorithm to construct ptefficient portfolios the markowitz 1952a tobin 1958 mean variance mv rule is probably the most popular investment decision rule under uncertainty in economics and in finance and it is widely employed by both academics and practitioners the strength of the mv analysis is that in the case of normal return distributions the choice of any expected utility maximizing risk averse individual will be according to the mv rule 1 the mv framework is the foundation of the sharpe 1964 lintner 1965 capital asset pricing model capm which is a cornerstone of modern finance moreover the mv framework provides a very important practical procedure for the construction of efficient portfolios while standard economic theory and in particular mv analysis assume expected utility maximization and risk aversion in a breakthrough article kahneman and tversky 1979 show that the actual behavior of individuals systematically and consistently violates these

black white earnings ratios since the civil rights act of 1964 the importance of labor market dropouts published median earnings of wage and salary workers by race and sex are based on distributions that exclude those without earnings and those not employed as wage and salary workers at the time of the survey it has been argued that the changing importance of these exclusions rather than any improvement in the distribution of offered wages for blacks accounts for the apparent increase in black white relative median earnings this paper presents a new method for correcting the published medians for such censoring the apparent improvement in relative earnings is reduced but not eliminated by the correction

prospect theory much ado about nothing prospect theory is a paradigm challenging the expected utility paradigm one of the fundamental components of prospect theory is the s shaped value function the value function is mainly justified by experimental investigation of the certainty equivalents of prospects confined either to the negative or to the positive domain but not of mixed prospects which characterize most actual investments we conduct an experimental study withmixed prospects using for the first time recently developed investment criteria called prospect stochastic dominance psd and markowitz stochastic dominance msd we reject the s shaped value function showing thatat least 62 76 of the subjects cannot be characterized by such preferences we find support for the markowitz utility function which is a reversed s shaped function exactly the opposite of the prospect theory value function it is possible that the previous results supporting the s shaped value function are distorted because the prospects had only positive or only negative outcomes presenting hypothetical situations which individuals do not usually face and which are certainly not common in financial markets

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

hydropower the politics of water and energy introduction and overview this special issue of energy policy is dedicated entirely to hydropower and this introductory article provides an overview of the contents it is divided into three main subject areas the present situation and history the main policy issues and the future of the hydropower industry the first area covers the evolving context the diversity and the potential of the hydropower industry and also reports on hydropower in china the country with the largest remaining potential the policy area covers the social and environmental effects the regulatory framework and public acceptance issues the discussion of the future describes the changes that are underway and still need to be made to ensure that hydropower will continue to serve the needs of society for electricity and several other important services hydropower projects can yield large benefits to society but they also entail costs and well informed decision making processes are necessary to ensure the best outcomes for a region or a country the authors who contributed to this special issue hope that their articles will provide some of the information needed for good decision making

can fiscal rules constrain the size of government an analysis of the crown jewel of tax and expenditure limitations abstract fiscal rules attempt to alter budget outcomes by constraining policy makers they have been one of the primary responses to the recent string of fiscal crises around the globe we ask if these rules succeed in altering fiscal outcomes by examining what is arguably the most stringent set of fiscal rules in the u s colorado s taxpayer bill of rights tabor as tabor attempts to constrain both taxes and expenditures we develop a novel approach of estimating treatment effects for multiple outcomes simultaneously using the synthetic control methodology of abadie et al 2010 although there will always be a degree of uncertainty over external validity when a policy is enacted in only a single state our results provide no evidence that tabor affected the level of taxes or spending in colorado and are precise enough to rule out large negative effects thus no support is found for the contention that fiscal rules alter budget outcomes instead tabor appears to have been partly evaded by policy makers and voters despite its stringency and partly nothing more than a ratification of the state s preference over the size of its public sector

the local socio economic impacts of large hydropower plant development in a developing country abstract despite extensive discussion in the literature about the socio economic impacts of hydropower development on surrounding communities there is 1 a lack of quantitative studies that look at impacts over extended periods of time and 2 a lack of studies including multiple projects in the context of a developing country here we use econometric methods to evaluate the relationship between county level socio economic indicators and hydropower development for 56 brazilian hydropower plants built between 1991 and 2010 we find that counties that built hydropower plants had greater gdp and tax revenues during their first few years of development than a control group that consisted of counties with hydropower projects planned but not yet built however those positive economic effects were short lived

desegregation and black dropout rates in 1954 the united states supreme court ruled that separate schools for black and white children were inherently unequal this paper studies whether the desegregation plans of the next 30 years benefited black and white students in desegregated school districts data from the 1970 and 1980 censuses suggest desegregation plans of the 1970 s reduced high school dropout rates of blacks by two to three percentage points during this decade no significant change is observed among whites the results are robust to controls for family income parental education and state and region specific trends as well as to tests for selective migration

stochastic dominance via quantile regression with applications to investigate arbitrage opportunity and market efficiency abstract tests for stochastic dominance constructed by translating the inference problem of stochastic dominance into parameter restrictions in quantile regressions are proposed they are variants of the one sided kolmogorov smirnoff statistic with a limiting distribution of the standard brownian bridge the procedure to obtain the critical values of our proposed test statistics are provided simulation results show their superior size and power they are applied to the nasdaq 100 and s p 500 indices to investigate dominance relationship before and after major turning points results show no arbitrage opportunity between the bear and bull markets our results infer that markets are inefficient and risk averters are better off investing in the bull rather than the bear market

do female officers improve law enforcement quality effects on crime reporting and domestic violence escalation we study the impact of the integration of women in us policing between the late 1970s and early 1990s on violent crime reporting and domestic violence escalation along these two key dimensions we find that female officers improved police quality using crime victimization data we find that as female representation increases among officers in an area violent crimes against women in that area and especially domestic violence are reported to the police at significantly higher rates there are no such effects for violent crimes against men or from increases in the female share among civilian police employees furthermore we find evidence that female officers help prevent the escalation of domestic violence increases in female officer representation are followed by significant declines in intimate partner homicide rates and in rates of repeated domestic abuse these effects are all consistent between fixed effects models with controls for economic and policy variables and models that focus exclusively on increases in female police employment driven by externally imposed affirmative action plans resulting from employment discrimination cases

are u s cities underpoliced theory and evidence we document the extent of measurement errors in the basic data set on police used in the literature on the effect of police on crime analyzing medium to large u s cities over 1960 to 2010 we obt

the effect of police response time on crime clearance rates police agencies devote vast resources to minimizing the time that it takes them to attend the scene of a crime despite this the long standing consensus is that police response time has no meaningful effect on the likelihood of catching offenders we revisit this question using a uniquely rich dataset from the greater manchester police to identify causal effects we use a novel strategy that exploits discontinuities in distance to the response station across locations next to each other but on different sides of division boundaries contrary to previous evidence we find large and strongly significant effects in our preferred estimate a 10 increase in response time leads to a 4 7 percentage points decrease in the likelihood of clearing the crime we find stronger effects for thefts than for violent offences although the effects are large for every type of crime we find suggestive evidence in support of two mechanisms the likelihood of an immediate arrest and the likelihood that a suspect will be named by a victim or witness both increase as response time becomes faster we argue that under conservative assumptions hiring an additional response officer would generate a benefit in terms of future crime prevented equivalent to 170 of her payroll cost

assessing the incidence and efficiency of a prominent place based policy abstract this paper empirically assesses the incidence and efficiency of round i of the federal urban empowerment zone ez program using confidential microdata from the decennial census and the longitudinal business database using rejected and future applicants to the ez program as controls we find that ez designation substantially increased employment in zone neighborhoods and generated wage increases for local workers without corresponding increases in population or the local cost of living the results suggest the efficiency costs of first round ezs were relatively modest jel h26 h77 j31 r23 r58

nonparametric instrumental variables estimation abstract in many economic models objects of interest are functions which satisfy conditional moment restrictions economics does not restrict the functional form of these models motivating nonparametric methods in this paper we review identification results and describe a simple nonparametric instrumental variables npiv estimator we also consider a simple method of inference in addition we show how the ability to uncover nonlinearities with conditional moment restrictions is related to the strength of the instruments we point to applications where important nonlinearities can be found with npiv and applications where they cannot

assessment of sustainability indicators for renewable energy technologies the non combustion based renewable electricity generation technologies were assessed against a range of sustainability indicators and using data obtained from the literature the indicators used to assess each technology were price of generated electricity greenhouse gas emissions during full life cycle of the technology availability of renewable sources efficiency of energy conversion land requirements water consumption and social impacts the cost of electricity greenhouse gas emissions and the efficiency of electricity generation were found to have a very wide range for each technology mainly due to variations in technological options as well as geographical dependence of each renewable energy source the social impacts were assessed qualitatively based on the major individual impacts discussed in literature renewable energy technologies were then ranked against each indicator assuming that indicators have equal importance for sustainable development it was found that wind power is the most sustainable followed by hydropower photovoltaic and then geothermal wind power was identified with the lowest relative greenhouse gas emissions the least water consumption demands and with the most favourable social impacts comparing to other technologies but requires larger land and has high relative capital costs

market prices of risk with diverse beliefs learning and catastrophes mies with identical patterns of endowments priors and information flows but two different market structures one with complete markets another in which consumers can trade only a single risk free bond we study how opportuni ties to speculate uncommon priors and learn ing affect market prices of risk two types of consumers have diverse beliefs about the law of motion for a random exogenous endowment one type knows the true law of motion while the other type learns about it via bayes s theo

theories of risk testing investor behaviour on the taiwan stock and stock index futures markets investor behavior towards risk lies at the heart of economic decision making in general and modern investment theory and practice in particular this paper uses both the mean variance mv criterion and stochastic dominance sd procedures to analyze the preferences for four of the most widely studied investor types in the taiwan stock and stock index futures market we find that risk averters concave utility function prefer spot to futures whereas risk seekers convex utility function prefer futures to spot our findings also show that investors with s shaped utility functions prefer spot futures to futures spot when markets move upward downward finally our results imply that investors with reverse s shaped utility functions prefer futures spot to spot futures when markets move upward downward these results are robust with respect to sub periods spot returns including dividends and diversification although we do not check whether risk averters risk seekers and investors with s shaped and reverse sshaped utility functions actually exist in the market we do show that their existence is plausible the implications of our findings on market efficiency and the existence of arbitrage opportunities are also discussed in this study

an introduction to the theory of rational expectations under asymmetric information every good economics textbook contains the cliche that market prices provide signals which facilitate the allocation of resources to their best use in a world not subject to random shocks consumers and producers when faced with competitive prices need look no further than their own preferences or production technology to be able to make a decision they need give no thought to the tastes endowments or technology of other agents however in a world subject to random shocks this is no longer the case agents are faced with the problem of forecasting future states of nature and more importantly of forecasting the impact of these states on the actions of other agents rational expectations theories provide a model of how agents make those forecasts in a world subject to random shocks it will be the case that agents acquire or at least attempt to acquire information about the future realization of the shocks it will in general be the case that different agents have access to different information the fact that information is dispersed throughout the economy has the potential to cause a misallocation of resources relative to what would be the case if all agents knew everything an efficient allocation of resources will in general require the transfer of information from consumers who have some information about their future demands to producers who can take current actions to mitigate avoidable scarcities or surpluses though many classical and neo classical writers emphasize the informational role of prices the standard marshallian or walrasian model of competitive equilibrium does not involve prices transferring information across traders the purpose of this paper is to show that rational expectations models are radically different from walrasian models in an economy where traders have diverse information this is demonstrated by showing that unlike what occurs in a walrasian equilibrium of an economy with heterogeneous information if there is a complete set of insurance markets and utility is additively separable over time then there exists a rational expectations equilibrium which gives consumers the same allocation as if each consumer has access to all of the economy s information this implies that under the above assumptions a central planner with all the economy s information could not pareto dominate the competitive allocation achieved when traders have diverse information and rational expectations this paper makes no attempt to survey the literature on rational expectations the reader is referred to shiller 1978 barro 1981 for a survey of macroeconomics and rational expectations and radner 1980 for a survey of the microeconomics and mathematical theory of rational expectations this paper will however try to outline the evolution of the rational expectations concept from a notion of optimal forecasting to a virtually complete departure from the walrasian model of equilibrium the rest of this section is devoted to a discussion of pre rational expectations ideas

place based policies heterogeneity and agglomeration place based policies though hardly new have just begun to attract serious attention from econ omists as evidence on the effects of these pro grams begins to trickle in it is useful to revisit the theoretical rationale for spatially targeted subsidies why after all should governments pay firms to move to less productive areas and incentivize workers to live in neighborhoods they don t like and who ultimately benefits from these subsidies in a general equilibrium environment i study here some stylized models of spatial equilibrium designed to answer these questions my conclusions are shown to depend critically upon the degree of preference hetero geneity in the population and the structure of any agglomeration economies

government programs can improve local labor markets evidence from state enterprise zones federal empowerment zones and federal enterprise communities 1 abstract federal and state governments spend well over a billion dollars a year on programs that encourage employment development in disadvantaged labor markets through the use of subsidies and tax credits in this paper we use an estimation approach that is valid under relatively weak assumptions to measure the impact of state enterprise zones entzs federal empowerment zones empzs and federal enterprise community entc programs on local labor markets we find that all three programs have positive statistically significant impacts on local labor markets in terms of the unemployment rate the poverty rate the fraction with wage and salary income and employment further the effects of empz and entc designation are considerably larger than the impact of entz designation we find that our estimates are robust to allowing for a regression to the mean effect we also find that there are positive but statistically insignificant spillover effects to neighboring census tracts of each of these programs thus our positive estimates of these program impacts do not simply represent a transfer from the nearest non treated census tract to the treated census tract our results are noteworthy for several reasons first our study is the first to jointly look at these three programs thus allowing policy makers to compare the impacts of these programs second our paper along with a concurrent study by neumark and kolko 2008 is the first to carry out the estimation accounting for overlap between the programs third our estimation strategy is valid under weaker assumptions than those made in many previous studies we consider three comparison groups and let the data determine the appropriate group fourth in spite of our conservative estimation strategy by looking at national effects with disaggregated data we show that entz designation generally has a positive effect on the local labor market while most previous research on entzs much of which used more geographically aggregated data to look at state specific effects did not find any significant impacts fifth we note that there is little or no previous work on entcs overall our results strongly support the efficacy of these labor market interventions

the employment impact of poland s special economic zones policy abstractin 1994 poland launched a special economic zones experiment to maintain employment structures outside the major cities using difference in difference estimations this paper evaluates whether the policy has been successful in its primary objective which is to sustain employment in gminas communes more likely to be negatively affected by the economic transition a significant and positive effect of the policy on employment is documented but with some negative spillovers at the policy level as zones start to spread rapidly accounting for covariates timing policy spillovers and reducing imbalance through matching the average treatment effect for employment is estimated to be 60

the effect of court ordered hiring quotas on the composition and quality of police arguably the most aggressive armative action program ever implemented in the united states was a series of court ordered racial hiring quotas imposed on municipal police departments my best estimate of the eect of court ordered armative action on workforce composition is a 14

racial segregation and the black white test score gap abstract racial segregation is often blamed for some of the achievement gap between blacks and whites we study the effects of school and neighborhood segregation on the relative sat scores of black students across different metropolitan areas using large microdata samples for the 1998 2001 test cohorts our models include detailed controls for the family background of individual test takers school level controls for selective participation in the test and city level controls for racial composition income and region we find robust evidence that the black white test score gap is higher in more segregated cities holding constant family background and other factors a shift from a highly segregated city to a nearly integrated city closes about one quarter of the raw black white gap in sat scores specifications that distinguish between school and neighborhood segregation suggest that neighborhood segregation has a consistently negative impact while school segregation has no independent effect though we cannot reject equality of the two effects additional tests indicate that much of the effect of neighborhood segregation operates through neighbors incomes not through race per se data on enrollment in honors courses suggest that within school segregation increases when schools are more highly integrated potentially offsetting the benefits of school desegregation and accounting for our findings

more cops less crime abstract i exploit a natural experiment to estimate the causal effect of police on crime the american recovery and reinvestment act increased funding for the community oriented policing services cops hiring grant program from less than 20 million over 2005 2008 to 1 billion in 2009 hiring grants distributed in 2009 were allocated according to an application score cutoff rule and i leverage quasi random variation in grant receipt by comparing the change over time in police and crimes for cities above and below the threshold in a difference in differences framework relative to low scoring cities those above the cutoff experience increases in police of about 3 2 and declines in victimization cost weighted crime of about 3 5 following the distribution of hiring grants the effects are driven by large and statistically significant effects of police on robbery larceny and auto theft with suggestive evidence that police reduce murders as well crime reductions associated with additional police were more pronounced in areas most affected by the great recession the results highlight that fiscal support to local governments for crime prevention may offer large returns especially during bad macroeconomic times

estimating the distortionary effects of ethnic quotas in singapore using housing transactions abstract desegregation is a key policy issue in many countries i investigate a residential desegregation program in singapore the ethnic housing quotas i show that choice restrictions imposed on apartment blocks above the quota limits constrained could have distortionary effects causing price and quantity differences for constrained versus unconstrained blocks i test these predictions by hand matching more than 500 000 names in the phonebook to ethnicities to calculate ethnic proportions at the apartment block level i can then investigate differences for constrained and unconstrained blocks close to the quota limits and test for sorting around the limits i find that price differences are between 3 and 5 quantity effects are economically significant translating to longer time on market durations selection cannot fully explain these results my results point to challenges in achieving desegregation using quantity restrictions

skill transferability migration and development evidence from population resettlement in indonesia we use a natural experiment in indonesia to provide causal evidence on the role of location specific human capital and skill transferability in shaping the spatial distribution of productivity from 1979 1988 the transmigration program relocated two million migrants from rural java and bali to new rural settlements in the outer islands villages assigned migrants from regions with more similar agroclimatic endowments exhibit higher rice productivity and nighttime light intensity one to two decades later we find some evidence of migrants adaptation to agroclimatic change overall our results suggest that regional productivity differences may overstate the potential gains from migration

how costly is affirmative action government contracting and california s proposition 209 abstract this paper investigates the effect of disadvantaged business enterprise subcontractor goals on the winning bids for highway construction contracts using california s proposition 209 which prohibited the consideration of race or gender in awarding state funded contracts after proposition 209 prices on state funded contracts fell by 5 6 relative to federally funded projects for which preferences still applied most of the price decline after proposition 209 resulted from the mix of subcontractors employed which seems to arise from the higher costs of firms located in high minority areas finally short run barriers to entry and expansion may increase the cost of affirmative action

the incentive effects of affirmative action in a real effort tournament abstract affirmative action policies bias tournament rules in order to provide equal opportunities to a group of competitors who have a disadvantage they cannot be held responsible for its implementation affects the underlying incentive structure which might induce lower performance by participants and additionally result in a selected pool of tournament winners that is less efficient in this paper we study the empirical validity of such concerns in a case where the disadvantage affects capacities to compete we conducted real effort tournaments between pairs of children from two similar schools who systematically differed in how much training they received ex ante on the task at hand contrary to the expressed concerns our results show that the implementation of affirmative action did not result in a significant performance loss for either advantaged or disadvantaged subjects instead it rather enhanced the performance for a large group of participants moreover affirmative action resulted in a more equitable tournament winner pool where half of the selected tournament winners came from the originally disadvantaged group hence the negative selection effects due to the biased tournament rules were at least partially offset by performance enhancing incentive effects