the effect of charter competition on unionized district revenues and resource allocation abstract this study examines the impact of competition due to charter school entry on the level of revenues and the composition of expenditures within traditional public school districts tpsds i leverage a policy change affecting the location and timing of charter entry to account for endogenous charter competition tpsds respond to competition by allocating resources away from instructional and other expenditures toward new capital construction using teacher contracts i show that collectively bargained salaries are largely unresponsive to competition and that declines in instructional spending are primarily due to decreases in the number of employed teachers competition depresses appraised housing valuations in turn causing tpsds to lose property tax revenues resulting in a decline in overall spending

are any growth theories robust this article investigates the strength of empirical evidence for various growth theories when there is model uncertainty with respect to the correct growth model using model averaging methods we find little evidence that so called fundamental growth theories play an important role in explaining aggregate growth in contrast we find strong evidence for macroeconomic policy effects and a role for unexplained regional heterogeneity as well as some evidence of parameter heterogeneity in the aggregate production function we conclude that the ability of cross country growth regressions to adjudicate the relative importance of alternative growth theories is limited despite the vast amount of empirical research generated by new growth theories there is remarkably little consensus on which mechanisms are most salient in explaining cross country differences this article is designed to provide some evidence on this question by examining the robustness of empirical support for different growth the ories as determinants of both aggregate growth and its underlying components total factor productivity tfp growth and physical and human capital accumulation one reason for the lack of empirical consensus on growth determinants is that the main statistical tool in empirical studies cross country growth regressions provides very different answers depending on how the regression is specified which for this context typically amounts to the choice of control variables individual papers typically employ regressions that include modest subsets of the body of regressors that have been pro posed in the literature as a whole others employ a kitchen sink approach to evaluate the relative evidentiary support of competing growth theories in such an exercise a large number of variables are included in a regression and those variables that prove to be significant are then declared to be the important determinants of growth while the others are dismissed as unimportant rodrik et al 2002 sachs 2003

inequality and growth in the united states why physical and human capital matter we investigate the relationship between economic growth and top income inequality under the influence of human and physical capital accumulation using an annual panel of u s state level data our analysis is based upon the unified framework offered by galor and moav 2004 while the empirics account for cross section dependence parameter heterogeneity and endogeneity in nonstationary series we conclude that changes in inequality do not influence growth neither in the short run nor in the long run in the united states as a whole in the 1929 2013 period our findings are robust to the inclusion of overall income inequality measures these findings provide support for the theoretical prediction of the unified theory of inequality and growth according to which the growth effect of inequality becomes insignificant in the latest stages of economic development that the united states experiences during our period of investigation therefore future policies aiming at moderating the concentration at the upper end of income distribution are not likely to have adverse growth consequences in developed countries such as the united states jel i21 o47 c23

the optimum quantity of debt abstract we find that the welfare gains to being at the optimum quantity of debt rather than the current us level are small and therefore concerns regarding the high level of debt in the us economy may be misplaced this finding is based on a model of a large number of infinitely lived households whose saving behavior is influenced by precautionary saving motives and borrowing constraints this model incorporates a different role for government debt than is found in standard models and it captures different cost benefit trade offs on the benefit side government debt enhances the liquidity of households by providing an additional means of smoothing consumption and by effectively loosening borrowing constraints on the cost side the implied taxes have adverse wealth distribution and incentive effects in addition government debt crowds out capital via higher interest rates and lowers per capita consumption

the fiscal framework in a currency union lessons from a comparison between the euro area and the eastern caribbean currency union this paper draws out lessons from the euro area ea that are transferable to the eastern caribbean currency union eccu and other caribbean economies with fixed exchange rates based on observations from both the ea and the eccu we present a new policy framework which is capable of imposing fiscal discipline with the aim of avoiding the risk of unsustainable fiscal policies reappearing and of preventing monetary policy from being undermined by undisciplined national governments in the eccu case we find that fiscal deficits are more a result of financial and trade imbalances than fiscal indiscipline per se consequently constraints on overall debt public and private rather than direct limits on endogenous public deficits appear to be the appropriate response

debt and growth new evidence for the euro area abstract against the background of the euro area sovereign debt crisis our paper investigates the relationship between public debt and economic growth and adds to the existing literature in the following ways first we use a dynamic threshold panel methodology in order to analyse the non linear impact of public debt on gdp growth second we focus on 12 euro area countries for the period 1990 2010 therefore adding to the current discussion on debt sustainability in the euro area our empirical results suggest that the short run impact of debt on gdp growth is positive and highly statistically significant but decreases to around zero and loses significance beyond public debt to gdp ratios of around 67 this result is robust throughout most of our specifications in the dynamic and non dynamic threshold models alike for high debt to gdp ratios above 95 additional debt has a negative impact on economic activity furthermore we can show that the long term interest rate is subject to increased pressure when the public debt to gdp ratio is above 70 broadly supporting the above findings

error correction mechanisms the interface between economic theory and applied econometrics is often one of uneasy compromise with the pragmatic justification for many accepted procedures resting on a theoretical base this paper examines the surprisingly strong arguments that exist in terms of economic theory for the use of error correction mechanisms in the specification of short run dynamic adjustment a common heresy exists that while economic theory provides a detailed analysis of comparative static equilibria it can offer no guidance as to the appropriate specification of dynamic adjustment towards an equilibrium perhaps in consequence it is not uncommon to find examples where the necessary dynamic specification is achieved by tacking onto an existing equilibrium specification some relatively ad hoc short run adjustment scheme the intercession of stochastic arguments in this process is confused and critical implications are frequently ignored in practice but perhaps more importantly there will typically be no guarantee that the dynamic specification is consistent with the prescribed equilibrium consistency in this sense requires that the short run dynamic adjustment be directed by the perceived disequilibrium and that eventual convergence to the equilibrium position be ensured that two separate theoretical arguments co exist within the final specification is the root cause of many difficulties both theoretical and empirical this abstract was borrowed from another version of this item

testing the endogenous growth model public expenditure taxation and growth over the long run endogenous growth models such as barro 1990 predict that government expenditure and taxation will have both temporary and permanent effects on growth we test this prediction using panels of annual and period averaged data for oecd countries during 1970 95 isolating long run from short run fiscal effects our results strongly support the endogenous growth model and suggest that long run fiscal effects are not fully captured by period averaging and static panel methods unlike previous investigations our estimates are free from biases associated with incomplete specification of the government budget constraint and do not appear to result from endogeneity of fiscal or investment variables jel classification h30 o40 validation du modele de croissance endogene depenses publiques fiscalite et croissance a long terme des modeles de croissance endogene comme celui de barro 1990 predisent que depenses gouvernementales et fiscalite vont avoir des effets temporaires et permanents sur la croissance on met cette prevision au test a l aide de donnees annuelles et pour certaines moyennes couvrant des sous periodes pour les pays de l ocde 1970 95 dans le but de departager les effets a court et a long terme les resultats valident fortement le modele de croissance endogene et suggerent que les effets fiscaux a long terme ne sont pas pleinement captures par des methodes utilisant des moyennes ou des methodes statiques contrairement aux resultats d enquetes anterieures les resultats proposes ne souffrent pas de distorsions attribuables a une specification incomplete de la contrainte budgetaire du gouvernement et ne semblent pas etre l effet d echo de l endogeneite des variables fiscales et de l investissement

on the determinants of school district efficiency competition and monitoring abstract a number of researchers have asserted that inefficiency in the u s school system arises from a lack of incentives for public schools to behave efficiently this paper uses a shephard input distance function to model educational production and a switching regressions estimation to explore the relationship between school district efficiency and two existing incentive mechanisms competition and voter monitoring we find evidence that ease of monitoring enhances both technical and allocative efficiency of urban school districts and that increased competition reduces allocative inefficiency in communities above a competitive threshold we find no evidence that competition is related to technical inefficiency

social capital barriers to production and capital shares implications for the importance of parameter heterogeneity from a nonstationary panel approach recent advances in the growth literature have proposed that difficult to quantify concepts such as social capital may play an important role in explaining the degree of persistent income disparity that is observed among countries other recently explored possibilities include institutional mechanisms which generate barriers to aggregate production an important limitation for empirical work in this area stems from the fact that it is difficult to distinguish sources of heterogeneity when direct observations are not available in this study we show how developments in the analysis of nonstationary panels can aid in this endeavor in contrast to traditional dynamic panel data analysis this approach focuses explicitly on low frequency behavior under relatively mild assumptions the approach can be used to infer properties of aggregate production which are robust to the presence of large classes of unobserved features in this framework we are able to estimate and test the distribution of production function parameters that would be required in order to generate conditional forecast convergence of per capita incomes even when some of the key factors required to explain growth are unobserved the results indicate that in order to fully explain the observed persistence in the disparity of per capita incomes the manner in which unobserved mechanisms influence production must go beyond merely accounting for differences in the trending behavior of aggregate productivity specifically if such mechanisms are to be successful empirically they must also be able to account for cross country heterogeneity in steady state capital shares this adds to a growing literature that provides support for models with multiple production regimes copyright 2007 john wiley sons ltd

fiscal sustainability using growth maximizing debt targets this article highlights the importance of debt related fiscal rules and derives growth maximizing public debt ratios from a simple theoretical model on the basis of evidence on the productivity of public capital we estimate public debt targets that governments should maintain if they wish to maximize growth for panels of oecd eu and euro area countries these are not arbitrary numbers but are founded on long run optimizing behaviour assuming that governments implement the golden rule of financing that is they contract debt only to finance public investment our estimates suggest that the euro area should target debt levels of around 50 of gdp if member states are to have common targets that is about 15 points lower than the estimate for the growth maximizing debt ratio in our oecd sample and comfortably within the stability and growth pact s debt ceiling of 60 of gdp we also indicate how forward looking budget reaction functions fit into a debt targeting framework

public budgetary rules and gdp growth an empirical study on oecd and twelve european countries we study the long term effects of budgetary rules on gdp growth rate and analyse the determinants of the short term gdp growth dynamics for both a sample of 19 oecd and a subsample of 12 european countries we show that in the long run improvements in the cyclically adjusted budget balance as well as increases in the tax burden have negative effects on gdp growth the highest effect of fiscal policy on gdp growth would be obtained if the structural deficits were used to increase the market size by reducing the tax burden in line with barro 1990 a deficit financed reduction of tax burden has a stronger effect for european than for oecd countries because in europe the government size with respect to market size is too large therefore if gdp growth is a dominant policy objective in europe specific actions should redress the 2012 treaty toward a reduction of the tax burden

loan price modelling for local governments using risk premium analysis previous studies have highlighted the question of government loan interest as one of great current importance government borrowing levels are high and reducing interest payments would generate savings to meet other spending needs and or to lower taxation thus supporting the sustainability of public finances however no previous study has presented a method for a local government to calculate its own credit risk and thus be in a position to negotiate lower interest rates on its borrowing this article defines a financial model that enables local governments to estimate the interest rate payable on a bank loan based on their credit risk premium in accordance with the basel ii rules and the findings of our empirical study of large local governments

economic development and the return to human capital a smooth coefficient semiparametric approach this paper investigates the impact of human capital on the process of economic growth by allowing the contribution of traditional inputs capital and labour as well as that of human capital to vary both across countries and time the former is accomplished by constructing an index of tfp growth for traditional inputs while the latter through semiparametric methods we derive estimates of the output elasticity and social return to human capital for 51 countries at various stages of economic development copyright 2005 john wiley sons ltd

dynamics of russian regional clubs the time of divergence carluer f 2005 the dynamics of russian regional clubs the time of divergence regional studies 39 713 726 this paper examines the evolution of russian regional disparities in the light of the theory of convergence clubs the first part presents the limits of the methodology traditionally used in most studies of the convergence process for example the choice of indicators usually per capita income or labour productivity and the statistical test applied beta or sigma convergence strongly influence the results obtained sometimes adversely then following the works of quah and fingleton the superiority of an analysis of distribution dynamics especially one based on markov chains is explained the second part presents the main results based on the per capita regional income of the russian database 88 regions over a fairly long period 1985 99 the key conclusion is the strong diversity of regional evolutions which are characterized by both inertia rich regions remain rich poor regions

examining the robustness of the inflation and growth relationship author affiliation department of economics 208 laws hall miami university oxford oh 45056 usa hinelidr muohio edu acknowledgment i would like to thank eric fisher paul evans pok sang lam george davis and two referees for helpful comments 1 introductionwhether or not inflation affects long run growth has been one of the most widely studied questions since the resurgence of interest in economic growth if higher inflation does reduce long run growth it can be addressed by known policies that may be easier to implement than promoting investment in human capital or the development of new technologies despite this research the reliability of estimates is questionable since levine and renelt 1992 have shown the results are sensitive to changes in model specification 1 however levine and renelt s study was limited to a linear relationship in cross sectional data averaged over 30 years and subsequent work has shown that inflation s effects are more pronounced in higher frequency data and also non linear this paper uses bayesian model averaging bma to examine whether inflation s effect on long run economic growth is robust to alternative model specifications fernandez ley and steel 2001 and sala i martin doppelhofer and miller 2004 use bayesian model averaging to overcome some shortcomings of extreme bounds tests to re examine the robustness of determinants of growth but inflation is not considered unlike these previous studies this paper applies these methods to panel data and also allows for non linear effects 2 while inflation is not robust in the cross sectional data it is one of the more robust variables when using panel data even allowing for high inflation to drive the results we find that inflation is not robust when using cross sectional data suggesting that the original results of levine and renelt were not due to the simple linear relationship assumed although non linear effects are important in the panel data it is the higher frequency of the data that makes the difference with regard to robustness one of the main criticisms of growth regressions is that they are reduced form regressions revealing correlation yet many variables inflation in particular are endogenous variables using bayesian model averaging but instrumenting for inflation inflation is not robust even allowing for panel data and non linearities the paper proceeds as follows section 2 provides a brief literature review section 3 provides an overview of the bayesian model averaging methodology and section 4 proceeds to the application on inflation and growth section 5 concludes 2 literature reviewover the last 20 years many economists have examined the relationship between inflation and economic growth the typical approach has been to run linear regressions with the growth rate of per capita gdp as the dependent variable and numerous factors including inflation as independent variables kormendi and mcguire 1985 fischer 1993 and barro 1996 1997 using similar methods report statistically significant negative coefficients on inflation at least when inflation is above some moderate level such as 10 this apparent non linearity has been addressed in detail by some authors fischer 1993 uses a spline regression and finds a negative relationship at all levels of inflation barro 1996 found inflation to be harmful to growth but showed the results were driven by the observations where inflation exceeded 20 for inflation below 20 the point estimate was negative but statistically insignificant sarel 1996 tests for a structural break and finds that inflation is negatively related to growth after 8 the point estimate for inflation at rates less than 8 is positive but statistically insignificant khan and senhadji 2001 use recently developed methods on determining threshold effects and find a threshold at 11 for a large sample of countries

does competition among public schools benefit students and taxpayers tiebout choice among districts is the most powerful market force in american public education naive estimates of its effects are biased by endogenous district formation i derive instruments from the natural boundaries in a metropolitan area my results suggest that metropolitan areas with greater tiebout choice have more productive public schools and less private schooling little of the effect of tiebout choice works through its effect on household sorting this finding may be explained by another finding students are equally segregated by school in metropolitan areas with greater and lesser degrees of tiebout choice among districts

local intergenerational mobility abstract using nlsy data we investigate whether the observed patterns of economic mobility as measured by income and educational attainment exhibit heterogeneity across socioeconomic groups and whether the nature of the heterogeneity can be explained by different levels of persistence in the intergenerational transmission of cognitive and non cognitive abilities across these groups in doing so we employ the varying coefficient model vcm to estimate nonparametric local measures of intergenerational mobility of those outcome variables by local we mean that the persistence coefficients are modeled as smooth functions of log parental permanent income our findings show that intergenerational mobility exhibits nonlinear patterns individuals with different parental income are characterized by different degrees of intergenerational mobility moreover we find evidence that suggests cognitive abilities play a role in explaining intergenerational mobility these findings provide some support for a new class of family investment models that emphasize the role of such abilities in economic mobility

wages profits and rent sharing the paper suggests a new test for rent sharing in the u s labor market using an unbalanced panel from the manufacturing sector it shows that a rise in a sector s profitability leads after some years to an increase in the long run level of wages in that sector the paper controls for workers characteristics for industry fixed effects and for unionism lester s range of wages is estimated for rent sharing reasons alone at approximately 24 per cent of the mean wage

rent sharing and wages evidence from company and establishment panels a central question in labor economics and macroeconomics is whether the textbook competitive model provides an adequate representation of the labor market using longitudinal data on companies and establishments this article suggests that it may not as predicted by rent sharing models of the labor market changes in profitability are shown to feed through into long run changes in wages these are not temporary wage effects and are not driven by the unionized workplaces in the data the article s estimates imply that for rent sharing reasons alone lester s range of wages is approximately 16

the local solow growth model abstract this paper generalizes the empirical analysis of the solow growth model to account for country specific heterogeneity this generalization relaxes the assumption made in bulk of empirical growth studies that all countries possess identical aggregate production functions our empirical results indicate that there is substantial country specific heterogeneity in the solow parameters heterogeneity that is associated with differences in initial income we therefore conclude that the explanatory value of the solow growth model is substantially enhanced by allowing for country specific i e local production functions

fiscal leadership and central bank design this article investigates the impact on economic performance of the timing of moves in a policy game between the government and the central bank for a government that has both redistributional and stabilization objectives it is shown that both inflation and income inequality are reduced without sacrificing output growth if the government assumes a leadership role compared with a regime in which monetary and fiscal policy are determined simultaneously further it is shown that government leadership benefits both the fiscal and monetary authorities through the enhanced coordination that this arrangement implies jel classification e52 e61 f42

interactions of commitment and discretion in monetary and fiscal policies we consider monetary scal interactions when the monetary authority is more conservative than the scal with both policies discretionary 1 nash equilibrium yields lower output and higher price than the ideal points of both authorities 2 of the two leadership possibilities scal leadership is generally better with scal discretion monetary commitment yields the same outcome as discretionary monetary leadership for all realizations of shocks but scal commitment is not similarly negated by monetary discretion second best outcomes require either joint commitment or identical targets for both authorities output socially optimal and price level appropriately conservative or complete separation of tasks jel e61 e63

the impact of high government debt on economic growth and its channels an empirical investigation for the euro area abstract this paper investigates the average impact of government debt on per capita gdp growth in twelve euro area countries over a period of about 40 years starting in 1970 it finds a non linear impact of debt on growth with a turning point beyond which the government debt to gdp ratio has a negative impact on long term growth at about 90 100 of gdp confidence intervals for the debt turning point suggest that the negative growth effect of high debt may start already from levels of around 70 to 80 of gdp the channels through which government debt is found to have a non linear impact on the economic growth rate are private saving public investment and total factor productivity

non linearity in the inflation growth relationship in developing economies evidence from a semiparametric panel model using data on developing economies we estimate a flexible semiparametric panel data model that incorporates potentially nonlinear effects of inflation on economic growth we find that inflation is associated with significantly lower growth only after it reaches about 12 percent which is notably lower than the comparable estimate obtained from a threshold model our results also suggest that models with restrictive functional form assumptions tend to underestimate marginal effects of inflation on economic growth we also document significant variation in the effect of inflation on growth across countries and over time

concentration in the labor market for public school teachers recent studies that have investigated the relationship between the monopsony power of school districts and teachers salaries have reached conflicting conclusions the authors of this paper argue that the discrepancies among previous studies may be due to the arbitrary demarcation of the boundaries of teacher labor markets and the use of faulty measures of monopsony using a new procedure for defining teacher labor market boundaries and several alternative indices of concentration this study finds evidence of monopsonistic activity in local teacher labor markets in pennsylvania the monopsony wage effects are small however and are present mainly at the mid to upper ranges of the bachelor s degree salary scale

classic or new monopsony searching for evidence in nursing labor markets the market for registered nurses rns is often offered as an example of classic monopsony while a new monopsony literature emphasizes that firm labor supply is upward sloping independent of market structure using data from multiple sources we explore the relationship between nursing wages in hospitals and measures of classic and new monopsony wage level analysis fails to provide support for classic monopsony the relative wages of rns in 240 u s labor markets being largely uncorrelated with hospital system concentration longitudinal analysis shows nursing wages declining with increases in hospital concentration we interpret these results as providing support for classic monopsony effects in the short run but question whether wage effects are sustained in the long run no relationship is found between nursing wages and a new monopsony measure of mobility but support for new monopsony is found for women elsewhere in the labor market rns display greater interemployer mobility than do women or men in general two conclusions follow first upward sloping labor supply need not imply monopsonistic outcomes second absent more compelling evidence nursing should not be held up as a prototypical example of monopsony classic or new

probation length and teacher salaries does waiting pay off tenure policies for elementary and secondary school teachers is a controversial issue in many states but there is virtually no empirical evidence on how tenure affects teacher labor markets this paper begins to fill this research void by using cross state variation in tenure policies to identify the effects if any of the length of the probationary period on entry level teacher salaries using data from the schools and staffing survey the authors investigate whether districts in states with longer probationary periods offer higher wages to teachers as a way to compensate for the extended evaluative period results suggest that they do although effects are concentrated in districts that are most likely to be competing for teachers with districts in neighboring states with shorter probation periods the authors also find that the relationship between probation length and wages is stronger for experienced teachers and in districts that engage in collective bargaining

barriers to price convergence this paper investigates the existence of convergence clubs in the cross country price mechanism for 96 individual goods retail price levels across 40 countries available semi annually for 1990 2010 using a nonlinear factor model and threshold regression tools to our knowledge this is the first paper to find strong evidence for club convergence of retail prices these clubs emerge due to the interaction of traded and non traded factors for example countries that are physically closer to potential trade partners converge faster than countries in the high distance regime as long as they have low initial labor productivity or low initial income moreover being behind the technology frontier appears to be more conducive to price convergence for countries with relatively small physical distance from potential trade partners we interpret our findings as evidence of a local law of one price due to barriers to price convergence that influence the duration of the effect of price shocks

using panel data to evaluate growth theories this paper formulates a method for using panel data to compare endogenous growth theories that predict cross country differences in trend growth rates with exogenous growth models that predict parallel balanced growth paths using this method the paper rejects theories that predict even small differences in trend growth rates for a sample of rich countries and a sample of countries with well educated populations exogenous growth theories may thus characterize the growth experiences of these countries by contrast the paper cannot reject theories that predict widely different trend growth rates for a sample of countries with poorly educated populations copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

measuring the financial sustainability and its influential factors in local governments abstractthe economic crisis has led international organizations and previous research to point out the need for measuring and controlling financial sustainability in governments based on the main international pronouncements this article seeks to contribute to the measurement and management of the financial sustainability analysing the income statement evolution and identifying its influential factors an empirical study of spanish municipalities is then undertaken to test the relationship between the measure of the financial sustainability and three dimensions proposed by international federation of accountants ifac revenues debt and services our findings indicate that the income statement is a good approach for the financial sustainability assessment because it reveals relevant information about its three dimensions allowing to identify the specific factors which could provoke sustainability problems on public services

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

public sector capital and the productivity puzzle a number of studies have suggested a quantitatively important relationship between public sector capital accumulation and private sector productivity with the most compelling evidence derived from analyses of state level data estimates herein of production functions that use standard techniques to control for unobserved state specific characteristics however reveal essentially no role for public sector capital in affecting private sector productivity only estimates of state production functions that do not include such controls find substantial productivity impacts this result reconciles existing econometric estimates with the findings of hulten and schwab based on growth accounting techniques as such techniques effectively control for state specific effects region level estimates are essentially identical to those from state data suggesting no quantitatively important spillover effects across states copyright 1994 by mit press

who benefits from financial development new methods new evidence abstract this paper takes a fresh look at the impact of financial development on economic growth by using recently developed kernel methods that allow for heterogeneity in partial effects nonlinearities and endogenous regressors our results suggest that while the positive impact of financial development on growth has increased over time it is also highly nonlinear with more developed nations benefiting while low income countries do not benefit at all we also conduct a novel policy analysis that confirms these statistical findings in sum this set of results contributes to the ongoing policy debate as to whether low income nations should scale up financial reforms

the solow model with ces technology nonlinearities and parameter heterogeneity this paper examines whether nonlinearities in the aggregate production function can explain parameter heterogeneity in the solow growth regressions nonlinearities in the production technology are introduced by replacing the commonly used cobb douglas cd aggregated production specification with the more general constant elasticity of substitution ces specification we first justify our choice of production function by showing that cross country regressions favour the ces over the cd technology then by using an endogenous threshold methodology we show that the solow model with ces technology is consistent with the existence of multiple regimes copyright 2004 john wiley sons ltd

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

convergence of euro area inflation rates abstract we study the behavior of inflation rates among the 12 initial euro countries in order to test whether and when the group convergence initially dictated by the maastricht treaty and now by the ecb occurs we also assess the impact of events such as the advent of the euro and the 2008 financial crisis due to the small size of the estimation sample we propose a new procedure that increases the power of panel unit root tests when used to study group wise convergence applying this new procedure to euro area inflation we find strong and lasting evidence of convergence among the inflation rates soon after the implementation of the maastricht treaty and a dramatic decrease in the persistence of the differential after the occurrence of the single currency after the 2008 crisis euro area inflation rates follow the ecb s price stability benchmark although greece reports relatively higher inflation

oligopsony and monopsonistic competition in labor markets we argue that models of oligopsony or monopsonistic competition provide insights and explanation for many empirical phenomena in labor markets using a simple model with job differentiation and preference heterogeneity we illustrate how such models can be employed to explain the existence of wage dispersion the persistence of labor market discrimination market failures in the provision of training and the anomalous employment effects of minimum wages

re examination of convergence hypothesis among indian states in panel stationarity testing framework with structural breaks abstractthis article examines the conditional income convergence hypothesis for 17 major states in india for the period of 1960 2012 univariate stationarity tests without structural breaks provide evidence against the convergence hypothesis however when two or more structural breaks are applied in per capita income series the incomes of around 11 13 states are found to stochastically converge to the national average this finding supports the convergence hypothesis for the panel as a whole after accounting for two data features cross sectional dependence and structural breaks in incomes using a unified panel stationarity testing framework

convergence technological interdependence and spatial externalities a spatial dynamic panel data analysis this study adopts a spatial dynamic panel data approach and spatial quasi maximum likelihood to re estimate the speed of growth convergence in 91 countries based on technological interdependence and spatial externalities we perform a conditional lagrange multiplier test for spatial error dependence and find some differences to previous studies first the switch from a cross sectional to a dynamic panel data framework enables the estimated rate of conditional convergence to be higher more accurate and more appropriate for realistic and theoretical expectations second the spatial durbin model sdm is a general form of simplified model that considers spatial error correlation and its likelihood ratio test for the theoretical model of learning by doing effect provides further evidence finally statistical tests find that spatial correlation not only occurs in each variable but also appears in the error term thus the sdm does not exist in the assumptions associated with the spatial error which ar

nonlinearities and heterogeneity in environmental quality an empirical analysis of deforestation we use a panel data set of 59 developing countries over the 1972 1994 period to study the deforestation process relying on both parametric and semiparametric models we examine nonlinearities and heterogeneity in the deforestation process we first study the existence of an environmental kuznets curve ekc and then analyze determinants of deforestation our data sample provides no evidence of an ekc we also find that political institution failures may worsen the deforestation process in developing countries

the rise and decline of economic policy as an autonomous discipline a critical survey after smith s statement of the market virtues the process of gestation of economic policy as a consistent set of rules for public agenda has been rather slow until not so long ago economic policy as a discipline was confined to prescribing practical rules intended to explain technical procedures of government intervention economic policy as a coherent and to some extent autonomous discipline emerged in the late 1950s in scandinavian countries the netherlands and italy when solid foundations indicating market failures and a theory about conditions for policy effectiveness and design had been developed this paper intends to explain the reasons for its emergence the circumstances which helped it to be taught in many scandinavian dutch and italian universities and a few other european ones the reasons for its apparent setback and some factors that could facilitate its diffusion in the next years

testing for country heterogeneity in growth models using a finite mixture approach we define a bivariate mixture model to test whether economic growth can be considered exogenous in the solovian sense for this purpose the multivariate mixture approach proposed by alfo and trovato is applied to the bernanke and gurkaynak extension of the solow model we find that the explanatory power of the solow growth model is enhanced since growth rates are not statistically significantly associated with investment rates when cross country heterogeneity is considered moreover no sign of convergence to a single equilibrium is found copyright 2008 john wiley sons ltd

monopsony in the labor market this paper surveys recent theoretical and empirical research on monopsony in labor markets broadly defined as upward sloping labor supply to an employer we compare older monopsony models based on small numbers of employers with newer models based on labor market frictions such as moving costs and search we also compare older econometric approaches that focus on static wage concentration relationships with newer approaches that focus on dynamics our review of empirical estimates suggests that monopsony power based on small numbers of employers is probably rare but occasionally large while monopsony power based on frictions is probably widespread but small on average

local labor markets job matching and urban location we present a new way of modeling local labor markets by linking the space of workers skills and the physical space of cities the key lesson of our analysis is that firms exploit workers in these two spaces by setting wages that are below the competitive level the degree of monopsony power depends on the elasticity of the firm s labor pool which is inversely related to the costs workers incur in commuting and acquiring skills our analysis thus shows how socioeconomic ghettos emerge as workers with poor skill matches are also those who incur the highest commuting costs

testing for convergence clubs in income per capita a predictive density approach the article proposes a technique based on the predictive density of the data conditional on the parameters of the model to jointly tests for groups of unknown size in a panel and to estimate the parameters of each group the procedure is applied to the problem of identifying convergence clubs in scaled income per capita data the steady state distribution of european regional data clusters around four poles of attraction with different economic features the distribution of income per capita of oecd countries has two poles of attraction and each group clearly identifiable economic characteristics we share the uncommonness of being different j p roche

structural change and cross country growth empirics one of the most striking features of economic growth is the process of structural change whereby the share of agriculture in gdp decreases as countries develop the cross country growth literature typically estimates an aggregate homogeneous production function or convergence regression model that abstracts from this process of structural change this paper investigates the extent to which assumptions about aggregation and homogeneity matter for inferences regarding the nature of technology differences across countries using a unique world bank dataset it estimates production functions for agriculture and manufacturing in a panel of 40 developing and developed countries for the period from 1963 to 1992 it empirically models dimensions of heterogeneity across countries allowing for different choices of technology within both sectors the paper argues that heterogeneity is important within sectors across countries implying that an analysis of aggregate data will not produce useful measures of the nature of the technology or productivity it shows that many of the puzzling elements in aggregate cross country empirics can be explained by inappropriate aggregation across heterogeneous sectors

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

testing for convergence in carbon dioxide emissions using a century of panel data this paper tests the convergence in per capita carbon dioxide emissions for a collection of developed and developing countries using data spanning the period 1870 2002 for this purpose three recently developed panel unit root tests that permit for dependence among the individual countries are employed the results lend strong support in favor of convergence for the panel as a whole estimates of the speed of this convergence is also provided

are regional incomes in the usa converging a non linear perspective christopoulos d k and tsionas e g 2007 are regional incomes in the usa converging a non linear perspective regional studies 41 525 530 this article deviates from the current practice of regional convergence by allowing output convergence to follow a non linear process in this scenario all standard linear unit root tests have low power thus frequently leading to misguided conclusions in light of this a unit root test based on a non linear model is adopted which tests the null hypothesis of a unit root against a non linear alternative the findings overwhelmingly support the tendency of us regions to converge over time christopoulos d k et tsionas e g 2007 les revenus regionaux aux etats unis est ce qu ils convergent un point de vue non lineaire regional studies 41 525 530 l article s ecarte de la pratique actuelle de la convergence regionale en permettant a la convergence du rendement de suivre un processus non lineaire dans ce cas ci tout test lineaire standard de la racine unit