access pricing and investment with stochastically growing demand abstract this paper examines the effect of access charges on firms incentives to invest in a network facility with a stochastically growing demand an access to bypass equilibrium is characterized in terms of an access charge and a level of network investment cost in the equilibrium a leader first enters a market by building a new network then a follower makes a sequential investment for the construction of an additional network after accessing the incumbent s network in an open access environment we confirm that the incentive for preemption can be enhanced by an increase in the access charge

the positional power of american labor 1963 1977 this paper extends perrone s conceptualization of positional power of labor and investigates its impact on three labor outcomes we conceptualize positional power as embedded in the structural relations among interconnected spheres of production in the economy we maintain that positional power is a threedimensional construct it entails 1 the ability of workers in a given industry to disrupt operations of other industries upstream in the production process 2 the ability to disrupt operations downstream in the production process and 3 the ability to disrupt production locally within their own industry after developing new measures of these three dimensions from interindustry input output flow matrices we estimate the impact of positional power on three labor outcomes a labor s organizational capacity b labor militancy and c labor s economic standing our findings suggest that positional power positively influences all three of these dimensions we discuss the significance of these results for future research

the gender gap fertility and growth changes in fertility have long been recognized as important correlates of economic growth with the relationship between the level of fertility and the level of income per capita being one of the strongest observable correlations in cross country data this paper examines the linkages between fertility and growth theory the structure of the model is presented in sections on production couples decision making system dynamics and steady state equilibria the first component of the model is that increases in capital per worker raise womens relative wages since capital is more complementary to womens labor input than to mens the second component is that increasing womens relative wages reduces fertility by raising the cost of children more than household income finally lower fertility raises the level of capital per worker a positive feedback loop generates demographic transition a rapid decline in fertility accompanied by accelerated output growth

price cap regulation and the scale and timing of investment this article shows how scale economies affect regulated firms investment behavior and welfare maximizing regulation of price and quantity regulated firms invest in smaller more frequent increments than social planners with greater investment distortions the greater the economies of scale regulators cap prices at lower levels than planners when economies of scale are moderate and at higher levels when they are substantial when quantity is also regulated the average cost of building capacity increases but the price cap decreases immediately after firms make their initial investment regulators want to transfer surplus from customers to shareholders by raising the price cap to induce additional investment

public versus private investment in human capital endogenous growth and income inequality in this paper we present an overlapping generations model with heterogeneous agents in which human capital investment through formal schooling is the engine of growth we use simple functional forms for preferences technologies and income distribution to highlight the distinction between economies with public education and those with private education we find that income inequality declines more quickly under public education on the other hand private education yields greater per capita incomes unless the initial income inequality is sufficiently high we also find that societies will choose public education if a majority of agents have incomes below average

skill biased technological change and rising wage inequality some problems and puzzles the recent rise in wage inequality is usually attributed to skill biased technical change sbtc associated with new computer technologies we review the evidence for this hypothesis focusing on the implications of sbtc for overall wage inequality and for changes in wage differentials between groups a key problem for the sbtc hypothesis is that wage inequality stabilized in the 1990s despite continuing advances in computer technology sbtc also fails to explain the evolution of other dimensions of wage inequality including the gender and racial wage gaps and the age gradient in the return to education

the impact of international outsourcing on unionization and wages evidence from the apparel export sector in central america it is often assumed that manufacturing workers in developing countries as recipients of outsourced jobs would achieve economic benefits and organizational power the author argues that job growth in developing countries through outsourcing to competing firms has often actually resulted in declining unionization and lower wage rates relative to traditional integrated manufacturing firms using time series data on union membership from 1980 2003 for honduras and el salvador as well as 2004 household survey data for el salvador he examines the determinants of unionization rates and wages in the manufacturing sectors he finds that that competitive outsourcing hurts labor at the plant level in three ways 1 it reduces labor s strike leverage by geographically dispersing the production process 2 it increases the threat of plant mobility by decreasing plant level investments and 3 it increases labor costs relative to total costs which creates an incentive for employers to keep wages low and unions out

investment under uncertainty with price ceilings in oligopolies abstract we study the impact of price cap regulation on the level and timing of investment in an oligopolistic cournot industry facing stochastic demand we find that a price ceiling affects investment decisions in two mutually competing ways it makes the option to defer investment more valuable but at the same time it reduces the incentive for firms to strategically underinvest in order to raise prices we show that while sensible price cap regulation speeds up investment a low price cap can be a disincentive for investment there exists an optimal price cap independent of market concentration the competitive investment price trigger that maximizes investment incentives and in the long term increases industry installed capacity this optimal price cap becomes less effective and less robust as the market becomes more competitive and as demand volatility increases errors in estimation of the optimal price cap have asymmetric effects underestimation has more dire consequences than overestimation

fertility volatility and growth abstract empirically growth rates are negatively correlated with birth rates they are also correlated with production risk we argue that these stylized facts are related and arise jointly from the decision of how many children to have in a risky environment

political bias in nlrb unfair labor practice decisions previous research has suggested that u s presidents appoint members to the national labor relations board who reflect the administration s own union management predilections no adequate empirical evidence has yet been reported however to show that once appointed board members act in a biased manner the present study develops and tests a choice model of board member decisions in selected unfair labor practice cases over the 1954 77 period the evidence strongly supports the popular belief that board decisions are heavily dependent upon shifting political winds

optimal regulation of network expansion we model the optimal regulation of continuous irreversible capacity expansion where a regulated firm has private information about capacity costs investments are financed from the firm s cash flows and demand is stochastic the optimal mechanism can be implemented as a revenue tax that increases with the level of the price cap if the asymmetric information has large support then the optimal mechanism consists of a laissez faire regime for low cost firms that is the firm s price cap corresponds to that of an unregulated monopolist and it is not taxed this maximal distortion at the top is necessary to provide information rents as direct subsidies are not feasible

what happened to long term employment the role of worker power and environmental turbulence in explaining declines in worker tenure recent declines in the average length of time that u s workers spend with a given employer represent an important change in the nature of the employment relationship yet it is one whose causes are poorly understood i explore those causes using current population survey data on the tenure of men aged 30 65 from the years 1979 2008 i argue that long term employment relationships primarily occur when workers pressure employers to close off employment from market competition reducing the attractiveness of external mobility relative to internal opportunities and increasing employment security i then explore how two changes in organizations environments a decline in union strength and increased turbulence from changes in technology and globalization might have affected workers ability to secure such closed employment relationships over the last 30 years my results support the argument that declines in tenure reflect the reduced power of workers to secure closed employment relationships recent declines in tenure have been concentrated in large organizations and many of those declines are explained by controlling for the changing levels of industry unionization i find little evidence that foreign competition or technological change affected mobility the results are robust to measures of changing industry growth rates and within industry reorganization supplementary analyses suggest that layoffs are associated with different industry pressures than tenure and that voluntary mobility may have played an important role in declines in tenure

the determinants of voting by the national labor relations board on unfair labor practice cases 1955 1975 this study has employed logit analysis in an attempt to determine important variables that influence the voting by the nlrb on unfair labor practice cases pooled regression results on the odds of voting prolabor were reported for the administrations of eisenhower kennedy johnson and nixon and for the entire period 1955 1975 a number of interesting findings are offered in this empirical investigation of the nlrb first it was found that if a board member is reappointed to the board the greater will be the odds that the member will vote prolabor this verifies the speculation that the democrats preferred a solidly prolabor voting board and that the republicans desired a strong prolabor voting minority on the board secondly political variables such as the party of the administration appointing the nlrb member and the member s own political party had an influence on the odds of voting prolabor if the administration in power was democratic or if the board member was a democrat the greater were the odds that the member would vote prolabor even if a member of the board professed to be an independent politically which was the case for two members during the eisenhower administration this variable was found to have a positive effect on prolabor voting for that particular administration and for the entire study period also in the eisenhower and nixon administrations being a former nonmember employee of the nlrb may have had some impact on the voting behavior finally variables for economic conditions in the economy were introduced into the regression equations to test whether or not these variables had any effect on the voting behavior of the nlrb members in almost all of the logit models reported the unemployment rate had an influence on voting by board members the effect was found to be positive in the eisenhower period and negative in the kennedy johnson and nixon periods the effect for the entire period was positive it is suggested that whether or not the influence of the unemployment rate on the voting on unfair labor practice cases was positive or negative depended on how the board perceived the role of organized labor in the tradeoff between inflation and unemployment if the members believe that organized labor s demands for higher wages caused accelerated inflation when the administration in power was simultaneously trying to reduce unemployment then the odds of the member voting prolabor were reduced besides the unemployment rate some other economic condition variables that were found to have a possible effect on nlrb voting during the kennedy johnson administration were real gnp strike days lost and union membership in the united states while admittedly this study is only a first attempt at modeling the voting behavior of the nlrb on important unfair labor practice decisions we believe that we have captured some of the most important political and economic variables that effect the behavior of a quasi judicial agency the nlrb

state revenue extraction from different income groups variations in tax progressivity in the united states 1916 to 1986 we examine the conditions that affected the progressivity of the individual income tax in the united states between 1916 and 1986 a multivariate time series analysis shows how macroeconomic conditions state imperatives the organizational capacities of social classes and political conditions have affected the progressivity and the symbolic component of the income tax progressivity is measured by the difference between the effective tax rates paid by moderate income and very high income families the symbolic component of this tax is measured by the difference between the nominal tax rate and effective income tax rate paid by very high income families the results reveal that changes in tax progressivity are due largely to macroeconomic and state fiscal conditions such as unemployment economic development and budget deficits although the organizational capacities of social classes and political conditions such as labor organization and political participation also have effects changes in progressivity are due primarily to adjustments in the rates paid by very high income families however the impacts of these conditions on tax progressivity changed somewhat when the federal income tax was transformed into a mass tax during world war il finally political conditions have a relatively greater effect on the symbolic component of the income tax than on progressivity overall this analysis supports a structural theory of the state in which the influences of politics and social classes on revenue extraction are circumscribed by macroeconomic and state fiscal conditions

union strength neoliberalism and inequality contingent political analyses of u s income differences since 1950 do historically contingent political accounts help explain the growth in family income inequality in the united states we use time series regressions based on 60 years to detect such relationships

green electricity investments environmental target and the optimal subsidy abstract we investigate the optimal investment decision in renewables under market demand uncertainty in the context of the italian strategy for renewable deployment under the eu policy the firm has to decide about the time and size of the investment we find that a higher subsidy level induces the firm to invest earlier with a smaller investment capacity this implies that a given environmental target cannot be reached by a too high too low subsidy level since this will cause the investment level to be too low too late we show that there exists an optimal intermediate subsidy level due to uncertain demand in some cases ensuring to reach the environmental target in time requires an additional conditional subsidy we propose a heuristic for policy makers stating when and how much subsidy to provide furthermore we find that in a more uncertain economic environment the subsidy adjustment to maintain the target level of investment results in the firm investing earlier which is opposite to the standard real options result

intertemporal price cap regulation under uncertainty this paper examines the intertemporal price cap regulation of a firm that has market power under uncertainty the unconstrained firm waits longer before investing or adding to capacity and as a corollary enjoys higher prices over time than would be observed in an equivalent competitive industry in the certainty case the imposition of an inter temporal price cap can be used to realise the competitive market solution by contrast under uncertainty it cannot even if the price cap is optimally chosen under uncertainty the monopoly firm will generally a under invest and b impose quantity rationing on its customers

the politics of union decline the contingent determinants of union recognition elections and victories despite the close political regulation of union recognition disputes sociologists have paid little attention to recent political determinants of success in these contests a state centered political opportunity approach suggests that if conservative political officials can reduce the number of union recognition elections union organization will be blocked partly because many labor scholars claim there was a postwar departure in labor movement fortunes we attempt to detect and model a contingent break in the relationship between republican control of the presidency and these elections using interactive specifications our findings show that shortly after the conservative anti union reagan administration took office recognition elections and union victories in these elections fell sharply with macroeconomic and other determinants held constant other political conditions with explanatory power include congressional oversight committee ideology and conservative appointments to the key regulatory age

illegal immigration border enforcement and relative wages evidence from apprehensions at the u s mexico border we examine illegal immigration in the united states from mexico over the period 1976 1995 one challenge is that we do not observe the number of individuals that attempt to enter the united states illegally we only observe the number of individuals apprehended attempting to cross the u s mexico border illegally based on a simple migration model we postulate the existence of an apprehensions function which expresses apprehensions at the border as a function of illegal attempts to cross the border and u s border enforcement effort we find that a 10 decrease in the mexican real wage leads to a 7 5 to 8 8 increase in apprehensions at the border excerpt

racial diversity and union organizing in the united states 1999 2008 does racial diversity make forming a union harder case studies offer conflicting answers and little large scale research on the question exists most quantitative research on race and unionization has studied trends in membership rather than the outcome of specific organizing drives and has assumed that the main problem is mistrust between workers and unions paying less attention for example to the role of employers the author explores the role of racial and ethnic diversity in the outcomes of nearly 7 000 organizing drives launched between 1999 and 2008 by matching the national labor relations board s information on union activity with the equal employment opportunity commission s surveys of large establishments the author reconstructs the demographic composition of the work groups involved in each mobilization the study finds that more diverse establishments are less likely to see successful organizing attempts little evidence is found however that this is because workers are less interested

when unionization disappears state level unionization and working poverty in the united states although the working poor are a much larger population than the unemployed poor u s poverty research devotes much more attention to joblessness than to working poverty research that does exist o

the population problem theory and evidence this study is concerned with the relationships among population growth poverty and environmental degradation with particular focus on the situation in developing countries the author rejects the concept of a general theory of fertility behavior in favor of an interpretation of these relationships which might be applicable to certain situations in the poorest parts of the indian subcontinent and sub saharan africa such situations include unacceptable risks of maternal death for poor illiterate women and a condemnation to extreme poverty in conditions of the deterioration of local resources and of the environment the author concludes that population growth rates are too high in certain specific areas and that an appropriate policy reaction to such conditions would be to try to change the options that men and women face so that their reasoned choice would be to lower their fertility

school attendance and child labor a model of collective behavior this paper theoretically investigates how community approval or disap proval aects school attendance and child labor and how aggregate behavior of the community feeds back towards the formation and persistence of an anti or pro schooling norm the proposed community model continues to take aggregate and idiosyncratic poverty into account as an important driver of low school attendance and child labor but it provides also an explanation for why equally poor villages or regions can display dierent attitudes towards schooling distinguishing between three dierent modes of child time allocation school attendance work and leisure the paper shows how the time costs of schooling and child labor productivity con tribute to the existence of a locally stable anti schooling norm it proposes policies that eectively exploit the social dynamics and initiate a permanent escape from the anti schooling equilibrium an extension of the model explores how an education contingent subsidy paid to the poorest families of a community manages to initiate a bandwagon eect towards education for all the optimal mechanism design of

uncertainty and the trade off between scale and flexibility in investment abstract this paper analyzes the behavior of a firm that chooses both the scale and timing of its investment sensitivity analysis shows that greater demand volatility is associated with the firm investing in larger increments less frequently this is in contrast to the conventional wisdom which is that greater volatility leads to investment in smaller increments more frequently overall the reduced frequency dominates the greater scale so that the long run average rate of investment is a decreasing function of demand volatility the timing and scale of investment are most sensitive to volatility when there are substantial investment economies of scale

investment flexibility as a barrier to entry abstract this paper presents a model of investment in a duopoly with firms that choose the scale and timing of investment decision making flexibility and the costs saved by investing in large steps rather than sequences of small steps determine an incumbent s ability to deter entry by a potential competitor entry occurs when these cost savings are very small or very large because the effect of increased industry capacity on the incumbent s assets in place is the same regardless of which firm invests in intermediate cases the incumbent is able to deter entry by making a smaller earlier investment than the potential entrant the smaller investment scale protects the incumbent s assets in place which offsets the incumbent s cost disadvantage from investing in smaller steps than the entrant would choose nevertheless the threat of entry constrains the incumbent s investment behavior and limits its profitability the model is solved using a combination of best response iteration and the projected successive over relaxation method

worker replacement costs and unionization origins of the u s labor movement the embattled state of u s labor has generated a voluminous body of research on the processes of deunionization contributing to its decline revisiting the less researched topic of unionization this study explores the social conditions facilitating union growth during the labor movement s formative years focusing on the first decade of the twentieth century in many respects for labor a period not unlike the present i seek to explain the pattern of organizing success and failure across industries and occupations i find that the most organized settings occurred where workers had greater disruptive capacities due to the high cost of being replaced during work stoppages the highest replacement costs were associated with three conditions scarcity of skilled labor geographically isolated worksites that raised the cost of importing strikebreakers and time sensitive tasks that rendered replacement workers economically impractical workplaces that had at least one of these conditions formed the backbone o

social norms savings behavior and growth we argue that many goods and decisions are not allocated or made through markets we interpret an agent s status as a ranking device that determines how well he or she fares in the nonmarket sector the existence of a nonmarket sector can endogenously generate a concern for relative position in for example the income distribution so that higher income implies higher status moreover it can naturally yield multiple equilibria it is thus possible to explain differences in growth rates across countries without recourse to differences in underlying preferences technologies or endowments different social organizations lead to different reduced form preferences which lead to different growth rates

pricing access forward looking versus backward looking cost rules abstract regulators across many different jurisdictions and industries have recently adopted the practice of setting access prices based on the current costs of providing the relevant facilities though widely regarded as being efficient the efficiency implications of using current costs instead of historical costs have not been formally analyzed our analysis shows that given stochastic costs forward looking access prices retard investment and are generally dominated by access prices determined by historical cost whenever investment is desired

contraction and expansion the divergence of private sector and public sector unionism in the united states the institutional structure of the american labor market changed remarkably from the 1950s and 1960s to the 1980s in the 50s and 60s trade unions seemed permanently established in the private sector of the economy a third of nonagricultur al wage and salary workers and over half of blue collar workers were union members hundreds of thousands of workers voted annually in national labor relations board nlrb representation elections to join unions most large firms sought stable collective bargaining relations with their unions by contrast in the public sector only 10 12 percent of workers were union members fewer were covered by collective bargaining contracts and most experts regarded public employees as intrinsically nonorganizable according to afl cio president george meany it was impossible to bargain collectively with the government kramer 1962 p 14 the massive contraction of unionism in the private sector and expansion in the public sector in the 1970s and 1980s see exhibit 1 has produced an utterly different situation today in the private sector the proportion of wage and salary workers in unions plummeted to 14 percent in 1986 a level comparable to that in the great depression only a minuscule number of workers joined unions through nlrb elections and national companies openly proclaimed their intent to establish a union free environment by contrast in the public sector over a third of the work force was unionized some 40 percent were covered by collective contracts 1 and 1 estimates of organization in the public sector differ somewhat among sources though all data show greater organization than in the private sector see freeman ichniowski and zax forthcoming for a detailed analysis of the various statistics

social norms fertility and economic development abstract this paper presents an overlapping generations model with endogenous fertility and human capital accumulation within such a framework it shows how the presence of family size norms can lead to multiple equilibria it can thus potentially explain different development patterns without recourse to increasing returns and differences in initial conditions furthermore it derives sufficient conditions under which different equilibria can be pareto ranked finally it shows that the main results hold also in the case where there exists parental altruism

irreversible investment with price ceilings a model of irreversible investment in a competitive industry under demand uncertainty is developed in the absence of restrictions investment by itself will keep the price from rising above a natural ceiling that exceeds the long run average cost by an option value factor when a lower ceiling is imposed investment is triggered only by the observation of an even higher shadow price as the imposed ceiling is reduced to the long run average cost this shadow price goes to infinity and investment ceases completely because investment is depressed a tighter price ceiling generally leads to a higher long run average price

a mass phenomenon the social evolution of obesity this paper proposes a theory for the social evolution of obesity it considers a society in which individuals experience utility from consumption of food and non food the state of their health and the evaluation of their appearance by others the theory explains under which conditions poor persons are more prone to be overweight although eating is expensive and it shows how obesity occurs as a social phenomenon such that body mass continues to rise long after the initial cause e g a lower price of food is gone the paper investigates the determinants of a steady state at which the median person is overweight and how an originally lean society arrives at such a steady state extensions of the theory towards dietary choice and the possibility to exercise in order to lose weight demonstrate robustness of the basic mechanism and provide further interesting results

endogenous fertility multiple growth paths and economic convergence abstract this paper extends the cass koopmans optimal growth model to allow for endogenous fertility choice it is shown that if agents choose their fertility rate then the net rate of return on capital marginal product of capital minus the population growth rate may not be monotonically decreasing in capital in this case multiple steady states and growth paths may emerge which can explain the persistent differentials in income between poor and rich countries as well as the existence of development miracles and disasters the paper provides also empirical evidence which supports the existence of multiple convergence groups and is consistent with the theoretical model

gender inequality endogenous cultural norms and economic development this research focuses on the role played by cultural norms in the long run persistence of gender inequalities cultural norms about gender roles are considered to be endogenous and can generate gender inequality and low development traps indeed when the gender gap is internalized it leads to inegalitarian views about gender roles due to these inegalitarian beliefs boys receive more education and the initial gender gap is reinforced the existence of gender inequality traps is pointed out by the world bank as a major obstacle for economic development wdr 2006 the present article allows for a better understanding of the persistence of such traps and the means to escape

determinants of the outcomes of union certification elections this study analyzes determinants of union election outcomes at the level of the work unit within a theoretical framework of utility maximization voting behavior is modeled as a function of the social psychology of groups the economic and sociopolitical environment nlrb procedures and the extent of union organization of the industry utilizing nlrb certification election records for 1979 the author finds a negative relationship between unit size and union victories in units of fewer than 65 workers but no relationship in larger units also negatively related to union victories are delays between petition and election dates elections held in southern states having right to work laws and elections involving the teamsters in contrast workers are more likely to vote for representation as unemployment levels and the proportion of consent elections rise and as the rate of unionization in their industry rises to 35 percent

fertility choice under child mortality and social norms abstract in most demographic transitions declines in child mortality precede declines in net fertility rates variants of the barro becker model of fertility fail to deliver this link a simple extension the inclusion of social norms regarding fertility generates the desired effect

through the contested terrain implementation of downsizing announcements by large u s firms 1984 to 2005 since the 1980s leading u s firms have announced massive downsizing plans in the name of maximizing shareholder value but some observers are skeptical about how serious firms are in implementing

the role of union strategies in nlrb certification elections analyzing 1986 87 data from 261 nlrb certification election campaigns the author finds that union tactic variables explain more of the variance in election outcomes than any other group of variabl

low powered vs high powered incentives evidence from german electricity networks abstract we propose a difference in differences approach to estimating the impact of incentives on cost reduction in the context of german electricity networks when subject to a lower powered regulation mechanism relatively more efficient operators pile up more costs in the year used to determine future prices this pattern is consistent with the idea that incentives matter higher powered incentives lead to cost reduction the results are also consistent with an equilibrium where more efficient firms pool with less efficient ones under the threat of ratcheting