a budget holdback policy for multi item procurement processes this paper is concerned with the development of an optimal budget holdback policy for a multi item procurement process an annual budget is made available for the purchase and resupply of n items the issue is to determine how much of the budget to commit initially and how much to hold back for spot purchases later in the year an analytic solution to the problem is developed for the single item case and compared to the unconstrained newsboy solution in the multi item case we develop stochastic linear programming with resource models under two views of the organization s procurement process the first view is that the overall budget is allocated to the individual item managers and spot purchase monies earmarked for one item cannot be used for another the computational and data requirements for solution of this model are reasonable the second view is that spot buy monies are pooled and allocated to individual items on an as needed basis the linear programming model of this procurement process is mu

the quality of schooling quantity alone is misleading although much research discusses the quantity of schooling as an effective impact on productivity and earnings most such research leaves out the idea of the quality of schooling which may cause biases in the estimated returns to schooling this paper consequently attempts to extend the standard mincerian approach to incorporate school quality as well as quantity it demonstrates how exclusion of quality in the standard procedure may cause biases in the estimated returns to years of schooling probably in the upward direction the paper explores the implications of this extension of the standard model for the case of young brazilian males it shows that the estimate of the private return to years of schooling using the preferred quality inclusive specification is only one half the estimate using the standard procedure indicating substantial upward bias in the standard estimates it further outlines a method for estimating a social return to quality and finds that it exceeds substantially the social return to quantity the paper then shows why this in turn suggests there may be an equity productivity trade off in schooling investments

do limits matter evidence on the effects of tax limitations on student performance abstract the goal of this research is to determine if limits on the revenue raising ability of school districts translate into constraints on the ability of these districts to affect student performance we use the recent imposition of property tax limitations on school districts in the chicago metropolitan area to determine if these limits have translated into slower growth in student performance we find only limited evidence that student performance in districts subject to the tax limitations has fallen relative to student performance in districts not subject to the limitations

budget constrained frontier measures of fiscal equality and efficiency in schooling equality and efficiency are key issues in educational reform here the authors analyze the efficiency and equality consequences of various school finance reforms using a cost indirect output distance function this function readily models multiple output production under conditions of budgetary constraint and provides a natural measure of performance that is closely related to farrell type measures of efficiency the analysis suggests that despite school district inefficiency finance reforms can affect student achievement however any potential gains in output from redistribution are dwarfed by the potential gains from increased efficiency more strikingly the analysis demonstrates that budgetary reforms designed to equalize expenditures could actually increase the inequality of student achievement

stock price reactions to lifo adoptions the association between excess returns and lifo tax savings although long a topic of accounting research little is known about the motives for or effects of voluntary changes in accounting techniques among the motives which have been suggested are attempts by managers to smooth reported earnings gordon 1964 copeland 1968 cushing 1969 white 1972 and ronen and sadan 1981 to influence man agement compensation to reduce regulatory or political costs watts and zimmerman 1978 and to avoid bond covenant restrictions holthausen 1981 while some of these motives may be consistent with a market value rule they often fail to provide unambiguous accounting change predictions e g which accounting changes result in lower regulatory costs moreover empirical verification has been constrained by the unobservability of the variables to which the managers allegedly respond the stock price reaction which should be expected for a given account ing change depends not only on its implications for the valuation of securities but also on the extent to which the implications are already known or anticipated by investors 3 ultimately our ability to detect these stock price effects if any depends on the power of our tests previous studies of the effects of accounting changes have generally not found significant stock price reactions archibald 1972 ball 1972 kaplan and roll 1972 harrison 1977 and holthausen 1981 4 for the most part these studies dealt with accounting changes which had no direct cash flow effects in contrast changes in inventory costing methods especially those involving the last in first out lifo cost flow assumption can generate potentially large changes in a firm s cash flows due to their impact on taxable earnings these cash flow effects provide not only a motive for lifo changes5 which is consistent with the market value rule but also implications for associated stock price effects if investors react to lifo s cash flow implications rather than to its effects on reported earnings then positive stock price adjustments should be associated with lifo adjustments however the evidence from previous studies of stock price reactions to lifo adoptions is inconclusive ball 1972 sunder 1973 1975 abdel khalik and mckeown 1978 brown 1980 and ricks 1982 while several factors may account for these results see section 2 it can be noted that the previous studies have considered only a dichotomous variable whether or not a firm has adopted lifo yet because the cash flow consequences of a lifo adoption decision depend on a number of firm specific factors this approach ignores potentially large differences among firms in the economic consequences of lifo adoptions most firms switching to lifo now reveal in their financial statement disclosures the tax savings which have been realized this study uses these disclosures to examine the association between unsystematic re turns and the magnitudes of first year lifo tax savings for all nyse firms which adopted or extended their use of lifo during the period 1972 80 subject to data availability 6 the research design employs within group comparisons based on cumulative monthly unsystematic excess returns with appropriate controls for unexpected earnings per formance 7 this design avoids several methodological weaknesses inherent in the previous studies and allows more definitive tests of hypotheses relating investor reactions to the income and cash flow effects of lifo adoptions as reported more fully below results based on lifo adoptions made in 1974 are consistent with a positive association between cumulative excess stock returns and the magnitudes of lifo tax savings 8 the results also provide evidence that changes in systematic risk may accompany lifo adoptions however contrary to previous studies most of the sample firms exhibit downward rather than upward changes in systematic risk section 2 reviews the previous studies of stock price reactions to lifo adoptions and suggests explanations for their results section 3 discusses the alternative approach employed in this study while section 4 describes the test methodologies employed the data and data selection procedures are described in section 5 the results and a discussion are presented in section 6 section 7 offers some conclusions

how responsive is higher education the linkages between higher education and the labour market higher education is considered vital for developing a productive and dynamic labour force to meet the demands of the global economy how effectively does the us higher education sector respond to labour market signals we match us postsecondary degree completions from 1984 to 2008 with occupational employment statistics and employ an instrumental variable iv strategy to examine the supply response to changes in occupation specific demand the supply of educated workers appears weakly responsive to short term wage signals and moderately responsive to long term employment conditions analysis reveals a sizeable degree of heterogeneity and lag in the responsiveness across specific occupation degree pairings failure to respond rapidly to changes in labour demand may be one factor driving inequality in wages across occupations and in the aggregate economy we suggest some simple policy measures to help increase the responsiveness of the higher education sector both in terms of the output of specific degree

caveat emptor cross country data on education and the labor force abstract cross country data on education and the labor force frequently are used to describe important dimensions of development and to estimate models of economic growth and growth determinants the impact of education and related phenomena this investigation finds 1 there are serious intertemporal and inter country comparability problems with these data that may importantly affect inferences about labor force size trends and productivity and schooling investments and impact 2 data gaps are systematically related to levels of development and literacy and 3 conclusions about the determinants or consequences of development based on constructed data that have been made available to fill data gaps can be seriously misleading

does government r d policy mainly benefit scientists and engineers conventional wisdom holds that the social rate of return to r d significantly exceeds the private rate of return and therefore r d should be subsidized in the u s the government has directly funded a large fraction of total r d spending this paper shows that there is a serious problem with such government efforts to increase inventive activity the majority of r d spending is actually just salary payments for r d workers their labor supply however is quite inelastic so when the government funds r d a significant fraction of the increased spending goes directly into higher wages using cps data on wages of scientific personnel this paper shows that government r d spending raises wages significantly particularly for scientists related to defense such as physicists and aeronautical engineers because of the higher wages conventional estimates of the effectiveness of r d policy may be 30 to 50 too high the results also imply that by altering the wages of scientists and engineers even for firms not receiving federal support government funding directly crowds out private inventive activity this abstract was borrowed from another version of this item

just luck an experimental study of risk taking and fairness choices involving risk significantly affect the distribution of income and wealth in society this paper reports the results of the first experiment to our knowledge to study fairness views about risk taking specifically whether such views are based chiefly on ex ante opportunities or on ex post outcomes we find that even though many participants focus exclusively on ex ante opportunities most favor some redistribution ex post many participants also make a distinction between ex post inequalities that reflect differences in luck and ex post inequalities that reflect differences in choices these findings apply to both stakeholders and impartial spectators

an economic model of teaching effectiveness the literature on the determinants of good teaching performance has been largely devoted to empirical measurement a complete review of the publications in this area would require at least an entire issue the size of this journal yet it is virtually impossible to discover attempts to derive hypotheses about the determinants of good teaching from explicit models of behavior this has led researchers into the trap of exploring only the empirical determinants of good teaching performance typically the results of student evaluations are correlated with affective personality traits of the teachers with peer evaluations of psychological compositions or even with the results of various psychological tests examples are the works of robert isaacson et al frank costin et al and wilbert mckeachie et al in most of these studies no substantive conclusions are reached regarding the determinants of effective teaching in the few studies which do contain significant findings the independent variable in question is difficult to explain as a direct determinant of teaching effectiveness for example isaacson et al find that virtually the only statistically significant determinant of effective teaching is the personality characteristic which they label culture this may imply that simply wearing a tweed jacket and taking up pipesmoking is sufficient to improve teaching this paper takes a somewhat different approach to the analysis of teaching assume that the individual in question wishes to maximize teaching effectiveness clearly there are constraints on this maximization process one must necessarily be the time budget constraint a second constraint however adds a good deal of interest to the model this constraint is best described as the bundle of characteristics available to the individual these characteristics could be termed the components of the individual s personality such attributes include physical appearance psychological makeup speaking ability and a myriad of other variables thus this model bears a resemblance to the standard economic models of monopolistic competition see a michael spence before proceeding to a formal statement of the problem a philosophical issue must be addressed what is meant by teaching effectiveness generally this is interpreted as maximizing student evaluations of teachers however this is clearly not always equivalent to maximizing student learning unfortunately the latter variable is difficult but not impossible to measure preand posttesting with standardized tests is becoming increasingly accepted for example the meaning of teaching effectiveness in this paper must unfortunately remain ambiguous some teachers concerned perhaps with obtaining tenure will interpret good teaching as obtaining good evaluations the criterion by which they are judged others may take a more eclectic viewpoint since the problem below is an individual maximization problem the precise definition of effective teaching may simply vary from individual to individual see w r allen formally this problem is exactly analogous to one first addressed by kelvin lancaster he assumes that the consumer attempts to maximize satisfaction through purchase of bundles of attributes each commodity is possessed of certain of these characteristics by consuming various combinations of these commodities the consumer is assistant professor department of economics and director center for economic education california state university hayward i would like to thank alex cassuto nancy sanders and an anonymous referee for helpful discussion in a previously unreported experiment in the department of economics california state universitybakersfield faculty members were required to wear coats and ties in classes it was subsequently observed that teaching evaluations improved unfortunately no detailed statistical results of this experiment are available for analysis

production and innovation when techniques are tacit the case of education abstract the central theme of this paper is that the conventional economic theory of production does not hold even approximately in a field like education after examining the result of input output studies in education and the effect of government attempts to enhance education effectiveness we provide a sketch of a new production theory for sectors where techniques are poorly articulated and idiosyncratic

modeling multiple outputs in educational production functions for some time now economists have conceptualized learning as a production process most educational production functions specify only one output usually a measure of cognitive achievement some recent studies have recognized the multidimensional aspects of schooling specifying outputs in both the cognitive and affective domains introducing multiple outputs into the production function raises interesting theoretical and empirical issues one issue is the manner in which various outputs are interrelated how one models output interactions in educational production functions may be important are the outputs multiple products if so are they independently or simultaneously produced or are the outputs joint products answers to these questions may affect empirical estimates of the educational production function s this paper briefly describes how one might approach this problem we argue on conceptual grounds that modeling outputs in the cognitive and affective domains as joint products is preferable in addition we compare the three approaches empirically to evaluate the sensitivity of educational production function parameter estimates to output specification

partial fiscal decentralization reforms and educational outcomes a difference in differences analysis for spain abstract several arguments derived from fiscal federalism theory suggest that decentralization may improve the provision of public goods and services however theory remains inconclusive regarding these effects under partial decentralization the aim of this study is to examine this hypothesis by evaluating the effects on educational outcomes of the partial fiscal decentralization reform that took place in spain during the 1980s since education competences were devolved to the regions at different points in time we can consistently estimate the effects of this reform by applying the differences in differences method and by using the non decentralized regions as the comparison group we find that the reform had a sizeable impact on the percentage of students dropping out early from school the effects are much stronger for regions with a high level of revenues we also find that the effects are concentrated in the high school program and that the reform was not able to improve educational outcomes in the vocational program we interpret these results as evidence that decentralization improved the match between education policy and population preferences

group and individual risk preferences a lottery choice experiment with self employed and salaried workers abstract this paper focuses on decision making under risk comparing group and individual risk preferences in a lottery choice experiment in the individual treatment subjects make choices individually in the group treatment each subject placed in a group made lottery choice via voting in the choice treatment subjects choose whether to be on their own or in a group the originality of this research lies in the fact that we introduced variability in socio demographic characteristics by recruiting salaried and self employed workers our main findings indicate that groups are more likely than individuals to choose safe lotteries our results also show that individuals risk attitude is correlated with both the type and the sector of employment

a stochastic inventory model incorporating intra year purchases and accounting tax incentives it has been observed that firms alter year end inventory policies in response to accounting tax incentives this study proposes a stochastic ordering policy model which quantifies these effects an innovative feature is its use of two decision variables an initial order up to level at the beginning of each year and a desired year end inventory level the ability to place a second order after demand has been assessed allows for an explicit consideration of the effects of tax incentives on order quantity decisions separate formulations are developed for the two most widely used inventory accounting methods lifo and fifo the model provides new implications for choices between lifo and fifo the forms of optimal ordering policies under each and for year end inventory levels a procedure is given for calculating the optimal fifo policy calculating optimal lifo policies is very difficult so myopic approximate policies are given which bound the optimal policy

schools and housing markets an examination of school segregation and performance in connecticut this paper estimates a dynamic model of price level school performance and school racial and ethnic composition in the state of connecticut the paper finds that increasing minority representation in a labor market area reinforces the existing pattern of school segregation changes in segregation appear to be influenced by demographic trends in urban areas and by the labour market factors that determine those trends there is no evidence however to suggest that this process affects housing prices rather the housing market appears to adjust relatively quickly

schooling and economic well being the role of nonmarket effects standard estimates of the economic value of additional schooling based on earnings differences associated with differences in the level of schooling attained cover only a portion of the total effects of education that are valued by citizens we first identify a catalog of nonmarketed effects many of which have been recently studied by economists and then propose a procedure for estimating a willingness to pay value for these effects using empirical estimates of the magnitude of a selection of these effects found in the literature we calculate willingness to pay values using our proposed procedure these illustrative calculations suggest that standard estimates of the benefit of incremental schooling substantially understate the full value of such investments

anticipating the consequences of school reform a new use of dea we use dea type linear programming techniques to simulate a basic component of educational reform eliminating restrictions on the allocation of school personnel our technique allows us to identify potential output gains or equivalently potential cost savings from reform we can also identify which personnel groups are likely to gain and lose under this reform when we apply our model to a sample of texas school districts we find evidence that the educational establishment has substantial economic rents to protect from school reform and that the primary beneficiaries of reform are likely to be affluent school districts with few minority students the technique which relies on the relationship between the direct and indirect distance functions can be easily generalized to measure the potential gains from removing other input restrictions such as union work rules environmental regulations or deed restrictions

causal effects in education abstract in recent years a wave of new studies on the effects of educational interventions on student performance has emerged the realization that inputs in the education process are endogenous is important for the validity of traditional findings because of ignoring endogeneity bias all traditional estimates might be wrong recent studies exploit exogenous variation in interventions in education produced by controlled or natural experiments results generated by this methodological innovation differ substantially from the traditional findings this article reviews this new literature illustrates new methods for identifying causal effects of interventions in education and compares the findings with the traditional literature

the engineering labor market this paper develops a dynamic supply and demand model of occupational choice and applies it to the engineering profession the model is largely successful in understanding data in the u s engineering labor market the engineering market responds strongly to economic forces the demand for engineers responds to the price of engineering services and demand shifters more important supply and enrollment decisions are remarkably sensitive to career prospects in engineering also a rational model in which students use some forward looking elements to forecast future demand for engineers fits the data reasonably well these findings suggest that subsidies to build technical talent ahead of demand are misplaced unless public policy makers have better information on future market conditions than the market participants do

betrayal aversion evidence from brazil china oman switzerland turkey and the united states comment in a series of binary choice problems we investigate how a chooser s risk taking changes when others share in their personal risk either equally or unequally we find that when the safe option yields inequality the risky option is taken significantly more often on the other hand the inequality resulting from the risky choice does not affect risk taking we also find that choosers tend to be less risk averse in a one person context compared to when the risk also affects the payoff of another c72 d81 z13

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

understanding the twentieth century growth in u s school spending persistent increases in spending on elementary and secondary schools have gone virtually undocumented real expenditure per student increased 3 percent per year over the period 1890 1990 decomposition of the spending growth shows that it resulted from a combination of falling pupil staff ratios increasing real wages to teachers and rising expenditure outside of the classroom although the expansion of education for the handicapped has had a disproportionate effect on spending most of the growth in expenditure during the 1980s came from other sources significant teacher salary increases particularly for females have failed to keep up with wages in other occupations

school decentralization helping the good get better but leaving the poor behind abstract the decentralization of public services is a major feature of institutional innovation the main argument in support of decentralization is that it brings decisions closer to the people thereby alleviating information asymmetries and improving accountability however decentralization can also degrade service provision in poor communities that lack the ability to voice and defend their preferences in this paper we analyze the average and distributional effects of school decentralization on educational quality in argentina we find that decentralization had an overall positive impact on student test scores the decentralization gains however did not reach the poor thus although bringing decisions closer to the people may help the good get better the already disadvantaged may not receive these benefits

on the social dimension of time and risk preferences an experimental study when explaining risk taking intertemporal allocation and distributing behavior economists rely on risk time and other regarding preferences but offer no guidance on how these three crucial aspects are interrelated we report on an experiment exploring such interrelation for this sake we compare evaluations of several prospects each of which allocates certain or risky and immediate or delayed payoffs to the actor and to another participant we find that individuals are selforiented as to social allocation of risk and delay and other regarding with respect to expected payoffs jel c91 d63 d81 there is ample empirical evidence that people do not behave rationally when rationality implies maximization of one s own material rewards to gain flexibility economists have taken into account nonlinear evaluation of material rewards e g in the familiar form of utility of money functions as well as social utilities including other regarding concerns like altruism as in andreoni and miller 2002 inequality aversion as in fehr and schmidt 1999 and bolton and ockenfels 2000 or quasi maximin preferences as in charness and rabin 2002 undeniably this provides a rich toolbox for neoclassical repair which allows aligning rational choice predictions with empirical data on decision behavior nonetheless this toolbox may be

dollars and performance treating alcohol misuse in maine abstract if public funds are allocated efficiently then an increase in funding should improve the performance of substance abuse treatment programs in the data used in this paper performance measured as abstinence rates and expenditures per patient are not positively correlated one explanation is that funding is endogeneous i e programs treating more difficult patients receive more funding the data comes from all maine s outpatient drug free programs that received public funding between 1991 and 1994 after controlling for endogeneity this paper concludes that the marginal impact of expenditures per patient on abstinence rates is small and statistically insignificantly different from zero

the effect on black white wage differences of differences in the quantity and quality of education using data from the national longitudinal survey of youth for the years 1979 88 the author examines the extent to which black white differences in educational attainment educational quality and unmeasured individual ability can explain black white wage differences an analysis that corrects for both selectivity and ability biases inherent in estimating the education wage relationship shows that the main source of the black white wage differential is the racial difference in the quality rather than quantity of schooling in fact the author concludes closing the racial gap in the basic skills learned in school could reduce the wage differential by two thirds

risk taking for oneself and others a structural model approach economic theory makes no predictions about social factors affecting decisions under risk we examine situations in which a decision maker decides for herself and another person under conditions of payoff equality and compare them to individual decisions by estimating a structural model we find that responsibility leaves utility curvature unaffected but accentuates the subjective distortion of very small and very large probabilities for both gains and losses we also find that responsibility reduces loss aversion but that these results only obtain under some specific definitions of the latter these results serve to generalize and reconcile some of the still largely contradictory findings in the literature they also have implications for financial agency which we discuss

intergenerational transfers production and income distribution abstract we consider an overlapping generations economy where the aggregative production process uses physical capital and human capital intergenerational transfers from parents to their children are motivated by altruism we distinguish between two types of transfers investment of parents in the education of their offspring and capital transfer the gift bequest motive we show that the intensity of each type of altruism and hence the composition of the two types of transfers affect significantly the equilibrium output and the intragenerational income distributions comparing competitive equilibria from the same initial distributions of capital transfers and human capital we derive a the economy with the higher education inclined altruism attains lower output and more equal intragenerational income distributions if either the production function s elasticity of substitution is not large or the altruism is weak b for more bequest inclined altruism the effects are usually reversed c under public provision of education higher bequest inclined altruism results in lower output and less equal distribution of income in all dates

cohort crowding how resources affect collegiate attainment abstract analyses of college attainment typically focus on factors affecting enrollment demand including the financial attractiveness of a college education and the availability of financial aid while implicitly assuming that resources available per student on the supply side of the market are elastically supplied the higher education market in the united states is dominated by public and non profit production and colleges and universities receive considerable subsidies from state federal and private sources because consumers pay only a fraction of the cost of production changes in demand are unlikely to be accommodated fully by colleges and universities without commensurate increases in non tuition revenue for this reason public investment in higher education plays a crucial role in determining the degrees produced and the supply of college educated workers to the labor market using data covering the last half of the twentieth century we find strong evidence that large cohorts within states have relatively low undergraduate degree attainment reflecting less than perfect elasticity of supply in the higher education market that large cohorts receive lower public subsidies per student in higher education explains this result indicating that resources have large effects on degree production our results suggest that reduced resources per student following from rising cohort size and lower state expenditures are likely to have significant negative effects on the supply of college educated workers entering the labor market

schools and housing values this study combines historical and quantitative methods to determine the market response to a major nineteenth century american urban architectural form the speculatively built row house the paper estimates a hedonic price index which decomposes the

risk preference differentials of small groups and individuals the risk prefer ences of thr ee person group s a nd individuals are compar ed using a non sequential repeated measures lottery exp eriment w ith 20 per player win pe rcentages varying from 10 to 90 analysis based on independent samples of certainty equivalent ratios certainty equivalent expected value elicited using a maximum willingness to pay mechanism for fifty two individuals and sixteen groups reveals that 1 certainty equi valent ratios cers va ry significantly a cross lottery win percentages 2 cer dispersion tends to decline as the lottery win percentage increases and is significantly smaller for groups than individuals in seven of the nine lotteries 3 for the highest risk lotteries the average cers submitted by groups are significantly smaller more risk averse than the average cers submitted by individuals 4 for the lowest risk lotteries the average cers submitted by groups are approximately risk neutral cer 1 and somewhat larger than the average cers submitted by individuals

misery loves company social regret and social interaction effects in choices under risk and uncertainty abstract extensive field evidence shows individuals decisions in settings involving uncertainty depend on their peers decisions one hypothesized cause of peer group effects is social interaction effects an individual s utility from an action is enhanced by others taking the same action we employ a series of controlled laboratory experiments to study the causes of peer effects in choice under uncertainty we find strong peer group effects in the laboratory our design allows us to rule out social learning social norms group affiliation and complementarities as possible causes for the observed peer group effects leaving social interaction effects as the likely cause we use a combination of theory and empirical analysis to show that preferences including social regret are more consistent with the data than preferences including a taste for conformity we observe spillover effects as observing another s choice of one risky gamble makes all risky gambles more likely to be chosen

social responsibility promotes conservative risk behavior abstract previous studies show that group risk taking can be more conservative than individual risk taking two common but untested reasons for this greater caution are the influence of social responsibility and a tendency to conform to the preferences of others we study changes in risk taking in simple settings where another s risk taking can sometimes be observed and where decisions affect not only one s own payoffs but sometimes also affect those of a passive second party we find that social responsibility leads to more conservative risk behavior in group decision making conformism has a more symmetric effect observing the choice of another tends to lead both individual and social decisions toward whatever the other s expressed risk preference is direct tests fail to link the social behavior we observe to the social preference for distributional fairness common in decision making under certainty

on the contract curve a test of alternative models of collective bargaining the traditional model of collective bargaining confines unions to settlements constrained by the employer s labor demand curve but an alternative model places wage employment outcomes on a contract curve that extends beyond the labor demand curve this paper derives a multidimensional hedonic contract curve model in which employment security provisions are used to maintain efficient bargains outside the employer s demand curve and distinguishes empirically between the contract curve and demand constraint models using data for public school teachers in new york state estimates clearly support the contract curve model over the demand constraint model by linking the gap between compensation and the value of the marginal product to the strength of employment security provisions

human capital vs signalling explanations of wages increases wages by directly increasing the worker s productivity this learning explanation is usually associated with human capital theory however it seems unlikely that learning explains all the wage differences associated with schooling and work history better educated workers are not a random sample of workers they have lower propensities to quit or to be absent are less likely to smoke drink or use illicit drugs and are generally healthier it is unlikely that employers make full use of differences in propensities to quit or to be absent or sick when hiring workers these characteristics are often not directly observed and the americans with disabilities act precludes firms from using either poor health or the likelihood of future sickness as a hiring criterion unless it is directly related to job performance however if low levels of education are associated with these unfavorable employee characteristics and employers are allowed to take education into account when hiring workers we would expect employers to favor better educated workers as a means of reducing their costs of sickness and job turnover in turn students will take these hiring criteria into account when deciding how long to stay in school students will choose a length of schooling to signal their ability to employers and employers will demand a minimum level of schooling

the impact of educational standards on the level and distribution of earnings the goal of this paper is to present the following finding an egalitarian policy maker might prefer higher standards than would a policy maker whose goal was to maximize the sum of earnings the result is based on the observation that if workers are differentiated with respect to ability an increase in educational standards will increase the earnings of both the most able and the least able workers the only workers whose earnings fall are those workers who after the increase fail to continue meeting the standard

the role of responsibility in strategic risk taking we explore play between groups where one member of each 2 person group dictates the play of that group and is therefore responsible for the payoff of the other group member we compare this to play when the game is the same but each person is playing only for herself consistent with the principle of responsibility alleviation described by charness charness g 2000 responsibility and effort in an experimental labor market journal of economic behavior and organization 42 375 384 we find that a sense of responsibility for the welfare of others has an effect while the issue of responsibility does not appear to influence the decisions of 2 3 of the population almost 90 percent of the remaining 1 3 of the population plays a less risky strategy when choosing for a group than when playing only for herself