dynamic banking a reconsideration financially intermediated and stock market consumption investment allocations with and without governmental interventions are compared in a welfare sense in overlapping generation economies with and without shocks to agents intertemporal preferences we first show that in economies with preference shocks governmental interventions subject to the same information requirements as those imposed on financial intermediaries lead to stock market allocations that are not inferior to those attained under financial intermediation second we argue that the necessary interventions are qualitatively no different from those required to implement stationary optimal allocations in olg models without shocks to agents intertemporal consumption preferences

banking panics information and rational expectations equilibrium this paper shows that bank runs can be modeled as an equilibrium phenomenon we demonstrate that some aspects of the intuitive story that bank runs start with fears of insolvency of banks can be rigorously modeled if individuals observe long lines at the bank they correctly infer that there is a possibility that the bank is about to fail and precipitate a bank run however bank runs occur even when no one has any adverse information extra market constraints such as suspension of convertibility can prevent bank runs and result in superior allocations banking panics were a recurrent phenomenon in the united states until the 1930s they have re emerged as a source of public concern and much theoretical research recently in this paper we provide an information theoretic rationale for bank runs the traditional story is that contagion is an important aspect of bank runs the idea seems to be that when the general public observes large withdrawals from the banking system fears of insolvency grow resulting in even larger withdrawals of deposits in our model some individuals withdraw because they get information that future returns are likely to be low uninformed individuals observing this also have an incentive to liquidate their investments in addition some individuals need to withdraw deposits for other than informationally based reasons thus if the random realization of such a group of individuals is unusually large then the uninformed individuals will be misled and will precipitate a run on the bank the technology is such that a large volume of withdrawals involves liquidation costs consequently runs on the bank do impose social costs a mechanism that may reduce these costs in our model is to suspend convertibility if withdrawals are high however those individuals who need to withdraw their assets for liquidity reasons are worse off ex post our model provides a rationalization for restrictions in demand deposits that were widespread prior to 1929 friedman and schwartz 7 suggest that restrictions of payments ensured

occupational self selection a human capital approach to sex differences in occupational structure a rich and diverse literature exists concerning the distribution of labor incomes one approach namely that of human capital concentrates on lifetime accumulation paths of earnings capacity units human capital individual variations in human capital imply differences in earnings power thereby yielding strong implications concerning earnings distribution within a population despite its explanatory power the human capital model has been widely criticized one criticism centers on its inability to obtain inferences concerning occupational distribution the purpose of this paper is to alleviate at least some such criticism by applying the hedonic price approach so as to embed occupational choice into the human capital framework the significance is that neoclassical economic theory can be used to obtain implications concerning the determinants of occupational structure excerpt

encompassing the forecasts of u s trade balance models yock y chong and david f hendry 1986 propose the concept of forecast encompassing the lack of additional information in another model s forecasts the corresponding test statistic is based on the regression of one model s forecast errors on the other model s forecasts this paper generalizes chong and hendry s statistic to include sets of dynamic nonlinear models with uncertain estimated coefficients generating multistep forecasts with possibly systematic biases using stochastic simulation the generalized statistic is applied to forecasts over 1985q1 1987q4 from six models of the u s merchandise trade balance revealing misspecification in all models copyright 1993 by mit press

bank liquidity and stability in an overlapping generations model in an infinitely repeated version of the diamond and dybvig 1983 model intergenerational transfers enable a bank to achieve interest rate smoothing and to provide depositors with liquidity insurance without diamond and dybvig s assumption of no side trades the bank is subject to runs that may result from either excessive withdrawals or the lack of new deposits the latter cause which cannot occur in diamond and dybvig s one generation model implies that suspension of convertibility may not prevent bank runs government intervention may be necessary to maintain bank stability article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

an expository note on individual risk without aggregate uncertainty abstract in economies where agents bear some risk the analysis would often be facilitated by the assumption that the risks are i i d and disappear in the aggregate a formal appeal to the law of large numbers requires the consideration of a sequence of finite economies in an economy with a continuum of agents there are countable families of sets for which it is impossible for a law of large numbers to be valid with countably many agents and a finitely additive measure independence is compatible with the law of large numbers

gendering the varieties of capitalism a study of occupational segregation by sex in advanced industrial societies this article explores the unintended gendered consequences of employment protection and vocational training systems it develops a micrologic of skill investment by workers and employers to identify the mechanism by which specific skills become disadvantageous for women the central claim of the article is that institutions that encourage male investment in specific skills exacerbate occupational sex segregation the article finds that coordinated market economies because of their robust institutional protection of male skill investments are generally more sex segregating than are liberal market economies the empirical section provides cross sectional analyses of advanced industrial countries

sex and earnings in industrial society a nine nation comparison a substantial difference in average earnings between men and women employed full time is documented for each of nine industrial nations and several hypothesized explanations for the earnings gap are explored a human capital hypothesis women earn less because they have less education and experience a dual career hypothesis women earn less because they adjust their work behavior to meet the demands of family obligations and an occupational segregation hypothesis women earn less because they are concentrated in lowlevel jobs none of these hypotheses receives much support in any country leaving open the possibility that the earnings differences are due to deeply entrenched institutional arrangements that limit women s opportunities and achievements

banking as the provision of liquidity this article represents a model economy in which demand deposits represent the optimal financial intermediation because these demand deposits are backed in part by an illiquid asset the in termediary bank is subject to panics in which each agent ration ally decides to withdraw his deposits making all worse off banks ca n prevent panics only through a distortion of the optimal contract t he government can prevent panics without this distortion by guarantee ing the return from deposits the moral hazard introduced by this dep osit insurance induces the government to regulate the intermediary s portfolio and returns copyright 1988 by the university of chicago

financial contagion and depositor monitoring this paper analyzes market discipline in a many bank economy where contagion and bank runs interact we present a model with differently informed depositors where those depositors that are more informed have incentives to monitor banks investments it is shown that when banks are undercapitalized and the probability of success of the risky asset is low depositors might prefer a contract that is subject to bank runs in the interim period to a contract that allows banks to gamble with their funds and maintain their investment the results of the paper emphasize the benefits of private monitoring of banks in order to promote market discipline

the resurgence of sharecropping historical anomaly or political strategy although traditional economic theories regard sharecropping as inefficient and likely to dwindle in systems of capitalist commodity production sharecropping has exhibited remarkable persistence under a range of historical conditions this article explores the reasons for the unexpected tenacity of share farming and considers its implications for the analysis of rural class structure and agrarian change using the example of the resurgence of sharecropping in the california strawberry industry the paper demonstrates that political constraints on agricultural production are key determinants of the contemporary adoption of sharecropping establishing a context in which sharecropping not only facilitates but is recreated by capitalist accumulation

gender domestic labor time and wage inequality this paper explores the relationship between domestic labor and wage labor by estimating the relative influence of hours spent in domestic labor e g housework and child care on women s and men s wages it is hypothesized that involvement in domestic activities negatively affects wages and is likely to be an important factor in explaining women s lower wages relative to men findings from ols regression analyses of white currently employed currently married women and men indicate that domestic labor time significantly decreases both sexes wages in order to assess whether this relationship differs by class the sex specific earnings equations also are estimated within the working class and the non working class the negative effect of domestic labor time on both sexes income persists in the within class analyses working class men are more vulnerable to the detrimental influence of domestic production unexpectedly housework and child care time decreases non workingclass women s wages more so than working class women s wages it is noted that these findings should be interpreted with caution due to the cross sectional nature of the data which precludes an unequivocal assessment of potential nonrecursivity in the linkages among key variables in the model overall the findings imply that a more equitable distribution of work in the home is necessary before labor market inequalities between the sexes can be ameliorated

welfare regimes family supportive policies and women s employment along the life course this article examines women s employment patterns during thechild rearing period and the consequences of those patterns for earnings later in life in 12 industralized countries this study proposes an analytic framework that combines welfare regime and gender specific policies to explain country differences the findings presented here suggest that institutional arrangements mediate the costs to women s part time and intermittent employment within welfare regimes employment continuity is highest among countries in which the state provides support for working mothers furthermore this study finds that lower support for mothers employment is associated with higher wage penalties to employment discontinuity

evaluating multiperiod survey forecasts of real net exports abstract examination of the asa nber survey data on real net exports indicates that the multiperiod professional forecasts are all unbiased the short term as well as the four quarter ahead forecasts are also rational suggesting their usefulness in policy making

the welfare costs of self fulfilling bank runs we study the welfare implications of self fulfilling bank runs and liquidity require ments in a neoclassical growth model where banks facing long lasting possible runs can choose in any period a run proof asset portfolio in this framework runs distort banks insurance provision against idiosyncratic liquidity shocks and liquidity requirements re solve this distortion by forcing a credit tightening quantitatively the welfare costs of self fulfilling bank runs are equivalent to a constant consumption loss of up to 2 5 percent of u s gdp depending on fundamentals liquidity requirements might generate small welfare gains but also increase the welfare costs by up to 1 8 percent

a cross national comparison of the gender gap in income this article examines national labor market samples from two dualist countries the united states and canada and two corporatist countries norway and sweden labor market location is less powerful in predicting income in norway and sweden where they have more inclusive employment policies in sweden though the labor market variables are more important in explaining the income gap family effects marital status and number of children are weak everywhere but especially in scandinavia nevertheless because it is encouraged by policies designed to integrate employment and family part time paid work has a major effect on the gender gap in income in norway and sweden women however pay more of a penalty than men for part time employment in north america

distinguishing panics and information based bank runs welfare and policy implications in this paper we contrast panics and information based bank runs in an effort to provide a robust and empirically plausible model of how bank runs are triggered the model of information based runs is characterized by two sided asymmetric information the bank cannot observe the true liquidity needs of the depositors while depositors are asymmetrically informed about bank asset quality we also examine the relative degrees of risk sharing provided by bank deposit contracts and traded equity contracts we show that the choice of deposit or equity depends on the attributes of and information about the underlying investment returns

the term structure of investment and the banks insurance function abstract the article re examines the proposition first formulated rigorously by bryant a model of reserves bank runs and deposit insurance journal of banking and finance 4 335 344 1980 and diamond and dybvig bank runs deposit insurance and liquidity journal of political economy 91 401 419 1983 that in a production economy with stochastic liquidity shocks to the household sector banks serve to provide optimal intertemporal insurance to consumers the paper argues that in order to understand the moral hazard problems inherent in this insurance problem it is too narrow to consider solely the role of banks as providers of liquidity the paper develops a model with several investment opportunities in which banks have the additional function of asset diversification this pooling of intermediation functions is shown to reduce the moral hazard problem thereby enhancing the stability of depository contracts and increasing the scope of the banks insurance function

bank runs as an equilibrium phenomenon a standard demand deposit contract in which individuals are entitled to their full deposit at any time provided the bank is solvent is analyzed in a context in which there are no exogenous events on which agents condition their behavior and a unique equilibrium involving a bank run with positive probability is shown to exist

explaining occupational sex segregation and wages findings from a model with fixed effects does segregation arise because female occupations have financial advantages for women planning to spend some time as homemakers as human capital theorists claim do male occupations have more onerous working conditions that explain their higher earnings as the neoclassical notion of compensating differentials suggests or do female occupations have low wages that are depressed by the sort of discrimination at issue in comparable worth as sociologists have argued to answer these questions the authors use a model with fixed effects to predict the earnings of young men and women from a pooled cross section time series of the national longitudinal survey analyses are undertaken for both blacks and whites a fixed effects model is useful for answering these questions because it corrects for the selection bias that results from the tendency of persons who differ on stable characteristics that are unmeasured but affect earnings to select themselves into different occupations the authors find little evidence that female occupations provide either low penalties for intermittent employment at high starting wages the advantages human capital theorists have argued them to have rather there is evidence of pay discrimination against men and women in predominantly female occupations implications for economic and sociological theories of labor markets are discussed authors

economic segmentation worker power and income inequality how economic segmentation generates income inequality constitutes a central question for theories of economic and social organization and of socioeconomic achievement previous research emphasizes two sources of the structural variation in income 1 employers with large amounts of resources for a variety of reasons may find it in their interests to pay workers higher wages and 2 some workers are able to acquire power against their employers as well as against other workers and can therefore extract higher earnings in this paper we investigate several issues involved in the links among economic segmentation worker power and income inequality we argue that the structure of economic segmentation is multidimensional and reflects such distinct concepts as concentration economic scale state intervention in the market capital intensity and organization size worker power also is derived from diverse sources such as union membership occupational skill and licensing class position and tenure wi

unwelcome immigrants the labor market experiences of 1980 mariel cuban and haitian refugees in south florida this article examines the situation of 2 recently arrived and disadvantaged immigrant groups in the context of 2 competing theoretical traditions classical assimilation and recent labor market segmentation theories predictions of both concerning us labor market entry of foreign minorities and determinants of subsequent mobility are tested on the basis of representative surveys most are not confirmed the analysis supports the hypothesis of heterogeneous modes of incorporation into the labor market including substantial numbers of refugees who remain outside of it sizable proportions have only managed to find fringe employment in a energing informal economy in south florida among cubans employment in the ethnic enclave is associated with positive returns comparable to those of entry into the primary labor market haitians lack an enclave option and thus cluster into secondary and informal employment although most remain without work determinants of these various situations are examined on the basis of multivariate logistic regressions implications of results for immigration theory and policy are discussed authors

wage structure and gender earnings differentials an international comparison using microdata to analyse the gender pay gap in ten industrialized nations we focus on the role of wage structure the prices of labour market skills in influencing the gender gap we find wage structure enormously important in explaining why the us gender gap is higher than that in most other countries we conclude that the us gap would be similar to that in sweden and australia the countries with the smallest gaps if the united states had their levels of wage inequality this finding reflects the larger penalty in the united states for those with low skill levels or employed in low wage sectors 650 o 75 the united states was amoung the countries with the largest differ entials oecd ilo usbls this paper uses microdata to analyse inter national differences in the gender pay gap among a sample of ten industrialized nations we focus particularly on explaining the surprisingly low ranking of the united states in comparison with other industrialized countries an advan tage of an international perspective is that countries vary considerably with respect to governmental policies women s relative labour market qualifications and wage setting institutions such variability allows one to infer reasons for differences in the pay gap and by implication the impact of alternative govern ment policies empirical research on gender pay gaps has traditionally focused on the role of gender differences in qualifications and on differences in the treatment of otherwise equally qualified male and female workers i e labour market dis crimination analyses of trends over time in the gender differential within countries as well as inter country comparisons of gender earnings ratios have tended to emphasize these types of gender specific factors an innovative feature of our study is to focus on the role of wage structure as an additional factor influencing the gender gap to analyse the impact of wage structure we adapt a framework developed by juhn et al 1991 to analyse trends over time in race differentials in the united states our findings suggest that labour market institutions that affect overall wage inequality have an extremely impor tant effect on the gender earnings gap wage structure describes the array of prices set for various labour market skills measured and unmeasured and rents received for employment in par

bank collapse and depression the recurrent banking panics of the 19th century and the great depression of the 1930s are widely viewed as failures of our economic system a simple version of samuelson s overlapping generations model is used to generate such failures of walrasian equilibrium the spontaneous panics generated involve a collapse of bank credit causing in turn a drop in investment demand the model suggests that both the recent technological advances in the intermediation industry and the current move towards deregulation of that industry are ominous developments

capital markets financial intermediaries and liquidity supply abstract we study a dynamic economy endowed with a sequence of overlapping generations of consumers and production processes and where productive assets are illiquid and consumption preferences are subject to uninsurable demand for liquidity we characterize the steady states that can be achieved with alternative financial systems we show that infinitely lived financial intermediaries offering a liability with age dependent restrictions may implement a social optimum with full insurance if instead they offer anonymous unrestricted contracts then only second best consumption allocations with partial insurance obtain we also examine the consumption allocations available when agents can trade shares in competitive stock markets while allowing for trade across generations may or may not improve upon generational autarky we show that this competitive equilibrium is not a social optimum and is dominated by a system of infinitely lived unrestricted intermediaries

economic dualism a critical review in this paper we examine the model underlying the dual economy approach to labor market segmentation we provide a specification of the components of the model as well as the linkages between components this construction of the underlying model allows us to evaluate it systematically as a model to consider and to evaluate each component and linkage separately while we conclude that there are several important contributions to retain from the dual approach including the insight that capital structure conditions labor market outcomes we argue that it is inadequate for sustaining theoretical and empirical development as a new starting point for the study of economic and labor market segmentation we suggest a resource perspective which retains insights from the dual approach but avoids its overly restrictive assumptions

the effect of sibship size on educational attainment in china period variations in industrialized nations sibship size generally depresses educational attainment the larger the number of siblings the lower the educational attainment presumably because of the reduction of family resources both material and intellectual available to each child however this association is much less consistent in developing nations and there is some evidence of substantial change over time in this paper we study the effect of number of siblings on educational attainment in china a nation that has experienced sharp vacillations between policies designed to promote equality between urban and rural residents and between men and women and policies designed to promote economic development the implementation of these policies in the educational arena has alternately reduced and increased competition for educational resources and we show has correspondingly reduced and increased the effect of the number of children in a family on their educational attainment

she works hard for the money household responsibilities and the allocation of work effort recent developments in human capital theory suggest that men and women differ in how they allocate effort to work activities this paper uses the 1973 and 1977 quality of employment surveys to test the assumtion that women allocate less effort to work because of their family and household responsibilities regression and ordered probit analyses show that on average women allocate more effort to work than do men further the sex difference is substantial when men and women with comparable family situations and market human capital are compared the paper discusses how experiments on sex differences in standards of personal entitlement and research on sex segregated workplaces provide an alternative to the economists perspective finally the paper argues for an integration of human capital models research on social equity and structural theories of work organization in order to provide a more complete explanation of men s and women s orientations toward work and family

financial system design and liquidity provision by banks and markets in a dynamic economy this paper contributes to the literature on financial system design by comparing markets and banks in a dynamic economy investors trade off their liquidity needs against the high returns on illiquid investments both the banking system and the market can provide partial liquidity insurance to investors we consider full market participation as well as limited market participation we demonstrate that the full participation market with intergenerational trading can provide more liquidity than one without insurance is provided through wealth transfer across generations instead of cross subsidization across contemporaneous types as is the case in the finite economy given a full participation market that allows trading across generations only banks with initial capital can provide additional liquidity in a limited participation market with uncertainty about trading types an intergenerational bank with or without initial capital provides additional insurance to investors the need for trade is eliminated finally if there is no uncertainty about trading types then an intergenerational bank with initial capital eliminates the need for trading and improves welfare for all an intergenerational bank without initial capital improves welfare for people who do not trade

financial markets intermediaries and intertemporal smoothing in an overlapping generations economy with incomplete financial markets but no intermediaries there is underinvestment in safe assets in an economy with intermediaries and no financial markets accumulating reserves of safe assets allows returns to be smoothed nondiversifiable risk to be eliminated and an ex ante pareto improvement compared to the allocation in the market equilibrium to be achieved in a mixed financial system however competition from financial markets constrains intermediaries so that they perform no better than markets alone

financial intermediation in an overlapping generations model with transaction costs abstract we analyze an overlapping generations economy where agents interact to share liquidity risk we show that a pure exchange economy has excessive trade in equilibrium because agents interact to rebalance their portfolios intergenerational financial intermediaries reduce the number of interactions because agents only transact when they face liquidity needs in the absence of asset risk intermediaries match redemptions with deposits and dividends and never sell assets if the economy is subject to transaction costs the intermediated economy can sustain higher stationary investment and welfare we also find that dead weight transaction costs can increase welfare because it protects banks from interbank arbitrage and dampens the inherent cyclicality of market economies

forecasting in cointegrated systems we consider the implications for forecast accuracy of imposing unit roots and cointegrating restrictions in linear systems of i 1 variables in levels differences and cointegrated combinations asymptotic formulae are obtained for multi step forecast error variances for each representation alternative measures of forecast accuracy are discussed finite sample behaviour in a bivariate model is studied by monte carlo using control variables we also analyse the interaction between unit roots and cointegrating restrictions and intercepts in the dgp some of the issues are illustrated with an empirical example of forecasting the demand for m1 in the uk

banking and insurance abstract this paper studies the economic role of financial institutions in economies where agents incomes are subject to privately observable idiosyncratic random events the information structure precludes conventional insurance arrangements however a financial institution perhaps best viewed as a savings bank can provide partial insurance by generating a time pattern of deposit returns that redistributes wealth from agents with high incomes to those with low incomes resulting in a level of expected utility higher than that achievable in simple security markets insurance is incomplete because the bank faces a tradeoff between provision of insurance and maintenance of private incentives

optimal capacity in the banking sector and economic growth the paper investigates from the welfare and growth point of view the determination of the optimal capacity of the banking system for that purpose we consider an overlapping generation model with endogenous growth there is horizontal differentiation and imperfect competition in the banking sector macroeconomic shocks affect the return on capital and together with the expectations of depositors condition the stability of the banking sector we specify to what extent deposit insurance may reduce instability and increase the number of deposits welfare and growth we also characterize the conditions under which excess banking capacities may appear and how their reduction may improve welfare

liquidity creation through banks and markets multiple insurance and limited market access abstract the paper studies the intertemporal allocation of funds through demand deposits and anonymous markets first separately and then in an integrated model it reviews some work on the role of market frictions and asset characteristics and suggests that the interplay between these two is crucial in explaining the observed coexistence of demand deposits and anonymous markets

the fragility of short term secured funding markets abstract this paper develops an infinite horizon model of financial institutions that borrow short term and invest in long term assets that can be traded in frictionless markets because these financial intermediaries perform maturity transformation they are subject to potential runs we derive distinct liquidity collateral and asset liquidation constraints which determine whether a run can occur as a result of changing market expectations we show that the extent to which borrowers can ward off an individual run depends on whether it has sufficient liquidity collateral and asset liquidation capacity these determinants depend on the borrower s endogenous balance sheet and on exogenous fundamentals systemic runs are possible if shocks to the valuation of collateral held by outside investors are sufficiently strong and uniform and if the system as a whole is exposed to high short term funding risk the theory has policy implications for prudential regulation and lender of last resort interventions

family policies wage structures and gender gaps sources of earnings inequality in 20 countries this study uncovers an unexpected effect of family friendly policies on women s economic attainments using hierarchical linear models the analysis combines individual level data obtained from th