how important are dual economy effects for aggregate productivity this paper brings together development accounting techniques and the dual economy model to address the role that factor markets have in creating variation in aggregate total factor productivity tfp development accounting research has shown that much of the variation in income across countries can be attributed to differences in tfp the dual economy model suggests that aggregate productivity is depressed by having too many factors allocated to low productivity work in agriculture data show large differences in marginal products of similar factors within many developing countries offering prima facie evidence of this misallocation using a simple two sector decomposition of the economy this article estimates the role of these misallocations in accounting for the cross country income distribution a key contribution is the ability to bring sector specific data on human and physical capital stocks to the analysis variation across countries in the degree of misallocation is shown to account for 30 40 of the variation in income per capita and up to 80 of the variation in aggregate tfp

informative advertising and product match abstract this paper studies informative advertising in a variety of market structures for which some consumers are informed about two differentiated products while other consumers are uninformed we characterize a unique symmetric subgame perfect nash equilibrium in advertising and pricing and analyze the welfare properties of the equilibrium remarkably total surplus is non monotonic in advertising in a duopoly market the equilibrium level of advertising may be more or less than socially optimal we also study the effect of a trade association and compare these results with the first best solution and a multiproduct monopolist

the vp function revisited a survey of the literature on vote and popularity functions after over 40 years nannestad and paldam public choice 79 213 245 1994 published herein an extremely influential review of the literature linking economics and elections what they called the vp functions in that work they offered a number of conclusions in proposition form about the state of the evidence in this field we present the key ones 16 in all and assess the extent to which they continue to hold in light of the new evidence about what has come to be known as economic voting as shall be shown nannestad and paldam were prescient in their early establishment of many of the principal results explaining how the economy moves the vote choice

constructive consumer choice processes consumer decision making has been a focal interest in consumer research and consideration of current marketplace trends e g technological change an information explosion indicates that this topic will continue to be critically important we argue that consumer choice is inherently constructive due to limited processing capacity consumers often do not have well defined existing preferences but construct them using a variety of strategies contingent on task demands after describing constructive choice consumer decision tasks and decision strategies we provide an integrative framework for understanding constructive choice review evidence for constructive consumer choice in light of that framework and identify knowledge gaps that suggest opportunities for additional research

what the seller won t tell you persuasion and disclosure in markets imagine that you are considering an investment in a new public offering of a firm s shares the firm s officers make a presentation that includes an audited financial statement an earnings forecast reviewed by its prestigious investment bankers and an impressive demonstration of its new technology or suppose that you are buying a new furnace to replace an old one that is not working well the salesman displays a chart showing that the projected total life cycle cost of one particular model including capital costs and fuel usage over the projected lifetime of the furnace is lower than that of some competing models you have considered this paper reviews the theoretical arguments about how sellers disclose information in an attempt to encourage buyers and the potential role for regulation in encouraging efficient disclosure of information how well does a system of private reporting work when should we expect all the relevant information to be reported if testing and reporting by the seller are costly will too little testing and reporting be done or too much when some information is withheld what sort of information is withheld how do rational buyers respond to such withholding how are prices and welfare affected what role is there for laws and regulations to improve the functioning of markets we address these questions by studying the theory of persuasion games games in which one or more sellers provide verifiable information to buyers to influence the actions they take

the advertising mix for a search good we extend the persuasion game to bring it squarely into the economics of advertising we model advertising as exciting consumer interest into learning more about the product and determine a firm s equilibrium choice of advertising content over quality information price information and horizontal match information equilibrium is unique whenever advertising is necessary the outcome is a separating equilibrium with quality unravelling lower quality firms need to provide more information for a given quality level as a function of consumer visit costs first quality information is disclosed then price information and then horizontal product information are added to the advertising mix some suggestive evidence is provided from airline ads in newspapers this paper was accepted by j miguel villas boas marketing

oligopolistic pricing with heterogeneous consumer search abstract a finite number of identical stores sell a homogeneous good to consumers with heterogeneous search costs who search sequentially with perfect recall and without replacement consumers search rules are optimal with respect to the stores pricing strategies and consumers must visit a store to obtain information about its actual price a symmetric nash equilibrium sne always exists the model exhibits a variety of equilibrium behaviors between monopoly pricing and marginal cost pricing the competitiveness of a market depends crucially on the shape of the search cost distribution moreso than on the number of competing firms

economic performance voting and political support a unified approach a presidential vote function and a presidential approval ratings function are jointly estimated for u s postwar observations the estimation technique treats the two equations as seemingly unrelated regressions with unequal numbers of observations cross equation restrictions implying that voters and poll respondents use identical standards in judging the economic performance of incumbents are imposed and tested estimates show that both votes and approval ratings are influenced by gnp growth and inflation the results suggest that poll respondents are more inflation averse than voters however tests of this hypothesis are not conclusive copyright 1990 by mit press

comparing real wage rates a real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys it provides an important indicator of the living standards of workers and also of the productivity of workers in this paper i set out the conceptual basis for such measures provide some historical examples and then provide my own preliminary analysis of a decade long project designed to measure the wages of workers doing the same job in over 60 countries workers at mcdonald s restaurants the results demonstrate that the wage rates of workers using the same skills and doing the same jobs differ by as much as 10 to 1 and that these gaps declined over the period 2000 2007 but with much less progress since the great recession jel c81 c82 d24 j31 n30 o57

who says it s the economy cross national and cross individual variation in the salience of economic performance theories of government approval usually assume that voters care about economic outcomes this assumption frequently does not hold data from the comparative study of electoral systems demonstrate that although the economy is often the most important issue in an election its place on the issue agenda varies across individuals and electoral contexts the economy is more likely to dominate other issue concerns under conditions of economic recession volatility and economic underdevelopment moreover at the individual level the salience of economic performance rises with unemployment and economic vulnerability governance crises related to corruption and human rights reduce attention to the economy as do large scale terrorist attacks if the economy is not perceived as important its effect on government approval is strongly mitigated thus variations in the economy s salience need to be further incorporated into studies linking economic and political outcomes

structural change in developing countries has it decreased gender inequality summary this paper examines the evolution of female labor market outcomes from 1987 to 2008 by assessing the role of changing labor demand requirements in four developing countries brazil mexico india and thailand the results highlight the importance of structural change in reducing gender disparities by decreasing the labor demand for physical attributes the results show that india the country with the greatest physical labor requirements exhibits the largest labor market gender inequality in contrast brazil s labor requirements have followed a similar trend seen in the united states reducing gender inequality in both wages and labor force participation

when does a firm disclose product information a firm chooses a price and the product information it discloses to a consumer whose tastes are privately known we provide a necessary and sufficient condition on the match function for full disclosure to be the unique equilibrium outcome whatever the costs and prior beliefs about product and consumer types it allows for products with different qualities as well as some horizontal match heterogeneity with independently distributed product and consumer types full disclosure is always an equilibrium and a necessary and sufficient equilibrium condition is that all firm types earn at least the full disclosure profit

informing transforming and persuading disentangling the multiple effects of advertising on brand choice decisions prior behavioral research has suggested that advertising can influence a consumer s quality evaluation through informative and transformative effects the informative effect acts directly to inform a consumer of product attributes and hence shapes her evaluations of brand quality the transformative effect affects the consumer s evaluation of brand quality by enhancing her assessment of her subsequent consumption experience in addition advertising may influence a consumer s utility directly even without providing any explicit information this is the persuasive effect in this paper we propose a framework that formally models the processes through which all three effects of advertisements impact consumers brand evaluations and their subsequent brand choice decisions in particular we model source credibility confirmatory bias and bounded rationality on the part of consumers by appropriately modifying the standard bayesian learning approach our model conforms closely to prior behavioral literature and the experimental findings therein in our empirical analysis we get significant estimates of both informative and transformative effects across brands we find interesting temporal patterns across the effects for instance the importance of transformative effects seem to grow over time while that of informative effects diminishes finally we conduct policy experiments to examine the impact of increased ad intensity on advertising effects as well as the role played by consumption ambiguity

price and advertising signals of product quality we present a signaling model based on ideas of phillip nelson in which both the introductory price and the level of directly uninformative advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good repeat purchases play a crucial role in our model a second focus of the paper is on illustrating an approach to refining the set of equilibria in signalling games with multiple potential signals

the varying political toll of concerns about corruption in good versus bad economic times under what conditions do citizens connect concerns about corruption to their evaluations of sitting executives in contrast to conventional scholarship positing a direct negative relationship between corruption and political support we build on a small but suggestive body of research to argue that this relationship is conditional on economic context we test this claim with national survey data collected in 19 presidential systems as part of the americasbarometer 2010 study using both fixed effects ordinary least squares and hierarchical linear regression analyses we show that individuals facing bad good collective economic conditions apply a higher lower penalty to presidential approval for perceived political corruption this result holds across both an individual level indicator of national economic assessment and a regional economic measure we further test and find less substantial results for the moderating influence of personal economic conditions on the political toll of corruption perce

severed linkages distorted accountability in uneven regimes though a general consensus exists regarding the significance of perceived performance in voters evaluations of incumbent governments much of the research underlying this consensus has been carrie

unsuccessful success failed no confidence motions competence signals and electoral support if no confidence motions are primarily motivated by bringing down governments why do only approximately 5 of no confidence motions in advanced parliamentary democracies from 1960 result in the termination of government in this project the author addresses this puzzle by developing a formal model of the electoral benefits of no confidence motions and tests these hypotheses with the use of an original data set no confidence motions represent highly visible opportunities for opposition parties to highlight their strength or ability compared to the government in the hopes of improving their vote shares the author finds support for the signal based theory on a sample of 20 advanced parliamentary democracies from 1960 to 2008 although no confidence motions result in decreases for the government parties the opposition parties that propose the motion experience boosts in vote share this relationship is even stronger when the proposing party is an alternative governing possibility illustrated by the condit

economic structure and factor payments there is a growing body of evidence that the labour payment share in national income varies across countries and over time suggesting that the popular aggregate cobb douglas production function may not capture income share dynamics there remains conflicting evidence on the importance of natural resource rents among low income economies and on estimates of the rate of return to produced capital this paper focuses on the structural differences among countries confirming the importance of the agriculture sector in estimates of labour and land s share of factor income based on 81 countries at diverse levels of economic development in the year 2005 i find that cross country data are best modelled by a ces production function with an elasticity of substitution of 0 8 and that many low income countries have a higher return to capital than the united states

employment insecurity incumbent partisanship and voting behavior in comparative perspective we argue that occupational unemployment rates by informing perceptions of economic insecurity serve as a salient and powerful heuristic for aggregate economic performance consequently high and