an economic analysis of factor usage and workplace regulation reply safety in the workplace has long been a subject of interest for economists much of this attention has focused on the presence of risks on the job and the tendency of workers and others to underestimate these risks adam smith 16 96 7 notes this optimism and as george stigler 19 points out jevons felt that workplace hazards were ignored by those most directly concerned this lack of faith in the market to provide adequate safety or to compensate those who face such risks is evident in the law regulating the workplace primarily workers compensation wc and the occupational safety and health act osha these policies are in the judgment of many modern economists justified by the misperception of risks 5 12 13 however other economists have argued that despite their intentions such laws may not have one of the primary effects they are directed to accomplish the reduction of workplace accidents relatively little research has been devoted to another aspect of safety regulation its cost perhaps because these costs are thought to be very small 2 it is on this issue that this paper focuses what is the impact of workplace regulation on firm decision making to accomplish this a model is developed in section ii which examines the impact on a firm s factor choices attributable to the imposition of workplace safety regulation the theory examines wc and osha both singly and jointly and their effects on the level of and changes in relative factor usage these considerations form the bulk of section iii this model yields some interesting conclusions about the effects of regulation in the workplace the primary implication of the theory is that all increases in safety are paid for through lowered output and factor employment moreover this result holds true whether the additional safety is the product of direct safety regulation osha or through indirect forms of regulation like wc these results are possibly more striking given the findings of empirical work done on the impact of wc and osha on safety this body of research has to

discrimination in the payment of full time wage premiums this study investigates how many hours must be worked per week in order for workers in different race and gender groups to receive a high hours full time wage premium an analysis of 1989 current population survey data shows that across occupations both white and black men received a full time wage premium for working at least 33 hours per week whereas white women had to work at least 37 hours and black women at least 39 hours to receive the premium controlling for occupation changes the threshold for black women to 33 hours but does not change the results for the other groups the authors find that the observed differences account for at most two percentage points of the wage differentials across race and gender

equal employment opportunity law and firm profitability based on a sample of 260 cases reported in the wall street journal between 1964 and 1986 this study finds that the equity value of firms charged with violating equal employment opportunity eeo laws fell at the time that a suit decision or settlement was announced most dramatically the value of firms involved in class action suits fell 15 6 percent on average around the time of the suit further the average loss to shareholders exceeds the amount firms are required to spend to settle the case this may be due to the expected costs of changing employment practices or to the information about the firm s management that is revealed by the case a staggering number of statutes amendments and court decisions regulating equal opportunity in employment have been passed during the past 25 years firms found guilty of violations of equal employment opportunity laws have been required to pay millions of dollars in back pay and to alter their employment practices to comply with the laws this study measures the costs to firms resulting from government and private lawsuits and the further costs of losing those suits i address this question by examining changes in the market value of the equity of firms at the time a lawsuit is filed for a violation of an equal employment opportunity eeo law and at the time a decision of guilty or a settlement

on decomposing the wage gap a critical comment on blinder s method many studies have found that the impact of schooling on earnings is greater for females than for males despite the fact that females tend to earn less both absolutely and controlling for personal characteristics this study investigates possible

parental education labor market experience and earnings new wine in an old bottle evidence from us data suggests that increases in parental education significantly steepen the slope of male experience earnings profiles during early career years other things equal

a positive theory of environmental quality regulation this paper demonstrates that environmental quality regulation may enhance producer wealth while simultaneously reducing an externality problem by restricting access to common property regulation not only corrects a resource misallocation but it creates a scarcity rent as well in the recent history of environmental quality the common access problem has been addressed by federal and state agencies through a standards based approach rather than through the enforcement of tradable property rights as a consequence rents from the right to use these assets have accrued to producers the data are convincing that there is a strong interplay between producers consumers and the victims of pollution each party has some influence on the outcome and one sided analysis neglects many important aspects of regulation environmental quality regulation is complicated but many of the observed perplexities are consistent with a rent seeking self interest theory of government 46 references 1 figure 7 tables

committee assignments constituent preferences and campaign contributions committee assignments constituent preferences and campaign constributions the familiar economic model of regulation as developed by stigler 1971 peltzman 1976 and becker 1983 posits an essentially frictionless market process for regulatory policy formation in which a single regulator legislator chooses policy to maximize net support from competing groups in this paper we extend the supply side of this model by considering the effect of legislative institutions and unorganized constituent preferences on the ability of incumbents in the house of representatives to serve specific interest groups we then test this formulation by examining the recent history of interest group campaign contributions to these legislators our theoretical model concentrates on how a legislator allocates time between serving specific interest groups outside his district and serving his constituency we do not model interest group decisions directly assuming simply that they purchase their desired amount of service from the lowest cost suppliers our model sorts legislators by the supply price at which they can serve a particular group this price depends on the preferences of the voters in the legislators district and the productivity of the legislator in producing policy service for each group 1 the empirical section tests the model by examining the pattern of interest group campaign contributions to house incumbents from 1978 through 1984 our regression analysis tends to confirm both implications of the theory first the pattern of campaign contributions from specific interest groups to legislators is shaped by the division of substantive legislative and regulatory jurisdictions represented by the system of house standing committees second voter preferences influence the pattern of contributions by affecting the supply price at which a legislator can offer policy to interest groups legislators with sympathetic or indifferent constituencies are able to offer a lower price and are therefore able to attract larger sums than those with hostile constituencies these results are important for two reasons first the influence of congressional institutions such as committees on policy is not widely accepted while several studies faith levins and tollison 1982 weingast and moran 1983 weingast 1984 grier 1989 and robert 1990 have documented the effects of changes in a particular committee on policies under its jurisdiction this work considers the jurisdiction of only a single committee in each case 2 by examining the linkages between congressional committees and political action committees pacs we investigate whether interest groups act as if committees have power second while the chicago model of regulation emphasizes correctly in our view that policy is the result of vote maximizing calculations and the incremental balancing nature of any equilibrium the model is imprecise about which sets of preferences are most important in determining the levels of policy or the size of changes in policies focusing on committees promotes a parsimonious specification of both the political players members of the relevant committee rather than the entire congress and the pivotal voters committee members constituencies more than the nation determining specific policy outcomes the paper is organized as follows section i reviews some issues on the nature and sources of committee influence in the u s congress the second section incorporates committee assignments into a theory of decision making by interest group investors sections iii and iv describe our data and estimation technique and present the empirical results the fifth and final section discusses some implications and conclusions of this research i committee power in congress legislators differ substantively by virtue of their committee assignments committees in congress and particularly in the house of representatives possess disproportionate power over the policy areas in their respective jurisdictions have the right to hold hearings and recommend budget allocations for the bureaus in their jurisdiction goodwin 1970

pollution control through price incentives the role of rent seeking costs in monopoly markets abstract we consider the effect of rent seeking costs on the design of an efficient pollution tax earlier work has concluded that a pollution tax levied on an otherwise unregulated monopoly should always be less than the pigouvian rate this study demonstrates that if rent seeking costs are present the appropriate discharge tax for a monopoly firm can equal or exceed the marginal damage from its pollution calculations reveal that under a wide range of conditions the ideal corrective tax for a monopoly firm is very close to the fully internalizing pigouvian tax

auctions or grandfathering the political economy of tradable emission permits despite the prevalence of grandfathered permits we still observe that a hybrid policy in which a fraction of initial emission permits is distributed through auctions is adopted in some cases we also observe that some polluting industries support auctioned permits and that most environmental groups support grandfathered permits this paper attempts to explain these phenomena from the perspective of political economy and investigates the conditions under which grandfathering auctions or a hybrid instrument will be the equilibrium policy by constructing a two stage lobbying game in which the type of policy instrument auction grandfathering or a hybrid instrument is determined in the first stage and then the number of permits is decided in the second stage we highlight the strategic interaction of the lobbying activities between the two stages in explaining the behavior of the lobbying groups

why do part time workers earn less the role of worker and job skills part time workers receive considerably lower hourly earnings than do full time workers using current population survey earnings files for september 1995 through december 2002 the author finds that measurable worker and job characteristics including occupational skill requirements account for much of the part time penalty longitudinal analysis of the data indicates that much of the remaining gap reflects worker heterogeneity evidenced by small wage gains and losses among workers switching between part time and full time jobs the lower skills of part time than full time workers result primarily from limited work experience and accumulation of human capital little evidence can be found of a large wage gap between part time and full time women a part time wage penalty is found for men but men account for less than one third of total part time employment

social security and retirement across the oecd abstract employment to population ratios differ markedly across organization for economic cooperation and development oecd countries especially for people aged over 55 years in addition social security features differ markedly across the oecd particularly with respect to features such as generosity entitlement ages and implicit taxes on social security benefits this study postulates that differences in social security features explain many differences in employment to population ratios at older ages this conjecture is assessed quantitatively with a life cycle general equilibrium model of retirement at ages 60 64 years the correlation between the simulations of this study s model and observed data is 0 67 generosity and implicit taxes are key features to explain the cross country variation whereas entitlement age is not

regulation the opec oil supply shock and wealth effects for electric utilities a popular view among specialists in electric utility economics is that the regulatory process exacerbated the negative effects of the opec s oil price increases during the 1970s in contrast peltzman s theory of regulation suggests that regulators should buffer a firm from cost increases this paper examines these contending propositions by examining the stock returns for a sample of electric utilities during the opec oil shock of october 1973 the data are more consistent with a buffering effect than a regulatory lag

age seniority and labour costs lessons from the finnish it revolution the bad labour market performance of the workforce over 50 indicates that an aged workforce is often a burden for firms our paper seeks to investigate whether and why this is the case by providing evidence on the relation between age seniority and experience on the one hand and the main components of labour costs namely productivity and wages on the other for a sample of plants in three manufacturing industries forest industrial machinery and electronics in finland during the it revolution in the 1990s in average industries those not undergoing major technological shocks productivity and wages keep rising almost indefinitely with the accumulation of either seniority in the forest industry or experience in the industry producing industrial machinery in these industries the skill depreciation often associated with higher seniority beyond a certain threshold does not seemingly raise labour costs in electronics instead the seniority productivity profile shows a positive relation first and then becomes negative as one looks at plants with higher average seniority this body of evidence is consistent with the idea that fast technical change brings about accelerated skill depreciation of senior workers we cannot rule out however that our correlations are also simultaneously produced by worker movements across plants the seniority earnings profile in electronics is instead rather similar to that observed for the other industries a likely symptom of the prevailing finnish wage bargaining institutions which tend to make seniority one essential element of wage determination in the end seniority matters for labour costs not age as such but only in high tech industries not in the economy at large this is well tuned with previous research on gross flows of workers and jobs in the us and other oecd countries which unveiled the productivity driving role of resource reallocation or lack thereof between plants to improve the employability of the elderly at times of fast technical change public policy should thus divert resources away from preserving existing jobs and lend more attention to the retraining of old workers to ease their reallocation away from less productive plants or plants where they have become less productive into new jobs francesco daveri and mika maliranta

on the evidence of a working spouse penalty in the managerial labor market this analysis of march 1993 current population survey data suggests that managers with working wives earn lower wages than their counterparts with non working wives the labor supply decisions of managers wives appear to be unaffected by that is exogenous with respect to their husbands wages in contrast there is evidence that the labor supply decisions of non managers wives are affected by their husbands wages and when the analysis takes account of that endogeneity it is found that non managers do not suffer a working spouse penalty the analysis also highlights some important issues related to the use of instrumental variables

how pollution taxes may increase pollution and reduce net revenues this paper develops a positive theory of pollution taxation by a federal authority when pollution abatement subsidies are used by local governments environmental and industry lobby groups influence governments with campaign contributions first pollution may increase in the pollution tax because the abatement subsidy increases decreases with the tax and pollution increases decreases in the abatement subsidy this occurs because the lobbying incentives change at a pollution tax reform second pollution taxes may reduce net revenues because subsidy expenditures rise third pollution may increase simultaneously as net revenues fall finally the welfare effect of a pollution tax may be negative

shareholder wealth effects of legislative events the case of airline deregulation this paper presents empirical evidence about the impact on shareholder wealth of legislative events leading to the enactment of the airline deregulation act of 1978 in contrast to prior regulatory event studies this paper examines not only the final legislative enactment but also the congressional hearings that preceded it no significant effect on shareholder wealth is indicated when averaged across all airline firms and all legislative events impact of deregulation however was expected to be different for trunk airlines than for local airlines moreover market expectations likely changed with the change in the political climate during the course of deregulation deliberations from an industry financial health emphasis under a republican ford administration to a consumer welfare emphasis under a democratic carter administration we find that trunk airlines experienced significant positive abnormal returns during the ford administration but negative abnormal returns during the carter administration in contrast local airlines exhibited significant negative abnormal returns during both the ford and carter eras systematic risk of both trunk and local airlines also increased with the change in the political climate

cost raising strategies advantage rivals by raising their costs in this paper we show that strategies designed to raise rivals costs have a number of advantages over predatory pricing they are credible do not necessarily require the victim to exit and do not necessarily require the existence of classical market power the paper sets up a general model proves a number of general results and then applies the model to specific strategies involving overbuying inputs and vertical integration

economic incentives for environmental protection integrating theory and practice for decades economists have been extolling the virtues of market based or economic incentive approaches to environmental protection some 70 years ago arthur cecil pigou 1920 suggested corrective taxes to discourage activities that generate externalities a half century later j dales 1968 showed how the introduction of transferable property rights could work to promote environmental protection at lower aggregate cost than conventional standards from these two seminal ideas corrective taxes and transferable property rights a substantial body of research has developed both environmental taxes and marketable permits are coming of age in the policy arena examples include the introduction of marketable permits in the united states to control acid rain the use of changes in europe to limit air and water pollution and the employment of deposit refund schemes for products ranging from beverage containers to batteries the introduction of these tools on a large scale provides a unique opportunity to extend the frontiers of knowledge this essay strives to identify prominent issues that merit investigation 8 refs

tied wage hours offers and the endogeneity of wages in the standard model of labor supply each worker is a price taker where the relevant price is an hourly wage rate which is fixed in the short run and which does not depend upon the number of hours supplied with this basic assumption the wage can be regarded as exogenous for the purpose of estimating a labor supply function this paper proposes and implements a pair of tests for the exogeneity of wages in a longitudinal labor supply model and for the particular failure of exogeneity associated with jobs that offer wage hour packages the first test is very simple it amounts to a test of whether hours granger cause wages at the individual level the second test involves a simultaneous estimation of labor supply and wage offer equations both tests indicate that the offered wage is related to hours worked though the offer locus is for this sample very flat the principal conclusion is that labor supply equations cannot properly be estimated in isolation from the process generating wages even when long time series are available on a sample of individuals this abstract was borrowed from another version of this item

the effect of epa enforcement funding on private sector pollution control investment the paper estimates the effects of the us environmental protection agency epa enforcement budget upon the demand for pollution control equipment in the private sector there are two possible effects a direct effect occurs when the enforcement budget is used for inspections that result in enforced compliance requiring additional pollution control equipment a second effect is anticipatory and arises from the private sector s objective of minimizing expected costs due to fines imposed by the epa for infractions of pollution control requirements this component of demand depends in part on the epa enforcement budget we find that increases in the epa budget increase the demand for pollution abatement equipment this in turn implies that increases in the epa enforcement budget have been effective in mitigating pollution

can rents run uphill a note on the theory of regulation no one familiar with the history of regulation would be surprised that inefficient firms can benefit at the expense of the efficient yet this outcome has not been analyzed within the standard rent seeking models this paper has derived conditions under which less efficient firms can profitably secure regulation that imposes costs on their more efficient rivals the possibility that less efficient firms can form a profitable coalition does not mean that they will actually do so we have analyzed only the polar situations in which inefficient firms form a coalition to put efficient firms out of business and efficient firms try to block the regulation by offering counter bids the actual formation of coalitions will depend on political entrepreneurship mcchesney 1987 the opportunity costs of various producers fort and hallagan 1987 and the particular cost functions of forming a coalition functions that may well differ among various firms i have placed these influences in the ceteris paribus pound in order to analyze the demand and supply conditions that are conducive to successful rent seeking by less efficient firms the theoretical demonstration that less efficient firms can outbid their more efficient counterparts for legislation and still earn profits helps explain a common regulatory outcome

wages seniority and the demand for rising consumption profiles abstract in many occupations wages rise faster than productivity over the life cycle other authors have suggested a variety of explanations for this pattern we argue that these explanations fail for at least two occupations commercial airline pilots and intercity bus drivers we then explore an alternative explanation based on the assumption that satisfaction depends on not only the level of consumption but also its rate of change we argue that upward sloping wage profiles are an expedient substitute for personal savings as a means for achieving upward sloping consumpion profiles

working part time by choice or by constraint the selection of workers into part time jobs and the wages they earn are analysed using the 1989 labour market activity survey we focus on the distinction between voluntary and involuntary part time workers since involuntary part time workers earn substantially lower wages than other workers we find that the selection of individuals into involuntary part time work is more closely tied to job characteristics than personal or human capital characteristics the lower wage earned by involuntary part time workers is largely due to differences in returns and selection effects rather than differences in endowments

optimal pollution taxation in a cournot duopoly it is well known that the optimal pollution tax in a competitive industry is equal to the marginal damage inflicted by the pollution it has also been shown that the optimal pollution tax on a monopoly is less than the marginal damage in this paper i derive the optimal pollution tax for a cournot duopoly if firms have different production costs the optimal tax rate may exceed the marginal damage this is so because the tax may be an effective instrument for allocating production from the less to the more efficient firm it is also shown that if one firm has a positive most preferred pollution tax the sum of consumer and producer surpluses will be declining in the tax at this level

high tech and productivity evidence from israeli industrial firms abstract the main purpose of this study is to characterize and analyze high technology industrial firms a technology index is constructed and used to classify firms the largest concentration of hightech firms is israel is found in electronics and transport equipment industries and the lowest in textiles and clothing high tech firms appear to be more productive more export oriented pay higher wages and earn higher rates of return than low tech firms the fact that high tech firms in israel are export oriented is shown to be consistent with the international trade theories of comparative advantage and strategic rent seeking

further analysis of the theory of economic regulation the case of the 1969 coal mine health and sfnety act scott m fuess jr and mark a loewenstein how does government regulation influence the structure of industries in the coal mining industry increased safety can be provided with personal protection devices or with engineering controls but the type of safety standard imposed is important because larger producers have a comparative advantage complying with engineering controls time series evidence indicates that the 1969 coal mine health and safely act by imposing engineering controls drove out smaller less safe mines thereby shifting production toward larger mines many of the proposals made in the name of safety have little to do with the safety of the individual miner but a great deal to do with the vested interests of the most powerful forces in the coal industry the large operators and the union mr robert holcomb pike county coal operators association house hearings on coal mine health and safety 4 march 1969 556 7 i introduction the theory of compensating wage differentials predicts that a worker will demand greater compensation if he is to bear a higher risk of injury on the job higher wages are paid for jobs where the probability of a fatal accident is greater although it is not clear this wage differential is paid for other unpleasant job characteristics despite this compensation for job accidents the federal government heavily regulates workplace safety federal job safety standards generally do not specify injury rate standards to be met rather regulations typically require producers to use particular types of equipment and workplace designs focusing on particular safety standards the economic report of the president 1987 199 200 notes in the case of the cotton dust standard for example the risk of lung disease could be reduced by allowing the use of disposable masks osha s occupational safety and health administration preference for engineering controls is particularly costly in the case of noise control the theory of economic regulation initiated by stigler 1971 1975 and peltzman 1976 suggests that government regulations benefit certain interest groups at the expense of others maloney and mccormick 1982 105 argue that if the most efficient firms in an industry have a comparative advantage in complying with regulation then price will increase more than costs for some firms the rents of marginal firms will decline and some will exit as they face higher costs pashigian 1984 notes that if there are economies of scale in compliance then regulation can increase the market share of the larger producers according to bartel and thomas 1985 osha regulations do not appear to have led to lower injury rates but the differential cost effects of occupational safety legislation may have benefited large producers and unions few studies notably marvel 1977 and linneman 1980 have examined specific acts of legislation to determine how government regulation redistributes rents among producers in an industry pashigian 1986 201 calls the study of regulation s intraindustry effects an infant industry this paper contributes to this infant industry by modeling the effects of safety regulation to study the impact of the 1969 coal mine health and safety act on underground bituminous coal mining previous empirical studies indicate that federal mine safety regulation has had important indirect effects on the coal mining industry central to our analysis of these effects is miller s 1984 observation that safety can be produced with clearly defined alternatives either labor specific personal protection devices or capital specific engineering controls and workplace designs since larger producers enjoy a comparative advantage complying with engineering controls and smaller producers have a comparative advantage complying with personal safety standards the type of safety standard decreed will favor one group of producers over the other

a framework to compare environmental policies 1 introduction to analyze environmental policy proposals it is important to determine the conditions under which some policies might work better than others when will a pollution tax work better than the sale of permits or some other alternative which is easier to administer or to enforce does one policy apply better to some kinds of pollutants than to others which policy has a greater chance of getting enacted this paper provides a framework to compare alternative policies for each pollutant in each context one policy may be more efficient while others better account for competing objectives like administrative efficiency political feasibility and fairness using this framework the paper will analyze and compare eight types of policies clearly no single policy instrument will work best in all cases under some circumstances command and control cac instruments might be necessary in either of two forms i emission restrictions sometimes called performance standards or ii technology restrictions that might be called design standards if emissions are difficult or impossible to measure for example then the authorities can at least enforce rules that require the proper installation of the required pollution control equipment such as a flue gas desulfurization unit scrubber on every electric power plant or a catalytic converter on every automobile in other cases that are important to identify these cac instruments can be replaced by incentive instruments such as taxes subsidies or permits as suggested by pigou 1932 the pollution problem could be addressed by i taxes on the pollution or ii subsidies to abatement a pigouvian tax applies to the pollutant itself rather than to output at a rate equal to the pollutant s marginal environmental damages med the term incentive instruments includes both the pigouvian tax and the subsidy to abatement and it includes two other policies that involve permits such as those traded by electric utilities under the clean air act amendments of 1990 those permits could be i grandfathered or handed out to existing firms in proportion to past emissions or ii sold at auction by the government a simple analytical model is used below to demonstrate conditions under which the pigouvian tax is equivalent to a government sale of permits much of the environmental economics literature finds that the use of incentives is more cost effective than cac restrictions with imperfect information the regulatory authorities may or may not know what is the cheapest form of abatement technology thus cac regulations may require technology that is more expensive than necessary with a tax or a price per unit of emissions however each firm has incentives to find and to undertake any form of abatement that is cheaper than buying a permit since only the cheapest forms of abatement are undertaken these incentive policies can minimize the total cost of achieving any given level of pollution protection so far this cost effectiveness argument does not distinguish between taxes subsidies permits that are handed out or permits sold at auction yet the handout of permits does not raise any revenue thus a new literature in environmental economics concentrates on a distinction between policies that raise revenue like a tax on pollution or the sale of permits as opposed to polices that do not raise revenue like the handout of permits or a cac restriction on emissions 2 the model below will be used to reflect on this distinction as well so far i have listed two cac policies two pigouvian solutions and two versions of a permit policy yet in some cases with well defined property rights even with pollution coase 1960 shows how the private market can still achieve economic efficiency on its own government does not need to intervene at all except perhaps to help enforce property rights through a court system

soil quality and fertilizer use rates among smallholder farmers in western kenya studies of fertilizer use in sub saharan africa have been dominated by analyses of economic and market factors having to do with infrastructure institutions and incentives that prevent or foster increased fertilizer demand largely ignoring how soil fertility status conditions farmer demand for fertilizer we apply a switching regression model to data from 260 farm households in western kenya in order to allow for the possibility of discontinuities in fertilizer demand based on a soil carbon content scc threshold we find that the usual factors reflecting liquidity and quasi fixed inputs are important on high scc plots but not on those with poorer soils external inputs become less effective on soils with low scc hence the discernible shift in behaviors across soil quality regimes for many farmers improved fertilizer market conditions alone may be insufficient to stimulate increased fertilizer use without complementary improvements in the biophysical conditions that affect conditional factor demand

campaign contributions as investments the u s house of representatives 1980 1986 this paper treats the market for special interest campaign contributions and political favors as a simple asset market the model yields a simple equilibrium relationship among three variables the total amount of investor contributions a candidate receives the monetary value of the favors he has promised and his probability of winning using data on open seat races for the u s house of representatives i confront the model with a series of tests despite the starkness of the model the results of these tests are highly supportive

married women in part time employment this research deals with three aspects of the part time employment pattern of working wives 1 the wives characteristics 2 the level and structure of their earnings in part time jobs and 3 the duration of their employment when part time jobs are available to them this study improves upon previous research by using multivariate analysis to determine if the variation in the incidence of part time work consistently found in other studies persists when earnings potential fertility family income and other factors that may vary by age or race are held constant it differs further by including a data source that contains direct measures of market wages and experience for a large sample of married working women the authors find that husband s income family size and the wife s health race and previous work experience are among the variables that influence the probability that the wife works part time they also find that the level of wages and returns to some investments in human capital are rela

lowering the cost of pollution control versus controlling pollution economists have long argued that the market incentive approach to pollution control would achieve that control at least cost the political rejection of the market incentives approach and embrace of the far more costly command and control approach has been explained in terms of the tendency in the political process to favor the interests of organized groups over those of the unorganized public but because of this tendency it may be that a move to the market based approach to pollution control would result in less pollution control and be less efficient than the existing command and control approach

female labor supply with a discontinuous nonconvex budget constraint incorporation of a part time full time wage differential this paper incorporates the well documented part time full time wage differential into an empirical labor supply model with both a heterogeneity and a random error term and estimates that model fo

the political economy of environmental regulation towards a unifying framework there are several theories that attempt to explain various aspects of environmental policy building on insights from this theoretical work and recent advances in our understanding of instrument performance this paper constructs a more complete theory of environmental regulation there are two primary contributions of this research the first is to provide more satisfactory explanations for a number of observed patterns of environmental policy for example there is as yet no satisfactory theory about the emergence of incentive based mechanisms such as marketable permits and effluent fees the second contribution of this paper is to develop a parsimonious framework for understanding many important aspects of environmental policy this framework suggests the outputs of environmental policy emerge from a struggle between key interest groups

union wage differentials in the public and private sectors a simultaneous equations specification the paper attempts to integrate new approaches to estimating union wage effects with the analysis of public private sector wage differentials estimates of the union differential in both public and private sectors allowing for the endogeneity of union status are presented the hypothesis that the recently measured rents to public sector employment primarily reflect the recent increase in unionization in that sector is examined and receives considerable empirical support there was evidence of positive selection into the union sector especially for private sector workers union status appears to be strongly influenced by the expected wage gain from joining the union sector

regulation and firm size fda impacts on innovation this article estimates the highly differential impacts of fda regulations on pharmaceutical firms of various sizes where size is measured as scale of r d expenditures estimation is performed using the method of maximum quasi likelihoods using productivity trends of the united kingdom as a control to isolate fda regulatory effects in the united states it is shown that smaller u s pharmaceutical firms suffered devastating reductions in research productivity because of fda regulations in contrast the largest u s pharmaceutical firms apparently benefited from regulation as sales gains due to reduced competition more than offset their quite moderate declines in research productivity

are educated workers really more productive abstract this paper presents a new method for examining the productive nature of education it outlines an econometric model which simultaneously estimates an earnings function and a production function for workers and the firms where they are employed this approach permits a direct comparison to be made between the relative wage and relative productivity of workers with different levels of education using a unique data set from ghana two primary questions are addressed 1 are educated workers more productive than workers with no formal education and 2 do earnings differentials between workers with different levels of education reflect genuine productivity differentials the results suggest that education is positively correlated with productivity in ghanaian manufacturing and that firms pay workers according to their productivity

a selectivity model of employer size wage differentials this article investigates wage differentials for employees of different size firms utilizing an econometric methodology that allows the size of employer to be treated as endogenous in the context of discrete ordered employer size data as a result we are able to estimate i employer size wage gaps which are corrected for selectivity bias and ii the magnitude and direction of the selection bias decompositions of the resulting wage differentials are computed with comparisons of the conditional on sorting across employer size and unconditional wage gaps

are earnings profiles steeper than productivity profiles we test competing explanations of rising age earnings profiles by obtaining direct estimates of marginal productivity differentials between workers in different age groups and comparing these to associated earnings differentials using contemporary data from israeli manufacturing firms the results indicate that controlling for other productive inputs and firm characteristics for the unskilled or less skilled workers who represent most of the workers in our sample both earnings and productivity profiles are upward sloping moreover these profiles mirror each other closely and are statistically indistinguishable however the estimates of the profiles are sufficiently imprecise that even sizable deviations between point estimates of earnings growth and productivity growth would not be statistically significant while we view the results as most consistent with a general human capital model of rising earnings profiles over the life cycle there is not strong evidence with which to reject alternative models

the role of labor market intermittency in explaining gender wage differentials using the health and retirement survey and standard wage decomposition techniques this paper finds that the difference in intermittent labor force participation between men and women accounts for 47 percent of the contribution to the wage gap of differences in observed characteristics not controlling for intermittent behavior results in too much importance being placed on gender differences in job characteristics

interindustry part time and full time wage differentials regional and national analysis this paper provides more evidence that the wage differential is far smaller than is suggested by simple comparison of gross wages of full time and part time workers it is noted that to obtain a more reasonable measure of the full time and part time wage differential it is necessary to adjust for differences in workers characteristics labour market conditions and sample selection it is found that in general full time and part time workers exhibit different personal characteristics in particular full time workers possess more human capital and experience than part timers also labour market conditions such as unions and pension plans favour full timers these differences may partly account for the wage disparity between full time and part time workers it was noted that the nonrandomness of the workers into full time and part time jobs influences the wage determination of both full time and part time workers the results indicate that the adjustment of the wage equations to reflect the above menti

the effect of part time work on wages evidence from the social security rules this article identifies the part time wage effect using hours variation caused by the social security rules we show that work hours and wages drop sharply at ages 62 and 65 we argue that the hours decline causes the wage decline resulting in a 25 wage penalty for men who cut their work week from 40 to 20 hours however we find little evidence for such an effect among women we also show that models that fail to account for the joint determination of hours and wages will understate the labor supply response to a tax change by about 26

exclusionary manipulation of markets for pollution rights abstract strategic price manipulation can affect the distribution of transferable pollution rights across polluters and the efficiency of pollution control efforts prior research has concentrated on market manipulation by firms seeking only to minimize the sum of pollution rights costs and pollution abatement costs in this paper we explore the potential for the exclusionary manipulation of pollution permit markets intended to drive up the costs of one s rivals and we distinguish between the resource allocation effects of exclusionary manipulation and cost minimizing manipulation we find that exclusionary manipulation can sometimes worsen and sometimes ameliorate the abatement inefficiency which occurs under cost minimizing manipulation and that an overbuying rule can obviate or at least limit damages from this form of strategic behavior

environmental regulation whose self interests are being protected special interest can explain why environmental policy limits economic activity in areas where air quality is above minumum standards locational competition among region helped create a policy that raised factor mobility cost from slower to faster growing regions analysis of votes shows greater support for this policy was received from northern urban constituencies and the greatest opposition came from the south and the west pollution abatement costs per unit of output are higher in areas with higher not lower air quality

studying firm specific effects of regulation with stock market data an application to oil price regulation regulations are often introduced and reformed in response to unanticipated changes in market forces in late 1973 for example opec quadrupled the world price of oil and u s policy makers responded by imposing oil price regulation such events pose a fundamental problem of interpretation for studies that use stock prices to identify the economic effects of regulation what portion of the capital gains or losses experienced by investors in regulated firms is due to regulation and what portion is due to unanticipated economic events to answer these questions we use microeconomic theory to derive hypotheses about how the capital gains and losses created by opec pricing and u s regulatory policies are related to the underlying characteristics of petroleum firms we test the hypotheses by including a model of firm specific abnormal returns in the standard market models of common stock returns earned by investors in petroleum firms the results indicate the u s oil production and refiner access to price controlled crude oil were sources of capital gains and that u s and foreign refining were sources of capital losses

frontrunners and laggards the strategy of environmental regulation under uncertainty the extant literature on the political economy of environmental regulation does not provide a unified theoretical explanation for three salient stylized facts first companies voluntarily invest to reduce the environmental burden that they cause under threat of regulation second ex ante estimates of the compliance cost tend to be systematically higher than ex post estimates finally regulators use limited information provided by the industry i construct a game theoretic model of environmental regulation under uncertainty with a benevolent regulator in equilibrium companies undertake voluntary action to induce regulation that raises barriers to entry this profit driven behavior is not always socially detrimental however as the regulator obtains a credible commitment to production and a more accurate estimate of the compliance cost additionally the results provide a selection explanation for the mismatch between ex ante and ex post cost estimates if companies condition compliance on the installation cost only low cost companies install in equilibrium the analysis combines regulatory capture with social welfare maximization to explain the curious combination of voluntary action and low ex post compliance cost without serious information collection by the regulator

female labor force intermittency and current earnings a switching regression model with unknown sample selection using the health and retirement survey from the usa this paper finds a 16 selectivity corrected wage penalty among women who engage in intermittent labour market activity this penalty is experienced at a low level of intermittent activity but appears to not play an important role in a woman s decision to undertake such activity in addition employer preferences appear to play a larger role than human capital atrophy in the determination of the wage penalty

cleaning up while cleaning up pollution abatement interest groups and contingent trade policies this paper analyzes the political economy of environmental policy formation in a trading economy with established rules for administered protection we argue that the social costs associated with the adoption of an inefficient environmental regime are likely to be compounded by induced restrictions on trade when the effected industries are import competing the preferences of interest groups for alternative environmental regimes tend to be linked to the legal institutional setting in which trade policy is conducted under existing rules and practices in the area of administered protection there is reason to believe that interest group preferences for an inefficient approach to pollution control will be strengthened because the adoption of such a regime is more likely to lead to a concomitant increase in trade barriers

seniority rules and productivity an empirical test the primary purpose of this paper is to test empirically the effect of labor quality on short run manufacturing productivity in doing so the study makes major advances in two areas for the first time a job tenure function is estimated and a time series of job tenure in manufacturing is developed this estimated tenure series empirically verifies the use of seniority rules in the firm worker employment relationship having generated a tenure series the authors then test whether tenure enhances productivity in manufacturing the results clearly indicate that seniority rules have a statistically significant positive impact on productivity and the pattern of the seniority rules is reminiscent of a model where human capital has a specific component copyright 1989 by the london school of economics and political science

a test of dual labor market theory despite substantial differences in their views of the appropriate policy response to the existence of poverty neither the proponents of dual market theory nor its critics have proposed potentially conclusive tests of the dual market hypothesis this paper presents a test of the two central propositions of dual market theory 1 the existence of two distinct labor markets with different wage setting mechanisms and 2 the existence of barriers to mobility between the labor markets we find considerable support for both hypothesis estimation of a switching model of wage determination with unknown regimes yields two distinct wage equations the one which most workers are associated with closely resembles the standard human capital regression with significant returns to education and experience the other equation is flat with no returns to human capital these two equations resemble the predictions of dual market theory for the primary and secondary markets respectively further we present evidence that at least some non white workers are involuntarily confined to the secondary market this crowding of minority workers into the low wage labor market accounts for a substantial portion of white non white wage differences we interpret these results as providing empirical support for the dual market hypothesis and for recent theoretical work on efficiency wagemodels in addition combining the efficiency wage argument with the observation that much of the white non white wage difference is explained by the exclusion of non whites from the primary sector suggests an explanation for the persistance of wage differences this abstract was borrowed from another version of this item

childcare subsidies wages and employment of single mothers this paper develops and estimates a model for the choice of part time and full time employment and the decision to pay for childcare among single mothers the results indicate that a lower childcare price and a higher full time wage rate both lead to an increase in overall employment and the use of paid childcare the part time wage effects are found to be too small to have significant behavioral implications an analysis of cost effectiveness indicates that the additional hours of work generated per dollar of government expenditure is larger for a childcare subsidy than a wage subsidy

national treatment and the optimal regulation of environmental externalities we analyze the role of national treatment in the regulation of environmental product standards for an open economy a social planner uses product standards to control emissions from the consumption of a traded good we show that whether national treatment of standards interferes with welfare maximizing policy depends on the instruments available to the policy maker consumption or emissions tax and differences in the cost of complying with the standard we also highlight the asymmetric incidence of the domestic and import product standard when taxes are suboptimal this asymmetric incidence can also cause welfare maximizing policy to violate national treatment on analyse le role du principe de traitement identique des entites domestiques ou importees dans la reglementation des normes environnementales dans une economie ouverte un gouvernement utilise des normes pour controler les emissions decoulant de la consommation d un produit transige internationalement on montre que le fait que le traitement identique des normes va ou non interferer avec l objectif poursuivi qui est de maximiser le niveau de bien etre va dependre de l ensemble des instruments disponibles pour l architecte des politiques une taxe sur la consommation ou sur les emissions et des differences dans les couts a encourir pour se conformer aux normes on souligne aussi l incidence asymetrique des normes sur les produits domestiques et importes quand les taxes sont sous optimales cette incidence asymetrique peut faire que la politique qui vise la maximisation du bien etre soit en violation du principe de traitement identique

when are private standards more stringent than public standards retailers private standards are increasingly important for addressing consumer concerns about safety quality and social and environmental issues empirical evidence shows that these private standards are frequently more stringent than their public counterparts this article develops a political economy model that helps explain this stylized fact we show that if producers exercise their political power to persuade the government to impose a lower public standard retailers may apply their market power to install a private standard at a higher level than the public one depending on several factors

labor market discrimination against hispanic and black men h ispanic american men have lower average wage rates than white non hispanics in 1975 the average white non hispanic male wage earner in the united states earned 5 97 an hour mexican men earned 4 31 72 as much as white non hispanics puerto rican men earned 4 52 76 as much and cuban men earned 5 33 89 as much as white non hispanics by way of comparison black men s average wages in 1975 were 4 65 78 of the white male wage several possible reasons for the hispanics lower wages come to mind among them are age and education geographic location immigration language difficulties and discrimination for example as shown in table 1 mexicans and puerto ricans are younger on average than the white non hispanic population and earnings tend to rise with age hispanics have lower average levels of education than white non hispanics and wages are positively associated with education many mexican americans live in the southwest where prices are relatively low moreover hispanics are more likely to be recent immigrants and to lack fluency in english than white non hispanics and so to be at a disadvantage in the labor market in addition there is a widespread belief that hispanics suffer from employment discrimination and cannot obtain the wages that their human capital would command if they were non hispanic whites how much of the wage differentials described above are due to each of these factors and to other inter group differences in wage related characteristics in particular how much impact does labor market discrimination have on the average hispanic man s wage and how does this compare with discrimination against blacks this paper provides answers to these questions a few other efforts have been made to analyze the relative earnings of hispanic and white nonhispanic men using 1960 and 1970 census data fogel 1966 poston and alvirez 1973 poston alvirez and tienda 1976 long 1977 and gwartney and long 1978 we use more recent data from the 1976 survey of income and education this data set enables us to measure wage rates more accurately and to specify the wage function more completely than does the census unlike previous analysts in estimating the wage function we take account of possible selectivity bias due to the distinction between average wage offers and average observed wages thus we hope to obtain a more accurate and up to date measure of labor market discrimination against hispanic men section ii explains the method used to separate the minority white non hispanic wage differential into the portions due to differences in average characteristics and the portion due to differences in unobserved factors and discrimination taking into account the possibility of selectivity bias in the observed wage sample section iii describes the data used in the study and the specification of the wage equation the breakdown of the observed wage differentials into components due to differences in participation in the wage and salary sector local price levels average characteristics and discrimination are presented in section iv section v summarizes our findings and discusses their implications for efforts to improve the economic situation of hispanics in the united states

the definition of part time employment a switching regression model with unknown sample selection rejecting the standard less than thirty five hours per week categorization of part time workers this paper offers an empirically justified definition of the part time employed the definition is based on the distinction through wage payments that employers make between a high hours full time and a low hours part time group of workers a switching regression model of wage equations with deterministic but unknown sample selection is estimated resulting in a significant split between high hours and low hours workers that is higher than the standard definition wage differentials are calculated and decomposed and estimates from the structural choice model are presented copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

misalignment of productivity and wages across regions evidence from belgium abstractthis paper is one of the first to estimate how regions affect the productivity wage cost and cost competitiveness i e the productivity wage gap of firms detailed linked employer employee panel data for belgium and the hellerstein neumark framework are used to estimate dynamic models at the establishment level the findings show that interregional differences in productivity and wages are significant but to a large extent due to drivers at the individual and or firm level the research provides evidence that the specificity of the brussels region can be linked to its higher density compared with the rest of belgium robustness tests suggest that the relatively better ceteris paribus performance of firms in brussels is limited to the service sector

estimating the structure of market reaction to news information events and lumber futures prices we develop a new event study technique the distributional event response model derm appropriate to relatively slowly evolving information events we apply the model to twelve years of daily lumber futures prices and analyze the effects of three different types of information releases a monthly housing starts estimates b aperiodic administrative and judicial announcements about u s canada trade disputes and c novel and unprecedented court decisions related to the endangered species act esa the information releases are different in ways that predict their relative speeds of impoundment in prices we find that housing start events are absorbed more quickly than trade events which are absorbed more quickly than esa events

to fight or not to fight an analysis of submission struggle and the design of contests this paper considers the players behaviour in an asymmetric two player contest when do they decide to struggle and when to subjugate analysing contest success functions it is found that two crucial prerequisites for struggle or war have to be met thus such an equilibrium is possible but restrictive if a self interested rule setter chooses the contest success function endogenously we show that one player will always subjugate applications to rent seeking and environmental regulation are discussed

friends in high places the wealth effects of jfk s assassination on the assets of lbj s supporters this paper uses anecdotal evidence to identify a group of firms that had significant ties to president lyndon johnson and determines the effect of johnson s unexpected rise to the presidency on the market value of these firms the unexpected nature of president kennedy s death eliminates the confounding event problem typically associated with election results we are able to identify four separate portfolios of firms that had political ties to lyndon johnson our research suggests that the market expected significant benefits to accrue to these firms as a result of johnson s becoming president

investor base and corporate borrowing evidence from international bonds abstract we examine international bond issues by us firms to study the benefits of investor taste for cross border security issuances we proxy for firms international investor taste with the fraction of prior international bond holding in firms domestic and international bonds and find that international investor demand increases with such taste moreover the offering yield spreads on international bonds are lower than domestic offering yield spreads for these internationally recognized firms and they have higher probability of issuing internationally such international recognition may occur for instance if the diversification benefits of adding the security to investor s portfolio outweigh the negative effects of higher renegotiation costs for international compared to domestic investors

market power and cartel formation theory and an empirical test abstract antitrust enforcement makes it difficult to test theories of cartel formation because most attempts to form cartels are blocked or kept secret however federal laws allow u s produce growers to operate marketing cartels through devices called marketing orders these cartels use quantity controls and quality standards to raise prices of fresh produce some growers have adopted marketing orders and others have not this paper develops and tests a positive theory of the adoption of marketing orders the theory suggests that growers in a region are more likely to adopt a marketing order if the demand for fresh produce is inelastic the growers market share in the fresh market is large there are barriers to entry and expansion the fraction of the output the growers ship to the fresh market is not too large or too small growers are homogeneous and large cooperatives exist probit analyses support these hypotheses

do workers prefer increasing wage profiles we present survey data challenging the assumption implicit in analyses of labor supply that all else being equal workers prefer declining over increasing wage profiles we test several explanations for our results including that a there is something special about wages e g their association with productivity as opposed to other types of payments that induces the preference for increasing wages b utility depends not only on absolute levels of consumption but also on changes in consumption over time and c respondents who prefer increasing wage profiles are irrational and would change their behavior if the rationale for preferring declining wages were explained

the impact of corporate pollution on market valuation some empirical evidence abstract this paper investigates the relation between the market valuation of publicly listed corporations and their social performance as measured by their pollution record relative to environmental regulations expectations are that corporations with a good bad environmental record should be valued at a premium discount by the stock market such a relation results from the emergence of ethical or green investing and from an increased awareness by investors of the potential negative consequences from corporate environmental damages two significant innovations are introduced in this study first using governmental data a pollution index is computed for each sample firm second the relevance of social information for investors purposes is directly assessed by looking at the relation between the pollution index and a firm s market valuation within the accounting identity framework modigliani and miller 1958 results suggest that a firm s pollution performance is interpreted by market participants as providing information about its environmental liabilities furthermore results weakly support the existence of a premium discount in the stock market valuation of firms that meet do not meet environmental regulations thus lending some credence to the existence of a demand by some stock market participants for ethical or green investments this suggests that the disclosure of audited social information of a non financial nature in a firm s annual report could be beneficial to market participants

women as agents of change female income and mobility in india economic globalization will give many women in developing countries access to steady and relatively remunerative employment for the first time potentially shifting bargaining power within their households and changing the choices that are made for their children this paper exploits a unique setting a group of tea plantations in south india where women are employed in permanent wage labor and where incomes do not vary by caste to anticipate the impact of globalization on mobility across social groups in the future the main result of the paper is that a relative increase in female income weakens the family s ties to the ancestral community and the traditional economy but these mobility enhancing effects are obtained for certain historically disadvantaged castes alone although the paper provides a context specific explanation for why the women from these castes emerge as agents of change the first general implication of the analysis is that the incentive and the ability of women to use their earnings to influence household decisions depends importantly on their social background the second implication is that historically disadvantaged groups may in fact be especially responsive to new opportunities precisely because they have fewer ties to the traditional economy to hold them back

green business and blue angels this paper presents a model of a monopolist svoluntary overcompliance with legal environmentalstandards under asymmetric information about thefirm s environmental impacts the key assumptions are the existence of quality premia for environmentalsoundness a positive but imperfect degree ofmonitoring and adaptive consumer expectations conditions necessary for overcompliance to arise in aprofit maximizing equilibrium are derived the effectsof a third party eco labeling system are analyzed itis shown that the existence of an independent labelingauthority increases the likelihood of overcomplianceto be profit maximizing moreover firms might have anincentive to lobby for the introduction of such asystem the effect of consumers risk preferences andan instrument for preventing greenwash companieslying about their environmental performance is alsodiscussed

on the decomposition of wage differentials the often used method for decomposing wage differentials into human capital and discrimination components is reformulated so that both t he disadvantage or cost discrimination it imposes on a black or minority wage earner and the advantage or benefit it bestows on a white or majority wage earner can be estimated copyright 1988 by mit press

why do wage profiles slope upwards tests of the general human capital model this article tests the implications of the general human capital that i at the individual level there is a negative relationship between the initial wage level and wage growth of inexperienced workers and ii at the market level the ratio of the present values of wage profiles of investors and otherwise identical noninvestors equals one we find a negative relationship between initial wage levels and wage growth even after correcting for negative biases in existing estimates of this relationship we also find that the ratio of the present values of rising wage profiles to flat wage profiles is generally close to one

neoclassical political economy an application to trade policies abstract this paper starts with a review of the literature on neoclassical political economy and then goes on to apply this perspective to the issue of trade liberalization in this connection the paper critically discusses various political economy models which have been advanced to explain patterns of trade policies in both developed and developing countries and assesses them in light of recent empirical evidence the paper also makes a brief review of the empirical planning studies which estimate the gains from trade liberalization

the impact of economics on environmental policy abstract environmental economists have seen their ideas translated into the rough and tumble policy world for over two decades they have witnessed the application of economic instruments to several environmental issues including preserving wetlands lowering lead levels and curbing acid rain this essay examines the impact of the rise of economics in the policy world on the making of environmental policy i focus on two related but distinct phenomena the increasing interest in the use of incentive based mechanisms such as tradable permits to achieve environmental goals and the increasing interest in the use of analytical tools such as benefit cost analysis in regulatory decision making i argue that economists and economic instruments have had a modest impact on shaping environmental health and safety regulation but that economists will play an increasingly important role in the future although the role of economics is becoming more prominent it does not follow that environmental policy will become more efficient this apparent inconsistency can be explained by the political economy of environmental policy

transitional politics emerging incentive based instruments in environmental regulation abstract this paper proposes a positive theory of environmental instrument choice we study a democratic society that seeks to lower the level of pollution from industrial sources to a pre specified target the target can be implemented by one of three instruments s uniform emission standards p tradeable permits and t emission taxes the conflict of interest between special interests representing polluters and the electorate is resolved by an elected politician we characterize when each of the three policy instruments is chosen in political equilibrium and show that the transition observed in many countries from s to either p or t can be understood as a natural consequence of increasingly ambitious environmental targets

exploring new ways of assessing the effect of regulation on environmental management abstract studies indicate that while a variety of factors positively influence voluntary environmental management regulatory pressures are among the most important however most research examines samples representing large manufacturers or single industries essentially assuming a level of regulatory constraint using a sample of heterogeneous facilities this study finds that facilities can be classified according to the level of regulatory constraint and that group membership impacts the choice of environmental management strategy when assessed within a utility maximization framework more extensively regulated facilities implement more individual environmental management practices but participate in fewer formal voluntary environmental programs veps compared to other facilities

strategic quality competition and the porter hypothesis abstract this paper offers new support for the porter hypothesis within the context of a quality competition framework we use a duopoly model of vertical product differentiation in which two firms simultaneously choose to produce either a high environmentally friendly quality or low standard quality variant of a good before engaging in price competition in this simple setting we show that a nash equilibrium of the game featuring the low quality good can be pareto dominated by a different strategy profile in which both firms opt in favour of the green product our analysis demonstrates that in such a case both firms stand to profit from the introduction of a rule penalizing any firm refusing to produce the environmentally friendly product we also find that consumers themselves may benefit from such regulations this is always the case when shifting from low quality to high quality production brings about a cost efficiency improvement

the strategic use of innovation to influence regulatory standards this paper investigates the welfare consequences of strategic behavior by firms to affect the amount of environmental regulation they face environmental regulation often attempts to force an industry to develop cleaner technology but the regulator may have no means to commit to a specific standard this lack of regulatory commitment induces firms to choose innovation strategically it is well known that firms have incentives to suppress innovation to induce the regulator to ratchet down the standard and this strategic behavior lowers welfare this paper explores a countervailing incentive in oligopoly settings firms have heightened incentives to innovate so as to increase regulation and raise rivals costs in equilibrium the incentive to raise rivals cost can mitigate the welfare loss arising from no regulatory commitment also a regulator who is unable to commit ex ante to the stringency of a regulatory standard can induce more clean technology than a regulator with a commitment mechanism

impact of bovine spongiform encephalopathy on agribusiness in the united kingdom results of an event study of equity prices this article assesses the impact on agribusinesses of the united kingdom government s announcement of a possible link between bovine spongiform encephalopathy and human health three approaches are employed to derive benchmark models against which abnormal returns are estimated a simple market model scholes williams approach and an autoregressive distributed lag model abnormal returns are estimated for single firms and for subsectors over an eight day event window the autoregressive distributed lag model performs best and indicates significant negative abnormal returns in the beef pet food animal feed and dairy sectors and positive abnormal returns in the other meats sector

a signaling model of environmental overcompliance abstract we present a theory of unilateral regulatory overcompliance as a signaling device firms that have a competitive advantage in the use of a cleaner but more costly technology overcomply in order to signal to an imperfectly informed benevolent government that compliance costs are low thereby triggering tougher regulation we identify the conditions under which such an overcompliance signaling equilibrium arises showing that there may be over overcompliance in that firms may overcomply even when tougher regulation is not socially desirable we also discuss the differential implications of the signaling theory as compared to other theories of unilateral regulatory overcompliance

rent seeking and its implications for pollution taxation one of the fundamental insights gained from the study of economics comes from an understanding of how market prices arising from private property and exchange can motivate efficient responses to the problem of scarcity not surprisingly when private property rights and market exchange are deemed not to be feasible for either technological or political reasons economists have overwhelmingly recommended that politically imposed prices be employed as surrogates for market prices the most extensively discussed example of this in the literature is the use of pollution taxation as a means of motivating polluters to take the full cost of their polluting activities into account 1

some evidence on the relationship between performance related pay and the shape of the experience earnings profile we investigate the relationship between performance related pay prp and the shape of workers experience earnings profiles in particular we argue that the slope of the profile depends critically upon the degree of equity held by workers in their enterprise as measured by the extent of prp the implication is that the slope of the profile for prp workers falls between those of their zero equity fixed wage and one hundred per cent equity self employed counterparts our empirical analysis of three british data sets namely the british social attitudes survey the british household panel survey and the british family expenditure survey supports this prior in this paper we explore the shape of the experience earnings profile for individuals employed under different types of contracts fixed wage performance related pay prp and self employment contracts we follow lazear 1979 1981 and lazear and moore 1984 in hypothesizing that the slope of the experience earnings profile reflects agency costs and the reduction thereof with increased agency costs inducing steeper profiles if monitoring costs are high firms may implement compensation schemes designed to encourage employees to self select behavior in the firms interests one such scheme defers a substantial amount of compensation until the later years of tenure the resulting experience earnings profile provides a penalty for shirking lazear and moore 1984 we therefore presume that the profiles of workers employed under fixed wage contracts are steeper than those of self employees for whom the issue of agency does not arise because of the duality of principal and owner lazear and moore 1984 the interesting case is that of workers employed under prp if such contracts represent a hybrid between fixed wage and self employment then one would expect their experience earnings profiles to lie somewhere between these two extreme