bertrand edgeworth oligopoly in large markets the relation between perfectly competitive and monopolistically competitive equilibria is analysed for a bertrand edgeworth model of a single market in which capacity constrained firms choose prices as strategies the market always has a nash equilibrium in pure or mixed strategies as the number of firms increases the corresponding equilibria converge in distribution to a perfectly competitive price this result provides a justification for perfect competition that is based on an explicit account of price formation however monopoly prices persist with a positive but vanishing probability regularity or well defined inverse demand functions are not required

distinguishing between whole farm vs partial farm participation in the conservation reserve program by distinguishing between the decision to participate in the conservation reserve program crp and the decision for whole farm vs part farm participation we model participation as separate binary decisions our results suggest the farm characteristics and other factors affect the decision to participate in crp differently than the decision regarding whole farm vs part farm participation this model formulation also helps to clarify the conditions under which the effect of crp payments on the acreage enrolled in the program is positive or negative

the effect of scale on the response to reform by chinese state owned construction units abstract using firm level data on large and medium state owned construction units a production function approach evaluates the effect of scale on the response of chinese state enterprises to reform large state units have greater economies of scale but are less productive and less input price efficient as investment increases in nonproductive fixed assets large unit profits are declining fastest and a comparison of coastal interior and ministry level units contradicts the hypothesis that competition is the primary source of this decline instead falling profits are explained by the increased autonomy which allows these units to be more inefficient

labour supply of married women in canada 1980 this study uses recently released data from the 1981 census to reex amine the labor supply behavior of married women in canada using j j heckman s procedure to correct for selectivity bias and incorporating the influence of income taxes this study finds small wage and income effects on canadian wives labor supply the estimat es are similar in magnitude to those reported by a n akamura and m nakamura 1981 in their study of data from the 1971 census and t o t he estimates reported in a more recent canadian study by c robinson and n tomes 1985 who used data drawn from the 1979 quality of life survey

the role of credit in the great moderation a multivariate garch approach abstract during the great moderation financial innovation in the us increased the size and scope of credit flows supporting the growth of wealth we hypothesize that spending out of wealth came to finance a wider range of gdp components such that it smoothed gdp both these trends combined would be consistent with a decrease in the volatility of output we suggest testable implications in terms of both growth of credit and output and volatility of growth in a multivariate garch framework we test this view for home mortgages and residential investment we observe unidirectional causality in variance from total output residential investment and non residential output to mortgage lending before but not during the great moderation these findings are consistent with a role for credit dynamics in explaining the great moderation

the effect of child support payments on the labor supply of female family heads an econometric analysis recent census bureau statistics show that women who receive child support payments have higher earnings and work longer hours than women who do not does this suggest that child support unlike all other nonwage income does not deter work effort or are women who receive it simply different we use 1979 1982 cps data on divorced or separated women to estimate the determinants of hours worked when afdc participation and child support are endogenous we find evidence of unobservable differences between women who receive child support and those who do not controlling for these both child support and other nonwage income appear to reduce hours worked but the deterrent effect of child support is considerably less

trade credit bank lending and monetary policy transmission this paper investigates the role of trade credit in the transmission of monetary policy most models of the transmission mechanism allow the firm to access only financial markets or bank lending according to some net worth criterion in our model we introduce trade credit as an additional source of funding we predict that when monetary policy tightens there will be a reduction in market and bank lending and an increase in trade credit this is confirmed with an empirical investigation of 16 000 manufacturing firms

takeovers and other influences on economic performance a plant level analysis the results of an empirical investigation into the effects of takeovers and other variables on corporate performance is reported our sample of 972 establishments is taken from the workplace industrial relations survey 1984in which the plant is the unit of investigation and the assessment of performance is made by mangers using logit analysis we find that the main determinansts of relative financial performance are avoidance of takeover and strength of market position the main determinants of growth of sales are profitability change of ownership smaller size and lack of market dominance in these results we find support at the plant level for views on the effects of mergers market dominance and the determinants of growth that have traditionally been demonstrated at the level of the firm

wage returns to ownership and fee responses to physician supply the labor and entrepreneurial components of reported physician net income are separated in an analysis of input and output market performance a wage equation corrected for selectivity bias is estimated for employee physicians and the results indicate that the performance of the labor market for primary care physicians is consistent with competitive theory the parameters are used to predict opportunity wage rates for self employed physicians differences between net income per hour and the predictions indicate that 16 percent of net income from practice is attributable to entrepreneurship evidence of negative selectivity into employee status is also found copyright 1990 by mit press

the effects of derivatives on firm risk and value using a large sample of nonfinancial firms from 47 countries we examine the effect of derivative use on firm risk and value we control for endogeneity by matching users and nonusers on the basis of their propensity to use derivatives we also use a new technique to estimate the effect of omitted variable bias on our inferences we find strong evidence that the use of financial derivatives reduces both total risk and systematic risk the effect of derivative use on firm value is positive but more sensitive to endogeneity and omitted variable concerns however using derivatives is associated with significantly higher value abnormal returns and larger profits during the economic downturn in 2001 2002 suggesting that firms are hedging downside risk

evidence on the volunteer labor supply of married women 1 introduction in this paper i investigate the volunteer labor supply of married women there are dozens of studies that examine the labor supply of married women and a smaller number that investigate the supply of volunteer labor in general as far as i know there are none that have focused on the supply of volunteer labor by married women i analyze time diary data for the 1970s to consider one main question and three subsidiary questions i what was the direct effect of economic variables after tax wage rate and other income on married women s volunteering both participation and hours ii does the number of children in the family influence the volunteering of married women to the extent that rising wages may induce smaller family size is this an indirect channel that reduces volunteering if one of the motivations for volunteering is to increase the quantity or quality of activities for one s own children the 1970s is an especially interesting time period to examine in the united states as that was the decade that saw the first large increases in married women s labor force participation rates iii are time and donations substitutes or complements for married women iv do the data support the brown and lankford 1992 modeling conjecture concerning a sequence of time allocation decisions as opposed to the gronau model of household time allocation where such decisions are made simultaneously gronau 1986 i find that i the volunteer labor supply for married women is positively sloped and inelastic with an estimated wage elasticity of 0 64 rises in the net wage have a small negative effect on married women s participation in volunteer activities a 25 rise in the net wage is associated with a 1 drop in the probability of volunteering there is a small negative other income from assets and husband s earnings elasticity of volunteer labor supply 0 09 so other sources of income mattered for married women s volunteering in the 1970s the effect of other income on married women s volunteer participation is positive ii having more children increases the probability of volunteering but reduces the number of hours volunteered iii donations of time and money appear to be substitutes overall the elasticity of married women s volunteer hours with respect to the tax price of giving is greater than two the participation effect is again negative this result is tentative because the data are not based on tax return information and i lack good information on cash donations iv there is mixed support for the brown and lankford conjecture the finding of a positive wage elasticity of volunteer labor supply is at odds with the opportunity cost of time interpretation of the wage especially as the finding for other income is also negative implying that volunteer hours are an inferior good substitution and income effects would therefore both be in a negative direction as the net wage rises the results with the sequential specification are sensible and easily interpreted but the key parameter estimate does not quite meet conventional standards of statistical significance increased hours of work decrease married women s participation and hours an added test of the sequential model is less favorable the wage findings suggest that rising wages for women caused a reduced incidence of volunteering among married women but if anything increased the hours of volunteering one possible vehicle for this would be the entry of women into professional careers where volunteering is a normal part of the career another possible explanation is that married women with a loose attachment to volunteering stopped volunteering and those married women with greater attachment to volunteering increased their hours commitments to offset the participation effect the link between children and volunteering is important as an indicator of how much selfinterest is involved in volunteering for example school volunteering may be a way of providing enhanced investment in one s own children where the benefit to others is a by product

how valuable is a good reputation a sample selection model of internet auctions on the online auction site ebay by convention sellers do not ship goods to winning bidders until after they have received payment so there is an opportunity for sellers to take advantage of bidders trust realizing this the designers of ebay created a system that relies on self enforcement using reputation several recent studies have found that bidders give little or no reward to sellers who have better reputations i show that in fact sellers are strongly rewarded for the first few reports that they have behaved honestly but marginal returns to additional reports are severely decreasing

female income and the divorce decision evidence from micro data escalating divorce rates during the 1960s and 1970s led to large numbers of academic investigations into the causes of divorce most of these studies concentrated on a significant increase in female income that resulted from rising female labour force participation rates the difficulty with quantifying these arguments is that it is possible to observe the income of married females or it is possible to observe the income of divorced females but it is not possible to observe both outcomes simultaneously this research attempts to resolve these difficulties by using sample selection techniques to correct for possible bias from simple observation of the income of married and divorced females

testing for sample selection bias a simple regression test of the null hypothesis of no sample selection bias has been suggested by j j heckman because of its computational simplicity this test is widely used by applied researchers this paper shows that heckman s test is equivalent to the lagrange multiplier test of the null hypothesis this allows us to readily deduce that the simple regression test also has desirable large sample properties

comparing public and private schools the puzzling role of selectivity bias recent articles using the same data and variants of the same estimation technique report conflicting estimates of the relative quality of education provided by public and catholic schools this article explains the reasons for the conflict in so doing the article clarifies the assumptions underlying the increasingly popular two step methods for controlling selectivity bias and highlights the hazards of using these methods when the assumptions are not satisfied the article also illustrates an alternative method for detecting the presence of selectivity bias

guestworker migration remittances and the extended family evidence from pakistan the paper places migration in the context of the extended family it models informal loans between migrant and extended family for financing the costs of international labor migration to show repayments to extended family is important we trace the effects of such loans on migrant savings and remittance to the immediate family we employ a standard life cycle approach which predicts that the demand for extended family financing rises with migration costs and falls with pre migration wealth remittance to the immediate family and savings retained abroad both fall with the pre migration loan these hypotheses are tested using data from a survey of return migrants to pakistan carried out in 1986

bank capital structure regulatory capital and securities innovations since late 1993 nonfinancial corporations have used financial instruments that permit them to treat preferred stock dividends as tax deductible interest bank holding companies bhcs however did not issue these trust preferred securities tps until 1996 when the federal reserve qualified them as tier 1 capital we delineate and test five not mutually exclusive hypotheses by 1 analyzing the stock market s reaction to the fed s ruling and to tps filings and 2 comparing bhcs that issued tps with those that did not we find that regulatory capital requirements tax savings and uninsured sources of funds had significant positive effects on bhcs demand for capital and that the market responded favorably to tps filings our event study findings are contrary to prior empirical results in that we find a positive market reaction to equity offerings

a monetary minsky model of the great moderation and the great recession abstract steve keen s model of minsky s financial instability hypothesis keen 1995 displayed qualitative characteristics that matched the real macroeconomic and income distributional outcomes of the preceding and subsequent fifteen years a period of economic volatility followed by a period of moderation leading to a rise of instability once more and a serious economic crisis this paper extends that model to build a strictly monetary macroeconomic model which can generate the monetary as well as the real phenomena manifested by both the great recession and the great moderation

r d and subsidies at the firm level an application of parametric and semi parametric two step selection models this paper analyzes the effects of public r d subsidies on r d expenditure in the german manufacturing sector the focus is on the question whether public r d funding stimulates or crowds out private investment cross sectional data at the firm level is used by apllying parametric and semiparametric selection models it turns out that public funding increases firms r d expenditure altough the magnitude of the treatment effect depends on the assumpions imposed by the particular selection model

wage discrimination in the reemployment process this paper examines wage discrimination by gender in the reemployment market by looking at the experiences of unemployed individuals and decomposing their wage gap upon reemployment the neumark decomposition technique is extended to incorporate selectivity and counter factual estimates are used to explain the development of the wage gap over time whereas total discrimination upon reemployment is declining over time the part directly attributable to hiring is increasing policy makers should consider that employers constrained by existing legislation that does not address hiring issues directly are switching over to discriminatory hiring practices that are becoming relatively easier to adopt less likely to be detected and harder to prove in a court of law

the effectiveness of yts as a manpower policy using data from the 1985 and 1986 scottish people s surveys this paper attempts to measure the effectiveness of the youth training scheme by estimating the impact of youth training scheme participation on both the subsequent probability of employment and the subsequent earnings potential the youth training scheme is found to have a positive impact on the probability of employment after allowing for possible sample selection bias owing to participation being nonrandom there are indications that the youth training scheme may have a positive impact on subsequent wages but the estimates are so imprecise that it was not possible to draw any statistically significant conclusions about wage effects copyright 1990 by the london school of economics and political science

a macroeconomic model with a financial sector this paper studies a macroeconomic model in which financial experts borrow from less productive agents we pursue four sets of results i the economy is prone to instability and occasionally enters volatile episodes as volatility spikes agents precautionary motive increases depressing prices even further log linear approximations fail to capture these non linear effects that can cause economies to be significantly depressed for long periods of time ii endogenous risk during volatile episodes increases asset price correlations iii financial experts impose a negative externality on each other and on the labor sector by not maintaining adequate capital cushion and funding structure iv while risk sharing within the financial sector through securitization and derivatives contracts reduces many inefficiencies it can also amlify systemic risks

order submission strategy and the curious case of marketable limit orders we provide empirical evidence on order submission strategy of investors with similar commitments to trade by comparing the execution costs of market orders and marketable limit orders i e limit orders with the same trading priority as market orders the results indicate the unconditional trading costs of marketable limit orders are significantly greater than market orders we attribute the difference in costs to a selection bias and provide evidence suggesting the order submission strategy decision is based on prevailing market conditions and stock characteristics after correcting for the selection bias the results show the average trader chooses the order type with lower conditional trading costs

wage and labor supply effects of illness in cote d ivoire and ghana instrumental variable estimates for days disabled abstract sickness should make individuals less productive but there are problems in measuring this effect first how is adult morbidity measured in a household survey second how is the impact or morbidity on productivity inferred if earning is partly used to improve health self reported functional activity limitation due to illness is considered an indicator of morbidity for wage earners and self employed people to deal with both the measurement and joint determination problems an instrumental variable estimation approach is used where local food prices and health services instrument for disability days that reduce wages by at least 10 and hours by 3 or more

the employer size wage gap evidence for britain university of edinburgh and university of sussexfinal version received 5 may 1992 this paper presents estimates for the employer plant size wage gap for britain using anordered probit model selectivity corrected wage equations are estimated for three plant sizecategories in a comparison between plants with more than 500 workers and those with lessthan 100 a wage gap estimate of over 17 per cent is detected the wage effects of unionizationin plants with more than 500 workers is reported as insignificant in contrast to evidenceprovided by idson and feaster 1990 for the united states no evidence of non randomsorting of workers across plant size is detected

the determinants of migrating with a pre arranged job and of the initial duration of urban unemployment an analysis based on indian data on rural to urban migrants abstract based on survey data on 1 400 rural migrants in delhi this paper examines within a multivariate context the determinants of migrating with a pre arranged job and of the initial duration of urban unemployment the results show that the probability of moving with a prearranged job increases with education and with age and is higher for those who seek non manual jobs for migrants who arrive in the city without a pre arranged job unemployment duration depends on marital status premigration information on urban employment opportunities and on the reliance on contacts for job search

pension wealth and household savings tests of robustness abstract a substantial literature exists on the impact of pension schemes both public and private on the level of household saving yet there is no clear consensus on the impact of pensions on private saving in this paper we show how beliefs about this displacement effect are modified by prior beliefs both about variables which might be relevant in an equation for private savings and about the magnitude of the displacement effect using data for 8279 canadian households and estimates of pension wealth both private and social security which we construct for each household in the sample the estimated displacement effects are found to be relatively robust with respect to both types of prior belief

do efficiency wages explain dismissals this study modifies rebitzer s 1987 model of efficiency wages to predict dismissal from employment using a sample selection method and data from australian workplaces the analysis supports the predictions that both very high and very low levels of required effort loose labour markets and high dismissals costs are associated with fewer dismissals among other results we find extensive internal labour markets and active unions reduce dismissals the evidence suggests that large employers rely more heavily on dismissals to motivate employees although such employers screen more effectively and so exhibit lower dismissal rates jel j24 j41 j42

the impact of late nineteenth century unions on labor earnings and hours iowa in 1894 this paper presents an analysis of data on male workers taken from an 1894 survey of the iowa labor market consistent with the results of earlier research by paul douglas the author finds evidence of a statistically significant and economically important union earnings premium the analysis also shows that late nineteenth century unionism like unionism in the twentieth century tended to reduce wage dispersion on the other hand the author finds no evidence that late nineteenth century unions reduced the length of the workday for union members compared to nonunion workers

sample selection and biases in local house value indices abstract analysis of cross sectional or intertemporal variations in house values among localities requires reliable house value indices however prior studies applying the hedonic method to transaction data have reported price series that may be biased our paper investigates a possible cause of bias and uses a censored regression technique extended to an intertemporal model to derive an unbiased index we apply our method to 1971 1991 data from the miami florida msa and find evidence in time varying amounts of bias our results suggest that prior studies using the hedonic method and samples consisting only of sold houses have understated the intertemporal variability of house prices

job mobility wage determination and market segmentation in the presence of sample selection bias this paper tests the hypothesis that mobility between jobs is an important determinant of individual wages and that econometric estimates of wage determination should correct for sample selectivity bias in job mobility we also test the hypothesis that different patterns of job mobility produce different appropriate corrections for sample selectivity bias in different segments of the labour market we conclude that labour market segments do differ and in particular that one can identify a marginal or low wage sector with mobility patterns and pay packages which differ from the pattern one can discern in the labour market as a whole mobilite entre emplois determination des salaires et segmentation du marche quand il y a biais de selection dans l ehantillonnage ce memoire verifie l hypothese que la mobilite entre emplois est un element determinant des salaires des individus et la proposition que les calibrations econometriques du processus de determination des salaires doivent etre corrigees pour tenir compte d un biais de selection dans l echantillonnage de mouvements entre emplois les auteurs verifient aussi l hypothese que differents patterns de mobilite entre emplois commandent des corrections appropriees differentes dans differents segments du marche du travail les auteurs en arrivent a la conclusion que les divers segments du marche du travail sont differents et qu en particulier on peut reperer un secteur marginal ou de bas salaires ofu les patterns de mobilite entre emplois et les remunerations different remarquablement de ce qui se passe dans le marche du travail dans son ensemble

forecasting the fragility of the banking and insurance sectors linkages between banks and insurance companies are important when forecasting the fragility of the banking and insurance sectors we propose a novel empirical framework that allows us to estimate unobserved linkages in panel data sets that contain observed regressors we find that taking unobserved common factors into account reduces the root mean square forecasts error of firm specific forecasts by up to 9 of system forecasts by up to 14 and by up to 39 for systemic forecasts of more distressed firms relative to a model based on observed variables only estimates of the factor loadings suggest that the correlation of financial institutions has been relatively stable over the forecast period

the temporal nature of growth determinants in new bank foundings implications for new venture research design abstract several authors have suggested the founding period as a critical time in the development of a firm arguing that the resource and decision choices made at this point have a substantive impact on the firm s future yet historically most studies have measured new venture choices considerably after the founding period we suggest that the uniqueness of the founding event is important and test its validity through the examination of two implicit assertions these implicit assertions are those of temporal stability and temporal locus of growth determinants

joseph schumpeter lecture the great moderation the great panic and the great contraction this lecture examines the causes of the recent financial crisis and subsequent recession on the macroeconomic side the great moderation encouraged an overly optimistic assessment of risk combined with low interest rates reflecting both loose monetary policy and relatively high asian savings rates that encouraged a build up of excessive leverage in the banking system on the microeconomic side distorted incentives led to a concentration and mispricing of risk informational complexities associated with new financial assets and the interconnectedness of financial institutions then resulted in the closure of funding markets and a flight to safety when loan defaults rose unexpectedly the episode indicates the need to focus on agency and information problems between banks and their funders in addition to those between the banks and their borrowers it also suggests that the process of financial intermediation should play a more prominent role in macroeconomic models jel e32 e44 e52 e58 f32 g01 g21

did the recent housing boom signal the global financial crisis author affiliation david m kemme dmkemme memphis edusaktinil roy saktinil athabascau ca1 introductionshiller 2005 pp xiii iv argued that the rapid surges of real home prices in the united states and other countries in the late 1990s and early 2000s signaled the potential for widespread personal and institutional bankruptcies and a worldwide recession probably as deep and lasting as japan s lost decade 1 of course as we know today this was one of few highly accurate predictions of events that unfolded after the u s subprime market collapse of 2007 2008 2 given the prevailing regulatory conditions and implied financial liberalization the housing boom was a bubble phenomenon driven primarily by the over optimism of a new era in which home prices would only rise historically financial booms around the world which were similarly associated with wishful thinking of unending future increases in asset prices also imploded and led to recession in similar ways indeed thorough observation of these historical episodes and of the contemporary sudden changes in the housing markets was the basis of shiller s 2005 pp xiii iv chapters 2 7 prescience regarding the potential magnitude and impact of the current turmoil nevertheless the emerging literature on the current episode has not yet provided an empirical framework with which to confirm these observations and prescience could the insights that followed from historical and contemporary evidence but that were not so obvious to most researchers policy makers and market participants be produced with appropriate data and standard statistical procedures specifically following shiller s 2005 pp xiii iv chapters 2 7 observations and insights shouldn t the rapid rise since 1998 of real house prices alone provide enough information to foretell the current state of the housing and banking sectors and the implications for the whole economy this article employs standard statistical models and examines this simple proposition we follow a two step procedure answering two different but related questions first we provide a statistical confirmation of the observation made by shiller 2005 chapter 2 2008 chapter 2 that the drastic increase in real house prices in the united states since 1998 was mainly unexplained by changes in economic fundamentals such as income population building costs and long term interest rates we find that although these fundamentals largely explain real house prices in the united states over the period from 1950 through 1997 our out of sample forecasts indicate that the same fundamentals fail to account for a sudden large rise of real house prices during 1998 2005 next in line with shiller s observation 2005 chapter 7 that similar historical financial booms imploded in similar ways we examine the predictability of the recent global crisis based on historical house price data associated with other post war bank centered crisis episodes we fit panel probit and logit models to a cross country panel of data for real house prices for advanced economies that experienced banking crises in the post war period and conclude that a housing boom is a good predictor of financial crisis we then ask if the recent global crisis specifically the systemic banking crises in the united states britain ireland and spain which also had prior housing bubbles can be predicted out of sample the finding is that this is indeed possible credible alarms can be generated for the banking crises of all four countries three years in advance in section 2 we present shiller s 2005 chapter 2 argument for an unsustainable housing boom in the united states during 1998 2005 and substantiate it statistically in section 3 we investigate the observation by shiller 2005 chapter 7 inter alia that prior speculative bubbles are quite common to financial crises around the world so that the housing booms in the united states and other countries in the early 2000s signaled a global recession

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

on the choice of incentives in firms abstract simple models of individual and group incentives under uncertainty are compared and comparative performance is shown to depend upon various exogenous parameters the incentive effects of profit sharing will thus vary with organizational and other characteristics that may be difficult to observe and attempts to quantify productivity effects that neglect selection bias are likely to be misspecified significant selection effects are found in previously used firm level data and productivity effects of existing profit sharing are found to be much larger than potential effects in firms without sharing arrangements this throws doubt on policies to encourage sharing in isolation

arthritis and the earnings of men an analysis incorporating selection bias abstract arthritis is a chronic and crippling disease which affects the work effort and earnings of more than 14 million working age victims this paper examines the effects of arthritis on the earnings of men aged 18 to 64 arthritis has large and significant effects on earnings most models incorporating selection bias have examined groups with lower labor force participation rates than prime age males but significant selection bias is found here when selection bias is considered the estimated absolute effects of arthritis are increased and the percentage of the gap between arthritic and non arthritic males explained by arthritis as opposed to other factors increases this study is unusual in identifying the effects of a single disease on earnings

does risk matter the case of wage labour allocation by owner cultivators this study analyses the impact of revenue risk on the hiring out behaviour of owner cultivators since hiring out is not certain labour market risk is also allowed for a large sample of owner cultivators residing in semi arid regions in india and hence subject to high production and labour market risks is used for this purpose it is found that possibly because production risks carry forward into the local labour market households are unable to use the labour market as a hedge against production risk we also find that labour force participation is positively affected by increases in the real wage rate a result that is contrary to the findings of earlier studies using data from less developed agriculture several other insights also result

housing purchases and transitory income a study with panel data in this paper we explore the role of transitory income in the housing purchase decision because of moral hazard considerations banks typically require downpayments to be financed internally hence transitory income is potentially important in overcoming the downpayment constraint using a novel approach to the measurement of permanent and transitory income we estimate a two stage model in which households decide whether to purchase housing in the first stage and the quantity to be purchased in the second the results indicate a significant role for transitory income in both decision stages

child support welfare dependency and poverty female headed families have among the highest poverty rates of any major demographic group in the united states the purpose of this paperis to investigate empirically the effectiveness of current child support enforcement policies and to determine their role in reducing poverty and welfare dependency a special supplement to the april 1982 current population survey provides the data for the analysis the results indicate that child support enforce ment may represent an effective means for re ducing welfare program costs but isunlikely to have a dramatic effect on either welfare de pendency or poverty copyright 1986 by american economic association

economic rents derived from hospital privileges in the market for podiatric services abstract this study examines the relative impacts of human capital and market conditions on the economic rents associated with hospital privileges in the market for footcare an empirical model of hospital privileges for podiatrists is formulated based on the pauly redisch model of hospital behavior the privelege model is then incorporated into a model of podiatrists earnings via a selection adjustment as proposed by heckman and lee the results indicate the persistance of economic rents even after controlling for unobserved quality factors

gender differences in displacement cost evidence and implications this paper uses a unique and newly available data set on displaced workers to estimate differences in the wage costs of displacement between women and men while predisplacement wages rise at about the same rate with tenure for women as men in this data set women lose more from displacement than men and the magnitude of this loss increases with tenure overall we interpret our results as not supportive of the specific capital hypothesis that women accumulate less firmspecific human capital than men and we suggest that future attempts to explain our result focus on gender differences in the process of search for a new job

time series analysis cointegration and applications author s granger clive w j abstract this is the speech that professor granger gave at nobel prize awards 2004

political hierarchies and political shirking abstract we analyze how citizens can screen candidates for high political office in a political hierarchy in our model politicians differ in willingness to misuse discretionary powers of office those politicians willing to abuse the powers of office knaves can be induced in a hierarchy to reveal their type while in low office thus disqualifying themselves for advancement hierarchy s capacity for screening knaves out of high office depends on the conditions for reappointment to low office a seemingly perverse rule that reappoints shirking politicians can perform well to demonstrate an empirical application we analyze shirking in the house bank check bouncing scandal

rising household debt its causes and macroeconomic implications a long period analysis the article analyses the rise in household indebtedness from the point of view of its causes and long run macroeconomic implications the analysis is focussed on the us case differently from life cycle interpretations of the phenomenon and from interpretations in terms of erratic deviations of current income flows from their long run trend the rising household debt is viewed as the outcome of persistent changes in income distribution and growing income inequalities through household debt low wages appear to have been brought to coexist with relatively high levels of aggregate demand thus providing the solution to the contradiction between the necessity of high and rising consumption levels for the growth of the system s actual output and a framework of antagonistic conditions of distribution which keeps within limits the real income of the vast majority of society the question of the long run sustainability of this substitution of loans for wages is finally discussed copyright the author 2008 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

estimating random effects production function models with selectivity bias an application to swedish crop producers abstract in this paper the estimation of production functions and measurement of the rate of technical change is performed when selectivity bias is expected a sample selection model consisting of a selection and a regression equation is estimated using heckman s two stage method it is discussed in the context of a production function where the underlying technology is represented by a translog functional form for the regression a random effects model with heteroscedastic variances is assumed this model and an alternative conventional model retaining heteroscedasticity without considering selectivity bias are estimated using the generalized least squares method the data used are a large rotating panel data set from swedish crop producers over the period 1976 1988 the empirical results from the comparison between these two models show that the introduction of heteroscedasticity and the integration of sample selection in the production relationship is important the impact of a correction for selectivity bias on the results in terms of input elasticities and returns to scale is found to be significant

estimation of a labour supply model with censoring due to unemployment and underemployment this study proposes and implements a method of labour supply estimation which is appropriate when the sample contains unemployed and underemployed workers the estimation method consists of excluding unemployed and underemployed workers from the sample and then using to avoid selection bias an extension of heckman s approach to the case where two correlated selection rules generate the sample hausman s specification test is then used to determine whether ignoring constrained workers has led to biases in traditional labour supply estimates and the empirical results suggest that previous estimates of several important parameters are biased since the biases go in the direction that would be predicted by the hypothesis that the unemployed and underemployed are constrained the results support this hypothesis

financial fragility in the great moderation abstract a nascent literature explores the measurement of financial fragility this paper considers evidence for rising financial fragility during the 1984 2007 great moderation in the u s the literature suggests that macroeconomic stability combined with strong growth of credit to asset markets in asset prices and in credit relative to output are all indicators of rising financial fragility we show each of these trends in the great moderation we derive the testable implication that in the great moderation credit growth is driven more by past credit growth and less by output growth allen and gale 2000 relative to pre great moderation years results from a var model estimated on quarterly data for 1955 2007 are consistent with the hypothesis this invites a reinterpretation of the great moderation our methodology may help understand when a credit boom turns into a credit bubble and contributes to the development of methods of measuring financial fragility