geographic mobility race and wage differentials abstract this paper analyzes the relationship between geographic mobility and earnings we present an equilibrium search model that yields differences between the reservation wages of mobile and immobile workers the expected wages of mobile workers exceed those of immobile workers due to partial sorting across high and low paying firms an extension to visibly distinct groups with different immobile proportions yields statistical discrimination against immobile group members using combined displaced workers files we find that mobility positively affects earnings and partially explains racial and ethnic earnings differentials to test for statistical discrimination we estimate separate earnings functions for union and nonunion workers

discrimination in an equilibrium search model i construct an equilibrium search model where some employers have a distaste for hiring minority workers and show that this bias results in economic discrimination against minority workers although only unprejudiced firms hire minority workers minority workers receive lower wages than workers not facing discrimination whenever any employers in the market have a distaste for minority workers one implication of the model is that gender or racial wage differentials understate the utility loss from discrimination in addition the wages of minority workers increase when their proportion increases in the labor market

race and gender discrimination in bargaining for a new car more than three hundred paired audits at new car dealerships reveal that dealers quoted significantly lower prices to white males than to black or female test buyers using identical scripted bargaining strategies ancillary evidence suggests that the dealerships disparate treatment of women and blacks may be caused by dealers statistical inferences about consumers reservation prices but the data do not strongly support any single theory of discrimination copyright 1995 by american economic association

bargaining in environmental regulation and the ideal regulator abstract we present a model of environmental regulation in which the stringency of a firm s emissions standard is determined by cooperative bargaining between the firm and a regulator we show that bargaining can be socially beneficial because it can achieve the first best outcome this outcome is never an equilibrium of the noncooperative stackelberg game we also show that the social cost function is not the preferred objective function for a regulator when regulations are determined by bargaining social costs are lower with a regulator that attaches more importance to damages and enforcement costs than to the firm s compliance costs

paying to queue a theory of locational differences in nonunion wages abstract traditional theories of the effect unions have on nonunion wages are difficult to reconcile with firm and worker mobility we show how differences in nonunion wages can persist in a two city search model nonunion wage differences across cities are driven by transition rates into the union sector should union queues form in the nonunion sector union power decreases nonunion wages as workers are willing to take lower wages to line up for union jobs however if queues are formed in the unemployed sector union power increases nonunion wages as nonunion firms pay premiums to induce workers to leave the queue

optimal technology adoption when the arrival rate of new technologies changes our paper contributes to the literature of technology adoption in most of these models it is assumed that the intensity rate of new arrivals is constant we extend this approach by assuming that after the last technology jump the intensity of a new arrival can change right after the arrival of a new technology the intensity equals a specific value that switches if no new technology arrival has taken place within a certain period after the last technology arrival we look at different scenarios dependent on whether the firm is threatened by a drop in the arrival rate after a certain time period or expects the rate to rise we analyze the effect of a mean preserving spread of the time between two consecutive arrivals on the optimal investment timing and show that larger variance can accelerate investment in case the arrival rate rises while it can decelerate investment in case the arrival rate drops we find that firms often adopt a new technology a time lag after its introduction which is a phenomenon frequently observed in practice regarding a firm s technology releasing strategy we explain why additional uncertainty can stimulate customers buying behavior the optimal adoption timing changes significantly depending on whether the arrival rate is assumed to change or be constant over time adding uncertainty about the length of the time period after which the arrival intensity changes we find that increasing uncertainty accelerates investment a result that is opposite to the standard real options theory

the social cost of uniform regulatory standards in a hierarchical government abstract regulatory agencies charged with public health and safety typically promulgate uniform regulatory standards which suggests the agencies are concerned mainly to reduce harmful externalities with little concern for firms costs a focus on benefits to the exclusion of costs in standard setting and enforcement leads to inefficiencies we show that even when the legislature cannot peg the budget to a specific enforcement policy it can reduce the distortions by limiting the enforcement agency s budget and by permitting the agency to partially self finance from rebates of noncompliance fines

an interim evaluation of sulfur dioxide emissions trading ide iv of the 1990 clean air act amendments established the first large scale long term environmental program to rely on tradable emissions permitscalled allowances in this program to control pollution this program was designed to cut acid rain by reducing sulfur dioxide so2 emissions from electric generating plants to about half their 1980 level beginning in 1995 it is of interest both as a response to an important environmental issue and as a landmark experiment in environmental policy this experiment comes at a particularly important time since emission trading is under serious consideration with strong u s backing for use to deal with global climate change by curbing emissions of carbon dioxide co2 the economic stakes in climate change surpass those in acid rain by several orders of magnitude intergovernmental panel on climate change 1996 this article summarizes the results to date of our ongoing empirical analysis of compliance costs and allowance market performance under the u s acid rain program

incomplete enforcement with endogenous regulatory choice abstract this paper extends the economic literature on the incomplete enforcement of social regulation by incorporating regulatory choice in an institutional environment of limited regulatory resources and powers we show how regulatory decisions determine the structure of incentives faced by regulated firms our results indicate that the expense of monitoring relative to the regulator s power to levy penalties helps to explain the differences between compliance and deterrence enforcement styles we find that in most circumstances firms with higher abatement costs will receive a larger share of regulatory resources and thus face higher penalties than firms with lower costs

measurement error and state dependent pollution control enforcement abstract a two group model of state dependent enforcement is applied to identical firms which minimize the expected present value of costs and fines measurement error affects the probabilities of transitions between groups and the receipt of fines it is shown that state dependent enforcement can reduce social cost below the level attainable with static enforcement and that differentiation in both monitoring probabilities and standards may be optimal however setting fines for both groups at the maximum is likely to be optimal comparisons between models and alternative model interpretations are offered

an equilibrium model of search unemployment this paper develops a simple general equilibrium model with sequential search in which a nondegenerate wage offer distribution is endogenously determined we use this model to analyze the comparati

a reconsideration of enforcement leverage when penalties are restricted abstract harrington s 1988 model of state dependent enforcement of pollution standards indicates the potential for significant reductions in monitoring cost however this approach results in firms with identical pollution cost functions polluting at different levels and thereby failing to minimize control cost for a given total pollution reduction derivations indicate that a state independent approach with a modified standard will often yield a lower sum of pollution control and monitoring cost for a given level of pollution control

split sample instrumental variables estimates of the return to schooling this article reevaluates recent instrumental variables iv estimates of the returns to schooling in light of the fact that two stage least squares is biased in the same direction as ordinary least squares ols even in very large samples we propose a split sample instrumental variables ssiv estimator that is not biased toward ols ssiv uses one half of a sample to estimate parameters of the first stage equation estimated first stage parameters are then used to construct fitted values and second stage parameter estimates in the other half sample ssiv is biased toward 0 but this bias can be corrected the splt sample estimators confirm and reinforce some previous findings on the returns to schooling but fail to confirm others

commutes quits and moves abstract this paper analyzes the effects of commuting distance on quit and move propensities in metropolitan areas with conventional wage and housing price gradients most workers ordinarily move in order to lengthen commutes and quit in order to shorten them however quits and moves by workers whose residential choices are constrained by segregation should be relatively insensitive to commutes descriptive statistics and simultaneous probit estimates of move and quit propensities for white and black employees of a single firm confirm these predictions they demonstrate that long commutes encourage white quits and discourage white moves commute increases of one standard deviation would increase white quit propensities and reduce white move propensities by approximately 10 in contrast commutes by black employees have no significant effects on their quit and move propensities

instrument choice when regulators and firms bargain abstract we compare outcomes with an emissions tax and an emissions standard when a firm and regulator engage in cooperative bargaining over the stringency of the regulation bargaining is motivated by giving the firm a choice of abatement technologies if the firm s preferred technology differs from the regulator s the first best outcome is not an equilibrium of the traditional noncooperative game in which the regulator is a stackelberg leader the regulator may therefore choose to offer the firm a more lenient regulation if it agrees to switch technologies we find that the resulting bargaining outcomes differ for a tax and a standard even though information is symmetric and we identify conditions under which each instrument yields lower social costs

enforcement leverage when penalties are restricted in the united states empirical studies of the enforcement of continuous compliance with environmental regulations especially air and water pollution regulations have repeatedly demonstrated the following i for most sources the frequency of surveillance is quite low ii even when violations are discovered fines or other penalties are rarely assessed in most states iii sources are nonetheless thought to be in compliance a large part of the time the evidence for the apparently low level of enforcement activity is found in a number of case studies of state and local enforcement of air and water quality regulations conducted jointly by the environmental protection agency epa and council on environmental quality ceg together with periodic surveys of implementation of air and water quality legislation conducted by the general accounting office gao these surveys show

mortgage lending in boston interpreting hmda data the home mortgage disclosure act was enacted to monitor minority and low income access to the mortgage market the data collected for this purpose show that minorities are more than twice as likely to be denied a mortgage as whites yet variables correlated with both race and creditworthiness were omitted from these data making any conclusion about race s role in mortgage lending impossible the federal reserve bank of boston collected additional variables important to the mortgage lending decision and found that race continued to play an important though significantly diminished role in the decision to grant a mortgage copyright 1996 by american economic association

guilty until proven innocent regulation with costly and limited enforcement abstract we consider optimal regulations for a polluting firm when regulators cannot observe emission control costs and can only observe emissions via costly monitoring fines or subsidies for enforcing compliance are also limited the optimal regulations resemble a deposit refund system the firm reports its emissions and pays an initial tax based on this report if the firm is monitored it receives a rebate when actual and reported emissions coincide the enforcement constraints and the firm s rights determine whether the incentives to reduce emissions are optimally provided by varying the rebate for compliance the monitoring probability or the initial tax

are there limits to growth a simple theoretical model of pollution is developed that generates an inverted u shape relationship between per capita income and environmental quality this model is then used to study long run growth the same inverted u shape is shown to appear in time series and the prospects for sustained growth are shown to hinge on whether increasingly strict environmental regulation is compatible with a constant rate of return on capital implementation is also studied tax and voucher schemes are shown to have an advantage over direct regulation because they provide the correct incentives for capital accumulation copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

car ownership employment and earnings abstract we assess whether the positive relationship between car ownership and employment outcomes reflects a causal effect of auto ownership we match state level data on car insurance premiums and gas taxes to a microdata sample containing information on car ownership and employment outcomes in ols regressions that control for observable covariates we find large differences in employment rates weekly hours worked and hourly earnings between those with and without cars instrumenting for car ownership with insurance and gas taxes yields estimates of the employment and hours effects that are quite close to the ols estimates concerning wages instrumenting eliminates the positive impact of auto ownership

immigration reform and the earnings of latino workers do employer sanctions cause discrimination this paper investigates whether employer sanctions for hiring undocumented workers introduced by the 1986 immigration reform and control act irca adversely affected the hourly earnings of latino workers in the southwestern u s we exploit the staggering of the sanctions and employee verification requirements across sectors to estimate this effect in particular irca s employer sanctions provisions were not extended to agricultural employers until two years after their imposition on non agricultural employers hence latino agricultural workers provide a control group against which to compare changes in the wages of latinos in non agricultural employment we find substantial pre post irca declines in the hourly earnings of latino non agricultural workers relative to latinos in agriculture this pattern however is considerably stronger for latino men than latina women we do not observe similar inter sectoral shifts in relative wages among non latino white workers in fact the relative wage changes for non latino white workers are of the opposite sign finally the pre post irca relative decline in latino non agricultural wages reverses the pre irca trend where we observe the relative earnings of latino non agricultural workers increasing

intra urban mobility migration and tenure choice this analysis develops a model in which for the first time households mobility decisions are separated into intra urban movements and migrations these two mobility decisions and the households tenure own rent choice are estimated as part of a multinomial logit framework and are found to be jointly determined the literature suggests that the intra urban mobility and migration decisions are motivated by quite different factors consequently by separating the two choices for the purpose of estimation each equation can be specified more correctly in addition variables which affect migration can be shown to have an impact on intra urban mobility and tenure choice which would otherwise be ignored copyright 1991 by mit press

self reporting and the design of policies for regulating stochastic pollution abstract existing environmental regulations frequently require firms to self report their compliance status to regulatory agencies using a principal agent framework i derive and compare incentive compatible regulatory policies with and without self reporting i find the firm needs to be audited less often when self reporting is required but punished more often the sign and magnitude of the gains from self reporting depend on the relative size of audit and sanction costs the accuracy of the regulator s monitoring technology and the desired level of abatement effort

firms compliance to environmental regulation is there really a paradox it has often been claimed that firms compliance to environmental regulations is higher than predicted by standard theory a result labeled the harrington paradox in the literature enforcement data from norway presented here appears at first glance to confirm this stylized fact firms are inspected less than once a year detected violators are seldom fined but still serious violations seem relatively rare however at a closer look the pattern seems less paradoxical enforcement of minor violations is lax but such violations do flourish serious violations on the other hand are subject to credible threats of harsh punishment and such violations are more uncommon this seems quite consistent with predictions from standard theory we argue that the empirical existence of the harrington paradox is not well documented in the international literature the claim that firms compliance with environmental regulations is generally higher than predicted by standard theory should thus be regarded as a hypothesis rather than an established fact

initial and continuing compliance and the trade off between monitoring and control cost abstract the trade off between firm abatement costs and regulatory monitoring costs modeled by amacher and malik 1 2 am is reinterpreted extended and critiqued in part the notion of technology is replaced with the quantity of abatement capital and a constant fine per unit is replaced with a lump sum maximum total fine analysis of first and second best regulatory situations indicate that the first best allocation involves a higher capital to labor ratio than that which would minimize the firm s costs of meeting the standard the relationship between initial and continuing compliance is analyzed the curvature of iso abatement curves is related to the extent of net cost saving possible from more capital intensive abatement and the effect of a delayed commitment to the pollution standard by the regulator is considered am s comparison of pollution taxes versus pollution standards fails to hold up under the modified assumption on fines

distance income migration trade off of young french workers an analysis per education level magrini m b and lemistre p distance income migration trade off of young french workers an analysis per education level regional studies most research studies on migration see the latter as a move from one geographic area to another taking into account distance in an analysis of young french workers migration from one local labour market to another enables one to evaluate more precisely the migration decision viewed as a cost benefit trade off based on the distance travelled and some territorial characteristics it is found that the wage returns to migration are nil for the most highly skilled workers leading one to consider that these workers conduct their job search on a national scale in contrast the less skilled workers get a positive return to migration magrini m b and lemistre p

the spatial mismatch hypothesis what has the evidence shown this paper reviews 20 years worth of empirical evidence on the spatial mismatch hypothesis after briefly surveying the relevant models from urban and labour economics and recent trends in employment and population suburbanisation the empirical evidence on spatial effects is examined this literature includes evidence on the effects of residential segregation residential suburbanisation and employment suburbanisation and direct measures of access such as travel times the most recent evidence suggests that spatial mismatch is relevant for explaining black white employment differences though the magnitudes of these effects remain unclear

optimal timing of technology adoption abstract in a dynamic programming framework this paper investigates the optimal timing of technology adoption by a competitive firm when technology choice is irreversible and the firm faces a stochastic innovation process with uncertainties about both the speed of the arrival and the degree of improvement of new technologies a numerical example illustrates how the optimal timing decision is affected by changes in parameter values reflecting market conditions the firm s initial technological attributes and the characteristics of the stochastic innovation process some of these effects turn out to be in sharp contrast to common intuition contrasting the optimal decision rule derived here with the rule obtained under the net present value shows that the former implies a slower pace of adoption than implied by the latter the optimal decision rule is generalized for the case of multiple technology switches and it is shown that for all the switching decisions except the last one the optimal rule satisfies the net present value criterion

monopsony in the labor market this paper surveys recent theoretical and empirical research on monopsony in labor markets broadly defined as upward sloping labor supply to an employer we compare older monopsony models based on small numbers of employers with newer models based on labor market frictions such as moving costs and search we also compare older econometric approaches that focus on static wage concentration relationships with newer approaches that focus on dynamics our review of empirical estimates suggests that monopsony power based on small numbers of employers is probably rare but occasionally large while monopsony power based on frictions is probably widespread but small on average

policy design and conservation compliance on highly erodible lands we develop a game theoretic model of heterogeneous producers in order to identify the economic determinants of producer noncompliance with the conservation provisions of the united states department of agriculture usda policy on highly erodible lands we evaluate the policy effectiveness in inducing compliance and adoption of conservation practices the current policy design creates economic incentives for all noncompliant producers to masquerade as adopters and to claim government payments for which they are not entitled both theoretical and empirical results indicate that the increased income transfers to agriculture enacted under the latest farm bill will increase producer compliance and conservation activity on highly erodible lands

racial differences in residential and job mobility evidence concerning the spatial mismatch hypothesis abstract the spatial mismatch hypothesis asserts that job decentralization adversely impacts the labor market outcomes of african americans this paper tests whether race and job access have an independent effect on the probability of a joint residential move and job change no evidence is found to indicate that race directly influences the joint probability the paper finds however that poor job access has an independent negative effect on the probability of a joint residential move and job change because african american residences are heavily concentrated in american central cities these results suggest that african american workers may not be able to fully adjust as new jobs are created in the suburbs

workforce location and equilibrium unemployment in a duocentric economy with matching frictions this article examines unemployment disparities and efficiency in a duocentric city where workers are non uniformly distributed between the two job centers we introduce commuting costs and search matching frictions to deal with the spatial mismatch between workers and firms in a decentralized economy job seekers do not internalize a composition externality they impose on all the unemployed with symmetric job centers a change in the distribution of the workforce can lead to asymmetric equilibrium outcomes we calibrate the model for los angeles and chicago metropolitan statistical areas simulations suggest that changes in the workforce distribution have non negligible effects on unemployment rates wages and net output but cannot be the unique explanation of a substantial mismatch problem