unionization and labor market institutions in advanced capitalism 1950 1985 this article examines the depedence of unionization on labor market institutions and long run trends in inflation unemployment and the sectoral composition of the labor force in 18 oecd countries the large number of contending explanations highlights the difficulty in comparative sociology of drawing confident conclusions when there are few cases to compare this problem is addressed through diverse evidence a review of the comparative historical record and a time series analysis to form a bayesian prior distribution which is combined with a cross sectional data set to sharpen conventional estimates of economic and institutional effects this analysis indicates working class organization in trade unions expanded in the postwar period where labor acquired an institutional influence over capitalist labor markets

information school choice and academic achievement evidence from two experiments we examine a natural experiment and a field experiment that provided direct information on school test scores to lower income families in a public school choice plan receiving information significantly increases the fraction of parents choosing higher performing schools parents with high scoring alternatives nearby were more likely to choose nonguaranteed schools with higher test scores using random variation from each experiment we find that attending a higher scoring school increases student test scores the results imply that school choice will most effectively increase academic achievement for disadvantaged students when parents have easy access to test score information and good options from which to choose

do better schools matter parental valuation of elementary education the evaluation of numerous school reforms requires an understanding of the value of better schools given the difficulty of calculating the relationship between school quality and student outcomes i turn to another method and use house prices to infer the value parents place on school quality i look within school districts at houses located on attendance district boundaries houses then differ only by the elementary school the child attends i thereby effectively remove the variation in neighborhoods taxes and school spending i find that parents are willing to pay 2 5 percent more for a 5 percent increase in test scores this finding is robust to a number of sensitivity checks

the analytics of the pricing of higher education and other services in which the customers are inputs many services provide outputs that depend partially on the customers as inputs the presence of other customers often contributes to the output experienced by each purchaser higher education is the premier example others are legion we provide a simple model that addresses the questions of competitive pricing and allocative efficiency for these types of services prices that charge customers for what they get on net output minus input from the firm both are competitive and support efficient allocations these prices internalize the apparent external effects of customers on each other few examples of such prices exist in the real world

planning under incomplete information and the ratchet effect abstract central planning of production is usually performed under asymmetric information the firm in general has more information about its productive possibilities than the central planner from now on for short cp this justifies the use of incentives schemes in which the cp does not directly fix activity levels casual observation of such existing schemes suggests that the time dimensions is crucial for their working typically the cp revises the incentive scheme over time to take into account the information provided by the firm s performance managers of centrally planned economies as well as economists have long recognized that this revision induces firms to underproduce in order to avoid demanding schemes in the future this is the ratchet effect it is purpose of the present paper to study the ratchet effect under the non commitment assumption which we believe to be more realistic the inadequacy of conceptual tools made if difficult in the past to consider such an assumption now basic research on dynamic games with incomplete information recently resulted in new ideas which look particularly relevant for a theoretical analysis of the problem

competition between private and public schools vouchers and peer group effects a theoretical and computational model with tax financed tuition free public schools and competitive tuition financed private schools is developed students differ by ability and income achievement depends on own ability and on peers abilities equilibrium has a strict hierarchy of school qualities and two dimensional student sorting with stratification by ability and income in private schools high ability low income students receive tuition discounts while low ability high income students pay tuition premia tuition vouchers increase the relative size of the private sector and the extent of student sorting and benefit high ability students relative to low ability students

competition and the ratchet effect in labor markets the ratchet effect refers to a situation where workers subject to performance pay choose to restrict their output because they rationally anticipate that firms will respond to higher output levels by raising output requirements or by cutting pay we model this effect as a multiperiod principal agent problem with hidden information and study its robustness to labor market competition both theoretically and experimentally consistent with our theoretical model we observe substantial ratchet effects in the absence of competition which are nearly eliminated when competition is introduced this is true regardless of whether market conditions favor firms or workers

the effect of school choice on participants evidence from randomized lotteries school choice has become an increasingly prominent strategy for enhancing academic achievement to evaluate the impact on participants we exploit randomized lotteries that determine high school admission in the chicago public schools compared to those students who lose lotteries students who win attend high schools that are better in a number of dimensions including peer achievement and attainment levels nonetheless we find little evidence that winning a lottery provides any systematic benefit across a wide variety of traditional academic measures lottery winners do however experience improvements on a subset of nontraditional outcome measures such as self reported disciplinary incidents and arrest rates

comparative statics of the optimal dynamic incentive contract abstract each period a firm must carry out an indivisible project the cost of which depends on the firm s constant efficiency and its variable level of effort only the cost is observed by the regulator who has to choose the incentive scheme the optimal dynamic mechanism is derived under possible commitment of the regulator over time then under non commitment it is shown that there are four types of continuation equilibria also the profile of effort levels is compared to the commitment case finally some numerical comparative statics is performed and it is shown that all types of equilibria can be optimal

structural stability in models of american trade union growth recent interest in trade union activity has led to the development of econometric models of union membership growth this paper examines the structural stability of two of the leading models ashenfelter pencavel s and bain elsheikh s each of which claimed to have captured the primary determinants of union growth in the twentieth century the models were reestimated using revised corrected and extended membership data and a nonlinear maximum likelihood procedure was employed to estimate the shift point for each model contrary to previous studies we found evidence of a break in the structure of each model and unlike earlier work that hypothesized a world war ii break point our estimated point was 1937 1938 most likely reflecting the impact of the wagner act

good principals or good peers parental valuation of school characteristics tiebout equilibrium and the incentive effects of competition among jurisdictions good principals or good peers parental valuation of school characteristics tiebout equilibrium and the incentive effects of competition among jurisdictions by j esse m r othstein school choice policies may by aligning admin istrators incentives with parental demand yield improved efficiency in educational production milton friedman 1962 john e chubb and terry m moe 1990 but eric a hanushek 1981 cautions if the efficiency of our school systems is due to poor incentives for teachers and admin istrators coupled with poor decision making by consumers it would be unwise to expect much from programs that seek to strengthen market forces in the selection of schools p 35 empha sis added poor decision making is not required parents may rationally choose schools with pleasant surroundings athletic facilities cultural advantages ibid p 34 over those that most efficiently pursue academic performance they may prefer poorly run schools with good peer groups over those that are more effective but en roll worse students j douglas willms and frank h echols 1992 1993 or they may simply be unable to identify effective schools thomas j kane and douglas o staiger 2002 any factor that leads parents to choose any but the most effective available schools will tend to dilute the incentives for efficient management that choice might otherwise create this study examines the distribution of stu dent outcomes across schools within metropol itan housing markets for evidence on parental demand economists have long noted that par ents choices among residential locations are potentially informative about how more com plete choice systems may operate charles m tiebout 1956 melvin v borland and roy m howsen 1992 caroline m hoxby 2000 rothstein 2005 1 i ask whether school effec tiveness plays a sufficiently important role in these decisions to create meaningful incentives for more productive school management i adopt a specific understanding of effective ness appropriate to the question at hand a substantial portion of between school differ ences in student performance can be attributed to differences in student body composition this portion includes the effects of individual stu dent characteristics on their own test scores any direct peer group effects and any indirect ef fects of a school s composition on the quality of its instruction if wealthy schools attract better teachers joseph r antos and sherwin rosen 1975 or more parental involvement this is for my purposes a peer effect it depends on the quality of the school s administration only via school composition a school administrator cannot attract demand by offering a school with wealthy students as these can be offered only if wealthy families demand the school in the first place only the remaining portion of a school s contribution to test scores is effectiveness 2 department of economics and woodrow wilson school princeton university wallace hall 3 rd floor princeton nj 08544 e mail jrothst princeton edu i thank alan auerbach tom davidoff caroline hoxby jus tin mccrary rob mcmillan john quigley cecilia rouse emmanuel saez till von wachter four anonymous refer ees editor robert moffitt seminar participants at several institutions and especially david card for helpful sugges tions i am grateful to the college board for essential data and to a national science foundation graduate research fellowship and the fisher center for real estate and urban economics at uc berkeley for funding see cecilia elena rouse 1998 julie b cullen et al 2005 william g howell et al 2002 and alan b krueger and pei zhu 2004 for analyses of several existing nonresidential choice programs though none focuses on the particular issue studied here this definition avoids the need to find observable de terminants of effectiveness which have proved elusive hanushek 1986 my definition however ignores a school s contribution to nontest outcomes e g sports or music if such outcomes motivate parental choices i will conclude that parents do not demand effective schools of

managerial incentive problems a dynamic perspective the paper studies how a person s concern for a future career may influence his or her incentives to put in effort or make decisions on the job in the model the person s productive abilities are revealed over time through observations of performance there are no explicit output contingent contracts but since the wage in each period is based on expected output and expected output depends on assessed ability an implicit contract links today s performance to future wages an incentive problem arises from the person s ability and desire to influence the learning process and therefore the wage process by taking unobserved actions that affect today s performance the fundamental incongruity in preferences is between the individual s concern for human capital returns and the firm s concern for financial returns the two need be only weakly related it is shown that career motives can be beneficial as well as detrimental depending on how well the two kinds of capital returns are aligned it is well understood by now that informational externalities may place special demands on the organization of economic exchange simple price mediated markets will frequently fail in the presence of asymmetric information in that case more elaborate contractual arrangements have to be used as substitutes for the price system lately considerable effort has been devoted to the analysis of contracting under incomplete information with the objective to understand the range of economic institutions that emerge in response to the failure of the price system the analysis of moral hazard has played a prominent role in this development moral hazard problems arise when for some reason or another transacting parties cannot contract contingent on the delivery of the good for instance in buying labour services it may be that the amount of labour supplied is not directly observable precluding a simple exchange of wage for labour as a partial remedy to this problem an imperfect mutually observed signal about the supply of labour can be used as a proxy in the contract frequently output is taken as such a proxy the drawback is that output is often influenced by other factors than labour input which induce undesirable risk into the contract one is therefore faced with a tradeoff between allocating risk associated with incomplete observability and providing incentives for a proper supply of labour gaining insight into this tradeoff is important not only for understanding contracting in the small e g managerial incentive schemes but also because it is closely related to the fundamental tension between equity and efficiency in the society as a whole while our understanding of moral hazard has advanced a lot in past years it is clear that much work remains an important question that has received little attention until

asymmetric tournaments equal opportunity laws and affirmative action some experimental results this paper assesses whether affirmative action programs and equal opportunity laws affect the output of economic agents more precisely we find that equal opportunity laws and affirmative action programs always benefit disadvantaged groups equal opportunity laws also increase the effort levels of all subjects and hence the profits of the tournament administrator usually the firm the effects of affirmative action programs depend on the severity of a group s cost disadvantage when the cost disadvantage is severe these programs significantly increase effort levels and hence profits the opposite is true when the disadvantage is slight

optimal incentive contracts in the presence of career concerns theory and evidence this paper studies optimal incentive contracts when workers have career concerns concerns about the effects of current performance on future compensation we show that the optimal compensation contract optimizes total incentives the combination of the implicit incentives from career concerns and the explicit incentives from the compensation contract thus the explicit incentives from the optimal compensation contract should be strongest for workers close to retirement because career concerns are weakest for these workers we find empirical support for this prediction in the relation between chief executive compensation and stock market performance

affirmative action and labor markets affirmative action remains controversial the controversy extends from the original antidiscrimination legislation and its interpretation to estimates of affirmative action s effect on the labor market this paper provides a progress report on our recent efforts at detecting the effects of affirmative action on minority wages and employment although we find a substantial increase in wages for black men and black women over our sample period the timing of these wage changes is surprising most of the wage gains came prior to 1974 before the establishment of an effective monitoring structure for affirmative action indeed when the powers of the eeoc and ofcc are greatest the wage effects for young blacks are somewhat perverse using eeo 1 reports we find a major shift in black employment toward firms most vulnerable to the monitoring and potential sanctions of the affirmative action programs as with wages the shift in minority employment came prior to the expansion of the powers and budgets of the ee

efficiency improving investment and the ratchet effect abstract in a long term relationship between a regulator and a firm the production technology may change due to investment this paper investigates how the introduction of such an investment possibility influences the dynamic regulation problem when long term commitments are infeasible contractible investment is shown to reduce the ratchet effect by increasing separation in the first period due to the separation effect of investment the first period optimal scheme converges toward the optimal scheme with commitment as investment increases finally assuming noncontractible investment the paper analyzes the relationship between separation and the degree of under investment

will affirmative action policies eliminate negative stereotypes a key question concerning affirmative action is whether the labor market gains it brings to minorities can continue without it becoming a permanent fixture in the labor market the authors argue that this depends on how the policy affects employers beliefs about the productivity of minority workers they study the joint determination of employer beliefs and worker productivity in a model of statistical discrimination in job assignments the authors prove that even when identifiable groups are equally endowed ex ante affirmative action can bring about a situation in which employers correctly perceive the groups to be unequally productive ex post copyright 1993 by american economic association

procurement and renegotiation parties bound by an incomplete contract have an incentive to renegotiate after acquiring new information the issue of the parties investment in the relationship before renegotiation is analyzed in a simple two period procurement model the firm invests in the first period it then learns its production cost and the sponsor learns its value for the project williamson s underinvestment presumption is shown to hold under very general assumptions about bargaining and about the ex post asymmetry of information as long as the firm s investment is not observable by the sponsor the introduction of a cancellation fee may well lead to even less investment contrary to what is sometimes argued the role of ex ante price fixing as an alternative way to reintroduce some form of commitment and the problem of cost overruns are discussed last it is shown that if investment is observable by the sponsor andthus may become a joint decision variable the two parties may choose to under or overinvest

the dynamics of incentive contracts the paper studies a simple two period principal agent model in which the principal updates the incentive scheme after observing the agent s first period performance the agent has superior information about his ability the principal offers a first period incentive scheme and observes some measure of the agent s first period performance cost or profit which depends on the agent s ability and unobservable first period effort the relationship is entirely run by short term contracts in the second period the principal updates the incentive scheme and the agent is free to accept the new incentive scheme or to quit the strategies are required to be perfect and updating of the principal s beliefs about the agent s ability follows bayes rule the central theme of the paper is that the ratchet effect leads to much pooling in the first period first for any first period incentive scheme there exists no separating equilibrium second when the uncertainty about the agent s ability is small the optimal scheme must involve a large amount of pooling the paper also gives necessary and sufficient conditions for the existence of partition equilibria and looks at the effect of cost uncertainty

trade union growth in ireland 1943 1977 abstract this paper reports some results which were obtained when the bain and elsheikh model of union growth was employed in an analysis of the irish experience during the period 1943 to 1977

union organization in advanced industrial democracies i suggest a new explanation of cross national differences in unionization rates the size of the labor force size matters because the gains unions are able to achieve in collective bargaining depend on the proportion of substitutable workers who are organized while the costs of organizing depend in part on the absolute number to be recruited the comparison of the costs and benefits of organizing new workers yields the conclusion that unions in larger labor markets will accept lower levels of unionization statistical analysis of cross national differences in unionization rates among advanced industrial societies in the late 1970s indicates that the size of the labor force and the cumulative participation of leftist parties in government explain most of the variance

reputation and school competition abstract stratification is a distinctive feature of competitive education markets that can be explained by a preference for good peers learning externalities can lead students to care about the ability of their peers resulting in across school sorting by ability this paper shows that a preference for good peers and therefore stratification can also emerge endogenously from reputational concerns that arise when graduates use their college of origin to signal their ability reputational concerns can also explain puzzling observed trends including the increase in student investment into admissions exam preparation and the decline in study time at college jel i21 i23 i26 j24

school vouchers a survey of the economics literature we review the theoretical computational and empirical research on school vouchers with a focus on the latter our assessment is that the evidence to date is not sufficient to warrant recommending that vouchers be adopted on a widespread basis however multiple positive findings support continued exploration specifically the empirical research on small scale programs does not suggest that awarding students a voucher is a systematically reliable way to improve educational outcomes and some detrimental effects have been found nevertheless in some settings or for some subgroups or outcomes vouchers can have a substantial positive effect on those who use them studies of large scale voucher programs find student sorting as a result of their implementation although of varying magnitude evidence on both small scale and large scale programs suggests that competition induced by vouchers leads public schools to improve moreover research is making progress on understanding how vouchers may be designed to limit adverse effects from sorting while preserving positive effects related to competition finally our sense is that work originating in a single case e g a given country or in a single research approach e g experimental designs will not provide a full understanding of voucher effects fairly wide ranging empirical and theoretical work will be necessary to make progress

the enforcement of equal opportunity laws under imperfect information affirmative action and alternatives more than twenty years have passed since the enactment of the civil rights act during that period the enforcement of title vii with its broad prohibition of discrimination in employment and compensation has proved to be both difficult and controversial as part of any attempt to regulate economic activity we must be able to observe violations but unequal treatment in employment relationships is difficult to identify employers must always differentiate between individuals when making hiring and promotion decisions since applicants possess diverse skills and abilities this diversity creates a fundamental problem in monitoring the compliance or noncompliance of employers with equal opportunity laws this paper examines the enforcement of equal opportunity laws in a labor market that exhibits statistical discrimination this type of discrimination may arise as a rational response by profitmaximizing firms to imperfect information about individual productivity in lundberg and startz 1983 an equal opportunity policy prohibiting raceor sex specific wage schedules was shown to be an efficiency enhancing response to statistical discrimination section ii extends this model to allow information a role in allocating heterogeneous workers among jobs in this environment restricting firms use of information through an equal opportunity policy improves workers incentives to acquire human capital at the expense of production losses and its net effect on efficiency becomes ambiguous firms will attempt to evade an equal opportunity law presenting the government and the courts with the task of monitoring and enforcing compliance the regulators are likely to possess imperfect information not only about the relationship between worker characteristics and productivity but also about the actual personnel policies followed by firms in section iii a simple costminimizing evasion policy for firms in which other worker attributes are used as imperfect proxies for race or sex is outlined in the next two sections alternative policies for enforcing compliance

job discrimination market forces and the invisibility hypothesis the invisibility hypothesis holds that the job skills of disadvantaged workers are not easily discovered by potential new employers but that promotion enhances visibility and alleviates this problem then at a competitive labor market equilibrium firms profit by hiding talented disadvantaged workers in low level jobs consequently those workers are paid less on average and promoted less often than others with the same education and ability as a result of the inefficient and discriminatory wage and promotion policies disadvantaged workers experience lower returns to investments in human capital than other workers

identification of treatment effects under imperfect matching with an application to chinese elite schools abstract this paper extends the treatment effect framework for causal inference to contexts in which the instrument appears in a data set that can only be linked imperfectly to the treatment and outcome variables contained in another data set to overcome this problem i form all pairwise links between information on the instrument and information on the treatment and outcome matched by the commonly recorded personal characteristics in both data sets i show how these imperfect conditional matches can be used to identify both the average and distributional treatment effects for compliers of the common units of the two data sets this multiple data source approach is then applied to analyze the effect of attending an elite middle school in a chinese city where schools admissions lottery records can only be linked imperfectly to the administrative student records

regulation with wage bargaining in many regulated industries labour unions are strong and there is clear empirical evidence of labour rent sharing in this paper we study optimal regulation in a model in which wages are determined endogenously by wage bargaining at the firm level a seemingly robust conclusion at least when worker bargaining power is considerable is that incentives for cost efficiency should be stronger than in the standard case in which wages do not depend on the regulatory regime

bureaucrats or politicians part i a single policy task this paper investigates the normative criteria that guide the allocation of a policy task to an elected politician versus an independent bureaucrat the bureaucrat is preferable for technical tasks for which ability is more important than effort or if there is great uncertainty about whether the policymaker has the required abilities the optimal allocation of redistributive tasks is ambiguous and depends on how the bureaucrat can be instructed but irrespective of the normative conclusion the politician prefers not to delegate redistributive policies

does the market value value added evidence from housing prices after a public release of school and teacher value added value added data are an increasingly common evaluation tool for schools and teachers many school districts have adopted these methods and released the results publicly in this paper we study the release of value added data in los angeles by the los angeles times newspaper to identify how measured value added is capitalized into housing prices this analysis is the first in the us school valuation literature to examine property value responses to a value added information shock which is of interest as this measure is less correlated with demographics than typical school quality measures unique to this setting as well is the release of both school and teacher level value added data which allows us to examine how property values respond to both types of information using a difference indifferences methodology surrounding the release we find that neither school nor teacher value added scores are capitalized into home prices our results suggest that despite the contentiousness following these data releases homeowners do not consider value added models as currently constructed to be a relevant school quality measure on the margin

welfare expenditures and the decline of unions to what extent has the increased supply by government of certain union like services reduced the demand for union membership and thereby contributed to the decline in trade union density the existing empirical evidence is meager and conflicting the puropse of our paper is to reexamine the government substitution hypothesis specifically with respect to the relationship between government welfare spending and union density we test the hypothesis with time series data using three alternative models of union growth the advantage of this approach is that it will permit an assessment of how sensitive the results are to both specification and sample period changes in all we find the time series evidence of a negative welfare effect on union density to be mixed copyright 1989 by mit press

market power and price discrimination in the u s market for higher education the main purpose of this paper is to estimate an equilibrium model of private and public school competition that can generate realistic pricing patterns for private universities in the u s we show that the parameters of the model are identified and can be estimated using a semi parametric estimator given data from the npsas we find substantial price discrimination within colleges we estimate that a 10 000 increase in family income increases tuition at private schools by on average 210 to 510 a one standard deviation increase in ability decreases tuition by approximately 920 to 1 960 depending on the selectivity of the college discounts for minority students range between 110 and 5 750

customer discrimination and affirmative action i introduction beginning with the work of becker 1957 economists have been concerned with the relationship between competitive market forces and the persistence of labor market discrimination 1 a major insight of becker and the literature that followed is that competition could tend to eliminate discriminatory pay differentials if competitive forces do eliminate discrimination then empirical findings of persistent discrimination are either a result of faulty testing or market imperfections economic analysis of the link between competition and discrimination depends on the origins of prejudice becker identified at least three possible sources employers co workers and consumers 2 in each of these instances the group against which prejudice is directed e g women or minorities which will be termed minorities in this paper may be able to escape discrimination first minorities can work for nondiscriminatory employers if there are any moreover stiglitz 1973 shows that with constant returns to scale such employers will take over markets from the discriminators eliminating any pay gap based on prejudice 3 second if there is co worker prejudice then minorities can work in segregated firms which under constant returns to scale may have a cost advantage over integrated or all majority firms again discrimination will be driven away 4 third minorities can theoretically escape customer discrimination by specializing in the production of goods for which there is no contact between producers and consumers a case discussed by cain 1986 while competitive forces may in some cases erode discriminatory wage differentials the rate of decline of race and sex wage differentials has evidently not been rapid enough in the eyes of policymakers u s anti discrimination policy has been guided by two major vehicles title vii of the 1964 civil rights act and the office of federal contract compliance programs ofccp 5 the equal employment opportunity commission eeoc was created to enforce title vii and is empowered to aid plaintiffs or bring suit itself against employers the commission monitors the employment practices of federal contractors not only are contractors barred from discrimination against protected groups these firms are also required to take affirmative action not to discriminate the purpose of this paper is twofold first it demonstrates that in a general equilibrium framework the case of customer discrimination is theoretically distinct from employer or co worker prejudice in particular while constant returns to scale and the existence of nondiscriminatory firms can eliminate the latter two forms of discrimination customer discrimination may persist even under such conditions the persistence of discriminatory wage differentials is shown to depend on consumer demand technology and the relative size of the minority labor force 6 second the general equilibrium framework is then used to evaluate the impact of government anti discrimination policy where customers are the source of discrimination it is shown that if the government requires equal pay and proportional representation for minorities then the resulting allocation of resources will under particular assumptions be the same as if customers did not discriminate i then contrast these theoretical results with the predicted general equilibrium impact of affirmative action when there is employer or co worker prejudice among previous general equilibrium models of affirmative action welch 1976 assumed no discrimination while freeman 1978 did not specify the source of discrimination it is shown here that the source of prejudice markedly affects one s conclusions about affirmative action further even in some cases where segregation has eliminated discriminatory wage differentials the introduction of affirmative action has allocative effects finally evidence from studies evaluating the impact of affirmative action is used to distinguish among the various equilibrium models

accountability and flexibility in public schools evidence from boston s charters and pilots charter schools are publicly funded but operate outside the regulatory framework and collective bargaining agreements characteristic of traditional public schools in return for this freedom charter schools are subject to heightened accountability this paper estimates the impact of charter school attendance on student achievement using data from boston where charter schools enroll a growing share of students we also evaluate an alternative to the charter model boston s pilot schools these schools have some of the independence of charter schools but operate within the school district face little risk of closure and are covered by many of same collective bargaining provisions as traditional public schools estimates using student assignment lotteries show large and significant test score gains for charter lottery winners in middle and high school in contrast lottery based estimates for pilot schools are small and mostly insignificant the large positive lottery based estimates for charter schools are similar to estimates constructed using statistical controls in the same sample but larger than those using statistical controls in a wider sample of schools the latter are still substantial however the estimates for pilot schools are smaller and more variable than those for charters with some significant negative effects

inefficient competition in shadow education investment abstract we investigate how inequalities in wages productivity and education affordability determine individuals educational efforts as they compete for premier jobs extending tullock s 1980 contest theory framework with endogenous returns we first find that competition for better paying jobs can result in social inefficiency in the form of excessive educational efforts second a widening wage gap intensifies the effort competition which induces inefficiency with higher likelihood when the returns to education effort diminish too quickly third when one player s productivity improves relative to the other s the benefitting player is encouraged to exert more effort while his opponent tends to be discouraged to do so the larger share of social inefficiency is carried by the less productive player fourth when educational effort becomes more affordable to one player compared to the other competition increases efficiency only if the change favors the more productive player in the opposite case social inefficiency increases in both cases the less productive player again bears the larger share of social inefficiency

school markets the impact of information approximating schools effectiveness abstract the impact of competition on school performance is likely to depend on whether parents are informed about schools effectiveness or value added which may or may not be correlated with absolute measures of their quality and on whether this information influences their school choices thereby affecting schools market outcomes this paper explores this by considering chile s sned program which seeks to identify effective schools selecting them from homogeneous groups of comparable institutions its results are widely disseminated and the information it generates is different from that conveyed by a simple test based ranking of schools which turns out to approximate a ranking based on socioeconomic status we use a sharp regression discontinuity to estimate the effect that being identified as a sned winner has on schools enrollment tuition levels and socioeconomic composition through five applications of the program we find no consistent evidence that winning a sned award affects these outcomes

the rise and fall of unions the public sector and the private as of the late 1980s american unionism as a whole has been in decline for about thirty years this decline has been concentrated in the unions serving workers in the private sector and contrasts sharply with the growth of public sector unions during much of the same period this paper attempts to explain these divergent trends but takes their existence as given by decline or rise of unionism i refer to changes in the percentage relative number of union adherents among a specified group of workers though i believe that movements in the relative number of union adherents have run parallel to broader but more vague movements of union influence the reader must draw such inferences for himself as best he can a union adherent is assumed to be both a dues payer and covered by a collective bargaining contract possible differences between these two concepts of union affiliation are unimportant for this paper individuals are assumed always to act as if they had compared the costs and benefits of union adherence and chosen adherence if the benefits were greater and otherwise if the opposite applied as used here costs and benefits are limited to hourly compensation wages and fringes employment opportunities and working conditions while ideological preferences undoubtedly influence a small minority of workers it is assumed that such individuals are too few to affect the trends analysed 1 the above assumptions obscure important interdependencies among the decisions of individual workers and those of an employee and his employer for example if an 1i do not deny either that changes in attitudes toward the relative desirability of working under union conditions may have occurred from time to time or that such changes might be of interest however i assume that the dominant factors affecting movements in the quantity of union adherents are changes in the benefits and costs of unionization particularly hourly compensation and employment opportunities

postwar unionization in eighteen advanced capitalist countries unionization follows strongly divergent patterns among oecd countries in the postwar period i propose business cycle demographic and political arguments to explain varying unionization over time centralized union movements that engage in corporatist bargaining and union disbursement of unemployment benefits suggest explanations of crossnational variability in unionization analysis of annual data for 18 oecd countries from 1950 to 1985 indicates strong positive effects of union centralization and union disbursement of unemployment benefits on unionization union centralization also shapes the longitudinal effect of strike activity on unionization while union disbursement of unemployment benefits positively influences longitudinal effects of unemployment and employment growth results suggest that labor movementsflourish when they establish an institutional control over labor market outcomes beyond wage bargaining when labor s institutional control is weak worker militancy may encourage working class organization in trade unions

investors facing opportunistic governments is it really good to know the market before investing when a government cannot commit to future policies investors face the risk of opportunistic behavior in addition to uncertain market conditions we show that although reducing market uncertainty is sometimes essential for investment it may aggravate problems of opportunism the better informed the investor is before investing the more information the government can infer from observing that investment takes place in turn enabling more efficient rent extraction this signaling effect can dominate if the investor receives too accurate information before investing the only equilibrium is the one in which no investment occurs jel classification d82 l51

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

biased screening and discrimination in the labor market the traditional economic analysis of discrimination is based on gary becker s study of taste discrimination by employers employees and consumers more recent work by kenneth arrow 1972 1973 has attempted to interpret intergroup wage differences in an alternative framework as a rational reaction to uncertainty in labor markets his model of statistical discrimination demonstrates that when the screening process used to determine a worker s qualifications is costly and prior expectations of productivity differ across race or sex groups then wage differentials may arise between workers of identical productivity by implicitly assuming a perfect screening process arrow ignores a potentially important source of wage differentials namely the fact that the screening process might be a more reliable predictor of productivity for one group than for another our paper generalizes the arrow model in two ways first in contrast to arrow we assume that all groups have identical distributions of productivity secondly the screening process used by the firm to determine an applicant s productivity is biased in the sense that a members of various groups may pass the test in different proportions despite their identical productivity distributions and b the predictive power of the test might vary across groups our objective is to analyze the effects of these types of biases in the screening process on the wage differentials between different population groups

admission tuition and financial aid policies in the market for higher education we present an equilibrium model of the market for higher education our model simultaneously predicts student selection into institutions of higher education financial aid educational expenditures and educational outcomes we show that the model gives rise to a strict hierarchy of colleges that differ by the educational quality provided to the students we also develop a new estimation procedure that exploits the observed variation in prices within colleges identification is based on variation in endowments and technology it does not rely on observed variation in potentially endogenous characteristics of colleges such as peer quality measures and expenditures we estimate the structural parameters using data collected by the national center for education statistics and aggregate data from peterson s and the national science foundation

the effects of generalized school choice on achievement and stratification evidence from chile s voucher program in 1981 chile introduced nationwide school choice by providing vouchers to any student wishing to attend private school as a result more than 1000 private schools entered the market and the private enrollment rate increased by 20 percentage points with greater impacts in larger more urban and wealthier communities we use this differential impact to measure the effects of unrestricted choice on educational outcomes using panel data for about 150 municipalities we find no evidence that choice improved average educational outcomes as measured by test scores repetition rates and years of schooling however we find evidence that the voucher program led to increased sorting as the bbestq public school students left for the private sector d 2005 elsevier b v all rights reserved