physical appearance and earnings further evidence the literature contains numerous studies on earnings differentials based on age race and gender comparatively few studies have examined differences in labour market success related to physical appearance using three waves of data collected at two organizations this paper tested for earnings differentials among workers based on their self reported appearance significant earnings premiums for attractiveness were found for women but not for men

the economic value of teeth abstract this paper examines the effect of oral health on labor market outcomes by exploiting variation in fluoridated water exposure during childhood the politics surrounding the adoption of water fluoridation by local governments suggests exposure to fluoride is exogenous to other factors affecting earnings exposure to fluoridated water increases women s earnings by approximately 4 percent but has no detectable effect for men furthermore the effect is largely concentrated amongst women from families of low socioeconomic status we find little evidence to support occupational sorting statistical discrimination and productivity as potential channels with some evidence supporting consumer and possibly employer discrimination

an empirical analysis of self employment in the u k the paper formulates a self employment paid employment choice problem that draws upon knight s notion that the individual responds to the risk adjusted relative earnings opportunities in each sector based on a development of such choice theoretic considerations an econometric model is developed with the purpose of empirically examining the determinants of self employment the model features simultaneous determination of employment status and earnings which allows for self selectivity the model is estimated using a sample of 4762 individuals from the general household survey for 1978 the estimation of the earnings equation enables a calculation of the self employment paid employment earnings differential and the estimated probit equation for self employment paid employment status facilitates the prediction of the probability of self employment the paper finds that there is positive selection bias in the observed earnings of employees that the probability of self employment depends positively on the earnings difference between the two sectors and that education and age are significant determinants of self employment

beauty and the labor market the authors examine the impact of looks on earnings using interviewers ratings of respondents physical appearance plain people earn less than average looking people who earn less than the good looking the plainness penalty is 5 to 10 percent slightly larger than the beauty premium effects for men are at least as great as for women unattractive women have lower labor force participation rates and marry men with less human capital better looking people sort into occupations where beauty may be more productive but the impact of individuals looks is mostly independent of occupation suggesting the existence of pure employer discrimination copyright 1994 by american economic association

the effect of cohort size on earnings growth a reexamination of the evidence this study reexamines the effect of cohort size on earnings growth finis welch finds that individuals in larger cohorts experience depressed earnings conditions on entry into the labor market but that their earnings grow at faster rates than in smaller cohorts thus a large portion of the cohort size effect on earnings dissipates after a few years however using data almost identical to those of welch but estimating less restrictive models it is found here that cohort size not only depresses earnings at entry but also seems to slow down early career earnings growth the evidence suggests that earnings ini larger cohorts do not approach normal levels after at brief period in the labor force rather the negative cohort size effect on earnings appears to worsen with experience

compensating differentials and self selection an application to lawyers this paper models individual choice between two types of jobs as dependent on the difference in potential earnings and on preferences for nonpecuniary the model leads to simultaneous estimation of earnings and job choice functions in a manner that takes account of self selection of individuals into the sector of highest utility an application to lawyers choosing between private and public interest law casts doubt on the notion that public interest lawyers are accepting substantially lower earnings by virtue of their choice an impression derived from estimation of earnings functions without accounting for self selection the estimation technique also takes proper account of the choice based nature of the sample which appears to be important

an ols approach to computing ramsey equilibria in medium scale macroeconomic models abstract this note describes a general procedure for solving for the steady state and the dynamics implied by the ramsey equilibrium of medium scale macroeconomic models the procedure yields an exact numerical solution for the steady state and second order accurate dynamics it introduces a novel projection based approach to calculating exact solutions to the steady state of ramsey equilibria

life satisfaction and self employment a matching approach despite lower incomes the self employed consistently report higher satisfaction with their jobs but are self employed individuals also happier more satisfied with their lives as a whole high job satisfaction might cause them to neglect other important domains of life such that the fulfilling job crowds out other pleasures leaving the individual on the whole not happier than others moreover self employment is often chosen to escape unemployment not for the associated autonomy that seems to account for the high job satisfaction we apply matching estimators that allow us to better take into account the above mentioned considerations and construct an appropriate control group in terms of balanced covariates using the bhps dataset that comprises a large nationally representative sample of the british populace we find that individuals who move from regular employment into self employment experience an increase in life satisfaction up to 2 years later while individuals moving from unemployment to self employment are not more satisfied than their counterparts moving from unemployment to regular employment we argue that these groups correspond to opportunity and necessity entrepreneurship respectively these findings are robust with regard to different measures of subjective well being as well as choice of matching variables and also robustness exercises involving simulated confounders

new keynesian phillips curve with bertrand competition and endogenous entry abstract we derive a new keynesian phillips curve under calvo staggered pricing and endogenous market structures with bertrand competition both strategic interactions and endogenous business creation strengthen the nominal rigidities price adjusters change their prices less when there are more direct competitors that do not adjust which reduces the slope of the phillips curve current and future firms entering in the markets decrease current inflation because they reduce markups and the welfare based price index endogenous entry amplifies the impact of both monetary and supply shocks we also characterize the optimal social planner allocation that can be replicated with a labor subsidy and a dividend tax both decreasing in the number of firms and zero producer price inflation the optimal ramsey allocation implies zero inflation tax in steady state

beauty in the classroom are german students less blinded putative pedagogical productivity due to professors pulchritude peculiar or pervasive given that instructional student ratings measure differences in pedagogical productivity this study examines whether perceived attractiveness of german university teachers impact on these differences apart from some refinements and adjustments to idiosyncracies of the german system of higher learning the quantitative analysis widely follows the strategy of the seminal work by hamermesh and parker 2005 based on us data in comparison to findings for the usa perceived attractiveness of teachers is found to have if at all only a weakly significant and quantitatively less important impact on the evaluation outcomes

short criminals stature and crime in early america abstractwe consider the extent to which an individual s height affected the age at which he entered into criminal activity in early america using data on prisoners incarcerated in pennsylvania s nineteenth century prisons we show that prisoners were short relative to the contemporary population then using weibull continuous time duration econometric models we show that age at entry into criminal activity was negatively associated with an individual s height after controlling for several individual characteristics the results are consistent with recent research showing that shorter individuals face less attractive legitimate labor market opportunities because lower stature is associated with lower cognitive ability and because of general discrimination against shorter people

ghg emissions control and monetary policy this paper examines the optimal environmental and monetary policy mix in a new keynesian model embodying pollutant emissions abatement technology and environmental damage the optimal response of the economy to productivity shocks is shown to depend crucially on the instruments policy makers have available the intensity of the distortions they have to address i e imperfect competition costly price adjustment and negative environmental externality and the way they interact

growing up in the projects the economic lives of a cohort of men who came of age in chicago public housing empirical research by labor economists relies overwhelmingly on data collected in largescale government funded surveys the availability of such data dramatically lowers the cost of conducting research for any individual scholar large sample sizes and extensive breadth of variables allow precise testing of a wide variety of hypotheses combined with enormous increases in computing capabilities and the development of new techniques to analyze such data these data sets have transformed the field of labor economics james heckman 2000 the use of large scale survey data however has not come without a cost the set of questions that can be addressed is constrained by the variables that have been collected these studies are typically nationally representative with sample sizes too small to undertake detailed analysis in particular localized geographic areas or very specific subsets of the overall population because the researcher is removed from the data collection process and the analysis is national in focus understanding of institutional detail is de emphasized ethnography used by sociologists and anthropologists represents the polar opposite of the standard economic approach an ethnographer integrates himself or herself into the community being analyzed paying careful attention to the context in which the actors operate such studies tend to rely almost exclusively on qualitative analysis rarely gathering systematic quantitative data the benefits to such an approach are that the researcher structures the analysis to answer precisely the desired question and the depth of specific knowledge acquired by the sociologist allows for a richer understanding of the problem the costs of such an approach are that it is time intensive cannot be replicated and is of questionable generalizability in this paper we report preliminary findings of a joint study undertaken by an economist and an ethnographer that aims to integrate the usual economic and ethnographic approaches to empirical research 1 focusing on the residents of one high rise housing project building in chicago we have attempted to reconstruct retrospectively the economic and social histories of all young males who spent their adolescence in the housing project in the early 1990 s through the use of an extensive net of community contacts we have to date succeeded in locating 105 of these 118 men who are now in their late twenties and early thirties for almost all of these men we have obtained not only extensive self reported information but also evaluations of these men by other community members on a wide range of characteristics

job dissatisfaction of the self employed in indonesia in developed countries the self employed have been found to be more satisfied with their jobs than paid employees we found the exact opposite for a developing country after analyzing 8732 respondents in the indonesian family life survey the job dissatisfaction of the self employed was not fully explained by earnings personal traits job characteristics anticipation or adaptation but mostly by segregation into a small number of industries with few job benefits this finding is consistent with the dual labor market theory we also found that among the self employed those with the highest probability of being paid employees were the least satisfied paid employment was highly sought after in developing countries and these were presumably self employed workers with high abilities this finding cannot be explained by the dual labor market theory alone to explain this inconsistency we enriched this theory with relative deprivation our results suggest that the existence of the dual labor market and relative deprivation are important determinants of the job satisfaction of the self employed in developing countries

up or out rules in the market for lawyers we examine how up or out rules operate as a screening device in the market for lawyers using data on large new york law firms we show that firm growth is a slow and uncertain process because performance as an associate is not an especially informative signal about whether a lawyer will make a good partner and because the costs of mistaken promotion are relatively high a newly hired associate is unlikely to be a suitable partner and the screening process is relatively imprecise firm growth therefore contributes between 5 7 of the present value of profits of a law firm

von neumann morgenstern stable sets discounting and nash bargaining we establish a link between von neumann morgenstern stable set and the nash solution in a general n player utility set the stable set solution is defined with respect to a dominance relation payoff vector u dominates v if one player prefers u even with one period delay we show that a stable set exists and if the utility set has a smooth surface any stable set converges to the nash bargaining solution when the length of the period goes to zero

beauty productivity and discrimination lawyers looks and lucre we propose models with an ascriptive characteristic generating earnings differentials and causing sectoral sorting allowing us to distinguish among sources producing such differentials we use longitudinal data on a large sample of graduates from one law school and measure beauty by rating matriculation photographs 1 betterlooking attorneys who graduated in the 1970s earned more than others after 5 years of practice an effect that grew with experience 2 attorneys in the private sector are better looking than those in the public sector differences that rise with age these results support theories of dynamic sorting and customer behavior

the importance of bundling in a gorman lancaster model of earnings the idea that the labor market of individuals can be decomposed into payments to separate productive attributes has an enduring appeal in economics assuming that demographic groups differ only in their endowments of productive characteristics it is possible to rationalize observed demographic earnings differentials without invoking the arguments that characteristics specific to a particular demographic group are direct objects of employer demand by aggregating skills over all demographic groups it is possible to produce a theory of the market determination of the prices of skills held in different amounts by different demographic groups this paper considers conditions under which characteristics are uniformly priced across sectors of a multisector economy the paper presents empirical evidence that rejects uniform pricing of characteristics as a description of the us labor market bundling may account for this evudence but other hypotheses do as well authors

on the interpretation of the nash bargaining solution and its extension to non expected utility preferences the paper reexamines the foundations of the axiomatic nash bargaining theory more specifically it questions the interpretation of the nash bargaining solution and extends it to a family of non expected utility preferences a bargaining problem is presented as x d 2 where x is a set of feasible agreements described in physical terms d is the disagreement event and 1 and 2 are preferences defined on the space of lotteries in which the prizes are the elements in x and d the ordinal nash bargaining solution is defined as an agreement y satisfying for all p e 0 1 and for all x e x if px 1 y then py 2 x and if px 2 y then py x where px is the lottery which gives x with probability p and d with probability 1 p revisions of the pareto symmetry and iia axioms characterize the ordinal nash bargaining solution in the expected utility case this definition is equivalent to that of the nash bargaining solution however this definition is to be preferred since it allows a statement of the nash bargaining solution in everyday language and makes possible its natural extension to a wider set of preferences it also reveals the logic behind some of the more interesting results of the nash bargaining solution such as the comparative statics of risk aversion and the connection between the nash bargaining solution and strategic models

fund raising success and a solicitor s beauty capital do blondes raise more funds abstract this study uses a door to door fund raising field experiment to explore the returns to physical appearance on fund raising success interestingly blonde females earn more on average than brunette counterparts however the returns to physical appearance depend critically on the race of a potential donor

beauty and the sources of discrimination we analyze discrimination against less attractive people on a tv game show with high stakes the game has a rich structure that allows us to disentangle the relationship between attractiveness and the determinants of a player s earnings unattractive players perform no worse than attractive ones and are equally cooperative in the prisoner s dilemma stage of the game nevertheless they are substantially more likely to be eliminated by their peers even though this is costly we investigate third party perceptions of discrimination by asking subjects to predict elimination decisions subjects implicitly assign a role for attractiveness but underestimate its magnitude

the relationship between unions and job satisfaction this paper examines the assoication between canadian unions and their member attitudes data on job satisfaction indicate that unionized workers in canada are less happy with the quality of their jobs than non union workers the former however are more satisfied with their financial compensation and job security than non members

pay differences among the highly paid the male female earnings gap in lawyers salaries this article uses very detailed information on graduates of the university of michigan law school to examine male female pay differences in that population men and women in this population have virtually identical human capital on graduation from law school allowing us to examine carefully the different impact of children and work history on men s and women s careers and earnings taking time from work in order to care for children reduces wages significantly but a rich set of controls including childcare work history school performance and job setting measures still leave one fourth to one third of the earnings gap unexplained

on the asymptotic uniqueness of bargaining equilibria abstract this note reexamines the connection between the asymmetric nash bargaining solution and the equilibria of strategic bargaining games a first example shows non convergence to the asymmetric nash bargaining solution a second example demonstrates the possibility of multiple limits

why beauty matters we decompose the beauty premium in an experimental labor market where employers determine wages of workers who perform a maze solving task this task requires a true skill which we show to be unaffected by physical attractiveness we find a sizable beauty premium and can identify three transmission channels a physically attractive workers are more confident and higher confidence increases wages b for a given level of confidence physically attractive workers are wrongly considered more able by employers c controlling for worker confidence physically attractive workers have oral skills such as communication and social skills that raise their wages when they interact with employers our methodology can be adopted to study the sources of discriminatory pay differentials in other settings

the role of financial market structure and the trade elasticity for monetary policy in open economies the degree of international risk sharing matters for how monetary policy should optimally be conducted in an open economy this is because risk sharing afiects the way in which monetary policy is afiected by terms of trade considerations in a standard twocountry model with monopolistic competition and nominal rigidities i consider difierent assumptions on international flnancial markets complete markets flnancial autarky and a bond economy and a large region for the crucial parameter of the trade elasticity there are three main results one the prescription of producer price stability as the optimal policy is obtained only as a special case while in general it is optimal to deviate from a strictly zero in ation rate two while gains from international policy coordination are generally small they do become substantial when international risk sharing is poor and wealth efiects from shocks across countries are large and three when international flnancial markets are incomplete there are also sometimes considerable gains over the exible price allocation achievable

matching and sorting in online dating using data on user attributes and interactions from an online dating site we estimate mate preferences and use the gale shapley algorithm to predict sta ble matches the predicted matches are similar to the actual matches achieved by the dating site and the actual matches are approximately efficient outof sample predictions of offline matches i e marriages exhibit assortative mating patterns similar to those observed in actual marriages thus mate pref erences without resort to search frictions can generate sorting in marriages however we underpredict some of the correlation patterns search frictions may play a role in explaining the discrepancy

labor market frictions and optimal steady state inflation in central theories of monetary non neutrality the ramsey optimal steady state inflation rate varies between the negative of the real interest rate and zero this paper explores how the interaction of nominal wage and search and matching frictions affect the policy prescription we show that adding the combination of such frictions to the canonical monetary model can generate an optimal inflation rate that is significantly positive specifically for a standard u s calibration we find a ramsey optimal inflation rate of 1 16 percent per year

consumer discrimination and self employment self employment rates and incomes differ significantly by race we show that these differentials arise in markets with consumer discrimination and incomplete information about the price of the good and the race of the seller equilibrium income distributions have two properties mean black incomes are lower than mean white incomes and the returns to ability are lower for black than for white sellers able blacks therefore are less likely to self select into the self employment sector than able whites using the 1980 census data we find that observed racial differences in the self employment income distributions are consistent with the theoretical predictions

one dimensional bargaining we study a model of multilateral bargaining over social outcomes represented by the points in the unit interval the acceptance or rejection of a proposal is determined by an acceptance rule represented by the collection of decisive coalitions the focus of the paper is on the asymptotic behavior of subgame perfect equilibria in stationary strategies as the players become infinitely patient we show that along any sequence of stationary subgame perfect equilibria the social acceptance set collapses to a point this point called the limit of bargaining equilibria is independent of the sequence of equilibria and is uniquely determined by the set of players the utility functions the recognition probabilities and the acceptance rule the central result of the paper is a characterization of the limit of bargaining equilibria as a unique zero of the characteristic equation

risk incomprehension and its economic consequences abstractalmost all theoretical and empirical studies implicitly assume that every economic agent understands the concept of risk we exploited a unique feature of the indonesian family life survey and argued that this assumption may not apply to the developing world a third of working men failed to understand the concept of risk and this incomprehension did not result from a mistake or a preference for simple answers moreover after applying ols we found that relative to risk comprehensive men risk incomprehensive men earned 11 9 per cent less and possessed household assets worth 9 8 per cent less

a note on aggregation of skills and labor quality we use a unique new data set that combines data on individual workers and their employers to estimate marginal productivity differentials among different types of workers we then compare these to estimated relative wages leading to new evidence on

self employment in the developing world summary this paper analyzes heterogeneity among the self employed in 74 developing countries representing two thirds of the population of the developing world after profiling how worker characteristics vary by employment status it classifies self employed workers outside agriculture as successful or unsuccessful entrepreneurs based on two measures of success whether the worker is an employer and whether the worker resides in a non poor household four main findings emerge first jobs exhibit a clear pecking order with household income and worker education highest for employers followed by wage and salaried employees non agricultural own account workers non agricultural unpaid family workers and finally agricultural workers second a substantial minority of own account workers reside in non poor households suggesting that their profits are often a secondary source of household income third as per capita income increases across countries the structure of employment shifts rapidly first out of agriculture into unsuccessful non agricultural self employment and then mainly into non agricultural wage employment finally roughly one third of the unsuccessful entrepreneurs share similar characteristics with their successful counterparts suggesting they have the potential to be successful but face constraints to growth the authors conclude that although interventions such as access to credit can benefit a substantial portion of the self employed effectively targeting the minority of self employed with higher growth potential is important particularly in low income contexts the results also highlight the potential benefits of policies that facilitate shifts in the nature of work first from agricultural labor into non agricultural self employment and then into wage and salaried jobs

earnings gaps for conspicuous characteristics evidence from indonesia recent research has begun to analyze the effects of height on earnings in indonesia a developing country with a large population little has been done on the potential effects of weight and general health status on earnings using a household production function grossman and benham 1974 provide empirical evidence of the positive effect of good health on earnings carefully accounting for selection into the workforce and the potential endogeneity of our health variables we use a sample of individuals between the ages of 25 and 55 from the indonesian family longitudinal survey ifls to identify the effect of health on earnings and conduct oaxaca blinder decompositions to identify possible discrimination we compare these results to those using less conspicuous health measures such as blood pressure cholesterol and chest pain endogeneity of our health measures is subsequently addressed using several econometric methodologies results suggest that overweight males in indonesia earn an income premium while underweight females are subject to an income penalty