on the statistical origins of the learning curve abstract this paper presents a statistical rationale for the existence of the learning curve phenomenon we consider a firm which allocates a fixed amount of input into several activities under uncertainty concerning the values of the parameters of the production function it is shown under fairly reasonable assumptions that if the firm learns about the parameters of the production function from previous observations of allocations and outputs then a learning curve phenomenon will emerge this result occurs since the estimates of the parameters become more precise over time and thus the allocation of the production factor into the various activities becomes more efficient i e closer to the optimum allocation that would have been determined if the parameters were known with certainty output therefore increases and inputs per unit of output decrease as a function of time and cumulative output and a learning curve emerges plateauing of the learning curve is discussed as are the conditions sufficient for the existence of this phenomenon for which the model presented herein is offered as a possible explanation

immigration and structural change evidence from post war germany does immigration accelerate sectoral change towards high productivity sectors this paper uses the mass displacement of ethnic germans from eastern europe to west germany after world war ii as a natural experiment to study this question a simple two sector model of the economy in which moving costs prevent the marginal product of labor to be equalized across sectors predicts that immigration boosts output per worker by expanding the high productivity sector but decreases output per worker within a sector using german district level data from before and after the war we find strong empirical support for these predictions

three million foreigners three million unemployed immigration flows and the labour market in france this paper investigates the effect of the flows of immigrant workers on the french labour market from the mid 1970s to the mid 1990s using a system of equations for unemployment labour force participation the real wage and the immigration rate it is shown that in the long run both legal and amnestied immigrant workers and immigrant families lower the unemployment rate permanently in the short run the arrival of immigrants increases unemployment slightly with an impact effect similar to that of an increase in domestic labour force participation the composition of immigration flows matters and the results indicate that the distribution between workers from the european union and other regions of the world also more skilled and less skilled workers should remain balanced

a new product growth for model consumer durables this article originally appeared in management science january 1969 volume 15 number 5 pp 215 227 published by the institute of management sciences a growth model for the timing of initial purchase of new products is developed and tested empirically against data for eleven consumer durables the basic assumption of the model is that the timing of a consumer s initial purchase is related to the number of previous buyers a behavioral rationale for the model is offered in terms of innovative and imitative behavior the model yields good predictions of the sales peak and the timing of the peak when applied to historical data a long range forecast is developed for the sales of color television sets

undocumented immigration and unemployment of u s youth and minority workers econometric evidence we use census based data on the state distribution of the undocumented alien population in analyzing the relationship between that population and unemployment among youth and minority workers in the united states regression results from our two equation models do not support commonly expressed fears that undocumented immigration has caused any substantial increases in joblessness among these presumably vulnerable groups although small amounts of displacement are indicated a sizeable reverse effect is evident undocumented immigrants tend to concentrate in states where labor markets for these marginal groups are most favorable excerpt

the substitutability of black hispanic and white labor this paper analyzes the extent of labor market competition among blacks hispanics and whites in the united states the specification of a generalized leontief production function leads to an empirically tractable system of input demand functions the estimation of the demand system using the 1976 survey of income and education reveals that a blacks and hispanics are complementary inputs b hispanics and whites may also be complements and c blacks and whites are not complements and may be substitutes

carbon trading in the policy mix the kyoto protocol is stimulating the development of emissions trading schemes at the national and international levels these are being introduced alongside existing policy instruments such as carbon taxes and negotiated agreements leading to complex problems of policy interaction but the topic of policy interaction remains under researched this paper aims to improve understanding of such interactions by examining the conditions under which a cap and trade scheme for carbon dioxide emissions may usefully coexist with carbon energy taxes support mechanisms for renewable electricity and policies to promote energy efficiency the paper argues that each of these instrument combinations may be acceptable provided they contribute to either improving the static or dynamic efficiency of the trading scheme or delivering other valued policy objectives but since the coexisting instruments may raise overall abatement costs while contributing nothing further to emission reductions the objectives and trade offs within the policy mix must be explicit

immigrants minorities and labor market competition this paper investigates the extent of labor market competition among immigrants minorities and the native population an analysis of 1980 u s census data reveals that immigrants tend to be substitutes for some labor market groups and complements for others the effects of shifts in immigrant supply on the earnings of native born men are however very small on the other hand increases in the supply of immigrants do have a sizable impact on the earnings of immigrants themselves an increase of 10 percent in the supply of immigrants for example reduces the immigrant wage by about 10 percent

bridging trade theory and labour econometrics the effects of international migration this paper surveys current theoretical and empirical research on international migration with a particular emphasis on the links between trade theory and labour empirics

productivity crowding out in labor markets with motivated workers abstract when workers intrinsic motivation matters a wage increase has mixed consequences on applicants productivity and motivation as shown in public service healthcare education and politics in a simple theoretical framework where ability and motivation are workers private information we rationalize these differentiated responses and identify intuitive conditions for higher wages inducing self selection of more or less productive and motivated workers the selection patterns depend both on the statistical association between workers characteristics and on the difference between the incentivized returns to ability across sectors we emphasize a crowding out effect of wage on workers productivity that has not been analyzed in the theoretical literature before

choosing the right pond social approval and occupational choice we model the endogenous emergence of social perceptions about occupations and their impact on occupational choice in particular an individual s social approval increases with his community s perception of his skill in his chosen career these perceptions vary across communities because individuals better assess the skill of those in occupations similar to their own such imperfect assessment can distort choices away from comparative advantage when skill distributions differ across occupations and or correlate positively the community perceives one occupation more favorably this favored sector experiences overcrowding but misallocation occurs across both sectors furthermore a positive skill correlation can produce multiple steady states

native internal migration and the labor market impact of immigration this paper presents a theoretical and empirical study of how immigration influences the joint determination of the wage structure and internal migration behavior for native born workers in local labor markets using data from the 1960 2000 decennial censuses the study shows that immigration is associated with lower in migration rates higher out migration rates and a decline in the growth rate of the native workforce the native migration response attenuates the measured impact of immigration on wages in a local labor market by 40 to 60 per cent depending on whether the labor market is defined at the state or metropolitan area level

individual teacher incentives and student performance this paper is the first to systematically document the relationship between individual teacher performance incentives and student achievement using the united states data we combine data from the national education longitudinal survey on schools students and their families with our own survey conducted in 2000 regarding the use of teacher incentives this survey on teacher incentives has unique data on frequency and magnitude of merit raises and bonuses teacher evaluation and teacher termination we find that test scores are higher in schools that offer individual financial incentives for good performance moreover the estimated relationship between the presence of merit pay in teacher compensation and student test scores is strongest in schools that may have the least parental oversight the association between teacher incentives and student performance could be due to better schools adopting teacher incentives or to teacher incentives eliciting more effort from teachers it is impossible to rule out the former explanation with our cross sectional data

the eu renewables directive what is the fuss about trading abstract considerable argument about trading in green electricity certificates gecs preceded the publication of the proposed eu renewables directive in early 2008 the proposed directive set a binding target of 20 per cent of eu energy to be derived from renewable energy by 2020 broken down into targets for each member state those arguing for trade in green certificates called certificates of guaranteed origin go included major electricity companies however the idea of mandatory trading was opposed by the main renewable energy industry lobby groups the proposed directive limited trading in accordance with the demands of the renewables industry pressure groups analysis suggests that if member states were forced to trade to achieve a mandatory target of 20 per cent target then gec prices would rise to high levels because the demand for tradeable certificates would be much higher than their supply trading is unlikely to improve the prospects for meeting the targets a system of nationally based feed in tariff systems would not face the problems of uncertain certificate prices faced by compulsory trading in gecs

political careers or career politicians two main career paths are prevalent among politicians in modern democracies there are career politicians i e politicians who work in the political sector until retirement and political careers i e there are politicians who leave politics before retirement and work in the private sector in this paper we propose a dynamic equilibrium model of the careers of politicians in a political economy with a private sector and a political sector where individuals are heterogeneous with respect to their market ability as well as their political skills we characterize the conditions under which the two career paths emerge in equilibrium and establish a number of comparative statics results with respect to the quality of politicians and their careers

the sensitivity of labor demand functions to choice of dependent variable this paper investigates whether the parameters of labor demand functions are sensitive to alternative methods of estimation the assumption that the production technology is of the generalized leontief type implies that the demand system can be estimated by analyzing cross section differences in earnings across labor markets by studying longitudinal changes in earnings within a labor market or by investigating cross section differences in labor force participation rates across labor markets the estimation of these models on the 1970 and 1980 public use samples from the u s census reveals that the estimates of labor demand functions are indeed quite robust to major specification changes this abstract was borrowed from another version of this item

if you pay peanuts do you get monkeys a cross country analysis of teacher pay and pupil performance why are teachers paid up to four times as much in some countries compared to others and does it matter specifically is the quality of teachers likely to be higher if they are paid higher up the income distribution in their own country and are pupil outcomes influenced by how well their teachers are paid this paper considers the determinants of teachers salaries across countries and examines the relationship between the real and relative level of teacher remuneration and the internationally comparable measured performance of secondary school pupils we use aggregate panel data on 39 countries published by the oecd to model this association our results suggest that recruiting higher ability individuals into teaching and permitting scope for quicker salary advancement will have a positive effect on pupil outcomes

the global economic crisis and the effect of immigrant workers on native born employment in europe the debate regarding the economic effects of employing immigrants has attracted renewed interest in european countries since the economic crisis we provide an approximation of the labour market effects of immigrant workers in four european countries during the global economic crisis after briefly analysing native and foreign born worker conditions for the most recent period our analysis focuses on the correlation between the stock of immigrant workers and the number of native labour market workers across several segments of the labour market using a simple model approach using eurostat and lfs labour force survey data we estimate a structural dynamic model using the generalised method of moments gmm to examine adjustment dynamics in the labour market and labour market segment and worker educational levels countries of origin and genders overall the empirical results suggest that immigrant labour force effects on native born worker employment rates have been persistent and but weak throughout the business cycle these effects are globally positive and immigrant origins do not appear to change the nature of their impact we offer some explanations for these findings related to dual labour markets and to differences in levels of substitution among native and immigrant workers

the entrepreneurship premium recent evidence suggests that entrepreneurship does not pay enough to compensate people for the risk that it entails it sometimes even shows an entrepreneurship discount this paper shows that such a discount can arise if entrepreneurial skills and working skills are negatively correlated in the population of agents the paper also shows that in an otherwise standard occupational choice setting the entrepreneurship premium rises with entrepreneurial scarcity and falls with their span of control finally liquidity constraints on startups raise the entrepreneurship premium by lowering the equilibrium wage

a meta analytic assessment of the effect of immigration on wages in our increasingly interconnected and open world international migration is becoming an important socio economic phenomenon for many countries since the early 1980s many studies have been undertaken of the impact of immigration on host labour markets borjas 2003 noted that the estimated effect of immigration on the wage of native workers varies widely from study to study and sometimes even within the same study in addition these effects cluster around zero such a small effect is a rather surprising outcome given that in a closed competitive labour market an increase in labour supply may be expected to exert a downward pressure on wages we revisit this issue by applying meta analytic techniques to a set of eighteen papers which altogether generated 348 estimates of the percentage change in the wage of a native worker with respect to a one percentage point increase in the ratio of immigrants over native workers while many studies in our database employ us data estimates are also obtained from germany the netherlands france norway austria israel and australia our analysis shows that results vary across countries and are inter alia related to the type of modelling approach technical issues such as publication bias and quality of the estimates are addressed as well

the private net present value and private internal rate of return to becoming a nurse in great britain the private net present value and private internal rate of return to becoming a nurse in great britain is estimated the calculations are made using the standard equations inputted with data from the new earnings survey and the british household panel survey basic age earnings profiles are adjusted for mortality unemployment other causes of economic inactivity and discontinuation from training the conclusions are that 1 there is a high private internal rate of return to becoming a nurse in great britain relative to other occupations 2 using the internal rate of return criterion is inappropriate when there exists a crossover marginal time preference rate which is shown to be the case here and 3 using the net present value criterion there are net financial benefits to becoming a nurse in great britain for individuals with a marginal time preference rate of 8 13 or more

the empirical content of the roy model this paper clarifies and extends the classical roy model of self selection and earnings inequality the original roy model based on the assumption that log skills are normally distributed is shown to imply that pursuit of comparative advantage in a free market reduces earnings inequality compared to the earnings distribution that would result if workers were randomly assigned to sectors aggregate log earnings are right skewed even if one sectoral distribution is left skewed most major implications of the log normal roy model survive if differences in skills are log concave however few implications of the model survive if skills are generated from more general distributions we consider the identifiability of the roy model from data on earnings distributions the normal theory version is identifiable without regressors or exclusion restrictions sectoral distributions can be identified knowing only the aggregate earnings distribution for general skill distributions the model is not identified and has no empirical content with sufficient price variation the model can be identified from multimarket data cross sectional variation in regressors can substitute for price variation in restoring empirical content to the roy model

towards an attention based view of the firm the central argument is that firm behavior is the result of how firms channel and distribute the attention of their decision makers what decision makers do depends on what issues and answers they focus their attention on what issues and answers they focus on depends on the specific situation and on how the firm s rules resources and relationships distribute various issues answers and decision makers into specific communications and procedures the paper develops these theoretical principles into a model of firm behavior and presents its implications for explaining firm behavior and adaptation 1997 by john wiley sons ltd

a panel analysis of job changes and unemployment abstract this paper tests for state dependence in histories of unemployment and job mobility from the first six waves of the german socio economic panel soep transitions between states of employment and unemployment are modelled as outcomes of binomial probit processes which are first and higher order markov the use of simulation estimation allows quite general intertemporal covariance structures in order to capture individual heterogeneity it is investigated how differences in human capital and other personal characteristics and macro or industry determinants such as regional unemployment growth and immigration pressure affect labour mobility

who formulates renewable energy policy a swedish example a broad participation by stakeholders and an extensive reliance on expert advice are often seen as preconditions for a legitimate and successfully implemented renewable energy policy however we have lacked systematic data for testing this argument this article s contribution is to examine the actors who take part in the making of swedish energy policy with the help of data on the composition of various committees of inquiry over the last twenty years 1988 2009 swedish renewable energy policy is often characterised with words like pioneering and forerunner suggesting that the policy making process in this area engages many different experts and stakeholders our data give only some support to this argument results point to a noteworthy predominance of politicians civil servants and representatives of state agencies within the policy process producers of uranium and fossils based energy have been engaged more often than producers of renewable energy experts have played a prominent role but this is mostly due to the participation of expert bureaucrats rather than of scientists the study suggests that a better understanding of the making of energy policy both in sweden and elsewhere requires greater attention to the networks and role of various state employees

the impact of the 1962 repatriates from algeria on the french labor market this paper uses census data to examine the impact on the french labor market of the 900 000 people repatriated from algeria in 1962 repatriates settled in regions culturally and climatically simil

institutional dynamics and technology legitimacy a framework and a case study on biogas technology legitimacy is central for both novel and established technologies to mobilize the resources necessary for growth and survival a loss of legitimacy in turn can have detrimental effects for an industry in this paper we study the rise and fall of technology legitimacy of agricultural biogas in germany over a period of more than 20 years 1990 2012 the field witnessed impressive growth and professionalization for many years and has become one of the key technologies in germany s energy transition in recent years however it has been confronted with major criticism which finally resulted in a substantial cut back of public and political support the aim of our study is twofold in empirical terms we will explain the technology s loss of legitimacy despite its compliance with original policy objectives growth and maturation in theoretical terms we work toward a more general framework to understand technology legitimacy and to explain the institutional dynamics of technological innovation systems

addressing nurse shortages what can policy makers learn from the econometric evidence on nurse labour supply this paper provides a detailed review of the international studies that have used formal econometric models to investigate the labour supply decision of registered nurses rns the main finding is that at least in the short run rn labour supply appears to be fairly unresponsive to wage changes consequently even large wage increases are unlikely to be successful in tackling current and predicted nurse shortages this finding points to the importance of non pecuniary job aspects in influencing labour supply however the paper concludes by arguing that these empirical findings should be viewed with some caution given both theoretical and econometric limitations

favorable selection with asymmetric information in his well known lemons paper akerlof 1970 shows that when sellers know more about the quality of their product than the buyers do adverse selection is likely to result his argument may be put as follows let x be the money value of the utility that the seller gets from owning one unit of a good the goods all look alike to the buyers so they all sell at the same price let w be this price but then the sellers for whom x w will withdraw from the market leaving behind only those for whom x w represents adverse selection from the point of view of the buyers because the high quality cars are selected out of the market wilson s generalization of akerlofs model has the same property wilson 1980 the basic reason is that in the population of used cars utilities of buyers and of sellers are positively correlated because of the hierarchical nature of automobile quality applications of the adverse selection model to the labor market greenwald 1979 stiglitz 1976 weiss 1980 also assume that labor quality productivity is hierarchical if one worker is better at task x than another then he is also better at task y the consequence is that adverse selection prevails in markets where workers productivities are not observable the present paper shows that once one abandons the assumption of hierarchical quality the presence of uncertainty and asymmetric information may result in favorable selection rather than adverse selection this point is made within the context of an elaboration of roy s 1951 model of comparative advantage in the labor market the model is presented in section ii and the equilibrium is discussed in section iii a favorable selection equilibrium is radically different from an

immigration wage effects by origin we estimate the direct partial wage effects of immigrant induced increases in labor supply using the national skill cell approach with longitudinal records drawn from norwegian administrative registers the results show overall negative but heterogeneous wage effects with larger effects on immigrant wages than on native wages and with native wages more responsive to inflows from nordic countries than from developing countries these patterns are consistent with natives and nordic citizens being close substitutes while natives and immigrants from developing countries are imperfect substitutes estimates are sensitive to accounting for effective immigrant experience selective native participation and variation in demand conditions and native labor supply

determinants of automobile pac contributions to house incumbents own versus rival effects this paper examines pac contributions by the big threeu s automakers and japanese auto dealers to houseincumbents a regression model is estimated where paccontributions are a function of a firm s own ties toan incumbent s district as measured by firmemployment and those of rivals for the big three own and u s rival effects are positive further theresults do not indicate the presence of a free ridereffect employment by a foreign subsidiary has no neteffect on u s contributions for the japanesedealers japanese plant employment has a positiveimpact on contributions and that of the big three anegative

the economics of vocation or why is a badly paid nurse a good nurse abstract given the longstanding shortage of nurses in many jurisdictions why could not nursing wages be raised to attract more people into the profession we tell a story in which the status of nursing as a vocation implies that increasing wages reduces the average quality of applicants attracted the underlying mechanism accords with the notion that increasing wages might attract the wrong sort of people into the profession and highlights an in efficiency wage mechanism particular to vocations which makes wages sticky up wards the analysis has implications for job design in vocation based sectors such as nursing and teaching

sorting multidimensional types theory and application this article studies multidimensional matching between workers and jobs workers differ in manual and cognitive skills and sort into jobs that demand different combinations of these two skills to study this multidimensional sorting problem i develop a theoretical framework that generalizes the unidimensional notion of assortative matching and sufficient conditions on the technology under which sorting obtains i derive the equilibrium in closed form and use this explicit solution to study biased technological change the main finding is that an increase in worker job complementarities in cognitive relative to manual inputs leads to more pronounced sorting and wage inequality across cognitive relative to manual skills this can trigger wage polarization and boost aggregate wage inequality i then estimate the model for the u s and identify sizable technology shifts during the last two decades worker job complementarities in cognitive inputs strongly increased whereas complementarities in manual inputs decreased in addition to this bias in complementarities there has been a cognitive skill bias in production counterfactual exercises suggest that these technology shifts as opposed to changes in skill supply and demand can account for observed changes in worker job sorting wage polarization and a significant part of the increase in u s wage dispersion

social status culture and economic performance in analysing the differences in productive capacity among economies it is usual to concentrate on the physical aspects of the population the different attributes of capital including human capital and on the available production technologies societies also differ in culture in ways which are relevant for economic performance the sociological literature recognises that different occupations have different social status and that workers benefit not only from the wage they receive but also from being associated with a particular occupation cultural differences among societies may translate into different status of occupations and can therefore affect the choice of education and occupation and consequently the equilibrium level of output and wages conversely the economic choices of individuals influence the social status of occupations in particular it is well established by sociological research that the social status of an occupation is influenced by economic attributes such as the average wage and the average level of education in the occupation a major objective of our work is to illustrate that sociological and economic approaches can be combined within a unified framework this is in contrast to some social scientists who view the two approaches as competing with each other phelpsbrown i 977 ch 4 in this paper we construct a simple general equilibrium model in which both wages and status are determined endogenously we show that changes in the demand for status triggered by changes in preferences or in income distribution influence the wage structure the level of aggregate output and economic welfare the link between status and aggregate output is created by the fact that differences in occupational status imply occupational wage differences among workers of the same skill the larger is the demand for status the larger is the wage gap and the lower is aggregate output our discussion of status is closely related to the economic analysis of discrimination against ethnic or racial groups becker i 97 i arrow i 973

searching for the effect of immigration on the labor market we compare two approaches to analyzing the effects of immigration on the labor market and find that the estimated effect of immigration on u s native labor outcomes depends critically on the empirical experiment used area analyses contrast the level or change in immigration by area with the level or change in the outcomes of non immigrant workers factor proportions analyses treat immigrants as a source of increased national supply of workers of the relevant skill the different effects of immigration on native outcomes in the area and factor proportions methodologies appear to result from the diluting effect of native migration flows across regions and failure to take adequate account of other regional labor market conditions in area comparisons excerpt

the substitutability of foreign born labour in canadian production circa 1980 the impact of immigrant workers on the employment of canadian born workers is analyzed in 125 canadian industries a translog production function is estimated using data for the year 1980 the estimated cross elasticities suggest no economywide displacement of canadian born workers by immigrants however displacement did occur in a portion of the canadian economy results are compared with a similar u s study

strengthening state capabilities the role of financial incentives in the call to public service we study a recent recruitment drive for public sector positions in mexico different salaries were announced randomly across recruitment sites and job offers were subsequently randomized screening relied on exams designed to measure applicants intellectual ability personality and motivation this allows the first experimental estimates of i the role of financial incentives in attracting a larger and more qualified pool of applicants ii the elasticity of the labor supply facing the employer and iii the role of job attributes distance attractiveness of the municipal environment in helping fill vacancies as well as the role of wages in helping fill positions in less attractive municipalities a theoretical model guides each stage of the empirical inquiry we find that higher wages attract more able applicants as measured by their iq personality and proclivity towards public sector work i e we find no evidence of adverse selection effects on motivation higher wage offers also increased acceptance rates implying a labor supply elasticity of around 2 and some degree of monopsony power distance and worse municipal characteristics strongly decrease acceptance rates but higher wages help bridge the recruitment gap in worse municipalities

the economics of immigration this literature review concerns the impact of immigration on the economy of the host country focusing on the experience of the united states the emphasis is on the period from the 1970s to the 1990s the author shows that research earlier in this period generally concluded that the economic effects of immigration were positive but that more recent research on later migrations have generally concluded that immigration may be having an adverse effect on the earnings of native unskilled workers and be placing an increased burden on welfare programs the importance of such economic analysis for the formulation of appropriate migration policies is stressed

post industrialisation immigration and unemployment how and why the impact of immigration on unemployment differs between dutch cities studies on the substitution thesis in advanced economies show scattered results the impact of immigration on the wages and likelihood of unemployment of the less educated varies strongly both studies on the substitution thesis itself and studies on the unequal post industrial development of urban economies suggest that this is because the substitution thesis is conditional on the type of urban economy the empirical validity of this suggestion is tested by comparing the impact of immigration on the employment level of the less educated among 22 dutch metropolitan areas the findings corroborate the central hypothesis in strong service oriented urban economies the impact of immigration on unemployment levels is mitigated because of high labour demand for the less educated

immigration and wages evidence from the 1980s this paper presents new evidence on the effects of immigration based on changes in the distributions of wages in 24 major u s cities during the 1980s we concentrate on measuring the effects of immigration at the lower tail of the wage distribution in particular we ask whether recent declines in the real earnings of the least skilled workers in the u s economy are related to immigration our empirical analysis reveals large differences across cities in the relative growth rates of wages for low and high paid workers nevertheless these differences bear little or no relation to the size of immigrant inflows excerpt

the labour market impact of immigration in the first part of this paper we present a stylized model of the labour market impact of immigra tion we then discuss mechanisms through which an economy can adjust to immigration changes in factor prices output mix and production technology in the second part we explain the problems of empirically estimating how immigration affects labour market outcomes of the resident population and review some strategies to address these we then summarize some recent empirical studies for the uk and other countries we conclude with an outlook on what we believe are important avenues for future research

applied general equilibrium models of taxation and international trade an introduction and survey we wish to acknowledge the help of three referees and of john pencavel on several earlier drafts as well as the assistance of the modelers whose work is referred to in the paper they corrected our lack of understanding of their work and provided many other helpful comments excellent research and bibliographical assistance have been provided by debbie fretz radwan shaban and janet stotsky helpful comments have been made by charles ballard michael boskin lans bovenberg sylvester damus harvey galper glenn harrison gordon lenjosek jack mutti serena ng t n srinivasan charles stuart and eric toder the authors also acknowledgefinancial support from the national bureau of economic research the national science foundation international business machines and the social sciences and humanities research council ottawa canada

learning and capacity expansion under demand uncertainty a competitive dynamic model of entry into a new industry is set up and both its positive and normative aspects are studied the main assumptions are that entry is sequential that it occurs under imperfect information on the size of the market and that better information becomes available as time goes on the gradual improvement in information is due to the fact that later waves of entrants are able to observe the profitability of earlier entrants the major results reported here under suitable restrictions are that the equilibrium rate of entry is monotonically decreasing over time and that at any given point in time it is smaller than the socially optimal one when a new market opens as a result of a product being newly invented for instance or when an existing market starts to expand uncertainty with respect to its size is likely to prevail as a result of this uncertainty entry of firms into such markets typically will occur in waves some firms will enter initially while others will wait to see the consequences of that initial entry if the experience of early entrants is favourable entry will continue otherwise entry will cease hence with the introduction of a new product two phases are associated the growth phase typified by positive operating profits for existing firms and expansion of productive capacity due to entry of new firms and the mature phase typified by erosion of profits and fixed total productive capacity empiricists estimating the time pattern of investments during the growth phase have found an s shaped diffusion curve see mansfield 1986 and gort and klepper 1982 the purpose of the present paper is to theoretically characterize these time patterns and to investigate their welfare properties any attempt to model the type of entry described above must account for differences in both entry dates and resultant earnings in other words the theory must explain why the realized earnings of different cohorts of firms are not equal often such ex post differences are reconciled by assuming heterogeneity with respect to some latent underlying characteristic managerial ability for instance and attributing differences in earnings to differences in that characteristic in this paper instead earning differentials are attributable to luck only ex ante all firms are technologically identical and equally capable of forecasting market prospects and rationally acting upon those forecasts ex post some firms turn out to have entered at the right time and are for that reason more profitable the model developed in this paper analyzes a parametric example of a sequential entry problem in which the uncertainty over market size is gradually resolved over time in a bayesian setting in an environment of perfect competition and constant returns toscale a free entry equilibrium concept is introduced and the aggregate implications of the time path of investments are derived i then compare this actual time path to the optimum this comparison is interesting because the equilibrium is analysed under the

understanding carbon lock in abstract this paper narrative argues that industrial economies have been locked into fossil fuel based energy systems through a process of technological and institutional co evolution driven by path dependent increasing returns to scale it is asserted that this condition termed carbon lock in creates persistent market and policy failures that can inhibit the diffusion of carbon saving technologies despite their apparent environmental and economic advantages the notion of a techno institutional complex is introduced to capture the idea that lock in occurs through combined interactions among technological systems and governing institutions while carbon lock in provides a conceptual basis for understanding macro level barriers to the diffusion of carbon saving technologies it also generates questions for standard economic modeling approaches that abstract away technological and institutional evolution in their elaboration the question of escaping carbon lock in is left for a future paper

atheoretical macroeconometrics a critique abstract the spurious nature of the restrictions used to identify many macroeconometric models has led some researchers to advocate a style of econometric inquiry that is less dependent on prior theoretical restrictions of the sort that were central to the approach of the cowles commission this development which we call atheoretical macroeconometrics is summarized and evaluated in the current paper it is contrasted with an updated version of the cowles commission approach we conclude that while some of the exercises of atheoretical macroeconometrics are valid those that have attracted the most attention and appear the most innovative exogeneity testing impulse response analysis and policy analysis using estimated vector autoregressions are based on incorrect analysis

public service motivation as an argument for government provision a public service motivation psm inclines employees to provide effort out of concern for the impact of that effort on a valued social service though deemed to be important in the literature on public administration this motivation has not been formally considered by economists when a psm exists this paper establishes conditions under which government bureaucracy can better obtain psm motivated effort from employees than a standard profit maximizing firm the model also provides an efficiency rationale for low powered incentives in both bureaucracies and other organizations producing social services 2000 elsevier science s a all rights reserved

partisan embedding of liberalism how trade investment and immigration affect party support for the welfare state political scientists have long debated how economic globalization influences national social policies but they have so far not explored the political demands of political parties implicitly underl

immigration integration and support for redistribution in europe immigration poses individual or collective economic risks that might increase citizen support for government redistribution but it can also generate fiscal pressure or undermine social solidarity to diminish such support these offsetting conditions obscure the net effects of immigration for welfare states this article explores whether immigration s effects are mediated by the economic and social integration of immigrants integration can be conceptualized and measured as involving the degree to which immigrants suffer unemployment rates depend on welfare state benefits and harbor social attitudes similarly to the native population such integration may alter how immigration reduces solidarity and imposes fiscal and macroeconomic pressures but does not much alter how immigration spurs economic risks for natives where migrants are more integrated by such measures immigration should have less negative or more positive implications for native support for government redistribution and welfare states than where migrants are less integrated the article explores these arguments using survey data for twenty two european countries between 2002 and 2010 the principal finding is that economic integration more than sociocultural integration softens the tendency of immigration to undermine support for redistributive policies

signaling and screening of workers motivation abstract this paper develops a model in which workers are heterogeneous in their intrinsic motivation to work at a firm we characterise optimal incentive schemes and examine how the firm can attract and select highly motivated workers to fill a vacancy when workers motivation is private information while posting a higher wage increases the probability of filling the vacancy it decreases the expected average quality of job applicants because less motivated workers are induced to apply the optimal wage scheme entails a trade off between the probability of filling the vacancy the rents left to the worker and the expected worker s motivation

ethnic diversity public spending and individual support for the welfare state a review of the empirical literature we review the empirical literature that studies the effect of ethnic diversity on public spending and on individual support for the welfare state the survey puts a particular focus on the fast growing literature that uses experiments to study the effects of ethnic diversity many of these studies have appeared since the pioneering survey by alesina and la ferrara and have not been covered by a survey before

international migration imperfect information and brain drain we consider a model of international migration where skills of workers are imperfectly observed by firms in the host country and where information asymmetries are more severe for immigrants than f

the effect of immigration on native self employment we examine the impact of immigration on self employed natives in a new general equilibrium model of self employment and wage salary work a range of plausible parameter values implies small negative effects of immigration on native self employment rates and earnings using 1980 and 1990 census microdata we then examine the relationship between changes in immigration and native self employment rates and earnings across 132 of the largest u s metropolitan areas we find evidence suggesting that self employed immigrants displace self employed natives but do not have a negative effect on native self employment earnings the effects are much larger than those predicted by the theoretical model

the impact of 1970s repatriates from africa on the portuguese labor market this paper examines the labor market effect of the retornados who immigrated to portugal from angola and mozambique in the mid 1970s following portugal s loss of its african colonies the retornados increased the portuguese labor force by roughly 10 in just three years two analyses suggest contrasting conclusions first comparisons of portugal with spain and france indicate that any adverse effect of the retornados was quantitatively swamped by the europe wide downturn in labor market conditions in the 1970s second comparisons between districts within portugal indicate that the retornados may have had a strong adverse effect on portuguese wages suggesting that immigration may be considerably more harmful than previous case studies have concluded the authors however regard the results of the within portugal analysis as less reliable than those of the comparison across countries

the impact of immigration on the labor market the literature on the impact of immigration on the labor market is highly controversial the aim of this paper is to review the existing literature and draw some general conclusions on how wages and employment respond to immigration economic studies indicate that the impact of immigration on the average wage and employment of native workers is null or slightly positive however because adjustments take time the immediate labor market effects of unexpected as opposed to expected migration episodes can be detrimental immigration also can have distributional consequences in particular the skill composition of immigrants matters in determining their impact on native labor market outcomes an inflow of immigrants will tend to reduce the wages of competing native workers with skills similar to those of the migrants and increase those of complementary workers with skills that complement those of immigrants by affecting the skill composition of the workforce immigration can create winners and losers among native workers via changes in the wage structure

are tradable green certificates a cost efficient policy driving technical change or a rent generating machine lessons from sweden 2003 2008 in the european policy debate tradable green certificates tgc have been suggested to be a superior regulatory framework for promoting the diffusion of renewable electricity technologies the purpose of this paper is to assess the performance of the swedish tgc system contributing to the european debate on the suitability of different types of frameworks the expectations of the tgc system were that it would a be effective in terms of increasing the supply of green electricity b do this in a cost effective manner from both a social and a consumer perspective c generate an equitable distribution of costs and benefits and d drive technical change so far it has performed adequately in terms of effectiveness and social cost effectiveness however consumer costs have been substantially higher than expected very large rents are generated and at best it contributes marginally to technical change thus a tgc framework should be selected if the overriding concern is to minimize short term social costs of reaching a certain goal with a high degree of predictability however it cannot be expected to also drive technical change keep consumer costs down and be equitable such trade offs need to be revealed and not obscured by analysts

analyzing the returns to entrepreneurship by a modified lazear model a modified version of lazear s model in american economic review 94 208 211 2004 journal of labor economics 23 649 680 2005 for occupational choice is formulated it includes a utility adjustment factor that captures the combined effect of nonpecuniary benefits and uncertainty associated with entrepreneurship we show that the counterfactual income returns to entrepreneurship are lower than the market value of entrepreneurial talent and higher than the inverse of the utility adjustment factor moreover if the skill profiles in the population are frechet distributed the ratio between the expected incomes of entrepreneurs and observationally similar wage employees is lower than the inverse of the utility adjustment factor thus entrepreneurs will on average earn less than wage employees if the utility adjustment factor is greater than or equal to one it is also shown that the self selection bias related to this income ratio or returns measure increases with the observed percentage of entrepreneurs swedish employment data are used to calibrate the modified lazear model the empirical results indicate that uncertainty considerations might be more important for the occupational choices than nonpecuniary benefits

the labor market impact of immigration a quasi experiment exploiting immigrant location rules in germany with the fall of the berlin wall ethnic germans living in eastern europe and the former soviet union were given the opportunity to migrate to germany within 15 years 2 8 million individuals had done so upon arrival these immigrants were exogenously allocated to different regions to ensure an even distribution across the country their inflow can therefore be seen as a quasi experiment of immigration i analyze the effect of these inflows on skill specific employment rates and wages the results indicate a displacement effect of 3 1 unemployed workers for every 10 immigrants that find a job but no effect on relative wages

institutional work and climate change corporate political action in the swedish electricity industry this paper utilises qualitative methods to examine factors that influence corporate political actions cpa linked to climate policy in the swedish electricity industry cpa strategies are examined in connection to two policy instruments the eu emission trading scheme and the swedish electricity certificate scheme these instruments are the main drivers of climate related investments in the sector the study treats cpa as a form of institutional work and examines reasons for companies to seek to maintain disrupt institutions the study finds that cpa is driven primarily by the need to manage external resource dependencies and that where risks are more acute companies are more likely to seek to disrupt regulative institutions however the study also shows that respondents appraisals of policy instruments are based on a convergent set of shared values cognitive institutions that form the basis of cpa and which actors do not seek to disrupt despite resource based risks cpa is thus characterised as a means to transmute cognitively held values and beliefs into regulative institutions the study concludes with implications for policymakers and theory

competition and screening with motivated health professionals two hospitals compete for the exclusive services of health professionals who are privately informed about their ability and motivation hospitals differ in their ownership structure and in the mission they pursue the non profit hospital sacrifices some profits to follow its mission but becomes attractive for motivated workers in equilibrium when both hospitals are active the sorting of workers to hospitals is efficient and ability neutral allocative distortions are decreasing in the degree of competition and disappear when hospitals are similar the non profit hospital tends to provide a higher amount of care and offer lower salaries than the for profit one

regulating technological change the strategic reactions of utility companies towards subsidy policies in the german spanish and uk electricity markets abstract this paper focuses on how incumbent electric utilities strategically react to subsidy schemes supporting renewable energy technologies in the uk germany and spain firms coordinate the development of their technological capabilities and their political activities to shape their regulatory environment analysing the diffusion of wind power in these countries we show that the different ways in which firms coordinate their technological and political strategies lead to very different market outcomes both for the firms market share and the size of the overall market although incumbents are usually seen as being resistant to change in energy systems we show that spanish utilities proactively drive the diffusion of wind power we speculate about the relation between the ownership structure of the energy system and its inertia with respect to the integration of new technologies we derive novel policy implications that explicitly take into account the strategic actions of incumbent firms shaping the technological and regulatory system

selection in insurance markets theory and empirics in pictures government intervention in insurance markets is ubiquitous and the theoretical basis for such intervention based on classic work from the 1970s has been the problem of adverse selection over the last decade empirical work on selection in insurance markets has gained considerable momentum this research finds that adverse selection exists in some insurance markets but not in others and it has uncovered examples of markets that exhibit advantageous selection a phenomenon not considered by the original theory and one that has different consequences for equilibrium insurance allocation and optimal public policy than the classical case of adverse selection advantageous selection arises when the individuals who are willing to pay the most for insurance are those who are the most risk averse and so have the lowest expected cost indeed it is natural to think that in many instances individuals who value insurance more may also take action to lower their expected costs drive more carefully invest in preventive health care and so on researchers have taken steps toward estimating the welfare consequences of detected selection and of potential public policy interventions in this essay we present a graphical framework for analyzing both theoretical and empirical work on selection in insurance markets this graphical approach provides both a useful and intuitive depiction of the basic theory of selection and its implications for welfare and public policy as well as a lens through which one can understand the ideas and limitations of existing empirical work on this topic

undocumented immigration and income inequality in the native born population of the us econometric evidence according to the theoretical models suggested by chiswick and others the growing presence of undocumented immigrants in the us should have a disequalizing effect on income distribution in the native born population however this proposition has not been subjected to empirical test here an econometric model of income inequality in native born households is constructed and census based estimates of the state distribution of undocumented immigrants are used to estimate model parameters the results show that such immigration has been disequalizing but that the impact has been small ranking behind several other socio economic variables

international trade agreements and international migration despite large potential economic gains bilateral and multilateral negotiations focusing on liberalisation of migration have not shared the high profile of international trade negotiations and agreements migration and trade have been traditionally viewed rather separately and the relevance of the many and complex interdependencies has been given remarkably little attention in the literature to date in this article we focus on the two way interaction between international migration and agreements designed to enhance cross border trade and investment liberalisation of international trade in services and in the movement of people potentially offers much greater economic gains than liberalisation of remaining barriers to goods trade however progress within multilateral frameworks is fraught with difficulty the world trade organization s general agreement on trade in services gats has yielded little real progress so far and negotiations within more flexible unilateral and bilateral frameworks are likely to be more successful in liberalising the movement of labour we discuss a range of specific examples focusing particularly on the interesting case of new zealand we find that trade agreements are increasingly including agreements on migration though typically favouring temporary migration and involving numerically modest quotas we conclude that migration regulatory frameworks are likely to be further and more strongly linked to trade and investment agreements in the future particularly given changing economic and demographic forces the primary focus of migration policies may nonetheless remain different from that of trade policies while further migration liberalisation is likely to be through bilateral and regional agreements it will be important to try to lock in the gains of such agreements while simultaneously working to consolidating these in a way that will help to facilitate future multilateral agreement

the welfare state migration and voting rights this paper proposes a political economic analysis of public opinion in european union countries toward migrants from poor countries by focusing on redistributive policy the analysis sheds light on specific determinants of public opinion the theoretical analysis based on the median voter framework shows that one of the key variables affecting public opinion is the voting rights of migrants where migrants do not have the right to vote their presence negatively impacts the poorest natives in countries where migrants enjoy voting rights they are able to vote on redistributive policy therefore the impact of migration on natives welfare is fundamentally different after the theoretical analysis the paper proposes an empirical analysis of europeans attitudes toward non western migrants in european union countries this empirical analysis confirms the decisive impact of migrants voting rights it shows that in eu countries the more educated natives are significantly less favorable to migrants from poor countries when the latter have the right to vote

how to measure labour market effects of immigration a review abstract this paper surveys available empirical evidence on labour market effects of immigration many different approaches have been used already to try to find out whether immigration hurts the labour market opportunities of natives no doubt new approaches will follow in the future as globalization will keep the migration issue on the agenda this literature review discusses the different approaches concentrating on both the methodology and the results at the end it tries to summarize available evidence

income distribution and macroeconomics this paper analyzes the role of wealth distribution in macroeconomics through investment in human capital it is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital the initial distribution of wealth affects aggregate output and investment both in the short and in the long run as there are multiple steady states this paper therefore provides an additional explanation for the persistent differences in per capita output across countries furthermore the paper shows that cross country differences in macroeconomic adjustment to aggregate shocks can be attributed among other factors to differences in wealth and income distribution across countries

trade theory distribution of income and immigration this paper examines the impact of mass immigration utilizing the analytical framework of so called trade theory as such its emphasis is on general equilibrium effects and on the constraints imposed by the openness of the economy on such effects the analysis will center on the distributional impact of unskilled labor immigration excerpt

self fulfilling beliefs about social status abstract human beings care a lot about being viewed as smart this paper defines social status as the public beliefs about one s smartness inferred from one s publicly observed social mobility experience this status motive can easily generate multiple equilibria based upon self fulfilling beliefs it also tends to amplify the inequality of economic success between agents with different social origins this theory of persistent inequality is compared with other theories of inequality based upon self fulfilling beliefs such as the model of statistical discrimination and the model of learning about one s chances of mobility in the absence of a status motive as well the sociological theories of merton boudon and bourdieu

escaping carbon lock in this article explores the climate policy implications of the arguments made in understanding carbon lock in unruh 2000 which posited that industrial countries have become locked into fossil fuel based energy systems through path dependent processes driven by increasing returns to scale carbon lock in arises through technological organizational social and institutional co evolution culminating in what was termed as techno institutional complex tic in order to resolve the climate problem an escape from the lock in condition is required however due to the self referential nature of tic escape conditions are unlikely to be generated internally and it is argued here that exogenous forces are probably required

the impact of mass migration on the israeli labor market mass migration from the former soviet union increased the israeli population by 12 in the first half of the 1990s this exodus was precipitated by the lifting of emigration restrictions in an unstable ussr and by the open immigration policy of israel toward soviet jews who faced more restrictive entry policies elsewhere i use this natural experiment to study the impact of immigration on the labor market outcomes of native israelis ols yields significant reductions in wages and small reductions in employment however ols is biased if the distribution of immigrants across occupations in israel was not exogenous to relative wage and employment conditions i instrument for the entry of russians into an occupation in israel using information on their former occupations in the ussr there is a significant positive correlation between the former presence of the immigrants in an occupation in the ussr and their presence in that occupation in israel but the previous occupational choices of russians abroad were independent of israeli wage and employment growth subsequent to their migration iv estimates indicate that immigration did not have an adverse impact on native israeli labor market outcomes

migration and labour markets in oecd countries a panel cointegration approach this article examines the interaction between immigration and the host labour market of 14 organization for economic co operation and development oecd countries using nonstationary panel data methodology we estimate a trivariate vector error correction model vecm and derive causality tests to simultaneously assess the long and short term macroeconomic impact of newcomers on wages and unemployment levels in the host country the results suggest that an increase of migrants is likely to increase wages in the destination countries in the short run but to increase them in the long run there is no evidence of adverse effects on unemployment due to immigration in short and long term except for anglo saxon countries in the short term our findings also show that immigration is conditioned by levels of unemployment and wages especially in anglo saxon countries

labor supply of politicians using data on members of the european parliament meps we examine the impact of salaries on the composition and the behavior of legislators employing a differences in differences approach we exploit the introduction of a law that equalized meps salaries which had previously differed by as much as a factor of 10 increasing salaries raises the fraction of meps who run for re election but decreases the quality of elected meps proxied by college quality salary has no discernible impact on effort or legislation output higher salaries induce more political competition

on the cultural transmission of preferences for social status abstract we study the formation of preferences for social status as the result of intergenerational transmission of cultural traits we characterize the behavior of parents with preferences for status in terms of socialization of their children to this particular cultural trait we show that degenerate distributions of the population whereby agents have either all status preferences or all non status preferences are dynamically unstable moreover under some conditions there exists a unique stationary distribution which is non degenerate in which both status and non status preferences co exist in the population and this distribution is locally stable finally we study the dependence of the stable stationary distribution of status preferences on institutional technological and policy parameters which affect agents economic conditions

immigration and wages evidence from construction to identify relative wage impacts of immigration we make use of certification and licensing requirements in the norwegian construction sector that give rise to exogenous variation in immigrant employment shares across trades individual panel data reveal substantially lower wage growth for workers in trades with rising immigrant employment than for other workers selective attrition from the sector masks the causal wage impact unless accounted for by individual fixed effects for low and semi skilled workers effects of new immigration are comparable for natives and older immigrant cohorts consistent with perfect substitutability between native and immigrant labor within trade finally we present evidence that immigration reduces price inflation as price increases over the sample period were significantly lower in activities with growth in the immigrant share than in activities with no or small change in immigrant employment

do better paid politicians perform better disentangling incentives from selection the wage paid to politicians affects both the choice of citizens to run for office and the performance of those who are appointed first if skilled individuals shy away from politics because of higher opportunities in the private sector an increase in politicians pay may change their mind second if the re election prospects of incumbents depend on their in office deeds a higher wage may foster performance we use data on all italian municipal governments from 1993 to 2001 and test these hypotheses in a quasi experimental setup in italy the wage of mayors depends on population size and sharply rises at different thresholds we apply a regression discontinuity design to the only threshold that uniquely identifies a wage increase 5 000 inhabitants exploiting the existence of a two term limit we further disentangle the composition from the incentive component of the effect of the wage on performance our results show that a higher wage attracts more educated candidates and that better paid politicians size down the government machinery by improving efficiency importantly most of this effect is driven by the selection of competent politicians rather than by the incentive to be re elected

labour market responses to immigration evidence from internal migration driven by weather shocks we study the labour market impact of internal migration in indonesia by instrumenting migrant flows with rainfall shocks at the origin area estimates reveal that a one percentage point increase in the share of migrants decreases income by 0 97 and reduces employment by 0 24 percentage points these effects are different across sectors employment reductions are concentrated in the formal sector while income reduction occurs in the informal sector negative consequences are most pronounced for low skilled natives even though migrants are systematically highly skilled we suggest that the two sector nature of the labour market may explain this pattern

managerial talent motivation and self selection into public management the quality of public management is a recurrent concern in many countries calls to attract the economy s best and brightest managers to the public sector abound this paper studies self selection into managerial and non managerial positions in the public and private sector using a model of a perfectly competitive economy where people differ in managerial ability and in public service motivation we find that if demand for public sector output is not too high the equilibrium return to managerial ability is always highest in the private sector as a result relatively many of the more able managers self select into the private sector since this outcome is efficient our analysis implies that attracting a more able managerial workforce to the public sector by increasing remuneration to private sector levels is not cost efficient

entrepreneurship over the life cycle where are the young entrepreneurs most individuals do not start a business and if they do they start well into their 30s to explain these stylized facts i estimate a dynamic roy model with experience accumulation risk aversion and imperfect information about ability using the panel study of income dynamics information frictions and income risk reduce entrepreneurship by up to 40 and 35 respectively entry costs and information frictions explain most of the delayed entry results from counterfactual policies targeting delayed entry suggest that entrepreneurship education can yield higher returns than subsidies fostering young entrepreneurship yields higher returns than fostering old entrepreneurship