testing the morale theory of nominal wage rigidity this paper tests the morale theory of nominal wage rigidity according to which firms resist making nominal cuts to workers pay even in adverse economic conditions because such cuts hurt worker morale and productivity the authors analyze data from an employer employee survey they conducted in japan in 2000 that year coincided with a rare spell of deflationary recession which the authors argue is a good setting in which to study how nominal pay cuts affect morale they find that a nominal annual pay freeze experienced by 21 of the sampled workers demoralized workers by reducing their trust in the firm and that even greater demoralization not wholly attributable to reduced trust was associated with a nominal pay cut which affected 17 of the workers the observed negative relationship between nominal pay cuts and morale persists even when the estimation includes controls and firm fixed effects

constrainedly fair job assignments under minimum wages a number of jobs are to be assigned to a greater number of workers while having to abide by the law of minimum wages firms must determine who should be assigned which job and at what salary in such situations fair envy free allocations usually fail to exist to cope with this situation this paper proposes a new concept of fairness called constrained fairness among the set of constrainedly fair allocations the so called constrainedly fair and minimal allocations are of particular interest the reason for this is that the salaries are not only compatible with the minimum wages they are also optimal from the standpoint of cost minimizing firms and the assignment of jobs is efficient from the viewpoint of workers a convergent dynamic procedure that identifies constrainedly fair and minimal allocations is proposed furthermore strategic properties of the mechanism are derived and two notions of efficiency are evaluated

improving willingness to pay estimates for quality improvements through joint estimation with quality perceptions willingness to pay for quality change may depend on heterogeneous perceived quality levels contingent valuation studies should include measures of quality perceptions as covariates in the willingness to pay model in order to avoid omitted variable bias variation in quality perceptions across respondents leads to a potential endogeneity of quality perceptions i address the potential for endogeneity bias using an instrumental variables approach in which a measure of quality perceptions is included as a determinant of willingness to pay and is simultaneously determined by various exogenous factors the willingness to pay model is estimated jointly with quality perceptions allowing for correlation of the error terms using data on willingness to pay for water quality improvements in the neuse river in north carolina i reject exogeneity of perceived quality correcting for endogeneity improves the measurement of willingness to pay by differentiating willingness to pay among respondents with heterogeneous quality perceptions

gender differences in training capital and wages this paper constructs an equilibrium job matching model where workers differ in their attachment to the labor force the model predicts that workers with weaker attachment to the labor market will receive lower starting wages and lower post training wages and will be placed in jobs that offer less training and use less capital the implications of the model for gender differences in pay and job assignment are tested with the eopp data set ourfindings suggest that while training intensity during the first three months of employment is similar in positions filled by males and females females are employed in positions that have a shorter duration of on the job training and that use less capital these differences in on the job training and capital in positions filled by men and women as well as a lower market value for women s prior labor market experience account for a substantial part of the gap in wages between males and females

dynamic contracts with worker mobility via directed on the job search this article proposes a model with dynamic incentive contracts and on the job search in a frictional labor market the optimal long term contract exhibits an increasing wage tenure profile with increasing wages worker effort also increases with tenure these two features imply that the probabilities of both voluntary and involuntary job separation decrease with both job tenure and the duration of employment given these results workers experience differing labor market transitions between employment unemployment and across different employers and the equilibrium generates endogenous heterogeneity among ex ante homogeneous workers abstract from author

the british low wage sector and the employment prospects of the unemployed abstractare low wages a way for the unemployed to switch to higher paying jobs using data from the british household panel survey the labour market dynamics of unemployed low paid and higher paid employed men are analysed moreover the respective un employment duration and occupational skill level are accounted for results show that in general low wages significantly reduce the risk of future unemployment and increase the chances of ascending the salary ladder especially in the case of long term unemployment 360 days furthermore the occupational skill level has a substantial influence on the upward mobility of low paid jobs individuals working in the initial period in a low paid and higher skilled occupation have on average an 11 percentage points higher probability of entering higher pay compared to when working in a low paid and low skilled occupation

price quantity strategic market games this paper is yet another in a rapidly growing series e g 2 11 on strategic approaches to economic equilibrium our aim here is to make precise the remark implicitly due to bertrand 1 or 10 ch 4 5 that if the agents in an economy use price setting strategies then the strategic nash equilibria will in fact be walrasian and this without any assumption of a large number of small agents however in our models not only prices but also quantities are set by the agents thus it might actually be more appropriate to call them bertrand cournot types of models we begin with a standard walras exchange economy with a finite number of traders and commodities this is recast as a game in strategic form in essentially two different ways there is a trading post for each commodity to which traders send contingent statements about how much they wish to buy and sell and at what prices in model 1 the trading point is determined by the intersection of the aggregate supply and demand curves in model 2 trade takes place so as to meet as many contingent statements as possible each buyer whose orders are filled pays the price he quoted using a fiat money which can be borrowed costlessly and limitlessly but after trade is over there is a settlement of accounts and a penalty is levied on those who are bankrupt no attempt is made to model the penalty in any detail it is simply described in the form of a disutility but this in turn may be imagined to stem from confiscation of assets see remark 5 or the necessity of procuring highly priced loans etc call a noncooperative equilibrium active if it turns out that no trader is isolated i e trapped as the sole buyer or seller at some trading post then our results may be described as follows in model 1 the active2 n e of the game coincide with the c e of the market furthermore there is a subset of tight active n e which also coincide with the c e and each n e in this subset is strong

competitive fair division several indivisible goods are to be divided among two or more players whose bids for the goods determine their prices an equitable assignment of the goods at competitive prices is given by a fair division procedure called the gap procedure that ensures 1 nonnegative prices that never exceed the bid of the player receiving the good 2 pareto optimality though coupled with possible envy 3 monotonicity such that higher bids never hurt in obtaining a good 4 sincere bids that preclude negative utility and 5 prices that are partially independent of the amounts bid as in a vickrey auction a variety of applications are discussed

large indivisibles an analysis with respect to price equilibrium and fairness an exchange economy is considered in which there are a finite number of individuals the same number of indivisibles and a fixed amount of a divisible good each individual consumes exactly one of the indivisibles and a certain quantity of the divisible good the existence of prices corresponding to pareto efficient allocations is proved it is also shown that this economy possesses fair allocations income fair allocations coalition fair allocations and pareto efficient egalitarian equivalent allocations in this study the effect of including large indivisibles in an exchange economy will be analyzed the analysis will be carried out with respect to the existence of price equilibrium and with respect to the existence of different forms of fairness the economy consists of a finite number of individuals the same number of indivisibles and a fixed amount of a divisible good it is assumed that each individual consumes exactly one of the indivisibles and some quantity of the divisible good we may interpret the indivisibles as being professions or houses the relationship between price equilibrium and a pareto efficient allocation is well known and proved in a number of cases under different assumptions about preferences and commodities for a standard economy see e g debreu 5 in case of nonconvexities which may also describe a certain type of indivisibility we may have an exact relationship in economies with a continuum of individuals see e g hildenbrand 11 but otherwise an approximate relationship obtains the degree of approximation depends on the degree of nonconvexities in preferences and not on the number of individuals see e g arrow and hahn 1 we will prove the existence of prices characterizing a pareto efficient allocation in a case where the indivisibles play an essential role and where approximate results would be too approximate the indivisibles may be considered large for the individual compared to his total consumption the theory of fairness has developed considerably during the seventies different kinds of concepts of fairness have been introduced and analyzed see daniel 41 foley 81 pazner and schmeidler 121 and schmeidler and vind 141 among others normally these authors have considered models with divisible goods or an infinite number of individuals for exchange economies the existence of fair allocations an envy free and pareto efficient allocation has been proved in

the firm as a dedicated hierarchy a theory of the origins and growth of firms in the formative stages of their businesses entrepreneurs have to provide incentives for employees to protect rather than steal the source of organizational rents we study how the entrepreneur s response to this problem determines the organization s internal structure growth and its eventual size large steep hierarchies will predominate in physical capital intensive industries and will have seniority based promotion policies by contrast e at hierarchies will prevail in human capital intensive industries and will have up or out promotion systems furthermore e at hierarchies will have more distinctive technologies or cultures than steep hierarchies the model points to some essential differences between organized hierarchies and markets at the root of most enterprises generating economic surplus is an entrepreneur with a unique critical resource such as an idea good customer relationships a new tool or superior management technique a fundamental problem of entrepreneurship is how to enlist the cooperation of the many agents necessary for production without ceding to them too much of the surplus generated by the enterprise the risk of being expropriated however is always inherent in production in particular the entrepreneur has to give her employees whom we call managers close proximity or access to the critical resource for them to learn to produce effectively for example a manager has to understand the idea be in contact with the key customers and suppliers or even learn the entrepreneur s unique managerial techniques in order to work effectively but access also gives the manager the opportunity to expropriate this critical resource and compete against the entrepreneur managers may steal the idea walk away with clients or mimic the entrepreneur s management style and start up a rival concern the greater the access a manager has the more he can appropriate and the more effectively he can compete this paper explores the role of organizational design in

should i stay or should i go career choices for young workers in latin america labor market institutions shape the return to workers skills they define the incentives of firms and workers to invest in general and specific skills affecting the returns to experience and tenure this paper presents an empirical assessment of this hypothesis we take advantage of rich administrative data from brazil and chile two countries with different regulatory frameworks we focus on young workers as they face to a greater extent the trade off between accumulating general or specific skills the analysis is motivated by a simple conceptual framework from which we derive empirical predictions it takes into account the potential endogeneity of occupational choices while allowing for heterogenous returns to tenure and experience we find positive average returns to both dimensions in both countries with larger returns to tenure in brazil and larger returns to experience in chile this is consistent with the original conjecture as the more rigid labor market legislation in brazil encourages firms to carry out additional investments in young workers s specific skills chile s institutions on the contrary promote the acquisition of general skills we further examine how these returns differ by educational attainment an important policy consideration in the region and find that more educated workers in both countries face larger returns to experience and tenure relative to their less educated counterparts

insurance and labor market contracting an analysis of the capital market assumption in recent years a large literature has developed that investigates the role of insurance in labor market contracting papers in this literature typically assume that workers are completely restricted from borrowing we argue and to some extent demonstrate that in many environments capital market imperfections do not lead to a noborrowing result but rather to a capital market assumption that is intermediate between the no borrowing assumption and the perfect capital market assumption we then consider some of the ramifications that this intermediate capital market assumption has on the type of insurance the firms provide through the labor market contract

a theory of wage dynamics a dynamic equilibrium model of long term implicit labour contracts under incomplete but symmetric information is developed workers are assumed to be risk averse and of unknown ability or productivity risk neutral firms learn as do workers about each worker s productivity by observing the worker s output over time it is shown that equilibrium contracts provide for wages which never decline with age and increase only when the worker s market value increases above his current wage in addition to characterizing the equilibrium wage contract we also derive some of its implications for the behaviour of aggregate wages across various groups of workers these implications explain some findings in the recent empirical literature on ageearnings profiles in particular our model can explain why earnings may be positively related to experience even after controlling for productivity as some empirical studies have indicated

moral hazard in high office and the dynamics of aristocracy both aristocratic privileges and constitutional constraints in traditional monarchies can be derived from a ruler s incentive to minimize expected costs of moral hazard rents for high officials we consider a dynamic moral hazard model of governors serving a sovereign prince who must deter them from rebellion and hidden corruption which could cause costly crises to minimize costs a governor s rewards for good performance should be deferred up to the maximal credit that the prince can be trusted to pay in the long run we find that high officials can become an entrenched aristocracy with low turnover and large claims on the ruler dismissals for bad performance should be randomized to avoid inciting rebellions but the prince can profit from reselling vacant offices and so his decisions to dismiss high officials require institutionalized monitoring a soft budget constraint that forgives losses for low credit governors can become efficient when costs of corruption are low

pensions in labor contracts this paper con siders the optimality of a two period employment contract between a firm and a worker in which the firm provides the employee with insurance against states of low consumption with a wage pension payment schedule contingent upon the worker s productivity and state of employment the paper shows that with endogenous quits and dismissals the equilibrium pension plan could either impose vesting requirements or provide for severance pay depending on the relative perceptions of the probability of separation by the two parties the worker s productivi ty in each state of employment and the firm s policy regarding emplo yee retention copyright 1988 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

willingness to pay for ancillary benefits of climate change mitigation assessing the willingness to pay wtp of the general public for climate change mitigation programmes enables governments to understand how much taxpayers are willing to support the implementation of such programs this paper contributes to the literature on the wtp for climate change mitigation programmes by investigating in addition to global benefits the ancillary benefits of climate change mitigation it does so by considering local and personal benefits arising from climate change policies the contingent valuation method is used to elicit the wtp for ancillary and global benefits of climate mitigation policies in the basque country spain results show that wtp estimates are 53 73 higher when ancillary benefits are considered

job assignments signalling and efficiency this article analyzes a model in which information about a worker s ability is only directly revealed to the firm employing the worker other firms however use the worker s job assignment as a signal of ability three results recur throughout the analysis first wage rates tend to be more closely associated with jobs than with ability levels second there is frequently an inefficient assignment of workers to jobs i e even when a firm has complete information about a worker s output third the severity of this inefficiency tends to be negatively correlated with the level of firm specific human capital in the economy

are wages habit forming evidence from micro data although utility functions play a central role in economics the axiom that utility depends only on the absolute levels of its arguments is rarely tested this paper uses panel data on 2000 british employees who remain with the same employer and who are not promoted from one wave to the next it is shown that one important measure of well being overall job satisfaction is strongly positively correlated with the change in the worker s pay between waves but is unrelated to the current level of pay empirical tests suggest that a reference dependent satisfaction function where individual well being depends on current pay relative to past pay is more consistent with these regression results than are productivity or agency explanations of increasing wage profiles some evidence is presented of greater job satisfaction effects of pay rises for lower paid less well educated and younger workers these results provide some micro evidence consistent with the theory widespread in social science of habituation individuals may become used to any given level of consumption or income as such they tie in with the finding that a country s well being as measured by the average happiness of its citizens is only weakly correlated with its per capita gnp

salaries and piece rates compensation can take many forms remuneration can come as pecuniary payments as fringes such as health and pension benefits or as a nonpecuniary reward such as plush office furniture that costs the firm less than it benefits the worker a significant literature has examined the trade offs between pecuniary and nonpecuniary compensation the modern work having been pioneered by rosen 1974 more recently another body of literature has examined the selection of method of total compensation ignoring the distinction between pecuniary and nonpecuniary payment this work has focused on risk and incentive factors it has resulted in comparisons of compensation based on absolute output levels to that based on relative performance it has also led to explorations of the relation of compensation to experience over the work life 2 little attention has been paid to what may be among the most important and obvious distinction in methods of compensation namely the choice between a fixed salary for some period of time that is paying on the basis of input and some workers receive compensation that is specified in advance and not directly contingent on performance instead it depends on an input measure such as hours worked for others compensation is directly related to output this essay is an attempt to predict a firm s choice of compensation method piece rates are defined more rigorously among the more important factors discussed are worker heterogeneity incentives sorting considerations monitoring costs and asymmetric information one result is that salary workers tend to be of lower quality and more homogeneous than are their piece rate counterparts numerous additional results are provided helpful comments by victoria lazear and yoram weiss are gratefully acknowledged support was provided by the department of labor and the national science foundation 1 see lazear and rosen 1981 stiglitz 1981 holmstrom 1982 green and stokey 1983 2 see lazear 1979 1981 and harris and holmstrom in press

micro foundations for wage flexibility wage insurance at the firm level to what extent do firms insulate their workers wages from fluctuations in product markets which firm and worker attributes are associated with wage flexibility at the micro level we first rely on guiso pistaferri and schivardi 2005 to estimate dynamic models of sales and wages finding that in portugal workers wages respond to permanent shocks on firm performance as opposed to transitory shocks we then explore the factors associated with wage flexibility finding that collective bargaining and minimum wages are associated with higher wage insurance by the firm while the threat of firm bankruptcy reduces it managers receive less protection against permanent shocks than other workers

how beliefs influence the willingness to contribute to prevention expenditure we study how beliefs affect individuals willingness to contribute to prevention expenditure through a two type n person public good game and test several results empirically we show analytically that pessimistic agents will invest more in prevention expenditure than optimists we also demonstrate how small differences in beliefs may induce substantial differences in type related prevention expenditure the more atomistic agents are the less they will contribute to the public good pessimistic beliefs then lead to a double deprivation and we discuss potential issues and remedies the more optimistic a society is the lower will be its total green expenditure we then use a large international survey to study how beliefs and additional controls determine prevention expenditure we rely on several proxies for beliefs and the willingness to contribute to prevention expenditure which we combine through principal component analysis in addition we investigate the role of environmental education for the relationship between beliefs and the willingness to contribute because of potential endogeneity bias due to unobserved variables that are likely to affect both beliefs and the willingness to contribute we follow the theoretical analysis and resort to a recursive bivariate model our main findings are very much in line with the theoretical predictions we find across all specifications that more optimistic beliefs lead to a lower willingness to contribute environmental education affects the willingness to contribute only indirectly through its impact on beliefs

implicit contracts explicit contracts and wages over the past decade the search for an explanation of aggregate money wage stickiness in the face of substantial shifts in the marginal revenue product of labor of the kind that was associated with an increase in real wages in the depression of the 1930 shas led to an extensive examination of explicit union and implicit nonunion employment contracting arrangements this distinction can be exaggerated long term union contracts have an implicit element in the sense that they specify only a limited number of contingencies to which wages will be adjusted moreover the implicit contracting branch of the literature has pushed in the direction of implying that the explicit contracts observed in the union sector may be formalizations of common informal arrangements in the nonunion sector so that differences between the sectors in the behavior of wages and employment may be more apparent than real the purpose of this paper is to examine the empirical basis for some of the key propositions of implicit contract theories and to note some important differences in the outcome of implicit and explicit contracting

an empirical study of labor market equilibrium under working hours constraints predictions of economic theory for the equilibrium condition of workers in three labor markets with differing working hours constraints are tested original data allow the marginal rate of substitution of income for leisure to be estimated directly in two markets working hours constraints resulting from high fixed employment costs and the overtime premium respectively cause workers to desire fewer and more hours in the third market agricultural labor constraint factors are absent the predicted relationship between the wage and the marginal rate of substitution of income for leisure holds in each case implications for agency and human capital models are investigated additionally in the agricultural case preferences and equilibria are indistinguishable for legal and illegal workers copyright 1990 by mit press

unionization and plant closure in canada this paper examines for the first time the role of unionization as a determinant of plant closings in canada using the 1999 to 2001 canadian workplace and employee survey the paper contributes to the north american evidence by showing that the share of a plant s workers covered by collective bargaining has a robust positive partial correlation with the probability of larger plants closing for smaller plants the extent of unionization tends to be much lower and its variation plays no role in plant closure the study highlights the theoretical and statistical importance of examining closure separately for large and small plants ce memoire examine pour la premiere fois le role de la syndicalisation en tant que determinant de la fermeture d usines au canada a l aide des resultats de l enquete sur le milieu de travail et les employes de 1999 et de 2001 emte le texte contribue a enrichir le dossier qui montre qu il y a correlation positive partielle robuste entre la portion des travailleurs d usines couverts par une convention collective et la probabilite de fermeture des grandes usines pour les plus petites usines le degre de syndicalisation tend aetre plus faible et sa variation ne joue pas de role dans le processus de fermeture d usines cette etude montre l importance theorique et pratique qu il y a aetudier separement les fermetures des grandes et des petites usines

testing for temporal reliability in contingent valuation with time for changes in factors affecting demand we develop a temporal reliability test of the contingent valuation method separate random samples were administered the same telephone survey five years apart in the retest respondents have less favorable attitudes toward the environment given this result a temporally reliable contingent valuation would find lower willingness to pay we find that the estimates are temporally reliable after accounting for attitudes which have changed over the five year period values are not significantly different five years apart this study provides additional evidence that use of the contingent valuation method can provide useful information for environmental policy analysis

seniority rules and productivity an empirical test the primary purpose of this paper is to test empirically the effect of labor quality on short run manufacturing productivity in doing so the study makes major advances in two areas for the first time a job tenure function is estimated and a time series of job tenure in manufacturing is developed this estimated tenure series empirically verifies the use of seniority rules in the firm worker employment relationship having generated a tenure series the authors then test whether tenure enhances productivity in manufacturing the results clearly indicate that seniority rules have a statistically significant positive impact on productivity and the pattern of the seniority rules is reminiscent of a model where human capital has a specific component copyright 1989 by the london school of economics and political science

does rising productivity explain seniority rules for layoffs seniority rules for layoffs are a widespread feature of the union and nonunion workplace many explanations have been offered for their existence some emphasize the role of unions but others argue that seniority rules can promote economic efficiency in this context the rules are simple easy to implement and widely regarded as fair they may help control turnover and conserve valuable investments in specific capital they may also be a response to the higher reliability of more experienced workers or they may reflect the higher value young workers place on their time at home or at search in this company a new explanation is hardly needed and this note will not provide one rather i will show that one of the most commonly accepted explanations is based on an assumption that is quite unrealistic one of the most plausible explanations for seniority rules seems to follow directly from human capital theory 2 senior workers having had more time to invest in on the job training are likely to be more productive the seniority rule may therefore be a convenient rule of thumb which ensures that on average it is the less productive workers who are let go while the more productive ones are hoarded until business picks up this argument has been given added weight by some results from implicit contract theory when workers differ in skill levels but share the same value of time at home efficient contracts will always lay off the unskilled workers before the skilled ones the natural corollary again seems to be that where senior workers are more skilled they should be last to go 3 i show in this paper however that when skill grows with experience as human capital models predict this corollary is false in fact human capital growth by itself predicts that it is the most senior workers who should be laid off first previous writers have missed this result because they have implicitly and unrealistically assumed that workers continue to gain productive skills while sitting at home on layoff my analysis will also shed light on some aspects of collective bargaining contracts and on the phenomenon of early retirement the results are first derived in the context of an implicit contract model which is stripped of all but the barest essentials subsequently the robustness of the conclusions is examined in a series of extensions finally some implications of the analysis are discussed

organizing contests for status the matthew effect vs the mark effect what is the best way to design tournaments for status in which individuals labor primarily for the esteem of their peers what process in other words should organizers of status based contests impose upon those who covet peer recognition we propose a formal model of status based competition that contrasts two competing alternatives the first following merton is the matthew effect according to which a tournament s architect directs slack resources to elite actors and thus widens the distribution of rewards by favoring cumulative advantage the second is the mark effect under which a tournament s designer instead pushes slack resources to marginal actors and thus tightens the distribution of rewards our results suggest that although the mark effect is better for the social welfare of most tournaments the matthew effect is preferable in two distinct contexts in small tournaments where variation in underlying ability translates into acute advantages for the most capable contestants and in large tournaments whose contestants face constant rather than rising marginal costs a condition we relate to contestants perception of their work as intrinsically valuable our contributions are twofold we find counter to the thrust of merton s work that cumulative advantage is not invariably optimal for the functioning of status contests and we identify circumstances in which the production of superstars is likely to make contests for status better off in aggregate implications for future research on status and management are discussed this paper was accepted by olav sorenson organizations and social networks

wages effort and incentive compatibility in life cycle employment contracts existing models of incentive compatibility in life cycle employment contracts arrive at different predictions partly because of the different kinds of contract breaking behavior allowed in them this paper sets out and classifies the full range of such behaviors argues that no model has yet incorporated all of them and examines the consequences of doing so in the context of lazear s well known model in the extended model wages cannot rise faster than marginal products throughout the entire contract and the set of feasible contracts can often be empty even when both parties can commit to terminate the contract whenever it is broken by the other party

the strategy structure of two sided matching markets we study two sided markets in which agents are buyers and sellers or firms and workers or men and women the agents are to form partnerships which provide them with satisfaction and at the same time make monetary transfers e g salaries or dowries the core of this market game is shown to have a particularly nice structure so that precise answers can be given to questions concerning comparative statics and manipulability the idea of using walrasian equilibrium as a mechanism for making allocations with desirable properties of fairness and efficiency has been studied extensively the scheme involves having agents specify their supply and demand functions the competitive equilibria are then calculated and allocations are made accordingly in general this procedure may run into two difficulties first nonuniqueness if there are several equilibria there may be no fair way to decide which one should be implemented and second manipulability if there is only one equilibrium an informed agent may be able to influence it by suitably falsifying his demand data however as we will show here using the walrasian mechanism does work remarkably well for a certain class of important markets these are the matching markets of our title and they include markets for single items like houses where it is assumed that traders do not wish to acquire more than one item they also include labor markets in which it is desired to match workers with jobs at suitable salaries academic markets in which students are to be assigned to educational institutions marriage markets where men and women are matched through negotiating of dowries it turns out that in these markets both the problems of nonuniqueness and manipulability can be resolved in a

performance responses to competition across skill levels in rank order tournaments field evidence and implications for tournament design tournaments are widely used in the economy to organize production and innovation we study individual data on 2775 contestants in 755 software algorithm development contests with random assignment the performance response to added contestants varies nonmonotonically across contestants of different abilities precisely conforming to theoretical predictions most participants respond negatively whereas the highest skilled contestants respond positively in counterfactual simulations we interpret a number of tournament design policies number of competitors prize allocation and structure number of divisions open entry and assess their effectiveness in shaping optimal tournament outcomes for a designer

no envy and consistency in economies with indivisible goods we consider the problem of fair allocation in economies with indivisible goods our main objective is to identify appealing subsolutions of the no envy solution we formulate desirable properties of solutions and look for solutions satisfying them given an allocation chosen by a solution for some economy and given a subgroup of the agents consider the problem of fairly distributing among its members the resources that this group has collectively received the solution is consistent if it recommends that the same bundle be attributed to each of these agents as initially we show that there is no proper subsolution of the no envy solution that satisfies consistency however many subsolutions satisfy bilateral consistency or the converse of consistency but again there is no proper subsolution satisfying these two properties together

multi item auctions a collection of items is to be distributed among several bidders and each bidder is to receive at most one item assuming that the bidders place some monetary value on each of the items it has been shown that there is a unique vector of equilibrium prices that is optimal in a suitable sense for the bidders in this paper we describe two dynamic auction mechanisms one achieves this equilibrium and the other approximates it to any desired degree of accuracy

do workers prefer increasing wage profiles we present survey data challenging the assumption implicit in analyses of labor supply that all else being equal workers prefer declining over increasing wage profiles we test several explanations for our results including that a there is something special about wages e g their association with productivity as opposed to other types of payments that induces the preference for increasing wages b utility depends not only on absolute levels of consumption but also on changes in consumption over time and c respondents who prefer increasing wage profiles are irrational and would change their behavior if the rationale for preferring declining wages were explained

wage contracts when output grows stochastically the roles of mobility costs and capital market imperfections the paper considers an industry in which individual output follows a stochastic growth process with a cumulative effect it analyzes the roles of labor mobility and capital market conditions in the determination of wage contracts positive costs of mobility are shown to be necessary for the provision of wage and employment insurance when workers have no access to the capital market when insurance is provided wages grow less than average productivity if the capital market is perfect wage insurance will be provided even in the absence of costs of mobility in this case wages grow faster than average productivity

measuring the benefits of local publilc goods environmental quality in gaston county north carolina local governments across the united states have been confronted with a growing range of federal and state mandated environmental protection programmes it is found that an application of contingent valuation to a local environmental policy is internally valid by theoretically and empirically examining the economic determinants of responses to a hypothetical referendum the resulting option price estimate is statistically reliable and has a reasonable order of magnitude results indicate that respondents are willing to pay for improvements in water quality but not air qualilty it is found that informatiion from various external sources helps to explain risk perceptions and these perceptions in turn influence willingness to pay the aggregate benefits of an air and water polllution control programme to gaston county are estimated to be 13 07 million annually with a 90 confidence interval of 11 07 million and 16 12 million

human capital vs signalling explanations of wages increases wages by directly increasing the worker s productivity this learning explanation is usually associated with human capital theory however it seems unlikely that learning explains all the wage differences associated with schooling and work history better educated workers are not a random sample of workers they have lower propensities to quit or to be absent are less likely to smoke drink or use illicit drugs and are generally healthier it is unlikely that employers make full use of differences in propensities to quit or to be absent or sick when hiring workers these characteristics are often not directly observed and the americans with disabilities act precludes firms from using either poor health or the likelihood of future sickness as a hiring criterion unless it is directly related to job performance however if low levels of education are associated with these unfavorable employee characteristics and employers are allowed to take education into account when hiring workers we would expect employers to favor better educated workers as a means of reducing their costs of sickness and job turnover in turn students will take these hiring criteria into account when deciding how long to stay in school students will choose a length of schooling to signal their ability to employers and employers will demand a minimum level of schooling

tenure unions and the relationship between employer size and wages the unionization rate in a worker s industry and the worker s tenure are interacted with employer size in wage regressions using current population survey data the results provide insight into the relatively small size wage relationship in the union sector nonunion tenure profiles steepen sharply with establishment size while union profiles flatten also the effect of industry unionization increases with firm size in the nonunion sector a pattern indicative of threat effects a separate analysis of nonunion wages indicates that size wage relationships are stronger in occupations associated with high monitoring costs

an empirical study of the determinants of green party voting i empirically study the determinants of individuals green voting behavior for this i make use of three datasets from germany a panel dataset and two cross sectional datasets the empirically strongest determinants are the voters attitude or distance to nuclear sites the level of schooling and net income i show that those voters with deviant attitudes or alternative world views are more likely to vote green a result of the fact that the green party has always had the position of a protest party i find little role for demographic variables like gender marital status or the number of children this is in contrast to the stated preference literature age plays a role for explaining voting behavior only insofar as it proxies for health

comparing benefit estimates from travel cost and contingent valuation using confidence intervals for hicksian welfare measures an approach to determining whether benefit estimates derived from the travel cost method and contingent valuation method are statistically different is presented unlike past comparisons compensating variation is estimated for both methods benefit comparisons are made more rigorous by use of confidence intervals which are developed using the same krinsky and robb simulation technique for both valution mothods the techniques are applied to deer hunting in california while point estimates of benefits from both truncated and untruncated adjusted travel cost methods are lower than the contingent valuation method the confidence intervals on the untruncated travel cost method do overlap the contingent valution method benefit estimates

intergenerational conflicts of interest and seniority systems in organizations this paper studies the role of a proposed seniority system in an organization the organization consists of at least three overlapping generations of short lived members and chooses either a shortsighted or a farsighted action in each period this results in intergenerational conflicts of interest the old generation desires to obtain an immediate profit while the middle and young generations have incentives to invest for future profits we use a model of infinitely repeated games and demonstrate that the seniority system solves these conflicts in the sense that the farsighted action profile is sustainable in equilibrium

estimating the wetland rental fee a case study involving a taiwan wetland wetlands provide many functions that are both economic and recreational and are valuable in terms of their ecological diversity while at the same time being nonmarket value products the purpose of this study is to estimate the optimal wetland rental through estimations of both the demand and supply functions in relation to wetland the wetland supply function is directly estimated based on the data provided by the owners of the wetland while the estimation of the wetland input demand function involves using the bootstrapping and contingent visitation approaches such estimation approaches could also be applied to other nonmarket value products that give rise to environmental externalities the estimation of rental fee could provide a long term leasing contract that gives the landlord with a particular rent to lease their lands to support a wetland eco tourism park to maintain wetland for substantial management several environmental management policy implications are also addressed

political economy of mechanisms we study the optimal mirrlees taxation problem in a dynamic economy in contrast to the standard approach where the taxation mechanism is operated by a benevolent planner with full commitment power we focus on economies in which policy decisions are made by self interested politicians who cannot commit to policies the society controls politicians using elections we show that the provision of incentives to politicians can be partly separated from redistribution across agents and that political economy constraints can be modeled as introducing additional aggregate distortions in the dynamic mirrlees problem we provide conditions under which the political economy distortions persist or disappear in the long run if the politicians are as patient as the agents the best sustainable mechanism leads to an asymptotic allocation where the aggregate distortions arising from political economy disappear in contrast when politicians are less patient than the citizens positive aggregate labor and capital taxes remain even asymptotically we conclude by providing a brief comparison of centralized

fair allocation of indivisible goods and criteria of justice a set of n objects and an amount m of money is to be distributed among m people example the objects are tasks and the money is compensation from a fixed budget an elementary argument via constrained optimization shows that for m sufficiently large the set of efficient envy free allocations is nonempty and has a nice structure in particular various criteria of justice lead to unique best fair allocations that are well behaved with respect to changes of m this is in sharp contrast to the usual fair division theory with divisible goods