public employment and the welfare state in sweden this is a nontechnical summary of a much longer study which will appear with the same title in richard freeman birgitta swedenborg and robert topel eds forthcoming i am especially indebted to henry ohlsson and birgitta swedenborg and to stan engerman vic fuchs assar lindbeck stephen lundgren and agnar sandmo for comments on initial drafts i alone am responsible for the views expressed here

a model of the origins of basic property rights this paper studies the origins of one of the most basic of property rights namely the right of an individual or an organization to the fruits of its labour my objective is to address the questions of why when and how this property right can emerge and be made secure i develop a model of the strategic interaction between two players in the state of nature which is an environment characterized by the absence of any laws and institutions including property rights and the state my analysis explores in particular the roles of the players fightin g and productive skills on the emergence and security or otherwise of this property right

child care policy and the labor supply of mothers with young children a natural experiment from canada in 1997 the provincial government of quebec the second most populous province in canada initiated a new child care policy licensed child care service providers began offering day care spaces at the reduced fee of 5 00 per day per child for children aged 4 by 2000 the policy applied to all children not in kindergarten using annual data 1993 2002 drawn from statistics canada s survey of labour and income dynamics the results show that the policy had a large and statistically significant impact on the labor supply of mothers with preschool children

export industry policy and reputational comparative advantage abstract country of origin reputations are endogenized in this paper and it is shown that otherwise identical countries can be correctly perceived as differing in their percentage of high quality producers these self fulfilling reputations determine not only the average quality of a country s exports but also the type of products in which a country specializes hence the pattern of international trade can be determined by this reputational comparative advantage an inferior country of origin reputation leads to lower national welfare therefore several trade and industrial policies that can improve country of origin reputation are examined

price of high quality daycare and female employment using local variation between municipalities i analyze the degree to which the price of high quality publicly subsidized childcare affects female employment following maternity leave importantly prices are income dependent and thus likely endogenous yet by exploiting information on minimum income compensation during non employment i bypass this problem the results show that the price negatively affects employment a price increase of 1 per month decreases employment by 0 08 which corresponds to a price elasticity of 0 17 these effects prevail during the first 12 months after childbirth i also find that availability of childcare increases employment

the value of commitment in contests and tournaments when observation is costly we study the value of commitment in contests and tournaments when there are costs for the follower to observe the leader s behavior in a contest the follower can pay to observe the leader s effort but cannot observe the effectiveness of that effort in a tournament the follower can pay to observe the effectiveness of the leader s effort but not the effort itself we show that this distinction matters significantly when observation is costly the value of commitment vanishes entirely in sequential and endogenous move contests regardless of the size of the observation cost by contrast in tournaments the value of commitment is preserved completely provided that the observation costs are sufficiently small

cournot oligopoly and the theory of supermodular games abstract we reconsider the cournot oligopoly problem in light of the theory of supermodular games invoking the recent ordinal version of this theory proposed by milgrom and shannon we generalize novshek s existence result derive the associated uniqueness result give an extension of a classical existence result under symmetry and provide conditions making a cournot oligopoly into a log supermodular game with the natural order on the action sets we also provide extensive and precise insight as to why decreasing best responses are widely regarded as being typical for the cournot model with production costs several illustrative examples are provided journal of economic literatureclassification numbers c72 l10 l13

i m not a high quality firm but i play one on tv this article investigates the role of noise in a multidimensional signalling game a monopolist that offers a high or low quality product can signal its quality to consumers through its selection of price and advertising it is shown that when the advertising channel is noisy there is no separating equilibrium where the monopolist will simultaneously employ both signalling mechanisms advertising will take place only when price is uncorrelated to quality furthermore the noise complicates the process of consumer inference this enables a low quality firm to take advantage of consumer ignorance by partially mimicking the strategy of the high quality firm

is universal child care leveling the playing field abstract we assess the case for universal child care programs in the context of a norwegian reform which led to a large scale expansion of subsidized child care we use non linear difference in differences methods to estimate the quantile treatment effects of the reform we find that the effects of the child care expansion were positive in the lower and middle parts of the earnings distribution of exposed children as adults and negative in the uppermost part we complement this analysis with local linear regressions of the child care effects by family income we find that most of the gains in earnings associated with the universal child care program relate to children of low income parents whereas upper class children actually experience a loss in earnings in line with the differential effects by family income we estimate that the universal child care program substantially increased intergenerational income mobility to interpret the estimated heterogeneity in child care effects we examine the mediating role of educational attainment and cognitive test scores and show that our estimates are consistent with a simple model where parents make a tradeoff between current family consumption and investment in children taken together our findings could have important implications for the policy debate over universal child care programs suggesting that the benefits of providing subsidized child care to middle and upper class children are unlikely to exceed the costs our study also points to the importance of universal child care programs in explaining differences in earnings inequality and income mobility across countries and over time

noisy leadership an experimental approach abstract we examine the strategic behavior of leaders and followers in sequential duopoly experiments with errors in communication followers either perfectly observe the leaders actions or else they observe nothing consistent with the theory the leaders in our experiments enjoy a greater first mover advantage when followers observe their actions with higher probability albeit their advantage is weaker than the theory predicts and is only weakly increasing with the probability that their actions will be observed our results also show that i when informed followers hardly ever underreact to the leaders quantities but tend to overreact slightly and ii when uninformed followers try to predict leaders quantities and react optimally this suggests that followers view the symmetric cournot outcome as fair and when informed punish leaders who try to exploit their first mover advantage in turn such punishments by overreactions induce leaders to behave more softly than the theory predicts

first mover disadvantages with private information we consider a leader follower game with output quantities as strategies so as to demonstrate the reduced advantages of the stackleberg leader in a stochastic environment with private information at the equilibrium the strategy of the leader reveals to the follower information about the demand in an attempt to signal low demand the leader contracts his output nevertheless unless the leader s information is infinitely noisy the follower can always correctly infer his signal we find a wide range of parameter values over which the follower is better off compared to the leader

money for nothing universal child care and maternal employment abstract the strong correlation between child care and maternal employment rates has led previous research to conclude that affordable and readily available child care is a driving force both of cross country differences in maternal employment and of its rapid growth over the last decades we analyze a staged expansion of subsidized child care in norway our precise and robust difference in differences estimates reveal that there is little if any causal effect of subsidized child care on maternal employment despite a strong correlation instead of increasing mothers labor supply the new subsidized child care mostly crowds out informal child care arrangements suggesting a significant net cost of the child care subsidies

the value of commitment in stackelberg games with observation costs abstract we study stackelberg games in which the follower faces a cost for observing the leader s action we show that irrespective of the size of the cost the leader s value of commitment is lost completely in all pure strategy equilibria however there also exists a mixed strategy equilibrium that fully preserves the first mover advantage in this type of equilibrium the probability that the follower looks at the leader s action is independent of the cost of looking

imprecision in accounting measurement can it be value enhancing accounting measurements of firms investments are usually imprecise we study the economic consequences of such imprecision when it interacts with information asymmetry regarding an investment project s ex ante profitability known only by the firm s managers absent agency and risk sharing considerations we find that some degree of accounting imprecision could actually be value enhancing we characterize the optimal degree of imprecision and identify its key determinants the greater the information asymmetry regarding the project s profitability the greater is the imprecision that should be tolerated in the measurement of the firm s investment

gradualism in free trade agreements a theoretical justification a notable feature of many recent trade agreements is the gradual rather than immediate reduction of trade barriers in this paper we model trade liberalization as a cooperative relationship that evolves gradually in a non cooperative environment we show that specialization capacity irreversibility and the development of trade partner specific capital increase the benefit of continuing the liberalizing relationship and decrease over time the lowest obtainable self enforcing tariff by increasing the penalty of future defection sunk costs ensure that the self enforcing trading relationship starts slowly but once in progress the level of cooperation continues to improve

the extensive macro labor supply elasticity integrating taxes and expenditures abstract this paper shows that accounting for certain public expenditures is crucial when comparing labor tax system efficiencies across countries to measure the extensive margin response to taxation i assemble a large cross country dataset consisting of the employment ratios the average effective tax rates the out of work benefits transfers as well as public expenditures on childcare elderly care and family policy covering all oecd countries and more than two decades when not controlling for the country and year fixed effects the extensive margin elasticities are negative once accounting for transfers the elasticities are negative or at most flat even with fixed effects once additionally accounting for public expenditures subsidies on labor complements which are robustly positively associated with the employment to population ratios i obtain either flat or positive extensive margin elasticities in the lower end of the expected range

does an exhaustible resource usually have many near optimal depletion paths in a recent article chapman finds that different depletion paths for a highly abstract world oil model yield objective function values close to the optimal level in this article the near optimality of chapman s marginal cost pricing solution is explained and many other near optimal solutions to his competitive model are identified furthermore evidence is cited that multiple near optima emerge from numerical exhaustible resource models incorporating several important real world complexities and reasons for this occurrence are provided the principal implications for public policy and economic theory are also discussed in a recent article chapman argues for the use of computational techniques to analyze exhaustible resource problems and highlights an interesting empirical finding from a highly

the effect of child care costs on married women s labor force participation the effect of child care costs on the probability that married women with children will participate in the labor market is examined child care costs are estimated using a generalized tobit specification corrected for selection estimates of a structural probit model of labor force participation provide evidence to support the prediction that increased child care costs lower the probability of participation it is also shown that the lower rate of labor force participation among mothers of preschoolers is entirely the result of the higher child care costs faced by these women and endogeneity of the number of young children in the participation equation copyright 1992 by mit press

endogenous sequencing of firm decisions abstract when firms are symmetrically informed a stackelberg leader prefers to be leader rather than a cournot duopolist however when the leader has superior information about demand the leader may earn lower ex ante profits than it would earn if it was choosing quantities simultaneously with the follower in this paper i give the firm with superior information the option of delaying its quantity decision until the decision period of the less informed firm so that decisions are made simultaneously surprisingly in the unique stable outcome the informed firm moves first regardless of its private information journal of economic literature classification numbers c72 c73 d82 l10

child care costs as a barrier to employment for single and married mothers because women typically serve as primary care providers for their children female labor force participation behavior is likely to be affected significantly by the costs associated with replacing maternal care with nonmaternal care while some evidence of this phenomenon exists in the economics literature discrepancies across studies make it difficult to provide conclusive evidence of the employment effects of these child care costs this paper uses an improved sipp survey design to present new evidence regarding the degree to which child care prices impede mothers employment behavior with additional evidence of the difference in these elasticities across marital status empirical technique and equation specification this permits linking this paper to the existing evidence drawing the conclusion that child care prices impede mothers employment behavior significantly with single mothers exhibiting less responsiveness in their labor force participation behavior to child care price changes than marri

inefficiency as a strategic device in group contests against dominant opponents i introduction many strategic situations in economics and politics can be understood as contests rd nitzan and ueda 2009 a private good nitzan 1991a 1991b nitzan and ueda 2009 or a mixed good esteban and ray 2001 nitzan and ueda 2011 to a large extent the intensity of free riding or conversely the motivation for individuals to exert effort in a contest is shaped by the intra group incentive scheme or governance structure in standard contests incentives are inseparably linked to the sharing rule i e to the usually exogenous procedure by which the rents acquired in the contest are distributed within the group 1 in a number of economic applications however incentives to exert effort appear to be separate or are even willfully separated from the sharing rule phenomena such as team spirit akerlof and kranton 2005 identification with the group sherif 1966 bornstein and ben yossef 1994 peer pressure kandel and lazear 1992 or social norms to contribute to the social good elster 1989 are examples for this separation alternatively groups could apply selective incentive schemes based on relative performance lazear and rosen 1981 or marginally align individual and group incentives nitzan and ueda 2009 in all these scenarios individuals behave cooperatively i e in the interest of the entire group even if the final distribution of rents follows a standard sharing rule mechanisms to induce cooperation often are costly sanchez pages and straub 2010 may only work under restrictive conditions che and gale 2003 require strategic coordination among individuals hardin 1995 or cannot be ensured to be obeyed unanimously oliver 1980 this might explain why they do not emerge universally or automatically the point we make in this article is even stronger even if there existed perfect and costless solutions to within group free riding problems which will henceforth be called intra group efficient incentive schemes igeis they might not always be adopted why would a group for which an igeis is freely available not wish to utilize it but rather adopt an apparently inefficient governance structure by definition an igeis internalizes all within group externalities and seems to be a safe way to increase one s payoffs however this reasoning ignores repercussions that arise in strategic environments like contests suppose for example that the competing groups have sufficiently unequal strengths say due to unequal sizes or different comparative advantages then the weaker group may refrain from implementing a costless igeis to avoid the contest from heating up adoption of an igeis makes a group more efficient and consequently more aggressive in the contest on one hand higher efforts constitute a cost on the other they affect the share of the rent that this group can hope to acquire or the likelihood of succeeding in the contest 2 an igeis clearly enhances a group s prospects if the other group did not change its behavior however if members of the opponent group reply with a sufficiently strong increase in their contest efforts this diminishes and may potentially more than offset the gains from one s own increased efforts whether this happens depends on the direction of the strategic interaction between groups the detrimental firing back effect can only become relevant if the other group s efforts are sufficiently strong strategic complements to one s own efforts

simultaneous vs sequential price competition with incomplete information abstract we compare equilibria with sequential and simultaneous moves under homogeneous good bertrand competition when unit costs are private information under an alternative interpretation we examine the consequences of awarding a right of first refusal in a first price procurement auction with endogenous quantity

the incentive to cheat an empirical analysis of opec relatively little is known about the payoffs to various kinds of strategies facing opec cartel members we propose an empirically tractable procedure to calculate the payoffs to relevant opec strategies fresh insights into the problem of the quota system and deterring cheating are presented stressing the importance of the nonrenewability of the oil stock the short run rigidity of demand short term capacity constraints the presence of a backstop technology and the different discount rates the cartel members are facing we conclude that punishment is a dominant strategy for the saudis and that the finite resource base in the oil industry substantially attenuates the incentive to cheat also the biased market quota system in favor of small producers weakens but does not eliminate their incentive to cheat in addition we compute the price paths and payoffs corresponding to competitive cournot and joint profit maximization solutions and contrast them with the actual historical patterns of opec beha

estimation of limited dependent variable models with dummy endogenous regressors applied economists have long struggled with the question of how to accommodate binary endogenous regressors in models with binary and nonnegative outcomes i argue here that much of the difculty with limited dependent variables comes from a focus on structural parameters such as index coefcients instead of causal effects once the object of estimation is taken to be the causal effect of treatment several simple strategies are available these include conventional two stage least squares multiplicative models for conditional means linear approximation of nonlinear causal models models for distribution effects and quantile regression with an endogenous binary regressor the estimation strategies discussed in the article are illustrated by using multiple births to estimate the effect of childbearing on employment status and hours of work

two birds with one stone female labor supply fertility and market childcare abstract the correlation between the female labor force participation rate fpr and the total fertility rate tfr has switched from negative to positive in some developed countries in this paper we show how increasing the substitutability between maternal time and market childcare can raise both fpr and tfr and provide an explanation for the change in the tfr fpr correlation simulations of a life cycle model of married women s work and fertility decisions indicate that the fpr increases whereas the tfr is u shaped with regard to substitutability the dynamic relationship depends on the relative strength of behavioral and composition effects greater substitutability allows working women to have more children but it also attracts less productive women to enter the labor force who trade childbirths for labor supply the findings imply that raising substitutability to a sufficiently high level can achieve the two seemingly conflicting goals increasing female labor force participation and fertility rates

assessing the importance of tiebout sorting local heterogeneity from 1850 to 1990 this paper argues that long run trends in geographic segregation are inconsistent with models where residential choice depends solely on local public goods the tiebout hypothesis we develop an extension of the tiebout model that predicts as mobility costs fall the heterogeneity across communities of individual public good preferences and of public good provision must weakly increase given the secular decline in mobility costs these predictions can be evaluated using historical data we find decreasing heterogeneity in policies and proxies for preferences across i a sample of u s municipalities 1870 1990 ii all boston area municipalities 1870 1990 and iii all u s counties 1850 1990

allocation of canadian natural gas to domestic and export markets canadian natural gas is allocated to domestic and export markets using a non linear optimization model efficient near term prices are low to stimulate consumption and reduce reserves of shut in natural gas many near optimal depletion paths also exist implying greater importance of non efficiency criteria for selecting a socially optimal depletion path finally for canadian consumption decisions through the early 1990s the value of perfect information about future export prospects is likely small mistakes in allocating gas to domestic markets to that time are unlikely to cause serious losses in any of several performance measures including producer surplus economic rent l allocation du gaz naturel canadien entre le marche domestique et les marches d exportation on alloue le gaz naturel canadien entre les marches domestique et 6trangers a l aide d une modele d optimisation non lineaire les prix efficients a court terme sont bas a la fois pour stimuler la consommation et pour reduire les reserves de gaz naturel des puits fermes on peut identifier plusieurs sentiers d epuisement quasi optimaux qui donnent une importance relativement plus grande aux criteres autres que l efficacite dans la selection d un sentier d epuisement socialement optimal enfin pour ce qui a trait aux decisions de consommation au canada jusque dans les debuts des annees 1990 il appert que la valeur d une information parfaite quant aux possibilites d exportation n est pas susceptible d etre grande de plus des erreurs dans l allocation du gaz aux marches domestiques jusqu a ce moment ia ne sont pas susceptibles de causer des pertes enormes quels que soient les indicateurs de performance y compris le surplus au producteur i e la rente economique

using the wrong discount rate to allocate an exhaustible resource what are the social welfare implications of using the wrong discount rate to allocate an exhaustible resource utilizing a simple numerical model it is found that over the real discount rate range of 6 to 9 the welfare losses of employing a rate no more than 3 different from the social rate are small and decline as the social rate rises even for stringent supply circumstances however substantial transfers of surplus between producers and consumers occur as the improper rate deviates from the social rate other issues such as income distribution immediately loom larger when a discount rate is chosen

schooling and labor market consequences of school construction in indonesia evidence from an unusual policy experiment between 1973 and 1978 the indonesian government engaged in one of the largest school construction programs on record combining differences across regions in the number of schools constructed with differences across cohorts induced by the timing of the program suggests that each primary school constructed per 1 000 children led to an average increase of 0 12 to 0 19 years of education as well as a 1 5 to 2 7 percent increase in wages this implies estimates of economic returns to education ranging from 6 8 to 10 6 percent

commitment and observability in a contracting environment this paper examines leader follower games where a leader must purchase an essential input from a price setting supplier in order to take an action we show that equilibrium outcomes when the followers perfectly observe the leaders actions cannot be approximated by mixed equilibrium outcomes of the game where followers imperfectly observe the leaders actions i e they are not accessible accessibility fails since in a pure strategy equilibrium a supplier makes positive profits however in an equilibrium where a leader randomizes supplier profits must be zero our result follows from a generalized indifference principle that mixed strategies must satisfy in economic environments while supplier profits cannot be approximated player action profiles are accessible our results also apply to games with costly observation

child care costs and family labor supply this paper presents a theoretical and empirical analysis of the effects of child care costs on family labor supply and the demand for market child care the model is a framework for cross section estimation of the effects of child care costs on labor supply and child care use it applies to households having young children requiring continuous care and in which both the mother and 1 other potential child care provider are present the 3 potential sources of child care are the mother the potential informal provider and the market using data from the 1980 baseline household survey of the employment opportunity pilot projects this empirical analysis uses a subsample of 6170 households in which there is a married woman under age 45 with her spouse present at the time of the survey at least 1 child under age 14 and nonmissing data on key variables results show that 1 higher market child care costs discourage women from working even when an informal source of care is available indicating that such informal care is an imperfect substitute for market care 2 a higher wage rate for the mother encourages her to work thus a higher wage rate increases the probability of using market child care 3 the number of children requiring care has a negative impact on the probability of the women working with the largest impact caused by younger children 4 nonwage income has a negative impact on the probability of the woman working and 5 black women are more likely to work than whites and are statistically more likely than whites to use market child care if they do work this family labor supply model predicts that the cost of market child care will affect household decisions on labor supply and child care use estimates of a qualitative choice model provide strong confirmation that child care costs affect such decisions the responsiveness of the labor supply of mothers to child care costs demonstrated in this study indicate that such subsidies do have their intended effect of encouraging labor supply the fact that a large proportion of current child care subsidies benefit primarily middle and upper income families via the income tax credit suggests that the labor supply effets of such subsidies may in practice be stronger for less needy families than for low income families employer subsidized child care may become an increasingly popular tool for attracting mothers into the labor force

maintaining a reputation when strategies are imperfectly observed this paper studies reputation effects in games with a single long run player whose choice of stage game strategy is imperfectly observed by his opponents we obtain lower and upper bounds on the long run player s payoff in any nash equilibrium of the game if the long run player s stage game strategy is statistically identified by the observed outcomes then for generic payoffs the upper and lower bounds both converge as the discount factor tends to 1 to the long run player s stackelberg payoff which is the most he could obtain by publicly committing himself to any strategy

a structural model of labor supply and child care demand this paper specifies and estimates a structural model in which the decision to purchase market child care and the quality purchased is made simultaneously with the employment decision of the mother separate analyses are performed for married mothers and single mothers the structural estimates are used to simulate the effects and costs of changes in the federal child care tax credit the simulations indicate that a refundable child care tax credit would distribute child care benefits more equally across the population by increasing the shares of subsidies received by low income families and would induce a considerable increase in expenditures on market child care labor supply also increases but by considerably less than child care expenditures a surprising result is that despite large increases in child care

public schooling for young children and maternal labor supply as policy makers have sought to reduce the welfare rolls by increasing labor supply among single mothers much attention has been given to the possible role of expanded child care subsidies including direct provision of public preschool at the same time public interest in child care subsidies for two parent households is high for example former vice president gore not long ago proposed to make high quality pre school fully available to every family for every child in every community in america albert gore 1999 in this paper i use 1980 census data to estimate the effect of public school enrollment for a woman s five year old on measures of labor supply and public assistance receipt this approach has two advantages first i am able to estimate the effect of a large implicit child care subsidy 1 second because public kindergarten is universally available to all age eligible children where it is provided selection problems related to means testing do not arise a difficulty with public school enrollment arises because parents may choose to hold their children back a year or enroll them in private school i deal with this issue by using five yearold s quarter of birth qob variables as instruments for public school enrollment status this strategy works because parents ability to enroll a child in public kindergarten in the academic year when the child turns five typically depends on the calendar date of the child s birth 2 in most states children born in the second quarter april 1 june 30 of 1974 will have been eligible to start kindergarten in the fall of 1979 while children born in the first quarter january 1march 31 of 1975 generally will not eligibility for children born between july 1 and december 31 1974 depends on the rules where they live 3

the value of commitment with imperfect observability and private information the idea that commitment is valuable plays a key role in many economic models however bagwell 1995 has shown that commitment may have no value if there is even a slight noise in the observation of the leader s action thus casting doubt on the notion that commitment has strategic value here i reconsider the commitment story in a model where the leader s action is imperfectly observed and the leader has private information and i examine how it is affected by uncertainty about the leader s type and by the observation noise

female employment and occupational changes in the 1990s how is the eu performing relative to the us abstract this paper provides a comparison of the incidence and composition of female employment both in the eu and in the us despite a significant increase in female labour market participation in the eu about 50 of the difference between the employment rates in the us and the eu can still be attributed to differences in the educational attainments and the employment rates of women aged 25 54 we highlight the main features of female employment in both areas paying particular attention to the differences across age cohorts and educational levels our main findings are as follows i the educational level of the eu female population is slowly converging to that of the us across age cohorts ii the employment rates of less educated women are much lower in the eu than in the us with the exceptions of the scandinavian countries even for women aged 25 34 and iii occupational segregation is lower for the younger highly educated women who seem to be entering more typically male occupations and less typically female occupations although at a higher rate in the us than in the eu