moral hazard adverse selection and health expenditures a semiparametric analysis theoretical models predict asymmetric information in health insurance markets may generate inefficient outcomes due to adverse selection and moral hazard however previous empirical research has found it difficult to disentangle adverse selection from moral hazard in health care consumption we propose a two step semiparametric estimation strategy to identify and estimate a canonical model of asymmetric information in health care markets with this method we can estimate a structural model of demand for health care we illustrate this method using a claims level data set with confidential information from a large self insured employer we find significant evidence of moral hazard and adverse selection

testing for asymmetric information in insurance markets the first goal of this paper is to provide a simple and general test of the presence of asymmetric information in contractual relationships within a competitive context we also argue that insurance data are particularly well suited to such empirical investigations to illustrate this claim we use data on contracts and accidents to investigate the extent of asymmetric information in the french market for automobile insurance using various parametric and nonparametric methods we find no evidence for the presence of asymmetric information in this market

taxes benefits and careers complete versus incomplete markets abstract an incomplete market life cycle model with indivisible labor makes career lengths and human capital accumulation respond to labor tax rates and government supplied non employment benefits we compare aggregate and individual outcomes in this individualistic incomplete market model with those in a comparable collectivist representative family model with employment lotteries and complete insurance markets the incomplete and complete market structures assign leisure to different types of individuals who are distinguished by their human capital and age these microeconomic differences distinguish the two models in terms of how macroeconomic aggregates respond to some types of government supplied non employment benefits but remarkably not to labor tax changes

reputation and prices on the e market evidence from a major french platform we use an exhaustive data set from one of france s largest e commerce platforms priceminister com to estimate a statistical causal effect of a seller s reputation rating and size on transaction prices we go beyond the results currently available by tackling the issue of seller unobserved heterogeneity and the dynamics of reputation in price equations we can also produce results for a large range of product categories books cds video games or dvds product conditions used or new and seller types individual or professional sellers our results show large scale empirical evidence of a significant positive and strong effect of seller reputation on prices

labor supply and the optimality of social security abstract traditional economic theory predicts that an unfunded public pension system can be justified on the basis of its ability to provide intergenerational transfers and also for its ability to provide partial insurance against mortality and labor income risks in this paper i demonstrate that the quantitative importance of these traditional roles depends on how the pension system distorts households labor supply decisions using a general equilibrium life cycle consumption model calibrated to the u s economy i show that these distortions can be large enough to erase much of the traditional welfare gains from social security i also find that this fact is robust within the range of labor supply elasticities usually encountered in the macroeconomic literature

adverse selection and moral hazard in insurance can dynamic data help to distinguish a standard problem of applied contracts theory is to empirically distinguish between adverse selection and moral hazard we show that dynamic insurance data allow to distinguish moral hazard from dynamic selection on unobservables in the presence of moral hazard experience rating implies negative occurrence dependence individual claim intensities decrease with the number of past claims we discuss econometric tests for the various types of data that are typically available finally we argue that dynamic data also allow to test for adverse selection even if it is based on asymmetric learning jel d82 g22 c41 c14

market transparency adverse selection and moral hazard we study the eects of improvements in market transparency on ebay on seller exit and continuing sellers behavior an improvement in market transparency by reducing strategic bias in buyer ratings led to a significant increase in buyer valuation especially of sellers rated poorly prior to the change but not to an increase in seller exit when sellers had the choice between exiting a reduction in adverse selection and improved behavior a reduction in moral hazard they preferred the latter because of lower cost increasing market transparency improves on market outcomes

micro and macro elasticities in a life cycle model with taxes we build a life cycle model of labor supply that incorporates changes along both the intensive and extensive margin and use it to assess the consequences of changes in tax and transfer policies on equilibrium hours of work we find that changes in taxes have large aggregate effects on hours of work moreover we find that there is no inconsistency between this result and the empirical finding of small labor elasticities for prime age workers in our model micro and macro elasticities are effectively unrelated our model is also consistent with other cross country patterns

sources of lifetime inequality is lifetime inequality mainly due to differences across people established early in life or to differences in luck experienced over the working lifetime we answer this question within a model that features idiosyncratic shocks to human capital estimated directly from data as well as heterogeneity in ability to learn initial human capital and initial wealth we find that as of age 23 differences in initial conditions account for more of the variation in lifetime earnings lifetime wealth and lifetime utility than do differences in shocks received over the working lifetime jel d31 d91 j24 j31 to what degree is lifetime inequality due to differences across people established early in life as opposed to differences in luck experienced over the working lifetime among the individual differences established early in life which ones are the most important a convincing answer to these questions is of fundamental importance first and most simply an answer serves to contrast the potential importance of the myriad policies directed at modifying or at providing insurance for initial conditions e g public education against those directed at shocks over the working lifetime e g unemployment insurance second a discussion of lifetime inequality cannot go too far before discussing which specific type of initial condition is the most critical for determining how one fares in life third a useful framework for answering these questions should also be central in the analysis of a wide range of policies considered in macroeconomics public finance and labor economics we view lifetime inequality through the lens of a risky human capital model agents differ in terms of three initial conditions initial human capital learning ability and financial wealth initial human capital can be viewed as controlling the intercept of an agent s mean earnings profile whereas learning ability acts to rotate

structural transformation and the deterioration of european labor market outcomes this paper examines hours worked in continental europe and the united states from 1956 to 2003 the empirical work establishes two results first hours worked in europe decline by almost 45 percent compared to the united states over this period second this decline is almost entirely accounted for by the fact that europe develops a much smaller market service sector than the united states a simple model of time allocation is used to understand these patterns i find that relative increases in taxes and technological catch up can account for most of the differences between the european and american time allocations over this period

economic insights from internet auctions this paper surveys recent studies of internet auctions four main areas of research are summarized first we survey several studies that document and attempt to explain the frequently observed sniping or last second bidding behavior in these auctions second we summarize several methods proposed to quantify the distortions caused by asymmetric information in these markets most notably due to the winner s curse third we explore research about the role of reputation mechanisms installed to help combat these distortions finally we discuss what internet auctions have to teach us about auction design

long term changes in married couples labor supply and taxes evidence from the us and europe since the 1980s abstract we document the time series of employment rates and hours worked per employed by married couples in the us and seven european countries belgium france germany italy the netherlands portugal and the uk from the early 1980s through 2016 relying on a model of joint household labor supply decisions we quantitatively analyze the role of non linear labor income taxes for explaining the evolution of hours worked of married couples over time using as inputs the full country and year specific statutory labor income tax codes we further evaluate the role of consumption taxes gender and educational wage premia and the educational composition the model is quite successful in replicating the time series behavior of hours worked per employed married woman with labor income taxes being the key driving force it does however capture only part of the secular increase in married women s employment rates in the 1980s and early 1990s suggesting an important role for factors not considered in this paper an independent and important contribution of the paper is that we make the non linear tax codes used as an input into the analysis available as a user friendly and easily integrable set of matlab codes

social security and retirement across the oecd abstract employment to population ratios differ markedly across organization for economic cooperation and development oecd countries especially for people aged over 55 years in addition social security features differ markedly across the oecd particularly with respect to features such as generosity entitlement ages and implicit taxes on social security benefits this study postulates that differences in social security features explain many differences in employment to population ratios at older ages this conjecture is assessed quantitatively with a life cycle general equilibrium model of retirement at ages 60 64 years the correlation between the simulations of this study s model and observed data is 0 67 generosity and implicit taxes are key features to explain the cross country variation whereas entitlement age is not

labor supply and government programs a cross country analysis abstract there are substantial cross country differences in labor supply late in the life cycle age 50 a theory of labor supply and retirement decisions is developed to quantitatively assess the role of social security disability insurance and taxation for understanding differences in labor supply late in the life cycle across european countries and the united states the findings support the view that government policies can go a long way towards accounting for the low labor supply late in the life cycle in the european countries relative to the united states with social security rules accounting for the bulk of these effects

cross country differences in unemployment fiscal policy unions and household preferences in general equilibrium we develop a five period overlapping generations model with individuals who differ by ability and with an imperfect labour market union wage setting for the individuals of lower ability the model explains human capital formation hours worked and unemployment within one coherent framework its predictions match the differences in the unemployment rate across 12 oecd countries remarkably well a shapley decomposition of these differences reveals an almost equal role for fiscal policy variables and union preferences as to fiscal policy differences in unemployment benefits play a much more important role than tax differences differences in households taste for leisure are unimportant

taxation of human capital and wage inequality a cross country analysis wage inequality has been significantly higher in the united states than in continental european countries ceu since the 1970s moreover this inequality gap has further widened during this period as the us has experienced a large increase in wage inequality whereas the ceu has seen only modest changes this paper studies the role of labor income tax policies for understanding these facts we begin by documenting two new empirical facts that link these inequality differences to tax policies first we show that countries with more progressive labor income tax schedules have significantly lower before tax wage inequality at different points in time second progressivity is also negatively correlated with the rise in wage inequality during this period we then construct a life cycle model in which individuals decide each period whether to go to school work or be unemployed individuals can accumulate skills either in school or while working wage inequality arises from differences across individuals in their ability to learn new skills as well as from idiosyncratic shocks progressive taxation compresses the after tax wage structure thereby distorting the incentives to accumulate human capital in turn reducing the cross sectional dispersion of before tax wages we find that these policies can account for half of the difference between the us and the ceu in overall wage inequality and 76 of the difference in inequality at the upper end log 90 50 differential when this economy experiences skill biased technological change progressivity also dampens the rise in wage dispersion over time the model explains 41 of the difference in the total rise in inequality and 58 of the difference at the upper end

the cyclical and secular behaviour of the labour input comparing efficiency units and hours worked summary a monthly labour input series designed to correct for the fact that all hours worked are not of the same quality is constructed and its properties compared with unadjusted hours worked this efficiency units series is constructed from bls data on hours worked and earnings by age and sex the cyclical fluctuations displayed by the efficiency units series are smaller on average than those displayed by hours worked although the difference is not large however the secular behaviour of the series is quite different hours worked per capita displays a significant positive trend while efficiency units per capita does not

effective tax rates in macroeconomics cross country estimates of tax rates on factor incomes and consumption abstract this paper proposes a method for computing tax rates using national accounts and revenue statistics using this method we construct time series of tax rates for large industrial countries the method identifies the revenue raised by different taxes at the general government level and defines aggregate measures of the corresponding tax bases this method yields estimates of effective tax rates on factor incomes and consumption consistent with the tax distortions faced by a representative agent in a general equilibrium framework these tax rates compare favorably with existing estimates of marginal tax rates and highlight important international differences in tax policy

transparency in markets for experience goods experimental evidence we propose an experimental design to investigate the role of information disclosure in the market for an experience good the market is served by a duopoly of firms that choose both the quality and the price of their product consumers differ in their taste for quality and choose from which firm to buy we compare four different treatments in which we vary the degree to which consumers are informed about quality contrary to theoretical predictions firms do not differentiate quality under full information rather both tend to offer products of similar high quality entailing more intense price competition than predicted by theory under no information we observe a lemons outcome where quality is low at the same time firms manage to maintain prices substantially above marginal cost in two intermediate treatments quality is significantly higher than the no information level and there is evidence that prices become better predictors of quality taken together these findings suggest that information disclosure is a more effective tool to raise welfare and consumer surplus than theory would lead one to expect jel l15 c91 d82

social security and cross country differences in hours a general equilibrium analysis abstract i develop a general equilibrium life cycle model with an intensive and extensive margin of labor supply and endogenous human capital accumulation i use the model to assess the effects of changes to various features of social security on labor supply outcomes of particular interest are changes to the scale of the program and to the relevant eligibility rules i find that the cross country differences in social security programs account for at least 79 of the differences in employment rates of people aged 55 64 and 17 31 of the differences in aggregate hours worked between the us and continental europe

price quality and reputation evidence from an online field experiment we examine the link between price quality seller claims and seller reputation in internet auctions after purchasing actual baseball cards and having them professionally graded we find that some buyers in the online graded market are misled by incredible claims of quality they pay higher prices but do not receive better quality and in fact are defrauded more often online seller reputation is effective for identifying good faith sellers but conditional on completed auctions reputable sellers do not provide better quality evidence also suggests that high claim sellers target less experienced buyers we attribute these patterns to two loopholes in the ebay rating system we benefited from the comments of austan goolsbee raphael thomadsen john shea dan vincent david reiley larry ausubel peter cramton v joseph hotz jeff smith jimmy chan vincent crawford mark duggan and attendees at numerous seminars and conferences we are particularly grateful to seth sanders and john list for their constructive advice at the early stage of the research to timothy bresnahan rachel kranton and thomas hubbard for their detailed suggestions in reshaping earlier versions and to editor ariel pakes and two anonymous referees for their careful readings special thanks to eight friends who acted as our agents in purchasing baseball cards in retail markets and to numerous sports card store owners who shared their insights on the sportscard industry excellent research assistance from randy alexander moore and krzysztof fizyta is gratefully acknowledged any remaining errors are ours

the effect of information on product quality evidence from restaurant hygiene grade cards this study examines the effect of an increase in product quality information to consumers on e rms choices of product quality in 1998 los angeles county introduced hygiene quality grade cards to be displayed in restaurant windows we show that the grade cards cause i restaurant health inspection scores to increase ii consumer demand to become sensitive to changes in restaurants hygiene quality and iii the number of foodborne illness hospitalizations to decrease we also provide evidence that this improvement in health outcomes is not fully explained by consumers substituting from poor hygiene restaurants to good hygiene restaurants these results imply that the grade cards cause restaurants to make hygiene quality improvements

saving and pension reform in general equilibrium models in this paper we study saving and pension reform in the context ofgeneral equilibrium models we discuss some of the reasons for the existence of a social security system we highlight the key features of the us data that a general equilibrium model of saving and social security should match the life cycle profiles of savings con sumption and hours worked and the aggregate capital output ratio and saving rate we describe the structure of a general equilibrium model and discuss how its parameters are estimated or calibratedfrom the data we present the quantitative results from some policy experiments previously computed in the literature first in the context of stationary demographics and then with an ageing population and highlight the key policy prescrip tions that we learn from these experiments we conclude by providing some directions for future research

careers in foreign owned firms in japan this article examines how organizational environments affect labor market processes in japan i hypothesize that labor market inequality is generated through workers being positioned in either domestic or in foreign firms i apply the concept of social versus economic exchange to distinguish the nature of transactions between domestic and foreign firms i argue that foreign firms operate under an institutional context that is conducive to the economic mode of exchange which has enormous consequences for their personnel practices and reward systems using a dataset of japanese workers collected in 2000 i examine the extent to which employment practices in foreign firms deviate from the benchmark features observed in the japanese labor market my results confirm that employment in foreign firms significantly affects career outcomes the highcommitment culture commonly associated with the japanese workforce is an outcome of the organizational environment i find little evidence of japanese employment pra

pennies from ebay the determinants of price in online auctions this paper presents an exploratory analysis of the determinants of prices in online auctions for collectible united states one cent coins at the ebay web site starting with an initial data set of 20 000 auctions we perform regression analysis on a restricted sample of 461 coins for which we obtained estimates of book value we have three major findings first a seller s feedback ratings reported by other ebay users have a measurable effect on her auction prices negative feedback ratings have a much greater effect than positive feedback ratings do second minimum bids and reserve prices have positive effects on the final auction price in particular minimum bids appear only to have a significant effect when they are binding on a single bidder as predicted by theory third when a seller chooses to have her auction last for a longer period of days this significantly increases the auction price on average

the effects of health insurance and self insurance on retirement behavior this paper provides an empirical analysis of the effects of employer provided health insurance medicare and social security on retirement behavior using data from the health and retirement study we estimate a dynamic programming model of retirement that accounts for both saving and uncertain medical expenses our results suggest that medicare is important for understanding retirement behavior and that uncertainty and saving are both important for understanding the labor supply responses to medicare half the value placed by a typical worker on his employer provided health insurance is the value of reduced medical expense risk raising the medicare eligibility age from 65 to 67 leads individuals to work an additional 0 074 years over ages 60 69 in comparison eliminating 2 years worth of social security benefits increases years of work by 0 076 years

income and wealth heterogeneity in the macroeconomy how do movements in the distribution of income and wealth affect the macroeconomy we analyze this question using a calibrated version of the stochastic growth model with partially uninsurable idiosyncratic risk and movements in aggregate productivity our main finding is that in the stationary stochastic equilibrium the behavior of the macroeconomic aggregates can be almost perfectly described using only the mean of the wealth distribution this result is robust to substantial changes in both parameter values and model specification our benchmark model whose only difference from the representative agent framework is the existence of uninsurable idiosyncratic risk displays far less cross sectional dispersion and skewness in wealth than u s data however an extension that relies on a small amount of heterogeneity in thrift does succeed in replicating the key features of the wealth data furthermore this extension features aggregate time series that depart significantly from permanent income behavior

selection on moral hazard in health insurance economic analysis of market failure in insurance markets tends to analyze selection and moral hazard as distinct phenomena in this paper we explore the potential for selection on moral hazard in insurance markets by this we mean the possibility that moral hazard effects are heterogenous across individuals and that individuals selection of insurance coverage is affected by their anticipated behavioral response to coverage we examine these issues empirically in the context of employer provided health insurance in the united states specifically we break down the general

retirement and consumption in a life cycle model consumption expenditure declines sharply at the time of retirement for many households but the majority maintain a smooth consumption path a simple life cycle model with uncertainty about the time of retirement can account for this pattern a richer version of the model is calibrated to data from the health and retirement study hrs the median change in consumption expenditure at retirement generated by the model is zero while the mean is negative matching the hrs data however the magnitude of the drop in consumption among households that experience a decline is too small in the model compared to the data

the market for evaluations recent developments in computer networks have driven the cost of distributing information virtually to zero creating extraordinary opportunities for sharing product evaluations the authors present pricing and subsidy mechanisms that operate through a computerized market and induce the efficient provision of evaluations the mechanisms overcome three major challenges first evaluations which are public goods are likely to be underprovided second an inefficient ordering of evaluators may arise and third the optimal quantity of evaluations depends on what is learned from the initial evaluations

does social security privatization produce efficiency gains while privatizing social security can improve labor supply incentives it can also reduce risk sharing we analyze a 50 privatization using an overlapping generations model where heterogeneous agents with elastic labor supply face idiosyncratic earnings shocks and longevity uncertainty when wage shocks are insurable privatization produces about 18 100 of extra resources for each future household after all transitional losses have been compensated for with lump sum taxes when wages are not insurable privatization reduces efficiency by about 2 400 per future household we check the robustness of these results to different model specifications as well as policy reforms and arrive at several surprising conclusions first privatization performs better in a closed economy where interest rates decline with capital accumulation than in an open economy second privatization also performs better when an actuarially fair private annuity market does not exist third government matching of private contributions on a progressive basis is not very effective at restoring efficiency and can actually cause harm

quality disclosure and certification theory and practice this essay reviews the theoretical and empirical literature on quality disclosure and certification after comparing quality disclosure with other quality assurance mechanisms and describing a brief history of quality disclosure we address two sets of theoretical issues first why don t sellers voluntarily disclose through a process of unraveling and given the lack of unraveling is it desirable to mandate seller disclosure second when we rely on certifiers to act as the intermediary of quality disclosure do certifiers necessarily report unbiased and accurate information we further review empirical evidence on these issues with a particular focus on healthcare education and finance the empirical review covers quality measurement the effect of third party disclosure on consumer choice and seller behavior as well as the economics of certifiers jel d18 k32 l15 m31

wage risk and employment risk over the life cycle we specify a structural life cycle model of consumption labour supply and job mobility in an economy with search frictions that allows us to distinguish between different sources of risk and to estimate their effects the sources of risk are shocks to productivity job destruction the process of job arrival when employed and unemployed and match level heterogeneity our model allows for four main social insurance programmes in contrast to simpler models that attribute all income fluctuations to shocks our framework allows us to disentangle the effects of the shocks from the responses to these shocks estimates of productivity risk once we control for employment risk and for individual labour supply choices are substantially lower than estimates that attribute all wage variation to productivity risk increases in productivity risk impose a considerable welfare loss on individuals and induce substantial precautionary saving increases in employment risk have large effects on output and primarily through this channel affect welfare the welfare value of government programs such as food stamps which partially insure productivity risk is greater than the value of unemployment insurance which provides partial insurance against employment risk and no insurance against persistent shocks

embeddedness in the making of financial capital how social relations and networks benefit firms seeking financing i investigate how social embeddedness affects an organization s acquisition and cost of financial capital in middle market banking a lucrative but understudied financial sector using existing theory and original fieldwork i develop a framework to explain how embeddedness can influence which firms get capital and at what cost i then statistically examine my claims using national data on small business lending at the level of dyadic ties i find that firms that embed their commercial transactions with their lender in social attachments receive lower interest rates on loans at the network level firms are more likely to get loans and to receive lower interest rates on loans if their network of bank ties has a mix of embedded ties and arm s length ties these network effects arise because embedded ties motivate network partners to share private resources while arm s length ties facilitate access to public information on market prices and loan opportunities so that the benefits of different types of ties are optimized within one network i conclude with a discussion of how the value produced by a network is at a premium when it creates a bridge that links the public information of markets with the private resources of relationships

employment tenure and earnings profiles in japan and the united states comments the relationship between job tenure and annual earnings in japan has received considerable attention from social scientists examining employment contracts and the japanese compensation system in their widely cited article masanori hashimoto and john raisian 1985 using data for 1980 showed that japanese men have greater job tenure than comparable workers in the united states and that the earnings of japanese men rise more rapidly with increased tenure they found that an additional year of tenure increases earnings in both small and large firms in japan more than does an additional year of general market experience their results for the united states indicate that general market experience increases earnings more than an additional year of job tenure the 1970 s and 1980 s were a period of substantial change in japanese labor markets due to the rapid aging of the population and the restructuring of the economy following the oil crisis the present analysis extends the work of hashimoto and raisian by estimating earnings equations for japanese men for the years 1971 1976 1981 and 1986 specifically we wish to investigate whether hashimoto and raisian s findings have been stable over time or whether changes in the labor market have altered the importance of tenure relative to total labor market experience in the japanese labor market i changes in the labor market

the definition of part time employment a switching regression model with unknown sample selection rejecting the standard less than thirty five hours per week categorization of part time workers this paper offers an empirically justified definition of the part time employed the definition is based on the distinction through wage payments that employers make between a high hours full time and a low hours part time group of workers a switching regression model of wage equations with deterministic but unknown sample selection is estimated resulting in a significant split between high hours and low hours workers that is higher than the standard definition wage differentials are calculated and decomposed and estimates from the structural choice model are presented copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the effects of health wealth and wages on labour supply and retirement behaviour this paper estimates a life cycle model of labour supply retirement and savings behaviour in which future health status and wages are uncertain individuals face a fixed cost of work and cannot borrow against future labour pension or social security income the method of simulated moments is used to match the life cycle profiles of labour force participation hours worked and assets that are estimated from the data to those that are generated by the model the model establishes that the tax structure of the social security system and pensions are key determinants of the high observed job exit rates at ages 62 and 65 removing the tax wedge embedded in the social security earnings test for individuals aged 65 and older would delay job exit by almost one year by contrast social security benefit levels health and borrowing constraints are less important determinants of job exit at older ages for example reducing social security benefits by 20 would cause workers to delay exit from the labour force by only three months

a clash of capitalisms foreign shareholders and corporate restructuring in 1990s japan this article examines the clash between stakeholder and shareholder based business systems resulting from an increase in foreign portfolio investment in the japanese economy during the 1990s an analysis of 1 108 firms between 1991 and 2000 shows that as foreign institutional investors who were more interested in investment returns than in long term relationships replaced domestic shareholders one fundamental pillar of japan s stakeholder capitalism began to crack japanese firms began to adopt downsizing and asset divestiture practices more characteristic of anglo american shareholder economies the influence of foreigners however was weaker in firms more deeply embedded in the local system through close ties to domestic financial institutions and corporate groups thus foreign investors were influential primarily in firms less embedded in the existing stakeholder system this research contributes to debates on globalization and convergence of business systems institutional change and corporate

taxation and labor supply of married couples across countries a macroeconomic analysis we document contemporaneous dierences in the aggregate labor supply of married couples across 18 oecd countries relative to their us counterparts european married men work on average 9 to 17 percent and married women in western and southern europe 26 and 31 percent fewer hours married women in scandinavia and eastern europe however work almost as many hours as us married women we nd that a model of joint household decision making can largely replicate these facts if the full non linearity of labor income taxes and the tax treatment of married couples are taken into account going to a system of strictly separate taxation would increase labor supply of married women by more than 100 hours annually in a third of our sample countries

learning from the crowd regression discontinuity estimates of the effects of an online review database internet review forums increasingly supplement expert opinion and social networks in informing consumers about product quality however limited empirical evidence links digital word of mouth to purchasing decisions we implement a regression discontinuity design to estimate the effect of positive yelp com ratings on restaurant reservation availability an extra half star rating causes restaurants to sell out 19 percentage points 49 more frequently with larger impacts when alternate information is more scarce these returns suggest that restaurateurs face incentives to leave fake reviews but a rich set of robustness checks confirm that restaurants do not manipulate ratings in a confounding discontinuous manner

foreign direct investment education and wages in indonesian manufacturing this paper examines whether the higher wages paid by foreign owned manufacturing plants than by domestically owned plants typical of most countries represents a higher price for labor that is does it reflect a higher price for workers of a given quality as represented by the level of education we then ask whether foreign owned plants pay a higher price for labor given the characteristics of the plants foreign owned firms are found to pay a higher price for labor of a given educational level than domestically owned ones only a part of the difference is associated with plant characteristics rather than ownership

aggregate implications of indivisible labor incomplete markets and labor market frictions this paper analyzes a model that features frictions an operative labor supply margin and incomplete markets we flrst provide analytic solutions to a benchmark model that includes indivisible labor and incomplete markets in the absence of trading frictions we show that the steady state levels of aggregate hours and aggregate capital stock are identical to those obtained in the economy with employment lotteries while individual employment and asset dynamics can be difierent second we introduce labor market frictions to the benchmark model we flnd that the efiect of the frictions on the response of aggregate hours to a permanent tax change is highly non linear we also flnd that there is considerable scope for substitution between voluntary and frictional nonemployment in some situations

the risk free rate in heterogeneous agent incomplete insurance economies abstract why has the average real risk free interest rate been less than one percent the question is motivated by the failure of a class of calibrated representative agent economies to explain the average return to equity and risk free debt i construct an economy where agents experience uninsurable idiosyncratic endowment shocks and smooth consumption by holding a risk free asset i calibrate the economy and characterize equilibria computationally with a borrowing constraint of one year s income the resulting risk free rate is more than one percent below the rate in the comparable representative agent economy

a structural retirement model the life cycle model analyzed here constrains most work on the main job to be full time partial retirement entails a wage reduction and frequently a job change maximum likelihood estimates of utility function parameters are designed to incorporate information on the age of leaving full time work and the age of full retirement the model closely tracks retirement behavior including peaks in retirement activity at 62 and 65 the paper explores the relation of these peaks to nonlinearities in the budget constraint created by various retirement programs policy analyses based on this and on earlier models with simpler structures are compared the retirement choice is one of the more prominent manifestations of life cycle behavior the decision is the result of an interplay between an individual s preferences and a set of incentives which change in complicated ways as the individual progresses through his or her late 50 s and 60 s the purpose of this study is to formulate and estimate a structural model which incorporates in a fundamental way this interplay between lifetime preferences and incentives and to illustrate how such a model may be used to investigate retirement behavior a structural model of this type is essential for analyzing potential policy changes which can be expected to affect incentives in varying ways over a number of years in the life cycle the current study incorporates two structural features which have frequently been omitted from previous studies first the model requires that an individual who wishes to reduce work effort below full time must accept a reduced hourly wage rate in order to do so this reflects empirical evidence from micro data sets which indicates that around one third of older individuals engage in part time work at one time or another and that regardless of whether or not these older workers change jobs to obtain part time work they usually take wage cuts as compared to their previous full time work 2 the fact that an individual is willing to accept a lower wage rate in return for the opportunity to work fewer than full time hours contains important information about the preferences of the

the sound of silence in online feedback estimating trading risks in the presence of reporting bias most online feedback mechanisms rely on voluntary reporting of privately observed outcomes this introduces the potential for reporting bias a situation where traders exhibit different propensities to report different outcome types to the system unless properly accounted for reporting bias may severely distort the distribution of public feedback relative to the underlying distribution of private transaction outcomes and thus hamper the reliability of feedback mechanisms this study offers a method that allows users of feedback mechanisms where both partners of a bilateral exchange are allowed to report their satisfaction to see through the distortions introduced by reporting bias and derive unbiased estimates of the underlying distribution of privately observed outcomes a key aspect of our method lies in extracting information from the number of transactions where one or both trading partners choose to remain silent we apply our method to a large data set of ebay feedback our results support the widespread belief that ebay traders are more likely to post feedback when satisfied than when dissatisfied and are consistent with the presence of positive and negative reciprocation among ebay traders most importantly our analysis derives unbiased estimates of the risks that are associated with trading on ebay that we believe are more realistic than those suggested by a naive interpretation of the unusually high 99 levels of positive feedback currently found on that system

the trend in retirement a model with leisure production and endogenous retirement is used to explain declining labor force participation rates of elderly males the model is calibrated to cross sectional data on labor force participation rates of u s males by age their drop in consumption and leisure good expenditure share in 2000 running the calibrated model for the period 1850 2000 a prediction of the evolution of the cross section is obtained the model accounts for more than 87 of the increase in retirement of men over 65 the increase in retirement is driven by rising wages and falling prices of leisure goods

human capital and earnings distribution dynamics abstract earnings heterogeneity plays a crucial role in modern macroeconomics we document that mean earnings and measures of earnings dispersion and skewness all increase in us data over most of the working life cycle for a typical cohort as the cohort ages we show that i a human capital model can replicate these properties from the right distribution of initial human capital and learning ability ii differences in learning ability are essential to produce an increase in earnings dispersion over the life cycle and iii differences in learning ability account for the bulk of the variation in the present value of earnings across agents these findings emphasize the need to further understand the role and origins of initial conditions

language policies and practices in wholly owned foreign subsidiaries a recontextualization perspective this study adopts a recontextualization perspective on language policies and practices in wholly owned foreign subsidiaries drawing on a field study of 101 subsidiaries in japan we develop a contingency model that distinguishes between four different types of recontextualization with characteristic language policies and practices developing locally adaptive developing globally integrated established locally adaptive and established globally integrated our analysis shows how each of these four types is accompanied by specific problems and challenges in particular it elucidates five important aspects of language implementation 1 the emergence of language praxis from the interplay of headquarters strategies and local responses 2 the hybridization of language practices 3 the central role of key actors such as subsidiary presidents in recontextualization 4 the pervasive power implications of language policies and practices and 5 the multifaceted implications for strategic human resource management by so doing our analysis opens up new avenues for context specific and practice oriented studies of language in multinational companies

the economic future of europe after three years of near stagnation the mood in europe is definitely gloomy many doubt that the european model has a future in this paper i argue that things are not so bad and there is room for optimism over the last thirty years productivity growth has been much faster in europe than in the united states productivity levels are roughly similar today in the european union and in the united states the main difference is that europe has used some of the increase in productivity to increase leisure rather than income while the united states has done the opposite still not everything is well unemployment is still high and europe suffers from inefficient regulation here also however there is more action than often perceived and a wide ranging reform process is taking place this process is driven by reforms in financial and product markets reforms in those markets are in turn putting pressure for reform in the labor market reform in the labor market is slowly taking place but not without political tensions these tensions dominate the news but they are a symptom of change not a reflection of immobility

how social security and medicare affect retirement behavior in a world of incomplete markets this paper provides an empirical analysis of how the u s social security and medicare insurance system affect the labor supply of older males in the presence of incomplete markets for loans annuities and health insurance we estimate a detailed dynamic programming dp model of the joint labor supply and social security acceptance decision focusing on a sample of males in the low to middle income brackets whose only pension is social security the dp model delivers a rich set of predictions about the dynamics of retirement behavior and comparisons of actual vs predicted behavior show that the dp model is able to account for wide variety of phenomena observed in the data including the pronounced peaks in the distribution of retirement ages at 62 and 65 the ages of early and normal eligibility for social security benefits respectively we identify a significant fraction of health insurance constrained individuals who have no form of retiree health insurance other than medicare and who can only obtain fairly priced private health insurance via their employer s group health plan the combination of significant individual risk aversion and a long tailed pareto distribution of health care expenditures implies that there is a significant security value for these individuals to remain employed until they are eligible for medicare coverage at age 65 overall our model suggests that a number of heretofore puzzling aspects of retirement behavior can be viewed as artifacts of particular details of the social security rules whose incentive effects are especially strong for lower income individuals and those who do not have access to fairly priced loans annuities and health insurance