an empirical model of job to job transition with self selectivity the statistical relationship between accepted job duration and the job to job transition strategy chosen by job quitters is analyzed using parametric duration methods because job quitters can sort themselves between unemployed and employed search the labor market state occupied before acceptance of a new job must contain information about the search preferred strategy the results show that jobs preceded by unemployment tend to be shorter but also reveal a substantial amount of heterogeneity when the sample is split between those having comparative advantages in unemployed search and those with comparative advantages in employed search however even for those who have comparative advantages in unemployed search choosing unemployment does not seem to raise subsequent job duration

social insurance and occupational mobility this paper studies how insurance from progressive taxation improves the matching of workers to occupations we propose an equilibrium dynamic assignment model to illustrate how social insurance encourages mobility workers experiment to find their best occupational fit in a process filled with uncertainty risk aversion and limited earnings insurance induce workers to remain in unfitting occupations we estimate the model using microdata from the united states and germany higher earnings uncertainty explains the u s higher mobility rate when workers in the united states enjoy germany s higher progressivity mobility rises output and welfare gains are large

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

natural resources curse or blessing are natural resources a curse or a blessing the empirical evidence suggests that either outcome is possible this paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources these include that a resource bonanza induces appreciation of the real exchange rate deindustrialization and bad growth prospects and that these adverse effects are more severe in volatile countries with bad institutions and lack of rule of law corruption presidential democracies and underdeveloped financial systems another hypothesis is that a resource boom reinforces rent grabbing and civil conflict especially if institutions are bad induces corruption especially in nondemocratic countries and keeps in place bad policies finally resource rich developing economies seem unable to successfully convert their depleting exhaustible resources into other productive assets the survey also offers some welfare based fiscal rules for harnessing resource windfalls in developed and developing economies

the long term consequences of resource based specialisation using geological variation in oil abundance in the southern us i examine the long term effects of resource based specialisation through economic channels in 1890 oil abundant counties were similar to other nearby counties but after oil was discovered they began to specialise in its production from 1940 90 oil abundance increased local employment per square kilometre especially in mining but also in manufacturing oil abundant counties had higher population growth higher per capita income and better infrastructure 2010 the author s the economic journal 2010 royal economic society

migration under uncertainty about quality of locations abstract this paper develops a search theoretic framework for analyzing migration decisions of workers who can only observe the quality of a location by migrating to the location after accepting a job there after learning the location quality the worker can stay at the current job search locally at the same location or search for a job at another location leading to repeat migration this paper develops the properties of optimal search migration and repeat migration decisions and finds how revealed location quality influences the tradeoffs between local search and repeat migration the effects of search costs and better job opportunities on the reservation levels of wages and revealed quality levels are also determined

the big push natural resource booms and growth a simple application of big push reasoning suggests that natural resource booms can be important catalysts for development in poorer countries in this paper we present evidence from seven latin american countries that natural resource booms are sometimes accompa nied by declining per capita gdp we present a model with natural resources increasing returns in the spirit of big push models and expectations to clarify some of the reasons this may happen q 1999 elsevier science b v all rights reserved

experimentation and job choice in this article we examine optimal job choices when jobs differ in the rate at which they reveal information about workers skills we then analyze how the optimal level of experimentation changes over a worker s career and characterize job transitions and wage growth over the life cycle using the dictionary of occupational titles merged with the national longitudinal survey of youth 1979 we then construct an index of how much information different occupations reveal about workers skills and document patterns of occupational choice and wage growth that are consistent with a trade off between information and wages

a dynamic model of occupational choice abstract a dynamic model of occupational choice is developed where within an occupation the match at the current job may help forecast matches at future jobs an index policy is shown to be optimal each occupation is assigned an index and the occupation with the highest index is sampled when training costs are low and layoff risks are nonnegligible occupations in which job matching information is relatively occupation specific receive higher indices however this result is reversed when training costs are sufficiently high

innovation and communication signalling with partial disclosure this paper introduces a model of feedback effect equilibrium i e equilibria in which an asymmetrically informed agent is motivated to communicate its privately known attribute but can do so only through channels or signals which convey directly useful information to competing agents this revelation to the competition serves to reduce the value of the private information held by the first agent models of this kind are of obvious relevance to realistic theories of product or financial market disclosure policies of firms patenting and a host of related behavioural and regulatory issues this model is developed in the context of a set of firms engaged in research and development rivalry in which the value of privately held and disclosed information arises from its implications for the likelihood and timing of productive innovation

health and democracy in spite of the inexorable march of democracy around the globe just how democratic institutions a ect human well being is open to debate the evidence that democracy promotes prosperity is neither strong nor robust moreover which aspects of policy making and human well being are promoted by democracies is still a subject of debate 1 even if correlations between democracy and outcome measures can be found there is an overriding di culty of interpreting them as causal e ects whether democracy matters per se or simply serves as a proxy for societal and political development presents a di cult problem for research in this area thinkers such as lipset 1959 have argued that democracy can thrive only when conditions are right if this is correct then becoming democratic may only serve as a proxy for these hard to measure cultural and societal preconditions this paper explores these issues further by reconsidering the link between democracy and health using panel data from a cross section of countries the

antitakeover charter amendments and stockholder wealth abstract many large corporations have recently adopted antitakeover charter amendments which make the transfer of corporate control more difficult this paper develops and tests competing theoretical explanations for the passage of these amendments in one view antitakeover provisions are adopted because incumbent management seeks job protection at stockholders expense the alternative hypothesis is that antitakeover provisions benefit stockholders perhaps by extracting greater payment in exchange for corporate control although inconclusive the evidence provides weak preliminary support for the hypothesis that antitakeover amendments are best explained as a device for managerial entrenchment

issuing costs to existing shareholders in competitive and negotiated underwritten public utility equity offerings abstract this paper presents the results of an empirical investigation of whether there is any difference in the cost incurred by public utilities if they issue new equity through a negotiated or competitive underwriting we conclude that the expected cost of a competitive offer is less than the expected cost of a negotiated offer but that the variance of the cost is substantially greater with a competitive offer these results are interesting because most public utilities use negotiated underwriting unless forced by regulation to use competitive offers this paper is also an addition to the growing agency theory literature

relative efficiencies and comparative advantages in job search a model of employed and unemployed job search is estimated from a panel of new entrants into the labor force as well as prime age workers after investigating the relative efficiency of the two mai

the quantity and quality of life and the evolution of world inequality gdp per capita is usually used to proxy for the quality of life of individuals living in different countries welfare is also affected by quantity of life however as represented by longevity this paper incorporates longevity into an overall assessment of the evolution of cross country inequality and shows that it is quantitatively important the absence of reduction in cross country inequality up to the 1990s documented in previous work is in stark contrast to the reduction in inequality after incorporating gains in longevity throughout the post world war ii period health contributed to reduce significantly welfare inequality across countries this paper derives valuation formulas for infra marginal changes in longevity and computes a full growth rate that incorporates the gains in health experienced by 96 countries for the period between 1960 and 2000 incorporating longevity gains changes traditional results countries starting with lower income tended to grow faster than countries starting with higher income we estimate an average yearly growth in full income of 4 1 percent for the poorest 50 percent of countries in 1960 of which 1 7 percentage points are due to health as opposed to a growth of 2 6 percent for the richest 50 percent of countries of which only 0 4 percentage points are due to health additionally we decompose changes in life expectancy into changes attributable to 13 broad groups of causes of death and three age groups we show that mortality from infectious respiratory and digestive diseases congenital perinatal and ill defined conditions mostly concentrated before age 20 and between ages 20 and 50 is responsible for most of the reduction in life expectancy inequality at the same time the recent effect of aids together with reductions in mortality after age 50 due to nervous system senses organs heart and circulatory diseases contributed to increase health inequality across countries

job matching and on the job training conventional analysis predicts that workers pay part of their on the job training costs by accepting a lower starting wage and subsequently realize a return to this investment in the form of greater wage growth missing from the conventional treatment of on the job training is a discussion of the process by which heterogeneous workers are matched to jobs requiring varying amounts of training this matching process constitutes a key feature of the on the job training model presented in this article and tested with a unique data set containing extensive information concerning on the job training employer search wages and wage and productivity growth

uncertain infant mortality learning and life cycle fertility this article examines the links between infant mortality and fertility in an environment with unobserved heterogeneity in infant mortality risk across mothers in such an environment replacement behavior i e the fertility response to an experienced child death might be influenced by mothers learning about a family specific component of infant mortality risk i explicitly introduce learning by mothers in a dynamic stochastic model of life cycle marital fertility and i estimate the model s structural parameters using malaysian panel data the framework is used to estimate replacement rates and to correct for birth selectivity in the estimation of the relationship between infant mortality risk and health inputs

do giant oilfield discoveries fuel internal armed conflicts we use new data to examine the effects of giant oilfield discoveries around the world since 1946 on average these discoveries increase per capita oil production and oil exports by up to 50 percent but these giant oilfield discoveries also have a dark side they increase the incidence of internal armed conflict by about 5 8 percentage points this increased incidence of conflict due to giant oilfield discoveries is especially high for countries that had already experienced armed conflicts or coups in the decade prior to discovery

standstill agreements privately negotiated stock repurchases and the market for corporate control abstract standstill agreements are voluntary contracts which limit a substantial stockholder s ownership interest in a corporation for a specified number of years they are often accompanied by repurchase of the substantial stockholder s shares at a premium above the market price standstills and premium buybacks reduce competition for corporate control and provide differential treatment of large block stockholders the analysis indicates a statistically significant negative average effect on non participating stockholder wealth associated with standstill agreements negotiated premium repurchases are also associated with negative but less significant stockholder returns the evidence is inconsistent with the hypothesis that these management actions are in the best interests of non participating stockholders

the rule 415 experiment equity markets rule 415 allows a firm to register all the securities it reasonably expects to sell over the next two years and then at the management s option to sell those securities over these two years whenever it chooses this paper examines whether equity offerings made under rule 415 shelf offerings differ in issuing costs from equity offerings not sold under this rule we find that shelf offerings cost 13 less for syndicated issues and 51 less for nonsyndicated issues we also investigate the empirical relevance of the market overhang argument which suggests that shelf registrations depress the price of the registering firm s shares more than traditional registrations our data does not support the market overhang argument the securities and exchange commission s sec rule 415 which was permanently adopted for large firms in november 1983 allows a firm to register all the securities that it reasonably expects to sell over the next two years and then sell those securities whenever it chooses this procedure is known as shelf registration investment bankers securities regulators and corporate issuers vigorously debate the effect of rule 415 on firms issuing cost for new securities some mostly investment bankers argue that rule 415 increases new issue costs while others mostly issuers argue that rule 415 decreases new issue costs in addition many investment bankers argue that placing common stock on the shelf depresses the price of a firm s outstanding shares of stock most issuers

immigration search and loss of skill this article develops and estimates an on the job search model of the entry of highly skilled immigrants from the former soviet union into the israeli labor market the estimated parameters of the model together with information on the wages of immigrants from earlier waves imply that on average immigrants can expect lifetime earnings to fall short of the lifetime earnings of comparable natives by 57 of this figure 14 percentage points reflect frictions associated with nonemployment and job distribution mismatch and 43 percentage points reflect the gradual adaptation of imported schooling and experience to the local labor market

resource curse or not a question of appropriability this thesis presents three self contained essays focusing on empirical questions in growth and development economics each article addresses specific questions on why countries perform differently in particular i analyse the effect of democracy on economic development the relationship between natural resources and growth and the efficiency of foreign development assistance in the first essay democracy consolidation and growth i analyse the effect of democracy on economic growth in this context i argue that an important aspect to consider is how consolidated political systems are put simply i find that it is not only a question of how democratic countries are but also how long they have been democratic in other words economic performance tends to improve with the duration of uninterrupted democracy the performance of autocracies on the other hand tends to deteriorate over time however for newly established political systems there seems to be a cost of being democratic this implies that democracies only bear their fruit after some time the analysis has important policy implications to overcome initial straits international assistance focused on democratic consolidation may be important and a very good investment in fostering long run development the second essay resource curse or not a question of appropriability together with anne boschini and jesper roine is concerned with the relation between natural resources and economic development for most laymen as well as for most economists it would seem reasonable that countries richly endowed in natural resources also benefit from this wealth however a large literature has found a systematic negative effect of natural resource abundance on economic growth we suggest that this so called resource curse is not determined by resource endowments alone but rather by the interaction between the type of resources a country possesses and the quality of institutions in the country this combination of factors determines what we call the appropriability of a resource the concept of appropriability captures the likelihood of natural resources leading to rentseeking corruption or conflicts which in turn will harm economic development our results suggest that if institutions are good enough the curse may be turned into a blessing this may explain why some countries such as norway and botswana tend to benefit from their resources while others such as angola and sierra leone do not the third and final essay of this thesis foreign sectoral aid fungibility growth and poverty reduction is a contribution to the aid efficiency literature which is concerned with the question of whether aid helps or hinders economic development foreign development assistance is often targeted on specific public expenditure sectors if this aid is not used in the sector for which it was granted e g health education it is said to be fungible and donors may end up financing something completely different from what they intended e g military expenditures the major concern about sectoral fungibility is that the alternative use of aid may be less productive or less socially useful however measuring fungibility is not sufficient to determine whether foreign sectoral aid fungibility is actually harmful what is important is how the funds treated as fungible are used the essay starts by obtaining estimates of fungibility for 57 countries the results suggest that sectoral aid is indeed largely treated as fungible by recipient countries next to assess the economic and health effects of fungibility these estimates are incorporated into an empirical model of aid and growth as well as into a model of aid and infant mortality altogether i find no evidence of more fungible sectoral aid leading to worse performance

news shocks in open economies evidence from giant oil discoveries this article explores the effect of news shocks in open economies using worldwide giant oil and gas discoveries as a directly observable measure of news shocks about future output the delay between a discovery and production is on average four to six years we first analyze the effects of a discovery in a two sector small open economy model with a resource sector we then estimate the effects of giant oil and gas discoveries on a large panel of countries our empirical estimates are consistent with the predictions of the model after an oil or gas discovery the current account and saving rate decline for the first five years and then rise sharply during the ensuing years investment rises robustly soon after the news arrives whereas gdp does not increase until after five years employment rates fall slightly and remain low for a sustained period

the paradox of plenty a meta analysis since sachs and warner s seminal article in 1995 numerous studies have addressed the link between natural resources and economic growth although the resource curse effect was commonly accepted at first many articles have challenged its existence and the results found in the literature are ambiguous in this paper we aim to quantitatively review this literature in order to i identify the sources of heterogeneity and ii assess the impact of natural resources on economic growth a meta analysis is performed on 69 empirical studies on the resource curse totaling 1 419 estimates our findings show that i only developing countries suffer from the resource curse although it is soft ii the way natural resources are taken into account is crucial to understand the heterogeneity found in the literature iii the negative impact of the volatility of the terms of trade on growth should be qualified an additional mra performed on indirect effects size also indicate that when institutions are at their best level the resource curse disappears and may be turned into a blessing

learning about new products an empirical study of physicians behavior i introduction an important aspect of economic innovation is the development of new products thus firms often devote large amounts of resources to research and development the pharmaceutical industry in particular is characterized by a high degree of product innovation and significant investments in research and development 1 critical to the adoption of a new pharmaceutical however is the willingness of physicians to prescribe it although clinical trials and advertising convey information about the quality of a new pharmaceutical considerable uncertainty remains not only about its general quality but also about its effect on individual patients 2 because physicians ultimately resolve this uncertainty by prescribing the new drug 3 to their patients namely by experimentation the adoption of a new pharmaceutical is closely related to the experimentation process by which physicians gain information in this paper we focus on the entry of a new antiulcer drug omeprazole in the italian pharmaceutical market in june of 1990 4 our data consist of monthly prescriptions of antiulcer medications by physicians in the rome metropolitan area between june 1990 and december 1992 we develop and estimate a dynamic discrete choice model of physician bayesian learning about the quality of a new drug in our model physicians have initial beliefs about the new drug s efficacy and update them every time that they prescribe the new drug and observe the treatment outcome when choosing which drug to prescribe to a particular patient a forward looking physician considers not only the expected outcome for that patient but also the opportunity to learn about the new drug s quality and use the information on future patients our parameter estimates allow us to disentangle how uncertainty about the new drug s quality intertemporal preferences and prices affect the adoption of the new drug and the corresponding health outcomes a recent literature has explored the role of learning about pharmaceuticals 5 as noted by manchanda et al 2005 in their review of this literature some important aspects of the learning mechanism are the channels through which agents learn prescription detailing marketing meetings and events their preferences toward risk risk averse or risk neutral and whether they are short sighted myopic or forward looking myopic agents maximize their current expected utility while forward looking agents evaluate their current utility as well as the expected future value of the information they might gain through the current prescription 6 the studies also differ in whether they use physician level or aggregate data a central contribution of our paper is the prediction of market demand for the new drug through a parsimonious yet behaviorally rich model using the same physician level data used here coscelli and shum 2004 model the behavior of doctors who learn in a bayesian fashion yet are myopic we in contrast model the forward looking behavior of physicians and reject the null hypothesis that physicians are myopic according to our estimates myopic behavior significantly delays the adoption of the new drug and generates large losses to patients health crawford and shum 2005 use related patient level data and model how forward looking patients learn about their curative and symptomatic matches with respect to alternative medications in their model a patient s learning about a medication is not driven by the fact that the medication is new rather it is driven by her need to learn which medication suits her best hence she learns about her match to each medication not just the new one in our model however learning is driven by the market level uncertainty associated with omeprazole as a new product 7 while it would be of interest to study both doctors and patients learning our doctor level data motivate our focus on physician learning

ethical aspects of investor behavior the neoclassical paradigm assumes that shareholders utility is solely a function of their wealth and prescribes that management should act in a manner consistent with share price maximization the stakeholder view also assumes that shareholders utility derives from wealth but prescribes that managers must balance the shareholder wealth maximization objective against the rights of other constituencies thus while neoclassicists and stakeholder theorists have different prescriptives for management behavior their definitions of the shareholders interest are consistent shareholders are self interested economic agents whose utility is best served by share price maximization however if shareholders are other interested and attack importance to ethical and moral values then both the neoclassical and stakeholder view derive from invalid assumptions in this paper i present evidence that much shareholder behavior is ethically motivated as a result the basis for both the neoclassical and the stakeholder view are weakened

job separation in a non stationary search model a structural estimation to evaluate alternative unemployment insurance systems this paper considers a job search model in which the environment is not constant throughout the unemployment spell and where jobs do not last for ever in this situation reservation wages can be lower than they would be in a model without consideration of such separations but they can initially be higher precisely because of the non constant environment the model is estimated structurally by using spanish data for the period 1985 1996 the main finding is that after controlling for unobserved heterogeneity the unemployment hazard rate is almost flat during the first six months however after this duration the highly decreasing job offer arrival rate comes to be the only significant factor given that acceptance probabilities become equal to one the estimated parameters are used to evaluate different unemployment insurance designs we conclude that a non monotonic pattern in unemployment benefits joint with a tax paid by workers and based on unemployment duration makes this duration 13 2 lower than it currently is in spain copyright 2006 john wiley sons ltd

subsidised training and youth employment distinguishing unobserved heterogeneity from state dependence in labour market histories using the 1990 2 wave of the french labour force survey to study the employment histories of young people i consider transitions between six labour market states employment contracts whether permanent or temporary unemployment training education and non participation i use a fixed effect estimator in a dynamic multinomial logit model which can accommodate any form of unobserved heterogeneity in levels this analysis can be extended to markov processes of any order i relate heterogeneity components to individual and family characteristics by using simulated maximum likelihood methods these procedures allow evaluation of the effects training schemes have on youth employment histories

job search with belated information and wage signalling the paper uses multi armed bandit methods to characterize the optimal policy of the job search problem with belated information that is if the non pecuniary aspect of the job is discerned only after the job has been tested for one period there is given a sufficient condition such that the reservation wage property of the optimal search policy remains preserved even if a job searcher believes in a positive resp negative correlation between the wage rate pecuniary aspect and the job quality non pecuniary aspect offered by a firm

an estimate of a sectoral model of labor mobility this paper develops a model of sectoral labor mobility and tests its main implications the model nests two distinct hypotheses on the origin of mobility a sectoral shocks and b worker employer mismatch we estimate the relative importance of each hypothesis and find that the bulk of labor mobility is caused by mismatch rather than by sectoral shift we then try to put a value on society s match specific information that is we ask to what extent the availability of the option to change jobs raises gnp we find that the mobility option raises expected earnings by roughly between 8 5 percent and 13 percent of labor earnings which translates to an increase in gnp of between 6 percent and 9 percent

the effect of job heterogeneity on reservation wages this paper develops a model of job search in which jobs differ in the amount of inspection and experience uncertainty under these circumstances reservation wages may not remain constant or decrease over an unemployment spell even if job offer rates are constant over an unemployment spell negative duration dependence of the reemployment hazard can occur when individuals search amongst a variety of jobs since this duration dependence is a result of time varying unobserved heterogeneity conventional methods for controlling for unobserved heterogeneity in reduced form hazard models are inappropriate copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

a dynamic analysis of educational attainment occupational choices and job search this article examines career choices using a dynamic structural model that nests a job search model within a human capital model of occupational and educational choices wage growth occurs in the model because workers move between firms and occupations as they search for suitable job matches and because workers endogenously accumulate firm and occupation specific human capital simulations performed using the estimated model reveal that both self selection in occupational choices and mobility between firms account for a much larger share of total earnings and utility than the combined effects of firm and occupation specific human capital

oil growth and health what does the cross country evidence really show we show that previous results from the body of literature on the resource curse have primarily been driven by the collapse in oil prices during the mid 1980s by exploiting cross country variations in the size of initial oil endowments and the timing of oil discoveries we find that there is a stable positive relationship between oil abundance and long run economic growth using dynamic panel data methods we also find that there is no evidence that higher oil rents hinder growth however to focus on material gain means that the welfare gain from oil is understated because oil rich countries benefit more by the reduction in infant mortality and the gain in longevity interestingly such oil led health improvements are more pronounced in non democratic countries where initial heath conditions were poor and oil wealth is concentrated among the ruling elites

conditional choice probability estimation of dynamic discrete choice models with unobserved heterogeneity we adapt the expectation maximization algorithm to incorporate unobserved heterogeneity into conditional choice probability ccp estimators of dynamic discrete choice problems the unobserved heterogeneity can be time invariant or follow a markov chain by developing a class of problems where the difference in future value terms depends on a few conditional choice probabilities we extend the class of dynamic optimization problems where ccp estimators provide a computationally cheap alternative to full solution methods monte carlo results confirm that our algorithms perform quite well both in terms of computational time and in the precision of the parameter estimates

oil governance and the mis allocation of talent in developing countries this paper sheds light on the relationship between oil rent and the allocation of talent toward rent seeking versus more productive activities conditional on the quality of institutions using a sample of 69 developing countries we demonstrate that oil resources orient university students toward specializations that provide better future access to rents when institutions are weak the results are robust to various specifications datasets on governance quality and estimation methods oil affects the demand for each profession through a technological effect indicating complementarity between oil and engineering manufacturing and construction however it also increases the size of the cake therefore when institutions are weak oil increases the incentive to opt for professions with better access to rents law business and the social sciences rather than careers in engineering creating a deviation from the optimal allocation between the two types of specialization

the impact of student debt on education career and marriage choices of female lawyers abstract we develop and estimate a dynamic model to study the impact of student debt on education career and marriage market choices of young female lawyers our model accounts for several important institutional features of the labor market for lawyers including differences in the work hours across occupational tracks and learning about the prospects of promotion to partner some female students need to take on large amounts of student debt to finance their education and hence start their careers with large amounts of negative wealth the empirical findings suggest that student debt has negative effects on marriage prospects career prospects and investments in educational quality of female lawyers the analysis also provides new insights into the design of public policies that aim to increase public sector employment we show that it is possible to design conditional wage or debt service subsidy programs that significantly increase public sector career choices at reasonable costs

determinants of entrepreneurial activities in china abstract the institutional environment including protection of private properties and contract enforcement has been rather unfavorable for the emergence and development of china s private enterprises this is in sharp contrast to the case of the developed economies where the institutional environment is conductive to the entrepreneurial activities and only the personal attributes of would be entrepreneurs determine their entrepreneurship decision we thus propose a theoretical framework for the entrepreneurship decision in china with a focus on the role of the institutional environment using a life histories survey data of 2854 respondents from twenty cities in china we find strong support for the impacts of the institutional environment and its interactions with other determinants of entrepreneurship decision

voting power in the proxy process abstract the likelihood that a firm will enact a management sponsored antitakeover charter amendment depends on ownership structure this implies that the adoption of antitakeover amendments may be anticipated then announcement returns provide a biased estimate of wealth effects an estimator that corrects for the bias induced by anticipation indicates that the enactment of an antitakeover amendment is associated with a statistically significant decrease in shareholder wealth the voting power of employee stock ownership plans and the chief executive officer plays a prominent role in determining whether a firm will adopt this type of takeover defense

debt relief for poor countries conditionality and effectiveness this paper studies the effectiveness of debt relief to stimulate economic growth in the most heavily indebted poor countries we develop a neoclassical framework with a conflict of interest between the altruistic donor and the recipient government and model conditionality as an imperfectly enforceable dynamic contract in contrast to the recent practice of fully cancelling debt optimal incentive compatible conditionality is accompanied by a concessionality level that implies a combination of subsidized loans and outright grants the optimal concessionality level depends on the recipient s access to international financial markets and on the strength of the conflict of interest incentive compatible transfers with optimal concessionality levels generate substantial welfare gains if the donor does not implement the optimal concessionality level and provides subsidized loans only then the effectiveness of transfers decreases in the long run with severe welfare implications in contrast transfers are less effective in the short run if the donor offers outright grants only

ex ante returns and occupational choice using data from duke university undergraduates we make three main contributions to the literature first we show that data on earnings beliefs and probabilities of choosing particular occupations

natural resources and economic growth a meta analysis summary an important question in development studies is how natural resources richness affects long term economic growth no consensus answer however has yet emerged with approximately 40 of empirical papers finding a negative effect 40 finding no effect and 20 finding a positive effect does the literature taken together imply the existence of the so called natural resource curse in a quantitative survey of 605 estimates reported in 43 studies we find that overall support for the resource curse hypothesis is weak when potential publication bias and method heterogeneity are taken into account our results also suggest that four aspects of study design are especially effective in explaining the differences in results across studies 1 controlling for institutional quality 2 controlling for the level of investment activity 3 distinguishing between different types of natural resources and 4 differentiating between resource dependence and abundance

on corporate governance a study of proxy contests abstract this paper examines a sample of firms experiencing proxy contests for seats on their board of directors dissident shareholders usually fail to obtain a majority of board seats nevertheless they capture some seats via mechanisms such as cumulative voting in over half of the sample contests regardless of proxy contest outcome positive and statistically significant share price performance is associated with the contest that finding is predicted by the standard economic analysis of proxy contests in which the challenges benefit shareholders by improving corporate performance the finding runs counter to the claim of berle 1962 that the economists view of proxy contests is a wholly imaginary picture a portion of the positive share price changes taking place in the early stages of some proxy contests is not permanent however and as suggested by manne 1962 is at least partially attributable to temporary increases in the market value of the vote attached to corporate shares

deal structuring in philanthropic venture capital investments financing instrument valuation and covenants philanthropic venture capital phvc is a financing option available for social enterprises that like traditional venture capital provides capital and value added services to portfolio organizations differently from venture capital phvc has an ethical dimension as it aims at maximizing the social return on the investment this article examines the deal structuring phase of phvc investments in terms of instrument used from equity to grant valuation and covenants included in the contractual agreement by content analyzing a set of semi structured interviews and thereafter surveying the entire population of phvc funds that are active in europe and in the united states findings indicate that the non distribution constraint holding for non profit social enterprises is an effective tool to align the interests of both investor and investee this makes the investor behaving as a steward rather than as a principal conversely while backing non profit social ventures philanthropic venture capitalists structure their deal similarly as traditional venture capital as the absence of the non distribution constraint makes such investments subject to moral hazard risk both in terms of perks and stealing and social impact focus

corporate earnings and financings an empirical analysis this article examines the long term behavior of corporate earnings around three corporate financing events sales of common stock convertible bonds and straight bonds the article shows that earnings declined for all issuers and that more capital is raised the larger the earnings decline these findings indicate that external financings are motivated by earnings declines no evidence is found of a relationship between the size of the subsequent earnings downturn or the amount of capital raised and stock price reactions to the financing announcements these findings suggest that security sales did not systematically provide new information about either the magnitude of subsequent earnings downturn or the amount of financing copyright 1990 by the university of chicago

systematic search belated information and the gittins index abstract this paper uses multi armed bandit methods to characterize the optimal solution of a rather complicated search problem the job search is conducted systematically and there is belated information that is some aspect of the job is discerned only after the job has been tested for one period

an empirical investigation of the impact of antitakeover amendments on common stock prices abstract antitakeover amendments are amendments to a corporation s charter that impede the ability of an outsider to gain control of the firm a number of individuals and institutions have onjected to such amendments on the grounds that they are not in the best interests of the shareholders of the firms that adopt them this paper employs event time methodology to investigate the impact of antitakeover amendments on the common stock prices of firms that adopt them the results indicate that the announcement of such amendments is associated with a positive revaluation of stock price contrary to the concerns of their critics we conclude that antitakeover amendments are proposed by managers who seek to increase the value of the firm and are approved by stockholders who share that objective

natural resources rent seeking and welfare abstract a new and very simple mechanism to explain why natural resource abundance may lower income and welfare is developed in a model with rent seeking a greater amount of natural resources increases the number of entrepreneurs engaged in rent seeking and reduces the number of entrepreneurs running productive firms with a demand externality it is shown that the drop in income as a result of this is higher than the increase in income from the natural resource more natural resources thus lead to lower welfare

increasing returns and the genesis of american resource abundance the usa became the world s leading mineral producing nation between 1870 and 1910 a development paralleled by the rising resource intensity of american manufacturing this paper challenges the premise that resource abundance simply reflected the country s geological endowment of mineral deposits instead in the century following 1850 the usa exploited its natural resource potentials to a far greater extent than other countries and did so across virtually the entire range of industrial minerals the paper argues that natural resource abundance was an endogenous socially constructed condition that was not geologically preordained it examines the complex legal institutional technological and organizational adaptations that shaped the us supply responses to the expanding domestic and international industrial demands for minerals and mineral products it suggests that strong positive feedbacks even in the exploitation of depletable resources were responsible for the explosive growth of the american minerals economy

learning and life cycle patterns of occupational transitions individuals experience frequent occupational switches during their lifetime and initial worker characteristics are predictive of future patterns of occupational switching we construct a quantitative model of occupational choices with worker learning and occupation specific productivity shocks to match life cycle patterns of occupational transitions and quantify the value of occupational mobility and learning for the average 18 year old worker the value of being able to switch occupations is about 67 months of the maximum wage he or she could earn in the model and the value of a worker learning his or her type is about 32 months of this maximum wage

inter industry wage differentials revisited wage volatility and the option value of mobility analysis of data from the psid reveals that idiosyncratic wage volatility varies inversely with inter industry wage differentials and is positively correlated with both returns to industry tenure and rates of inter industry mobility an incomplete markets life cycle model in which inter industry mobility decisions and wage differentials are endogenously determined in equilibrium is then developed and shown to be capable of rationalizing these features of the data in the model the ability of worker to switch industries generates option value that is large enough to offset the standard risk premium that workers demand for exposure to excess wage volatility

resource abundance and economic growth in the united states abstract it is a common assumption that regions within the same country converge to approximately the same steady state income levels the so called absolute convergence hypothesis focuses on initial income levels to account for the variability in income growth among regions empirical data seem to support the absolute convergence hypothesis for us states but the data also show that natural resource abundance is a significant negative determinant of growth we find that natural resource abundance decreases investment schooling openness and r d expenditure and increases corruption and we show that these effects can fully explain the negative effect of natural resource abundance on growth

the resource curse exorcised evidence from a panel of countries abstract this paper evaluates the impact of major natural resource discoveries since 1950 on gdp per capita using panel fixed effects estimation and resource discoveries in countries that were not previously resource rich as a plausibly exogenous source of variation i find a positive effect on gdp per capita levels following resource exploitation that persists in the long term results vary significantly between oecd and non oecd treatment countries with effects concentrated within the non oecd group i further test gdp effects with synthetic control analysis on each individual treated country yielding results consistent with the average effects found with the fixed effects model

direct equity financing a resolution of a paradox when raising new equity capital managers have historically rejected the direct offer method favoring instead the seemingly more expensive underwritten public issue this paper provides a resolution for this equity financing paradox by demonstrating empirically that firms which engage in direct offers enjoy a comparative cost advantage that is more than sufficient to account for the absolute reported cost differences between the two methods of equity financing

ownership risk investment and the use of natural resources the effect of insecure ownership on ordinary investment and natural resource use is examined insecure ownership is postulated to depend on the type of government regime in power and the prevalence of political violence or instability the political determinants of economy wide investment are estimated from cross country data and the results are used to form an index of ownership security when introduced into empirical models of natural resource use this index has a significant and quantitatively important effect on the use of forests and petroleum contrary to conventional wisdom ownership risk slows resource use in some circumstances

oil and women a re examination abstract in a seminal article ross 2008 reports a negative correlation between oil production and women s representation in the labour force and politics across countries this article re examines these relationships exploiting variations in oil endowments to address endogeneity concerns we confirm that oil production causes decline in women s representation additionally we show that consistent with dutch disease effects oil production decreases women s employment in the traded sector however it also leads to an increase in women s employment in the nontraded sector we explore some social consequences of oil production and show that it results in women marrying earlier and having more children

dynamic logit with choice aversion we characterize a generalization of discounted logistic choice that incorporates a parameter to capture different views the agent might have about the costs and benefits of larger choice sets the discounted logit model used in the empirical literature is the special case that displays a preference for flexibility in the sense that the agent always prefers to add additional items to a menu other cases display varying levels of choice aversion where the agent prefers to remove items from a menu if their ex ante value is below a threshold we show that higher choice aversion as measured by dislike of bigger menus also corresponds to an increased preference for putting off decisions as late as possible

the effect of management s choice between negotiated and competitive equity offerings on shareholder wealth this paper investigates the effect on shareholder wealth of two events that change management s choice between negotiated and competitive underwritten equity offerings these two events are the suspension and termination of suspension of rule 50 this rule is based on the public utility holding company act of 1935 and requires certain utilities to use the competitive method the results indicate that the shareholders of the affected utilities experience an abnormal negative return on the announcement of the suspension of rule 50 and an abnormal positive return on the announcement of the termination of suspension this evidence is consistent with the joint hypothesis i competitive offerings are less costly than negotiated offerings and ii manager shareholder agency costs are a determinant of the corporate choice between these two methods of raising equity

job search with belated information and wage signalling a comment abstract berninghaus 1986 investigated the optimal policy in a job search problem with belated information where jobs contain nonpecuniary components that can be observed only after the job has been tested for one period berninghaus uses techniques of dynamic programming specifically the gittens index to derive conditions under which a reservation wage policy is optimal for this problem we demonstrate that the gittens index has a simple economic interpretation when the pecuniary and nonpecuniary returns are jointly normally distributed the reservation wage policy is optimal in this case if the returns are either positively correlated or weakly negatively correlated

more oil less democracy evidence from worldwide crude oil discoveries this article exploits variations in the timing and size of oil discoveries to identify the impact of oil wealth on democracy i find that discovering 100 billion barrels of oil approximately the initial endowment of iraq pushes a country s democracy level almost 20 percentage points below trend after three decades the estimated effect is larger for oilfields with higher quality oil and lower exploration and extraction costs however the estimates become less precise when oil abundance is measured by oil discovery per capita suggesting politicians may care about the level instead of the per capita value of oil wealth

introduction to the distribution of earnings and of individual output by a d roy this article summarises the lasting contribution of roy s 1950 fundamental paper roy a d 1950 the distribution of earnings and of individual output economic journal vol 60 239 pp 489 505

political foundations of the resource curse in this paper we argue that the political incentives that resource endowments generate are the key to understanding whether or not they are a curse we show 1 politicians tend to over extract natural resources relative to the efficient extraction path because they discount the future too much and 2 resource booms improve the efficiency of the extraction path however 3 resource booms by raising the value of being in power and by providing politicians with more resources which they can use to influence the outcome of elections increase resource misallocation in the rest of the economy 4 the overall impact of resource booms on the economy depends critically on institutions since these determine the extent to which political incentives map into policy outcomes countries with institutions that promote accountability and state competence will tend to benefit from resource booms since these institutions ameliorate the perverse political incentives that such booms create countries without such institutions however may suffer from a resource curse

empirical analysis of occupational hierarchies using data on u s engineers and the position of engineering jobs within firms this paper estimates a model of hierarchies within firms the model extends rosen s 1982 model of recursive production to two skills and multiple hierarchy levels the model generates an empirical model that is nested within a general roy 1951 model of self selection maximum likelihood estimates of the parameters of the production technology and the skill experience profiles are estimated the results suggest that approximately two thirds of changes in employment shares across hierarchy levels across time are explained by demographic shifts in the stock of engineering skills most of the returns to experience and to assignment to higher hierarchy levels within firms are caused by skill accumulation and self selection rather than technological dierences across hierarchy levels

providing advice to jobseekers at low cost an experimental study on online advice we develop and evaluate experimentally a novel tool that redesigns the job search process by providing tailored advice at low cost we invited jobseekers to our computer facilities for twelve consecutive weekly sessions to search for real jobs on our web interface for one half instead of relying on their own search criteria we use readily available labour market data to display relevant alternative occupations and associated jobs the data indicate that this broadens the set of jobs they consider and increases their job interviews especially for participants who otherwise search narrowly and have been unemployed for a few months

the effect of pre emptive right amendments on shareholder wealth abstract pre emptive rights allow existing shareholders to purchase a new offering of shares before the general public this paper investigates the effect on shareholder wealth of removing pre emptive rights from corporate charters two hypotheses are constrasted 1 shareholder wealth maximization suggests that management uses this extra degree of freedom to pick the least cost method for raising new equity hence the amendment increases shareholder wealth 2 management welfare maximization holds that management will use the passage of the amendment to maximize their own welfare sometimes to the detriment of shareholders hence the amendment decreases shareholder wealth the evidence indicates that the amendment decreases shareholder wealth

why are ceos rarely fired evidence from structural estimation i evaluate the forced ceo turnover rate and quantify effects on shareholder value by estimating a dynamic model the model features learning about ceo ability and costly turnover to fit the observed forced turnover rate the model needs the average board of directors to behave as if replacing the ceo costs shareholders at least 200 million this cost mainly reflects ceo entrenchment rather than a real cost to shareholders the model predicts that shareholder value would rise 3 if we eliminated this perceived turnover cost all else equal the model also helps explain the relation between ceo firings tenure and profitability

interpreting common stock returns around proxy statement disclosures and annual shareholder meetings numerous studies have analyzed the stock market reaction to information released in proxy statements two possible biases in proxy statement research are suggested frequently misspecification of the return benchmark and a sample selection bias from analyzing only clean events this paper presents evidence that most of the conclusions of existing studies are not affected by these potential biases a significantly positive abnormal return was found around a random sample of shareholder meeting dates the result indicates that interpreting event study results for announcements occurring around annual shareholder meetings must be conducted carefully the results are consistent with the findings of kalay and loewenstein 14 who argue that risk and expected return can increase around predictable information producing events alternatively the study can be viewed as being consistent with several recent studies that find anomalous results using daily return data and large samples

job matching and occupational choice this paper presents a model of job matching the generalizes the existing literature by allowing for different jobs types or occupations such differences affect the value of job specific experience inducing a career profile where certain types are sampled before others more specifically the analysis shows that it is optimal for the young and inexperienced to gravitate toward jobs exhibiting a certain kind of risk then after deriving the equilibrium job turnover rate for an economy in which people do not switch occupations panel data are used to estimate its underlying parameters the hypothesis that people do not switch occupations is rejected against the alternative that they do thus providing empirical support for the theoretical extension undertaken here

mining away the preston curve summary i estimate the long term national health and education impacts of having a larger mining share in the economy by instrumenting the relative size of the mining sector with the natural geological variation in countries fossil fuel endowments i provide evidence suggestive of a causal relationship the findings suggest that countries with larger mining shares tend to have poorer health and education outcomes than countries with similar per capita incomes geographic characteristics and institutional quality doubling the mining share of an economy corresponds to on average the infant death rate being 20 higher life expectancy being 5 lower total years of education being 20 lower and 70 more people having no formal education divergences from the preston curve the concave relationship between cross country income and life expectancy that has long been of interest to economists demographers and epidemiologists are thus partly explained by the size of the mining sector within country evidence from indonesia paints a similar picture my results provide support for a growing body of evidence linking mining to poorer average living standards particularly vis a vis other types of income i also estimate the effects of national mining dependence on non mining income health and education investment and institutions

the elusive curse of oil abstract our goal is to show that contrary to the claims made in several recent papers the effect of a large endowment of oil and other mineral resources on long term economic growth of countries has been on balance positive moreover the claims of a negative effect of oil and mineral wealth on the countries institutions are called into question

tariff choice with consumer learning and switching costs abstract consumers choosing flat rate contracts tend to have insufficient usage to warrant the cost particularly for new products we propose and estimate a bayesian learning model of tariff and usage choice that explains this flat rate bias without relying on behavioral misjudgments or tariff specific preferences for new products consumers are uncertain about both their utility relative to the population mean and the mean itself we show that this latter uncertainty inflates prior variances which leads consumers to weight their private signals more heavily when updating beliefs posteriors are unbiased across products for a given product however the unknown mean yields a winner s curse consumers with high posteriors tend to overestimate their utility these consumers choose fixed rate tariffs and lower their usage as they correct their beliefs the flat rate bias arises when switching costs deter them from changing tariffs using the estimated model the authors find that tariff menus are ineff