changes in labor force composition and male earnings a production approach models of aggregate production are estimated and used to investigate the effects of changes in labor force composition on the recently observed decline in the earnings of college graduates relative to other workers and on the fall in the earnings of younger workers relative to older workers changes in labor force composition explain substantial proportions of these observed earnings changes the most important compositional change appears to have been the rapid increase in the number of young male college graduates projections outside the sample are consistent with depressed earnings throughout the lifetimes of the large baby boom cohorts especially among college graduates but do not suggest that depressed college graduate earnings are a permanent phenomenon for all birth cohorts

earnings inequality among males in the united states trends and the effect of labor force growth we analyze the variance of log earnings within labor force cohorts of u s males with particular attention to the influence of labor force growth rates estimates with data from the 1968 79 current population surveys reveal increases in earnings inequality within labor force cohorts even after we control for the level of education experience and unemployment a model of human capital investment is used to analyze differences among cohorts in the life cycle profile of the variance of log earnings it is shown that a pattern of sharply increasing and then declining labor force growth rates will tend to raise the return on human capital investment and thereby increase the variance of postschooling investment and log earnings early in the life cycle this positive effect on relative earnings inequality should decline with experience and possibly become negative because of the post world war ii baby boom and baby bust recent labor force entrants have faced just such a pattern of actual and projected labor

survey attrition and schooling choices we use data from three cohorts of the national longitudinal surveys of labor market experience and from the panel study of income dynamics to study the effect of survey attrition on estimates of statistical models of schooling choices we estimate regressions using data on people who always respond to the surveys stayers and on people who miss some surveys attritors and test whether the same statistical model describes the behavior of stayers and attritors in general with a few exceptions we find that attrition either has no effect on the regression estimates or only affects the estimates of the intercept and sometimes the coefficients of birth year dummies and does not affect estimates of family background slope coefficients

first party content and coordination in two sided markets the strategic use of first party content by two sided platforms is driven by two key factors the nature of buyer and seller expectations favorable versus unfavorable and the nature of the relationship between first party content and third party content complements or substitutes platforms facing unfavorable expectations face an additional constraint their prices and first party content investment need to be such that low zero participation equilibria are eliminated this additional constraint typically leads them to invest more less in first party content relative to platforms facing favorable expectations when first and third party content are substitutes complements these results hold with both simultaneous and sequential entry of the two sides with two competing platforms incumbent facing favorable expectations and entrant facing unfavorable expectations and multi homing on one side of the market the incumbent always invests weakly more in first party content relative to the case in which it is a monopolist this paper was accepted by bruno cassiman business strategy

schooling choices and demographic cycles this paper examines the effect of demographic cycles on schooling choices and the timing of school completion utilizing data from the u s national longitudinal surveys of labor market experience and from the panel study of income dynamics we find that men and women born during the upswing of a demographic cycle obtain more schooling and take longer to finish a year of schooling than comparable individuals born during the downswing of a demographic cycle the patterns that we document are more complex than would be predicted by any of the theoretical models of educational responses to demographic cycles that have been presented in the literature excerpt

race and human capital while human capital has been used with some success to analyze recent changes in racial income differences scholars have repeatedly pointed to a major empirical problem that appears to severely limit the historical relevanlce and scope of skill based theories as applied to racial questions the challenge they raise is legitimate put simply if measured skill disparities between the races narrowed throughout the twentieth century why did income ratios first begin to converge in the 1960 s in this paper i address this question relying on some unexploited census data by race on education literacy occupations and income using these data that begin with the 1890 census i present new estimates of agespecific relative income positions of black men for all postslavery birth cohorts in addition to reconciling the apparently inconsistent skill and income series these income ratios offer a very different historical record than many economists believe to have been the case to cite a prominent example gunnar myrdal s classic work 1944 saw the economic position of his contemporary black america not only as dismal but made even more so by its sense of hopelessness given the absence of any hint of progress or change while myrdal s pessimism is understandable it appears that even in his day seeds had long been sown that were already permanently altering and improving the relative economic status of black men

market provision of broadcasting a welfare analysis this paper presents a theory of the market provision of broadcasting and uses it to address the nature of market failure in the industry advertising levels may be too low or too high depending on the nuisance cost to viewers the substitutability of programs and the expected benefits to advertisers from contacting viewers market provision may allocate too few or too many resources to programming and these resources may be used to produce programs of the wrong type monopoly ownership may produce higher social surplus than competitive ownership and the ability to price programming may reduce social surplus

the demographic cycle and optimal schooling choices a model is developed that enables the authors to estimate the effects of demographic cycles on both earnings and schooling the model is tested using data from the 1991 korean occupational wage survey the results indicate that cohorts following large birth cohorts in the cycle choose relatively less formal schooling compared to pre peak cohorts and that post peak cohorts also have lower incomes this result concerning south korea is consistent with findings from previous studies concerning the united states annotation

strategies to fight ad sponsored rivals we analyze the optimal strategy of a high quality incumbent that faces a low quality ad sponsored competitor in addition to competing through adjustments of tactical variables such as price or the number of ads a product carries we allow the incumbent to consider changes in its business model we consider four alternative business models a subscription based model an ad sponsored model a mixed model in which the incumbent offers a product that is both subscription based and ad sponsored and a dual model in which the incumbent offers two products one based on the ad sponsored model and the other based on the mixed business model we show that the optimal response to an ad sponsored rival often entails business model reconfigurations we also find that when there is an ad sponsored entrant the incumbent is more likely to prefer to compete through the subscription based or the ad sponsored model rather than the mixed or the dual model because of cannibalization and endogenous vertical differentiation concerns we discuss how our study helps improve our understanding of notions of strategy business model and tactics in the field of strategy

chicken and egg competition among intermediation service providers we analyze a model of imperfect price competition between intermediation service providers we insist on features that are relevant for informational intermediation via the internet the presence of indirect network externalities the possibility of using the nonexclusive services of several intermediaries and the widespread practice of price discrimination based on users identity and on usage efficient market structures emerge in equilibrium as well as some specific form of inefficient structures intermediaries have incentives to propose non exclusive services as this moderates competition and allows them to exert market power we analyze in detail the pricing and business strategies followed by intermediation services providers copyright 2003 by the rand corporation

time scarcity and the market for news abstract we develop a theory of news coverage in environments of information abundance time constrained consumers browse through news items across competing outlets they choose which outlets to access and which stories to read or skip thus indirectly deciding how much time to spend on a given outlet firms decide on rankings of news items that maximize their profits we show that even when readers or television viewers and firms are rational and unbiased they spend more time on the news than they would like and not necessarily on the topics they prefer in particular relevant news items may be crowded out we then study how reader efficient standards can be restored and derive implications on diverse aspects of new and traditional media these include tabloidization and polarization of the news and other aspects relevant for the political economy of the media including political knowledge gaps and voter turnout

educational attainment and cohort size we argue that the postwar baby boom caused substantial fluctuations in both the economic rewards to education and educational attainment over the last 3 decades if substitutability between young and old workers diminishes with education the present value of lifetime earnings for a boom cohort is depressed more for highly educated workers reducing incentives for educational attainment the opposite is true for pre and postboom cohorts the diminishing substitutability hypothesis explains the declines in both the returns to college and college completion rates in the 1970s and predicts a substantial increase in educational attainment for postboomers

the assessment international competitiveness the concept of international competitiveness as applied to national economies is a popular one politicians businessmen and economists alike re fer to it in day to day discussion when looking at the external export import market share or trade balance performance of different countries indi cators are produced showing changes in or levels of various countries competitiveness e g the relative price or cost indices regularly published by the imf and the oecd or the absolute measures produced by organizations such as the geneva world economic forum and the lausanne institute for management development governments of ten instigate research on the matter as for instance in the case of the 1993 us competitiveness policy council orthe 1995 eu competitiveness advisory group yet it has recently been argued by paul krugman that competitiveness is a meaningless word when applied to national economies and the obsession with competitiveness is both wrong and dangerous krugman 1994 p 44 apositionkrugman forcefully reaffirms in his contribution to this issue of the oxford review of economic policy

cohort crowding how resources affect collegiate attainment abstract analyses of college attainment typically focus on factors affecting enrollment demand including the financial attractiveness of a college education and the availability of financial aid while implicitly assuming that resources available per student on the supply side of the market are elastically supplied the higher education market in the united states is dominated by public and non profit production and colleges and universities receive considerable subsidies from state federal and private sources because consumers pay only a fraction of the cost of production changes in demand are unlikely to be accommodated fully by colleges and universities without commensurate increases in non tuition revenue for this reason public investment in higher education plays a crucial role in determining the degrees produced and the supply of college educated workers to the labor market using data covering the last half of the twentieth century we find strong evidence that large cohorts within states have relatively low undergraduate degree attainment reflecting less than perfect elasticity of supply in the higher education market that large cohorts receive lower public subsidies per student in higher education explains this result indicating that resources have large effects on degree production our results suggest that reduced resources per student following from rising cohort size and lower state expenditures are likely to have significant negative effects on the supply of college educated workers entering the labor market

a framework for analyzing the impact of cohort size on education and labor earning the paper analyzes three models of labor demand solving for the change in wages of a given labor group due to a change in the size of a birth cohort when the production function includes age schooling groups as separate factors an increase in the size of one birth cohort changes the size of several labor market groups also in this case the demand effect of changing factor size is joined by a supply effect of changing schooling proportions ignoring the supply effect may cause us to overestimate the effect of a large birth cohort on wages of young skilled workers

two sided markets a progress report the paper provides a road map to the burgeoning literature on two sided markets and presents new results it identifies two sided markets with markets in which the structure and not only the level of prices charged by platforms matters the failure of the coase theorem is necessary but not sufficient for two sidedness the paper builds a model integrating usage and membership externalities that unifies two hitherto disparate strands of the literature emphasizing either form of externality and obtains new results on the mix of membership and usage charges when price setting or bargaining determine payments between end users

a simple model of search engine pricing we present a simple model of how a monopolistic search engine optimally determines the average relevance of firms in its search pool in our model there is a continuum of consumers who use the search engine s pool and there is a continuum of firms whose entry to the pool is restricted by a price per click set by the search engine we show that a monopolistic search engine may have an incentive to set a relatively low price per click that encourages low relevance advertisers to enter the search pool in general the ratio between the marginal and average relevance in the search pool induced by the search engine s policy is equal to the ratio between the search engine s profit per consumer and the equilibrium product price these conclusions do not change if the search engine charges a fixed access fee rather than a price per click a search engine is a platform that serves a two sided market it is based on a technology that potentially improves the quality of consumer search before the advent of internet search engines yellow pages were the closest example of a search engine firms pay to be included in the yellow pages with various degrees of prominence the yellow pages organise the set of firms according to some categorisation system in internet environments consumers use search engines by submitting a query in a language dictated by the search engine the objects that the query elicits depend on the search engine s

search diversion and platform competition abstract platforms use search diversion in order to trade off total consumer traffic for higher revenues derived by exposing consumers to unsolicited products e g advertising we show that competition between platforms leads to lower equilibrium levels of search diversion relative to a monopoly platform when the intensity of competition is high on the other hand if there is only mild competition then competing platforms induce more search diversion relative to a platform monopolist when platforms charge consumers fixed access fees all equilibrium levels of search diversion under platform competition are equal to the monopoly level irrespective of the nature of competition furthermore relative to platforms that cannot charge such fees platforms that charge positive negative access fees to consumers have weaker stronger incentives to divert search

two sided network effects a theory of information product design how can firms profitably give away free products this paper provides a novel answer and articulates trade offs in a space of information product design we introduce a formal model of two sided network externalities based in textbook economics a mix of katz and shapiro network effects price discrimination and product differentiation externality based complements however exploit a different mechanism than either tying or lock in even as they help to explain many recent strategies such as those of firms selling operating systems internet browsers games music and video the model presented here argues for three simple but useful results first even in the absence of competition a firm can rationally invest in a product it intends to give away into perpetuity second we identify distinct markets for content providers and end consumers and show that either can be a candidate for a free good third product coupling across markets can increase consumer welfare even as it increases firm profits the model also generates testable hypotheses on the size and direction of network effects while offering insights to regulators seeking to apply antitrust law to network markets

opinion dynamics via search engines and other algorithmic gatekeepers abstract ranking algorithms are the information gatekeepers of the internet era we develop a stylized model to study the interplay between a ranking algorithm and individual clicking behavior we consider a search engine that uses an algorithm based on popularity and on personalization the analysis shows the presence of a feedback effect whereby individuals clicking on websites indirectly provide information about their private signals to successive searchers through the popularity ranking algorithm accordingly when individuals provide sufficiently positive feedback to the ranking algorithm popularity based rankings tend to aggregate information while personalization acts in the opposite direction moreover we find that under fairly general conditions popularity based rankings generate an advantage of the fewer effect fewer websites reporting a given signal attract relatively more traffic overall this highlights a novel ranking driven channel that can potentially explain the diffusion of misinformation as websites reporting incorrect information may attract an amplified amount of traffic precisely because they are few

the industrial policy of competitiveness a review of recent developments in the uk the article reviews the recent developments in uk competitiveness policy and explores its relationship with industrial policy including regional industrial policy it argues that competitiveness is virtually synonymous with productivity growth but that while four competitiveness white papers of the 1990s potentially broadened the scope of uk industrial policy the shift from sectoral to horizontal measures has in fact helped much reduce the content of this policy the article reviews current industrial policy and expenditure distinguishing between the areas of science and technology small firms and regional policy it argues that industrial policy is now a part of competitiveness policy being closely aligned to the efficiency role of government it finds that while policy has converged on a narrower set of measures the traditional boundaries between the science and technology small firm and regional policy components have become much less clear cut

the impact of targeting technology on advertising markets and media competition an important component of advertising effectiveness is the quality of the match between advertisers and the intended recipients of ads traditionally media have been able to tighten such matches by providing content tailored for specific groups of consumers for example local media outlets attract audiences from their localities ensuring that when local advertis ers place ads they are mostly viewed by their potential customer base recently online adver tising has afforded new technologies that tar get consumers directly rather than indirectly through tailored content a leading example of such targeting is based on geographic loca tion as inferred from ip addresses so while the boston globe may have had an advantage in selling ads to boston advertisers now the new york times can offer boston based ads to consumers located in boston industry specula tion is that such technologies may spur higher demand for online advertising but that these technologies will benefit general outlets more than local newspapers 1 it may be problematic for the future of the local news industry if gen eral outlets gain at their expense to date there has been little analysis on how the market for advertising might be impacted by targeting 2 intuition suggests that an outlet

advertising competition and entry in media industries this paper presents a model of media competition with free entry when media platforms are financed both from advertising receipts and customers subscriptions we establish a relationship between the equilibrium levels of prices advertising and entry the welfare maximizing levels and the advertising technology under constant or increasing returns to scale in the audience size we find an excessive level of entry and an insufficient level of advertising we then extend the analysis along several dimensions the price as a strategic variable on the market for advertising free media platforms and the media quality dimension