intra metropolitan variation in earnings and labor market discrimination an econometric analysis of the atlanta labor market one of the most enduring debates concerning racial differences in earnings is whether housing segregation within metropolitan areas adversely affects the employment opportunities of urban blacks two possible negative effects can be listed first the decentralization of lower skilled jobs combined with the suburban residential exclusion of low income households may have caused wage rates within the suburban labor market to rise above those paid within the central city if this is the case and if housing market discrimination restricts the relative ability of blacks to offer their labor supply to suburban employers then at least part of the racial difference in earnings can be attributed to housing segregation second housing segregation may cause private sector labor market discrimination to be more severe within the central city in comparison to suburban areas as suggested by becker s taste for discriminating model 3 a relatively large black labor supply within the central city may require a lower black to white earnings ratio in order to induce prejudiced employers to hire large numbers of black workers with the workforce of most central cities becoming increasingly black this may be an important factor in explaining racial differences in earnings surprisingly while variation in discrimination among occupations regions industries and sectors have been examined in some detail spatial differences in discrimination between the central city and suburbs have largely escaped analysis in this paper the earnings of private sector workers broken down by occupation race and sex are compared between worksite areas encompassing the metropolitan area of atlanta georgia while an extensive literature can be found on interregional differences in earnings little evidence exists on the spatial variation in wage rates within metropolitan regions in fact virtually nothing has been done on this issue since the classic study of the chicago labor market by rees and shultz 19

will the consumption externalities effects in the ramsey model please stand up abstract according to the prior literature in a ramsey model consumption externalities have no impact on steady state behavior once labor supply is exogenous in contrast this paper argues that in the presence of technical change consumption externalities always affect steady state behavior via their impact on the elasticity of marginal utility of consumption

welfare implications of the interaction between habits and consumption externalities we analyze the welfare properties of the equilibrium path of a growth model where both habits and consumption externalities affect the utility of consumers our analysis highlights the crucial role played by complementarities between externalities and habits in order to generate an infficient dynamic equilibrium in particular we show that the competitive equilibrium is inefficient when consumption externalities and habit adjusted consumption are not perfect substitutes

tax policy and aggregate demand management under catching up with the joneses this paper examines the role for tax policies in productivity shock driven economies with catching up with the joneses utility functions the optimal tax policy is shown to affect the economy countercyclically via procyclical taxes i e cooling down the economy with higher taxes when it is overheating in booms and stimulating the economy with lower taxes in recessions to keep consumption up thus models with catching up with the joneses utility functions call for traditional keynesian demand management policies but for rather unorthodox reasons

dynamic financial constraints distinguishing mechanism design from exogenously incomplete regimes we formulate and solve a range of dynamic models of constrained credit insurance that allow for moral hazard and limited commitment we compare them to full insurance and exogenously incomplete financial regimes autarky saving only borrowing and lending in a single asset we develop computational methods based on mechanism design linear programming and maximum likelihood to estimate compare and statistically test these alternative dynamic models with financial information constraints our methods can use both cross sectional and panel data and allow for measurement error and unobserved heterogeneity we estimate the models using data on thai households running small businesses from two separate samples we find that in the rural sample the exogenously incomplete saving only and borrowing regimes provide the best fit using data on consumption business assets investment and income family and other networks help consumption smoothing there as in a moral hazard constrained regime in contrast in urban areas we find mechanism design financial information regimes that are decidedly less constrained with the moral hazard model fitting best combined business and consumption data we perform numerous robustness checks in both the thai data and in monte carlo simulations and compare our maximum likelihood criterion with results from other metrics and data not used in the estimation a prototypical counterfactual policy evaluation exercise using the estimation results is also featured

distinguishing limited liability from moral hazard in a model of entrepreneurship we present and estimate a model in which the choice between entrepreneurship and wage work may be influenced by financial market imperfections the model allows for limited liability moral hazard and a combination of both constraints the paper uses structural techniques to estimate the model and identify the source of financial market imperfections using data from rural and semiurban households in thailand structural nonparametric and reduced form estimates provide independent evidence that the dominant source of credit market imperfections is moral hazard we reject the hypothesis that limited liability alone can explain the data

intrametropolitan variation in wage rates the case of atlanta fast food restaurant workers this paper utilizes a unique data base to provide some rare evidence on wage variation within a metropolitan area positively sloped wage gradients are found for both black and white employees of fast food restaurants in atlanta georgia blacks are found to work on that portion of the gradient where wage rates are lowest evidence on discrimination suggests that consumer prejudice affects the wages paid to black workers as distance from the central business district center increases the positive wage gradient effect is found to strongly dominate the negative effect on wages from greater consumer discrimination copyright 1994 by mit press

the green golden rule habit and anticipation of future consumption abstract we derive the green golden rule ggr in the habit formation hf and anticipation of future consumption afc frameworks since consumption is the key variable of ggr time non separabilities in preferences over consumption streams given by the afc and hf may have important impacts on the environment and sustainability we demonstrate that agents who smooth their consumption patterns according to the hf hypothesis are more likely to preserve the environment than those who anticipate future consumption or who do not so smooth consumption

optimal multiperiod contracts and the gain from enduring relationships under private information informational asymmetries can play a key role in explaining the existence and nature of multiperiod contracts in an illustrative risk sharing model even relatively short two period contracts can be mutually beneficial if there is private information though one period contracts suffice otherwise further contracts which are pareto optimal relative to the environment and the information structure are defined and partially characterized an example illustrates how otherwise inefficient intertemporal tie ins can be used optimally to mitigate incentive problems the obvious borrowing lending schemes are not private information pareto optimal in these period by period actions are not sufficiently constrained discounting affects the form of the optimal contract but none of these qualitative conclusions

optimal taxation when consumers have endogenous benchmark levels of consumption i examine optimal taxes in an overlapping generations economy in which each consumer s utility depends on consumption relative to a weighted average of consumption by others the benchmark level of consumption as well as on the level of the consumer s own consumption the socially optimal balanced growth path is characterized by the modi ed golden rule and by a condition on the intergenerational allocation of consumption in each period a competitive economy can be induced to attain the social optimum by a lump sum pay as you go social security system and a tax on capital income

relative wage movements and the distribution of consumption we analyze how relative wage movements among birth cohorts and education groups affected the distribution of household consumption and economic welfare our empirical work draws on the best available cross sectional data sets to construct synthetic panel data on u s consumption labor supply and wages during the 1980s we find that low frequency movements in the cohort education structure of pretax hourly wages among men drove large changes in the distribution of household consumption the results constitute a spectacular failure of between group consumption insurance a failure not explained by existing theories of informationally constrained optimal consumption behavior a welfare analysis indicates that the cost of between group consumption variability is larger than the cost of aggregate consumption variability by two orders of magnitude

financial systems in northern thai villages field research attempted to measure the risky environments the information structures the institutions and the risk response mechanisms of ten villages in northern thailand various key features are then modeled in an abstract but realistic way either with a full information risk sharing model or an information constrained version of the same model observations from some of the villages seem consistent with one or the other of these models but in many of the villages one is left with risk response variations across households which suggest that pareto improvements are possible

kinship and financial networks formal financial access and risk reduction kinship networks are beneficial for smoothing consumption and investment but the channels are not well understood we study the financing devices used for consumption and investment by thai households households that are connected to banks achieve significantly better consumption smoothing than unconnected households indirect connections via inter household borrowing are as effective as direct borrowing investment appears to be facilitated by kinship households with kin in the village display reduced sensitivity of investment to income while connections to banks do not significantly reduce sensitivity kin may act as implicit collateral permitting borrowing that would violate repayment constraints in its absence

using repayment data to test across models of joint liability lending theories rationalising joint liability lending are rich in implications for repayment rates we exploit this fact to test four diverse models we show that the models repayment implications do not always coincide for example higher correlation of output and borrowers ability to act cooperatively can raise or lower repayment depending on the model data from thai borrowing groups suggest that repayment is affected negatively by the joint liability rate ceteris paribus and social ties and positively by the strength of local sanctions and correlated returns further the relative fit of the adverse selection versus informal sanctions models varies by region

is more always better a survey on positional concerns abstract we use survey data to provide some empirical information about concerns regarding relative standing respondents chose between a world where they have more of a good than others and one where everyone s endowment of the good is higher but the respondent has less than others questions asked about education attractiveness and intelligence for one s child and oneself income vacation time approval and disapproval from a supervisor and papers to write half of the respondents preferred to have 50 less real income but high relative income concerns about position were strongest for attractiveness and supervisor s praise and weakest for vacation time

village economic accounts real and financial intertwined using the household panel data from townsend thai data we create economic and balance of payments accounts for a set of villages in rural and semiurban areas of thailand we then study these village economies as small open countries as in international economics exploring in particular the relationship between the real production and trade and financial credit and financial flows variables we examine cross village risk sharing and the feldstein horioka puzzle our results suggest that within village consumption against income risk sharing is better than across village and while there is smoothing in both the mechanisms are different we also find that unlike countries the cross village capital markets for investment are highly integrated in the conclusion we touch on factor price equalization and on trade and financial frictions

village and larger economies the theory and measurement of the townsend thai project i have spent close to 20 years cataloging transactions between households in thai villages along with a research team just this past summer we documented a number of ways in which even relatively poor villages have money markets not dissimilar in some ways from new york financial markets with borrowing and repayment passing along links in credit chains in another project we have been looking at month by month school attendance grade level completion and graduation for children in these villages following them from birth to graduation the townsend thai project is a theory based data collection endeavor measuring and mapping village and larger economies into general equilibrium frameworks this paper reviews a number of findings implications applications and lessons learned and considers next steps

impact of climate change on rice production in thailand our goal is to evaluate crop yield impacts from likely climate changes for southeast asia to do so we link soil science crop modeling weather simulators and global climate change modeling into an integrated economic model of multi stage rice production the economic model is estimated with detailed monthly data on inputs operations and environmental data over a five year period we then forecast impacts under two different future economic scenarios one assuming high future global anthropogenic pollution emissions and the other assuming low we compare results of the integrated economic model with those of a biophysical model inputting into both the stochastic realizations of a weather generator calibrated against the present no climate benchmark and against the two climate mild and severe climate change scenarios the more realistic forecasts from socio economic model thus include important farmer behavioral mitigation strategies we discuss both aggregate average impacts as well heterogeneity in response

job access employment and earnings outcomes for welfare leavers in a us urban labour market this article examines the effect of job access on employment outcomes for welfare recipients in cleveland ohio leaving assistance during 1998 2000 a rich longitudinal dataset is employed combining administrative and survey data with multiple measures of access to and competition for jobs the focus is on both a population and a range of measures of employment outcomes not previously studied in this context empirical ambiguity in the existing literature has resulted from the difficulty of modelling causality when employment and residential location are jointly determined in this study labour market outcomes are related to the residential locations of welfare leavers prior to employment thus overcoming much potential endogeneity virtually no evidence is found that job access influences labour market outcomes for this population

jealousy and equilibrium overconsumption the idea that the happiness of an individual depends upon the consumption of others is widely viewed as an important feature of our shared social existence recent research in finance has used this idea through consumption externalities to explore asset pricing anomalies consumption externalities potentially break the link between pareto optimality and competitive equilibria and open the door for beneficial government intervention e g lars ljungqvist and harald uhlig 2000 in this paper we delineate two effects that a consumption externality may have an increase in aggregate consumption may a raise the marginal utility of individual consumption relative to leisure and or b lower an individual s utility level we refer to a as keeping up with the joneses henceforth kuj following jordi gali 1994 and we refer to b as jealousy jealousy is a distinct concept from kuj under kuj an individual derives greater utility from additional own consumption relative to leisure when others consume more at the same time higher per capita consumption holding fixed individual consumption can trigger either jealousy so that individual utility falls or admiration so that individual utility rises in section i of this paper we show that jealousy implies that the laissez faire equilibrium consumption level is greater than the optimal level whether preferences exhibit kuj is not necessary for this main result intuitively in the presence of jealousy consumption is similar to pollution overpollution exists because individuals do not take into account the cost of polluting on others not because an increase in economywide pollution makes the return to individual polluting higher similarly overconsumption exists because individuals do not take into account the negative effect of own consumption on jealous others things go in the opposite direction when individuals are admiring in section ii we consider a functional form that encompasses several existing models we show that jealousy determines the optimal tax to correct overconsumption and that kuj is mainly important for asset pricing

we are what we eat obesity income and social comparisons abstract the empirical evidence of a non monotone relation between income and obesity is not well explained we build a theoretical model combining income inequality and social comparisons to explain the link between income and obesity and study tax policy implications for fighting obesity we assume that differences in food consumption patterns between poor and wealthy households partly reflect positionality which is the concern for social status our key assumption is that positionality for low calorie food consumption is positively related to a country s wealth in this framework body weight outcomes reflect competing income and positionality effects yielding the following results we explain the link between average obesity rates and standards of living and suggest the existence of a kuznets curve for obesity in accordance with empirical evidence for cross sections of the population we explain the observed correlation between income and obesity which is positive in poor countries and negative in rich countries we find that increasing the relative cost of high calorie food is less effective at decreasing the relative weight of poor individuals in rich countries than in poor countries

the spatial distribution of black employment between the central city and the suburbs i introduction smock 1968 kain 1968 and leonard 1987 have shown that the share of jobs held by blacks is smaller in the suburbs in comparison to the central city little is known concerning the factors accounting for this skewness in the spatial distribution of black employment because of the absence of suitable data a number of possible factors can be suggested first there may be no incentive to commute to the suburbs if wages are no higher or jobs no more available than within the central city that is the alleged spatial mismatch that has presumably created a surplus of less educated workers living in the central city and a shortage of these workers living in the suburbs may in fact not exist second the distances to jobs in the suburbs may make commuting to these jobs prohibitively costly and may limit the information readily available to urban blacks on suburban job opportunities third becker type consumer and or employer discrimination may cause employers to prefer hiring blacks in the central city or prefer hiring whites in suburban areas or both finally in comparison to central city jobs fewer suburban jobs are within walking distance of a public transit stop and many central city blacks do not own automobiles 1 from a policy perspective it is crucial to determine the relative importance of the above explanations for black employment segregation for example based upon a belief in the spatial mismatch hypothesis kasarda 1989 orfield 1985 hughes 1989 skinner 1989 and wilson 1992 have recommended that improved public transportation be provided to reverse commuters however on its own this strategy may not be particularly effective if blacks encounter greater hiring discrimination outside the central city and or know little about suburban jobs to shed some light on the spatial distribution of black employment between the central city and the suburbs this paper 1 provides some evidence on whether the central city labor market is tighter or looser than the suburban labor market for less educated workers 2 develops and estimates a model which explains the racial composition of firms workforces and 3 uses the parameter estimates from this model to investigate the relative importance of the aforementioned factors as explanations for black employment segregation the data come from a survey which we conducted of the managers of 102 fast food hamburger restaurants in the atlanta georgia metropolitan area the results yield three conclusions first expected wages the probability of employment times the wage rate are higher in the suburbs than within the central city which lends support to the spatial mismatch hypothesis and reinforces the need to understand the spatial distribution of black employment second the manager s race the percentage of the restaurant s customers who are white distance from the central business district and the proximity of the restaurant to mass transit are all found to have an important influence on the racial composition of the restaurant s crew third all of these variables are found to play an important role in explaining the difference in black employment share between central city and suburban restaurants of particular interest is that approximately 36 percent of this difference can be attributed to the fact that suburban restaurants are less frequently served by public transit the next section reviews the literature on the spatial mismatch hypothesis and relates this hypothesis to black employment segregation section iii describes the data evidence is presented on the quality and availability of suburban in comparison to central city jobs in section iv a model of the racial mix of the restaurant s crew is developed in section v the results from estimating this model are discussed in section vi policy implications and suggestions for future research conclude the paper ii the spatial mismatch hypothesis and black employment segregation the last half of the 1980s witnessed a revival of interest in the old idea that the suburbanization of jobs and involuntary housing market segregation have acted together to create a surplus of workers relative to the number of available jobs in inner city neighborhoods where blacks are concentrated

full insurance in the presence of aggregate uncertainty this paper tests implications of full consumption insurance the object is to determine how much mileage can be obtained from a model with complete markets with such features as private information or liquidity constraints omitted the implication exploited is that individual consumption responds to aggregate risk but not to idiosyncratic risk the test involves regressing the change in household consumption onto the change in aggregate consumption and other right hand side variables such as the change in household income and change in employment status all variables other than the change in aggregate consumption are predicted to be insignificant in explaining the change in household consumption with observations on consumption and income for 10 695 households from the consumer expenditure survey the results are mixed the results for one specification exponential utility are mostly consistent with full consumption insurance the results for the other specification power utility are not

relative consumption and tax evasion abstract relative consumption effects or status concerns that feature jealousy in the sense of dupor and liu 2003 boost consumption expenditure if consumption is financed by labour income such status considerations increase labour supply and hence the tax base a higher taxable income in turn can make tax evasion more attractive we show for various specifications of preferences that the tax base effect generally dominates consequently relative consumption effects tend to reduce tax evasion this is true irrespective of whether tax parameters are exogenous guarantee a balanced budget or are set optimally

household choices in equilibrium this paper is an empirical investigation of equilibrium restrictions on household consumption and male labor supply it exploits a simple factor structure rationalized by two assumptions that household allocations are pareto optimal and that the labor market is competitive the paper estimates household preferences and tests how well this parsimonious factor structure represents panel data on married couples and time series data on asset returns most of the estimates are roughly comparable to those found in previous work no evidence against the simple factor representation is found and the intertemporal capital asset pricing model is not rejected copyright 1990 by the econometric society

a simple test of consumption insurance are consumers effectively insured against idiosyncratic shocks to income or wealth either by formal institutions such as charities private insurance and government programs or by informal mechanisms such as gifts and loans from relatives friends and neighbors under full insurance consumption growth should be cross sectionally independent of idiosyncratic variables that are exogenous to consumers this proposition is tested by cross sectional regressions of consumption growth on a variety of exogenous variables full insurance is rejected for long illness and involuntary job loss but not for spells of unemployment loss of work due to strike and an involuntary move

the spatial mismatch hypothesis what has the evidence shown this paper reviews 20 years worth of empirical evidence on the spatial mismatch hypothesis after briefly surveying the relevant models from urban and labour economics and recent trends in employment and population suburbanisation the empirical evidence on spatial effects is examined this literature includes evidence on the effects of residential segregation residential suburbanisation and employment suburbanisation and direct measures of access such as travel times the most recent evidence suggests that spatial mismatch is relevant for explaining black white employment differences though the magnitudes of these effects remain unclear

the mechanisms of spatial mismatch the spatial mismatch hypothesis smh argues that low skilled minorities residing in us inner cities experience poor labour market outcomes because they are disconnected from suburban job opportunities this assumption gave rise to an abundant empirical literature which is rather supportive of the smh surprisingly it is only recently that theoretical models have emerged which probably explains why the mechanisms of spatial mismatch have long remained unclear and not properly tested this article presents relevant facts reviews the theoretical models of spatial mismatch confronts their predictions with available empirical results and indicates which mechanisms deserve further empirical tests

ownership agency and wages an examination of franchising in the fast food industry this paper estimates the difference in compensation between company owned and franchisee owned fast food restaurants the contrast is of interest because contractual arrangements give managers of company owned outlets less of an incentive to monitor and supervise employees estimates based on two data sets suggest that employee compensation is slightly greater at company owned outlets than at franchisee owned outlets the earnings gap is 9 percent for assistant and shift managers and 2 percent for full time crew workers furthermore the tenure earnings profile is steeper at company owned restaurants these findings suggest that monitoring difficulties influence the timing and generosity of compensation

getting ahead of the joneses when equality increases conspicuous consumption among bottom tier consumers it is widely believed that increasing the equality of material possessions or income in a social group should lead people at the bottom of the distribution to consume less and save more however this prediction and its causal mechanism have never been studied experimentally five studies show that greater equality increases the satisfaction of those in the lowest tier of the distribution because it reduces the possession gap between what they have and what others have however greater equality also increases the position gains derived from status enhancing consumption since it allows low tier consumers to get ahead of the higher proportion of consumers clustered in the middle tiers as a result greater equality reduces consumption when consumers focus on the narrower possession gap but it increases consumption when they focus on the greater position gains i e when consumption is conspicuous social competition goals are primed and the environment is competitive

is the extended family altruistically linked direct tests using micro data this paper uses panel study of income dynamics data on parents and their adult children to test the standard altruism model this model predicts that within the extended family the distribution of consumption is independent of the distribution of resources the authors findings strongly reject this prediction copyright 1992 by american economic association