rational household labor supply traditionally household behavior is derived from the maximization of a unique utility function in this paper we propose an alternative approach in which the household is modeled as a two member collectivity taking pareto efficient decisions the consequences of this assumption are analyzed in a three good model in which only total consumption and each member s labor supply are observable if the agents are assumed egoistic i e they are only concerned with their own leisure and consumption it is possible to derive falsifiable conditions upon household labor supplies from both a parametric and nonparametric viewpoint if alternatively agents are altruistic restrictions obtain in the nonparametric context useful interpretation stems from the comparison with the characterization of aggregate demand for a private good economy

out of the wallet and into the purse using micro data to test income pooling this paper uses an exogenous change in the intrahousehold distribution of income provided by a change in united kingdom family allowance policy to test the income pooling hypothesis implied by unitary household models expenditure shares are estimated for a wide range of goods using household level data shifts in expenditure shares suggest that children and mothers benefited at the expense of fathers when this policy change shifted income within households from men to women similar shifts are not found among married couple households with no children this paper refutes income pooling and confirms and extends results in lundberg pollak and wales 1997

commodity price shocks and civil conflict evidence from colombia how do income shocks aect armed con ict theory suggests two op posite eects if labor is used to appropriate resources violently higher wages may lower con ict by reducing labor supplied to appropriation this is the opportunity cost eect alternatively a rise in contestable income may increase violence by raising gains from appropriation this is the rapacity eect our paper exploits exogenous price shocks in inter national commodity markets and a rich dataset on civil war in colombia to assess how dierent income shocks aect con ict we examine changes in the price of agricultural goods which are labor intensive and natural resources which are capital intensive we focus on coee and oil the two largest exports we nd that a sharp fall in coee prices in the 1990s increased violence dierentially in regions growing more coee by lower ing wages and the opportunity cost of joining armed groups in contrast a rise in oil prices increased violence dierentially in the oil region by in creasing municipal revenue siphoned through rapacity this pattern holds in several other agricultural and natural resource sectors providing robust evidence that price shocks aect con ict in opposite directions depending on the factor intensity of the commodity

externalities property rights and the allocation of resources in major league baseball most economists who have analyzed professional baseball have concluded that two distinctive features of its labor market the reserve clause and player draft influence the distribution of wealth between players and owners but do not affect the allocation of playing talent among teams such conclusions which are strongly at variance with laymen s views of such matters are derived from theoretical considerations rather than empirical examinations our paper examines data from the two decades of major league history and concludes that on the basis of that data the empirical generalizations of previous economists do not appear to be justified

government revenues and economic growth in weakly institutionalised states the lack of sustained growth in poor countries has often been attributed to fiscal weakness empirical evidence suggests that governments often fail to provide crucial public goods i argue that this failure may be the result of a political instability effect more resources fuel power struggles among competing elites and decrease the incumbent regime s time horizon in office but with a shorter time horizon it is less attractive to finance growth promoting institutions whose returns only accrue in the future the model further predicts the instability effect to be stronger in countries with little capital or in remote places which render technology adoption expensive

a life cycle consumption model with liquidity constraints theory and empirical results a structural consumption model incorporating endogenous liquidity constraints is fit to a cross section of 798 u s families liquidity constrained families are estimated to constitute 19 4 percent of the population sampled a group that accounts for 16 7 percent of consumption in the population sampled in sample simulations of the model suggest that a temporary tax has three to four times more impact on aggregate consumption than it would if liquidity constraints were not in effect copyright 1987 by the econometric society

marriage divorce and asymmetric information we use data on people s valuations of options outside marriage and beliefs about spouses options the data demonstrate that in some couples one spouse would be happier and the other spouse unhappier outside of some marriages suggesting that bargaining takes place and that spouses have private information we estimate a bargaining model with interdependent utility that quantifies the resulting inefficiencies our results show that people forgo some utility in order to make their spouses better off and in doing so offset much of the inefficiency generated by their imperfect knowledge thus we find evidence of asymmetric information and interdependent utility in marriage

on the empirics of foreign aid and growth the present paper re examines the effectiveness of foreign aid theoretically and empirically using a standard olg model we show that aid inflows will in general affect long run productivity the size and direction of the impact may depend on policies deep structural characteristics and the size of the inflow the empirical analysis investigates these possibilities overall we find that aid has been effective in spurring growth but the magnitude of the effect depends on climate related circumstances finally we argue that the collier dollar allocation rule should be seriously reconsidered by donor agencies if aid effectiveness is related to climate the usefulness of foreign aid in promoting growth in developing countries has been an area of controversy ever since rosenstein rodan in 1943 advocated for aid to eastern and south eastern europe browsing through successive editions of a leading textbook in development economics provides a telling illustration of how the confidence in aid effectiveness dwindled over the years in the first edition of leading issues in economic development meier 1964 dedicated a full 18 page section to the issue of foreign aid he started out asking how much aid by the time of the sixth edition meier 1995 the treatment of foreign aid had been cut into half and the questions in focus were why official assistance and does aid work in the 2000 edition meier and rauch 2000 foreign aid is not even listed in the index

consumption income and retirement the authors use canadian family expenditure survey data to estimate consumption and income age profiles for married couple families paying attention to the transition between work and retirement the common presumptions of numerical simulation life cycle models upward sloping consumption age profiles and dissaving in retirement are not supported there is some evidence that the consumption of certain blue collar households declines discontinuously near retirement which casts doubt upon the frequently encountered assumption that the marginal utility of consumption is independent of the quantity of leisure consumed the results also imply that the functional form of euler equations should be sufficiently flexible to permit preretirement consumption to have an inverted u shape in addition the paper shows that the uncertain lifetime model with the addition of a bequest motive can rationalize the empirical results

managerial quality team success and individual player performance in major league baseball this paper uses 1969 87 major league baseball data to investigate the impact of managerial quality on team winning and individual player performance managerial quality and player performance are measured as predicted pay based on salary regressions these market based measures permit conclusions about costs and benefits of managerial quality there are two major findings first when player inputs are controlled for higher quality managers lead to higher winning percentages second players tend to play better relative to their prior performance levels the higher the manager s quality these findings suggest that as emphasized by the human resource management literature the quality of management makes an important difference in the performance of organizations

measuring managerial efficiency the case of baseball in economic analysis the role of the entrepreneur is paramount to the production process the entrepreneur is engaged in a darwinian game of efficiently transforming scarce resource inputs into outputs in the modern business organization this role is delegated to managers despite the conceptual importance of the role of management in the production function very little is known about the actual effect on output of variations in managerial skill in part this is due to the lack of proprietory data in part it is due to difficulties in measuring the outputs and inputs of complex production processes in a meaningful way a number of investigators have employed the concept of the frontier production function as developed by forsund and hjalmarsson 1 and timmer 6 and more recently by schmidt and lovell 3 to measure the effect on technical and price efficiency of various property rights structures or institutional constraints to our knowledge estimates of managerial efficiency have not been obtained with firm specific data except for some regulated industries in this study we estimate managerial efficiency by manager and by firm managerial marginal revenue product the rate of change in managerial efficiency over years of experience and relative factor price efficiency we use major league baseball teams over the period 1961 1980 as our data source what is particularly appealing about the choice of major league baseball teams as the industry for analysis is that outputs win percent and inputs player skills are unambiguously measured and the production function is simply specified as shown by scully 5 our results indicate that managerial skill in baseball contributes very substantially to the production process the paper will evolve as follows first the concept of the frontier production function is briefly outlined then estimates of managerial efficiency by manager and by team are provided and discussed a managerial efficiency learning curve is estimated an estimate of managerial marginal revenue product provided and the managerial efficiency

the retirement consumption puzzle a marital bargaining approach abstract evidence from several countries reveals a substantial drop in household consumption around the age of retirement that is difficult to explain with life cycle models using food consumption data from more than 550 households from the panel study of income dynamics for the years 1979 1986 and 1989 1992 we find that married couple households decrease their expenditures on both food consumed at home and away from home by about 9 following the retirement of the male household head no significant decrease in consumption is found for single households either in a sample of males or a pooled sample of single males and females these results are consistent with a model of marital bargaining in which wives prefer to save more than their husbands do to support an expected longer retirement period and relative control over household decisions is affected by control over market income the pattern of the consumption decline which is increasing in the age gap between husband and wife lends further support to this interpretation

politics and economics in weak and strong states abstract while much research in political economy points out the benefits of limited government political scientists have long emphasized the problems created in many less developed nations by weak states which lack the power to tax and regulate the economy and to withstand the political and social challenges from non state actors i construct a model in which the state apparatus is controlled by a self interested ruler who tries to divert resources for his own consumption but who can also invest in socially productive public goods both weak and strong states create distortions when the state is excessively strong the ruler imposes such high taxes that economic activity is stifled when the state is excessively weak the ruler anticipates that he will not be able to extract rents in the future and underinvests in public goods i show that the same conclusion applies in the analysis of both the economic power of the state i e its ability to raise taxes and its political power i e its ability to remain entrenched from the citizens i also discuss how under certain circumstances a different type of equilibrium which i refer to as consensually strong state equilibrium can emerge whereby the state is politically weak but is allowed to impose high taxes as long as a sufficient fraction of the proceeds are invested in public goods the consensually strong state might best correspond to the state in oecd countries where taxes are high despite significant control by the society over the government

household investment decisions and offspring gender parental accounting numerous behavioural factors have been identified as having an impact on household stockholding decisions given there is both theoretical and empirical evidence to support the premise that offspring gender can influence specific types of parental preferences i test the theory that offspring gender has an effect on parental investment decision making i find that offspring gender does influence household stock market participation specifically i find that having only female offspring can significantly increase the probability of stockholding given stockholding can have large effects on household wealth levels and that family wealth levels affect intergenerational transfers this finding could have important implications for understanding distributional welfare issues

the saving behaviour of a two person household the facts that wives are typically younger than their husbands and that women typically live longer than men imply that wives may have more incentive to save for old age than do husbands a theoretical model of the determination of household saving and portfolio choice is introduced which takes into account differences in preferences for saving the most important result is that the level and the composition portfolio of saving and the time path of consumption are dependent on the distribution of income within the household women typically live longer than men and wives are typically younger than their husbands these two facts imply that preferences about saving for old age in married households with forward looking members may differ between husband and wife this paper presents a theoretical analysis of saving and portfolio behaviour if the members of the household have differ ent preferences over future consumption as compared to current consump tion the analysis stands in contrast to unitary models of household intertemporal allocation which assume that the household has a single utility function thus this paper is a contribution in a novel context to the burgeoning literature on intra household decision making the base case analysis is for a simple two person husband and wife1 two period model in which there is only one asset saving it is assumed that because of the two facts given at the start of the introductory paragraph the husband discounts the future more than the wife in section ii the implications of a non cooperative decision making process for the base case are derived see ulph 1988 for a non cooperative model of demand and

consumption during retirement the missing link in the life cycle this study presents the first evidence on the relation of consumption to lifetime wealth based on data from the 1973 and 1975 retirement history survey that have been linked to social security earnings records nearly 500 white married fully retired couples ages 62 69 form the basis of the analysis on average their consumption early in retirement exceeds by 14 percent the income that their financial pension and social security wealth can generate this implies that their saving both private and through social security is insufficient to sustain consumption throughout the rest of their lives additional evidence based on changes in spending between 1973 and 1975 shows that these households respond by reducing their real consumption at a rate sufficient to generate positive changes in net financial worth within a few years after retirement these two pieces of evidence can be rationalized by a rate of time preference much higher than the interest rate coupled with either a bequest motive or uncertainty about the length of life they also imply that even when combined with private pensions and savings social security in the united states today does not enable most recipients to maintain their living standard at the levels they enjoyed before they retired this abstract was borrowed from another version of this item

quasi hyperbolic discounting and retirement abstract some people have self control problems regularly this paper adds endogenous retirement to laibson s quasi hyperbolic discounting savings model quarterly journal of economics 112 1997 443 477 earlier selves think that the deciding self tends to retire too early and may save less to induce later retirement still earlier selves may think the pre retirement self does this too much saving more to induce early retirement the consumption pattern may be different from that with exponential discounting other observational non equivalence includes the impact of changing mandatory retirement rules or work incentives on savings and a possibly negative marginal propensity to consume out of increased future earnings naive agents are briefly considered

work health and income among the elderly contents include introduction and summary public policy implications of declining old age mortality aging the ability to work policy issues and recent trends occupational effects on the health and work capacity of older men involuntary early retirement and consumption life cycle labor supply and social security a time series analysis life insurance of the elderly its adequacy and determinant

the effect of wealth on individual and household labor supply evidence from swedish lotteries abstract we study the effect of wealth on labor supply using the randomized assignment of monetary prizes in a large sample of swedish lottery players winning a lottery prize modestly reduces earnings with the reduction being immediate persistent and quite similar by age education and sex a calibrated dynamic model implies lifetime marginal propensities to earn out of unearned income from 0 17 at age 20 to 0 04 at age 60 and labor supply elasticities in the lower range of previously reported estimates the earnings response is stronger for winners than their spouses which is inconsistent with unitary household labor supply models jel d14 j22 j31

the control of politicians in divided societies the politics of fear autocrats in many developing countries have extracted enormous personal rents from power in addition they have imposed inefficient policies including pervasive patronage spending i present a model in which the presence of ethnic identities and the absence of institutionalized succession processes allow the ruler to elicit support from a sizeable share of the population despite large reductions in welfare the fear of falling under an equally inefficient and venal ruler that favours another group is enough to discipline supporters the model predicts extensive use of patronage ethnic bias in taxation and spending patterns and unveils a new mechanism through which economic frictions translate into increased rent extraction by the leader these predictions are consistent with the experiences of bad governance ethnic bias wasteful policies and kleptocracy in post colonial africa

the voracity effect abstract we analyze an economy that lacks a strong legal political institutional infrastructure and is populated by multiple powerful groups powerful groups dynamically interact via a fiscal process that effectively allows open access to the aggregate capital stock in equilibrium this leads to slow economic growth and a voracity effect by which a shock such as a terms of trade windfall perversely generates a more than proportionate increase in fiscal redistribution and reduces growth we also show that a dilution in the concentration of power leads to faster growth and a less procyclical response to shocks jel f43 o10 o23 o40

procrastination and obedience in this lecture i shall focus on situations involving repeated decisions with time inconsistent behavior although each choice may be close to maximizing and therefore result in only small losses the cumulative effect of a series of repeated errors may be quite large thus in my examples decision makers are quite close to the intelligent well informed individuals usually assumed in economic analysis but cumulatively they make seriously wrong decisions that do not occur in standard textbook economics this lecture discusses and illustrates several pathological modes of individual and group behavior procrastination in decision making undue obedience to authority membership of seemingly normal individuals in deviant cult groups and escalation of commitment to courses of action that are clearly unwise in each case individuals choose a series of current actions without fully appreciating how those actions will affect future perceptions and behavior the standard assumption of rational forwardlooking utility maximizing is violated the nonindependence of errors in decision making in the series of decisions can be explained with the concept from cognitive psychology of undue salience or vividness for example present benefits and costs may have undue salience relative to future costs

is consumption growth consistent with intertemporal optimization evidence from the consumer expenditure survey in this paper we show that some of the predictions of models of consumer intertemporal optimization are in line with the patterns of nondurable expenditure observed in u s household level data we propose a flexible specification of preferences that allows multiple commodities and yields empirically tractable equations we estimate preference parameters using the only u s micro data set with complete consumption information we show that previous rejections can be explained by the simplifying assumptions made in previous studies we also show that results obtained using good consumption or aggregate data can be misleading

the economic design of sporting contests what is the optimal number of entrants in a race or the optimal number of teams in a baseball league what is the optimal structure of prizes for a golf tournament or degree of revenue sharing for a football championship how evenly balanced should the competing teams be in the nascar or formula one championships what is the maximum number of entrants per nation to the olympic games that should be permitted what quota of qualifying teams to the soccer world cup should be allocated to the developing nations

who holds the purse strings within the household the determinants of intra family decision making abstract we study the determinants of intra household decision making responsibility over economic and financial choices using a direct measure provided in the 1989 2010 bank of italy survey of household income and wealth we find that the probability that the wife is responsible for decisions increases as the wife s characteristics in terms of age education and income become closer or even higher than those of her husband s thus consistently with a bargaining approach decision making responsibility is associated with marriage heterogamy and not only along strictly economic dimensions however in support of an alternative household production approach we also find that the probability that the wife is responsible is lower when she is employed which suggests the presence of a specialization pattern assigning responsibility to the spouse with more available time our results are robust to additional controls and alternative samples

household intertemporal behaviour a collective characterization and a test of commitment in this paper a formal test of intra household commitment is derived and performed to that end two models of household intertemporal behaviour are developed in both models household members are characterized by individual preferences in the first formulation household decisions are always on the ex ante pareto frontier in the second model the assumption of intra household commitment required by ex ante efficiency is relaxed it is shown that the full efficiency household euler equations are nested in the no commitment euler equations using this result the hypothesis that household members can commit to future allocations of resources is tested using the consumer expenditure survey i strongly reject this hypothesis it is also shown that the standard unitary framework is a special case of the full efficiency model however if household members are not able to commit household intertemporal behaviour cannot be characterized using the standard life cycle model these findings have two main implications first policy makers can change household behaviour by modifying the decision power of individual household members second to evaluate programmes designed to improve the welfare of household members it would be beneficial to replace the standard unitary model with a characterization of household behaviour that allows for lack of commitment

convergence clustering and their effects on attendance in the japan professional baseball league in this research using a panel data set for the japan professional baseball league jpbl during the post wwii period we apply the technique developed by hobijn and franses 2000 to examine the competitive balance from the view point of convergence and its effect upon game attendance the jpbl comprises two leagues the central league cl and the pacific league pl the cl is far more popular with fans than the pl our estimation results showed that the number of the pl clusters continues to go towards unity thereby raising the uncertainty of the outcome to increase the pl game attendance more rapidly also attendance by cl fans tends to be more inelastic with team performance than for the pl therefore the pl payroll was more elastic to wins than that of the cl the features of each league have crucial impacts on the outcomes and the behaviours of team insiders such as players and managers

institutions and the resource curse countries rich in natural resources constitute both growth losers and growth winners we claim that the main reason for these diverging experiences is differences in the quality of institutions more natural resources push aggregate income down when institutions are grabber friendly while more resources raise income when institutions are producer friendly we test this theory building on sachs and warner s influential works on the resource curse our main hypothesis that institutions are decisive for the resource curse is confirmed our results contrast the claims of sachs and warner that institutions do not play a role

collective labor supply and welfare the paper develops a general collective model of household labor supply in which agents are characterized by their own possibly altruistic preferences and household decisions are only assumed to be pareto efficient an alternative interpretation is that there are two stages in the internal decision process agents first share nonlabor income according to some given sharing rule then each one optimally chooses his or her own labor supply and consumption this setting is shown to generate testable restrictions on labor supplies moreover the observation of labor supply behavior is sufficient for recovering individual preferences and the sharing rule up to a constant finally the traditional tools of welfare analysis can be adapted to the new setting

the varieties of resource experience natural resource export structures and the political economy of economic growth many oil mineral and plantation crop based economies experienced a substantial deceleration in growth following the commodity boom and bust of the 1970s and early 1980s this article illustrates how countries dependent on point source natural resources those extracted from a narrow geographic or economic base such as oil and minerals and plantation crops are predisposed to heightened economic and social divisions and weakened institutional capacity this in turn impedes their ability to respond effectively to shocks which previous studies have shown to be essential for sustaining rising levels of prosperity analysis of data on classifications of export structure controlling for a wide array of other potential determinants of governance shows that point source and coffee and cocoa exporting countries do relatively poorly across an array of governance indicators these governance effects are not associated simply with being a natural resource exporter countries with natural resource exports that are diffuse relying primarily on livestock and agricultural produce from small family farms do not show the same strong effects and have had more robust growth recoveries

the retirement consumption puzzle in china abstract using data from china s urban household survey and exploiting china s mandatory retirement policy we use the regression discontinuity approach to estimate the impact of retirement on household expenditures retirement reduces total non durable expenditures by 20 percent among the categories of non durable expenditures retirement reduces work related expenditures and expenditures on food consumed at home but has an insignificant effect on entertainment expenditures after excluding these three components retirement does not have an effect on the remaining non durable expenditures it suggests that the retirement consumption puzzle might not be a puzzle if a life cycle model with home production is considered

what drives the global land rush the authors review evidence regarding the size and evolution of the land rush in the wake of the 2007 8 boom in agricultural commodity prices and authors study the determinants of foreign land acquisition for large scale agricultural investment the use of data on bilateral investment relationships to estimate gravity models of transnational land intensive investments confirms the central role of agro ecological potential as a pull factor however this finding contrasts the standard literature insofar as the quality of the destination country s business climate is insignificant and weak tenure security is associated with increased interest for investors to acquire land in the country policy implications are discussed

spousal control and intra household decision making an experimental study in the philippines i elicit causal effects of spousal observability and communication on financial choices of married individuals in the philippines when choices are private men put money into their personal accounts when choices are observable men commit money to consumption for their own benefit when required to communicate men put money into their wives account these strong treatment effects on men but not women appear related more to control than to gender men whose wives control household savings respond more strongly to the treat ment and women whose husbands control savings exhibit the same response changes in information and communication interact with underlying control to produce mutable gender specific outcomes

the life cycle model of consumption and saving a central implication of life cycle models is that agents smooth consumption we review the empirical evidence on smoothing at frequencies from within the year up to across a lifetime we find that life cycle models particular those which incorporate realistic features of markets and goods have more empirical successes than failures we also show that some apparent deviations from theoretical predictions imply very small welfare losses for agents finally we emphasize that the coherence of life cycle models imposes an important discipline when incorporating new features into models

sources of inefficiency in a representative democracy a dynamic analysis this paper studies the efficiency of policy choice in representative democracies it extends the citizen candidate model of democratic policy making to a dynamic environment equilibrium policy choices are shown to be efficient in the sense that in each period conditional on future policies being selected through the democratic process there exists no alternative current policy choices which can raise the expected utilities of all citizens however policies that would be declared efficient by standard economic criteria are not necessarily adopted in political equilibrium the paper argues that these divergencies are legitimately viewed as politicalfailures

redistribution of individual pension wealth to survivor pensions evidence from a stated preferences analysis abstract pension schemes in the netherlands allow workers to redistribute their own pension wealth to increase the survivor pension of their partner however due to lacking communication and knowledge of survivor pensions among workers and also due to the lack of transparent products and choice architecture redistribution remains limited this paper uses a stated preferences experiment that is explicitly designed for workers with a partner in the age group of 55 to 65 years to elicit their pension redistribution preferences we find that on average the preferred pension wealth redistribution amounts to 50 35 of all individuals have such a preference 33 of all individuals would prefer less redistribution and 32 percent prefers to redistribute more pension income to the partner upon one s death we further show that total family income during working life does not affect the redistribution to survivor pensions however the distribution of the contribution to total family income before retirement across partners as well as the survival likelihood of the partner and the number of years the partner is expected to survive have a significant causal impact on the preferred pension redistribution decision the preference for redistribution to survivor pensions also depends significantly on personal characteristics preferences and social attitude males have a significantly stronger preference for redistribution compared to females moreover forward looking more risk averse and more altruistic individuals have a stronger preference to redistribute part of their pension wealth to a survivor pension finally in particular when employees have the perception that their partner is more forward looking they are willing to invest more in a survivor pension

what accounts for the variation in retirement wealth among u s households even among households with similar socioeconomic characteristics saving and wealth vary considerably life cycle models attribute this variation to differences in time preference rates risk tolerance exposure to uncertainty relative tastes for work and leisure at advanced ages and income replacement rates these factors have testable implications concerning the relation between accumulated wealth and the shape of the consumption profile using the panel study of income dynamics and the consumer expenditure survey we find little support for these implications the data are instead consistent with rule of thumb mental accounting or hyperbolic discounting theories of wealth accumulation jel di d91 e21

on the evolution of competitive balance the impact of an increasing global search the coase theorem maintains that where free market precepts exist the allocation of property rights does not impact the distribution of resources an application to major league baseball suggests that institutions such as free agency and the reverse order amateur draft would not impact player distributions and therefore would not impact competitive balance the present study finds that the distribution of wins is generally consistent with the precepts of the coase theorem and therefore suggests a course for those who wish to alter the level of competitive balance major league baseball should increase its focus on expanding the size of its labor pool jel o15 l83 c22

time to cook expenditure at retirement in spain detailed panel expenditure data from spain reveal little evidence of a retirement consumption puzzle in 1985 2004 there is a drop in food at home expenditure in the later years of the sample along with evidence of households paying lower prices for the food they purchase after retirement however our findings are consistent with a model that allows for home production as long as one accounts for the greater participation in housework by men after retirement coinciding with this latter period our work adds to the evidence from several countries and helps in reconciling the retirement consumption puzzle with life cycle models

kleptocracy and divide and rule a model of personal rule many developing countries have suffered under the personal rule of kleptocrats who implement highly inefe cient economic policies expropriate the wealth of their citizens and use the proceeds for their own glorie cation or consumption we argue that the success of kleptocrats rests in part on their ability to use a divide and rule strategy made possible by the weakness of institutions in these societies members of society need to cooperate in order to depose a kleptocrat yet such cooperation may be defused by imposing punitive rates of taxation on any citizen who proposes such a move and redistributing the benee ts to those who need to agree to it thus the collective action problem can be intensie ed by threats which remain off the equilibrium path in equilibrium all are exploited and no one challenges the kleptocrat kleptocratic policies are more likely when foreign aid and rents from natural resources provide rulers with substantial resources to buy off opponents when opposition groups are shortsighted when the average productivity in the economy is low and when there is greater inequality between producer groups because more productive groups are more dife cult to buy off jel o12 h00

labor supply and household dynamics abstract using the panel study of income dynamics we provide evidence that to understand household decisions and evaluate policies designed to affect individual welfare it is important to add an intertemporal dimension to the by now standard static collective models of the household specifically we document that the observed differences in labor supply by gender and marital status do not arise suddenly at the time of marriage but rather emerge gradually over time we then propose an intertemporal collective model that has the potential of explaining the observed patterns

two studies of women s retirement incomes in australia assessing some outcomes of pluralism in economic research to illustrate the potential use of plural research methods two studies of australian women s retirement incomes are examined the first study employed quantitative microsimulation techniques its outcomes emphasised low lifetime earnings as a cause of women s lower retirement incomes the second study used an inductive approach known as grounded theory and its conclusions emphasised household decision making processes as a cause of both women s low lifetime earnings and lower retirement incomes using runde s criteria for assessing causal explanations a comparison is made of the outcomes of the two studies the conclusion is that rather than being seen as competing accounts the outcomes of the two varying research methods can be viewed as complementary by demonstrating the different insights afforded by contrasting research methods this paper provides some support for pluralism of research methods within the discipline of economics

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

coaching team production coaching team production the actual function of managers is the subject of much debate using data on more than 3000 male college basketball players their coaches and their skill levels we find a positive and significant relation between our ability to replicate an individual coach s allocation of playing time across players and his winning percentage although this result does not answer the central question of just what it is that managers contribute the results do support the property rights paradigm managers are the employees of workers and more generally sports data can be used to help understand related economic processes where quantifiable measures of inputs and outputs are more costly to obtain what is meant by performance input energy initiative work attitude perspiration rate of exhaustion or output sometimes by inspecting a team member s input activity we can better judge his output effect it is not always the case that watching input activity is the only or best means of detecting measuring or monitoring output effects of each team member but in some cases it is a useful way i introduction a major tenet of the alchian demsetz 1972 representation of the firm is that managers are hired by workers to prevent shirking and malfeasance in their own ranks absent overseers individual workers bear only a fraction of the cost of shirking and hence everyone undersupplies labor relative to its opportunity cost in this world the managerial function is to monitor inputs and meter rewards thereby reducing the incentive to shirk and raising each worker s marginal productivity the more dependence there is in the marginal products of laborers the more important the role of management this view of supervision is simultaneously intuitively pleasing and difficult to quantify this paper investigates the role of management in a setting where indisputably there is team production intercollegiate basketball 1 data on 3012 college basketball players across ten years and sixty five teams are used to replicate one aspect of coaching the allocation of playing time next we attempt to link coaching decisions to winning the goal is to determine if coaches who manage well by our standards are successful section ii motivates the paper in section iii the empirical methodology is detailed the monitoring function is estimated and related to coaching success section iv contains a summary and conclusion ii coaching decisions the essence of team production is interdependence and the inherent immeasurability of marginal productivity across workers however this does not mean that proxies for marginal productivity cannot be developed managers monitor worker inputs and deduce marginal products accordingly of course some inputs are more cheaply quantified than others attitude is hard to measure but heart rate is easy sweat is observed cheaply but workers can feign exhaustion in the famous chinese boatpullers fable the coxswain uses his whip to insure that coolies pull efficiently to persuade each worker to give the appropriate effort 2 mcmanus 1975 341 relates a story told by cheung boats are pulled upstream by a team of coolies prodded by an overseer with a whip an american lady horrified at the sight of the overseer whipping the men as they strained at their harness demanded that something be done about the brutality she was quickly informed those men own the rights to draw boats over this stretch of water and they have hired the overseer and given him his duties here the monitor uses his vision intuition and experience to determine shirking counseling the loafers with his whip but employing subjective observation is just one way to monitor

household portfolio choice and retirement this study examines household portfolio choice through the retirement transition i show that couples significantly decrease their stock allocations after retirement whereas singles allocations remain relatively unchanged reallocations are concentrated among couples in which the wife is more risk averse than her husband husbands and wives respective retirement events are followed by opposite signed changes in stock allocations these findings are consistent with a model of collective household decision making in which spouses have heterogeneous risk preferences and suggest that dynamics in the distribution of intrahousehold bargaining power generate time varying household risk aversion

separate spheres bargaining and the marriage market this paper introduces the separate spheres bargaining model a new model of distribution within marriage it differs from divorce threat bargaining models e g manser brown mcelroy horney in that the threat point is not divorce but a noncooperative equilibrium within marriage this noncooperative equilibrium reflects traditional gender roles the predictions of our model thus differ from those of divorce threat bargaining models in the separate spheres model cash transfer payments to the mother and payments to the father can but need not imply different equilibrium distributions in existing marriages in the long run the distributional effects of transfer policies may be substantially altered by changes in the marriage market equilibrium

the effect of financial development on convergence theory and evidence we introduce imperfect creditor protection in a multicountry schumpeterian growth model the theory predicts that any country with more than some critical level of financial development will converge to the growth rate of the world technology frontier and that all other countries will have a strictly lower long run growth rate we present evidence supporting these and other implications in the form of a cross country growth regression with a significant and sizable negative coefficient on initial per capita gdp relative to the united states interacted with financial intermediation in addition we find that other variables representing schooling geography health policy politics and institutions do not affect the significance of the interaction between financial intermediation and initial per capita gdp and do not show any independent effect on convergence in the regressions our findings are robust to removal of outliers and to alternative conditioning sets estimation procedures and measures of financial development

rule changes and competitive balance in japanese professional baseball i introduction since rottenberg s 1956 classic analysis of baseball s reserve clause economists have been interested in whether the rules for initially allocating players among major league baseball mlb teams affect their final allocation el hodiri and quirk 1971 formalized rottenberg s analysis of player allocation rules for a sports league in which each team independently maximizes its profits within the league s institutional constraints 1 consider the effect of a player draft regime and an open bidding regime on the allocation of new players often called rookies if a player draft allows team a to claim initially a particular new player and that player would generate a higher marginal product with team b then the two teams have incentives to make an exchange and send the player to team b alternatively under an open bidding regime the new player signs with the team presenting the highest offer i e team b with which he generates the highest marginal product assuming that transaction costs of exchanging players are zero el hodiri and quirk showed that the final allocation of players across teams will be the same in both regimes this result that the final allocation of players does not depend on the rules governing the initial allocation of players is baseball s version of the coase theorem following coase s 1960 analysis this invariance result vanishes if there are obstacles to exchanging players after the initial allocation in an open bidding regime players are initially allocated to the team with which they have the highest marginal product thereby eliminating the need for player exchanges since the best players are likely to generate the highest marginal product with teams in cities that have a high demand for winning games in an open bidding regime these teams are likely to have higher winning percentages and win more championships than other teams 2 by contrast in a draft regime the best players are often initially allocated to a team located in a city with a low demand for winning games if there are obstacles to player exchange then players will be allocated more evenly across teams under a draft regime and competitive balance should improve both within a given season and over time 3 empirical studies have used performance data from north american mlb to analyze whether changes in the rules for allocating rookies among teams affect competitive balance fort and quirk s 1995 recent study found that mlb s change in 1965 from an open bidding to a draft regime for allocating new players increased competitive balance in the american league and had little effect on competitive balance in the national league the power of statistical tests conducted with the mlb data is however severely limited due to the small number of observations from the draft regime period this article uses a larger data set from japanese baseball to examine the same rule change that economists have analyzed for mlb remarkable as it may seem the japanese professional baseball league jpbl adopted the same rule change from an open bidding to a draft regime for rookies in the same year 1965 as major league baseball our goal is to examine how the rule change in the jpbl affected competitive balance in its two leagues and to compare the outcomes of these two remarkably similar experiments set in two very different cultures ii studies of north american mlb and japanese jpbl daly and moore 1981 compared player allocation in the two regimes for allocating rookies by examining mlb s 1965 switch from an open bidding to a draft regime they used pre and post 1965 performance data from the american and national leagues to examine several measures of competitive balance in the post 1965 draft regime they found substantially more competitive balance in the american league and somewhat more competitive balance in the national league using different tests for competitive balance fort and quirk 1995 1 282 86 also found evidence for more competitive balance in the american league but found no change in competitive balance in the national league

is there a retirement consumption puzzle evidence using subjective retirement expectations abstract previous research finds a systematic decrease in consumption at retirement a finding that is inconsistent with the life cycle permanent income hypothesis if retirement is an expected event in this paper we use workers subjective beliefs about their retirement dates as an instrument for retirement after demonstrating that subjective retirement expectations are strong predictors of subsequent retirement decisions we still find a consumption decline at retirement for workers who retire when expected however our estimates of this consumption fall are about a third less than those found when we instead rely on the instrumental variables strategy used in prior studies

structural change in mlb competitive balance the depression team location and integration no detectable break points in within season competitive balance 1901 99 occur after 1937 in the national league or after 1962 in the american league despite expansion free agency and the growth of local tv revenue disparity since then instead a continual improvement in competitive balance has occurred since those years associated with break points prior to these years 1 the al emerged from the depression much more unbalanced than the nl 2 team movement and league expansion alter balance in well known ways and 3 discriminatory preferences were stronger in larger revenue markets than in smaller revenue markets in both leagues jel c32 l83

free agency competitive balance and diminishing returns to pennant contention e woodrow eckard this article argues that the 1976 introduction of free agency increased competitive balance in major league baseball the evidence is based on a new empirical measure that captures the key dynamic element of balance year to year fluctuations in team performance my hypothesis is that diminishing returns to each additional year s production of a pennant contending team reduces the incentive to bid continually for top players free agency allows talent to be reallocated more readily to potential new contenders given that player sales had been restricted prior to 1976 the hypothesis is supported by evidence of declining attendance during contending streaks jel l83 i introduction since the inception of free agency in major league baseball mlb over 20 years ago its effect on competitive balance has been controversial for almost a century the reserve system had assigned de facto property rights in players services to mlb teams this changed after 1976 when veteran players were allowed to unilaterally sell their services to the highest bidder team owners predicted a consequent decline in competitive balance arguing that large market clubs would outbid others for talent and come to dominate this claim is still made today as the basis for major restructuring proposals such as new restrictions on player salaries and mobility team payroll caps and various cross subsidization schemes 1 economists have examined the issue from both theoretical and empirical angles theorists such as el hodiri and quirk 1971 implicitly agree with the owners that the best players concentrate where their marginal revenue products mrps are the highest that is in high demand cities that also may be the most populous debate has revolved instead around rottenberg s 1956 invariance proposition which states that the distribution of playing talent will be the same under both systems if player sales are unrestricted teams where mrps are the highest purchase the services of the best players whether from other low mrp clubs or directly from the players themselves free agency therefore should not affect competitive balance critics such as daly 1992 argue that before 1976 first line players seldom were sold so the invariance proposition does not apply several studies examine empirically the effect of free agency on competitive balance taken together the results are consistent with the invariance proposition namely balance did not change this article argues that these studies use balance measures that ignore a critical aspect of competition namely year to year changes in a team s position in league standings using empirical measures that capture this dynamic i report new evidence that balance improved after free agency i then extend the existing theory of sports leagues to explain why free agency might cause such an outcome and provide an independent test of the theory specifically there are diminishing marginal returns to each additional year s production of a pennant contending team reducing the incentive to bid continually for top players this allows also rans to obtain the talent necessary to improve their performance and become contenders i also provide evidence that quality players were seldom sold under the old reserve system ren dering the invariance proposition moot the article is organized as follows the next section reviews the relevant theoretical and empirical literature section iii describes my measures of competitive balance and section iv presents empirical results comparing balance in mlb before and after free agency section v provides evidence that sales of first line players were sufficiently rare as to nullify the invariance proposition section vi presents the theoretical argument linking free agency to an improvement in balance followed by a supporting empirical test in section vii section viii summarizes and concludes the article

is there a retirement savings puzzle in this paper we ask whether households are saving enough for their retirement we use data on income expenditure and expenditure components to analyse patterns of behaviour at and around the time of retirement for successive date of birth cohorts we compare periods of unemployment to periods of retirement and separate expenditures into categories reflecting work related expenditures basic necessities and other goods we find that income typically falls by more at unemployment than retirement but the reverse is true for expenditure we observe falls in expenditure at retirement for all expenditure categories using a stochastic life cycle model including mortality rates we assess the anticipated impact of retirement on consumption against that of unemployment the inter relationship between goods and leisure explains a large part of the persistent fall in expenditure at retirement we argue that the only way in which the life cycle hypothesis could be reconciled with the remaining unanticipated dip in consumption would be with the systematic arrival of unexpected adverse information at the time of retirement