statistical discrimination and the early career evolution of the black white wage gap this article develops and tests a simple dynamic model of statistical discrimination the model improves on earlier static models both by allowing ex ante uncertainty about worker productivity to be resolved as on the job performance is observed and by generating several testable empirical implications these predictions are tested using a sample of young men from the national longitudinal survey of youth producing mixed evidence for the model the main empirical result is that no black white wage gap exists at labor force entry but that one develops as experience accumulates mainly because blacks reap smaller gains from job mobility

anticipated discrimination choices and performance experimental evidence abstract this paper studies experimentally whether potential perceived discrimination affects decisions in a labor market setting with different stereotypes participants are assigned to a seven person group and randomly allocated a role as a firm or worker in each group there are five workers and two firms the only information firms have about each worker is a self selected avatar male female or neutral representing a worker s gender each firm then decides which worker to hire female workers react to potential discrimination when they know the task is math related but not otherwise men choose similar avatar patterns regardless of the task men do perform at much higher levels in the math related task but there is no difference in performance in the emotion recognition task where there is a strong female stereotype

experience tenure and wage growth of young black and white men this paper studies the source of differences in wage growth between young black and white workers focusing on terminal high school graduates from the national longitudinal survey of youth we estimate the returns to on the job tenure and general labor market experience using ordinary least squares altonji and shakotko and topel estimators results from all three estimators indicate that returns to general experience for black workers trail those for white workers but that black workers earn equal if not higher returns to tenure than do white workers

what went wrong the erosion of relative earnings and employment among young black men in the 1980s this paper shows a widening in black white earnings and employment gaps among young men from the mid 1970s through the 1980s earnings gaps increased most among college graduates and in the midwest while gaps in employment population rates grew most among dropouts we attribute the differential widening to shifts in demand for subgroups due to shifting industry and regional employment the falling real minimum wage and deunionization the growing supply of black to white workers that was marked among college graduates and to increased crime among dropouts the different factors affecting subgroups highlight the economic diversity of black americans

some macro data on the regionalisation globalisation debate a comment on the rugman verbeke analysis this paper critiques an earlier contribution by rugman and verbeke 2004 and it does so by considering the global distribution of foreign direct investment fdi it also adds several new dimensions to the regionalisation globalisation debate noticeably by i the incorporation of inward multinational enterprise mne activity ii evaluating changes in the geography of fdi between 1990 and 2003 and iii the introduction of the concept of revealed investment comparative advantage rica of countries and regions while broadly supporting the findings of rugman and verbeke our paper shows that much of the explanation for the regional concentration of fdi and mne activity reflects that of the gross domestic product gdp and trade of the countries concerned rather than any distinctive strategy on the part of investing firms

racial disparities in job finding and offered wages abstractthe extent to which discrimination can explain racial wage gaps is one of the most divisive issues in the social sciences using a newly available data set this paper develops a simple empirical test that under plausible but not innocuous conditions provides a lower bound on the extent of discrimination in the labor market taken at face value our estimates imply that differential treatment accounts for at least one third of the black white wage gap we argue that the patterns in our data are most naturally rationalized through a search matching model in which employers statistically discriminate on the basis of race when hiring unemployed workers but learn about their marginal product over time

gender differences in training capital and wages this paper constructs an equilibrium job matching model where workers differ in their attachment to the labor force the model predicts that workers with weaker attachment to the labor market will receive lower starting wages and lower post training wages and will be placed in jobs that offer less training and use less capital the implications of the model for gender differences in pay and job assignment are tested with the eopp data set ourfindings suggest that while training intensity during the first three months of employment is similar in positions filled by males and females females are employed in positions that have a shorter duration of on the job training and that use less capital these differences in on the job training and capital in positions filled by men and women as well as a lower market value for women s prior labor market experience account for a substantial part of the gap in wages between males and females

racial discrimination in the labor market theory and empirics we review theories of race discrimination in the labor market taste based models can generate wage and unemployment duration differentials when combined with either random or directed search even when strong prejudice is not widespread but no existing model explains the unemployment rate differential models of statistical discrimination based on differential observability of productivity across races can explain the pattern and magnitudes of wage differentials but do not address employment and unemployment at their current state of development models of statistical discrimination based on rational stereotypes have little empirical content it is plausible that models combining elements of the search models with statistical discrimination could fit the data we suggest possible avenues to be pursued and comment briefly on the implication of existing theory for public policy jel j15 j31 j64 j71

location and the multinational enterprise john dunning s thoughts on receiving the journal of international business studies 2008 decade award a retrospective by john h dunning on location and the mne written in the form of responses to questions posed by rajneesh narula in an interview recorded at the university of reading which was shown at the jibs decade award session at the aib annual meetings in milan june 2008

counteroffers and efficiency in labor markets with asymmetric information this article considers the effect of offer matching on labor market outcomes when the current employer has better information about his worker s productivity than potential employers previous research found that when current employers have better information than potential employers the latter use job assignment to infer an employed worker s qualifications as a result assignment of workers to jobs is inefficient i find that when current employers can match outside offers the equilibrium outcome may be efficient i analyze the effect of the asymmetric information on investment in human capital made by employers and workers and find these investment levels to be first best

job market signalling stereotype threat and counter stereotypical behaviour i introduce stereotype threat in a multiple productivity signalling model existence of multiple self fulfilling stereotypes which can generate statistical discrimination is more likely if there is less variance in the ability distribution a low endogenously correct stereotype about a group forces higher ability group members to choose a higher productivity and a higher separating signal thereby engaging in counter stereotypical behaviour this counter stereotypical behaviour causes the remaining partially pooling group to have lower average productivity reinforcing the negative stereotype the co existence of stereotype threat and counter stereotypical behaviour can explain the simultaneity of lower wages and higher education attainment in a group facing labour market discrimination resume signaux sur le marche du travail menace de stereotype et comportement contre stereotype l auteur introduit une menace de stereotype dans un modele de signalisation des multiples productivites l existence de multiples stereotypes porteurs d autorealisation qui peuvent engendrer la discrimination statistique est davantage vraisemblable s il y a moins de variance dans la repartition des habiletes un stereotype depreciatif endogenement correct a propos d un groupe force les membres du groupe a hautes habiletes a choisir des signaux de haute productivite et qui les separent grandement et donc a s engager dans des comportements contre stereotypiques ce comportement contre stereotypique entraine une productivite moyenne plus faible pour le reste du groupe partiellement agrege ce qui renforce le stereotype negatif la coexistence de menace de stereotype et de comportement contre stereotypique peut expliquer la simultaneite de salaires plus bas et de statut educationnel plus eleve dans un groupe faisant face a la discrimination dans le marche du travail

liabilities of regional foreignness and the use of firm level versus country level data a response to dunning et al 2007 we are pleased that dunning et al have provided macro country level data demonstrating the increased internationalization of many nations over the past decade we also appreciate their findings lending support to our perspective on the regional nature of world business our work was based solely on micro firm level data both country level data and firm level data have methodological problems which we attempt to reconcile in this commentary we also address the broader conceptual issues of how to interpret country level vs firm level data

why and how fdi stocks are a biased measure of mne affiliate activity many international business ib studies have used foreign direct investment fdi stocks to measure the aggregate value adding activity of multinational enterprises mne affiliates in host countries we argue that fdi stocks are a biased measure of that activity because the degree to which they overestimate or underestimate affiliate activity varies systematically with host country characteristics first most fdi into countries that serve as tax havens generate no actual productive activity thus fdi stocks in such countries overestimate affiliate activity second fdi stocks do not include locally raised external funds funds widely used in countries with well developed financial markets or volatile exchange rates resulting in an underestimation of affiliate activity in such countries finally the extent to which fdi translates into affiliate activity increases with affiliate labor productivity so in countries where labor is more productive fdi stocks also result in an underestimation of affiliate activity we test these hypotheses by first regressing affiliate value added and affiliate sales on fdi stocks to calculate a country specific mismatch and then by regressing this mismatch on a host country s tax haven status level of financial market development exchange rate volatility and affiliate labor productivity all hypotheses are supported implying that fdi stocks are a biased measure of mne affiliate activity and hence that the results of fdi data based studies of such activity need to be reconsidered

prelude to macroeconomics two schools of macroeconomic thought compete today the keynesian school attempts to analyze each sector of the economy using the usual tools of optimizing models but produces general equilibrium descriptions of a macroeconomy which are rarely pareto efficient for this reason economists question the internal consistency of keynesian models in contrast the neoclassical or rational expectations school maintains consistency with the principles of perfect competition and flexible prices in essence the neoclassicists macroeconomy behaves as an arrow debreu general equilibrium once this is understood we realize that the economy is pareto efficient though this does not preclude occasional ex post bad draws government policy can be expected to be either neutral or damaging in fairness i am describing polar cases of the keynesian and neoclassical view nearly all economists are extraordinarily prejudiced in favor of models exhibiting rational behavior as am i and the last decade has seen an almost complete intellectual victory for the neoclassical school complete victory has been elusive for a single reason in apparent ignorance of the intellectual arguments of the neoclassical school the economy persists in behaving pretty much as the modern keynesian models predict as premier examples neither the great depression nor the recent massive recession was in my opinion a pareto efficient equilibrium the model i present below rigorously adheres to the rule that agents should follow rational principles in this paper that rule means that agents equate marginal rates of substitution to relative prices at the same time i insert a single piece of imperfect information which prevents the formation of a complete arrow debreu general equilibrium the model predicts qualitative behavior of gnp and employment which is analogous to keynesian predictions government spending is shown to increase gnp and economic welfare the substantive results of the paper appear in the next three sections section i presents the role of imperfect information in the labor market and then goes on to solve for general equilibrium in the absence of government intervention section ii examines the keynesian like behavior of this equilibrium section iii examines the impact on gnp aggregate labor supply and welfare of balanced budget government spending the model produces four major results 1 aggregate spending and labor supply decisions are not simply the sum of individual decisions the model identifies the logical error that paul samuelson has labeled the fallacy of composition 2 say s law fails a unit increase in aggregate supply produces a less than unit increase in demand for output 3 an increase in government spending increases gnp and reduces unemployment 4 an increase in government spending can generate a pareto improvement in individual utility the last section of the paper discusses some of the ways this model differs from the way we usually think about the economy while the paper develops a particular model of aggregate demand its real goal is to demonstrate a general principle once the right set of mathematics is put together it is easy to produce a model of the economy which is at once rational and keynesian in the specific setting i present all the results fol department of economics university of washington seattle wa 98195 the first version of this paper was written while visiting at the graduate school of business stanford university the final version was written while a member of the finance department university of pennsylvania shelly lundberg deserves many thanks for extensive aid and partial absolution from any remaining errors stanley fischer mark flannery robert solow a number of other friends and colleagues and two anonymous referees all contributed valuable constructive criticism for which i am most grateful

over identification tests in earnings functions with fixed effects the fixed effects model for panel data imposes restrictions on coefficients from regressions of all leads and lags of the dependent variable on all leads and lags of right side variables in the standard fixed effects model the omnibus goodness of fit statistic is shown to simplify to the degrees of freedom times the rz from a regression of analysis of covariance residuals on all leads and lags of right side variables this result is applied to test models for the union wage effect using data from the national longitudinal survey of youth nlsy identification and estimation of the return to schooling in models with fixed effects is also discussed although schooling is often treated as time invariant schooling increases over a five year period for nearly 20 of continuously employed men in the nlsy the analysis of covariance estimate of the returns to schooling is precisely estimated and roughly twice as large as the ordinary least squares estimate unlike in the union wage effects equation however

mommy tracks and public policy on self fulfilling prophecies and gender gaps in hiring and promotion abstract consider a model with two types of jobs the profitability of hiring a worker to a fast track job depends not only on his or her observable talent but also on incontractible effort we investigate whether self fulfilling expectations may lead to higher hiring or promotion standards for women if employers expect women to do more household work than men thereby exerting less effort in their paid job then women must be more talented to make it profitable to hire them specialization in the family will then result in women doing most of the household work such self fulfilling prophecies can be defeated by affirmative action or family policy however it is unlikely that temporary policy can move the economy to a symmetric equilibrium policy must be made permanent anti discrimination policy need not enhance efficiency and from a distribution viewpoint this is a policy with both winners and losers

liability of country foreignness and liability of regional foreignness their effects on geographic diversification and firm performance the costs of inter and intra regional diversification have been widely discussed in the existing international business literature but the findings are mixed explanations for the mixed findings have important managerial implications because business managers have to estimate accurately the costs of doing business within and across regions before they make their internationalization decisions to explain the existing mixed findings this study differentiates between liabilities of foreignness at the country and regional levels and explores the joint effects of liability of country foreignness lcf and liability of regional foreignness lrf on the performance of internationalizing firms using data from 167 canadian firms we find that lcf may not necessarily be negatively correlated with intra regional diversification but lrf is positively correlated with inter regional diversification lcf moderates the relationship between lrf and inter regional diversification and also mediates the relationship between intra regional diversification and firm performance lrf mediates the relationship between inter regional diversification and firm performance missing one or more of these variables may result in different cost estimates identification of the relationships between these variables helps to improve the accuracy of estimating the costs of doing business aboard

reassessing home regionalisation alan rugman and co authors argue that globalisation and with it global strategy is a myth this contention rests on a taxonomy of the world s largest firms based on their sales showing an overwhelming share of home regional firms we question the rationales underpinning their classification scheme when retesting the data using different schema we find that the original results are far from robust with a significant share of firms attaining bi regional or global status further longitudinal analysis shows that large firms increasingly are extending their sales beyond the home region our results defy regionalisation theory in its current form and we call for refinements through further research

a theory of collective reputations with applications to the persistence of corruption and to firm quality the paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations a member s current incentives are affected by his past behaviour and because his track record is observed only with noise by the group s past behaviour as well the paper thus studies the joint dynamics of individual and collective reputations and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature it shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone and it derives necessary and sufficient conditions under which group reputations can be rebuilt last the paper applies the theory to analyse when a large firm can maintain a reputation for quality 1 collective reputations collective reputations play an important role in economics and the social sciences countries ethnic racial or religious groups are known to be hard working honest corrupt hospitable or belligerent some firms enjoy substantial rents from their reputations for producing high quality products some departments are reported to treat their faculty or students fairly the paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations a member s current incentives are affected by her past behaviour and because her track record is observed only with noise by the group s past behaviour as well the paper studies the joint dynamics of individual and collective reputations in a model in which current generations are progressively replaced by new ones and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature see section 2 for a detailed comparison with the literature it shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone and it derives necessary and sufficient conditions under which group reputations can be rebuilt last the paper applies the theory to analyse when a large firm can maintain a reputation for quality let us spell out the building blocks of our theory in more detail a a group s reputation is only as good as that of its members each member is characterized by individual traits such as talent diligence or honesty past individual behaviour conveys information about these traits and generates individual reputations

sex related wage differentials and women s interrupted labor careers the chicken or the egg wage differentials between men and women are often attributed to differences in on the job training the lower investment of women being explained by their plans to interrupt their careers for family reasons career interruptions however are often explained by low wages to trace this interrelationship i adopt a simultaneous equations approach trying to explain wages planned separations on the job training and the skill intensity of the job simultaneously skill intensity is found to be a key variable in the explanation of the wage differential traditional theory is hard pressed to explain the sex related differences in this variable

an equilibrium search matching model of discrimination abstract a model in which firms have incomplete information about workers at the hiring stage is shown to entail discrimination as the unique stable equilibrium outcome even if no agents have a taste for discrimination and groups are ex ante identical groups which are discriminated against e g blacks women earn lower wages and endure longer unemployment spells

a perspective on regional and global strategies of multinational enterprises multinational enterprises mnes are the key drivers of globalization as they foster increased economic interdependence among national markets the ultimate test to assess whether these mnes are global themselves is their actual penetration level of markets across the globe especially in the broad triad markets of nafta the european union and asia yet data on the activities of the 500 largest mnes reveal that very few are successful globally for 320 of the 380 firms for which geographic sales data are available an average of 80 3 of total sales are in their home region of the triad this means that many of the world s largest firms are not global but regionally based in terms of breadth and depth of market coverage globalization in terms of a balanced geographic distribution of sales across the triad thus reflects a special and rather unusual outcome of doing international business ib the regional concentration of sales has important implications for various strands of mainstream ib research as well as for the broader managerial debate on the design of optimal strategies and governance structures for mnes journal of international business studies 2004 35 3 18 doi 10 1057 palgrave jibs 8400073

native immigrant wage differentials and occupational segregation in the greek labour market this article explores native immigrant wage differentials in the greek labour market data from the most recent greek household budget survey 2004 05 were employed four alternative occupational categories were considered and occupational choice was explicitly modelled controlling for occupational selectivity occupation specific wage regressions for representative samples of employed native and immigrant workers were estimated and an augmented decomposition technique was utilized to analyse inter and intra occupation wage differentials the obtained results demonstrate that roughly 48 of the average wage differential cannot be explained by differences in observed characteristics and that the larger component of this unexplained part is due to asymmetrical occupational access by native and immigrant workers

cultural transmission and discrimination workers can have good or bad work habits these traits are transmitted from one generation to the next through a learning and imitation process which depends on parents investment in the trait and the social environment where children live if a sufficiently high proportion of employers have taste based prejudices against minority workers we show that their prejudices are always self fulfilled in steady state and minority workers end up having on average worse work habits than majority workers this leads to a ghetto culture affirmative action can improve the welfare of minorities whereas integration can be beneficial to minority workers but detrimental to workers from the majority group

sex discrimination in labor markets the role of statistical evidence reply correlations between statistically measured wage discrimination and confidential survey reports of discrimination are used to estimate the relative importance of statistical evidence in determining womens self assessed discrimination levels statistical evidence is found to be considerably less important than other nonstatistical evidence assuming courts weigh statistical versus other evidence as individuals do the effects of making statistical evidence admissible are calculated young well educated women are predicted to be the main beneficiaries of this policy copyright 1987 by american economic association

discrimination and the effects of drug testing on black employment abstract a common assumption is that the rise of drug testing among u s employers must have had negative consequences for black employment i use variation in the timing and nature of drug testing regulation to identify the impacts of testing on black hiring i find that adoption of protesting legislation increases black employment in the testing sector by 7 to 30 and relative wages by 1 4 to 13 0 with the largest shifts among low skilled black men the results are consistent with ex ante discrimination and suggest that drug testing may benefit african americans by enabling nonusing blacks to prove their status to employers

the globalization of swedish mnes empirical evidence and theoretical explanations we define globalization as the geographical dispersion of multinational enterprises mnes value chain in combination with increased inter regional coordination and use detailed firm level data to show that 12 of sweden s 17 largest manufacturing companies indeed are global by developing a globalization process model we theoretically argue in contrast to much of the existing literature that globalization may evolve to a more general phenomenon the globalization process is tortuous as mnes have to develop dynamic capabilities which make them gradually more competitive and able to cope with varying institutional contexts empirical testing on globalization of mnes originating from other home countries is suggested

labor intensity and employment creation in a constrained economy abstract when considered in a general equilibrium context this paper shows that sectoral labor intensity is a poor proxy for the employment effects of sectoral demand or export expansion we develop an open economy input output model with endogenous consumption and capital formation to measure the employment effects of these two sorts of exogenous increases in demand we show that in an open economy the employment effect of sectoral government spending programs is always less than the number of jobs created by the program and could well be negative while the opposite is true for sectoral export expansion

does privatization improve job satisfaction the case of ghana this paper analyzes the impacts of privatization in ghana on the basis of a survey of 300 workers in privatized and state owned enterprises the findings indicate a significant positive relationship between privatization and job satisfaction whereas monthly wage is an important determinant of job satisfaction in state owned enterprises education and the availability of training opportunities are strong determinants in privatized enterprises the study also shows that there exists a variety of instruments to implement a privatization program smoothly

foreign trade and its impact on employment the mexican case abstract this paper discusses the relationship between foreign trade and employment in a small open economy and carries out some empirical work using mexican data it is argued that employment multipliers are not stable if intermediate inputs are imported actual employment multipliers will be given by the relationship between effective demand and installed capacity in each sector and will depend strongly on whether quotas or tariffs are in operation it is also found that mexican exports are capital intensive relative to its imports

employer skill demands and labor market outcomes of blacks and women the author uses data from a 1992 94 survey of employers in four metropolitan areas to investigate the effects of skill demands as measured by hiring requirements and job tasks on the wages and employment of newly hired workers skill demands were generally associated with lower employment of blacks than whites and with higher employment of women than men most tasks and requirements had statistically significant positive effects on starting hourly wages together these effects help to account for some of the differences between the hourly wages of white and black men and for some of the trends over time in the relative wages and employment of race and gender groups

are emily and greg more employable than lakisha and jamal a field experiment on labor market discrimination we study race in the labor market by sending fictitious resumes to help wanted ads in boston and chicago newspapers to manipulate perceived race resumes are randomly assigned african american or white sounding names white names receive 50 percent more callbacks for interviews callbacks are also more responsive to resume quality for white names than for african american ones the racial gap is uniform across occupation industry and employer size we also find little evidence that employers are inferring social class from the names differential treatment by race still appears to still be prominent in the u s labor market jel j71 j64

location and the multinational enterprise a neglected factor this article first traces the changing world economic scenario for international business over the past two decades and then goes on to examine its implications for the location of foreign direct investment and multinational enterprise activity it suggests that many of the explanations of the 1970s and early 1980s need to be modified as firm specific assets have become mobile across natural boundaries a final section of the article examines the dynamic interface between the value added activities of multinational enterprises in different locations

an experimental study of statistical discrimination by employers this article reports findings of an experiment motivated by a dynamic labor market model that considers the problem faced by employers in making hiring decisions between workers of different types the question examined here is how quickly employers learn about the ability of a group of workers through observing representatives of that group if prior opinions are weak the employer will use information from the workplace to quickly update any incorrect group based stereotypes it may have on the other hand if priors are heavily weighted incorrect initial perceptions will result in persistent wage differences our experimental findings are twofold first subjects employers behavior moves quickly toward optimal choices second strong priors are hard to establish these results suggest that it would take a long time for employers to form group based stereotypes and that such stereotypes should go away quickly in response to signals that contradict these stereotypes

home region focus and performance of family firms the role of family vs non family leaders do family firms benefit more from a regional or a global geographic scope we suggest it depends on their family leadership type family vs non family leadership we offer a nuanced view of agency and stewardship theories to hypothesize that family leaders are most beneficial when pursuing a regional strategy i e high home region focus hrf whereas non family leaders are more advantageous when pursing a global strategy i e low hrf utilizing a sample of 202 western european firms from 1996 to 2006 we find support for this central hypothesis thus family leadership influences the degree to which family firms benefit from hrf

measuring the degree of internationalization of a firm in spite of both positivistic and instrumental research the reliability of measuring the degree of internationalization of a firm remains speculative we collected data on nine attributes of seventy four american manufacturing mncs alpha factor and frequency analyses revealed a linear combination of five variables with a reliability coefficient of 79 as a measure of the degree of internationalization of a firm we discuss the statistical and conceptual properties of the scale and their implications for content and construct validity

expanding rtas trade flows and the multinational enterprise we test the relationship between the size of regional trade agreements rtas and openness by using a gravity equation with multilateral trade factors our sample includes 11 rtas seven with constant membership and four with expanding membership regional trade bias declines with the size of the club three of the four expanding rtas have already surpassed their optimal size we also explore the link between openness of the rta and the geographic strategy of the multinational enterprise we find strong evidence in favor of the regionalization strategy which has been enhanced by the presence of rtas

labor market dynamics and black white earnings gaps abstract earnings gaps between black and white workers have widened over the past 30 40 years this increase is not explained by differences in observed demographics or the industry and occupational composition of employment we suggest that variation in labor market dynamics between black and white workers are important disparities in job switching job loss and associated wage growth result in flatter career wage profiles for black workers and widening earnings gaps over the work life

a test of screening discrimination with employer learning this paper tests for the presence of screening discrimination a type of statistical discrimination that occurs when employers are less able to evaluate the ability of workers from one group than from another using data from the 2000 release of the nlsy79 the author examines wage equations in a framework of employer learning to test the hypothesis that the market receives less reliable productivity signals at labor market entry from black men than from white men the estimation results support this hypothesis variables that are difficult for employers to observe such as the afqt score had less influence on the wages of black men and easily observed variables had more influence than on the wages of white men the influence of hard to observe variables on wages however increased faster with experience for black men

does affirmative action work caste gender college quality and academic success in india public policy in modern india features affirmative action programs intended to reduce inequality that stems from a centuries old caste structure and history of disparate treatment by gender we study the effects of one such affirmative action program an admissions policy that fixes percentage quotas common across more than 200 engineering colleges for disadvantaged castes and for women we show that the program increases college attendance of targeted students particularly at relatively higher quality institutions an important concern is that affirmative action might harm intended beneficiaries by placing them in academic programs for which they are ill prepared we find no evidence of such adverse impacts

the racial wage gap the importance of labor force attachment differences across black mexican and white men labor market attachment differs significantly across young black mexican and white men although it has long been agreed that potential experience is a poor proxy for actual experience for women many view it as an acceptable approximation for men using the nlsy this paper documents the substantial difference between potential and actual experience for both black and mexican men we show that the fraction of the black white and mexican white wage gaps that are explained by differences in potential experience are quite different from the fraction of the racial wage gaps that are explained by actual real experience differences

informal job search and black youth unemployment in this paper i analyze how young black and white unemployed jobseekers use various methods of search and the employment outcomes which result from their use the focus is on distinguishing informal search methods i e friends and relatives or direct application without referral from more formal ones in analyzing racial differences the results show that the two informal methods of search account for about 90 of the difference in employment probabilities between white and black youth this also accounts for 57 71 of the difference in unemployment rates between the two furthermore most of these results reflect differences in the ability of these methods to generate job offers as opposed to differences in search effort or job acceptance rates however our ability to explain these differences through personal family and household characteristics was generally quite limited this abstract was borrowed from another version of this item

on the blurring of the color line wages and employment for black males of different skin tones abstract we evaluate the role skin color plays in earnings and employment for black males in the nlsy97 by applying a novel scaled measure of skin tone to a nationally representative sample and by estimating the evolution of labor market differentials over time we bridge a burgeoning literature on skin color with more established literatures on wage differentials and labor market discrimination we find that while intraracial wage gaps widen with experience gaps between the lightest skinned black workers and whites remain constant suggesting that a blurring of the color line elicits subtle yet meaningful variation in earnings differentials over time

firms choice of method of pay using data from the bls industry wage survey the author tests the theory that firms choose their methods of pay by balancing the gains from more precise links between performance and pay against m

breaking free of a stereotype should a domestic brand pretend to be a foreign one consumers in many emerging markets exhibit a pronounced preference for western and global brands while domestic brands are often associated with a cheap but low quality image frustrated with the negative country of origin coo stereotype imposed on them many domestic brands from emerging markets follow a variety of approaches to disguise their coo and pretend to be foreign this paper studies the strategic aspects of this phenomenon we consider an experience good market where consumers learn about each brand s quality using its coo as a prior each firm can invest in product quality or coo dissociation the former generates better quality signals while the latter simply masks the firm s coo identity the analysis reveals a few main insights sharing a reputation leads to a common good problem where firms free ride on each other s quality investments as a high quality firm dissociates itself from the stereotype it ceases to contribute to the coo image but also prevents its low quality peers from free riding on it this incurs a negative direct effect but a positive strategic effect on the group image consequently a country s coo image may actually improve when more high quality brands shun their identities and pretend to be foreign in equilibrium coo image improves monotonically as firms become more efficient in providing quality however the prevalence of coo dissociation may first increase then decrease we discuss the implications of these results for emerging market brands as well as policy makers

unemployment and economic development during the past thirty five years opinions on unemployment have significantly influenced our thoughts about the process of economic development in low income countries the economic strategies appropriate for governments committed to accelerating that process and the best way for the rich nations to assist in that endeavour which of the many and sometimes conflicting opinions of economists regarding the magnitude causes and costs of unemployment in ldcs reigns as the conventional wisdom at any given time is not determined by purely scientific criteria the emergence of a particular set of hypotheses as dominant may be strongly influenced by the attitudes and political preoccupations of observers as well

the impact of the london bombings on the well being of adolescent muslims we exploit the timing of the london bombings coinciding with a large scale national survey of adolescents to identify the impact of extremist islamic terror attacks on the well being of adolescent muslims our analysis reveals interesting gender differences we find evidence of a decline in the happiness of muslim teenage girls after the bombings which is also accompanied by a rise in expectations of facing discrimination in the labour market these findings are robust to several falsification tests on the other hand we fail to uncover compelling evidence of any impact of the bombings on muslim teenage boys

separate and unequal in the labor market human capital and the jim crow wage gap competing explanations for the long standing gap between black and white earnings attribute different weight to wage discrimination and human capital differences using new data on local school quality we find that human capital played a predominant role in determining 1940 wage and occupational status gaps in the south despite entrenched racial discrimination in civic life and the lack of federal employment protections the resulting wage gap coincides with the higher end of the range of estimates from the post civil rights era we estimate that truly separate but equal schools would have reduced wage inequality by 29 48

a theory of sex discrimination abstract in this paper we put forward a theory that explains the way in which social attitudes towards sex discrimination in the labour market have evolved we suggest that sex discrimination in the labour market can generate both costs and benefits and that a sizeable part of these costs can be ameliorated through marriage the fact that marriage is no longer a pervasive and stable institution has contributed to the awareness that sex discrimination in the labour market is a major social problem

job discrimination market forces and the invisibility hypothesis the invisibility hypothesis holds that the job skills of disadvantaged workers are not easily discovered by potential new employers but that promotion enhances visibility and alleviates this problem then at a competitive labor market equilibrium firms profit by hiding talented disadvantaged workers in low level jobs consequently those workers are paid less on average and promoted less often than others with the same education and ability as a result of the inefficient and discriminatory wage and promotion policies disadvantaged workers experience lower returns to investments in human capital than other workers

the dynamic implications of search discrimination abstract blacks have both lower employment rates and lower earnings than whites further the earnings gap increases as workers age this paper focuses on explaining differences in black white earnings profiles and how government interventions work in a dynamic environment three contributions are made firstly multiple equilibria may exist solely because of a coordination failure by firms even without taste discrimination blacks may play no role in their poor labor market outcomes secondly search discrimination leads to economic discrimination against the non discriminated group reverse discrimination finally in response to a quota program whites may find it optimal to subsidize black investment

does job testing harm minority workers evidence from retail establishments because minorities typically fare poorly on standardized tests job testing is thought to pose an equality efficiency trade off testing improves selection but reduces minority hiring we develop a conceptual framework to assess when this trade off is likely to apply and evaluate the evidence for such a trade off using hiring and productivity data from a national retail firm whose 1 363 stores switched from informal to test based worker screening over the course of one year we document that testing yielded more productive hires at this firm raising mean and median tenure by 10 or more consistent with prior research minorities performed worse on the test yet testing had no measurable impact on minority hiring and productivity gains were uniformly large among minority and nonminority hires these results suggest that job testing raised the precision of screening without introducing additional negative information about minority applicants most plausibly because both the job test and the informal screen that preceded it were unbiased

regional and global strategies of mnes revisiting rugman verbeke 2004 we describe the extent to which the world s largest companies in terms of revenues achieve sales around the globe and have been able to penetrate markets outside of their home region we try to answer the following question has there been a recent increase in the world s largest firms achieving a global sales orientation meaning a balanced global distribution of sales rugman verbeke 2004 found that few of the 2002 fortune global 500 fortune magazine 2002 firms accounting for over 90 of the world s stock of fdi actually had a global sales orientation a majority of multinational enterprises mnes were home region oriented suggesting that much work on corporate globalization was normative rather than accurately describing reality we present the equivalent data for the 2017 fortune global 500 fortune magazine 2017 list our data confirm that many large firms are still home region oriented but to a lesser extent than before with 36 mnes up from only nine in the 2002 list now having widely distributed sales across the world s core economic regions the question arises whether this relative increase in the number of mnes with a global sales orientation holds any normative value for the firms that presently do not have such a sales distribution

black white life cycle earnings differences and the vintage hypothesis a longitudinal analysis a common finding of virtually all previous studies of black white earnings differences is that the earnings of white males appear to rise at a more rapid rate with each additional year of work experience or with age than do the earnings of black workers this finding has been noted by economists since at least the mid 1950 s when morton zeman called

displacement asymmetric information and heterogeneous human capital gibbons and katz s asymmetric information model of the labor market predicts that wage losses following displacement should be larger for layoffs than for plant closings this was borne out in their empirical work in this article we examine how the difference in wage losses across plant closing and layoff varies with race and gender we find that the basic prediction by gibbons and katz holds only for white males we augment their asymmetric information model with heterogeneous human capital and show that this augmented model can match the data

a language theory of discrimination any advanced industrial society is composed of a number of speech communities with different verbal and nonverbal languages in particular in the united states blacks and whites and men and women have sharply differing methods of speaking and listening this paper develops a model in which people can only work together if they speak the same language and in which it is costly to learn a second language the competitive market will tend to minimize communication through segregation but if interaction is required the cost will be borne by the minority a number of nontrivial predictions are derived from the model

arbitraging a discriminatory labor market black workers at the ford motor company 1918 1947 the 1918 47 employee records of the ford motor company provide a rare opportunity to study a firm willing to hire black workers when similar firms would not the evidence suggests that ford did profit from discrimination elsewhere but not by paying blacks less than whites an apparent wage equity constraint prevailed resulting in virtually no racial variation in wages inside ford an implication was that blacks quit ford jobs less often than whites holding working conditions constant arbitrage profit came from exploiting this nonwage margin as ford placed blacks in hot dangerous foundry jobs where quit rates were generally high

information learning and wage rates in low income rural areas in this essay we present evidence that employers in rural areas of developing countries have imperfect information with regard to the productivity of heterogeneous workers in addition to obtaining direct measures of the completeness of employer information we consider the implications of information asymmetries for the structure of casual labor markets we then evaluate the extent to which casual labor markets do in fact exhibit these attributes we find that 1 there is adverse selection out of the time rate labor market 2 employers discriminate statistically given two workers with different observed characteristics but the same actual productivity the worker from the group with the higher average productivity will have a higher wage 3 employers exhibit learning over time the extent of employer ignorance is negatively related to labor market exposure on the part of the workers and 4 calorie consumption affects productivity but is not rewarded in the time rate labor market in concluding we argue that an analysis of wage and employment patterns and the implications of these patterns for human capital investment in rural areas of developing countries that ignored the role of information problems could yield misleading conclusions

statistical discrimination and efficiency this paper asks whether statistical discrimination is a market failure i consider the problem for a utilitarian social planner who operates in an environment that can generate statistical discrimination as an equilibriumphenomenon it is found that there are potential efficiency gains from discrimination in terms of reduced mismatch between workers and jobs whether the solution to the planning problem involves discrimination depends on the trade off between the informational gains of specialization and the losses in terms of increased investment costs

trade unions v statistical discrimination theory and application to post apartheid south africa a simple model of statistical discrimination is analyzed which captures some stylized facts of the south african labor market it shows that this type of discrimination disappears when the wage rates are determined by efficient bargaining between a representative firm and a union with endogenous membership this may explain why the wage gap between black and white workers in post apartheid south africa is smaller among unionized workers than among non unionized ones

second order statistical discrimination abstract the low representation of female workers in elite jobs is sometimes attributed to a tail effect if the human capital distribution exhibits less variation among females than among males then even with comparable average human capital there will be fewer females in the right tail than males this paper offers an explanation for why the human capital distribution might have this property we show that the belief that the female human capital distribution has a lower variance than the male distribution can be self fulfilling in that it provides individuals with incentives to invest in human capital such that the resulting distribution exhibits exactly this characteristic if this happens fewer females are employed in high end jobs a glass ceiling effect the average productivity of female workers may at the same time be higher than that of male workers

a general equilibrium model of statistical discrimination we study a general equilibrium model with endogenous human capital formation in which ex ante identical groups may be treated asymmetrically in equilibrium the interaction between an informational externality and general equilibrium effects creates incentives for groups to specialize discrimination may arise even if the corresponding model with a single group has a unique equilibrium the dominant group gains from discrimination rationalizing why a majority may be reluctant to eliminate discrimination the model is also consistent with reverse discrimination as a remedy against discrimination since it may be necessary to decrease the welfare of the dominant group to achieve parity

wages employment and statistical discrimination evidence from the laboratory i introduction while taste based discrimination becker 1957 is driven by prejudice research on statistical discrimination attempts to explain differential treatment of individuals unrelated to prejudice in essence statistical discrimination results when the actual or assumed statistical properties of a group are applied to anyone belonging to that group differential treatment based on lower average outcomes of one s group e g minorities females was considered a starting point for modeling of statistical discrimination see phelps 1972 however labor market researchers then considered that statistical discrimination could result from measures other than the average outcomes of one s group see aigner and cain 1977 lundberg and startz 1983 theoretical models have explored various reasons why statistical discrimination might arise in varied contexts most notable are the models based on differential screening or communication costs cornell and welch 1996 lang 1986 noisier productivity signals see discussion in aigner and cain 1977 or incomplete information lundberg and startz 1983 1 field studies some of which involve experimental manipulations have uncovered evidence of statistical discrimination in mortgage lending ladd 1998 auto sales ayers and siegelman 1995 goldberg 1996 harless and hoffer 2002 sports card price negotiations list 2004 law enforcement decisions applebaum 1996 exam grading hanna and linden 2012 taxi fare negotiations castillo et al 2013 and vehicle repair estimates gneezy and list 2006 in labor markets some discrimination may be due to factors other than productivity characteristics neumark 1999 but the evidence for statistical discrimination based on race has been elusive see altonji and pierret 2001 identifying statistical discrimination from field data is complicated by the fact that it may arise as first moment or second moment statistical discrimination and they are difficult to disentangle empirically more controlled laboratory studies have also examined statistical discrimination anderson and haupert 1999 castillo and petrie 2010 davis 1987 dickinson and oaxaca 2009 fershtman and gneezy 2001 masclet peterle and larribeau 2012 2 findings from these laboratory studies indicate that statistical discrimination may result from aversion to risk mistaken stereotypes biased probability assessments or incomplete information the benefit of the laboratory approach is our ability to control and cleanly identify the source of the discrimination if it exists whether taste based or statistical discrimination is most always measured along a single dimension such as vehicle pricing labor market wages group choice or job assignments 3 however in many instances multiple avenues for discrimination exist simultaneously and to focus on only one may produce a systematically biased view of the prevalence of statistically based discrimination 4 in this paper we examine statistical discrimination in a controlled experimental environment statistical discrimination in our study can only be based on productivity distribution risk attached to worker groups we not only cleanly separate taste based from statistical discrimination but we also cleanly isolate second moment statistical discrimination in a way not possible from field data building on dickinson and oaxaca 2009 our key contribution is to examine an environment in which discrimination may be exercised simultaneously along the dimensions of both wages and employment rates this more closely approximates the field environments we hope to study where discrimination may exist in terms of labor market wages and or hiring practices auto sales prices and or sales rates mortgage rates and or home sales as in dickinson and oaxaca 2009 subjects negotiate in a simulated labor market where worker subjects are given an induced common knowledge productivity distribution

the effect of statistical discrimination on black white wage inequality estimating a model with multiple equilibria this article presents the structural estimation of the parameters of a statistical discrimination model although the model is capable of displaying multiple equilibria an estimation strategy that identifies both the model parameters and the equilibrium selected by the economic agents is developed and empirically implemented a comparison between the selected equilibria and the other potential equilibria reveals that the decline in wage inequality experienced in the u s economy cannot be attributed to changes in the equilibrium selection nonetheless a counterfactual experiment shows that in a color blind society blacks wage would have been on average more than 20 higher

globalization and location choice an analysis of us multinational firms in 1980 and 2000 in this paper we examine foreign location choices of the top 100 us multinational corporations mncs in 1980 and 2000 we first ask whether there has been a change in mnc foreign location choice in this two decade period second we explore the underlying reasons of location change by focusing on country level factors accounting for firm industry and regional level explanations our findings suggest first that the extent of mncs activities around the globe is more extensive than assumed by regionalists arguments and well beyond ohmae s triad but still less widespread than claimed by the globalists the two main traditions within the globalization regionalization debate second we uncover an interesting de location pattern in this period third we develop an integrative framework where both economic and institutional cultural arguments are shown to influence mncs foreign location choice in different ways we conclude with a discussion of our findings and provide suggestions for future research

statistical discrimination productivity and the height of immigrants building on the economic research that demonstrates a positive relationship between height and worker ability the author compares wage returns to height for immigrants and for natives to explore possible explanations for the positive wage height gradient using multiple data sets the article presents a robust empirical finding that the wage gains associated with height are almost twice as large for immigrants as for native born individuals this wage relationship occurs because the productivity gap between tall and short immigrants is greater than the productivity gap between tall and short native born workers the author next tests for the possibility that in the relative absence of other sources of information about immigrants employers place more importance on height for immigrants than for native born individuals the evidence does not support the hypothesis of statistical discrimination based on height

the regional dimension of mnes foreign subsidiary localization this paper examines the regional effect of mnes foreign subsidiary localization we hypothesize that the number of subsequent foreign subsidiaries in a country is in part determined by a firm s prior foreign subsidiary activity at the regional level we test our hypotheses using data on 1076 japanese mnes that created 3466 foreign subsidiaries 1837 wholly owned fdis and 1629 joint ventures over the period 1996 2001 we use a multilevel negative binomial approach with three levels of analysis localization decisions in a country 49 countries in a region six regions and at the headquarters level in this way we test the regional effects controlling for country and corporate dimensions we also run separate models to differentiate wholly owned and joint venture localization decisions our results strongly support the semi globalization perspective in that the regional level effects are significant and different from the country level effects for all foreign subsidiaries for wholly owned subsidiaries and for jointly owned subsidiaries japanese mnes adopt a regional perspective that complements their decisions at the country and firm levels they seek regional agglomeration benefits and make arbitrage decisions between countries in the same region

affirmative action in a competitive economy abstract we consider a model of endogenous human capital formation with competitively determined wages discrimination is sustainable in equilibrium in the presence of two distinguishable but ex ante identical groups of workers an affirmative action policy consisting of a quota may fail in the sense that there still may be equilibria where groups are treated differently however the incentives to invest for agents in the discriminated group are improved by affirmative action if the initial equilibrium is the most discriminatory equilibrium in the model without the policy the welfare effects are ambiguous it is possible that the policy makes the intended beneficiaries worse off even if the starting point is the most discriminatory equilibrium the expected payoff may decrease for all agents in the target group

trends in the well being of american women 1970 1995 this paper examines the trends in the well being of american women over the last 25 years a time of significant changes in the relative economic status of women and in the labor market as a whole a broad range of indicators are considered to capture changes in women s well being in the family as well as in the labor market for virtually all age and education groups substantial evidence is obtained of rising gender equality in labor market outcomes notably labor force participation wages and occupational distributions broad evidence is also found of greater gender parity within married couple families as the housework time of husbands increased relative to wives and the relative wages of wives rose compared to their husbands however parallel to the recent evidence of the declining labor market position of lower skilled men there has been a similar deterioration in the economic status of less educated women especially high school dropouts their labor force participation rates and wages have risen at a much slower pace than those of more highly educated women while their incidence of single headship has increased much more rapidly these findings for less educated women serve to underscore the widening gap between more and less skilled americans of both sexes as well as to emphasize its broad dimensions

location and the multinational enterprise in the early development of the international business field the focus of attention moved from the country level to the firm level and interest in location issues declined more recently firm based research has itself become increasingly concerned with the study of firm location interactions when examining two way knowledge flows or spillovers between multinational enterprises mnes and other actors in specific locations the diversity or heterogeneity of firms matters as does the diversity of locational environments the localization of knowledge sources depends on mne group level strategies for growth and organizational decentralization on subsidiary level evolution towards local competence creating efforts and on the development of suitable business networks within locations mnes now have a greater potential to benefit from a synergistic locational portfolio of complementary sources of knowledge the locational composition of the international network for knowledge sourcing of a given mne depends upon the extent of institutional compatibility between the locations in which the mne is active this compatibility between locations in turn affects the capacity of the mne to become an insider in local business systems and to influence the local institutional environment

school quality and black white relative earnings a direct assessment the wage differential between black and white men fell from 40 percent in 1960 to 25 percent in 1980 it has been argued that this convergence reflects improvements in the relative quality of black schools to test this hypothesis we assembled data on pupil teacher ratios annual teacher pay and term length for black and white schools in the eighteen segregated states from 1915 to 1966 these data are linked to estimated returns to education for southern born men from different cohorts and states in 1960 1970 and 1980 improvements in the relative quality of black schools explain 20 percent of the narrowing of the black white earnings gap between 1960 and 1980

the labor market impact of state level anti discrimination laws 1940 1960 by the time congress passed the 1964 civil rights act 98 of non southern blacks 40 of all blacks already resided in states with fair employment laws prohibiting labor market discrimination using census data from the integrated public use microdata series the author assesses the impact of fair employment legislation on black workers relative income unemployment labor force participation migration and occupational and industrial distributions in general the fair employment laws adopted in the 1940s appear to have had larger effects than those adopted in the 1950s and the laws had considerably smaller effects on the labor market outcomes of black men than on those of black women

alliances in international governmental organizations regional trade agreement formation and multinational enterprise regionalization strategy abstract drawing from political science alliance theories we explain why countries are likely to enter regional trade agreements we argue that the probability that this will happen is higher if the countries are allies in the same international governmental organizations igos as such alliances can help build trust and reduce political risk our results show that igo scope and also partner reliability and influence in the igo network play important roles our findings provide guidance to multinational enterprises in formulating regionalization strategies

education and labor market discrimination using a model of statistical discrimination and educational sorting we explain why blacks get more education than whites of similar cognitive ability and we explore how the armed forces qualification test afqt wages and education are related the model suggests that one should control for both afqt and education when compar ing the earnings of blacks and whites in which case a substantial black white wage differential emerges we reject the hypothesis that differences in school quality between blacks and whites explain the wage and education differentials our findings support the view that some of the black white wage differential reflects the operation of the

experience tenure and the perceptions of employers this paper examines how group based assessments concerning employee ability impact employee compensation the employer learns about worker ability through bayesian updating creating an additional channel for wage growth that is not available to those workers with only general labor market experience consistent with the model s predictions results from national longitudinal survey of youth nlsy indicate that black workers fare much better relative to white workers in returns to tenure than in returns to experience finally parameter estimates in the structural model suggest that employers initially undervalue black males but that their wages rise with learning by employers over time on average black males earn lower wages than white males just as average wages differ across many groups this paper examines one explanation for this wage gap the possibility that employers underestimate the ability of workers in one or more groups in particular this paper proposes a model that provides explicit predictions about the affect of employer s perceptions on workers returns to general experience and tenure on the job we then examine the wage growth of young males to see whether patterns are consistent with the model economic theory provides many other explanations for differences in wages across groups

minimum wage effects in the longer run exposure to minimum wages at young ages could lead to adverse longer run effects via decreased labor market experience and tenure and diminished education and training while beneficial longer run effects could arise if minimum wages increase skill acquisition evidence suggests that as individuals reach their late 20s they earn less the longer they were exposed to a higher minimum wage at younger ages and the adverse longer run effects are stronger for blacks if there are such longer run effects of minimum wages they are likely more significant than the contemporaneous effects on youths that are the focus of research and policy debate