the economic impact of social ties evidence from german reunification we use the fall of the berlin wall in 1989 to show that personal relationships which individuals maintain for noneconomic reasons can be an important determinant of regional economic growth we show that west german households who had social ties to east germany in 1989 experienced a persistent rise in their personal incomes after the fall of the berlin wall moreover the presence of these households significantly affects economic performance at the regional level it increases the returns to entrepreneurial activity the share of households who become entrepreneurs and the likelihood that firms based within a given west german region invest in east germany as a result west german regions that for idiosyncratic reasons have a high concentration of households with social ties to the east exhibit substantially higher growth in income per capita in the early 1990s a one standard deviation rise in the share of households with social ties to east germany in 1989 is associated with a 4 7 percentage point rise in income per capita over six years we interpret our findings as evidence of a causal link between social ties and regional economic

output dynamics in real business cycles models the time series literature reports two stylized facts about output dynamics in the united states gnp growth is positively autocorrelated and gnp appears to have an important trend reverting component this paper investigates whether current real business cycle rbc models are consistent with these stylized facts many rbc models have weak internal propagation mechanisms and must rely on external sources of dynamics to replicate both facts models that incorporate labor adjustment costs are partially successful they endogenously generate positive autocorrelation in output growth but they need implausibly large transitory shocks to match the trend reverting component in output

social networks and the process of globalization we propose a stylised dynamic model to understand the role of social networks in the phenomenon we call globalization this term refers to the process by which even agents who are geographically far apart come to interact thus being able to overcome what would otherwise be a fast saturation of local opportunities a key feature of our model is that the social network is the main channel through which agents exploit new opportunities therefore only if the social network becomes global heuristically it reaches far in few steps can global interaction be steadily sustained to shed light on the conditions under which such a transformation may or may not take place is the main objective of the paper one of the main insights arising from the model is that in order for the social network to turn global the economy needs to display a degree of geographical cohesion that is neither too high for then global opportunities simply do not arise nor too low then the meeting mechanism displays too little structure for the process to take off but if globalization does materialize we show that it is a robust state of affairs that often arises abruptly as key parameters change this occurs in particular as the rate of arrival of ideas rises or when there is a high enough increase in the range at which the network transmits information

altruism and risk sharing in networks we provide the first analysis of the risk sharing implications of altruism networks agents are embedded in a fixed network and care about each other we study whether altruistic transfers help smooth consumption and how this depends on the shape of the network we identify two benchmarks where altruism networks generate efficient insurance for any shock when the network of perfect altruism is strongly connected and for any small shock when the network of transfers is weakly connected we show that the extent of informal insurance depends on the average path length of the altruism network and that small shocks are partially insured by endogenous risk sharing communities we uncover complex structural effects under iid incomes central agents tend to be better insured the consumption correlation between two agents is positive and tends to decrease with network distance and a new link can decrease or increase the consumption variance of indirect neighbors overall we show that altruism in networks has a first order impact on risk and generates specific patterns of consumption smoothing

market structure and borrower welfare in microfinance motivated by recent controversies surrounding the role of commercial lenders in microfinance we analyze borrower welfare under different market structures considering a benevolent non profit lender a for profit monopolist and a competitive credit market to understand the magnitude of the effects analyzed we simulate the model with parameters estimated from the mix market database our results suggest that market power can have severe implications for borrower welfare while despite possible information frictions competition typically delivers similar borrower welfare to non profit lending in addition for profit lenders are less likely to use joint liability than non profits

equilibrium homophily in networks abstract i look at the equilibrium effects of homophily in network formation games having positive externalities i show that very weak preferences for network effects such as a preference for being part of a clique may result in very high levels of homophily at equilibrium i present an empirical procedure that allows an evaluation of the role of network effects on the observed level of homophily in the data i apply my method to the formation of friendship networks in the usa i show that network effects are small and have a negligible contribution to the observed racial homophily in friendship networks

renegotiation and symmetry in repeated games abstract the paper derives a theory of renegotiation proofness in symmetric repeated games based on a notion of equal bargaining power according to consistent bargaining equilibrium a player can mount a credible objection to a continuation equilibrium in which he receives a particular expected present discounted value if there are other self enforcing agreements that never give any player such a low continuation value after any history the definition does not imply strongly symmetric solutions but under modest assumptions consistent bargaining equilibria of infinitely repeated games with perfect monitoring are strongly symmetric such solutions have an unusually elementary characterization journal of economic literature classification numbers c7 c72

risk sharing networks and insurance against illness most risk sharing tests on developing country data are conducted at the level of the village generally the full risk sharing hypothesis is rejected this paper uses detailed data on all insurance networks within a village in tanzania networks are not clustered but largely overlapping we test whether full risk sharing occurs within these networks while village level full insurance cannot be rejected for food consumption we find evidence consistent with at least partial insurance of non food consumption via networks

non stationary hours in a dsge model the time series fit of dynamic stochastic general equilibrium dsge models often suffers from restrictions on the long run dynamics that are at odds with the data using bayesian methods we estimate a stochastic growth model in which hours worked are stationary and a modified version with permanent labor supply shocks if firms can freely adjust labor inputs the data support the latter specification once we introduce frictions in terms of labor adjustment costs the overall time series fit improves and the model specification in which labor supply shocks and hours worked are stationary is preferred

meeting strangers and friends of friends how random are social networks we present a dynamic model of network formation where nodes find other nodes with whom to form links in two ways some are found uniformly at random while others are found by searching locally through the current structure of the network e g meeting friends of friends this combination of meeting processes results in a spectrum of features exhibited by large social networks including the presence of more high and low degree nodes than when links are formed independently at random having low distances between nodes in the network and having high clustering of links on a local level we fit the model to data from six networks and impute the relative ratio of random to network based meetings in link formation which turns out to vary dramatically across applications we show that as the random network based meeting ratio varies the resulting degree distributions can be ordered in the sense of stochastic dominance which allows us to infer how the formation process affects average utility in the network

cooperation punishment and immigration abstract we study the incentive to cooperate in a society comprised of citizens and immigrants the level of cooperation is governed by a steady state under population dynamics along with the behavior of individual citizens and immigrants we provide an equilibrium characterization exhibiting a uniquely determined positive level of cooperation in society we then use this framework to study the impact of government programs aimed at punishing immigrants who defect when agents produce offspring we show that a consequence of such punishment is that while the incentive for immigrants to defect decreases there is an equilibrium substitution effect whereby citizens realize an increased incentive to defect

labor and investment frictions in a real business cycle model abstract this paper develops a prototype real business cycle model in which labor and investment frictions may compete directly with technology shocks in accounting for fluctuations in the postwar us economy using ireland s 2004a a method for taking models to the data journal of economic dynamics and control 28 1205 1226 methodology we establish that both types of friction are quantitatively important technology shocks still explain a substantial fraction of the fluctuations in aggregate output as the baseline real business cycle model predicts formal hypothesis tests suggest that changes in the recurrence of shocks frictions and structural parameters all play a role in accounting for the shift in the time series properties of the data between the periods before and after 1980

credibly identifying social effects accounting for network formation and measurement error understanding whether and how connections between agents networks such as declared friendships in classrooms transactions between firms and extended family connections influence their socio economic outcomes has been a growing area of research within economics early methods developed to identify these social effects assumed that networks had formed exogenously and were perfectly observed both of which are unlikely to hold in practice a more recent literature both within economics and in other disciplines develops methods that relax these assumptions this paper reviews that literature it starts by providing a general econometric framework for linear models of social effects and illustrates how network endogeneity and missing data on the network complicate identification of social effects thereafter it discusses methods for overcoming the problems caused by endogenous formation of networks finally it outlines the stark consequences of missing data on measures of the network and regression parameters before describing potential solutions

politician family networks and electoral outcomes evidence from the philippines we demonstrate the electoral importance of politician family networks and provide evidence of the mechanisms behind the relationship we use a 20 million person dataset allowing us to reconstruct intermarriage networks for over 15 000 villages in 709 municipalities in the philippines we show that politicians are disproportionately drawn from more central families and that controlling for candidate fixed e ects candidates receive a higher vote share in villages where their families are more central we present evidence that centrality confers organizational and logistical advantages that facilitate clientelistic transactions such as vote buying and do not operate through popularity name recognition or through the choice of policies more aligned with their constituents preferences

social norms and random matching games abstract nash equilibrium has been tremendously useful in understanding economic problems in which strategic behavior is important the theoretical foundations of the solution concept often include the assumption that the game to be played is common knowledge an unrealistic assumption in games with many players we introduce the concept of norm equilibrium for random matching games a norm equilibrium is a nash equilibrium that relies on substantially less information than common knowledge of the game we use norm equilibria to provide a folk theorem for random matching games and to analyze increasing numbers of players in a random matching game journal of economic literature classification numbers c70 c72

ostracism and forgiveness many communities rely upon ostracism to enforce cooperation if an individual shirks in one relationship her innocent neighbors share information about her guilt in order to shun her while continuing to cooperate among themselves however a strategic victim may herself prefer to shirk rather than report her victimization truthfully if guilty players are to be permanently ostracized then such deviations are so tempting that cooperation in any relationship is bounded by what the partners could obtain through bilateral enforcement ostracism can improve upon bilateral enforcement if tempered by forgiveness through which guilty players are eventually readmitted to cooperative society

factor adjustment costs a structural investigation abstract this paper assesses various capital and labor adjustment costs functions estimating a general equilibrium framework with bayesian methods using us aggregate data the estimation finds that the adjustment costs are convex in both capital and labor and allowing for their joint interaction is important the structural model enables us to identify the response of factor adjustment costs to exogenous disturbances and to establish that shocks to technology and the job separation rate are key drivers of adjustment costs the analysis shows that factor adjustment costs enable the model to explain fluctuations in the firm s market value in the data

group size and the efficiency of informal risk sharing this paper seeks to understand and test empirically the relationship between group size and informal risk sharing models of informal risk sharing with limited commitment and grim trigger punishments upon deviation imply that larger groups provide better insurance however when subgroups of households can credibly deviate so that sustainable informal arrangements ought to be coalition proof the relationship between group size and the amount of insurance is unclear building on genicot and ray 2003 we show that this relationship is theoretically ambiguous we then investigate it empirically using data on the size of the sibships of the household head and spouse in rural malawi to identify the relevant potential risk sharing group we exploit a social norm among the main ethnic group in our sample that the wife s brothers play a key role in ensuring her household s wellbeing we find that households where the wife has many brothers are poorly insured against crop loss events we fail to uncover a similar relationship for the wife s sisters ruling out that our findings are driven by wives with many siblings e g brothers simply having poorer extended family networks a simple calibration exercise indicates that the threat of coalitional deviations can explain our empirical findings

an economic approach to social capital a standard optimal investment model can be used to analyse an individual s decision to accumulate social capital we analyse six facts that support the predictions of this individual based approach 1 social capital first rises and then falls with age 2 social capital declines with expected mobility 3 social capital rises in occupations with greater returns to social skills 4 social capital is higher among homeowners 5 social connections fall sharply with physical distance 6 people who invest in human capital also invest in social capital we fail to find robust evidence that social capital investments fall with the value of time or that geographic religious groups generate social capital complementarities

asymmetric network monitoring and punishment in public goods experiments abstract we extend the recent experimental literature on incomplete punishment networks in linear public goods games in these games we use an exogenous network to restrict both monitoring and the set of feasible punishment flows in addition to two baseline structures the complete network and the circle network we examine a novel asymmetric network in which both punishment responsibility and exposure differ across players average contributions are significantly lower in the asymmetric network driven entirely by the under monitored player who faces only one potential punisher we formulate and examine the hypothesis that asymmetry among a player s potential punishment targets may lead to discriminatory patterns of punishment in particular players might wish to punish targets for whom they are solely responsible discriminately more than targets for whom they share responsibility the experimental data do not support this hypothesis although they do suggest a compelling explanation as to why specifically we find that the under monitored player in the network retaliates against previous punishment significantly more often than others in the group which deters their only potential punisher from issuing stronger sanctions thus an additional complication of asymmetry in the network is that it may lead to more instances of anti social retaliation inhibiting the effectiveness of the decentralized punishment institution

the economic consequences of social network structure we survey the literature on the economic consequences of the structure of social networks we develop a taxonomy of macro and micro characteristics of social interaction networks and discuss both the theoretical and empirical findings concerning the role of those characteristics in determining learning diffusion decisions and resulting behaviors we also discuss the challenges of accounting for the endogeneity of networks in assessing the relationship between the patterns of interactions and behaviors

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

revealed preferences for public goods applying a model of voter behavior most analyses of preferences for government supplied goods disregard the fact that in a democratic society these preferences are revealed by an individual choice the vote in this paper this is taken account of in a model explaining the dynamics in voting behavior in a multi party system the model assumes that voters may be categorized into k groups of individuals pursuing the same interests who remember how parties do in representing these interests given the level to which they are held responsible for government policy the model allows one to estimate party identification sensitiveness to economic performances time preference and relative preferences for public versus private goods all for each of the groups furthermore the model allows for an estimation of the level to which various parties are held responsible for government policies

the role of social capital in financial development to identify the effect of social capital on financial development we exploit social capital differences within italy in high social capital areas households are more likely to use checks invest less in cash and more in stock have higher access to institutional credit and make less use of informal credit the effect of social capital is stronger where legal enforcement is weaker and among less educated people these results are not driven by omitted environmental variables since we show that the behavior of movers is still affected by the level of social capital of the province where they were born

cooperation with network monitoring this paper studies the maximum level of cooperation that can be sustained in perfect bayesian equilibrium in repeated games with network monitoring where players observe each other s actions either perfectly or not at all the foundational result is that the maximum level of cooperation can be robustly sustained in grim trigger strategies if players are equally well monitored comparative statics on the maximum level of cooperation are highly tractable

sanctions in networks the most unkindest cut of all the extensive literature on sanctions has mainly focused on a dyadic interaction between sender and target in contrast this paper examines sanctions when the sender and target are embedded in a network of linkages to other agents the sender can assemble a sanctioning coalition of neighbors to sever their links execute multi link cuts to the target and her allies efficacy of sanctions is now crucially dependent on the network architecture we characterize the structural properties of networks in which a sender can effectively sanction a target in the short run when links can only be deleted and the long run when links can be both deleted and added

measuring factor adjustment costs i estimate adjustment costs for labor and capital from the euler equations for factor demand for both factors i find relatively strong evidence against substantial adjustment costs my estimates use annual data from two digit industries my results support the view that rents arising from adjustment costs are relatively small and are not an important part of the explanation of the large movements of the values of corporations in relation to the reproduction costs of their capital i investigate the potential effects of three types of specification error 1 aggregation over time 2 aggregation over firms with heterogeneous demand shocks and 3 estimation of a convex adjustment cost technology in the presence of nonconvex discrete adjustment costs i find that the likely biases from these specification errors are relatively small

an estimated canadian dsge model with nominal and real rigidities this paper develops a dynamic stochastic general equilibrium dgse model for the canadian economy and evaluates the real effects of monetary policy shocks to generate high and persistent real effects the model combines nominal frictions in the form of costly price adjustment with real rigidities modelled as convex costs of adjusting capital and employment

social capital and social quilts network patterns of favor exchange we examine the informal exchange of favors in societies such that any two individuals interact too infrequently to sustain exchange but such that the social pressure of the possible loss of multiple relationships can sustain exchange patterns of exchange that are locally enforceable and renegotiation proof necessitate that all links are supported any two individuals exchanging favors have a common friend in symmetric settings such robust networks are social quilts tree like unions of completely connected subnetworks examining favor exchange networks in 75 villages in rural india we find high levels of support and identify characteristics that correlate with support

network structure and the aggregation of information theory and evidence from indonesia abstract we use unique data from over 600 indonesian communities on what individuals know about the poverty status of others to study how network structure influences information aggregation we develop a model of semi bayesian learning on networks which we structurally estimate using within village data the model generates qualitative predictions about how cross village patterns of learning relate to network structure which we show are borne out in the data we apply our findings to a community based targeting program where citizens chose households to receive aid and show that the networks that the model predicts to be more diffusive differentially benefit from community targeting jel d14 d83 d85 i32 o12 z13

trust and social collateral this paper builds a theory of trust based on informal contract enforcement in social networks in our model network connections between individuals can be used as social collateral to secure informal borrowing we define network based trust as the largest amount one agent can borrow from another agent and derive a reduced form expression for this quantity which we then use in three applications 1 we predict that dense networks generate bonding social capital that allows transacting valuable assets whereas loose networks create bridging social capital that improves access to cheap favors such as information 2 for job recommendation networks we show that strong ties between employers and trusted recommenders reduce asymmetric information about the quality of job candidates 3 using data from peru we show empirically that network based trust predicts informal borrowing and we structurally estimate and test our model

the voting behavior of bureaucrats some empirical evidence this paper has examined the voting behavior of bureaucrats and the consequences for elections the economic theory of the rational voter predicts that bureaucrats would have more to gain by voting than the general public the cost of voting is lower for public employees than for those who work in the private sector as a consequence theory predicts that bureaucrats would participate in elections at a greater rate than other individuals as a test of the validity of the economic theory of voting an empirical analysis of national elections from 1964 to 1978 was presented the evidence is drawn from household survey data published by the u s bureau of the census the data permit a direct observation of voting participation rates of public and private employees the empirical results indicate that bureaucrats consistently participate in elections at significantly greater rates than non bureaucrats as the public sector expands and voter participation rates remain low bureaucrats will exert disproportionate influence on election outcomes

how powerful are public bureaucrats as voters empirical evidence is collected and discussed regarding the influence of public bureaucrats on government sector outcome in their capacity as consumer voters it is necessary to isolate the specific effect of working in the public sector compared to other occupations on voting participation and on the probability to support an increase in the public budget for a balanced evaluation of public bureaucrats power other forms of their influencing the government sector outcome need to be taken into account

barriers to formal saving micro and macroeconomic effects this paper examines different barriers to formal saving considering various interventions and their possible effects at microeconomic and macroeconomic levels it presents a comprehensive review of the literature based on a detailed classification of the barriers associated with supply side factors related to access to financial products and demand side barriers related to the use and frequency of use of those products the paper concludes that this classification and analysis contributes to a fuller understanding of the question of financial inclusion and how to achieve it

why the west became wild informal governance with incomplete networks settlers flocking to boomtowns on the american western frontier were faced with the same task that communities in weak states across the globe face in contemporary times self governance peer sanctions can enforce cooperation in these environments but their efficacy depends on the social networks that transmit information from peer to peer the author uses a game theoretic model to show that peripheral network positions can generate such strong incentives to misbehave that persistent cheating occurs in equilibrium the model reveals that groups maintaining high levels of cooperation that face shocks to their strategic environment or to their network can ratchet down into less cooperative equilibria in which the most peripheral become ostracized furthermore population change that features rapid growth high turnover and enclave settlements can undermine cooperation the insights from this article help to explain the trajectory of cooperation in the mining towns of the wild west in which high levels of cooperation deteriorated as the population surged and help to make sense of why only certain nonwhite settlers were targets of hostility and racism

endogenous money or sticky prices abstract what explains the correlations between nominal and real variables in the postwar us data are these correlations indicative of significant nominal rigidity or do they simply reflect the particular way that monetary policymakers react to developments in the real economy to answer these questions this paper uses maximum likelihood to estimate a model of endogenous money this model allows but does not require nominal prices to be sticky the results show that nominal price rigidity over and above endogenous money plays a role in accounting for key features of the data

networks in economic development this chapter surveys the implications of some studies in network economics research for economic development we focus on information flow and risk sharing two topics where work in theory empirics and policy analysis have been especially intensive and complementary in analysing information we distinguish models of information diffusion and aggregation highlight how different models imply very different guidance regarding the right way to seed information in discussing risk sharing we look at the key frictions that impede efficient informal insurance and some potential unintended consequences when policymakers intervene to help throughout we stress practical insights that can be used with limited measurement of the details of networks

a strategic model of social and economic networks we study the stability and efficiency of social and economic networks when self interested individuals can form or sever links first for two stylized models we characterize the stable and efficient networks there does not always exist a stable network that is efficient next we show that this tension persists generally to assure that there exists a stable network that is efficient one is forced to allocate resources to nodes that are not responsible for any of the production we characterize one such allocation rule the equal split rule and another rule that arises naturally from bargaining of the players

technology shocks and the business cycle on empirical investigation abstract this paper uses maximum likelihood to estimate a prototypical real business cycle model under several different assumptions regarding the stochastic process governing technological change the estimation approach permits the use of formal statistical hypothesis tests to help discriminate between competing specifications the approach also allows each specification to be evaluated based on its ability to generate accurate out of sample forecasts overall the results indicate that the data prefer a version of the model in which technology shocks are extremely persistent but still trend stationary

evidence on the role of cash flow for investment abstract recent work in macroeconomics argues that imperfections in capital markets may lead to business cycle fluctuations by propagating relatively modest shocks evidence for such a mechanism also known as the financial accelerator consists largely of firm level studies showing that cash flow is an important predictor of investment but this evidence is often viewed with skepticism because cash flow is also a good indicator of investment opportunities in this paper we develop a framework for estimating the extent to which the predictive power of cash flow can be attributed to its role as a fundamental versus its role in alleviating credit frictions for firms with access to commercial paper and bond markets we find that the perfect capital markets model of investment can fully account for the role of cash flow for firms with only limited access to capital markets as indicated by lack of participation in public debt markets however investment appears to be excessively sensitive to fluctuations in cash flow these results thus clarify the role of cash flow in investment equations and provide support for the existence of a financial accelerator

reciprocity in groups and the limits to social capital robert putnam defines social capital as features of social organization such as networks norms and social trust that facilitate coordination and cooperation putnam 1995 67 such networks are typically associated with norms that promote coordination cooperation and reciprocity for the mutual benefit of network members these norms coupled with the appropriate use of sanctions in case of noncompliance are often thought to enable these groups to deal smoothly and effectively with multiple social and economic issues at the same time some authors have noted that strongly bonded groups may have adverse consequences for others see for instance alejandro portes and patricia landolt 1996 or even for themselves see for instance george akerlof 1976 or kaushik basu 1986 it is this latter aspect that we wish to emphasize in these notes

neutral technology shocks and the dynamics of labor input results from an agnostic identification this article studies the dynamic response of labor input to neutral technology shocks it uses benchmark dynamic stochastic general equilibrium models enriched with labor market search and matching frictions and investment specific technological progress that enables a new agnostic identification scheme based on sign restrictions on a structural vector autoregression svar the estimation supports an increase of labor input in response to neutral technology shocks this finding is robust across different perturbations of the svar model

sanctions in networks abstract in this paper we contribute to the sender target models of sanctions by explicitly incorporating the linkages social political or economic that bind the sender and target to other agents given any network model and architecture we draw attention to two factors that play a key role in determining the efficacy of sanctions in reducing the frequency of violations these are respectively strategic complementaritiesbetween the sanctioning action deleting link with target and number of direct links of the sender and the externalities imposed on the sender by third parties we examine the role played by these factors both in the short run when links can only be deleted and the long run when links can also be added as well as when sanctions are unilateral the sender can only delete own links or multilateral the sender can impose on common allies to sever links to the target our analysis allows an active role to the target to build an opposing coalition to deflect sanctions and to third parties to engage in sanction busting it also extends to multiple senders and targets existence of interest groups within sender and target with dissimilar objectives and signed networks allowing both antagonistic and cordial bilateral relationships

local identification in dsge models abstract the issue of identification arises whenever structural models are estimated lack of identification means that the empirical implications of some model parameters are either undetectable or indistinguishable from the implications of other parameters therefore identifiability must be verified prior to estimation this paper provides a simple method for conducting local identification analysis in linearized dsge models estimated in both full and limited information settings in addition to establishing which parameters are locally identified and which are not researchers can determine whether the identification failures are due to data limitations such as lack of observations for some variables or whether they are intrinsic to the structure of the model the methodology is illustrated using a medium scale dsge model

social division with endogenous hierarchy many societies are divided into multiple smaller groups certain kinds of interaction are more likely to take place within a group than across groups i model a reputation effect that enforces these divisions people who are observed to interact with members of different groups are believed to be less trustworthy by members of their own group a hierarchical relationship between groups appears endogenously in equilibrium the information requirements for my equilibrium to exist are much less demanding than the information requirements in related models these different information requirements correspond to concrete differences between the institutions of different indian castes

economic shocks and labor market flexibility we test how labor markets adjust to large but temporary economic shocks in a context in which such shocks are common using an individual level panel from 1 140 philippine municipalities over 26 quarters we find that workers in areas affected by strong typhoons experience reductions in hours worked and hourly wages without evidence of layoffs the results are strongest for formal wage paying jobs we argue that those results are best explained by implicit contracts where workers and firms share risks we provide extensive qualitative data suggesting that employment contracts in the philippines allow for such flexibility abstract from author

clean money dirty system connected landowners capture beneficial land rezoning we use a unique regulatory event that occurred in queensland australia from 2007 to 2012 to examine the predictive power of landowner relationship networks and lobbying behaviour on successfully gaining value enhancing rezoning a state authority the urban land development authority ulda took planning control away from local councils in selected areas in order to increase the speed and scale of development in those areas in the process increasing land values using micro level relationship data from multiple sources we compare the relationship network characteristics of landowners of comparable sites inside and outside the ulda areas finding that connected landowners owned 75 of land inside the rezoned areas and only 12 outside capturing 410 million in land value gains out of the total 710 million from rezoning we also find that engaging a professional lobbyist is a substitute for having one s own connections scaling up from our sample of six rezoned areas to the hundreds of rezoning decisions across queensland and australia in the last few decades suggests that many billions of dollars of economic rent are being regularly transferred from the general population to connected landowners through political rezoning decisions

labor and the market value of the firm what role does labor play in a firm s market value we explore this question using a production based asset pricing model with frictions in the adjustment of both capital and labor we posit that hiring of labor is akin to investment in capital and that the two interact with the interaction being a crucial determinant of the time series behavior of market value we use aggregate u s corporate sector data to estimate firms optimal hiring and investment decisions and the consequences for firms value the model generates a good fit of the data we decompose the estimated market value thereby quantifying the link between firms value and gross hiring flows employment gross investment flows and physical capital we find that a conventional specification quadratic adjustment costs for capital and no hiring costs performs poorly hiring and investment flows unlike employment and capital stocks are volatile and both are essential to account for market value volatility a key result is that firms value embodies the value of hiring and investment over and above the capital stock

social norms and the enforcement of laws we examine the interplay between social norms and the enforcement of laws agents choose a behavior e g tax evasion production of low quality products corruption harassing behavior substance abuse etc and then are randomly matched with another agent there are complementarities in behaviors so that an agent s payoff decreases with the mismatch between her behavior and her partner s and with overall negative externalities created by the behavior of others a law is an upper bound cap on behavior a law breaker when detected pays a fine and has her behavior forced down to the level of the law equilibrium law breaking depends on social norms because detection relies at least in part on whistle blowing law abiding agents have an incentive to whistle blow on a law breaking partner because this reduces the mismatch with their partners behaviors as well as the negative externalities when laws are in conflict with norms and many agents are breaking the law each agent anticipates little whistle blowing and is more likely to also break the law tighter laws banning more behaviors greater fines and better public enforcement all have counteracting effects reducing behavior among law abiding individuals but increasing it among law breakers we show that laws that are in strong conflict with prevailing social norms may backfire whereas gradual tightening of laws can be more effective in influencing social norms and behavior