a theory of socio economic disparities in health over the life cycle motivated by the observation that medical care explains only a relatively small part of the ses health gradient we present a life cycle model that incorporates several additional behaviours that potentially explain jointly a large part of observed disparities as a result the model provides not only a conceptual framework for the ses health gradient but more generally an improved framework for the production of health we derive novel predictions from the theory by performing comparative dynamic analyses more generally our comparative dynamic method can be applied to models of similar form e g human capital health deficits firm investment to name a few

the effect of uncertainty on the demand for medical care health capital and wealth we analyze the effect of the uncertainty of the incidence of illness on the demand for medical care and on the accumulation of health capital and wealth over the retirement years we use a simplified version of a dynamic grossman household production model to characterize patterns of an individual s precautionary behavior elderly individuals respond to uncertainty by smoothing their expected utility over time by making specific patterns of purchases of medical care and consumption we examine these patterns for individuals with different degrees of risk aversion

dynamic spillover effects among crude oil precious metal and agricultural commodity futures markets abstract this paper examines spillover effects among six commodity futures markets gold silver west texas intermediate crude oil corn wheat and rice by employing the multivariate deco garch model and the spillover index specifically we investigate the dynamics of return and volatility spillover indices to reveal the intensity and direction of transmission during the recent global financial and european sovereign debt crises our empirical results are as follows first we estimate a positive equicorrelation between commodity futures market returns and find that it increased sharply during the crises this effect can persist during periods of economic and financial turmoil diminishing the benefits of international portfolio diversification for investors second we identify bidirectional return and volatility spillovers across commodity futures markets and find more pronounced trends in their levels in the post crisis period this indicates the strong impact of spillovers during crisis periods third both gold and silver are information transmitters to other commodity futures markets while the remaining four commodity futures investigated were receivers of spillovers during recent periods of financial stress finally we analyse the optimal portfolio weights and time varying hedge ratios between metal and other commodities futures markets overall our findings provide new insights into channels of information transmission which may improve investment decisions and inform portfolio investors trading strategies

competition risk and managerial incentives this paper examines how the degree of competition among firms in an industry affects the optimal incentives that firms provide to their managers a central assumption is that there is free entry and exit in the industry which implies that changes in the nature of competition lead to changes in the equilibrium market structure the main result is that as the intensity of product market competition increases as a result of greater product substitutability or greater market size principals unambiguously provide stronger incentives to their agents to reduce costs at the same time more intense competition also leads to more volatile firm level profits consequently managers incentives are positively correlated with firm level risk consistent with empirical evidence a decrease in the cost of entering the market has the opposite effect on incentives but still induces a positive correlation between risk and incentives

drivers and triggers of international food price spikes and volatility the objective of this study is to explore empirical evidence about the quantitative importance of supply demand and market shocks for price changes in international food commodity markets to this end it distinguishes between root conditional and internal drivers of price changes using three empirical models 1 a price spike model in which monthly food price returns spikes are estimated against oil prices supply and demand shocks and excessive speculative activity 2 a volatility model in which annualized monthly variability of food prices is estimated against the same set of variables plus a financial crisis index and 3 a trigger model that estimates extreme values of price spikes and volatility using quantile regressions the results point to increasing linkages between food energy and financial markets this explains much of the observed food price spikes and volatility while financial speculation amplifies short term price spikes oil price volatility intensifies medium term price volatility

the family as the health producer when spouses are nash bargainers the grossman model is extended to a situation in which the family is regarded as the producer of individual health and spouses are nash bargainers the model has implications for the interaction between family structure income and the stocks of health capital and the bargaining strength of different family members the main insight is that the possibility of divorce affects the distribution of health capital between family members we analyse inter alia the impact on the distribution of health particularly regarding child health of changes in family policies related to the dissolution of the family

an empirical analysis of risk incentives and the delegation of worker authority the authors empirically test prendergast s 2002 theory that incorporates the delegation of worker authority into the principal agent model to explain the lack of consistent empirical support for a tradeoff between risk and incentives using data from the 1998 british wers the authors investigate whether there is 1 evidence of a risk incentives tradeoff as predicted by the principal agent model 2 evidence of a positive relationship between incentive pay and the delegation of worker authority 3 evidence of a positive relationship between risk and authority 4 support for the main testable implication of prendergast s model namely that the evidence favoring a risk incentives tradeoff should strengthen when authority controls are added to the empirical model the answers are affirmative for all four questions thereby providing evidence clarifying the relationship between risk and incentive pay and how managers optimally bundle incentive pay and the delegation of worker decision rights to cope with

the effect of children on adult demands for health risk reductions we examine patterns in adults willingness to pay for health risk reductions we allow both their marginal utilities of income and their marginal disutilities from health risks to vary systematically with the structures of their households demand by adults for programs which reduce their own health risks is found to be influenced by 1 their parenthood status 2 the numbers of children in different age brackets currently in their households 3 the ages of the adults themselves 4 the latency period before they would fall ill and 5 whether there will still be children in the household at that time for younger adults willingness to pay by parents is greater than for non parents and increases with each additional young child for middle aged adults willingness to pay for corresponding risk reductions falls when teenagers are present and falls further with each additional teenager in the household language en

pay performance sensitivity and production uncertainty abstract the pay performance sensitivity of linear incentive contracts can increase with increasing production uncertainty depending upon the timing and nature of this uncertainty this provides a possible explanation for the failure of empirical tests to yield convincing support for a negative relationship

analyzing the time frequency lead lag relationship between oil and agricultural commodities abstract we analyze the time frequency co movement of and lead lag relationship between price indices of oil and 21 agricultural commodities and attempt to identify the leader and follower among the considered price indices for the 1980m1 2017m5 period the empirical analysis is conducted using four wavelet tools wavelet coherency phase difference multiple correlation and multiple cross correlation the first two tools are used to identify the time frequency co movement of and lead lag relationship between price indices of oil and 21 agricultural commodities and the third and fourth tools are used to identify the leader and follower among all series of price indices across different scales our results on wavelet coherency show a high degree of co movement at a long run horizon for the entire period between the price indices of oil and coal cotton fishmeal maize rice rubber and wheat furthermore the connection between these commodity markets and the oil market strengthened after 2000 indicating the importance of financial crisis phenomena and geopolitical turbulence additional findings show that short run investors should invest in the beef and swine pork markets as they have very little correlation with the oil markets the results of multiple correlation and multiple cross correlation analysis show that the coffee price was leader or follower across all time scales except wavelet scale 16 where barely was a leader or a follower

uncertainty and health care spending by the poor the health capital model revisited this short theoretical paper examines health care utilization by the poor in the context of grossman s 1972 health capital model earlier work has shown that uncertainty can reduce the attractiveness to the poor of health capital investments this paper demonstrates that uncertainty can also have precisely the opposite effect that is while there may be cases in which it is excessively risky for the poor to invest in their health there may also be cases in which the poor can ill afford the risks that arise from not making timely investments in their health

an analysis of the use of accounting and market measures of performance in executive compensation contracts prior research has provided useful insights into the structure of compensation plans and their incentive effects however one important limitation of these studies is the virtual absence of any cross sectional analyses of the attributes of compensation contracts 2 this absence is related in part to the problems associated with controlling for other factors that affect compensation that is compensation contracts are

co movement of major energy agricultural and food commodity price returns a time series assessment abstract using monthly data between 1970 and 2013 we provide a comprehensive analysis of the extent of co movement measured by correlation coefficients among the nominal price returns of 11 major energy agricultural and food commodities we study the degree and the time evolution of unconditional and conditional correlations using a uniform spacings estimation and testing approach multivariate dynamic conditional correlation models and a rolling regression procedure we find that 1 the price returns of energy and agricultural commodities are highly correlated 2 the overall level of co movement among commodities increased in recent years especially between energy and agricultural commodities and in particular in the cases of maize and soybean oil which are important inputs in the production of biofuels and 3 the stock market volatility is positively associated with the co movement of price returns across markets especially after 2007

bargaining and distribution in marriage the standard economic model of the family is a common preference model that assumes that a family maximizes a single utility function and implies that family behavior is independent of which individuals receive income or control resources in recent years this model has been challenged by game theoretic models of marriage that do not impose pooling and are therefore consistent with empirical evidence that income controlled by husbands and wives does have different effects on family behavior in this paper the authors review a number of simple bargaining models and relevant empirical evidence and discuss their implications for distribution within marriage

agency theory and franchising some empirical results this article provides an empirical assessment of various agency theoretic explanations for franchising including risk sharing one sided moral hazard and two sided moral hazard the empirical models use proxies for factors such as risk moral hazard and franchisors need for capital to explain both franchisors decisions about the terms of their contracts royalty rates and up front franchise fees and the extent to which they use franchising in this article i exploit several new sources of data on franchising to construct a cross section of 548 franchisors involved in various business activities in the united states in 1986 the data are most consistent with a model based on two sided moral hazard the empirical models are also more successful at explaining the extent to which franchisors choose to franchise stores than at explaining the terms of franchise contracts finally contrary to the predictions of several theoretical models i find that royalty rates and franchise fees are not negatively related

revisiting the trade off between risk and incentives the shocking effect of random shocks despite its central role in the theory of incentives empirical evidence of a trade off between risk and incentives remains scarce we reexamine this trade off in a workplace lab environment and find that in line with theory principals increase fixed pay while lowering performance pay when the relationship between effort and output is noisier unexpectedly agents produce substantially more in the noisy environment than in the baseline despite weaker incentives in addition principals earnings are significantly higher in the noisy environment we show that these findings can be accounted for when agents maximize a non cara utility function or when they exhibit loss aversion data and the online appendix are available at https doi org 10 1287 mnsc 2017 2914 this paper was accepted by uri gneezy behavioral economics

do energy prices stimulate food price volatility examining volatility transmission between us oil ethanol and corn markets this paper examines volatility transmission in oil ethanol and corn prices in the united states between 1997 and 2011 we follow a multivariate garch approach to evaluate the level of interdependence and the dynamics of volatility across these markets preliminary results indicate a higher interaction between ethanol and corn markets in recent years particularly after 2006 we only observe however significant volatility spillovers from corn to ethanol prices but not the converse we also do not find major cross volatility effects from oil to corn markets the results do not provide evidence of volatility in energy markets stimulating price volatility in grain markets

co movements between crude oil and food prices a post commodity boom perspective using the correlations of var forecast errors at different horizons this paper analyzes the dynamics of co movements between crude oil and food prices for each food price considered a bivariate var model is estimated on two subsample periods a pre commodity boom 1990m1 2006m12 and a post boom period 2007m1 2015m5 our results reveal strong positive co movements between crude oil and food prices in the aftermath of the commodity boom while no statistically significant co movements are observed over the pre boom period hence our findings provide further empirical evidence on the actual linkages between the crude oil and agricultural markets

implications of spillover effects within the family for medical cost effectiveness analysis medical cost effectiveness analyses traditionally treat patients as isolated individuals and neglect the effects of improvement in patients health on the welfare of their family members we use a model based on a family utility function with altruistic linkages to show that there can be direct and indirect effects on the welfare of all family members we focus specially on a model of how the spillover effects to the spouse in a two person family might affect choice of treatments for prostate cancer we then test the predictions of this model by analyzing treatment choices of prostate cancer patients using the linked seer medicare database we find that our results are consistent with the model s predictions we conclude that cost effectiveness analyses may better reflect the full costs and benefits of medical interventions if they incorporate these family effects however concerns about equity present a dilemma for the practice of cea from the societal perspective

the demand for health with uncertainty and insurance this paper develops michael grossman s demand for health model by letting the depreciation rate depend upon the level of health by letting the incidence and size of illness be uncertain and by investigating how the individual s demand for health would be affected by the introduction of insurance beside the more theoretical results there are also some results with important policy implications when formulating the hypothetical scenario in willingness to pay wtp studies it is important whether the individual believes that the level of health is uncertain or not the existence of insurance could also affect the stated wtp amount taking this into account could therefore explain some of the differences in the wtp for seemingly identical health care programs in different countries or different areas in the same country

impact of food price volatility on the us restaurant sector although fluctuations in agricultural commodity prices appear to be a source of risk to the us restaurant sector the effect that volatility of food price has on the performance returns of that s

parental behavior and the value of children s health a health production approach data on individual children and on sibling pairs are used to examine how family resource allocations affect children s health and to estimate willingness to pay for reduced acute illness in children results highlight the importance of accounting for the endogeneity of child health and suggest that children with greater stocks of health capital whose parents invest in preventive and remedial medical care experience fewer days of illness estimated willingness to pay to avoid one day of illness induced school loss is about 100 to 150 a range broadly consistent with limited prior evidence but sub stantially more than unit values applied in recent policy analyses all else equal willingness to pay is higher among single parents and for uninsured children and the estimated income elasticity is only 0 14 implied aggregate benefits of reductions in children s sick time associated with air pollution control may be substantial

volatility linkages between energy and agricultural commodity prices abstract we investigate price and volatility risk originating in linkages between energy and agricultural commodity prices in germany and study their dynamics over time we propose an econometric approach to quantify the volatility and correlation risk structure which has a large impact for investment and hedging strategies of market participants as well as for policy makers volatilities and their short and long run linkages are analyzed using an asymmetric dynamic conditional correlation garch model as well as a multivariate multiplicative volatility model our approach provides a flexible and accurate fitting procedure for volatility and correlation risk we find that in the long run prices move together and preserve an equilibrium while correlations are mostly positive with persistent market shocks our results reveal that concerns about biodiesel being the cause of high and volatile agricultural commodity prices are rather unjustified

does delegation increase worker training we model a principal firm offering training to its agent worker under two alternative organizational structures integration where the principal retains authority to overrule the investment project recommended by the worker and delegation where the principal cannot overrule the worker s preferred investment project we assume that training reduces the worker s effort cost of assembling information about alternative projects payoffs and identify the conditions under which delegation increases the profit maximizing intensity of training empirical estimates from matched employer employee data show that workplaces delegating authority do provide more worker training this result persists in two cross sections in panel fixed effect estimates and critically in an instrumental variable exercise that also controls for establishment fixed effects jel d21 d22 d23 m53 m54

integration of the sales force an empirical examination this article develops and tests a model of integration of a marketing function personal selling the model derived from transaction cost analysis as developed principally by williamson is formulated as a logistic function which is estimated with data from the electronic components industry as expected integration is associated with increasing levels of asset specificity difficulty of performance evaluation and the combination of these two factors contrary to the transaction cost model neither frequency of transactions nor interaction of specificity and environmental uncertainty is significantly related to integration the transaction cost model improves significantly upon the fit of a simple model relating integration to company size alone these results suggest that for studying transactions of this kind it is fruitful to view the firm as a governance structure

endogenous matching and the empirical determinants of contract form empirical work on contracts typically regresses contract choice on observed principal and agent characteristics if i some of these characteristics are unobserved or partially observed and ii there are incentives whereby particular types of agents end up contracting with particular types of principals estimated coefficients on the observed characteristics may be misleading we address this endogenous matching problem using a data set on agricultural contracts between landlords and tenants in early renaissance tuscany controlling for endogenous matching has an impact on parameters of interest and tenants risk aversion appears to have influenced contract choice

the neoclassical firm under moral hazard we develop a model of the neoclassical firm under moral hazard with endogenous capital and employment and perfectly competitive capital labor and product markets we assume that effort becomes harder to measure as the firm gets larger and the exogenous parameters are affiliated the model explains why incentives decline but wages rise with firm size the mixed evidence on the risk reward tradeoff and the positive correlation between wages and profits in the long run incentives are increasing in risk via endogenous capital finally the model makes novel predictions about the relationship between incentives and labor market conditions

risk sharing vs incentives contract design under two sided heterogeneity we study the matching patterns between heterogeneous principals and agents in a principal agent model the resulting equilibrium relationship between risk and incentives could be negative positive or u shaped these results may provide an explanation for the absence of systematic empirical support for the standard risk model d 2005 elsevier b v all rights reserved

franchising and risk management franchising is an important and controversial form of vertical integration allegations of opportunistic behavior by franchisors have led to calls for public regulation and in some states fairness in franchising laws the advisability of such regulation depends on the long run incentives to franchise if franchising is a temporary step on the path to complete ownership integration regulation may be called for alternatively if complete or partial franchising is a permanen t market solution regulation is at least contestable this paper offer s new evidence on the incentives to franchise copyright 1988 by american economic association

do food and oil prices co move abstract this paper studies co movements between world oil prices and global prices for corn soybean and wheat using copulas several copula models with different conditional dependence structures and time varying dependence parameters were considered empirical results for weekly data from january 1998 to april 2011 showed weak oil food dependence and no extreme market dependence between oil and food prices these results support the neutrality of agricultural commodity markets to the effects of changes in oil prices and non contagion between the crude oil and agricultural markets however dependence increased significantly in the last three years of the sampling period even though upper tail dependence remained insignificant indicating that food price spikes are not caused by positive extreme oil price changes these results have implications for policy design risk management and hedging strategies

the dependence structure across oil wheat and corn a wavelet based copula approach using implied volatility indexes abstract this paper examines the dependence structure between three commodities implied volatility indexes oil wheat and corn during bear normal and bull markets and at different scales for this purpose we combine wavelet and copula methods to analyse the changes of the tail dependence at different scales or investment horizons the results support evidence of time varying asymmetric tail dependence between the pair of cereals as well as between oil and the two cereals at different time horizons short term horizon medium term horizon and long term horizon suggesting that the dependence structure is sensitive to time horizons these results have important implications for the analysis of portfolio risk management

multiple output child health production functions the impact of time varying and time invariant inputs author affiliation mark d agee department of economics pennsylvania state university altoona pa 16601 usa mda4 psu edu corresponding authorscott e atkinson department of economics university of georgia athens ga 30602 usa atknsn uga eduthomas d crocker department of economics and finance university of wyoming laramie wy 82071 usa tcrocker uwyo edu acknowledgment comments and suggestions from two anonymous referees are gratefully acknowledged the u s environmental protection agency financially supported this research effort through grant number r82871601 however the research has not been subjected to the agency s required peer and policy review and therefore does not necessarily reflect the views of the agency 1 introductionin this paper we attempt to broaden and to redirect the standard theoretical and empirical approach in economics to the household production of human health especially child health the last decade has witnessed increased concern with the impact of public policies and private investments on child health perhaps motivated by an increased concern for equity and an enhanced recognition that human capital formation in children contributes significantly to society s future well being children live in households with parents or adults who combine their skills with good as well as bad inputs that produce good as well as bad child health outcomes physical behavioral and cognitive a good input could be the time spent reading to a child while a bad input could be parental smoking near a child a good outcome could be higher reading skills while a bad outcome could be a child s ill health three features distinguish our modeling approach to the household production of child outcomes first we argue that multiple good and bad inputs can affect multiple measures of good and bad outcomes for children ignoring this by estimating single equation relationships produces omitted variable bias and fails to model the tradeoffs among inputs and outcomes to examine jointness among several good and bad outcomes as well as inputs and allow for heterogeneity among households in the productivity of observed child inputs we specify and estimate an output based directional distance function chambers chung and fare 1998 for a balanced panel of households with coresident children this function allows us to estimate the maximum expansion of goods and the contraction of bads subject to a given level of observed inputs for a household using the underlying joint technology second we argue that households will produce child health with varying degrees of effectiveness the best practice household is defined as that household that cannot make further increases in all good dimensions of child health and reductions in all bad dimensions by some additive amount using a given level of observed inputs this household practices its child care on the production frontier households within this frontier make less efficient use of personal and marketed child care inputs thus we estimate the technical efficiency for household units in producing multiple outputs from multiple inputs finally although we have panel data and compute a fixed effects estimator we recover the effects of time invariant variables such as sex race and parent attributes on goods and bads in a second stage regression we adjust their estimated standard errors and correct for the bias caused by weak instruments in the first stage using a jackknife technique the next section presents background for our hypotheses of i jointness in the household production of child health outcomes and ii the presence of technical inefficiency among households in the production process in section 3 we discuss properties of the directional distance function and the calculation of partial effects results are presented in section 4 and conclusions follow in section 5

entrepreneurial orientation risk and incentives the case of franchising the standard principal agent model predicts a trade off in contract design between the protection against risk and incentive motivations distinguishing two types of risks we show that contrary to this traditional view the relationship between risk and incentives can be positive in franchise contracting this implies that the royalty rate decreases with the risk faced by the franchisee on the local market using a unique panel dataset combining french franchise and financial data we address this issue empirically alongside performance outcomes the data support the hypothesis of a negative relationship between risk and the royalty rate which contradicts the prediction of the standard agency theory furthermore our estimations provide evidence that chain performance increases with an adjusted royalty rate this paper has important implications for contract design showing that with increasing local market uncertainty and low risk aversion franchisors should reduce the royalty rate

a reputational model of authority abstract the paper provides a model where authority relaionships are founded on reputation the viability of authority is the result of subordinates free riding on each other s challenges reducing the frequency of challenges and making reputation worth defending the party with authority secures subordinates compliance through the payment of rents to influence the extent of their failure to act collectively and exacerbate the free rider problem they face the model provides a framework to explain how the magnitude and form of these rents depend on the primitives of the environment and on the authority s design of its reputation applications to employment relationships dictatorships and the notion of legitimacy are considered

the other side of the trade off the impact of risk on executive compensation the principal agent model of executive compensation is of central importance to the modern theory of the firm and corporate governance yet the exiting empirical evidence supporting it is quite wea

an economic analysis of life expectancy by gender with application to the united states this paper presents an economic model to explain the behavior of life expectancy of both sexes it explicitly examines the relationship between the gender gap in life expectancy and the gender gap in pay it shows that as the latter narrows over the course of economic development the former may initially expand but will eventually shrink simulation results from our model accord with the behavior of life expectancy for both sexes since the 1940s in the united states

executive compensation and principal agent theory the empirical literature on executive compensation generally fails to specify a model of executive pay on which to base and test hypotheses regarding its determinants in contrast this paper analy

the tenuous trade off between risk and incentives empirical work testing for a negative trade off between risk and incentives has not had much success the data suggest a positive relationship between measures of uncertainty and incentives rather than the posited negative trade off i argue that the existing literature fails to account for an important effect of uncertainty on incentives through the allocation of responsibility to employees when workers operate in certain settings firms are content to assign tasks to workers and monitor their inputs by contrast when the situation is more uncertain they delegate responsibility to workers but to constrain their discretion base compensation on observed output

uncertainty task environment and organization design an empirical investigation the paper addresses two broad research questions 1 how do internal uncertainty associated with the task environment and external uncertainty arising from market volatility impact organization design 2 what are the relationships among various elements of organization design delegation of decision making incentives monitoring and internal labor market practices promotion training employment security we expand on prendergast 2002a who challenged the conventional view of a tradeoff between risk and incentives and build a single unified framework for answering our two research questions using a uniquely rich dataset that contains detailed information about the task environment of core employees and organization design at the individual group and firms levels in 530 minnesota firms in the mid 1990s we first find support for prendergast s key argument that internal uncertainty over which employees have control affects directly the allocation of decision making and only indirectly incentives via allocation of decision making this confirms similar findings by foss and laursen 2005 devaro and kurtulus 2010 and shi 2011 we also find that internal uncertainty has much impact on organization design through the choice of delegation of decision making at the employee level less so at the group level and very little at the firm level whereas external market uncertainty has little effect on organization design especially at the individual and group level decision making monitoring various internal labor market practices and incentives are strongly related to each other through substitution and complementarity

oil price shocks and agricultural commodity prices abstract while the impacts of oil price changes on agricultural commodity markets are of great interest to economists previous studies do not differentiate oil specific shocks from aggregate demand shocks in this paper we address this issue using a structural var analysis our findings indicate that the responses of agricultural commodity prices to oil price changes depend greatly on whether they are caused oil supply shocks aggregate demand shocks or other oil specific shocks mainly driven by precautionary demand oil shocks can explain a minor friction of agricultural commodity price variations before the food crisis in 2006 2008 whereas in post crisis period their explanatory abilities become much higher after crisis the contributions of oil specific factors to variations in agricultural commodity prices are greater than those of aggregate demand shocks the results from an alternative svar confirm the robustness of our main findings

uncertainty and the demand for medical care abstract this paper provides an analysis of the effects of uncertainty on the demand for medical care using a simplified version of grossman s human capital model of the demand for health two types of uncertainty are analysed the uncertainty surrounding the incidence of illness and the uncertainty surrounding the effectiveness of medical care in the first the consumer s basic level of health is assumed to be a random variable in the second the effectiveness of medical care is assumed to be random comparative static results are reported indicating the effects on the demand for medical care of both increases in the means of these distributions and mean preserving spreads of the distributions

an opposing responses test of classic versus market based promotion tournaments we use a systems based econometric method to show that classic and market based tournament models are empirically distinguishable since the role of risk differs across these models implementing the method using a large finnish worker firm matched panel we find support for classic tournaments given that promotions depend on relative performance the firm s wage structure is convex promotion probabilities are decreasing in the number of competitors performance is increasing in the wage spread and workers and firms adjust their choice variables in opposite directions when the variance of the stochastic component of worker performance changes

why do firms use incentives that have no incentive effects this paper illustrates why firms might choose to implement stock option plans or other pay instruments that reward luck i consider a model where adjusting compensation contracts is costly and where employees outside opportunities are correlated with their firms performance the model may help to explain the use and recent rise of broad based stock option plans as well as other financial instruments even when these pay plans have no effect on employees on the job behavior the model suggests that agency theory s often overlooked participation constraint may be an important determinant of some common compensation schemes particularly for employees below the highest executive ranks many compensation plans reward or punish employees for factors they cannot control an often discussed example of this phenomenon is executive compensation where stock options are not generally indexed to the overall market however many firms also offer firm wide stock options and profit sharing plans that provide even weaker incentives than executive plans after all most workers can expect to reap trivial personal gain from their contribution to firm value or profits i consider an explanation for this phenomenon in which firms contract with employees as a means of indexing wages to market rates rather than to provide incentives while much of the agency literature has concentrated on inducing optimal effort i consider the importance of the generally overlooked participation constraint i study a model in which employees outside opportunities are correlated with firm profits or stock price and in which both turnover and adjusting the pay scheme parameters are costly given these assumptions the firm may find it most profitable to pay the employee in a way that is correlated with the outside options presented by the outside labor market despite the requisite risk premium rather than pay a fixed wage that insures participation in all states the model derived below starts from the assumption that wage adjustments are costly but that workers are willing to make part of their pay contingent

food versus fuel what do prices tell us abstract sorting out the impacts of biofuels on global agricultural commodity prices is impossible without turning to data and distinguishing between the short run versus the long run impacts using time series prices on fuels and agricultural commodities the aim is to investigate the long run cointegration of these prices simultaneously with their multivariate short run interactions results indicate no direct long run price relations between fuel and agricultural commodity prices and limited if any direct short run relationships in terms of short run price movements sugar prices are influencing all the other agricultural commodity prices except rice with sugar the number one world input for ethanol results indicate increased ethanol production is potentially influencing short run agricultural commodity prices overall results support the effect of agricultural commodity prices as market signals which restore commodity markets to their equilibria after a demand or supply event shock

contract choice in modern agriculture cash rent versus cropshare e conomists have expended enormous effort examining the rationale for various contractual arrangements in agriculture particularly sharecropping while economists have made considerable theoretical efforts to understand agricultural contracts few empirical studies have been undertaken the dearth of empirical analyses of agricultural contracts is particularly striking for modern western agriculture this is an important omission not only because the existing empirical work tends to focus on the question of efficiency but also because the theoretical models tend to examine contracts that bear little resemblance to those found in the united states today

an empirical look at franchising as an organizational form franchise contracts are identified as a hybrid form of economic organization motives for the dominance of franchise arrangements are identified by examining the theoretical literature on franchising and related literatures on the theory of the firm firm growth managerial and employee selection a nd brand name capital empirical tests are performed on the incidence of franchise contracts across states for three industries in which f ranchising is prominent and data are readily available the results s uggest that both principal agent incentives and informational incenti ves favor the use of franchise arrangements copyright 1988 by the university of chicago

non monotonic health behaviours implications for individual health related behaviour in a demand for health framework a number of behaviours influence health in a non monotonic way physical activity and alcohol consumption for instance may be beneficial to one s health in moderate but detrimental in large quantities we develop a demand for health framework that incorporates the feature of a physiologically optimal level an individual may still choose a physiologically non optimal level because of the trade off in his or her preferences for health versus other utility affecting commodities however any deviation above or below the physiologically optimal level will be punished with respect to health distinguishing between two individual types we study a the qualitative properties of optimal time paths of health capital and health related behaviour b the perturbations of the optimal time paths that result from changes in exogenous parameters and c steady state properties predictions of the model and the implications for empirical analysis are discussed at length some comments on potential future extensions conclude the paper

time varying co movements between energy market and global financial markets implication for portfolio diversification and hedging strategies abstract this study explores the time patterns of volatility spillovers between energy market and stock prices of seven major global financial markets including clean energy energy information technology corporations equity markets and united states economic policy index over the period vary from december 28 2000 to december 31 2018 we employ a time domain connectedness measures of diebold and yilmaz dy 2009 2012 and 2014 to examine spillover mechanism of volatility shocks across future markets optimal weights and hedge ratios are calculated for portfolio diversification and risk management the main findings of the study conclude that oil shocks are exogenous and contribution of oil market volatility to global financial markets is insignificant the returns of world stock index and world energy index are major transmitters of volatility to clean energy market moreover the impact of energy market become strong in global financial market when data is divided into pre during and post financial crisis periods finally the hedge ratios are volatile over time and their maximum value is observed during the financial crisis period of 2008 09 the optimal portfolio between energy and stock prices are heavily weighted to the stock markets

assessing the effect of oil price on world food prices application of principal component analysis the objective of this paper is to investigate the co movement of food prices and the macroeconomic index especially the oil price by principal component analysis to further understand the influence of the macroeconomic index on food prices we examined the food prices of seven major products eggs meat milk oilseeds rice sugar and wheat the macroeconomic variables studied were crude oil prices consumer price indexes food production indexes and gdp around the world between 1961 and 2005 we use the scree test and the proportion of variance method for determining the optimal number of common factors the correlation coefficient between the extracted principal component and the macroeconomic index varies between 0 87 for the world gdp and 0 36 for the consumer price index we find the food production index has the greatest influence on the macroeconomic index and that the oil price index has an influence on the food production index consequently crude oil prices have an indirect effect on food prices

employer investments in employee health implications for the family as health producer the model presented in this paper further extends the demand for health model in which the family is the producer of health investments to consider the case in which an employer has incentives for investing in the health of a family member the household and the employer are assumed to interact strategically in the production of health the general insight provided is that the conditions which determine the nature of the relationship between the employer and the employee for instance market conditions production technologies taxes and government regulation will also affect the allocation of health investments and health capital within the family

intra household resource allocation an inferential approach if household income is pooled and then allocated to maximize welfare then income under the control of mothers and fathers should have the same impact on demand with survey data on family health and nutrition in brazil the equality of parental income effects is rejected unearned income in the hands of a mother has a bigger effect on her family s health than income under the control of a father for child survival probabilities the effect is almost twenty times bigger the common preference or neoclassical model of the household is rejected if unearned income is measured with error and income is pooled then the ratio of maternal to paternal income effects should be the same equality of the ratios cannot be rejected there is also evidence for gender preference mothers prefer to devote resources to improving the nutritional status of their daughters fathers to sons

portfolio choice in retirement health risk and the demand for annuities housing and risky assets in a life cycle model a retiree faces stochastic health depreciation and chooses consumption health expenditure and the allocation of wealth between bonds stocks and housing the model explains key facts about asset allocation and health expenditure across health status and age the portfolio share in stocks is low overall and is positively related to health especially for younger retirees the portfolio share in housing is negatively related to health for younger retirees and falls significantly in age finally out of pocket health expenditure as a share of income is negatively related to health and rises in age

the family as the health producer when spouses act strategically the grossman model has been extended recently in order to take account of the fact that most people lead their lives in a family using frameworks in which family members respectively a have common preferences and b are nash bargainers these models however do not consider individual incentives for behaving strategically in the model presented in this paper spouses interact strategically both in the production of own health and in the production of health of other family members we analyse inter alia the impact on the distribution of health of changes in family policies such as child allowance and custody rules

speculation and volatility spillover in the crude oil and agricultural commodity markets a bayesian analysis this paper assesses factors that potentially influence the volatility of crude oil prices and the possible linkage between this volatility and agricultural commodity markets stochastic volatility models are applied to weekly crude oil corn and wheat futures prices from november 1998 to january 2009 model parameters are estimated using bayesian markov chain monte carlo methods speculation scalping and petroleum inventories are found to be important in explaining the volatility of crude oil prices several properties of crude oil price dynamics are established including mean reversion an asymmetry between returns and volatility volatility clustering and infrequent compound jumps we find evidence of volatility spillover among crude oil corn and wheat markets after the fall of 2006 this can be largely explained by tightened interdependence between crude oil and these commodity markets induced by ethanol production

performance pay delegation and multitasking under uncertainty and innovativeness an empirical investigation it has been recently noted that the trade off between risk and incentives that agency theory predicts turns out to be rather weak we examine predictions from agency theory on the basis of data from a data set encompassing close to 1000 danish firms we find that the relation between performance pay and environmental uncertainty is indeed weak we examine the relation between delegation and environmental uncertainty and find that this relation is confirmed we also examine the multi tasking agency hypothesis that as risk increases the flexibility of agents is restricted we fail to find support for this hypothesis

aggregation and linearity in the provision of intertemporal incentives we consider the problem of providing incentives over time for an agent with constant absolute risk aversion the optimal compensation scheme is found to be a linear function of a vector of n accounts which count the number of times that each of the n kinds of observable events occurs the number n is independent of the number of time periods so the accounts may entail substantial aggregation in a continuous time version of the problem the agent controls the drift rate of a vector of accounts that is subject to frequent small random fluctuations the solution is as if the problem were the static one in which the agent controls only the mean of a multivariate normal distribution and the principal is constrained to use a linear compensation rule if the principal can observe only coarser linear aggregates such as revenues costs or profits the optimal compensation scheme is then a linear function of those aggregates the combination of exponential utility normal distributions and linear compensation schemes makes computations and comparative statics easy to do as we illustrate we interpret our linearity results as deriving in part from the richness of the agent s strategy space which makes it possible for the agent to undermine and exploit complicated nonlinear functions of the accounting aggregates

volatility spillover between oil and agricultural commodity markets abstract this study examines volatility transmission between oil and selected agricultural commodity prices wheat corn soybeans and sugar we apply the newly developed causality in variance test and impulse response functions to daily data from 01 january 1986 to 21 march 2011 in order to identify the impact of the food price crisis the data are divided into two sub periods the pre crisis period 01 january 1986 to 31 december 2005 and the post crisis period 01 january 2006 21 march 2011 the variance causality test shows that while there is no risk transmission between oil and agricultural commodity markets in the pre crisis period oil market volatility spills on the agricultural markets with the exception of sugar in the post crisis period the impulse response analysis also indicates that a shock to oil price volatility is transmitted to agricultural markets only in the post crisis period this paper thereby shows that the dynamics of volatility transmission changes significantly following the food price crisis after the crisis risk transmission emerges as another dimension of the dynamic interrelationships between energy and agricultural markets

transactions costs and the efficient organization of production a study of timber harvesting contracts a transaction costs framework is developed to explain the choice between lump sum and per unit payment provisions in private timber harvesting contracts predictions about which contract type minimizes the transaction costs of presale measurement and contract enforcement and monitoring are derived and tested using private timber sales contracts from north carolina the empirical results provide strong support for the transaction costs approach and also reject several predictions from a risk based model the transaction costs framework also provides insights into the choice between negotiated and competitive sales procedures

time frequency contained co movement of crude oil and world food prices a wavelet based analysis abstract this paper evaluates the association between crude oil prices and world food price indices first within general space and time and then within the combined time frequency sphere monthly price data spanning from january 1990 to february 2016 were used for the analysis the johansen cointegration test conducted within the time domain confirmed the statistically significant cointegrated relationship between crude oil prices and the price indices of food and its sub categories such as dairy cereals vegetable oil and sugar however frequency information was not accounted for to incorporate both the time and frequency features of the data we used a wavelet method that has shown that the world food prices along with the prices of cereals vegetable oils and sugar co move with and are led by crude oil prices results that remain relevant from the short run policy perspective the outcome of toda yamamoto causality confirmed the spillover of crude oil price changes to the world food price index also in the long run the paper ends with the policy implications of these results

international economic policy uncertainty and stock prices wavelet approach this paper examines the link between economic policy uncertainty and stock price in both a time and frequency domain wavelet analysis reveals that the relationship is generally negative but changes over time exhibiting low to high frequency cycles moreover the timing of frequency changes overlaps when us policy uncertainty comoves with other countries policy uncertainty

uncertainty entrepreneurship and sharecropping in india this study attempts to explain the coexistence of different farm lease arrangements in terms of the varying significance of entrepreneurial functions in india crop sharing arrangements are common in areas of relative economic certainty with very little scope for decision making for example for product and factor substitution and where the entrepreneurial profit is low fixed cash rents are common in situations of high uncertainty where the scope for decision making is significant or where the crops are highly profitable efficiency considerations predominate in areas of sharecropping favoring a smaller farm size whereas under high uncertainty large size is favored for reducing risk

world oil prices and agricultural commodity prices evidence from an emerging market abstract oil prices are thought to have direct effect on agricultural prices followed by an indirect effect through the exchange rate this paper examines the short and long run interdependence between world oil prices lira dollar exchange rate and individual agricultural commodity prices wheat maize cotton soybeans and sunflower in turkey to this end the toda yamamoto causality approach and generalized impulse response analysis for identification of the long and short run interrelationships are applied to the monthly data spanning from january 1994 to march 2010 the impulse response analysis suggests the turkish agricultural prices do not significantly react to oil price and exchange rate shocks in the short run the long run causality analysis reveals that the changes in oil prices and appreciation depreciation of the turkish lira are not transmitted to agricultural commodity prices in turkey hence our results support neutrality of agricultural commodity markets in turkey to both direct and indirect effects of oil price changes

the family as producer of health an extended grossman model deriving a model where each family member is the producer of his own and other family members health shows that the family will not try to equalise marginal benefits and marginal costs of health capital for each family member they will rather invest in health until the rate of marginal consumption benefits equals the rate of marginal net effective costs of health capital the level of compensation in the social insurance system the effective price of care health related information and transfer payments will all affect the production possibility set and therefore the optimal level and distribution of family health

women s income and boy girl anthropometric status in the cote d ivoire abstract this paper examines the effects of the intrahousehold distribution of income on children s anthropometric status in the c te d ivoire we find that increases in the proportion of cash income accruing to women increases boys height for age relative to girls and that this effect is statistically significant we suggest that this result may reflect efficiency and equity concerns which in this case reinforce each other

dynamic co movement between oil and stock markets in oil importing and oil exporting countries two types of wavelet analysis abstract this study explores the dynamic co movement between oil and six stock markets china india japan saudi arabia russia and canada by using two types of wavelet analysis wavelet multi scale decomposition and wavelet coherence the main empirical results are as follows 1 maximal overlap discrete wavelet transform analysis shows that there are feedback relationships between the price movement of oil and stock markets in all six countries in the wavelet based decomposition at the d4 d5 and d6 scales 2 the pairs of oil and stock returns show high overall co movement at the 16 to 128 week scale based on continuous wavelet transform analysis the wavelet coherence and phase plots show that the pairs of oil and oil importing stock market returns have high co movement for the period between 2007 and 2012 especially during the global financial crisis of 2008 in addition the wavelet coherence and phase plots show that the pairs of oil and oil exporting stock market returns have high co movement from 2007 to 2017 3 oil price returns lead the stock returns of saudi arabia russia and canada from 2007 to 2017 at the 16 to 128 week scale the stock prices are more influenced by oil prices in oil exporting countries than in oil importing countries this evidence implies that the economic structure of oil exporting countries depends strongly on crude oil production 4 from the results of the wavelet based granger causality test there is a lead lag causality linkage in which the oil price leads stock market indices from 27 to 30 weeks 189 210 days the implications of these findings are discussed

dynamic spillovers among major energy and cereal commodity prices abstract over the past decade the sharp increases in the prices of oil and agricultural commodities have raised serious concerns about the heightened volatility of these markets and the possible negative interactions between them this article deals with the dynamic return and volatility spillovers across international energy and cereal commodity markets it also examines the impacts of three types of opec news announcements on the volatility spillovers and persistence in these markets for this purpose we make use of the var bekk garch and var dcc garch models for the daily spot prices of eight major commodities including wti oil europe brent oil gasoline heating oil barley corn sorghum and wheat our results provide evidence of significant linkages between these energy and cereal markets moreover the opec news announcements are found to exert influence on the oil markets as well as on the oil cereal relationships finally we show that the persistence of volatility decreases increases for the crude oil and heating oil gasoline returns after accounting for the opec announcements in these multivariate garch models however the results are more mixed for the cereal markets overall our results can be used to improve the risk adjusted performance by having more diversified portfolios and also serve to hedge the oil risk more effectively

on adaptation and the demand for health the purpose of this paper is to analyse the impacts of adaptation to failing health this is done by integrating adaptation processes in a grossman type of pure consumption model model simulations show that adaptation affects the health variables by lowering the incentives to invest in health as well as smoothing the optimal health stock path over the life cycle whether or not the risk of mortality is an object of choice has important effects when studying adaptation as well as for the joint development of the health variables

health insurance eligibility utilization of medical care and child health two economists applied data from the current population survey and the national health interview survey and state level data on child mortality to a simulation model of utilization of medical care that varies only with the states legislative environment to examine the utilization of medical care and health effects of medicaid eligibility on low income children the models took into consideration the recent expansions of medicaid to low income children 38 of those ineligible for medicaid in 1984 who became eligible due to changes during 1984 1992 were uninsured between 1984 and 1992 expansions of the medicaid program increased the proportion of children eligible for medicaid almost two fold 16 1 vs 31 2 yet coverage rates were always lower than eligibility rates 13 2 vs 16 1 in 1984 and 20 3 vs 31 2 in 1992 and the increase in coverage rates was only about 50 of the increase in eligibility rates during 1984 1992 the probability that a child was eligible for medicaid increased the probability of health insurance coverage by 29 77 when the model considered bias in variables e g a recession in a state the take up rate was only 22 73 nevertheless medicaid markedly increased use of medical care for example eligibility for medicaid increased the likelihood of making a visit to a physicians office in the last two weeks by about 50 it also increased the probability of a child visiting the hospital suggesting inefficiency in the way that providers deliver care to medicaid enrollees medicaid eligibility had a significant effect on reducing child mortality the 15 1 percentage point increase in eligibility during 1984 1992 reduced child mortality by 4 5 when the researchers examined parent assessed subjective health measures medicaid eligibility had no effect on child health medicaid eligibility reduced race and education based disparities in the number of visits and racial differences in mortality yet it may actually intensify current disparities in health care delivery site