physician choice of medical specialty do economic incentives matter in this paper a probabilistic discrete choice approach is used to examine the influence of economic and non economic factors on the choice of medical specialty by new physicians a two level nested logit model is estimated that relaxes the independence from irrelevant alternatives assumption and allows for a potentially more realistic pattern of substitution across specialty choices the results from this specification are compared to those obtained from joint and conditional logit models the findings which are relatively robust across models indicate that economic incentives play an important role in the specialty choice process in particular expected hours worked and medical school indebtedness physician tastes for specialties also appear to have an important influence

market structure and discrimination the case of small businesses this paper examines bank market structure to draw inferences concerning the role of discrimination in credit markets for small businesses the authors analyze credit application and denial rates loans outstanding and interest rates across demographic groups this set of variables in combination with information on local bank market structure helps them distinguish among borrower preferences lender tastes and inadequate lender information as likely causes of differences in credit market experiences of small business operators from distinct demographic groups the authors find that white men and women can expect similar treatment in credit markets with some benefits to female owned firms located in concentrated banking markets minorities by contrast fare worse than whites moreover by appealing to becker s 1957 classic theories we find some clear evidence to support the view that prejudicial discrimination is at least partly to blame

reverse moral hazard of liability insurers evidence from medical malpractice claims this study investigates putative differences in the legal defense of medical malpractice claims between liability carriers with distinct ownership forms doctor controlled and commercial stock the scope of a carrier s legal defense is determined by claim characteristics such as injury severity and liability and possibly the doctor s private costs from settling or losing a claim when a carrier does not internalize the doctor s private costs from losing or settling a claim then a conflict of interest arises as the carrier provides a lower level of legal defense than preferred by the doctor i e reverse moral hazard the perception is that doctor sponsored carriers mitigate such conflicts of interest if this is the case we should expect to see differences in the amount spent by the carrier in defense of the doctor and the propensity to settle claims to test these expectations we use medical malpractice claims filed in florida between 1985 and 1990 we indeed find differences in legal defense in t

mortgage lending in boston interpreting hmda data the home mortgage disclosure act was enacted to monitor minority and low income access to the mortgage market the data collected for this purpose show that minorities are more than twice as likely to be denied a mortgage as whites yet variables correlated with both race and creditworthiness were omitted from these data making any conclusion about race s role in mortgage lending impossible the federal reserve bank of boston collected additional variables important to the mortgage lending decision and found that race continued to play an important though significantly diminished role in the decision to grant a mortgage copyright 1996 by american economic association

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

who is credit constrained in the u s economy an important assumption of the life cycle model of consumption is the postulate of perfect capital markets this hypothesis has recently been challenged by substantial empirical evidence hall and mishkin 1982 using the panel study of income dynamics estimate that 20 percent of united states families are liquidity constrained mariger 1986 derives a life cycle model with endogenous liquidity constraints and using a cross section estimates this fraction to be 19 4 percent hubbard and judd 1986 simulate a model with a constraint on net worth which shows that with reasonable assumptions about preferences 19 0 percent of united states consumers are liquidity constrained the emerging consensus points therefore to a fraction of approximately 20 percent of the population behaving in a manner that is inconsistent with the pure life cycle model in addition hayashi 1985 and zeldes 1989 investigate the correlation among consumption wealth and income for various population groups and infer that liquidity constraints are more important for younger families with low levels of wealth and saving the main limitation of these studies is that in their data sets constrained consumers are not observable and have to be identified via indirect evidence thus there is as yet little firm evidence about the characteristics of the consumers who are likely to be credit constrained this paper adopts an approach that differs from previous tests for liquidity constraints because it makes use of data where constrained consumers are observable and explicitly links their existence to credit market imperfections and personal characteristics the data drawn from the 1983 survey of consumer finances scf and described in section ii provide information on individuals whose request for credit has been rejected by financial intermediaries in section iii a model is developed in which consumers and lenders behavior jointly determines the probability that a consumer is rationed in the credit market this probability is then

discrimination in the small business credit market we use data from the 1993 and 1998 national surveys of small business finances to examine the existence of racial discrimination in the small business credit market we conduct an econometric analysis of loan outcomes by race and find that black owned small businesses are about twice as likely to be denied credit even after controlling for differences in creditworthiness and other factors a series of specification checks indicates that this gap is unlikely to be explained by omitted variable bias these results indicate that the racial disparity in credit availability is likely caused by discrimination

racial discrimination in umpire voting an arguably unexpected result abstractusing data from an official most valuable player award in professional sport we test for the presence of discrimination by match officials umpires who are responsible for ranking the top three players within each match these umpires are found to award significantly more votes to and have a higher probability of voting for players identified as australian indigenous after controlling for within match production the result offers further evidence on racial discrimination and runs counter to numerous analogous studies both in sport as well as in labour and other socio economic outcomes in general

the effect of liquidity constraints on consumption a cross sectional analysis this paper examines the effect of liquidity constraints on consumption expenditures using a single year cross section data set a reduced form equation for consumption is estimated on high saving households by the tobit procedure to account for the selectivity bias since high saving households are not likely to be liquidity constrained the estimated equation is an appropriate description of how desired consumption that would be forthcoming without liquidity constraints is related to the variables available in the cross section data when the reduced form equation is used to predict desired consumption the gap between desired consumption and measured consumption is most evident for young households

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

international corporate diversification market valuation and size adjusted evidence errunza and senbet es 7 analyze the effects of international operations on the market value of the firm both at theoretical and empirical levels the theoretical model which is largely heuristic exploits the costly supply adjustment of multinational firms mncs in providing international portfolio diversification services to investors who face differential cost barriers to direct holdings of assets across national boundaries mncs compete as financial intermediaries to undo the barriers so that in equilibrium profits are driven out mncs and pure domestic firms sell at an equivalent risk adjusted return however costly financial intermediation and the associated relative efficiency leads to a positive valuation effect for mncs relative to purely domestic firms further the equilibrium analysis implies that demand side investor barriers to international capital flows alone are inconsequential to the valuation of mncs in their pure financial role but that the interaction with the supply side costs are necessary to produce a valuation effect at the corporate level es subject the theory to an empirical analysis in a value based approach by employing a variant of tobin s 17 qratio the analysis controlling for industrial market power suggests that the relationship between the excess valuation and the degree of international involvement doi has magnified over periods characterized by severe u s government controls vis a vis the more recent periods in this paper we formalize the theoretical argument by viewing indirect portfolio diversification by mncs as a means of completing the international capital market we employ a paradigm in the unanimity literature and formally characterize the equilibrium in which there is a rationale for mnc financial intermediation we then perform an expanded empirical study by employing generalized least squares and maximum likelihood procedures since the positive relationship between excess valuation and doi as suggested in es 7 might be attributed to the so called small firm or size and the p e effects the test methodology controls for such effects also the traditional literature has relied upon foreign sales percentage as a proxy for doi in view of the well recognized limitations of this proxy we employ four different measures of international

the effects of international operations on the market value of the firm theory and evidence this paper investigates the existence of monopoly rents associated with international operations in a market value theoretic framework the benefits of international operations evolve from such factors as 1 imperfections in the product and factor markets 2 differential international taxation and 3 imperfections in the financial markets in this paper these factors are subject to an equilibrium analysis in the context of recent advances in financial theory in particular imperfections in the financial sector arising from corporate international diversification are examined in a framework which allows a supply adjustments by multinational firms and b the interaction of barriers to international capital flows faced by both firms and investors taking the u s capital market and investors as a base we then specify the conditions under which the foregoing imperfections get priced out in an equilibrium these pricing effects cannot be detected empirically through the methodologies employed by the existing studies which examine the effects of corporate international diversification indeed it was an attempt to rescue the limitations of these studies which initially motivated our paper the existing empirical inquiries into this area rely on traditional risk adjusted performance measures e g 7 or international analogs of return generating processes e g 1 8 instead at the empirical level we employ a value based method which is in the same vein of the thomadakis 17 approach developed to identify the monopoly benefits of industrial market structure we conduct the tests over subperiods characterized by differential government controls in an attempt a to separate the pure financial motives for multinationality from other motives and b to detect if the benefits of international operations carry through recent periods

does educational indebtedness affect physician specialty choice there has been much debate over the effect of educational indebtedness on the specialty choices of new physicians especially in light of the perceived shortage of primary care physicians this paper explores the theoretical foundations on which this debate is based in addition the paper estimates the effects of various types of debt on specialty choice the results suggest that an increase in debt from subsidized loan sources i e guaranteed student loans national direct student loans or health professions student loans has mixed effects while an increase in debt from health education assistance loans reduces the likelihood of becoming a primary care physician though these effects are significant they are very small in magnitude economic returns to certain specialties and personal background appear to play a more important role in specialty choice

mortgage lending to minorities where s the bias this paper examines mortgage lending and concludes that studies based on data created by the boston fed should be reevaluated a detailed examination of these data indicates that irregularities in these data when combined with the most commonly used research methodology appear to have biased previous research toward a finding of discrimination against minority applicants when the most severe data irregularities are eliminated evidence to support a hypothesis of discrimination disappears the currently fashionable flexible underwriting standards of mortgage lenders may have the unintended consequences of increasing defaults for the beneficiaries of these policies

economies of scale and the demand for money cross sectional data from four surveys of small business finance demonstrate that economies of scale in money holding exist that these economies appear to be increasing over time and that the magnitudes are greater than those estimated for large us corporations firms not practising several specific cash management techniques and firms facing constraints in the credit market hold lower money balances minority owned firms exhibit economies of scale similar to the overall sample but cash management practices and credit constraint variables generally do not influence their money holding behavior scale economies vary widely across industries but overall means are relatively stable over time

racial discrimination among nba referees the nba provides an intriguing place to assess discrimination referees and players are involved in repeated interactions in a high pressure setting with referees making split second decisions that might allow implicit racial biases to become evident we find that more personal fouls are awarded against players when they are officiated by an opposite race officiating crew than when they are officiated by an own race refereeing crew these biases are sufficiently large so that they affect the outcome of an appreciable number of games our results do not distinguish whether the bias stems from the actions of white or black referees

consumption patterns and self selecting tariffs the authors describe and apply methods for empirically investigating the relation between consumption and tariff choice these methods allow 1 testing of alternative specifications for the relations of tariff choice and consumption patterns 2 estimation of parameters that provide information on the response of customers to marginal prices and fixed fees and 3 a determination of the extent to which the assumptions embodied in welfare results on self selecting tariffs are valid in a particular setting they apply the procedures to residential demand for local telephone service in an area where households are offered a choice among tariffs copyright 1989 by mit press

mortgage lending in boston a reconsideration of the evidence i introduction discrimination in the marketplace is often measured using statistical methods in order for the results to be interpretable as some form of discrimination it is necessary that these methods be firmly based on economic theories as to how these markets function the reason for this is that it is easy to confuse voluntary acts of segregation from involuntary acts of discrimination by the simple examination of statistical entrails the former is presumably acceptable to society whereas the latter is not any society that values its freedoms will want to ensure that a mis classification of the former as evidence of the latter is avoided claims of racial discrimination in mortgage lending provide an excellent arena to illustrate the issues that arise in statistically measuring discrimination in the united states data on mortgage applications has been collected for several years under the home mortgage disclosure act hmda these data show a persistent tendency for blacks to be denied mortgages at a greater rate than whites leading many political commentators to claim that they prove the existence and severity of racial discrimination one problem with the statistical measurement of discrimination is that the available data are often inadequate the hmda data has been criticized for not collecting all of the information germane to the loan decision such as the credit history or personal characteristics of the loan applicant and co applicant the argument is that blacks are denied loans more than whites because of these characteristics rather than the color of their skin whether or not this in turn reflects prior or concurrent racial discrimination in other markets e g in employment or housing or education is an intriguing question with important implications for policy reform in mortgage lending regulations 1 in an effort to address these concerns the federal reserve bank of boston undertook to augment the basic hmda data in the boston area with ancillary data on loan applicants see munnell et al 1992 1996 the vast bulk of these extra data were collected from the original loan application file at the bank of original application indicating that the information was viewed by the bank as relevant to the loan decision the boston fed study found that allowing for the characteristics of black applicants reduced the statistical importance of the applicant s race but that some racial discrimination remained specifically they find that black and hispanic applicants are roughly 60 more likely to be turned down just because of their ethnic origin the denial rate in this sample is about 17 for such applicants rather than the 11 denial rate for statistically equivalent whites although the study has been the subject of some controversy in the popular press 2 and policy circles 3 it remains an important effort to address these issues by directly collecting the primary data there are however some problems with the way in which these data are interpreted by munnell et al 1992 1996 these problem concern their statistical methods even if one accepts the economic model of mortgage lending decisions underlying their study simple corrections to their statistical procedures removes any evidence of discrimination an important conclusion echoing the boston fed study itself is to point out the dangers of drawing inferences about discrimination based on incomplete data moreover the simple statistical corrections considered here are the standard fare of textbooks and not from the fancy frontiers of econometrics hence it is likely to be useful in general to see why those textbook lessons are there by having them demonstrated explicitly in an important policy setting ii replicating the boston fed results the boston fed study began with the existing hmda database for mortgage applications in the boston area for 1990 4 the fed requested that banks augment their hmda reports for all applications made by blacks and hispanics and by a random sample of applications made by whites

a comparison of contingent valuation method and random utility model estimates of the value of avoiding reductions in king mackerel bag limits this paper estimates the value of king mackerel bag limit changes with both stated and revealed preference methods the 1997 marine recreational fishery statistical survey allows estimation of the value of avoiding bag limit reductions with the random utility model and the contingent valuation method using the contingent valuation method the willingness to pay to avoid a one fish reduction in the bag limit is 2 45 per year using the random utility model the willingness to pay to avoid a one fish reduction in the bag limit is 2 24 per trip and 7 71 for a two month time period considering several methodological issues the difference in willingness to pay between the stated and revealed preference methods is in the expected direction

debt for equity swaps under a rational expectations equilibrium this paper analyzes ldc debt for equity swaps under a rational expectations equilibrium under full information the swap can never be strictly preferred by the ldc the mnc and the bank under the postulated informational asymmetry assumptions the same results obtain leading to the lemons market in reverse under rational expectations the swap can only occur if the loan is correctly valued relative to all private information in the economy given that some swaps do occur future models must reflect the unique features of swaps

competition small business financing and discrimination evidence from a new survey we analyze credit applications loan denials and interest rates paid by small businesses across owner gender race and ethnicity in addition we examine data from owners who said they did not apply for credit because they believed that their applications would have been turned down after controlling for a rich set of explanatory variables including personal and business credit histories substantial differences in denial rates between firms owned by african americans and white males remain moreover consistent with becker s classic theories 1957 we find evidence that increases in competition in the firm s local banking market reduces these differences