reclaiming virtue ethics for economics contrast virtue ethics the study of moral character has been an important strand in moral philosophy for literally thousands of years but has received little strand in moral philosophy for literally thousands of years but has received little attention from contemporary economists that neglect has not been reciprocated attention from contemporary economists that neglect has not been reciprocated a signifi cant body of philosophical work in virtue ethics is associated with a radical a signifi cant body of philosophical work in virtue ethics is associated with a radical critique of the market economy and of economics expressed crudely the charge critique of the market economy and of economics expressed crudely the charge sheet is this the market depends on instrumental rationality and extrinsic motisheet is this the market depends on instrumental rationality and extrinsic motivation market interactions therefore fail to respect the internal value of human vation market interactions therefore fail to respect the internal value of human practices and the intrinsic motivations of human actors by using market exchange practices and the intrinsic motivations of human actors by using market exchange as its central model economics normalizes extrinsic motivation not only in markets as its central model economics normalizes extrinsic motivation not only in markets but also in its ventures into the territories of other social sciences in social life but also in its ventures into the territories of other social sciences in social life more generally therefore economics is complicit in an assault on virtue and on more generally therefore economics is complicit in an assault on virtue and on human fl ourishing we will argue that this critique is fl awed both as a descriphuman fl ourishing we will argue that this critique is fl awed both as a description of how markets actually work and as a representation of how classical and tion of how markets actually work and as a representation of how classical and neo classical economists have understood the market we will show how the market neo classical economists have understood the market we will show how the market and economics can be defended against the critique from virtue ethics and economics can be defended against the critique from virtue ethics crucially our response to that critique will be constructed crucially our response to that critique will be constructed using the language and logic of virtue ethics in this respect it is fundamentally different from a response in this respect it is fundamentally different from a response that many economists would fi nd more natural to point to the enormous benefi ts that many economists would fi nd more natural to point to the enormous benefi ts

quality competition with motivated providers and sluggish demand we study incentives for quality provision in markets where providers are motivated semi altruistic prices are regulated and firms are funded by a combination of block grants and unit prices competition is based on quality and demand adjusts sluggishly health or education are sectors in which the mentioned features are the rule we show that the presence of motivated providers makes dynamic competition tougher resulting in higher steady state levels of quality in the closed loop solution than in the benchmark open loop solution if the price is sufficiently high however this result is reversed if the price is sufficiently low and below unit costs sufficiently low prices also imply that a reduction in demand sluggishness will lead to lower steady state quality prices below unit costs will nevertheless be welfare optimal if the providers are sufficiently motivated

male female urban income distributions in canada the service sector in a dependency model international trends of increasing income inequality have not occurred equally for male and female income distributions in canadian cities urban male income inequality declined from 1970 to 1980 it increased in the next decade but only to its 1990 level female income inequality has declined consistently these urban income distributions can be well explained using a dependency model in which the female income distribution is influenced by the male income distribution and the income gap between males and females this dependence effect is modified by urban characteristics male and female income distributions are more alike in larger cities and in cities with relatively higher female median incomes beginning in 1990 service sector employment contributes significantly to income inequality for both gender groups with a slightly greater effect for females

women s suffrage political responsiveness and child survival in american history women s choices appear to emphasize child welfare more than those of men this paper presents new evidence on how suffrage rights for american women helped children to benefit from the scientific breakthroughs of the bacteriological revolution consistent with standard models of electoral competition suffrage laws were followed by immediate shifts in legislative behavior and large sudden increases in local public health spending this growth in public health spending fueled large scale door to door hygiene campaigns and child mortality declined by 8 15 or 20 000 annual child deaths nationwide as cause specific reductions occurred exclusively among infectious childhood killers sensitive to hygienic conditions

on measuring uncertainty and its impact on investment cross country evidence from the euro area abstract investment fell sharply in the euro area after the financial crisis and has not yet returned to pre crisis levels in many core economies focusing on the four largest euro area countries this paper investigates the role of uncertainty for investment dynamics by doing so we compare five prominent uncertainty proxies put forward in the recent literature the implied stock market volatility a survey derived measure of expectations dispersion a newspaper based indicator of policy uncertainty and two indicators taking up the concept of econometric unpredictability although all uncertainty measures show countercyclical behavior we find uncertainty as measured by the conditional volatility of the unforecastable components of a broad set of time series to exhibit noticeable robust effects across different model specifications and countries based on this type of uncertainty proxy we document pronounced negative investment responses to uncertainty shocks we further show that these effects can explain a relevant portion of the decrease in investment in the course of the great recession

cut to the bone hospital takeovers and nurse employment contracts the authors examine changes in the wages employment and effort of nurses in california hospitals following takeovers by large chains in the 1990s the market for nurses has been described as a classic monopsony so that one might expect increases in firm market power to be associated with declines in wages however a basic contracting model predicts effects on effort rather than on wages which is what this analysis finds nurses experienced few declines in wages following takeovers but did see increases in the number of patients per nurse the measure of effort used here the authors show that their results are also consistent with an extended version of the monopsony model that considers effort and allows for revenue shifts following a takeover finally they find that these changes were similar in the largest for profit and non profit chains suggesting that market forces are more important than institutional form

selfish bakers caring nurses a model of work motivation abstract work contributes to people s self image in important ways we propose a model in which effort is unobservable and where individuals have a preference for being important to others this gives the following predictions 1 if a worker s effort is paid by his marginal productivity bakers effort is just like in the standard model 2 if a worker s wage is unaffected by his effort nurses more effort is provided than in the standard model 3 to prevent that shirkers become nurses nurses wages must be kept strictly lower than bakers income at this wage level there will be too few nurses 4 overinvestment in nursing equipment can be justified as a means to attract motivated nurses 5 even with full income compensation both nurses and bakers may experience a net utility loss when losing their job 6 similarly both nurses and bakers may prefer work to welfare even with full income compensation

competition and screening with motivated health professionals two hospitals compete for the exclusive services of health professionals who are privately informed about their ability and motivation hospitals differ in their ownership structure and in the mission they pursue the non profit hospital sacrifices some profits to follow its mission but becomes attractive for motivated workers in equilibrium when both hospitals are active the sorting of workers to hospitals is efficient and ability neutral allocative distortions are decreasing in the degree of competition and disappear when hospitals are similar the non profit hospital tends to provide a higher amount of care and offer lower salaries than the for profit one

the macro and asset pricing implications of rising italian uncertainty evidence from a novel news based macroeconomic policy uncertainty index abstract we develop a new monthly and daily index of economic policy uncertainty for italy based on articles from the sole 24 ore a popular italian business daily newspaper var investigations document that an unexpected rise in the sole 24 ore news based epu index epu24 has mild effects on the real economic activity cross sectional asset pricing tests then show that both monthly and daily epu24 shocks command a positive risk premium a standard event study finally indicates the presence of statistically significant positive cumulative abnormal returns cars in the energy sector following different categories of policy related events negative and significant cars in the financial sector are instead found to be generated by international related events and political elections

the effect of minimum salaries on employment of teachers a test of the monopsony model author affiliation william m boal college of business and public administration drake university des moines iowa 50311 usa e mail william boal drake edu acknowledgment this paper has benefited from helpful comments on earlier drafts by david harrington and ronald oaxaca by seminar participants at drake university and iowa state university and by anonymous referees 1 introductionthe market for schoolteachers has long been cited as an example of labor monopsony where employers that is school districts enjoy market power ehrenberg and smith 2000 hyclak johnes and thornton 2005 the reasons offered are plausible by definition school districts enjoy exclusive territories teachers have specialized training that might not be interesting to nearby nonschool employers many teachers are second earners in their families and might be unwilling to relocate in response to distant job offers there is some evidence that teachers have strong personal geographic preferences boyd et al 2005 it would appear that the set of potential employers available to a certified teacher is limited to the set of school districts within commuting distance of current residence for these reasons it is often argued that the greatest monopsony power is probably held by rural school districts because of their large geographic size an empirical literature dating back to landon and baird 1971 has tried to document monopsony in this market by regressing teacher salaries on measures of geographic concentration of school districts these studies often appear to find a negative effect of geographic concentration on teacher salaries see luizer and thornton 1986 for a survey a major difficulty with the salary concentration research strategy is that concentration is inversely related to urbanization because urban areas tend to have many school districts in close proximity and salaries for all workers tend to be higher in urban areas the apparent negative estimated effect of concentration may disappear when sufficient measures of urbanization are included ransom boal and beck 1998 moreover the urban rural difference in teacher salaries appears similar to the urban rural difference for other professionals hirsch and nottage 1998 1a second difficulty with the salary concentration research strategy is the increasing presence of teachers unions 2 a monopsonist faces or at least perceives an upward sloping supply of labor this upward slope raises marginal labor cost above the current wage causing the monopsonist to reduce employment equilibrium occurs on the labor supply curve but below the monopsonist s labor demand curve by contrast a union tries to raise the wage by moving the equilibrium above the supply curve estimates based on 1970s data show that unionized teachers enjoyed an average wage differential of roughly 10 3 in some cases a union might even move the equilibrium above the demand curve this is the prediction of the so called contract curve model for which eberts and stone 1984 1986 found some evidence among new york state school districts any test for monopsony ought to exclude unionized districts from the sample or control for unionism in some way this has not generally been done 4a recent seemingly unrelated literature has investigated the effects of legal minimum wages on employment in fast food restaurants katz and krueger 1992 card and krueger 1994 this literature has apparently documented slight increases in employment following increases in minimum wages the authors note that this result is incompatible with competitive labor markets and may be evidence for employer monopsony a modest increase in a minimum wage may increase employment in a monopsonized market because it flattens the employer s perceived labor supply curve and thereby lowers the employer s marginal labor cost curve

productivity gains from geographic concentration of human capital evidence from the cities abstract based on recent theoretical developments the argument is made that the average level of human capital is a local public good cities with higher average levels of human capital should therefore have higher wages and higher land rents after conditioning on the characteristics of individual workers and dwellings this prediction is supported by data for standard metropolitan statistical areas smsas in the united states where the smsa average levels of formal education and work experience are used as proxies for the average level of human capital the alternative explanations of omitted smsa variables and self selection are evaluated an estimate of the effect of an additional year of average education on total factor productivity is computed

quality competition with profit constraints abstract firms in markets such as health care and education are often profit constrained due to regulation or their non profit status and they are often viewed as being altruistic towards consumers we use a spatial competition framework to study incentives for cost containment and quality provision by altruistic firms facing profit constraints if prices are regulated profit constraints lead to lower cost containment efforts but higher quality if and only if firms are sufficiently altruistic under price competition profit constraints reduce quality and cost containment efforts but lead to lower prices if and only if firms are sufficiently altruistic profit constrained firms cost containment efforts are below the first best while their quality might be too high or too low if prices are regulated profit constraints can improve welfare and be a complement or substitute to a higher regulated price depending on the degree of altruism

underpaid or overpaid wage analysis for nurses using job and worker attributes the nursing labor market presents an apparent puzzle hospitals report chronic shortages yet standard wage analysis shows that nursing wages have increased over time and greatly exceed those received by other college educated women this paper addresses this puzzle data from the current population survey cps are matched with detailed job content descriptors from the occupational information network o net nursing jobs require higher levels of skills and more difficult working conditions than do jobs for other college educated workers a standard cps only wage regression shows a registered nurse rn wage advantage of 22 log points compared to a pooled male female group of college educated workers control for o net job attributes reduces the rn gap to 08 while an arguably preferable nonparametric estimator produces a wage gap estimate close to zero we conclude that nurses receive compensation close to long run opportunity costs narrowing if not resolving the rn wage shortage puzzle

is there monopsonistic discrimination against immigrants the authors investigate immigrants and natives labor supply to the firm within an estimation approach based on a dynamic monopsony framework applying duration models that account for unobserved worker heterogeneity to a large administrative employer employee data set for germany they find that immigrants supply labor less elastically to firms than do natives under monopsonistic wage setting the estimated elasticity differential predicts a 7 7 log points wage penalty for immigrants thereby accounting for the entire unexplained native immigrant wage differential of 5 8 to 8 2 log points when further distinguishing immigrant groups differing in their time spent in the german labor market their immigration cohort and their age at entry the authors find that the observed unexplained wage differential is larger for those groups that show a larger elasticity differential relative to natives these findings not only suggest that search frictions are a likely cause of employers more pronounced monopsony

the urban wage premium in imperfect labor markets mit administrativen verknupften betriebs beschaftigtendaten fur westdeutschland untersucht diese studie ob ein teil des urban wage premiums durch eine geringere lohnsetzungsmacht von arbeitgebern auf dichteren arbeitsmarkten erklart werden kann wir zeigen zunachst dass das arbeitsangebot an firmen in dichteren arbeitsmarkten lohnelastischer ist die lohnsetzungsmacht der arbeitgeber also weniger ausgepragt ist diese unterschiede lassen eine lohnpramie von 1 1 bis 1 6 prozent bei einem anstieg der bevolke rungsdichte um 100 log punkte erwarten anschliesend zeigen wir dass die geschatzte lohnpramie bei kontrolle fur unbeobachtete zeitkonstante personenheterogenitat um 1 1 bis 1 4 prozentpunkte fallt wenn wir auf die regionalen suchfriktionen bedingen unsere ergebnisse legen nahe dass ein wesentlicher teil des urban wage premiums auf geringere suchfriktionen in dichteren arbeitsmarkten zuruckzufuhren ist

shirking or work morale abstract standard economics assumes that rational agents shirk and that they have to be disciplined by monitoring and regulating however under specific circumstances regulating systematically worsens workers morale and thereby negatively affects their behavior when a principal attributes a lower work morale to the agents than they actually have an implicit contract is unilaterally violated and agents reduce their excess morale this reaction is theoretically and empirically well supported by the notions of reciprocity and of overjustification the theoretical propositions are applied to a specific employment relationship but hold more generally they are consistent with empirical observations

wage differentials employer size and unemployment the unique equilibrium solution to a game in which a continuum of individual employers choose permanent wage offers and a continuum of workers search by sequentially sampling from the set of offers is characterized wage dispersion is a robust outcome provided that workers search while employed as well as when unemployed the unique nondegenerate equilibrium distribution of wage offers is constructed for three cases 1 identical workers and employers 2 identical employers and an atomless distribution of worker supply prices and 3 identical workers and an atomless distribution of job productivities copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

where does an industry locate abstract this paper presents an econometric model of industrial location and estimates the model for two industries in brazil based on a comprehensive data set the model predicts which cities will or will not have the industry and for these cities with the industry what the scale of operation will be the parameters estimated in a full information context represent the technology of production supply of entrepreneurs and equilibrating error in markets the results are strong and very suggestive and the explanatory power of the model is relatively high the results are used to simulate the impact of industry subsidies on locational patterns

competition among hospitals we examine competition in the hospital industry in particular the effect of ownership type for profit not for profit government we estimate a structural model of demand and pricing in the hospital industry in california then use the estimates to simulate the effect of a merger california hospitals in 1995 face an average price elasticity of demand of 4 85 not for profit hospitals face less elastic demand and act as if they have lower marginal costs their prices are lower than those of for profits but markups are higher we simulate the effects of the 1997 merger of two hospital chains in san luis obispo county where the merger creates a near monopoly prices rise by up to 53 and the predicted price increase would not be substantially smaller were the chains not for profit

nonprofit hospital mergers and the exercise of market power government challenges to mergers within the hospital industry have become more frequent many of those mergers involve nonprofit organizations rather than the for profit firms that are the norm in most other industries this difference in ownership has made no apparent difference in the antitrust agencies approach to proposed hospital mergers in this article i test the proposition that nonprofit and for profit hospitals price differently in response to the structure of the markets in which they compete based on a cross sectional analysis of california hospitals i find that estimated merger effects on hospital prices do vary by type of ownership in response to either higher market share or to the joint combination of higher share and higher market concentration private nonprofit hospital prices are statistically significantly lower than for profit hospital prices and on balance in this sample there is no evidence of any systematic price increasing effect on private nonprofit hospitals

evolutionary efficacy of a pay for performance scheme with motivated agents the paper studies the short run and long run effects of the introduction of a team oriented pay for performance p4p payment scheme when agents may differ in their degree of intrinsic motivation toward the job suppose that new potential employees were able to assess the expected pay offs of current workers then they may modify their approach to work in order to follow the employee type that earned the highest expected pay off we show that the definition of the scheme needs to take into consideration the effects produced on the evolution of the motivation of new generations in particular the desirability and success of a p4p scheme strongly depend on the way incentives are allocated to the members of a team on the power of the quality related financial incentive and on the economic and social context in which the scheme is introduced the analysis is in part motivated by the introduction in uk in 2004 of a p4p scheme for family practitioners in the uk quality and outcomes framework qof and of a new system of assessing the quality of academic research completed in 2014 research excellence framework ref

wage gaps large and small author affiliation barry t hirsch barry t hirsch is the w j usery chair of the american workplace department of economics andrew young school of policy studies georgia state university atlanta ga 30302 3992 and research fellow iza bonn germany bhirsch gsu eduthis presidential address was presented at the annual meeting of the southern economic association new orleans la on november 20 2007 acknowledgment i thank the many economists with whom i have interacted or coauthored over the years in particular john addison chris bollinger bill breit bill johnson dave macpherson and ed schumacher barry t hirsch w j usery chair of the american workplace department of economics andrew young school of policy studies georgia state university 2007 president of the southern economic association figure omitted see article image 1 introductionin the wealth of nations adam smith posited theory and institutional explanations for why wages differ modern labor economics has retained a focus on wage differentials although much of the literature is unabashedly empirical it is informed by theory neoclassical economics including human capital theory remains the principal approach although labor economists recognize the role played by human nature workplace incentives institutions and public policy in wage determination in this address i highlight several topics i have studied all involving wage gaps 1 these include census imputation methods union premiums product market regulation wages in male and female jobs the wage effects of military service and interarea wages and cost of living the purpose is not to trumpet my work although it may appear as such but to draw broader conclusions about labor economists understanding of wage determination 2 equalizing differentials and the law of one wagethe theory of equalizing differentials states that in competitive labor markets workers with similar skills working in similarly attractive jobs and locations should receive similar compensation long run wage differentials are explained by differences in skill and job disamenities with a single price wage conditional on worker and job attributes 2 the law of one wage equal compensation for equivalent workers and jobs follows naturally from competitive theory empirical studies attempt to test the law of one price in product markets industrial organization economists focus on a narrow set of homogeneous goods in markets with low cost information and similar transportation costs i e purchases of electronics and books at internet sites international economists test for purchasing power parity for homogeneous goods i e big mac prices across countries for a recent paper see parsley and wei 2007 even in these markets there is considerable deviation from the law of one price one does not see an equivalent literature in labor economics yes there is a vast literature on wage gaps but authors rarely characterize such work as a test of a law of one wage because there is little expectation that there should be wage equality even conditional on controls why not first as emphasized in personnel economics pay schemes that maximize profits often involve wages deviating from spot marginal products thus creating competitive wage differences across similar workers in similar jobs lazear and oyer 2007 second unions or other institutions can affect wages third there are rigidities in labor markets owing to imperfect mobility say from information and search costs firm specific training personal job attachment or tied household decisions regarding jobs location and housing manning 2003 mortensen 2003 fourth are problems of measurement leading to apparent variation in wages even when there is none and fifth even if data are error free we cannot hope to measure all the multitude of worker and job attributes that influence wages

public service motivation as an argument for government provision a public service motivation psm inclines employees to provide effort out of concern for the impact of that effort on a valued social service though deemed to be important in the literature on public administration this motivation has not been formally considered by economists when a psm exists this paper establishes conditions under which government bureaucracy can better obtain psm motivated effort from employees than a standard profit maximizing firm the model also provides an efficiency rationale for low powered incentives in both bureaucracies and other organizations producing social services 2000 elsevier science s a all rights reserved

an equilibrium model of city size abstract this paper develops an equilibrium model of city size in which population distribution real prices and real wages are determined two possible modifications are considered one involving externalities the partial equilibrium changes resulting from these modifications are derived and seen to be quite different from the general equilibrium changes finally the paper suggests that site specific factors of production must be introduced into any consistent model of city size

the relationship between income inequality and city size a general equilibrium model of an open system of cities approach a conclusion which emerges from studies of the factors affecting income inequality among cities is that many are connected through a number of different mechanisms with city size the explanations are derived from partial equilibrium models of the labour market and ignore considerations associated with labour mobility among cities to remedy this deficiency our paper employs a well developed general equilibrium model of an open system of cities to characterise the relationship between city size and income inequality that emerges an outstanding conclusion derived is that unlike existing explanations which provide justifications only for a unidirectional positive or negative rotation between city size and income inequality the general equilibrium model applies no restrictions on the direction of the relation additional restrictions are therefore needed to justify a positive or negative relation for instance if households with high income have relative preferences for non traded goods whose prices are

reducing public private sector pay differentials the single spine pay policy as a natural experiment in ghana empirical studies have documented the existence of the public private pay differentials in both developed and developing countries the implementation of policies aiming to reduce this gap has however been mitigated or inconclusive this paper exploits the single spine pay policy sspp in ghana as a natural experiment to examine the effectiveness of wage policies in developing countries the sspp was implemented in 2010 by the government of ghana to address the public private sector wage gap and improve productivity in the public sector using a quantile treatment effect approach based on a difference in difference did estimation we show that the sspp has yet to reduce the wage gap between the public and private sectors across the entire distribution of earnings in ghana the improvement observed is only at the lower tail of the distribution of earnings however the sspp has a larger effect on the earnings of female workers than that of males in the education and health services sector suggesting that the policy was successful in reducing the gender wage gap in that sector moreover the sspp has decreased the productivity of workers across the distribution of earnings mainly due to a decrease in the effort of female public sector workers nevertheless the sspp has had some successes and could be improved by putting in place a good managerial quality in the government agencies in addition it is important that the government pays much attention to various macroeconomic factors that have challenged the success of the sspp

occupational social value and returns to long hours this paper examines the phenomenon of uncompensated long hours in jobs with pro social characteristics and presents evidence that long hour wage premiums and occupational social value are substitutes in compensating salaried workers who supply hours exceeding the standard working week i show that the social value of an occupation in particular the degree to which jobs involve helping or providing service to others is inversely related to long hour pay allowing for heterogeneity in the degree to which workers value their job s helping orientation lets me explore how gender differences in employees attitudes toward pro social behaviour can explain some of the observed occupational sorting trends and gender differences in long hour compensation women tend to be more strongly drawn to helping occupations and at the same time receive lower long hour premiums in these jobs relative to men i offer a theoretical framework to rationalize the empirical trends

productivity crowding out in labor markets with motivated workers abstract when workers intrinsic motivation matters a wage increase has mixed consequences on applicants productivity and motivation as shown in public service healthcare education and politics in a simple theoretical framework where ability and motivation are workers private information we rationalize these differentiated responses and identify intuitive conditions for higher wages inducing self selection of more or less productive and motivated workers the selection patterns depend both on the statistical association between workers characteristics and on the difference between the incentivized returns to ability across sectors we emphasize a crowding out effect of wage on workers productivity that has not been analyzed in the theoretical literature before

monopsony power in the market for nurses estimates are presented of the inverse elasticity of supply of nursing services to the individual hospital a quantity which is a natural measure of employer market power the estimates corresponding to employment changes taking place over one year are quite high in the neighborhood of 0 79 and even for changes taking place over three years are substantial in the neighborhood of 0 26 the estimates do not significantly differ for hospitals in major metropolitan areas and do not depend very sensitively on the assumed form of the oligopsony equilibrium this abstract was borrowed from another version of this item

wage differentials across labor markets and workers does cost of living matter wage differentials studies rarely account for interarea differences in cost of living owing both to data limitations and theoretical ambiguity this study develops a price index for 185 metropolitan areas comprising about 70 of the u s labor force current population survey data for 1985 95 and data on sitespecific amenities are used to estimate earnings differentials based on nominal wages wages fully adjusted for measured cost of living and a simple approximation of real wages with partial adjustment for pricelevel differences dispersion in approximate real wages across 185 labor markets and differentials by region and city size are substantially lower than dispersion in nominal or full adjustment wages estimates of racial and ethnic differentials display moderate sensitivity to choice of a wage measure whereas other standard differentials do not both nominal wages and wages fully adjusted for cost of living may provide misleading estimates of real wage differentials absent data on interarea prices and amenities researchers should include detailed controls for region and city size in nominal wage equations jel j31 r23

monopsony in the low wage labor market evidence from minimum nurse staffing regulations this paper provides direct evidence on the extent of monopsony power in the low wage labor market by estimating the firm level elasticity of labor supply for nurse aides in the long term care nursing home industry using exogenous variation in hiring induced by the passage of a state minimum nurse staffing law i find that facilities initially out of compliance with the new law did not have to raise their wage offers relative to their competitors in order to hire more nurses while this is consistent with perfect competition in simple monopsony models of the labor market i discuss how the results may be more ambiguous in more complicated models

the economics of vocation or why is a badly paid nurse a good nurse abstract given the longstanding shortage of nurses in many jurisdictions why could not nursing wages be raised to attract more people into the profession we tell a story in which the status of nursing as a vocation implies that increasing wages reduces the average quality of applicants attracted the underlying mechanism accords with the notion that increasing wages might attract the wrong sort of people into the profession and highlights an in efficiency wage mechanism particular to vocations which makes wages sticky up wards the analysis has implications for job design in vocation based sectors such as nursing and teaching

the impact of public transport on us metropolitan wage inequality this article presents a wage inequality analysis for 158 large us metropolitan statistical areas msas the analysis is concerned with whether public transport has a detectable influence on 1990 levels of wage equality because public transport systems are generally designed to link residences with employment locations higher levels of service provision all other factors being equal should be associated with higher employment rates and more uniform distributions of earnings few analyses however have attempted to evaluate public policies that affect wage distributions the results of this research provide a macroscopic view of the effectiveness of urban transport investments with respect to urban wage inequality

classic or new monopsony searching for evidence in nursing labor markets the market for registered nurses rns is often offered as an example of classic monopsony while a new monopsony literature emphasizes that firm labor supply is upward sloping independent of market structure using data from multiple sources we explore the relationship between nursing wages in hospitals and measures of classic and new monopsony wage level analysis fails to provide support for classic monopsony the relative wages of rns in 240 u s labor markets being largely uncorrelated with hospital system concentration longitudinal analysis shows nursing wages declining with increases in hospital concentration we interpret these results as providing support for classic monopsony effects in the short run but question whether wage effects are sustained in the long run no relationship is found between nursing wages and a new monopsony measure of mobility but support for new monopsony is found for women elsewhere in the labor market rns display greater interemployer mobility than do women or men in general two conclusions follow first upward sloping labor supply need not imply monopsonistic outcomes second absent more compelling evidence nursing should not be held up as a prototypical example of monopsony classic or new

foreign policy uncertainty shocks and us macroeconomic activity evidence from china this paper investigates the spillover effects of economic policy uncertainty epu from china on us real macroeconomic variables in both expansion and recession periods we use monthly data and estimate a smooth transition var stvar model over the recent period we find robust evidence that chinese uncertainty significantly affects us economic activity during busts while no effect is perceptible during booms the results also underline that chinese epu is a determinant of policy uncertainty unemployment and industrial production in us

a stop too far how does public transportation concentration influence neighbourhood median household income research on us cities has connected the concentration of public transit with various neighbourhood outcomes but it remains unclear whether public transit was more attractive to lower or higher income households some research found neighbourhoods with public transportation were more attractive to lower income households likely because such households could not afford private transportation closer examination suggested that the type of transit was important as lower income households were more likely to use buses while higher income households were more likely to use rapid transit a key limitation of existing research on transit and neighbourhood household income was that it did not adequately control for variation over time the current study addresses this limitation by assessing how the concentration of subway and bus stops predicted variation in median household income in new york city during the 2000s results of cross sectional regressions partially confirm the findings of previous research that

economic policy uncertainty and unemployment in the united states a nonlinear approach we model us post wwii monthly data with a smooth transition var model and study the effects of an unanticipated increase in economic policy uncertainty on unemployment in recessions and expansions we find the response of unemployment to be statistically and economically larger in recessions a state contingent forecast error variance decomposition analysis confirms that the contribution of epu shocks to the volatility of unemployment at business cycle frequencies is markedly larger in recessions

firm sponsored general education and mobility frictions evidence from hospital sponsorship of nursing schools and faculty this study asks why hospitals provide direct financial support to nursing schools and faculty this support is striking because nursing education is clearly general clearly paid by the firm and information asymmetries appear minimal using aha and survey data i find hospitals employing a greater share of their msa s registered nurses are more likely to provide direct financial support to nursing schools and faculty net of size and other institutional controls given the institutional context i interpret this result as unusually specific evidence that technologically general skill training may be made de facto specific by imperfect and costly mobility

optimal wages in the market for nurses an analysis based on heyes model in a recent paper the economics of vocation or why is a badly paid nurse a good nurse anthony heyes posits a novel adverse selection mechanism whereby the average quality of nurses employed is declining in the wage and evaluates the consequences for an optimizing monopsonistic national health service nhs i conduct a standard welfare analysis here based on the proposed model it turns out that contrary to concerns raised by heyes the nhs will always choose a wage that is lower than the wage chosen by a welfare maximizing social planner nurse are underpaid i also extend the analysis to the case of a competitive labor market for nurses

optimal price setting in pay for performance schemes in health care abstract the increased availability of process measures implies that the quality of health care is in some areas de facto verifiable optimal price setting for verifiable dimensions of quality is well described in the theoretical literature on incentive design we seek to narrow the large gap that remains between actual price setting behaviour in pay for performance schemes and the incentive design literature we present a stylised model for hospital price setting for process measures of quality and show that optimal hospital prices should reflect the marginal benefit of the expected health gains the weight given to patients benefit relative to profits and the opportunity cost of public funds based on published estimates we derive the optimal prices for three measures of quality that have been incentivised in the english national health service since april 2010 treatment in an acute stroke unit rapid brain imaging and thrombolysis with alteplase we then compare the optimal prices with the actual prices offered to hospitals in england under the best practice tariffs scheme for emergency stroke care

hospital competition and quality with regulated prices we analyse the effect of competition on quality in hospital markets with regulated prices considering the effect of both introducing competition monopoly versus competition and increasing competition through either lower transportation costs increased substitutability or a higher number of hospitals with semi altruistic providers and a fairly general cost structure we show that the relationship between competition and quality is generally ambiguous in contrast to the received body of theoretical literature this is consistent with and potentially explains the mixed empirical evidence

wages and performance based pay evidence from the nlsy abstract the link between performance and pay should be strongest where performance is more accurately observed brown industrial and labor relations review 1990 43 1655 1825 rand journal of economics 1992 23 366 375 more productive workers self select into jobs with performance based pay consequently workers whose pay is based on performance should earn more than those whose pay is not based on such measures this paper adds to the literature on the subject by providing new empirical evidence for brown s model using the national longitudinal surveys of youth nlsy data

economic policy uncertainty in the us does it matter for the euro area abstract we investigate the effects of a us economic policy uncertainty shock on some euro area macroeconomic aggregates via structural vars we model the indicators of economic policy uncertainty recently developed by baker et al 2013 jointly with the aggregate price indexes and alternative indicators of the business cycle for the two above indicated economic areas according to our svars a one standard deviation shock to us economic policy uncertainty leads to a statistically significant fall in the european industrial production and prices of 0 12 and 0 06 respectively the contribution of the us uncertainty shock on the european aggregates is shown to be quantitatively larger than the one exerted by an euro area specific uncertainty shock

competition and teacher pay i introduction recent policy initiatives are increasing the degree of competition in primary and secondary education the number of charter schools is growing at an astounding rate vouchers are available to eligible children in florida utah and a number of cities including washington d c kafer 2005 school districts throughout the country are experimenting with subcontracting campuses to private firms the increasing popularity of policies that foster school competition dovetails with a burgeoning literature on the effects of educational competition researchers have examined the effects of educational competition on academic outcomes average public school spending and school district efficiency l this research has largely ignored the effects of increased competition on teacher pay yet reductions in the market power of school districts could have a significant impact on teacher earnings if school districts behave as typical monopsonists or oligopsonists when hiring then a lack of competition suppresses wages and policies that are designed to enhance competition among schools could lead to higher teacher salaries ceteris paribus 2 alternatively if a school district s position as a monopolistic provider of education services generates economic rents there are few parties to whom those rents might be dissipated besides school district personnel if teachers have been able to appropriate a share of the economic rents generated by the market power of school districts then increased competition could lower teacher salaries 3 this study uses individual data on more than 335 000 teachers from 670 texas school districts to explore the empirical relationship between competition and teacher pay the analysis suggests that a lack of competition in the public school system has led to significant market power for texas school districts resulting in lower wages for most texas teachers but higher wages for teachers in relatively concentrated markets ii theoretical models the elementary and secondary education industry in the united states is often highly concentrated more than 30 of u s educational markets are served by a single public school district and there are many more that are served by only a handful of educational providers 4 the concentrated nature of education markets suggests two alternative models of teacher wage determination the first is a classic oligopsony model and the second is a rent sharing model an oligopsony model of teacher wage determination boal and ransom 1997 lay out a classic cournot model of oligopsony that can be directly applied to the educational labor market 5 firms school districts choose an employment level l sub i to maximize the firm s revenue function r sub i given the employment level of all other firms in the market l sub i 1 r sub i l sub i w l sub i l sub i l sub i the market wage is determined by the total employment of all firms the first order condition for each firm implies that it chooses l sub i such that 2 mrp sub i w w l sub i l epsilon sup 1 in this model the gap between the marginal revenue product of firm i mrp sub i and the wage rate w depends on the firm s employment share l sub i l and the inverse wage elasticity of labor supply for the market epsilon sup 1 6 assuming that firms have different marginal revenue products the employment weighted average across all the firms in the market is 3 summation over i mrp sub i w l sub i wl epsilon sup 1 summation over i l sub i l sup 2 the last term on the right hand side is the familiar herfindahl index of market concentration thus wages are a function of market concentration h the employment weighted average marginal revenue profit per worker bar

monopsony power and relative wages in the labor market for nurses this paper examines the thesis that monopsony power is an important determinant of wages in nursing labor markets using data from the 1985 93 current population surveys measures of relative nurse non nurse wage rates for 252 labor markets are constructed contrary to predictions from the monopsony model no positive relationship exists between relative nursing wages and hospital density or market size nor is support found for the presence of monopsony power based on evidence on union wage premiums slopes of experience profiles or the mix of rn to total hospital employment

differences in labor supply to monopsonistic firms and the gender pay gap an empirical analysis using linked employer employee data from germany this article investigates women s and men s labor supply to the firm within a semistructural approach based on a dynamic model of new monopsony using methods of survival analysis and a large linked employer employee data set for germany we find that labor supply elasticities are small 1 9 3 7 and that women s labor supply to the firm is less elastic than men s which is the reverse of gender differences in labor supply usually found at the level of the market our results imply that at least one third of the gender pay gap might be wage discrimination by profit maximizing monopsonistic employers

if you pay peanuts do you get monkeys a cross country analysis of teacher pay and pupil performance why are teachers paid up to four times as much in some countries compared to others and does it matter specifically is the quality of teachers likely to be higher if they are paid higher up the income distribution in their own country and are pupil outcomes influenced by how well their teachers are paid this paper considers the determinants of teachers salaries across countries and examines the relationship between the real and relative level of teacher remuneration and the internationally comparable measured performance of secondary school pupils we use aggregate panel data on 39 countries published by the oecd to model this association our results suggest that recruiting higher ability individuals into teaching and permitting scope for quicker salary advancement will have a positive effect on pupil outcomes

oligopsony and monopsonistic competition in labor markets we argue that models of oligopsony or monopsonistic competition provide insights and explanation for many empirical phenomena in labor markets using a simple model with job differentiation and preference heterogeneity we illustrate how such models can be employed to explain the existence of wage dispersion the persistence of labor market discrimination market failures in the provision of training and the anomalous employment effects of minimum wages

effect of immigrant nurses on labor market outcomes of us nurses we study the effect of immigration of foreign trained registered nurses rns on the employment and wages of us trained rns we use the area approach and study effects of immigration in labor markets defined by the state we find substantial evidence that immigration by foreign trained nurses increases the supply of nurses and that this increase in supply is associated with a decrease in annual earnings estimates suggest that a 10 percent increase in supply due to immigration is associated with a one to four percent decrease in annual earnings

relative wages efficiency wages and keynesian unemployment while modern economic theorists have produced a variety of explanations for the failure of wages to fall in the face of unemployment keynes emphasis on relative wages has not been reflected in most contemporary discussions this short paper suggests that relative wage theories in which workers productivity depends primarily on their relative wage provide the best available apparatus for understanding actual unemployment and its fluctuations such theories are very closely related to the efficiency wage theories that have received widespread attention in recent years this abstract was borrowed from another version of this item

the effect of city size on the urban income distribution through time 1950 70 in the literature on the urban income distribution two important questions have been ignored first is the question of the appropriateness of hypotheses testing on samples of smsas with broad ranges of populations sizes the second question is the stability of the effects of city size and other determinants on the urban income distribution through time this stability is crucial to the propriety of drawing policy implications from previous studies which have employed data from only a single point in time this study finds that hypotheses tests are sensitive to the size classes of cities being examined and hence the results of hypotheses tested for smsas with broad ranges of population may be misleading the present analysis also reveals that significant structural changes have taken place in the standard linear model over time and therefore inferences regarding the future from past studies should be viewed with caution

male female income distributions city size and urban characteristics canada 1970 1980 the separate effects of city size on male and female income distributions are analyzed using canadian data for the period 1970 1980 the results indicate that cities with greater male income equality do not necessarily exhibit greater female equality further the variables which contribute to equality for males are different from those for females excerpt

efficiency wage models of unemployment keynesian economists hold it to be self evident that business cycles are characterized by involuntary unemployment but construction of a model of the cycle with involuntary unemployment faces the obvious difficulty of explaining why the labor market does not clear involuntarily unemployed people by definition want to work at less than the going wage rate why don t firms cut wages thereby increasing profits

the kuznets curve and the great u turn income inequality in u s counties 1970 to 1990 the authors examine the determinants of inequality in the distribution of family income in approximately 3 100 counties of the united states in 1970 1980 and 1990 such a study provides a window on global trends in social inequality during the period which spans the tail end of the kuznets curve and the more recent upswing in income inequality results from random effects regression models that control for unmeasured heterogeneity among states reveal the continued importance of the kuznetsian pattern of declining inequality with economic development a positive effect of urbanization on inequality a declining positive impact of sector dualism an increasing positive effect of educational heterogeneity and a persistent effect of racial dualism several variables associated with the recent upswing in inequality have significant effects female labor force participation negative female headed households positive percent of the population over age 65 changes from positive to negative over the period manufacturing employment negative and unemployment ambiguous they also discuss methods of estimating the gini coefficient for income inequality at the county level and measures of sector farm nonfarm dualism racial black white dualism and educational heterogeneity

monopsony in the labor market this paper surveys recent theoretical and empirical research on monopsony in labor markets broadly defined as upward sloping labor supply to an employer we compare older monopsony models based on small numbers of employers with newer models based on labor market frictions such as moving costs and search we also compare older econometric approaches that focus on static wage concentration relationships with newer approaches that focus on dynamics our review of empirical estimates suggests that monopsony power based on small numbers of employers is probably rare but occasionally large while monopsony power based on frictions is probably widespread but small on average

a new economic policy uncertainty index for spain abstract we explore how sensitive is the influential economic policy uncertainty epu index baker et al 2016 to certain key features of the construction methodology our results for the case of spain both as regards the chronology of economic policy related events as well as the effects of uncertainty shocks on the economy show the relevance of fine tuning two key methodological choices i the richness of the keywords and expressions used and ii the newspaper coverage thus our results are not to be read only as regards the case under study spain but rather convey a more general message

the effects of overtime pay regulation on worker compensation proponents claim that a statutory overtime premium by raising the relative cost of overtime may encourage firms to substitute employment for overtime hours the author argues that there will be no real effects if firms reduce straight time wages so as to offer the same package of weekly compensation and hours of work that was acceptable initially empirical analysis suggests that wage differentials do arise to mitigate the purely demand driven effects predicted by previous models but these differentials are not large enough to neutralize overtime pay regulation completely copyright 1991 by american economic association

for love or money or both this paper explores the implications for economic analysis societal well being and public policy of the movement of care services such as child and elder care from home to market a broad empirical overview sets the stage for the argument that this process cannot be properly evaluated using only a priori judgments about the suitability of marketization the context in which markets operate is crucial and while the growth of market provision poses some risks it also offers some potential benefits

urban diversity and economic growth at the risk of some simplification it is possible to identify four periods of intense study of cities by economists each of these has led to an increased understanding of the economics of urban areas and the unique role played by cities in the modem economy the first of these periods occurred in the decade after world war i only about ten years after the truck revolutionized the transport of goods within urban areas this period included the first systematic empirical analysis of the forces affecting the location of firms and households within cities robert murray haig 1926 and a number of other microeconomists at columbia analyzed the spatial pattems of manufacturing activity in lower manhattan and in the rest of new york city haig jmd his colleagues devoted considerable attention to where things belong in an urban area p 402 providing the first systematic economic analysis of urban spatial structure for example they analyzed the garment industry concluding that it was destined by nature to disperse north of 14th street and predicting that it would follow the estabhshed spatial pattem of the cooperage barrelmaking industry standardization in size and quality of barrels had meant that identical barrels could be made throughout the new york metropolitan area even in new jersey and the introduction of the truck meant that they could be transported cheaply throughout the region and exported the second of these periods though not in chronological order began in the mid 1960s it formalized many of the insights about location incentives within urban areas which had been uncovered a half century before mixed them with the logic of heinrich von thunen s 1826 ancient theories about agricultural crops and land values and applied them to the hotisehold sector the works of william alonso 1964

monopsony power pay structure and training although interest in monopsonistic influences on labor market outcomes has revived in recent years only a few empirical studies provide direct evidence on this topic in this article the authors analyze the effect of monopsony power on pay structure using a direct measure of labor market thinness the authors find evidence of monopsony power as firms facing fewer local competitors offer lower wages to skilled labor and trainees but not to unskilled labor the findings have important implications for the economic theory of training as most recent models assume monopsonistic pay setting for skilled labor but not for trainees

match bias in wage gap estimates due to earnings imputation about 30 of workers in the current population survey have earnings imputed wage gap estimates are biased toward zero when the attribute being studied e g union status is not a criterion used to match donors to nonrespondents an expression for match bias is derived in which attenuation equals the sum of match error rates attenuation can be approximated by the proportion with imputed earnings union wage gap estimates with match bias removed are presented for 1973 2001 estimates for recent years are biased downward 5 percentage points bias in gap estimates accompanying other non match criteria public sector industry etc is examined

female voting power the contribution of women s suffrage to the growth of social spending in western europe 1869 1960 women s suffrage was a major event in the history of democratization in western europe and elsewhere public choice theory predicts that the demand for publicly funded social spending is systematically higher where women have and use the right to vote using historical data from six western european countries for the period 1869 1960 we provide evidence that social spending out of gdp increased by 0 6 1 2 in the short run as a consequence of women s suffrage while the long run effect is three to eight times larger we also explore a number of other public finance implications of the gender gap

are foreign trained nurses perfect substitutes for u s trained nurses the authors investigate whether foreign and u s trained nurses are substitutes by studying the differences in their wages and whether wage differentials respond to relative supplies of foreign and u s trained nurses regression estimates suggest that foreign trained nurses without a bachelor s degree enjoy a wage premium of 1 to 3 over similar u s trained nurses after adjusting for demographic workplace work type and geographic differences but no wage difference remains among those with a bachelor s degree for all nurses combined the wage difference is modest and statistically insignificant this result suggests that foreign and u s trained nurses are equally productive and close substitutes the authors also test explicitly for whether foreign and u s trained nurses are substitutes and cannot reject the hypothesis that they are

unions and hospitals some unresolved issues abstract this article investigates the impact of unions on the wages of hospital workers our ols findings agree with previous ols studies unions increase registered nurses rns wages by five percent and by about eight to ten percent for other hospital workers by contrast we find after correcting for selectivity bias in hospital unionization status a direct union effect of about twenty percent on rn wages and in excess of thirty percent on wages of other hospital workers while the results based on selectivity bias adjustments make us uneasy we do not reject them out of hand we also find indirect union effects up to five percent by other unionized occupations within a hospital and up to ten percent by other unionized hospitals in the local labor market prospective reimbursement programs have a negative impact on the wages of hospital workers but are only significant for non unionized occupations our three empirical tests of monopsony all reject the view that monopsony is a factor in hospital wage setting even considering the large union effects based on selectivity bias adjustment we conclude that unions have been a minor contributor to hospital cost inflation

training opportunities in monopsonistic labour markets this paper studies the empirical relationship between the extent of monopsonistic power observed in occupational labour markets and the training opportunities available to workers in those markets