sovereign default risk and volatility abstract in a model of sovereign debt with endogenous default we find a non monotonic relationship between default risk and volatility reflecting a trade off between prudence and the insurance value of default we show that this feature also holds in the data

inflation and the fiscal limit abstract we use a rational expectations framework to assess the implications of rising debt in an environment with a fiscal limit the fiscal limit is defined as the point where the government no longer has the ability to finance higher debt levels by increasing taxes so either an adjustment to fiscal spending or monetary policy must occur to stabilize debt we give households a joint probability distribution over the various policy adjustments that may occur as well as over the timing of when the fiscal limit is hit one policy option that stabilizes debt is a passive monetary policy which generates a burst of inflation that devalues the existing nominal debt stock the probability of this outcome places upward pressure on inflation expectations and poses a substantial challenge to a central bank pursuing an inflation target the distribution of outcomes for the path of future inflation has a fat right tail revealing that only a small set of outcomes imply dire inflationary scenarios avoiding these scenarios however requires the fiscal authority to renege on some share of future promised transfers

stochastic growth a duality approach abstract we re examine the representative agent s optimal consumption and savings under uncertainty in the presence of investment constraints using martingale representation and convex analysis techniques this framework allows us to explicitly quantify precautionary savings which induces a higher average growth rate than in a certainty setup we provide a closed form solution for a cobb douglas economy the effect of uncertainty on portfolio selection is analyzed consumption growth rate and risk free interest rate exhibit a u shaped relationship uncertainty negatively affects expected consumption growth rate such a result seems to be supported by empirical evidence

inflation uncertainty and growth in a cash in advance economy abstract this paper analyzes the effects of inflation variability on economic growth in a model where money is introduced via a cash in advance constraint in this setting we find that inflation adversely affects long run growth even when the cash in advance constraint applies only to consumption at the same time we find that inflation and growth are positively related in the short run furthermore variability increases average growth through a precautionary savings motive since inflation and inflation variability tend to be highly correlated the presence of uncertainty attenuates the negative long run relationship between inflation and real growth it also provides a partial rationale for the apparent lack of robustness in cross country regressions of growth and inflation

globalization and gender wage inequality in china summary this paper uses an enterprise population level dataset to investigate the link between globalization and gender inequality in the chinese labor market we find that foreign and exporting firms employ more female workers than domestic nonexporters foreign participation and export orientation within the same region and industry significantly encourage female employment and reduce the gender wage gap furthermore we show that while a large gender wage gap exists for foreign and exporting firms it mainly reflects the difference in gender productivity gender wage discrimination is observed only among private nonexporting firms overall our results highlight the importance of globalization in encouraging female employment and reducing gender discrimination

interorganizational determinants of promotion client leadership and the attainment of women attorneys explanations of gender inequality typically emphasize individual characteristics the structure of internal labor markets or pressures from the institutional environment extending the structuralist and institutional perspectives this article argues that the demographic composition of an organization s exchange partners can influence the demographic composition of the focal organization when the focal organization is dependent upon its partners specifically law firms with women led corporate clients increase the number of partners who are women attorneys data on elite law firms and their publicly traded clients support a bargaining power hypothesis whereby law firms promote women attorneys when their corporate clients have women in three key leadership positions general legal counsel chief executive officer and board director these effects are stronger when the law firm has few clients reinforcing the hypothesis that interorganizational influence is more vital when a focal organization is depe

commodity price volatility and world market integration since 1700 abstract poor countries are more volatile than rich countries and this volatility impedes their growth furthermore commodity prices are a key source of that volatility this paper explores price volatility since 1700 to offer three stylized facts commodity price volatility has not increased over time commodities have always shown greater price volatility than manufactures and world market integration breeds less commodity price volatility thus economic isolation is associated with much greater commodity price volatility while world market integration is associated with less

policy variability and economic growth this paper explores the effect of policy variability or frequency of regime switching on economic growth and welfare we study a one sector growth model where investment can be subsidized at either a positive rate or not subsidized at all we find that the lack of persistence in policies per se need not be welfare reducing and that it is likely to decrease growth higher variability implies more frequent changes in consumption and investment but by creating a stronger intertemporal link across regimes variability reduces the fluctuation in investment rates thus decreasing the magnitude of changes in consumption and increasing welfare

risk taking global diversification and growth this paper develops a continuous time stochastic model in which international risk sharing can yield substantial welfare gains through its effect on expected consumption growth the mechanism linking global diversification to growth is an attendant world portfolio shift from safe low yield capital to riskier high yield capital the presence of these two types of capital captures the idea that growth depends on the availability of an ever increasing array of specialized hence inherently risky production inputs calibration exercises using consumption and stock market data imply that most countries reap large steady state welfare gains from global financial integration copyright 1994 by american economic association

on the job search the case of nevada test site contractor employees the us nuclear testing moratorium has reduced employment levels at the nevada test site nts this study analyses the incidence duration and determinants of on the job search activity of nts employees who expect permanent job losses empirical results support theoretical predictions originating from search theory and suggest that high skilled white collar workers are the most likely to search while employed and therefore are the least likely to face severe dislocation problems

unfunded liabilities and uncertain fiscal financing we develop a rational expectations framework to study the consequences of alternative means to resolve the unfunded liabilities problem the projected exponential growth in federal social security medicare and medicaid spending with no known plan for financing the transfers resolution requires specifying a probability distribution for how and when monetary and fiscal policies will change as the economy evolves through the 21st century beliefs based on that distribution determine the existence of and the nature of equilibrium we consider policies that in expectation combine reaching a fiscal limit some distorting taxation modest inflation and some reneging on the government s promised transfers in the equilibrium inflation targeting monetary policy and debt targeting tax policy cannot anchor expectations on those target variables expectational effects are always present but need not have large impacts on inflation and interest rates in the short and medium runs in the economy s stationary distribution the capital stock may grow or shrink and substantial probability falls on little or no reneging

ready for capital account convertibility abstract this paper investigates whether the impact of capital account convertibility on the long term volatility of economic growth depends on financial development it estimates a system of three simultaneous equations mean growth volatility of growth and financial development this allows for the study of both the impact of capital account liberalization on volatility as well as its direct impact on financial development results indicate that economies with low financial development fall prey to excess volatility arising from capital account openness while capital account openness itself has a significant positive impact on financial development the results are robust to alternative measures of financial development and volatility and to the removal of outliers

export diversification through resource based industrialization the case of natural gas for small resource rich developing economies specialization in raw exports is usually considered to be detrimental to growth and resource based industrialization rbi is often advocated to promote export diversification this paper develops a new methodology to assess the performance of these rbi policies we first formulate an adapted mean variance portfolio model that explicitly takes into consideration i a technology based representation of the set of feasible export combinations and ii the cost structure of the resource processing industries second we provide a computationally tractable reformulation of the resulting mixed integer nonlinear optimization problem finally we present an application to the case of natural gas comparing current and efficient export oriented industrialization strategies of nine gas rich developing countries

policy variability productive spending and growth in this paper i present two models with policy variability arising from randomness in the provision of productive public spending in the first model public spending enters as an input in output production in this case i find that the relationship between policy variability and growth depends critically on the technological parameters of the production function in the second model public spending enters as an input in the education sector of the economy in this case i find that policy variability retards growth as individuals respond to increased uncertainty by actually reducing rather than increasing their investment in human capital

the effect of worker mobility on compensating wages for earnings risk the effects of worker mobility on the payment of compensating wage differentials for earnings risk are examined previous research consistently finds compensating wages are paid to workers facing earnings uncertainty however job shopping models suggest that if workers have sufficient mobility they may prefer uncertain situations here simultaneous equations are estimated where both wages and worker mobility are endogenous to examine whether workers with greater uncertainty have greater mobility and whether workers with greater mobility receive lower compensating wage differentials results indicate that workers facing more uncertainty have a greater degree of mobility also workers with greater mobility receive lower compensation for income uncertainty although on average this compensation is positive these results are consistent with the traditional model predictions and supportive of job shopping models

commodity trade and international risk sharing how much do financial markets matter abstract this paper evaluates the social gains from international risk sharing in some simple general equilibrium models with output uncertainty a simulation model calibrated to selected moments of u s and japanese data estimates the incremental loss from a ban on international portfolio diversification to be on the order of 0 20 percent of output per year even the theoretical gains from asset trade may disappear under alternative sets of assumptions on preferences and technology the paper argues that the small magnitude of potential trade gains may help explain the apparently inconsistent findings of empirical studies on the degree of international capital mobility

the wage effects of voluntary labor mobility with and without intervening unemployment this study investigates how an unemployment spell between jobs affects a job changer s new wages one hypothesis holds that the search and mobility costs associated with unemployment between jobs are compensated for by increased wage gains resulting from more intensive job search opposing hypotheses are that unemployed job changers are at a disadvantage because they have fewer job contacts than job changers who move directly from one job to another or because they are unable to gain new skills or develop good work habits while unemployed the results of this analysis of 1979 81 data from the national longitudinal survey of young men support the first hypothesis an unemployment spell between jobs is associated with wage gains higher than those obtained when the job change was made with no intervening unemployment

how well do linear approximation methods work abstract in this paper we investigate the accuracy of approximating policy functions for three different approximation methods in the context of a neoclassical model with a production tax we find that a variant of the king plosser and rebelo procedure yields the best approximations overall but that in certain instances researchers may be better off using a discrete state space solution to the euler equations of the model

the impact of terms of trade and real exchange rate volatility on investment and growth in sub saharan africa abstract specialization in primary product exports reduces growth but why adverse trends in and the high variance of primary product prices are possible explanations the impact on investment and growth of the level and volatility of the terms of trade and the real effective exchange rate is estimated for a panel of 14 sub saharan african countries over 1980 1995 growth is negatively affected by terms of trade instability and investment by real exchange rate instability both growth and investment increase when the terms of trade improve and real exchange rate overvaluation is eliminated

complicated dynamics in a flow model of the labor market abstract we develop a worker flow model with a nonlinear and endogenous outflow rate from unemployment inconsistent claims on the output lead to changing inflation rates which feedback on job offers through the real money supply via simulations one can show that the nonlinear outflow rate causes asymmetric adjustment of unemployment to the equilibrium rate of unemployment in addition and depending on the parameters the equilibrium rate of unemployment may also become locally unstable then there is a downward sloping phillips curve but no trade off between unemployment and inflation in the short run as there is none in the long run

the dynamics of investment projects evidence from peru abstract we analyse the effect of commodity price cycles on firm investment decisions at the project level by considering the decision to delay cancel or complete a project as initially announced in particular we use logit and duration models of competing risks on a novel dataset of announced investment projects in peru from different economic sectors the empirical framework for the timing of investment is motivated by real option models for projects that take time to build with commodity prices used as a proxy of expected future income and their volatility as a proxy for uncertainty our results suggest that both a reduction in commodity prices and a reduction in their volatility increase the probability to delay investment in the mining sector this result is in line with a number of real option models with time to build in other sectors delays in implementation occur more often in periods of high volatility probability regressions under a competing risk framework suggest that higher commodity prices lead to a higher probability of completion in all sectors of the economy

inflation volatile public spending and endogenously sustained growth i construct a model of an economy whose government finances volatile public spending via money creation the model jointly accounts for the emergence of some well known empirical observations specifically it predicts a negative correlation between output growth and policy volatility furthermore given that both the mean and the variance of the inflation rate are elevated by fluctuations in public spending the model provides a novel theoretical justification for the simultaneous negative correlation of long run growth with both average inflation and inflation variability the model also supports the view that policy volatility reduces social welfare

preunemployment job search and advance job loss notice preunemployment search is the fundamental labor market process generating beneficial effects of advance notice yet theory indicates that workers receiving notice may not search whereas others may search even without advance notice our weighted results indicate that over one third of all nonnotified workers still search and over 40 of workers receiving notice do not respond by searching further preunemployment search determinants differ for notified nonnotified workers and men women for notified men search is strongly increased by longer notice and strongly decreased by higher unemployment insurance benefits but neither factor affects the employed search decisions of notified women

on the ineffectiveness of tax policy in altering long run growth harberger s superneutrality conjecture abstract in 1964 harberger conjectured that although theory predicts that changes in tax rates affect investment and growth in the long run in practice tax policy is an ineffective instrument to influence growth this paper provides theoretical and empirical evidence in favor of this view the growth effects of tax policy in the class of endogenous growth models driven by human capital accumulation are examined and numerical simulations of these models confirm the results harberger predicted cross country panel regressions estimated using a new method for measuring effective tax rates produce significant investment effects from taxes that are consistent with negligible growth effects these results are robust to the introduction of other growth determinants

the returns to mobility and job search by gender using data from the national longitudinal survey of youth the authors estimate the returns to job search mobility and the interaction of search and mobility for young men and women they find st

an empirical test of the theory of on the job search preunemployment search is the fundamental labor market process generating beneficial effects of advance notice yet theory indicates that workers receiving notice may not search whereas others may search even without advance notice our weighted results

oil and the macroeconomy since world war ii all but one of the u s recessions since world war ii have been preceded typically with a lag of around three fourths of a year by a dramatic increase in the price of crude petroleum this does not mean that oil shocks caused these recessions evidence is presented however that even over the period 1948 72 this correlation is statistically significant and nonspurious supporting the proposition that oil shocks were a contributing factor in at least some of the u s recessions prior to 1972 by extension energy price increases may account for much of post opec macroeconomic performance

terms of trade uncertainty and economic growth abstract this paper examines a stochastic endogenous growth model in which terms of trade uncertainty affects savings and growth the model explains the well known positive link between growth and the mean rate of change of terms of trade and predicts also that terms of trade variability affects growth increased terms of trade variability results in faster or slower growth depending on the degree of risk aversion but in either case it reduces social welfare these growth effects imply that welfare costs of macroeconomic uncertainty are much larger than first thought cross country panel regressions provide strong support for the model s key predictions

the terms of trade and the current account the harberger laursen metzler effect the paper examines the effect of terms of trade changes on a small country s spending and current account assuming optimizing behavior in an intertemporal framework with perfect international capital mobility a temporary future terms of trade deterioration implies a deterioration improvement of the trade balance whereas a permanent terms of trade deterioration has an ambiguous effect depending on the rate of time preference nominal and real variables are considered via exact price indexes two periods and an infinite horizon are examined

current account dynamics and the terms of trade harberger laursen metzler two generations later this is a study of the current account dynamics resulting from the savings and investment dynamics in a small open economy which is subject to exogenous changes in its terms of trade and in world interest rates anticipated and unanticipated as well as temporary and permanent terms of trade changes have very different effects there is however a general tendency towards cycles in both savings and investment which gives rise to cycles in the current account it is shown that the classic harberger laursen metzler effect on saving of a terms of trade deterioration can have any sign for plausible parameter values both for temporary and permanent disturbances

self imposed term limits in reconciling voters behavior with legislative term limits dick and lott argue that since more senior representatives are better at rent seeking there is an inefficient tendency to re elect incumbents in their model term limits are preferred collectively by constituencies even though no constituency would independently oust its incumbent representative however many term limits are unilaterally self imposed in particular the 22nd amendment limiting presidents terms to two and their model cannot explain these limits in this comment i suggest that term limits may be self imposed by risk averse voters who prefer cycling between left and right wing candidates to a once and for all election that imposes a candidate of a single ideology on the entre electorate the market failure that makes term limits helpful is that out of power minorities cannot bribe the median voter

term limits causes and consequences this paper consults multiple literatures to specify andevaluate the economic rationales for term limitation particularly on congress i first consider theories that aroseto explain among related issues why individual states mightunilaterally self impose term limits on their own delegationsto congress next i consider two main lines of argument foruniversal limits both of which begin with the empiricalphenomenon of high and rising congressional tenure first supporters of term limits argue that higher tenure biaseslegislatures toward inefficiency big government highspending second higher tenure creates inefficient anti competitive conditions in the legislative election market term limitation would remedy these inefficiencies by virtue ofdecreasing average tenure these claims are then evaluated inlight of the evidence amassed in the literature based on theliterature reviewed this paper finds that while term limitswill reduce average tenure there is no evidence to suggestthat term limits will affect the underlying causes of theseinefficiencies further research on a more general reform which would strike deeper at these underlying causes isimplied

explaining saving investment correlations national saving and investment rates are highly positively correlated in virtually all countries this is puzzling as it apparently implies a low degree of international capital mobility this paper shows that the observed positive correlation between national saving and investment rates arises naturally within a quantitatively restricted equilibrium model with perfect mobility of financial and physical capital the model is consistent with the fact that saving investment correlations are larger for larger countries but are still substantial for small countries further the model is consistent with the finding that current account deficits tend to be associated with investment booms copyright 1993 by american economic association

terms of trade risk with partial labor mobility abstract we examine the welfare consequences of terms of trade risk in a small open economy in which it is costly for workers to move between sectors relocation costs lead to partial labor mobility sectoral wage gaps and income risk exceeding that of an economy in which relocation is costless using observed wage differentials and standard values for volatility and preferences we find that the welfare cost of partial labor mobility alone is unlikely to be very large even in the absence of self insurance arrangements in addition modest consumption substitution elasticities significantly reduce these welfare costs

commodity prices and bank lending we analyze the transmission of changes in commodity prices to bank lending in a large sample of developing countries a bank level analysis shows that a fall in commodity net export prices is associated with a reduction of bank lending particularly for commodity exporters and during episodes of terms of trade decline we complement this analysis with loan level data from a credit register which allows us to identify the effect of a commodity price shock on the supply of credit controlling for unobserved factors that could drive borrowers credit demand results show that banks with relatively lower deposits and poor asset quality transmit the changes in commodity prices to lending more aggressively jel f30 f34 g21 q02

who pays the price of brokerage transferring constraint through price setting in the staffing sector this article analyzes how a broker s ability to affect prices and extract superior value from its position has economic consequences for the actors tied to it i argue that intermediaries may exercise partial control in price setting by transferring the price constraints imposed on them by the actors on one side of the market to those on the other side in so doing they generate unequal returns for the brokered parties who then receive different prices due to the nature of the tie between the broker and its other exchange partners i investigate this argument using a novel mix of quantitative and qualitative data gathered from an intermediary in the staffing sector the results show that the broker is able to transfer discounts offered to valued buyers clients on to the sellers workers matched with them instead of reducing its own margins as a result actors with the same resource endowments receive different prices depending on the relationships among other exchange partners in a given triadic ne

underpaid and overworked measuring the effect of imperfect information on wages this paper investigates the degree of shortfall between the wages workers earn and what they could earn assuming perfect or costless information in the labor market we use the stochastic frontier regression technique to estimate the degree of shortfall found in wages on an individual basis the paper tests in addition a number of hypotheses supplied by search theory in this context the results generally confirm the propositions from search theory and indicate that on the average worker wages fall short of worker potential wages by approximately 10 percent

rational contagion and the globalization of securities markets this paper argues that globalization may promote contagion by weakening incentives for gathering costly information and by strengthening incentives for imitating arbitrary market portfolios in the presence of short selling constraints the gain of gathering information at a fixed cost may diminish as markets grow moreover if a portfolio manager s marginal cost for yielding below market returns exceeds the marginal gain for above market returns there is a range of optimal portfolios in which all investors imitate arbitrary market portfolios and this range widens as the market grows numerical simulations suggest that these frictions can have significant implications for capital flows in emerging markets

job search by employed and unemployed youth analysis of data from the new youth cohort of the national longitudinal survey yields evidence that young unemployed job seekers chose higher levels of search effort as measured by number of methods used and time spent per method and lower reservation wages relative to offered wages than did comparable employed job seekers in 1981 these differences in search choices at least partly explain differences in search outcomes between the two groups unemployed searchers apparently were more likely than employed searchers to gain new employment and the wages they obtained were slightly lower the author argues that the greater search effort by unemployed job seekers is due to the higher costs of search they bear because of foregone earnings

the dynamic implications of foreign aid and its variability abstract the paper examines the effects of aid and its volatility on consumption investment and the structure of production in the context of an intertemporal two sector general equilibrium model calibrated using data for aid dependent countries in africa a permanent flow of aid mainly finances consumption rather than investment consistent with the historical failure of aid inflows to translate into sustained growth large aid flows are associated with higher real exchange rates and smaller tradable sectors because aid is a substitute for tradable consumption aid volatility results in substantial welfare losses providing a motivation for recent discussions of aid architecture stressing the need for greater predictability of aid these results are also consistent with evidence from cross country regressions of manufactured exports presented later in the paper

on the job search in a developing country an analysis based on indian data on migrants job search by those who are employed has received increasing attention in recent years in both the theoretical and the empirical literature on labor markets in developed countries much of the interest stems from the observation that job changes often take place without an intervening period of unemployment and that there is a close relationship between searching for a job and quitting the current job also on the job search affects the rate of unemployment during the period between jobs a major preoccupation of the empirical research has been to estimate the returns to on the job search and to test the determinants of job search the bulk of this work uses data for the united states and the united kingdom 2 job search theory has not been empirically tested in the context of a developing country on the job search particularly in the so called informal sector of the urban labor market is an important feature of probabilistic models of migration in developing countries in the vein of michael p todaro and of john r harris and todaro 3 such models hypothesize that individuals migrate to urban centers with the aim of obtaining employment in the formal sector and that informal sector employment is a transitional phase during which migrants are searching for formal sector jobs recent work by gary s fields has formalized the theoretical aspects of this job search process within the framework of a multisector model 4 thus it would be of interest to find out if there are significant differences between developed and developing countries with respect to the determinants of on the job search

assessing the economic vulnerability of small island developing states and the least developed countries macro vulnerability of the small island developing states sids as well as of least developed countries ldcs has been an increasing concern for the international community this has led to the design of an economic vulnerability index evi to assess the structural economic vulnerability resulting from natural or external shocks we first explain how vulnerability affects growth development and poverty reduction particularly in small developing countries we then examine how the evi has been designed and how it can be used to compare sids and ldcs we argue that evi is a relevant tool not only for identification of ldcs but also for geographical aid allocation to favour vulnerable countries including ldcs and sids even though not all sids qualify as ldcs

bending the pipeline executive search and gender inequality in hiring for top management jobs we study the sources of women s underrepresentation in hiring for top management jobs by focusing on the context of executive search using data that include proprietary information on 10 970 individuals considered by a search firm we examine the sources of the low proportion of women placed in senior roles contrary to received wisdom we find limited evidence that demand side screeners strongly contribute to gender disadvantage in this setting what gender differences exist tend to play out at the start of the hiring process and are driven both by supply side and demand side actors once considered for a position women are no less likely than men to be hired though they are slightly less likely to be interviewed by the search firm our findings highlight the theoretical importance of disentangling candidates self steering behavior from the pipeline bending of hiring agents we discuss the implications of our results for understanding gender inequality at upper echelons of the labor market this p

anticipatory sorting and gender segregation in temporary employment we examine the roots of gender segregation in the screening process by using a longitudinal data set of candidates considered for temporary projects at a staffing firm and following their progress through the hiring pipeline theories invoked to explain gender segregation across jobs traditionally rely on firm specific human capital and expectations of future commitment to explain this phenomenon these do not apply in this setting yet we find that the staffing firm is more likely to shortlist women for low paid projects and less likely to do so for high paid ones these effects are due to women being considered for different projects than men and associated at least partially to the level of competition within vacancies although client companies also exhibit some gender sorting behavior in the later steps of the hiring process they are more likely to prefer women and less likely to sort them into lower paid projects our findings are consistent with anticipatory gender sorting mechanisms by which first screeners generate segregation when narrowing down the pool of candidates for later decision makers we discuss the implications of this case for theories of gender stratification and workplace inequality especially in mediated labor markets this paper was accepted by jesper sorensen organizations

the terms of trade the real exchange rate and economic fluctuations this paper examines the relationship between terms of trade and business cycles using a three sector intertemporal equilibrium model and a large multicountry database results show that terms of trade shocks account for nearly one half of actual gdp variability the model explains weak correlations between net exports and terms of trade the harberger laursen and metzler effect and produces large and weakly correlated deviations from purchasing power parity and real interest rate parity terms of trade shocks cause real appreciations and positive interest differentials although productivity shocks have opposite effects the puzzle that welfare gains of international asset trading are negligible is left unresolved copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the influence of pensions on job mobility in this paper we construct a model of the loss of firm specific capital suffered by employees with occupational pensions who change job the simplest loss function may be represented as the product of job tenure and years to retirement estimates of logit equations for individual job search in great britain suggest that the effect of pension status can be satisfactorily captured by this simple loss function these equations and others for job turnover indicate that membership of an occupational pension scheme substantially reduces job mobility

male female wage differentials in job ladders much of the male female wage differential exists because men and women are assigned to different jobs within narrow job categories there is no male female differential only a tortured taste theory of discrimination can reconcile these facts we argue that differential movement along job ladders entails comparative advantage so the ability standard for promotion is higher for women this implies that more able women will be passed over in favor of less able men women assumed to have the same ability distribution as men earn less the differential reflects females lower promotion probability not within job discrimination

on the job search some empirical evidence from britain abstract this paper considers evidence from the labour force survey concerning job search by employed workers the unconditional probability of observing on the job search is decomposed into the product of two constituent probabilities upon which maximum likelihood estimation is performed the analysis facilitates the identification of who searches and whether search takes place in work or from unemployment temporary or part time employment encourages continued search by men but not women skilled workers search more than the unskilled and demonstrate a preference for employed search inter industry wage relativities encourage search on the job job tenure is a significant determinant of the quality of a job match and the subsequent likelihood that on the job search is undertaken employed job seekers adopt search strategies that are more readily integrated into a working environment

vested interests in a positive theory of stagnation and growth we study a positive theory of stagnation and growth aimed at understanding the large variations in growth outcomes across actual economies the theory points to the fundamental role played by vested interests in determining policies which are key to the growth process some agents seek to prevent the adoption of new technologies we develop a model of technology adoption and show how technological innovation may sow the seeds of its own destruction in particular we find that the equilibrium is characterized by a long cycle of stagnation and growth over this cycle incumbents are phased out of the economy will new innovation occur in formalizing our theory we make a methodological contribution by characterizing dynamic voting equilibria when voters must forecast the effects of different current policies on future prices and policy outcomes

separate and unequal occupation establishment sex segregation and the gender wage gap the authors report the first large scale empirical investigation of within job wage differences between men and women in the same occupation and establishment using data first on blue collar and clerical employees from 16 u s industries in 1974 83 and second on employees in 10 professional and administrative occupations the authors report three findings first wage differences at the occupation establishment level were small even without controls for individual level characteristics hence within job wage discrimination was much less important than occupation establishment segregation for observed wage differences second establishment segregation was an important cause although not as important as occupational segregation of wage differences third establishment segregation was extensive as was occupational segregation

on the welfare cost of economic fluctuations in developing countries macroeconomic fluctuations are much stronger in developing countries than in the united states yet while a large literature debates the welfare cost of economic fluctuations in the united states it remains an open question how large that cost is in developing countries using several models we provide such a measure we find that the welfare cost of consumption volatility per se is far from trivial and averages a substantial multiple of the corresponding u s estimate moreover in many poor countries the welfare gain from eliminating volatility may in fact exceed the welfare gain from an additional percentage point of growth forever

an empirical model of employed search unemployed search and nonsearch the 1969 1971 national longitudinal surveys data on young men were used to study the employed worker s choice among employed search unemployed search and not searching for a new job we assume that an unobserved variable search intensity governs this choice such that unemployed search involves a greater intensity than employed search which of course is associated with greater intensity than nonsearch the principal results are that current wages seniority collective bargaining coverage employment outside construction and employment by government are each ceteris paribus negatively associated with search intensity further each of these variables lowers the probability of not searching and raises the probabilities of employed and unemployed job search

competition for talent country and organizational level effects in the internationalization of european higher education institutions this paper analyzes the competition for skilled human resources between european higher education institutions hei through a multi level model predicting their ability to attract foreign researchers predictions of the model are tested on a dataset on internationalization of 601 heis in 8 european countries we show that 1 the model is able to explain a large proportion of the variance in the levels of internationalization of academic staff between heis 2 country factors are more important than heis characteristics in driving internationalization 3 research oriented heis in attractive countries have a larger share of international staff whereas this happens only to a limited extent with similar heis in low attractive countries 4 the association of research orientation with internationalization is mediated by the hei s international network these results have relevant implications for hei s hiring strategies as well as for national policies concerning careers and the mobility of researchers we suggest that policies should be tailored to structural conditions of heis and countries whereas imitating the approaches of highly attractive places might be damaging less attractive countries should rather focus on training and career opportunities for young national researchers as well as on instruments to keep linkages with national expatriates

distributive politics and economic growth a crude distinction between economics and politics would be that economics is concerned with expanding the pie while politics is about distributing it in this paper we analyze the relationship between the two we focus on how an economy s initial configuration of resources shapes the political struggle for income and wealth distribution and how that in turn affects long run growth our main conclusion is that inequality is conducive to the adoption of growth retarding policies we derive this result from a simple political economy model of growth and present cross country evidence consistent with it the key feature of our model is that individuals differ in their relative factor endowments we distinguish between two types of factors an accumulated factor called capital and a nonaccumulated factor called labor growth is driven by the expansion of the capital stock which is in turn determined by individual saving decisions long run growth is endogenous as the aggregate production function is taken to be linearly homogeneous in capital and productive government services taken together the provision of government services is financed by a tax on capital because government services are productive a small tax on

volatility and development why is gdp growth so much more volatile in poor countries than in rich ones we identify four possible reasons i poor countries specialize in more volatile sectors ii poor countries specialize in fewer sectors iii poor countries experience more frequent and more severe aggregate shocks e g from macroeconomic policy and iv poor countries macroeconomic fluctuations are more highly correlated with the shocks of the sectors they specialize in we show how to decompose volatility into these four sources quantify their contribution to aggregate volatility and study how they relate to the stage of development we document the following regularities first as countries develop their productive structure moves from more volatile to less volatile sectors second the level of specialization declines with development at early stages and slowly increases at later stages of development third the volatility of country specific macroeconomic shocks falls with development fourth the covariance between sector specific and country specific shocks does not vary systematically with the level of development we argue that many theories linking volatility and development are not consistent with these findings and suggest new directions for future theoretical work

policy volatility institutions and economic growth abstract in this paper we present evidence that policy volatility exerts a strong and direct negative impact on growth using data for 93 countries we construct measures of policy volatility based on the standard deviation of the residuals from country specific regressions of government consumption on output undisciplined governments that implement frequent and large changes in government spending unrelated to the state of the business cycle generate lower economic growth we employ both instrumental variables and panel estimation to address concerns of omitted variables and endogeneity a 1 standard deviation increase in policy volatility reduces long term economic growth by about 0 74 in the panel regressions and by more than 1 percentage point in the cross section

the cost of business cycles under endogenous growth robert e lucas jr argued that the welfare gains from reducing aggregate consumption volatility are negligible subsequent work that revisited his calculation continued to find small welfare benefits further reinforcing the perception that business cycles do not matter this paper argues instead that fluctuations can affect welfare by affecting the growth rate of consumption i show that fluctuations can reduce growth starting from a given initial consumption which can imply substantial welfare effects as lucas himself observed empirical evidence suggests the welfare effects are likely to be substantial about two orders of magnitude greater than lucas original estimates

who is afraid of political instability abstract an unstable macroeconomic environment is often regarded as detrimental to economic growth among the sources contributing to such instability much of the blame has been assigned to political issues this paper empirically tests for a causal and negative long run relation between political instability and economic growth but finds no evidence of such a relationship sensitivity analysis indicates that there is a contemporaneous negative relationship but also that in the long run and ignoring institutional factors the group of african countries plays the determining role

international real business cycles we ask whether a two country real business cycle model can account simultaneously for domestic and international aspects of business cycles with this question in mind we document a number of discrepancies between theory and data the most striking discrepancy concerns the correlations of consumption and output across countries in the data outputs are generally more highly correlated across countries than consumptions in the model we see the opposite

cumulative gender disadvantage in contract employment women s wages do not grow with experience or tenure as much as men s do many accounts of this cumulative gender disadvantage attribute it to women s underinvestment in firm specific skills yet if that were true this disadvantage would not exist where firm specific skills are not rewarded by the labor market this article investigates this argument in the context of contract employment where demand for firm specificity is minimal contrary to expectations men still receive higher rewards than women over time drawing on quantitative evidence and qualitative fieldwork using job histories of high skill contractors affiliated with a staffing firm the author finds support for two sources of women s disadvantage lower rates of movement across clients on the supply side and unmeasured demand side factors by which similar levels of tenure and client transitions accrue lower rewards to women implications for research on gender stratification and career advancement in nonformalized labor markets are discussed

policy uncertainty and long run investment and output across countries i present a model economy where policy uncertainty creates short term bias in investment and leads to a higher capital price and lower long run investment and output i conduct a calibration exercise using a set of industry level investment data across countries between the lowest income and the highest income countries policy uncertainty can account for capital price and investment level differences by a factor of about 3 and for the output level difference by a factor of about 2 copyright economics department of the university of pennsylvania and the osaka university institute of social and economic research association

winners and losers in the commodity lottery the impact of terms of trade growth and volatility in the periphery 1870 1939 abstract most countries in the periphery specialized in the export of just a handful of primary products for most of their history some of these commodities have been more price volatile than others and those with more volatility have grown much more slowly relative to the industrial leaders and to other primary product exporters this fact helps explain the growth puzzle noted by easterly kremer pritchett and summers more than a decade ago that the contending fundamental determinants of growth institutions geography and culture exhibit far more persistence than do the growth rates they are supposed to explain using a new panel database for 35 countries this paper estimates the impact of terms of trade volatility and secular change on country performance between 1870 and 1939 volatility was much more important for growth than was secular change and accounts for a substantial degree of the divergence in incomes within the sample of small commodity dependent periphery nations as well as under performance of the periphery as a whole relative to such nations as the us and western europe or core one channel of impact seems to be the adverse effect of volatility on foreign investment it appears that the terms of trade effects were asymmetric between core and periphery