search unemployment and the production of jobs the authors investigate the performance of the economy when search is required to find employment and when the duration of unemployment varies across sectors they assume that in one sector factor markets are frictionless while in the other se ctor idle factors of production must actively search each other out i n order to produce they focus on how well the economy allocates work ers across sectors and the conditions under which the factor mix with in a sector is correct the authors demonstrate that in equilibrium t he search sector is too small and its factor intensity is too asymmet ric copyright 1987 by royal economic society

monopoly rent seeking under conditions of uncertainty in recent years economists have come to recognize that the competition to obtain monopoly rents i e rent seeking may consume resources whose value greatly exceeds that associated with traditionally measured deadweight welfare loss triangles tollison 1982 early articles by tullock 1967 krueger 1974 and posner 1975 all concluded that this competition would exactly dissipate the rents sought later articles by tullock 1980 and baysinger and tollison 1980 modified that original conclusion the present paper develops a model which raises further doubts about the complete transformation of rents into costs the emphasis of the analytical framework presented is on the implications of the fact that rent seekers may typically be uncertain about being able to maintain a monopoly position even if they are initially successful in attaining one it is demonstrated that when there is even a moderate level of uncertainty about retention the likely effect will be a relatively large reduction in the magnitude of resources invested in rent seeking activities in addition it is shown that the size of this waste of resources depends somewhat on the extent to which rent seeking opportunities involve once and for all transfers as opposed to flows of rents finally in those cases where a flow of rents is at stake it is shown that considerable social waste might be eliminated through institutional changes which would reduce the subjective probabilities of potential monopolists retaining their rent streams once attained

choosy search and the mismatch of talents this article proposes a multi sector matching model where workers have symmetric sector specific skills and the search market is segmented by sector workers choose the range of markets they are willing to participate in i identify a composition externality workers do not take into account the impact of their choice on sector specific mean productivity among the pools of job seekers consequently workers prospect too many market segments and there is room for public policy even when the so called hosios condition holds

taxation in a two sided search model abstract this paper analyzes the effects of wage and profit taxation in a simple search and bargaining model wage tax effects depend upon the level of unemployment benefits if unemployment benefits are less than search costs or if benefits are taxed as income then a wage tax decreases unemployment it also decreases the wage thereby overshifting the tax burden profit tax effects depend upon job entry in the short run with a fixed number of jobs filled jobs plus vacancies a profit tax decreases unemployment it also raises the wage again overshifting the tax in the long run the converse holds

how does women s life satisfaction respond to retirement a two stage analysis we quantify the adjustment of women s life satisfaction to retirement as a two stage process the transition to retirement leads to an immediate increase in women s life satisfaction after becoming retired their life satisfaction declines with the duration of retirement

the strategic equivalence of rent seeking innovation and patent race games abstract we establish the strategic equivalence of a variety of rent seeking contests innovation tournaments and patent race games the results allow us to disentangle negative and positive externalities and to apply theorems and results intended for rent seeking games to other games and vice versa we conclude with several examples that highlight the practical utility of our results

l etranger status property rights and investment incentives in cote d ivoire this study uses data from cote d ivoire to show that outsider households have relatively small land holdings and less complete rights over land than locals it then demonstrates a link between property rights and investment incentives by looking at the decision to leave land fallow outsiders fallow a smaller proportion of their land indicating that their farms are left uncultivated for shorter periods this is only partly explained by their incomplete property rights and relative land poverty these differences in investment patterns lead to lower yields per hectare jel o12 q15

the council of economic advisors from stabilization to resource allocation this paper traces the changing role of the council of economic advisers in the 50 years since its creation the cea s focus has shifted from the design of policies to achieve full employment to one of advising on the much enlarged spending and tax activities of the federal government the cea s original attention to achieving cyclical stability through fiscal policy diminished as economists changed their views about the inherent stability of the economy and the usefulness of fiscal policy with the shift of macroeconomic policy to the federal reserve the cea s macroeconomic role has diminished but not disappeared the rapid growth of government spending during the past five decades has greatly increased the role for the cea in seeking efficient resource allocation this abstract was borrowed from another version of this item

unravelling of dynamic sorting we consider a two sided finite horizon search and matching model with heterogeneous types and complementarity between types the quality of the pool of potential partners deteriorates as agents who have found mutually agreeable matches exit the market when search is costless and all agents participate in each matching round the market performs a sorting function in that high types of agents have multiple chances to match with their peers however this sorting function is lost if agents incur an arbitrarily small cost in order to participate in each round with a sufficiently rich type space the market unravels as almost all agents rush to participate in the first round and match and exit with anyone they meet copyright 2005 wiley blackwell

retirement effects on health in europe what are the health impacts of retirement as talk of raising retirement ages in pensions and social security schemes continues around the world it is important to know both the costs and benefits for the individual as well as the governments budgets in this paper we use the survey of health ageing and retirement in europe share dataset to address this question in a multi country setting we use country specific early and full retirement ages as instruments for retirement behavior these statutory retirement ages clearly induce retirement but are not related to an individual s health exploiting the discontinuities in retirement behavior across countries we find significant evidence that retirement has a health preserving effect on overall general health our estimates indicate that retirement leads to a 35 percent decrease in the probability of reporting to be in fair bad or very bad health and an almost one standard deviation improvement in the health index while the self reported health seems to be a temporary impact the health index indicates there are long lasting health differences

the strategic bequest motive although recent research suggests that intergenerational transfers play an important role in aggregate capital accumulation our understanding of bequest motives remains incomplete we develop a simple model of strategic bequests in which a testator influences the decisions of his beneficiaries by holding wealth in bequeathable forms and by conditioning the division of bequests on the beneficiaries actions the model generates falsifiable empirical predictions that are inconsistent with other theories of intergenerational transfers we present econometric and other evidence that strongly suggests that bequests are often used as compensation for services rendered by beneficiaries

healthier when retiring earlier evidence from france this paper contributes to the literature on the health retirement relationship by looking at the effect of retiring before legal age on health in later life in france to account for the endogeneit

a transition cost rationale for transition of the firm within the family this paper is about the transition of ownership of shares in small and medium sized enterprises smes within the family i e from parents to children in spite of the fact that such successions are rather prevalent among smes there are no explanations in the literature as to why transitions are preferred to outright sale in this paper we assume that the decisive factor in the choice of succession mode is the desire for efficiency expressed as the highest possible firm value a firm should stay in the family if this is the most profitable transition alternative one reason for intergenerational succession to be the most profitable alternative is knowledge idiosyncrasy however the benefits of knowledge idiosyncrasy cannot be reaped without an institutional framework that constrains human activities in a proper way a part of an institutional framework are the laws that act as constraints in successions do these laws foster or prevent efficient transition of family firms this question is addressed in a study of the swedish inheritance and inheritance tax laws in the light of the policy recommendations on succession made by the european commission

schumpeterian competition in experimental markets abstract we report on a series of laboratory experiments that capture key elements of research and development r d rivalry the experimental environment has a small number of sellers who compete in terms of pricing and production decisions and in terms of cost reducing r d rewards for innovation depend on the profitability of product market competition the experiments capture a kind of dynamic schumpeterian competition there is a sharp contrast in experimental results between monopolies and four seller competitive markets aggregate r d is higher under competition than under monopoly and prices follow marginal cost reductions much more quickly under competition than under monopoly the paper examines market performance in the experiments and the sources of market performance problems

learning by doing vs learning about match quality can we tell them apart understanding the accumulation of match specific capital is crucial in shedding light on the reasons for the prevalence of long term employ ment relationships and on the welfare consequences of turnover in the labor market one of the most important source of match specific capital is human capital acquired through match specific learning such learn ing can take on two distinct forms in the first case workers accumulate match specific human capital through learning by doing in the second case a worker and a firm in an employment relationship learn about the quality of the match over time thereby acquiring valuable information i construct a structural model that embeds these two learning explana tions i show that it is possible to distinguish the two explanations given turnover data on employing firms coupled with data on workers such data now exist in the form of matched employer employee data sets i use a matched french data set to estimate the structural model using the efficient method of moments a simulation based estimation method i find that while learning by doing could be present in the first few months of an employment relationship learning about match quality dominates at tenures above half a year this finding has important consequences for economists understanding of the sources of match specific capital and for the desirability of policies that alter the incentives for turnover for workers of different tenure

the credibility of economic advice to government in a challenging paper frey and eichenberger f e i992 have argued that economists react to relative prices in their capacity as scholars the competitive american academic market drives them to specialize in publishing abstract papers in narrow neoclassics the closed european markets induce economists to be theoretically broad and to specialize with respect to institutions they engage more in advising and practical politics they contend that european economists have a proud performance with respect to practical policymaking more controversial is their prediction that the differences will narrow as a result of european integration for that will increase the size of the academic market and increase competition between academics and thereby make the evaluation of academic output in the form of published work a more important indicator of the quality of an economist s output the authors offer empirical support for their conclusions which i do not dispute but while i believe their observations offer a useful point of departure for the discussion of the place of advice giving in the composition of economists odtput there are two qualifications to it which strike me as important the first is that professional output and advice output display elements of complementarity in my experience much advice giving requires not only a broad knowledge of economic analysis but often specialised knowledge in areas in which one may have made a contribution indeed the very experience of advice giving may improve economic analysis in ways which satisfy academic criteria the economic analysis of government and of bureaucracy in particular is a case in point furthermore economists are no exception in wishing to satisfy not only their customers in either the private or public sector but also their peer group as i have argued elsewhere peacock i99i b advice giving economists may attach importance to long term income prospects and to public prestige but self respect and what alfred marshall called the desire for excellence can be sufficiently important for them to wish to maintain their professional reputation of course as they get older they may no longer stalk the pages of the prestigious academic journals but that fate awaits most economists academic or not my second observation emphasises that the proud performance as f e call it of economists engaged in advice giving is characterised by a continuous struggle to maintain and to improve the credibility of advice three problems face economists who are specifically asked to give advice to government as distinct from those who offer it gratuitously through press articles pamphlets and the like

matching workers and jobs cyclical fluctuations in match quality using national longitudinal survey of youth data on tenure and wages this article analyzes the extent to which the level of job mismatching varies over the business cycle and how it is dealt with by the labor market i find significant cyclical variation in job match quality and an internalization of the variation by the labor market through wages mismatching occurs more during recessions but is primarily captured in starting wages the evidence suggests the cyclical phenomenon is one of general mismatching rather than an increased number of stopgap jobs during recessions

search theory the 2010 nobel memorial prize in economic sciences this paper surveys search theory with an emphasis on the contributions of the 2010 laureates for the nobel memorial prize in economic sciences peter diamond dale mortensen and christopher pissarides

marriage specialization and the gender division of labor we consider why the gender division of labor is so often enforced by custom and why customary gender divisions of labor generally involve both direction and prohibition in our formal model agents first learn skills and then enter the marriage market we show that wasteful behavior may emerge due to strategic incentives in specialization choice and human capital acquisition and that both problems may be mitigated through a customary gender division of labor this division is not pareto improving both the distributional effects and welfare gains of a customary gender division of labor decrease as opportunities for market exchange increase

what explains the difference in the effect of retirement on health evidence from global aging data this paper analyzes the reasons for differences in the effect of retirement on health estimated results in previous studies we investigate these differences by focusing on the analysis methods used by these studies using various health indexes numerous researchers have examined the effects of retirement on health however there are no unified views on the impact of retirement on various health indexes consequently we show that the choice of analysis method is one of the key factors in explaining why the estimated results of the effect of retirement on health differ moreover we re estimate the effect of retirement on health by using a fixed analysis method controlling for individual heterogeneity and endogeneity of the retirement behavior we analyze the effect of retirement on health parameters such as cognitive function self report of health activities of daily living adl depression and body mass index in eight countries we find that the effects of retirement on self report of health depression and adl are positive in many of these countries

does retirement age impact mortality the relationship between retirement and mortality is studied with a unique administrative data set covering the full population of norway a series of retirement policy changes in norway reduced the retirement age for a group of workers but not for others difference in differences estimation based on monthly birth cohorts and treatment group status show that the early retirement programme significantly reduced the retirement age this holds true also when we account for programme substitution for example into the disability pension instrumental variables estimation results show no effect on mortality of retirement age neither do estimation results from a hazard rate model

the economic theory of rent seeking tullock s concept of rent seeking was the first statement of a quantitative principle about the social costs of such activities as lobbying and favor seeking as such this part of tullock s legacy to modern economics is one of his most important contributions

robust comparative statics in large dynamic economies we consider infinite horizon economies populated by a continuum of agents subject to idiosyncratic shocks this framework contains models of saving and capital accumulation with incomplete markets in the spirit of works by bewley aiyagari and huggett models of entry exit and industry dynamics in the spirit of hopenhayn s work and dynamic models of occupational choice and search models as special cases robust and easy to apply comparative statics results are established with respect to exogenous parameters as well as various kinds of changes in the markov processes governing the law of motion of the idiosyncratic shocks

racial integration as an innovation empirical evidence from sports leagues this paper treats racial integration as an innovation in economic process in which economic entities find it advantageous to utilize potentially more productive inputs previously unavailable due to law custom or managerial discretion data on the racial integration of major league baseball and atlantic coast conference basketball are employed to address this issue the central question examined is which type of team integrated first losers or winners the results strongly support the idea that entrepreneurship trumps competitive rivalry that is winning teams led the process of racial integration jel li j7 one of the watershed events in u s history is the struggle to achieve a racially integrated society while the civil rights laws and court rulings in the 195o s 196o s and 197o s are among the major changes in public policy that gradually led to a breakdown of jim crow rule in the american south other changes in law and custom also motivated the process of racial integration across time and place indeed segregation was not limited to the south but was a prominent feature of many national organizations and markets despite the extensive commentary on these events from various perspectives there has been very little economic analysis of the actual process of racial integration economists have focused their efforts on the economics of discriminatio n while the actual process by which individuals firms and

employer search training and vacancy duration we develop a model of optimal employer search strategy when information about match quality is endogenous the model is tested using four data sets two of which have not previously been used as theory predicts we find that when filling positions requiring more training employers search more intensively and extensively employers also search more extensively when hiring workers with more education and with prior experience these findings provide strong evidence of systematic variation in search strategies based on the characteristics of the positions and job applicants factors that influence employer search also affect the duration of a vacancy

learning matching and growth we examine an endogenous growth model in which market frictions are an integral part of the economic environment workers invest in education when young which raises their productivity onice employed the level of schooling also acts as a key determinant of the rate of economic growth by influencing workers ability to accumulate additional human capital on the job once schooling is completed workers search for employment the division of the surplus between vacancies and searching workers is characterized as is the optimal level of education the economy may display multiple steady state growth paths

covering dominance and institution free properties of social change this paper shows that different institutional structures for aggregation of preferences under majority rule may generate social choices that are quite similar so that the actual social choice may be rather insensitive to the choice of institutional rules specifically in a multidimensional setting where all voters have strictly quasi concave preferences it is shown that the uncovered set contains the outcomes that would arise from equilibrium behavior under three different institutional settings the three institutional settings are two candidate competition in a large electorate cooperative behavior in small committees and sophisticated voting behavior in a legislative environment where the agenda is determined endogenously because of its apparent institution free properties the uncovered set may provide a useful generalization of the core when a core does not exist a general existence theorem for the uncovered set is proven and for the downsian case bounds for the uncovered set are computed these bounds show that the uncovered set is centered around a generalized median set whose size is a measure of the degree of symmetry of the voter ideal points

economic and security consequences of supreme values islamic societies have in contemporary times lagged western societies in income growth and human development indicators the supreme values of radical islam further de prioritize economic achievement and impose self deprivation on own populations this paper investigates the reasons for economic outcomes under islam contemporary illustrations are also provided of the self deprivation predicted from pursuit of the supreme value objectives of radical islam the self deprivation is placed in a rent seeking context

costs and benefits of land fragmentation evidence from rwanda this paper disentangles different aspects of land fragmentation and its impact on the efficiency of resource use the paper uses information on the incidence of crop shocks to assess whether fragmentation provides benefits in reducing risk and parcel coordinates and terrain adjusted travel times between parcels to more precisely account for the associated costs in 2010 11 data from rwanda while fragmentation increases the time required to move between a household s parcels this does not appear to affect overall technical efficiency on the farm fragmentation rather reduces the incidence of crop shocks and increases yields and productive efficiency in rwanda s setting interventions to reduce fragmentation may therefore be ineffective or counterproductive

the incentives to organize and demand regulation two ends against the middle a consumer versus business view of regulation frequently is too simplistic producers as a group may also be able to obtain rents from non consumer surplus sources and therefore may have relatively strong aggregate incentives to organize and seek favorable regulation as compared to consumers incentives to avoid such regulation this occurs in an increasing cost industry where producers purchase inputs whose supply curves are not infinitely elastic the rents obtained by producers through regulatorily initiated output restrictions then include transfers from resource suppliers as well as from consumers and exceed the potential losses consumers face

regional effects of exchange rate fluctuations we exploit differences across u s states exposure to trade to study the effects of changes in the exchange rate on economic activity across states trade weighted exchange rate depreciations are associated with increased state exports reduced state unemployment and higher state hours worked the effects are particularly strong during periods of economic slack a multiregion model with interstate trade and labor flows calibrated to match state level trade data and migration flows replicates the empirical relationship between exchange rates and unemployment the high degree of interstate trade plays an important role in transmitting shocks across states in the first year whereas interstate migration shapes cross sectional patterns in later years we use the model to study the regional effects of tariffs in the united states the model suggests that a 25 chinese import tariff on u s goods would be felt throughout the united states even in states with small direct linkages to china raising unemployment rates by 0 2 to 0 7 percentage points in the short run

rent seeking noncompensated transfers and laws of succession my purpose in this paper is to analyze inefficiencies that may emerge from the noncompensated transfer of valued rights among persons this source of inefficiency has not to my knowledge been fully incorporated either in the economic theory of property rights or in orthodox tax analysis my discussion is based on the elementary fact that all noncompensated transfers are rents to the recipients implications for the emergence of rent seeking behavior follow straightforwardly the now familiar propositions to the effect that rent seeking may dissipate economic value can be applied to a variety of transfer settings only a few of which are explored in this paper 1 to the extent that the efficiency criterion is the relevant norm direct implications may be drawn for policy with respect to the laws or rules for succession

rent seeking from a property rights perspective james buchanan 15 15 has suggested that rent seeking analysis can readily be incorporated within the property rights approach and as with public choice the theory of rent seeking can be interpreted as an appropriate extension yet no one has really explored rent seeking or revenue premium tariff or directly unproductive profit seeking from a property rights perspective buchanan 14 15 16 17 clearly indicated that property rights assignments actually underlie the rent seeking process and others have also recognized this 4 20 23 28 but there are further insights into the workings of the political economy which can be derived for instance lobbying activities with nonpecuniary goals clearly fit into the rent seeking framework when viewed through the property rights paradigm this contrasts strikingly with the perception of rent seeking held by some writers 9 10 11 12 13 furthermore a property rights approach to rent seeking provides predictions of a spiraling process of government growth since successful rent seeking by one interest group generally requires expansion of bureaucratic powers while at the same time creating incentives for the formation of additional rent seeking interest groups legislative responses to these new groups requires further expansion of the bureaucracy and creates incentives for more rent seeking so the growth process continues in this paper a brief summary of the conclusions of the rent seeking literature will be presented followed by an explanation of how the same conclusions have been deduced using the property rights paradigm various extensions of the rent seeking concept such as those alluded to above are then obtained by emphasizing a property rights approach following this the terms used to describe rent seeking e g directly unproductive profit seeking etc will be discussed to determine which if any is the most appropriate characterization of the phenomenon

ricardian equivalence long run leviathan abstract this paper presents a heterogenous overlapping generations with altruism model in which intergenerational discounting is stochastic the model nests three popular macroeconomics models those of ramsey economic journal 38 152 1928 543 559 diamond american economic review 55 1965 1126 1150 and a variant of the blanchard journal of political economy 93 2 1985 223 247 buiter the economic journal 98 391 1988 279 293 weil journal of public economics 38 2 1989 183 198 model it is shown that under a mild condition originally derived by weil journal of monetary economics 19 3 1987 377 391 the long run capital intensity is robust to practically every popular theoretical criticism of the standard ricardian model these criticisms include the imperfect inheritability of time preference parameters and hence finite horizons on the part of all households myopia in the form of overly discounting the future borrowing constraints distortionary labor taxation exchange strategic bequest motives common cultural constraints egalitarian bequests and primogeniture endogenous fertility and joy of giving while precautionary saving can theoretically violate long run neutrality the asymptotic capital intensity is still bounded below by preference parameters the overall conclusions are sharply at odds with those found in most articles dealing with the theoretical foundations of ricardian equivalence

frictional assignment i efficiency abstract this paper examines the two sided matching problem where the agents on each side of the market are heterogeneous and the matching process is time consuming this is cast in a labor market setting where workers of different skills match with different machine qualities i characterize the efficient allocation and then show that it can be decentralized by a market mechanism the efficient assignment is not always positively assortative despite the fact that machine qualities and skills are complementary in production to decentralize the efficient allocation the market mechanism requires the firms to post wages and commit each machine quality to a particular skill implications on wage inequality are briefly examined journal of economic literature classification numbers j31 e24 j64

trading uncertainty and market form this paper examines purely random multilateral matching among a large number of informationally isolated individuals who desire to trade the structure of links among traders is characterized by means of random graphs defined by a parameter that is chosen by prospective traders trading groups of all sizes including pairs as a special case result but the size distribution may contain a mass point at infinity that is within a certain subset of the entire economy trading uncertainty is entirely eliminated the equilibrium price distribution consists of a mass point and of a mixture of densities copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

managerial ownership of voting rights abstract managers of firms with dual classes of common stock can choose different quantities of votes for a given cash flow interest by choosing different quantities of the two securities we study managerial stock holdings in 45 dual class firms and find that vote ownership per se is an important motivation for these holdings in that corporate officers and their families hold a median 56 9 of the votes and 24 0 of the common stock cash flows we also find significant family involvement in many sample firms and document four case studies in which explicit acquisition premiums were paid for superior voting shares

land inheritance and market transactions in uganda studies on the role of nonmarket land transactions remain limited this paper addresses two questions is land inheritance driven by underdeveloped land markets how does land inheritance influence land disposal and acquisition we use a switching regression model on household data from rural uganda we find that the initially landless or near landless households due to little or no land inheritance obtain land through land markets while those that are land rich dispose of land through land sales and bequests the results suggest that a process of land equalization is unfolding within the sample

environmental policy and the equilibrium rate of unemployment abstract this paper integrates environmental policy instruments with the theory of equilibrium unemployment we investigate the question of whether a low equilibrium rate of unemployment and a high quality of the environment are complementary policy goals or must be traded off it turns out that an interval exists for a tax on emissions where the two goals are indeed complementary the tax stimulates the emergence of an abatement sector which provides pollution control and vacancies for the job seekers for constrained efficiency the policy maker operates five instruments to internalize the environmental and the search externalities a tax on emissions employment subsidies and recruiting allowances for the polluting industries are sufficient to implement the first best the optimal emission tax is an increasing function of the workers bargaining strength for labor markets where workers have a strong bargaining position the optimal pollution tax may easily exceed the pigouvian tax

markets with search friction and the dmp model dale t mortensen delivered his prize lecture on 8 december 2010 at aula magna stockholm university this abstract was borrowed from another version of this item

mental retirement and schooling we assess the validity of differences in eligibility ages for early and old age pension benefits as instruments for estimating the effect of retirement on cognitive functioning because differences in eligibility ages across country and gender are correlated with differences in years of schooling which affect cognitive functioning at old ages they are invalid as instruments without controlling for schooling we show by means of simulation and a replication study that unless the model incorporates schooling the estimated effect of retirement is negatively biased this explains a large part of the mental retirement effects which have recently been found

ageing cognitive abilities and retirement we investigate the relationship between ageing cognitive abilities and retirement using the survey on health ageing and retirement in europe share a household panel that offers the possibility of comparing several european countries using nationally representative samples of the population aged 50 the human capital framework suggests that retirement may cause an increase in cognitive decline since after retirement individuals lose the market incentive to invest in cognitive repair activities our empirical results based on an instrumental variable strategy to deal with the potential endogeneity of retirement confirm this key prediction they also indicate that education plays a fundamental role in explaining heterogeneity in the level of cognitive abilities

gordon tullock s contributions to the theory of public choice i introduction gordon tullock came to economics and political science through a circuitous route he had almost no formal training in economics beyond a one quarter course that he took as a law student at the university of chicago from henry c simons he served in the foreign service for a number of years his first publications in economics date from the mid 1950s and were on monetary economics campbell and tullock 1954 1957 tullock 1956 tullock s formal entry into academia came in 1958 when he arrived at the thomas jefferson center for studies in political economy and social philosophy part of the department of economics at the university of virginia as a postdoctoral fellow tullock s biography from this point is fairly well known 1 tullock s contributions to economics and political science span almost forty years the following discussion is offered as a modest review of tullock s contributions the presentation is not meant to be detailed or copious but simply efficient in conveying what is important in tullock s work 2 ii methodology and style before turning to tullock s work a brief word is in order about his general approach to economic analysis and his writing style in fact tullock has shown far more interest in obtaining useful results than he has in how he happened to go about obtaining them in this way he has been a methodological anarchist operating under the general maxim that in science anything goes and results count his well known papers generally rely upon simple price theoretic or spatial constructs and perhaps a little algebra and game theory where he has found a need for more formidable tools he has generally acquired them through coauthors this anything goes approach does not seem to have hampered his work he has shown a talent for getting at the essence of problems and avoiding clutter in his work moreover he has shown almost no penchant for methodological exegesis in his work with the major exception of his general insistence that rational economic man models are the best description of behavior in almost any setting on this point he has been steadfast in fact buchanan 1987 uses tullock s emphasis on the homo economicus assumption to describe tullock as a natural economist i think this is an accurate interpretation of tullock we have all known people who are naturally good at things like playing short stop or the piano and in this sense it is analogous to say that tullock has a natural inclination toward economic reasoning and behavior tullock is not a great stylist his normal routine is to dictate the first draft of his papers and work through them from there this allows him to make his points but sometimes not very eloquently or clearly 3 the real question about scientific writing style is whether it matters or not there are protagonists on either side of this issue empirical research laband and taylor 1992 suggests that style has no marginal impact on citations this result can be interpreted in various ways but perhaps the most appropriate interpretation is that researchers have not yet found the margin on which writing style matters tullock of course could interpret this differently to say that style does not matter only results matter and this is what he has been about nonetheless mccloskey lists tullock along with several other modern economists as a good writer to wit when you read any of these in economics pay attention this is as good as it gets 1987 9 this either defends tullock s writing skills or calls into question the care with which mccloskey drew up his list of economists as writers iii the calculus the calculus of consent 1962 by james m buchanan and gordon tullock is a work of astounding creativity of all the classic works in the theory of public choice this book stands out for its range and depth of contribution it is moreover a readable book

economists views about parameters values and policies survey results in labor and public economics specialists in labor economics and public economics at 40 leading research universities provided opinions of policy proposals quantitative best estimates and 95 percent confidence intervals for economic parameters and answers to values questions regarding income redistribution efficiency versus equity and individual versus social responsibility their positions on policy are more closely related to their values than to their estimates of relevant economic parameters average best estimates of the economic parameters agree well with the relevant literature but individual best estimates are usually widely dispersed the individual 95 percent confidence intervals are much narrower than the substantial cross respondent variation in estimates would warrant

family ownership altruism and agency costs in australian small and medium sized enterprises given the continuing uncertainty about whether family firms enjoy lower agency costs this article hypothesizes that a combination of the effects of family ownership altruism and self control is instead at play to begin with family ownership can indeed reduce agency costs through better aligning the interests of owners and managers this is a determining effect in that it independently mitigates one source of agency problems however altruism combined with self control problems arising from the highly concentrated ownership often found in family firms can also increase agency costs this is an embedding effect as it is rooted in the personal relationships within the family firm using the business longitudinal database compiled by the australian bureau of statistics on small and medium sized enterprises smes we find that for larger smes those with 20 200 employees the gains in lower agency costs arising from family ownership are almost completely offset by the losses from altruism and the l

employment inequality why do the low skilled work less now abstract low skilled prime age men are less likely to be employed than high skilled prime age men and the differential has increased since the 1970s i build a search model encompassing three explanations 1 automation and trade reduced the demand for low skilled workers 2 health welfare and recreational gaming computer technology reduced the supply of low skilled workers and 3 factors affecting job search such as online job boards reduced frictions for high skilled workers i find a shift in demand away from low skilled workers was the leading cause a shift in supply had little effect and search frictions actually reduced employment inequality

toward a theory of agency and altruism in family firms surprisingly the majority of u s family firms offer employed family members short and long term performance based incentive pay we draw on the household economics and altruism literatures to explain why family firms might feel compelled to do so and develop theory that predicts when this practice will be beneficial results based on data obtained from 883 family firms show that altruism as reflected by the parents estate and share transfer intentions moderates the effect of these pay incentives as our theory predicts as such this article helps explain both how altruism influences agency relationships in family firms and why business practice in family firms differs from those found in other types of firms

r d in a model of search and growth just how important a determinant of economic growth is the efficacy with which markets are organized it is clear that in order to answer this question it is necessary to have both a well articulated theory of economic growth and a precise notion of what it means for one market to be better organized than another the newly developed theory of endogenous growth pioneered by among others paul m romer 1986 robert e lucas 1988 nancy stokey 1988 and gene grossman and elhanan helpman 1991 has equipped economists with a rigorous microeconomic foundation of the growth process since its original inception research in this area has bifurcated one strand of work has continued to emphasize the importance of capital accumulation both physical and human in environments in which agents are competitive price takers the other strand has a distinctly neo schumpeterian flavor in which firms are price setters and purposive innovative activity leads to technological advancement but what of the role played by market organization the growth literature has remained relatively silent on this issue the reason is that the canonical growth model is one in which trade either competitive or monopolisticly competitive is coordinated by the walrasian auctioneer given that ex hypothesi trade is frictionless it is meaningless to use this framework to discuss issues pertaining to improvements in market organization however beginning with the seminal contributions of peter diamond 1982 dale t mortensen 1982 and christopher pissarides 1985 economists have begun to construct models that dispense with the auctioneer s coordinating function in this setting it is possible to make precise the notion of an improvement in market efficacy since search and bargaining frictions are explicitly incorporated as an integral part of the trading environment yet it is only very recently that this literature has begun to explore the consequences for perpetual economic growth

monetary policy trend inflation and unemployment volatility the literature has long agreed that the dmp model after diamond 1982 mortensen 1982 pissarides 1985 with search and matching frictions in the labor market can deliver large volatilities in labor market quantities consistent with empirical data only if there is at least some wage stickiness i show however that the model can deliver nontrivial volatilities without wage stickiness as long as it has price dispersion and nonzero long run inflation rates i find that by keeping inflation at a positive rate monetary policy may be accountable for the large standard deviations observed on labor market variables in addition the shimer 2005 puzzle disappears under monetary policy shocks

economics and the political processt i want to use this once in a lifetime opportunity for pontificating to the profession to explore ways of improving the interaction between what economists do and the political process tension and conflict are of course inherent in political decisions especially on economic policy nothing can make such decisions easy nevertheless it is my contention that economic policymaking in washington in the last decade has been more frustrating muddled and confusing than necessary some of the fault lies with economists and economics some with politicians and the political process some in the interactions i want to offer some suggestions for modest improvements most economists probably share my premise that economics ultimately ought to be more than just challenging intellectual gymnastics it ought to help us understand how the economy works and provide a basis for intelligent political choices among economic policies even those who devote their energies to resolving purely theoretical issues imagine that somehow in the end their efforts will prove socially useful the dedicated idealistic young economist who aspires to advise a government may well envision herself someday as the wise and impartial adviser to the philosopher queen in this daydream the adviser presents the best forecasts that can be made of the future course of the economy she explains the macroeconomic policy options and what is likely to happen if each is undertaken she elucidates why market solutions are efficient when markets are likely to fail and what can be done when this occurs she identifies risks and uncertainties which fortunately are not overwhelming she represents the best professional judgment of her fellow economists indicating the major respects in which most economists agree and scrupulously pointing out that in minor respects the views of some of her professional colleagues might differ from her own she remains above the political fray identifying any values or distributional biases that may creep into her judgments and eschewing identification with interest groups or ideological causes the queen for her part listens carefully and intelligently asks thoughtful questions and weighs the options she may consult other experts on noneconomic aspects of the decisions but these can be assumed not to be very important she then makes final decisions even very hard ones and sticks to them the decisions are carried out the economy prospers and a grateful nation applauds the wisdom of the monarch and her economist and the usefulness of economics but in the real world both economics and politics are frustratingly unlike this picture both are pluralistic in the extreme and appear to be getting more so economists and political leaders not only miscqmmunicate but each accuses the other of incompetence obfuscation self serving motives and antisocial behavior economists of course do not wait for others to attack them they do it themselves walter heller said in his presidential address that the chorus of self criticism has risen to a new crescendo 1975 p 1 and the selfdeprecation has not abated in the intervening decade if a golden age of economists self confidence ever occurred it is long past events of recent years have kept reminding us that our national economy is diverse and complex battered by unpredictable shocks and increasingly interconnected with the even the brookings institution 1775 massachusetts avenue n w washington d c 20036 the views set forth here are solely my own and do not necessarily represent the opinions of the trustees officers or other staff members of the brookings institution i am grateful for the insights and assistance of many colleagues especially robert d reischauer charles l schultze mary s skinner and valerie m owens presidential address delivered at the ninety ninth meeting of the american economic association december 29 1986 new orleans louisiana

should buyers or sellers organize trade in a frictional market to answer the question in the title this article characterizes the socially efficient organization of the market with search frictions the efficient organization depends on the relative elasticity in the supply between the two sides of the market the costs of participating in the market and organizing trade and the a symmetry in matching we also show that the social optimum can be implemented by a realistic market equilibrium where the organizers set up trading sites to direct the other side s search the results provide a unified explanation for why trade has often been organized by sellers in the goods market by buyers firms in the labor market and by both sides in the asset market the analysis also sheds light on how the efficient market organization can change with innovations such as e commerce and just in time production

land property rights and international migration evidence from mexico abstract in this paper i ask whether there is a relationship between land property rights and international migration in order to identify the impact of property rights i consider a country wide land certification program that took place in mexico in the 1990s my identification strategy exploits the staggered implementation and the households eligibility for the program i find that the program increased the eligible households likelihood of having one or more members abroad by 12 in terms of the number of migrants my coefficient estimates explain 26 of the 1994 1997 increase in migrants from ejido areas and 13 15 of the increase from all of mexico consistent with our theoretical model the impact is strongest for households without a land will this implies that land inheritance issues drive at least part of the effect

decentralized international exchange traditional models of international trade take place within trading environments in which trade is coordinated by a walrasian auctioneer who instantly matches buyers and sellers in world markets this assertion seems inconsistent with evidence suggesting that trading arrangements seem to economize on transactions costs associated with international trade recognizing these insights we depart from standard models of international trade by incorporating the difficulties in the coordination of exchange within a two country random matching model of international trade we capture a motivation for trade through comparative advantage and interpret trade across economies to be associated with an agent s endogenous choice to participate in foreign markets although an individual may decide to search abroad to obtain additional gains from trade resulting from comparative advantage she is less likely to meet trading partners abroad as search frictions are higher in the foreign country than in the domestic market using this framework we show that international trade is associated with convergence in relative prices across countries we also show that the extent of market frictions in the foreign country affects relative prices the volume of international trade and welfare levels due to market participation externalities associated with international trade we show that a movement from autarky to free trade may actually lower welfare levels we conclude by examining the possible inefficiencies associated with international trade due to the decentralized nature of exchange and the policy implications of our model

land inheritance rules theory and cross cultural analysis abstract this paper develops a general theory of land inheritance rules that distinguishes between two classes of rules those allowing a testator discretion in disposing of his land e g a best qualified rule and those constraining his choice e g primogeniture the primary benefit of the latter is to prevent rent seeking by heirs but the cost is that the testator cannot use information about the relative abilities of his heirs to manage the land we also account for the impact of scale economies in land use and discuss the impact of the presence of a land market on the form of the inheritance rule we conclude by offering some empirical tests of the model using a cross cultural sample of societies

long term partnership formation marriage and employment of course marriage and employment are different nevertheless a worker looking for a job a rm looking for worker or a single person looking for a marriage partner face similar problems as all are seeking a long term partner indeed forming long term partnerships is a common occurrence in life there are many other examples business people search for other business people to form a pro table relationship bridge players seek to nd a suitable partners students search for a good university we would all like to nd a good friend etc the problem becomes signi cant if there are substantial differences in the return obtained from forming a partnership with different partners for example employers differ in the wages they offer or in the work environment they provide in such a situation a worker may reject some job offers similarly as many have learned to their cost some make better marriage partners than others the problem is two sided while a worker is evaluating a potential employer the employer is also evaluating the worker it is this two sided aspect of the problem that generates a signi cant interest a worker s willingness to accept employment at a rm depends not only on the characteristics of the rm but also the other possible options open to the worker the better an individual s opportunities elsewhere the more selective he or she will be in evaluating a potential partnership an academic who believes harvard may make an offer in the near future will be more selective in evaluating offers from lesser universities in this way expectations play a role if a single man believes that few if any women will nd him an acceptable marriage partner then he may accept the rst opportunity that presents itself partnership formation typically does not comply with a classic market situation where all participants know everything and all trades take place at zero cost finding a job nding a husband or wife or nding a business partner is a time consuming activity where opportunities typically arrive over time at uncertain intervals of time of course we can act in ways that in uence the arrival rate of potential partner workers go to employment agencies or read help wanted advertisements in newspapers singles of a certain age go to discos or join tennis clubs the literature on search and matching sm see mortensen 1982 and pissarides 1990 for early examples 1 provides an excellent framework for the economic journal 109 june f307 f334 royal economic society 1999 published by blackwell publishers 108 cowley road oxford ox4 1jf uk and 350 main street malden ma 02148 usa

a critical assessment of transaction cost theory and governance of public services with special reference to water and sanitation this is a pre copyedited author produced version of an article accepted for publication in cambridge journal of economics following peer review the version of record hulya dagdeviren and simon a robertson a critical assessment of transaction cost theory and governance of public services with special reference to water and sanitation cambridge journal of economics vol 40 6 1707 1724 january 2016 is available online at https doi org 10 1093 cje bev079

bequests sibling rivalry and rent seeking we examine bequest sharing rules where sibling rivalry creates wasteful competition for intergenerational transfers we show that equal division of bequests minimizes rent seeking expenditures by siblings while primogeniture maximizes rent seeking costs our results lend theoretical support to the empirical findings of equal bequests without appeal to complex models of the parent child relationship

on the job search and strategic bargaining abstract this paper studies wage bargaining in a simple economy in which both employed and unemployed workers search for better jobs the axiomatic nash bargaining solution and standard strategic bargaining solutions are inapplicable because the set of feasible payoffs is nonconvex i instead develop a strategic model of wage bargaining between a single worker and firm that is applicable to such an environment i show that if workers and firms are homogeneous there are market equilibria with a continuous wage distribution in which identical firms bargain to different wages each of which is a subgame perfect equilibrium of the bargaining game if firms are heterogeneous i characterize market equilibria in which more productive firms pay higher wages i compare the quantitative predictions of this model with burdett and mortensen s 1998 wage differentials employer size and unemployment international economic review 39 257 273 wage posting model and argue that the bargaining model is theoretically more appealing along important dimensions

wage differentials discrimination and efficiency abstract i analyze a large labor market where homogeneous firms post wages to direct the search of workers who differ in productivity i show that the model has a unique equilibrium the wage differential depends positively on the workers productivity differential only when the latter is large when the productivity differential is small high productivity workers get a lower wage than low productivity workers this reverse wage differential remains even when the productivity differential shrinks to zero however the equilibrium is socially efficient high productivity workers always get the employment priority and higher expected wages than low productivity workers although discrimination in terms of expected wages does not exist conventional measures are likely to incorrectly find discrimination in the model

do differences in presidential economic advisers matter using data on members on the council of economic advisors as well as us treasury secretaries and omb directors from 1952 through 2005 i investigate the effect of economic advisors educational and employment backgrounds on the time series performance of several policy variables ivy league advisors appear to raise non defense government spending although the size of the impact differs by president while voter preferences appear to matter for a wider variety of policy variables changes in federal regulation and marginal tax rates the share of ivy league advisors is at least as important as voter preferences in explaining non defense spending

a successful accident recollections and speculations about the cea as originally conceived the president s council of economic advisers would have a unique relation with the president using keynesian analysis to advise him on maintaining full employment after fifty years the council has evolved into being a useful cog in a large decision making apparatus dealing with the whole range of federal problems of economic policy and bringing to bear whatever economics has to say the initial keynesian predisposition has faded the council has participated in some mistakes but it has made a valuable contribution primarily by persistent representation of the value of the free market

economics of multihabitation housing conditions household occupancy and household structure under rent control inflation and nonmarketability of ownership rights abstract multihabitation in terms of sharing facilities in a dwelling or extended family occupancy is common in parts of the third world this paper uses the ghanaian housing market to assess the impact of multihabitation on house condition and on household occupancy rates per room as distinct from the influence of other factors on these variables multivariate statistical techniques form the method of analysis and the models have a high predictive accuracy the impacts of current government policies such as rent control on house condition and occupancy rates is also discussed along with cultural attitudes to ownership and obligations to the extended family

does land fragmentation increase the cost of cultivation evidence from india although a large literature discusses the productivity effects of land fragmentation measurement and potential endogeneity issues are often overlooked this paper uses several measures of fragmentation and controls for endogeneity and crop choice by looking at inherited paddy and wheat plots to show that these issues matter empirically while crop choice can mitigate effects fragmentation as measured by the simpson index increases production cost and fosters substitution of labor for machinery especially for small and medium farmers greater distances between fragments have a smaller effect creating opportunities for market based consolidation could be one step to limit fragmentation induced cost increases

employment efficiency and sticky wages evidence from flows in the labor market i consider three views of the labor market in the first wages are flexible and employment follows the principle of bilateral efficiency workers never lose their jobs because of sticky wages in the second wages are sticky and inefficient layoffs do occur in the third wages are also sticky but employment governance is efficient i show that the behavior of flows in the labor market strongly favors the third view in the modern u s economy recessions do not begin with a burst of layoffs unemployment rises because jobs are hard to find not because an unusual number of people are thrown into unemployment

altruism in the family and selfishness in the market place adam smith argued in a famous passage that people are selfish in their market transactions it is not from the benevolence of the butcher the brewer or the baker that we expect our dinner but from their regard to their own interest we address ourselves not to their humanity but to their self love and never talk to them of our own necessities but of their advantages 1937 p 14 in an earlier study he said with irony we are not ready to suspect any person of being defective in selfishness 1853 p 446 selfishness in market transactions has been assumed in practically all subsequent discussions of the economic system objections were dismissed with vague allusions to human nature or with an assertion that altruism loses out to selfishness in the struggle to survive in the market sector yet altruism is generally recognized to be important within a family again adam smith said

inheritance patterns in migration prone communities of the peruvian highlands abstract on the basis of detailed information on inheritance practices collected in the course of an in depth survey of three andean communities of peru and unlike most empirical studies which rely on remittance functions we have been able to estimate an inheritance function with a view to identifying the main factors associated with particular patterns of land bequests a central result is that the positive relationship between caring and a favourable access to land bequest indeed exists yet is only observed for migrant children whether urban or rural long distance or short distance migrants combined with other findings and observations this result strengthens the case for an interpretation based on an active role of potential heirs in the determination of inheritance outcomes it therefore calls into question the strategic bequest theory which presumes that parents are the ultimate decision makers in this matter in addition our study shows that inheritance patterns are complex besides migration and caring behavior personal characteristics of potential heirs such as gender birth order and family status having children or not do appear to influence division of parental land