spatial search migration and regional unemployment the dominant explanation of spatial unemployment in the literature assumes that workers must live in an area in order to be able to access job offers this gives rise to compensating variations in local wages and unemployment however for many occupations search is clearly conducted over longer distances from a home base in the model presented in this paper migration and unemployment are analysed both when the optimal search field is local as in the traditional model and when search is conducted over longer distances i compare equilibria in these two regimes and discuss the implications for regional policy

evaluating welfare reform in the united states this paper reviews the economic literature on welfare reform over the 1990s a brief summary of the policy changes is followed by a discussion of the methodological techniques that analyze the effects of these changes on outcomes the paper then critically reviews the econometric and experimental literature on caseload changes labor force changes poverty and income changes and family formation changes a growing body of evidence suggests that recent policy changes have influenced economic behavior and well being one particular set of new style welfare programs seems to show especially promising results with significantly increased work and earnings and reduced poverty

a survey of agency models of organizations abstract in recent years neoclassical economists have begun to turn their attention to issues of firm organization stimulated in large part by methodological advances in the economics of incentives and incomplete information the paradigm on which much of this work is based views an organization as an agency relationship agency models incorporate two basic features of organizations incomplete information and goal conflict among members of the organization this essay characterizes and critiques the existing research on agency models of organizations in order to broaden the set of consumers of such models and to stimulate the production of new research

amenity values versus land constraints the spatial effects of natural landscape features on housing values when local amenities are tied to natural land use features that cannot be developed for physical or regulatory reasons the corresponding implicit price estimates from a hedonic housing model may reflect local supply constraints and confound estimation of natural amenity values using a spatial simultaneous equations model of housing values and migration we examine whether local supply constraints from natural or preserved features have influenced the housing market results indicate that constraints associated with the presence of water bodies and some types of open space preservation have contributed to higher housing prices offsetting local demand for these natural amenities jel c31 r23

reap what you sow agricultural technology urbanization and structural change abstract this paper studies how productivity enhancing agricultural technology affects urbanization by provoking structural change we investigate these issues using a natural experiment in the united states the results show that technologies which improve crop productivity lead to a less urbanized economy as economic activity relocates from manufacturing and services towards agriculture the effects are highly persistent and are driven by the technology increasing agricultural labor demand our findings highlight the potentially unintended disruptive force of innovative technologies

the impact of supply constraints on house prices in england we test the theoretical prediction that house prices respond more strongly to changes in local earnings in places with tight supply constraints using a unique panel dataset of 353 local planning authorities in england between 1974 and 2008 exploiting exogenous variation from a policy reform vote shares and historical density to identify the endogenous constraints measures we find that regulatory constraints have a substantive positive impact on the house price earnings elasticity the effect of constraints due to scarcity of developable land is largely confined to highly urbanised areas and uneven topography has a quantitatively less meaningful impact

migration regional equilibrium and the estimation of compensating differentials in this study we have developed an improved model of net migration that encompasses both equilibrium and disequilibrium components instrumental variables fixed effects estimates of the model with time series data for 51 areas in the united states over the period 1971 1988 support the importance of both equilibrium and disequilibrium factors in migration excerpt

the unequal geographic burden of federal taxation in the united states workers in cities offering above average wages cities with high productivity low quality of life or inefficient housing sectors pay 27 percent more in federal taxes than otherwise identical workers in cities offering below average wages according to simulation results taxes lower long run employment levels in high wage areas by 13 percent and land and housing prices by 21 and 5 percent causing locational inefficiencies costing 0 23 percent of income or 28 billion in 2008 employment is shifted from north to south and from urban to rural areas tax deductions index taxes partially to local cost of living improving locational efficiency

public conservation land and employment growth in the northern forest region we quantify the effect that public conservation lands have on employment growth in the northern forest region of the united states a model of simultaneous employment and net migration growth is estimated with data on non metropolitan counties from 1990 to 1997 exogenous variables include the 1990 share of the land base in public conservation uses we find that net migration rates were higher in counties with more conservation lands but the effects are relatively small no significant effect on employment growth is detected as well variables measuring changes in public timber harvests have no effect on employment growth

quality of life firm productivity and the value of amenities across canadian cities we estimate quality of life and productivity differences across canada s metropolitan areas in a hedonic general equilibrium framework these are based on the estimated willingness to pay of heterogeneous households and firms to locate in various cities which differ in their wage levels housing costs and land values using 2006 canadian census data our metropolitan quality of life estimates are somewhat consistent with popular rankings yet find canadians care more about climate and culture quality of life is highest in victoria for anglophones montreal for francophones and vancouver for allophones and lowest in more remote cities toronto is canada s most productive city vancouver is the overall most valuable city qualite de vie productivite des entreprises et la valeur des avantages dans les diverses villes canadiennes on evalue les differences entre la qualite de vie et la productivite des entreprises entre les zones metropolitaines au canada a l aide d un cadre d analyse d equilibre general hedonique ces metriques sont basees sur l estimation de la volonte de payer de menages et d entreprises heterogenes pour se localiser dans diverses villes qui different tant pour ce qui est des niveaux de salaires des couts de l habitation et des prix des terrains a l aide des donnees du recensement canadien de 2006 on construit des evaluations de la qualite de vie des diverses zones metropolitaines qui s arriment convenablement aux ordonnancements en vogue mais on decouvre que les canadiens portent une attention particuliere au climat et a la culture la qualite de vie est la plus elevee a victoria pour les anglophones a montreal pour les francophones et a vancouver pour les allophones et la plus faible pour les villes eloignees des grands centres toronto est la ville la plus productive vancouver est generalement la plus appreciee

frictional labour mobility we build a dynamic model of migration where in addition to standard relocation costs workers face spatial frictions that decrease their ability to compete for distant job opportunities we estimate the model on a matched employer employee panel dataset describing labour market transitions within and between the 100 largest french cities our identification strategy is based on the premise that frictions affect the frequency of job transitions while mobility costs impact the distribution of accepted wages we find that 1 controlling for spatial frictions reduces mobility cost estimates by one order of magnitude 2 the urban wage premium is driven by better opportunities for local job to job transitions in larger cities 3 migration reduces lifetime inequalities by providing insurance against unsatisfactory initial location draws 4 labour mobility policies based on relocation subsidies are inefficient unlike switching from nationwide to local minimum wages

people places and earnings differentials in scotland abstractpeople places and earnings differentials in scotland regional studies this paper investigates the contribution of people and place effects to earnings differentials in scotland using individual and regional data the main sources of differentials are attributed to workers characteristics people effects particularly academic and vocational qualifications followed by occupational and industrial affiliations on the other hand differences in the attributes of local area labour markets place effects explain only a small part of individual earnings differentials the most relevant spatial attribute is local area human capital the findings suggest that people based policies are likely to be more effective at improving workers earnings prospects than place based policies

factors associated with the year end decline in working capital working capital is an important indicator of firm operational efficiency all else being equal lower levels signal greater efficiency managers are thus likely to be motivated to report lower levels of working capital at times of greater external attention we find that working capital levels decrease in the fourth fiscal quarter significantly more than expected conditional on seasonal changes in economic activity the decrease subsequently reverses in the following first fiscal quarter evidence indicates that firms manage down year end working capital through transactions that increase year end operating cash flow and that firms spread this activity over all working capital accounts finally the temporary decrease in year end working capital is correlated with compensation benchmarks and analysts annual cash flow forecasts the temporary drop is also more pronounced for firms with industry dominance this paper was accepted by mary barth accounting

the effects of housing prices wages and commuting time on joint residential and job location choices an empiricalmodelof joint decisions of where to l and where to work demonstrates that individuals make residential and job location choices by trading off wages housing prices and commuting costs wages are higher in metropolitan markets but housing prices are also higher in urban areas consumers can live in lower priced nonmetropolitan houses and still earn urban wages but they incur commuting costs that increase with distance from the city improvements in transportation that lower commuting time will increase nonmetropolitan populations and will increase the number of nonmetropolitan commuters to metropolitan markets equal wage growth across labor markets causes a shift in relative population from rural to urban markets while an equiproportional increase in housing prices causes a population shift toward rural areas

the effect of economic uncertainty on inventory and working capital for manufacturing firms abstract this paper develops an empirical model to investigate the impact of macro economic risk on working capital and the various types of inventory our analysis helps manufacturing firms anticipate the implications of high macro economic risk measured through the economic policy uncertainty epu index on their operations using a sample of 6503 us manufacturing firms during the period 1990 2018 we show that epu drives high levels of inventory thus corroborating existing theories about random disruptions raising safety stock levels we also show that increased economic uncertainty yields higher trade credits payables and working capital thus requiring firms to tie more capital to their operations our results are statistically significant yet these effects are small at the firm level the results are robust when applying the monetary policy uncertainty mpu index to the subsample of the data from 1990 to 2007 instead of the epu index to the same data set

hierarchical design and enforcement of income tax policies abstract a hierarchical model of tax compliance is studied in which the government selects a tax policy and then delegates the responsibility to collect taxes to the irs there is a fixed distribution of income in the economy individuals differ by their income which is known niether to the government nor to the irs we completely characterize the solution to the irs s revenue maximizing problem when taxpayers are risk neutral the optimal auditing policy divides the reported incomes into at most three groups we show that the government provides a smaller budget to the irs than the irs would wish

immigration and welfare magnets this article investigates if the location choices made by immigrants when they arrive in the united states are influenced by the interstate dispersion in welfare benefits income maximizing behavior implies that foreign born welfare recipients unlike their native born counterparts may be clustered in the states that offer the highest benefits the empirical analysis indicates that immigrant welfare recipients are indeed more heavily clustered in high benefit states than the immigrants who do not receive welfare or than natives as a result the welfare participation rate of immigrants is much more sensitive to changes in welfare benefits than that of natives

bidding for firms recently toyota sought a plant location in the united states the 800 million plant will employ 3000 workers and numerous states offered toyota generous investment incentives hoping this would induce toyota to select their state the commonwealth of kentucky won this competition but the price was high the present value of the payments exceeds 125 million the payment of investment incentives for the toyota plant is not unique in 1976 pennsylvania paid 75 million to attract a volkswagen plan nissan honda and mazda received generous investment incentives when locating plants in the united states and this bidding is not limited to states to attract the headquarters of the presbyterian church usa with its 1300 jobs and 38 million annual payroll civic leaders in louisville kentucky offered the church a warehouse and 6 2 million for renovation of the structure bidding the church away from kansas city missouri in this paper we contend that this competition may result from the average cost pricing of publicly provided goods and services 2 when the marginal cost of providing a firm and its workers with public services is less than the tax revenue they generate a government may offer the firm subsidies that reduce the distortions the average cost pricing of the public service creates thus this competition for industry is not a zero sum game where the subsidies are only transfers from the government to the firm rather these subsidies may facilitate the efficient location of industry

is there a compensating wage differential for high crime levels first evidence from europe abstract this paper investigates whether high regional crime levels lead to a compensating wage differential paid by firms in the respective region using data from german social security records official police statistics and official statistics for 2003 2006 i consider both violent and non violent crimes and use three way error components estimators to control for individual and regional heterogeneity the findings suggest that wages are practically unrelated to changes in crime rates this result is robust over a wide range of subgroups there is however some evidence that crime rates influence land prices

housing and location choices of retiring households evidence from france in this paper a study is made of the mobility and housing choices of the elderly when retiring using household data collected in france from a theoretical viewpoint individuals are likely to decrease their housing quantity because of an income loss when retiring but they may also increase it to benefit from more housing comfort for leisure using the 1992 trois generations survey it is first shown that housing mobility at retirement is substantial in france with a variety of self reported motives then using the 1994 2001 french europanel survey evidence is found of both upsizing and downsizing for mobile recent retirees in many cases housing adjustments lead to a correction of the initial disequilibrium between the number of rooms and the number of occupants however a significant proportion of mobile recent retirees improve the quality of their dwelling

do immigrant inflows lead to native outflows we use 1980 and 1990 census data for 119 larger metropolitan statistical areas to examine the effect of skill group specific immigrant inflows on the location decisions of natives in the same skill group and on the overall distribution of human capital to control for unobserved skill group specific demand factors our models include lagged mobility flows of natives over the 1970 80 period we also estimate instrumental variables models that use the fraction of mexican immigrants in 1970 to predict skill group specific relative immigrant inflows over the 1980s despite wide variation across cities in the size and relative skill composition of immigrant population changes we find no evidence of selective out migration by natives we conclude that immigrant inflows exert a direct effect on the relative skill composition of cities cities that have received relatively unskilled immigrant flows have experienced proportional rises in the size of their unskilled populations this abstract was borrowed from another version of this item

optimal monitoring policies in agencies this article considers a principal agent problem in which the principal has access to a costly monitoring technology that can be used to acquire additional information about the agent s actions subsequent to observing the agent s output although randomized monitoring policies are feasible we show that in a variety of contexts optimal monitoring policies are deterministic and lower tailed that is there exists some critical level of output such that further investigation of the agent s actions occurs if and only if output falls below this critical level

focusing the financial flow of supply chains an empirical investigation of financial supply chain management the objective of this paper is to establish a theoretical foundation for financial supply chain management fscm in order to strengthen managerial decisions concerning financial flows in supply chains although such decisions are made frequently and partial aspects of fscm are already understood in business practice empirical knowledge about fscm is in its early stages the study provides fundamental information derived from eight case studies based on 40 interviews the analysis extends previous studies of the interface between operations management and finance by i contributing to a mid range theory of fscm by exploring two distinct but not exclusive fscm categories their antecedents and performance effects ii empirically deriving a testable framework for fscm iii relating fscm to established theories in the field of scm and iv basing the analysis on transaction cost economics managerial insights reveal that weak working capital causes firms to focus on fscm more specifically the study identifies two fscm categories pre shipment fscm before invoice release and post shipment fscm after invoice release managers can improve upstream supply chain working capital with pre shipment fscm whereas post shipment fscm strengthens the buying firm s working capital position based on transaction cost economics we analyze how these improvements stem from risk reductions which are more effective if firms are integrated internally and externally

new estimates of climate demand evidence from location choice abstract we develop and apply to census data a new method for estimating climate demand the method is useful for ranking quality of life based upon a willingness to pay criterion our two major findings are that the willingness to pay quality of life index is correlated with the hedonic approach s ranking but that the migration approach generates much larger estimates of willingness to pay for a more moderate climate this finding is relevant for evaluating the economic impact of global warming

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

the resurgence of inventory research what have we learned abstract recent empirical and theoretical research on business inventories is surveyed and critically evaluated while most inventory research has had macroeconomic motivations we focus on its microtheoretic basis and on potential conflicts between theory and evidence the paper asks two principal questions first how can inventories which are allegedly used by firms to stabilize production nonetheless be a destabilizing factor at the macroeconomic level second why if firms are following the production smoothing model is production more variable than sales in many industries we suggest that the so called s s model may help answer both questions

delayed production and raw materials inventory under uncertainty abstract firms producing seasonal goods often make order and production choices prior to highly uncertain sales thus lending an investment quality to their decisions using specialized inputs imposes a delay in receiving them and linked with a long production period the firm makes its order production and pricing choices under successively reduced uncertainty the model shows that input and production costs have distinctive effects on the firm s order size with implications for the stock of raw materials inventory firms facing relatively low input costs are willing to risk leaving inputs unused as a bet for a good state of nature further we investigate situations of greater uncertainty and find a more nuanced explanation of firm behavior than previous research firms with relatively inexpensive inputs facing equal odds of good and bad states of nature will increase their order size a known result however a firm with a low relative cost of completing production may either raise or reduce its order size depending on the demand elasticity and the relative demand uncertainty intuitively firms with expensive inputs facing highly uncertain demand and with many substitute output goods are inhibited by the high cost of insuring against stock outs

u s state and local fiscal policy and economic activity do we know more now early reviews of the academic literature on the economic effects of state and local taxes and expenditures suggested that not enough was known upon which to base policy the reviews called for better data and improvements in empirical methodology this paper reviews studies conducted since the early literature reviews to assess our current state of knowledge the conclusion of the study is that we know more now but our knowledge is unlikely to ever be sufficient to provide universal policy guidance rather we suggest that more research is needed on specific state and local policies for specific circumstances consistent with the general principles that guide place based policy

a reexamination of the federal private wage differential in the united states the federal private wage differential is reexamined with recent data using specifications similar to those used in three previous studies i find that the federal private wage differential has narrowed since the 1974 79 period analyzed in those studies in addition i discover that wage differentials based on specifications used in the literature are biased upward because the previous studies did not control for detailed occupational and locational characteristics of workers corrected point estimates of the wage gap are much smaller than previous estimates in the literature differences in the gap across demographic groups occupations and locations are also discussed

anti poverty policy for families in the next century from welfare to work and worries this paper reveals that recent changes in social policy have included both sharp cutbacks in welfare for non working families and dramatic increases in supports for low income working families it explores the reasons for these changes and documents how they have radically changed work incentives for some persons notable single mothers the result has been a large increase in work by low wage single parents the paper concludes by examining several potential dangers of this new direction and explores the challenges that remain for the next century

recent immigrants as labor market arbitrageurs evidence from the minimum wage this paper investigates the local labor supply effects of changes to the minimum wage by examining the response of low skilled immigrants location decisions canonical models emphasize the importance of labor mobility when evaluating the employment effects of the minimum wage yet few studies address this outcome directly low skilled immigrant populations shift toward labor markets with stagnant minimum wages and this result is robust to a number of alternative interpretations this mobility provides behavior based evidence in favor of a non trivial negative employment effect of the minimum wage further it reduces the estimated demand elasticity using teens employment losses among native teens are substantially larger in states that have historically attracted few immigrant residents

self selection and the earnings of immigrants this paper analyzes the way in which the earnings of the immigrant population may be expected to differ from the earnings of the native population because of the endogeneity of the decision to migrate the empirical study shows that differences in the u s earnings of immigrants with the same measured skills but from different home countries are attributable to variations in political and economic conditions in the countries of origin at the time of migration excerpt

a transactions theory of trade credit use this paper derives a transactions theory of trade credit use from the motives of trading partners to economize on the joint costs of exchange in the formal analysis uncertain delivery time is used to generate a demand by firms to hold inventories of both goods and money trade credit is viewed as a mechanism that separates the exchange of money from the uncertainty present in the exchange of goods by forewarning both trading partners of the timing of money flows credit permits a reduction in precautionary money holdings and the more effective management of net money accumulations

native competition and low skilled immigrant inflows this paper demonstrates that immigration decisions depend on local labor market conditions by documenting the change in low skilled immigrant inflows in response to supply increases among the us born using pre reform welfare participation rates as an instrument for changes in native labor supply i find that immigrants competing with native entrants systematically prefer cities with smaller supply shocks the extent of the response is substantial for each native woman working due to reform 0 5 fewer female immigrants enter the local labor force these results provide direct evidence that international migration flows tend to equilibrate returns across us local labor markets

the determinants and welfare implications of us workers diverging location choices by skill 1980 2000 abstract from 1980 to 2000 the rise in the us college high school graduate wage gap coincided with increased geographic sorting as college graduates concentrated in high wage high rent cities this paper estimates a structural spatial equilibrium model to determine causes and welfare consequences of this increased skill sorting while local labor demand changes fundamentally caused the increased skill sorting it was further fueled by endogenous increases in amenities within higher skill cities changes in cities wages rents and endogenous amenities increased inequality between high school and college graduates by more than suggested by the increase in the college wage gap alone jel d31 i26 j24 j31 j61 r23

samurai accountant a theory of auditing and plunder a risk neutral principal wishes to exact a payment from a risk neutral agent whose wealth he does not know but may verify through a costly auditing procedure we characterize efficient schemes for the principal when he is allowed to choose schedules for preaudit and postaudit payments and audit probabilities subject to the constraint that only monetary incentives can be used and that the principal may never make a net payment to the agent the main results are that efficient schemes involve preaudit payments which are increasing in the agent s wealth audit probabilities are decreasing in the agent s wealth and also satisfy certain constraints as equalities in general such schemes involve stochastic auditing and rebates after an audit in this paper we analyse the problem of a principal extracting wealth from an agent who is reluctant to part with it and is also better informed than the principal as to the amount he owns we assume that the principal has a costly means of discovering the agent s

urban effects on participation and wages are there gender differences abstract this paper estimates participation and wage equations using panel data from the united kingdom to explore gender differences in urban wage and participation premiums the results suggest a small but economically significant urban participation premium for women but none for men results from the wage estimations suggest that after controlling for sample selectivity observed and unobserved heterogeneity the urban premium is larger for women this wage premium is also larger for married or cohabiting women relative to others there is also evidence of higher urban returns to experience for men and lower urban wage depreciation for both men and women

crime and economic incentives we explore the role that economic incentives particularly changes in wages at the bottom end of the wage distribution play in determining crime rates we use data on the police force areas of england and wales between 1975 and 1996 and find relative falls in the wages of low wage workers lead to increases in crime we carry out a number of experiments with different wage measures including a wage measure that accounts for the effects of changes in the composition of employment these reinforce the picture of a strong association between the low wage labor market and crime the result that incentives play a central role is reinforced further by the strong impact on crime of deterrence measures and of a measure of the returns to crime

why did the welfare rolls fall during the 1990 s the importance of entry during the late 1990 s the welfare caseload fell precipitously whereas 5 million families received cash welfare in 1994 only 2 1 million families received aid in 2000 as a fraction of the u s population this represents the lowest level of welfare receipt since 1964 u s department of health and human services 2002 the decline in the caseload could have resulted from a decrease in entries an increase in exits or some combination of the two although a number of studies have analyzed welfare exits either implicitly or explicitly few have focused on welfare entries entries may be important for a number of reasons conservative proponents of welfare reform explicitly sought to reduce welfare entries particularly entries related to unwed childbearing see r kent weaver 2000 ch 6 such observers might question the success of welfare reform if the decline in the caseload resulted entirely from increased exits entry effects may also have implications for the provision of in kind transfers historically both food stamps and medicaid were closely

working capital and fixed investment new evidence on financing constraints this article presents new tests for finance constraints on investment by emphasizing the often neglected role of working capital as both a use and a source of funds the coefficient of endogenous working capital investment is negative in a fixed investment regression as expected if working capital competes with fixed investment for a limited pool of finance this finding addresses a criticism of previous research on finance constraints that cash flows may simply proxy shifts in investment demand in addition previous studies may have underestimated the impact of finance constraints on growth and investment because firms smooth fixed investment in the short run with working capital

an optimal financial response to variable demand this paper develops a positive theory of trade credit based on its use as a financial response to deterministic variations in demand the operating alternatives to trade credit which include the use of storage or additional capacity are modeled using results from the peak load pricing literature the paper shows that the extension of credit partitions the buyer s inventory cost and permits specialization at incurring the components of this cost this specialization is economical when the seller has an advantage at incurring the financial cost and does not have an advantage at incurring the operating cost of accommodating variable demand conditions that provide these necessary and sufficient cost relationships are described the paper also shows that a reduction in costs rather than an increase in revenues is the source of both the buyer s and seller s increase in wealth

dynamic product portfolio management with life cycle considerations we consider a portfolio of products in which each product probabilistically transitions through various life cycle stages the evolution through these life cycle stages is impacted by both marketing support and product launch decisions which are bound by a financial constraint in the form of restricted working capital in the model the joint working capital level serves to finance the portfolio expenditures and is decided a priori by the company we use an infinite horizon markov decision process mdp to find the optimal decisions to coordinate the operations and finance depending on the composition of the portfolio we find that the policy optimizing the product launch marketing support and inventory decisions under a working capital constraint is independent of the correlation between demand levels of the products in the portfolio we numerically demonstrate that the joint management of the products has a significant positive effect on the total profit reducing the amount of working capital used per product we also show that the optimal policy smooths aggregated demand levels as well as cash flows

land use worker heterogeneity and welfare benefits of public goods we show that investments in public goods change the optimal land use in their vicinity leading to additional welfare benefits this occurs through two sorting mechanisms first availability of public goods leads to higher population densities second population groups sort according to their preferences for public goods we develop a structural spatial general equilibrium model that accounts for these effects the model is estimated using data on transport infrastructure commuting behaviour land use and land rents for some 3000 zip codes in the netherlands and for three levels of education welfare benefits of investments in public transport infrastructure are shown to differ sharply by workers educational attainment welfare gains from changes in land use account for up to 30 of the total benefits of a transport investment

cash flow management and manufacturing firm financial performance a longitudinal perspective abstract a firm s cash flow policies which manage working capital in the form of cash receivables from customers inventory holdings and cash payments to suppliers are inexorably linked to the firm s operations building on earlier research this study i extends prior studies by examining the relationships between changes in cash flow measures and changes in firm financial performance using a longitudinal sample of firm data and ii investigates the direction of the relationship between quarterly changes in cash flow positions and firm financial performance this study is conducted using the generalized estimating equations gee methodology to analyze a longitudinal sample of eight quarters of cash flow and financial performance data from 1233 manufacturing firms the analyses find that changes in the widely used cash conversion cycle ccc metric do not relate to changes in firm performance however changes in the less used operating cash cycle occ metric are found to be significantly associated with changes in tobin s q this examination of how changes in specific cash flow measures relate to changes in tobin s q shows that both reductions in accounts receivables measured as days of sales outstanding dso and reductions in inventory measured as days of inventory outstanding dio relate to firm financial performance improvements that persist for several quarters endogeneity tests of whether a firm s cash flow management strategy leads to changes in firm performance or if the cash flow strategy is a byproduct of firm performance suggest that reductions in dso lead to improved firm financial performance

the effect of immigration on wages exploiting exogenous variation at the national level this paper estimates the effect of immigration on native wages at the national level taking into account the endogenous allocation of immigrants across skill cells time varying exogenous variation across skill cells for a given country is provided by interactions of push factors distance and skill cell dummies distance mitigates the effect of push factors more severely for less educated and middle experienced because the analysis focuses on the united states and canada i propose a two stage approach sub sample 2sls that estimates the first stage regression with an augmented sample of destination countries and the second stage equation with the restricted sub sample of interest i derive asymptotic results for this estimator and suggest several applications beyond the current one the empirical analysis indicates a substantial bias in estimated ols wage elasticities to immigration sub sample 2sls estimates average 1 2 and are very stable to the use of alternative instruments

stochastic monitoring and moral hazard the phenomenon of monitoring subordinates actions and local environments so commonly observed in large firms is an attempt to alleviate the moral hazard problem induced by central managers principals being unable to costlessly observe subordinates agents actions and the state of their environment these monitoring activities take many forms and are generally performed in a stochastic manner for example supervisors make surprise checks on workers and investigations are often triggered by standard cost variance reports the information gathered from monitoring activities is used to penalize or reward subordinates agents thus altering their incentives and behavior it is intuitively clear that the monitoring policy that will be employed depends upon the contract to be enforced in a sense every type of contract has both benefits and associated monitoring costs the purpose of this paper is to study the simultaneous optimal choice of contracts and stochastic monitoring policies in a single period principal agent paradigm townsend 1979 first studied monitoring or verification in the context of a simple trading economy where the endowments of consumers were stochastic and known only to themselves however in townsend s analysis verification policies were constrained to be deterministic that is states were verified with probability one or not at all with deterministic verification townsend found that in the nondegenerate case unfavorable outcomes were verified and more favorable outcomes were

networks in the modern economy mexican migrants in the u s labor market this paper attempts to identify job networks among mexican migrants in the u s labor market the empirical analysis uses data on migration patterns and labor market outcomes based on a sample of individuals belonging to multiple origin communities in mexico over a long period of time each community s network is measured by the proportion of the sampled individuals who are located at the destination the united states in any year we verify that the same individual is more likely to be employed and to hold a higher paying nonagricultural job when his network is exogenously larger by including individual fixed effects in the employment and occupation regressions and by using rainfall in the origin community as an instrument for the size of the network at the destination

investment cash flow sensitivities are useful a comment on kaplan and zingales arecent paper in this journal by kaplan and zingales reexamines a subset of erms from work of fazzari hubbard and petersen and criticizes the usefulness of investment cash eow sensitivities for detecting enancing constraints we show that the kaplan and zingales theoretical model fails to capture the approach employed in the literature and thus does not provide an effective critique moreover we describe why their empirical classiecation system is eawed in identifying both whether erms are constrained and the relative degree of constraints across erm groups we conclude that their results do not support their conclusions about the usefulness of investment cash eow sensitivities in a recent paper in this journal kaplan and zingales 1997 hereinafter kz argue that investment cash eow sensitivities do not provide useful evidence about the presence of enancing constraints because kz use a subset of the same erms and the same regressions as fazzari hubbard and petersen 1988 hereinafter fhp and claim page 176 that fhp can legitimately be considered the parent of all papers in this literature it is appropriate that we respond based on a simple theoretical model kz reach the provocative conclusion page 211 that the investment cash eow sensitivity criterion as a measure of enancial constraints is not well grounded in theory in section i we show that the kz model does not capture the theoretical approach employed in fhp and many subsequent studies most of the kz paper attempts to show that empirical investment cash eow sensitivities do not increase monotonically with the degree of enancing constraints within the 49 low dividend erms from the fhp sample in section ii we explain why the kz classiecation of the degree of constraints is eawed in identifying both whether or not erms are constrained absolute constraints as well as the relative degree of constraints across erms as a result we argue in section iii that there is no expected ex ante pattern for the

going home evacuation migration decisions of hurricane katrina survivors in the wake of hurricane katrina many evacuees from the gulf region began the difficult process of deciding whether to rebuild or restart elsewhere we examine pre katrina gulf residents decision to return to the postdisaster gulf region which we call the return migration decision we estimate two separate return migration models first using data from a mail survey of individuals in the affected region and then focusing on self administered questionnaires of evacuees in houston our results indicate that return migration can be affected by household income age education level and employment marital and home ownership status but the results depend on the population under consideration we find no effect of connection to place on the return migration decision although the effect of income is relatively small within subsamples we find a much higher proportion of middle income households planning to return than lower income households when comparing across the subsamples in addition the real wage differential between home and host region influences the likelihood of return larger implicit costs in terms of foregone wages for returning induce a lower likelihood of return exploiting this difference at the individual level we are able to produce estimates of willingness to pay wtp to return home average wtp to return home for a sample of relatively poor households is estimated at 1 94 per hour or 3954 per year

riding the wave of urban growth in the countryside spread backwash or stagnation the advisability of an urban centered growth strategy to reap the benefits of urban agglomeration economies is much debated rural areas benefit when the growth spreads to the hinterlands especially within daily commuting distance yet in distant peripheral locations urban growth may create a backwash as households relocate to the urban center this study examines spread vs backwash as separate from long run distance from urban center trend effects using a novel canadian gis database the unique nation wide approach yields a spread and backwash rural growth topography that varies by distance from the urban center by urban population vs income growth and by size of rural community

international migration self selection and the distribution of wages evidence from mexico and the united states we use the 1990 and 2000 mexican and u s population censuses to test borjas s negative selection hypothesis that the less skilled are those most likely to migrate from countries with high skill premia earnings inequality to countries with low skill premia earnings inequality we find that mexican immigrants in the united states are more educated than nonmigrants in mexico and were mexican immigrants to be paid according to current skill prices in mexico they would be concentrated in the middle of mexico s wage distribution these results are inconsistent with the negative selection hypothesis and instead suggest that there is intermediate selection of immigrants from mexico

analysis of a production inventory system subject to random disruptions in this paper we study an unreliable bottleneck production inventory system with a constant production and demand rate that is subject to random disruptions we assume that the restoration times are constant the time between breakdowns is exponential the production setup cost and or setup time is positive and excess demand is backordered we propose an s s production policy for such systems and develop expressions for the operating characteristics of the system the properties of the policy parameters that minimize the expected total cost rate are investigated and a procedure for finding their optimal values is developed in addition we devise and test a simple heuristic procedure for finding near optimal production policies the results of a numerical experiment suggest that i setup cost reduction is more effective in reducing total operating cost when the production system is more reliable ii setup cost reduction in unreliable production systems results in higher optimal safety stock level and iii proper determination of the safety stock levels is extremely important in just in time systems which are susceptible to disruptions

corporate trade credit and inventories new evidence of a trade off from accounts payable and receivable abstract trade credit is an important source of finance for firms and has been well researched but the focus has been on financial trade offs in this paper we consider the trade offs with inventories and develop a simple model that recognizes the incentives a firm faces to offer and receive trade credit our model identifies the response of accounts payable and accounts receivable to changes in the cost of inventories profitability risk and liquidity and importantly this influence operates through a production channel our results support the model and complement many existing studies focused on explaining the financial terms of trade credit