el salvador s agricultural sector macroeconomic policy agrarian change and the environment abstract this paper argues that current agricultural policy in el salvador is failing to further the goals of macroeconomic growth and stability sustainable livelihood security and environmental sustainability macroeconomic policy has turned relative prices sharply against agriculture the plight of the rural poor has been exacerbated by continuing inequities in the agrarian structure the breakdown in rural livelihoods and limited access to land and other assets is accelerating environmental degradation suggested alternative policies such as more favorable price policies agrarian reform and environmental restoration would promote sustainable development by capitalizing on the complementarity among growth poverty reduction and consolidation of peace

resource allocation and use under collective rights and labour management in peruvian coastal agriculture a critical issue in the evaluation of labour management as a development policy is its impact on production in an effort to contribute to that evaluation and to the economics of labour management this study analyses production data collected from cooperative firms established by the peruvian agrarian reform the data present an unusual opportunity for careful microeconomic analysis of the reform itself as well as an opportunity to confront and refine existing propositions about the effects of the collective property rights of labour management on production property rights may affect production because of their effort on incentives for conventional resource allocation decisions they may also affect intrafirm principal agent decisions which determine the intensity with which given resources are utilised beginning with ward s i 958 paper a number of theoretical studies have compared labour managed and capitalist resource allocation and an approximate consensus has emerged about conditions under which differences occur in this study measures of the allocative behaviour of peruvian firms are estimated and compared with the theoretically expected behaviour of both capitalist and peasant agricultural producers the impact of collective ownership on the intensity of resource utilisation i e technical efficiency of the observable production function arouses greater theoretical dispute than the resource allocation question a collective assignment of property rights may weaken supervisory authority which can control free rider externality problems within the production process on the other hand participation of labour in management may foster cooperative attitudes and other social control devices which can fulfill the same functions as hierarchical supervision existing literature offers the competing hypotheses that labour management leads either to a breakdown in intrafirm coordination and the observable technical efficiency of production as jensen and meckling i 979 claim or to an improvement as vanek i 969 claims the results of the present paper do not unequivocably support either view instead they portray a diversity in labour managed production performance and suggest the importance of policy and institutional factors which condition the impact of labour management on production the results also provide a

strategic work interactions and the kibbutz kolkhoz paradox the authors develop a model of strategic work interactions in collective enterprises explaining the following observation the israeli kibbutz in which net collective output is distributed equally has been an economic success while the soviet kolkhoz in which net output traditionally was divided according to relative work input has been a failure in contrast the conventional cournot nash theory of collective enterprises predicts superoptimal output in the kolkhoz while in the kibbutz the free fider problem is predicted to lead to suboptimal effort their theory predicts pareto optimal work effort in the kibbutz and suboptimal effort in the kolkhoz copyright 1989 by royal economic society

the effect of child labor on learning achievement abstract this paper analyzes the effect of children s work on learning achievement its particular significance is that it goes beyond the analysis of the effects on school enrollment or attendance by using measures of skills learned in reading and mathematics the results show that work outside the household has a substantial effect on learning achievement although they confirm the accepted wisdom they introduce a new view of how that arises a large part of it is direct and not through school attendance the direct link could exist because of exhaustion or because of a diversion of interest away from academic concerns

art investment an empirical inquiry investment in art and especially in paintings by the masters is often considered to be highly profitable particularly in the united states but also in the richer european nations there is an even larger number of investors who believe that buying works of art is not only fun but also a good investment from a purely financial point of view american banks have recently strengthened this trend toward art as an investment by employing art investment counselors thus suggesting that it is a financially rewarding activity to engage in and also suggesting that superior knowledge helps to improve financial success in this market buying and selling art has in fact become an increasingly popular activity since the end of world war ii the auction houses report record turnovers and record prices are paid in increasingly rapid sequence in april 1987 van gogh s sunflowers was sold at christie s london for 39 9 million only to be surpassed in november 1987 by van gogh s irises sold by sotheby s new york for 53 9 million including the auction house s 10 percent commission this last painting had been bought by the seller s mother in 1947 for 84 000 less than 0 5 million in today s money which gives a real rate of return of about 12 percent per year these enormous prices that are paid today for some masterpieces create a widespread belief that the rate of return on such investments is in general and on average very high books devoted to the subject 40 385 27 24 12 215 et seq seem to confirm that the rate of return from investment in paintings at least during the 1950s and 1960s was far greater than the rate obtainable from comparable risky assets in financial markets that the financial profitability in the 1970s and 1980s is believed to be if anything even larger than before is confirmed by many articles in financial and investment newspapers and journals up to now only very few scientific studies of the subject exist but they also have serious limitations the most recent one by baumol 5 covers a period of over 300 years but ends in 1960 two other studies by anderson 1 and stein 42 extend up to the end of the 1960s but do not go any further all three studies are practically limited to transactions by anglo saxon auction

the relationship between relative prices and the general price level it is very nearly a truismi amaong neoclassical economists that the public is wont to confuse changes in the general price level with relative price changes correspondingl y one might speak of the independence between the two as one of the central postulates of the neoclassical tradition william stanley jevons was aml ong the first to identify this basic dichotomin economic life as well as to attempt to explain the ordinary citizen s seenming incapacity to understand it

shirking and the choice of technology a theory of production inefficiency with an empirical application abstract we develop a model of shirking and technology choice and show that organizations exercising less effective direct control over shirking adopt technologies that underutilize the workforce to a greater degree relative to neoclassical counterparts in order to control shirking indirectly thus technical inefficiency arises endogenously as a rational response to allocative inefficiency caused by shirking an empirical analysis of data from a sample of collective and private farms operating in jewish palestine reveals the presence of shirking and supports the prediction that farms with less effective direct control over shirking exhibit greater labor hoarding as a manifestation of technical inefficiency

labor market adjustment to political conflict changes in the labor market in el salvador during the 1980s abstract i use household survey data for the 1980s to examine changes in the labor market of el salvador the findings suggest that the labor market does adjust to conflict there have been significant effects of conflict on the regional distribution of employment on international migration on internal migration in the areas directly affected other indicators such as labor force participation and self employment rates show outcomes are lower in the areas that were affected by conflict but were lower even before the conflict began and for earnings the level of real hourly earnings has fallen substantially in all areas in the 1980s

inflation and unemployment the world economy today is vastly different from the 1930s when seymour harris the chairman of this meeting infected me with his boundless enthusiasm for economics and his steadfast confidence in its capacity for good works economics is very different too both the science and its subject have changed and for the better since world war ii but there are some notable constants unemployment and inflation still preoccupy and perplex economists statesmen journalists housewives and everyone else the connection between them is the principal domestic economic burden of presidents and prime ministers and the major area of controversy and ignorance in macroeconomics i have chosen to review economic thought on this topic on this occasion partly because of its inevitable timeliness partly because of a personal interest reaching back to my first published work in 1941

the performance of private and cooperative socialist organization postwar yugoslav agriculture socialist enterprises in yugoslav agriculture show higher levels of productivity than private producers the author examines the sources of these differences with total factor productivity estimates based on sectoral aggregate cobb douglas production functions which permit separation of environmental policy and organizational effects the results support the following conclusions cooperative socialist enterprises are not inherently inefficient and can even outperform private producers both types of producers were responding to their environment and their differential rates of technological change reflect the different constraints they faced and socialist enterprises exhibited technology adoption behavior similar to nonsocialist enterprises elsewhere copyright 1987 by mit press

effort technology and the efficiency of agricultural cooperatives abstract the inefficiency of cooperative agriculture relative to private farms is often attributed to difficulties in monitoring or poor incentives we develop a model to show that in technologies with numerous sequential steps even small shortfalls in worker effort can result in large output declines using data on cooperative and private farms in el salvador we find greater shortfalls in efficiency between cooperatives and private farms as well as among cooperatives for coffee a crop requiring numerous steps in its cultivation than for maize and sugar which require fewer steps thus the undersupply of effort in cooperatives may be less than differences in productivity suggest and cooperative agriculture is most likely to be successful where production does not involve many sequential steps

fisher phillips friedman and the measured impact of inflation on interest a reply the purpose of this paper is to demonstrate that empirical findings which persistently appear to contradict the fisher hypothesis that the nominal rate of interest should rise by the full amount of an increase in anticipated inflation are due basically to a failure to control for changes in the real rate of interest that are associated with changes in anticipated inflation we are guided in our search for proper specification of a fisher equation by a simple general equilibrium model which is employed to derive the impact of a change in anticipated inflation upon nominal interest given the requirement that commodity money and labor markets remain in equilibrium in effect we depart from the empirical tradition which has grown up around testing of the fisher hypothesis that takes the real interest rate to be independent of anticipated inflation and argues that for anticipated inflation properly measured the data ought to support the fisher hypothesis 1

is private farming more efficient than socialized agriculture this paper examines the technical efficiency of state and private farms in poland for the period 1960 74 we find that the average technical efficiency of the two types of farms does not differ although the dispersion of efficiency levels is greater among state farms than among private ones we do find clear evidence of allocative inefficiency with state farms oversupplied with fertilizer and machinery

mobility and labor market segmentation the urban labor market in el salvador there is now a large literature examining the hypothesis that there are barriers to mobility between sectors of the labor market in developing countries though there are many explanations for barriers to mobility most versions of the segmented labor market hypothesis are based on restricted access to a higher wage primary or formal sector and free access to a lower wage secondary or informal sector the testable predictions of the hypothesis are the implications of the assumption of excess supply to the primary sector most studies have found results consistent with these predictions including different structures of wages between sectors lower returns to human capital in the secondary sector and lower job tenure by sectors for some demographic groups but as several authors have recently noted it is difficult to distinguish this hypothesis from other competitive explanations for these patterns the competitive model is also consistent with the testable predictions of the segmented labor market hypothesis though the competitive model is consistent with the observed patterns the observed patterns do put restrictions on the version of the competitive model that is appropriate for developing countries for example the finding that earnings tend to be lower in the informal sector is consistent with compensating differentials but this applies only to compensating differentials that are based on formal sector employment as being less desirable such as job flexibility similarly the finding of lower returns to human capital in the informal sector is consistent with life cycle models of investment in human capital but only models in which there is lower labor market attachment of those employed in an informal sector and thus less time to recuperate investments in on the job training but most of the necessary assumptions are reasonable and as a result tests of the segmented labor market hypothesis cannot distinguish among competing explanations

decomposing the gender gap in cognitive skills in a poor rural economy girls lag markedly behind boys in education in many developing countries which may slow economic growth and increase inequity this paper uses indicators of the output of the education production process cognitive skills to characterize and to investigate the determinants of the large educational gender gap in rural pakistan local school availability accounts for about a third of the total cognitive achievement gender gap and over two fifths of that in numeracy which implies that policies that increased local school availability for girls could reduce substantially the gender gaps in cognitive skills to further reduce these gender gaps will require policies that focus on the demand side of the market where our results suggest the response to modest changes in incentives may be high

fisher s paradox and the theory of interest irving fisher s theory of interest has proved to be a most durable and influential contribution to economic theory a central element of fisher s contribution is the fisher hypothesis that over the longer term the real rate of interest is approximately constant being determined largely by time preference with movements in the nominal interest rate reflecting movements in the rate of inflation one for one the paradox of the fisher hypothesis is that despite its wide acceptance as the cornerstone of interest rate theory most empirical evidence appears to be inconsistent with the hypothesis at least in its strictest form this empirical anomaly was noted by fisher himself who attributed it to money illusion in the fifty years following the publication of the theory of interest a considerable literature has evolved around this paradox the unifying theme of this literature is a common acceptance of the essence of fisher s hypothesis most of the energy in this literature has been devoted to explaining systematic movements in the real rate of interest and to providing reasons why the relationship between the nominal interest rate and inflation may only be approximate in

collectivization and china s agricultural crisis in 1959 1961 the agricultural crisis in china in 1959 61 after the initial success of the collectivization movement resulted in 30 million extra deaths in this paper a game theory hypothesis proposes the main cause of this catastrophe i argue that because of the difficulty in supervising agricultural work the success of an agricultural collective depends on a self enforcing contract in which each one promises to discipline oneself a self enforcing contract however can be sustained only in a repeated game in the fall of 1958 the right to withdraw from a collective was deprived the nature of the collectivization was thus changed from a repeated game to a one time game as a result the self enforcing contract could not be sustained and agricultural productivity collapsed the empirical evidence is consistent with this hypothesis

the trade off between child labour and human capital formation a tanzanian case study we investigate the degree to which there is a trade off between child labour and human capital formation using time log data of children from a tanzanian household survey we find that a tradeoff between hours of work and study exists and hours of work tend to be more affected by social conditions than hours of study hours of work are negatively correlated to reading and mathematical skills through the reduction of human capital investment activities indicating a trade off between child labour and human capital the results point up the complexity of the issue and the need for detailed time allocation data

behavioural and material determinants of production relations in agriculture in this essay we develop a framework for analysing the major institutions governing the production and exchange of output and the primary factors of production in rural areas the analysis incorporates general considerations of risk and information constraints jointly with the principal material attributes of agriculture and of agricultural production factors the framework is used to analyse barriers to the existence of the major intertemporal and factor markets it is applied specifically to land scarce environments for which it provides an internally consistent explanation for many of the well documented institutional features of such settings in addition the analysis provides new implications for among other phenomena the inter relationships among ownership holdings operational scale family size and factor productivity for the scarcity of animal rental markets and use of animals as collateral for the renting out of land by small landowners and for the existence of plantations for certain crops