the private wage sector in cote d ivoire homogeneity or heterogeneity one dominant feature of economic development is change in the structure of the economy some sectors expand while others shrink in response to changes in output markets considerable adjustments must take place in factor markets as well development will therefore proceed more speedily when barriers in the factor markets are minimal whether or not barriers in the labor market exist macroeconomic discussions of labor markets usually assume uninhibited flows between sectors 13 similarly a large literature on earnings of wage workers has treated the wage sector as a homogeneous part of the labor market yet if the wage sector is heterogeneous model estimates have no empirical meaning and policy recommendations have no foundation

the economics of a blend mandate for biofuels a biofuel blend mandate may increase or decrease consumer fuel prices with endogenous oil prices depending on relative supply elasticities biofuel tax credits always reduce fuel prices tax credits result in lower fuel prices than under a mandate for the same level of biofuel production if tax credits are implemented alongside mandates then tax credits subsidize fuel consumption instead of biofuels this contradicts energy policy goals by increasing oil dependency co 2 emissions and traffic congestion while providing little benefit to either corn or ethanol producers these social costs will be substantial with tax credits costing taxpayers 28 7 billion annually by 2022 copyright 2008 oxford university press

individual taxpayer response to tax cuts 1982 1984 with implications for the revenue maximizing tax rate abstract this paper measures the response of taxpayers to the u s personal rate reductions from 1982 to 1984 a baseline income distribution is created to describe what level and distribution could be expected in the absence of tax changes comparison of this baseline with actual tax return data shows that at least one sixth and probably one quarter of the revenue ascribable to the rate reductions was recouped by changes in taxpayer behavior the data also show that federal income tax revenue would have been maximized at a tax rate of about 35 percent and total income tax revenue maximized at a total tax rate of about 40 percent

the importance of group coverage how tax policy shaped u s health insurance in 1954 the internal revenue service stipulated that employer contributions to the health insurance plans of their employees were to be excluded from employee taxable income today the tax subsidy is major feature of the u s health care market this paper examines the initial effects of the tax subsidy on the demand for health insurance using previously unexamined data from 1953 and 1958 results suggest that the tax subsidy increased the growth of group insurance particularly among union members and employed persons this is a critical effect because group insurance is not only less expensive than individual insurance but it is also easier to obtain and households with access to group health insurance are far more likely to purchase health insurance coverage than those without similar access by increasing access to group insurance the tax subsidy fostered an increase in the purchase of group health insurance by people who may not have purchased individual coverage and generated institutional change as it cemented an employment based system of group health insurance in the united states this abstract was borrowed from another version of this item

product differentiation and profitability an asymmetric model the purpose of this paper is to develop a model of product differentiation in which there is an asymmetry namely that some customers are easier to serve than others it turns out that profits are negatively related to difficulty of service and that profits and market share are negatively related the results of this model are used to shed light on some aspects of the collusion versus differential efficiency debate and are also compared with vertical product differentiation models copyright 1990 by blackwell publishing ltd

determinants of female administrative support personnel compensation at a large public university compared with research on faculty salaries and executive compensations very little is known about the earnings of administrative office support personnel this paper constructed and estimated the total compensation variant of a modified human capital earnings model using a 1989 90 fiscal year microdata sample consisting of about 300 all female office workers administrative secretaries regular secretaries and clerks at a large public university the total compensation consisting of wages plus actual dollar costs of five employer paid health life accident longevity sick leave vacation and pension benefit plans specification fitted the data reasonably well the pattern of estimated differential returns to specific human capital attributes within administrative support occupations tends to be significant and is consistent with the skill atrophy prediction of the human capital theory implications of the findings for secretarial productivity career choice decisions and opportunities for advancemen

sources of intra industry wage dispersion how much do employers matter observed human capital explains less than half of wage variation in bls industry wage surveys establishment based wage differentials controlling for occupation account for 20 70 percent of intra industry wage variation this corresponds to a standard deviation in wages of 14 percent of the mean almost as large as interindustry wage variation investigation suggests that establishment wage differentials are not random variations or returns to usual measures of human capital

efficiency versus collusion a reformulation of the weiss test the weiss test has been used to discriminate between the efficiency and collusion hypotheses using a conventional oligopoly model we show that the test is valid for the former hypothesis but not the latter contrary to recent emperical studies we find that a negative coefficient on concentration in profitability equations does not refute the collusion hypothesis in fact this finding supports the hypothesis if the sample is dominated by small firms

the impact of concentration and elasticity on line of business profitability abstract this paper explores the roles played by concentration and elasticity in a model of line of business profitability it concludes that the roles are conceptually distinguishable that concentration has a seperate effect on profit via the degree of collusion which is not eliminated by its dependence on elasticity and that assertions about a bias due to the exclusion of elasticity are based on incomplete theoretical foundations

compensating differentials and self selection an application to lawyers this paper models individual choice between two types of jobs as dependent on the difference in potential earnings and on preferences for nonpecuniary the model leads to simultaneous estimation of earnings and job choice functions in a manner that takes account of self selection of individuals into the sector of highest utility an application to lawyers choosing between private and public interest law casts doubt on the notion that public interest lawyers are accepting substantially lower earnings by virtue of their choice an impression derived from estimation of earnings functions without accounting for self selection the estimation technique also takes proper account of the choice based nature of the sample which appears to be important

quasi fixity and multiproduct firms abstract a short run model for the supply response and input demand of a multiproduct firm is developed based on the differential production approach a simple parameterization of the model is provided

domestic profit advantages of multinational firms this study uses confidential corporate data from the u s federal trade commission s line of business p rogram to test if u s multinational firms earn higher rates of profi t on domestic undertakings than do their nonmultinational rivals dom estic profits are regressed on various industry and firm characterist ics including three different measures of multinationality that correspond to industry overall firm and firm by industry classifica tions the evidence suggests that multinationals do have profit advan tages when foreign activities are in the same or related lines of bus iness the effects of foreign trade as a separate influence appear to be much as in previous studies but with richer interpretations copyright 1987 by the university of chicago

welfare losses in canadian manufacturing under alternative oligopoly regimes abstract welfare losses are computed for 167 canadian industries using simulations of a general oligopoly model the computations cover a wide range of oligopoly behavior and reveal the implications of different demand marginal cost and conjectural variation elasticities for the case of horizontal cost losses are a maximum of 0 51 percent of gnp under cournot equilibrium and 6 35 percent under a collusion equilibrium in general losses increase as the absolute value of the price elasticity of demand declines and as marginal cost and conjectural variation elasticities increase

the estimation of product supply and input demand by the differential approach this paper makes use of the differential approach to the theory of the multiproduct firm in order to empirically analyze input demand and product supply in italian agriculture estimation of the parameters of the model with annual 1961 80 data for a sector model of fourteen products and three factors of production suggests possibilities for farmers to change their output mix in response to changes in the expected prices of products on the input demand side the derived demand functions seem to satisfy the integrability conditions but turn out to be quite inelastic

employers provision of pensions and sick pay evidence from the 1990 workplace indistrial relations survey this paper examines the determinants of pension and sick pay provision using data on some 1100 private sector establishments with 25 or more employees it also compares the wages of employees eligible for a pension or for sick pay with the wages of those for whom no such provision was made using ordered probit techniques three levels of provision were examined with respect to each type of benefit no provision provision for white collar employees only and provision for all employees benefit provision was found to be associated with work place size and with the extent to which employment was white collar it was negatively associated with the level of part time working new establishments were slightly less likely to offer pensions than older ones but age had no impact on sick pay provision perhaps because it is less complex and costly than pension provision establishments which recognized trade unions were more likely to offer fringe benefits than those which did not however blue collar unions se

does health insurance reduce illness related worker absenteeism the objective of this article is to examine whether having health insurance reduces illness related absenteeism among older workers a nationally representative sample of 1780 workers in the united states aged 52 64 are drawn from the 2004 2006 health and retirement study hrs binary logistic regressions and censored tobit models are estimated for workers likelihood of missing work days due to illness and the number of illness related work days missed respectively while explicitly addressing the possibility of insurance selection effects the findings suggest that over a 12 month period older workers without health insurance are as likely as insured workers to miss work days due to illness and there are no differences in the number of days missed between insured and uninsured workers however there is strong evidence that poor baseline health onset of new diseases and longer hospitalization significantly increase an older worker s absenteeism at work these results suggest that having health ins

restoring the promise of american labor law the product of an october 1993 conference on labor law reform jointly sponsored by the school of industrial and labor relations at cornell u and the department of economic research at the afl cio this volume both argues the need for fundamental reform of the legal and institutional underpinnings o

dynamic input demand functions and resource adjustment for us agriculture state evidence abstract the paper presents an econometric model of dynamic agricultural input demand functions that include research based technical change and autoregressive disturbances and fits the model to annual data for a set of state aggregates pooled over 1950 1982 the methodological approach is one of developing a theoretical foundation for a dynamic input demand system and accepting state aggreage behavior as approximated by nonlinear adjustment costs and long term profit maximization although other studies have largely ignored autocorrelation in dynamic input demand systems the results show shorter adjustment lags with autocorrelation than without dynamic input demand own price elasticities for the six input groups are inelastic and the demand functions possess significant cross price and research effects

a note on the substitution between wage and non wage benefits in spot labour markets abstract recent empirical work suggests that spot labour market workers have a strong preference towards wages over fringe benefits this paper provides a theoretical framework based on this finding after a discussion of the utility function and equilibrium the paper proceeds to a comparative statics analysis an important result is that workers spend all extra compensation on wages only this is shown to be true in the case that wage benefits are taxed furthermore proportional taxes have no effect for workers choice between wage and non wage benefits

the elusive wage benefit trade off the case of employer provided health insurance this study shows that standard regressions estimated to measure a trade off between wages and health insurance are misspecified by insufficiently accounting for establishment and firm size an interactive size corrected specification is more likely to reveal a trade off furthermore because insurance decisions are typically made by firms and wages set by establishments the insurance constraint on establishments in multi establishment firms weakens the trade off we use model generated data to show that both factors contribute to the failure in previous research to identify a trade off and data from a cross section of northern californian establishments to test for a trade off in multi establishment and single establishment firms

drought ethanol and livestock abstract the 2012 drought in the u s midwest resulted in volatile crop prices with field crops constituting a major input in livestock production livestock producers sought a waiver to renewable fuel standard biofuel mandates they believed such a waiver would mitigate crop price volatility given crops are major inputs in biofuel production the u s environmental protection agency epa denied the waiver under the belief that the waiver would have minimal if any impact on mitigating price volatility employing a vecm the objective is to investigate if it was prudent for the epa to reject the waiver results generally support epa s conclusion that the waiver relaxing the biofuel mandate would have minimal impact

profit margins and the business cycle evidence from uk manufacturing firms this paper presents some empirical models of profitability using panel data covering 709 large u k companies ove r the 1970s and 1980s focusing specifically on the role of aggregate demand shocks in shaping firm level profitability in basic regressi ons and in quite complex econometric models the results suggest that firm level profit margins fell heavily during the deep manufacturing recession of the early 1980s and as such are consistent with model s predicting the procyclical nature of profit margins this result hol ds across different product groups producer goods consumer durables a nd nondurables though the timing of the impact of aggregate shocks appears to differ copyright 1993 by blackwell publishing ltd

optimal executive perquisites abstract expenditures by executives on personal perquisites can be optimal for the board of directors using a principal agent model we present a numerical example where the principal can reduce the total cost of compensation for the agent by offering a lower expected bonus and a larger budget allocation from which the agent diverts some funds to perquisites this is optimal when the agent has sufficiently large diminishing marginal utility for perquisites

myth and reality of flat tax reform micro estimates of tax evasion response and welfare effects in russia we examine the effects of russia s 2001 flat rate income tax reform on consumption income and tax evasion we use the gap between household expenditures and reported earnings as a proxy for tax e

a new test for supplier inducement and application to the canadian market for dental care abstract the hypothesis that dentists do not induce demand for their services is tested using reduced form estimates of the price elasticity of demand if demand is autonomous shifts in supply for whatever reason should generate equivalent estimates provided access costs change proportionately with shifts in supply if demand inducement is present demand can appear to be very elastic or very inelastic depending on what is causing the shift in supply each of three applications of this test conducted in the context of jointly estimated fee and quantity equations using annual canadian data for 1956 1989 rejects the no inducement hypothesis

farming the tax code the impact of high marginal tax rates on agricultural tax shelters surprisingly little scholarly work has examined the practice of farming the tax code in which accounting losses on agricultural investments are used to shelter other income from taxation economic theory suggests that the amount of investment in agricultural tax shelters is positively related to the marginal tax rate this hypothesis is empirically investigated using a sample of federal individual income tax returns filed for 1983 both the probability of reporting a farm tax loss and the amount of farm losses are increased by a rise in the marginal tax rate especially among upper income taxpayers

removing distortions in the u s ethanol market what does it imply for the united states and brazil we analyze the impact of trade liberalization and removal of the federal tax credit in the united states on ethanol markets using a multimarket international ethanol model we find that u s trade barriers have been effective in protecting the ethanol industry under current policy there is separability of the u s ethanol market from world markets with trade liberalization the ethanol market deepens making it less susceptible to price volatility the effect of trade liberalization extends beyond ethanol markets affecting agricultural markets the results show that the impact of removal of the tax credit overrides the impact of the tariff removal copyright 2008 oxford university press

the profitability concentration relation market power or efficiency industrial economists have been studying the relationship between profitability and concentration using cross industry samples for many years now however as sometimes happens once it appeared that some consensus had been achieved with few exceptions market concentration and industry profitability are positively correlated peltzman i977 p 229 people began to question the interpretation of those results in particular demsetz e g i973 i974 and others suggested that rather than concentration market power leading to higher prices and profits the causal direction in fact ran from greater efficiency to both higher profits and incidentally to higher concentration our purpose here is to subject these conflicting hypotheses to cross industry empirical test using u k data in order to do this we first develop a model which is sufficiently general to allow for both alternative explanations of a positive concentration profitability correlation in the light of this model we then examine the implications for the within industry relation between market share and firm level profitability more specifically we explore demsetz s claim that the empirical form of this relationship should signal which of the alternative hypotheses is consistent with the between industry profitability concentration correlation our model suggests that in certain special circumstances this claim is partly justified in that it should be possible to assess the relative strengths of the market power and efficiency effects from the within industry relation more generally however factors such as product differentiation and scale economies may seriously impair the information content of the relation with at least a strong suspicion that the estimates will tend to exaggerate the evidence in favour of the efficiency hypothesis in the event our results tend to confirm that for most industries the within industry data offer little conclusive support for either hypothesis but for a not insignificant minority of industries the evidence suggests some support for the view that both efficiency and market power are at work simultaneously our model is detailed in section ii and estimated on u k data in section iii after which we offer a few comments in section iv first however we drovide a backcloth to the later analysis

a multivariate evaluation of ex ante risks associated with fed cattle production the purpose of this paper is to evaluate production risks faced by fed cattle producers we do this by jointly modeling a group of cattle production yield risk factors using a multivariate dynamic regression model the proposed econometric model estimates parameters that influence the mean and variance of production yield factors as well as the covariance between variables while accounting for a high degree of censoring through the use of a dynamic multivariate tobit model the model provides insights into the relationship between production yield factors in fed cattle production copyright 2007 oxford university press

people i know job search and social networks we assess the strength of information spillovers relating unemployment duration of workers displaced by firm closures to their former colleagues current employment status displaced specific networks are recovered from a 20 year panel of matched employer employee data spillovers are identified by comparing performances of codisplaced workers a one standard deviation increase in the network employment rate reduces unemployment duration by about 8 the effect is magnified if contacts recently searched for a job and if their current employer is spatially and technologically closer to the displaced worker stronger ties and lower competition for information favor reemployment several indirect tests exclude other interaction mechanisms

tax evasion and self insurance abstract this paper examines the effect of an increase in the tax rates on tax evasion in a model where taxpayers self insure against possible penalties the analysis shows that the effect depends on the marginal productivity of self insurance if the marginal productivity is not too small an increase in the tax rates leads to greater tax evasion and less tax compliance this result stands in contrast with the theoretical result in the literature but accords well with empirical findings

investment under uncertainty and dynamic adjustment in the finnish pork industry bykyosti s pietola and robert j myersmay 1998paper prepared for a selected paper session at the annual meeting of the american agriculturaleconomics association salt lake city utah august 1998 this research was financed jointly byagricultural economics research institute in finland the academy of finland and the finnishcultural foundation we also knowledge the michigan agricultural experiment station for itssupport of this research authors are agricultural economist agricultural economics research institute helsinki finland and associate professor department of agricultural economics michigan state university eastlansing copyright 1998 by kyosti s pietola and robert j myers all rights reserved readers may makeverbatim copies of this document for non commercial purposes by any means provided that thiscopyright notice appears on all such copies

estimating intertemporal supply response in the fed beef market a partial adjustment model with monthly lag structures on expected output and input prices is used to estimate intertemporal supply behavior of fed beef previous research has provided conflicting supply elasticities the present work reconciles the conflicts by integrating different lengths of run into cattle marketing and placement decisions for example the model dynamics incorporate short run changes in cattle asset values and long run adjustments in resource use empirical results provide no evidence of short run supply fixity supply elasticities switch from negative to positive over time

the role of pensions in the labor market a survey of the literature because employer sponsored group pension plans entail agreements between workers and their employers explicitly linking future payment and employment they offer an unusual window into long term employment relationships this review of recent research on pensions explores how pensions influence employee compensation retirement turnover and other matters central to the determination of labor s price and quantity over time the authors also outline some unanswered questions and difficult to reconcile findings because the pension promise involves an explicit and relatively well documented set of statements regarding future contingent payment and employment an examination of the design and operation of employersponsored group pension plans can yield important insights into the long term employment relationship specifically pension research illuminates some important labor market questions in two ways it offers insight into an important element of compensation in its own right and it furthers our understanding of labor markets in which long term

in pursuit of monopoly power recent quantitative work in industrial economics this paper reviews empirical work in industrial organization devoted to the question of inferring the existence of monopoly power from data on observed market outcomes like profits and prices the discussion covers inter industry work long conventional in the area newer developments in intra industry analysis and case studies and concludes with some remarks on a small but growing body of work assessing market dynamics the wide range of studies reviewed all generally reveal that market power exists in many industries

to be different or to be the same it s a question and theory of strategic balance this paper addresses the performance consequences of firm level strategic similarity past research observed that firms face pressures to be different and to be the same by differentiating firms reduce competition by conforming firms demonstrate their legitimacy both reduced competition and legitimacy improve performance this paper begins building a theory of strategic balance by synthesizing the differentiation and conformity perspectives the theory directs attention to intermediate levels of strategic similarity where firms balance the pressures of competition and legitimation empirical support for the theory is found in a longitudinal study of commercial banks several suggestions for developing a theory of strategic balance conclude the paper the theory s major implication is that firms should be as different as legitimately possible copyright 1999 john wiley sons ltd

a dynamic adjustment model for u s agriculture 1948 79 abstract a multioutput model is developed within the adjustment cost framework to analyze the structure of dynamic adjustments in u s agriculture during the post war period an important feature of this model is that the econometric model is consistent with dynamic economic theory fluctuations in capital stocks variable inputs and outputs are explained by changing opportunity costs empirical results indicated that durable equipment farm produced durables and family labor exhibited significant rigidity in adjustment as a response to exogenous shocks surprisingly the hypothesis that real estate was a variable input could not be rejected the univariate flexible accelerator hypothesis which is widely maintained in most agricultural adjustment studies is inconsistent with the data

testable competing hypotheses from structure performance theory efficient structure versus market power this paper provides a structure performance theory that can accommodate leading firm efficiency as well as several competing market power hypotheses the author derive s testable implications distinguishing the simple collusion product differentiation and scale economy hypotheses from the innovative lea ding firm alternative it is shown that recent evidence of a positive market share price cost margin pcm relationship and a nonpositive concentration pcm relationship can reject the scale economy and simpl e collusion hypotheses in homogeneous product markets unfortunately this same evidence cannot reject the product differentiation hypothe sis in favor of leading firm efficiency copyright 1988 by blackwell publishing ltd

market structure and price cost margins in a paper that has become a standard reference in the structure conductperformance approach to industrial economics cowling and waterson 1976 developed a theoretical rationale for expecting industry profitability to be positively correlated with the level of concentration their model based on a simple algebraic description of oligopoly behaviour has been interpreted as providing a justification for the common empirical practice of cross industry regression analysis of price cost margins in terms of concentration levels in the present paper we show that on further examination this model implies a joint determination of margins and concentration this provides some interesting comparative static results of relevance to inter industry differences in concentration levels equally however it leads to various cautionary insights concerning the meaning of price cost margin versus concentration regressions

decompositions of corn price effects implications for feed grain demand and livestock supply this article examines how corn prices affect the demand for feed grains and the supply of livestock outputs the differential approach to the theory of the multiproduct firm is employed to examine ex ante decisions about feed grain demand and livestock supply the estimation results suggest that livestock producers have little flexibility in adjusting the demand for corn in response to an increase in corn prices the substitutable relationship between corn and distillers grains contributes to alleviating pressures on feed costs in response to high corn prices in addition the estimation results highlight that the composition of livestock supply can be altered by changes in livestock prices on the basis of the estimated elasticities the decompositions of profit maximizing input demand are conducted to examine the effects of changes in corn prices on feed grain demand and livestock supply the decomposition results reveal that an increase in corn prices reduces corn demand but raises the demand for distillers grains mainly due to the substitution effects of corn price changes the decomposition results also show that an increase in the price of corn reduces cattle supply but raises the supply of chicken and pork due to the output relationships in supply

labor market effects of employer provided health insurance i introduction increasing health insurance coverage is arguably an important policy goal the congressional budget office 2003 estimates that in 1998 20 30 million americans had no health insurance for the entire year approximately 40 million were uninsured at a specific point in time in the year and nearly 60 million were without coverage some time during the year most individuals who have health insurance in the united states obtain it through their employer in 1999 65 8 of nonelderly americans had employer provided insurance also called group insurance or employer sponsored insurance either through their own employer or through the employer of another household member see gruber 2001 employer provided insurance plans generally have lower premiums and offer more benefits than individual insurance plans health insurance providers can offer cheaper and better plans to company employees for at least two reasons first the average administrative cost of such plans is lower than individual plans second employment based plans are typically subject to less adverse selection than individual plans particularly so for large employers furthermore the tax subsidy afforded employment based health insurance renders the effective consumer price substantially lower than the cost see pauly 1986 and gruber 2001 together these various factors give a strong incentive for employers to offer and employees to accept coverage as part of their employment contract as employer provided insurance is by far the most prevalent form of coverage in the private sector policy makers look for further expansion of this base as a way to insure the uninsured while avoiding direct public financing as a way to increase employer based health insurance coverage some states either have or are considering government mandates that require employers to provide insurance to certain types of workers 1 the state of hawaii requires private sector employers to offer health insurance to all workers who work for more than 20 h a week and requires these workers to have insurance the state of california is currently considering a similar mandate there is a considerable interest from policy makers on the effects of such mandates on labor market outcomes in this study we report on an experiment that was designed to provide some insights about possible effects of alternative health insurance regulations on the competitive labor market with a particular focus on mandates since we only considered a competitive market setting with complete contracts and no wage rigidities our results may not be directly applicable to all labor market situations 2 however the study provides useful insights about the interaction of health insurance benefit provision wages and employment structure for labor markets where the competitive wage setting and the complete contracts assumptions are reasonable with these limitations in mind our results can be also generalized to other types of employer provided fringe benefits such as paid vacations or pension plans as any government intervention health insurance regulation may affect the labor market theory predicts that in perfectly competitive labor markets health insurance creates no distortionary effects on the labor market equilibrium as long as the coverage is not mandated and there are no wage rigidities 3 all workers who value insurance above its cost of provision are offered insurance and accept it the wages are adjusted downward see rosen 1986 and gruber 2000 summers 1989 used a simple supply and demand analysis to show that the effect of increases in premiums on equilibrium labor hours and wage depends both on the elasticity of labor demand and labor supply and on how fully workers value changes in the cost of health insurance if the demand or the supply of labor is completely inelastic or if workers fully value the insurance then an increase in the premium would result in an equal decrease shift in wages

is economics useful for public policy economists have always played an important role in major public policy debates even so i believe that the role of economists in these public policy discussions has often been misguided because it has typically relied upon best practices stated in the form of general guidelines or even universal principles however best practices are not best if the specific situation does not conform with the assumptions that underlie the advice so my first conclusion is a cautionary and negative one specific circumstances differ so profoundly across individuals firms markets countries and time that most any attempt to define best practices that apply in all circumstances will lead to profoundly misleading public policy recommendations however even if economics cannot identify the truth it can often identify a truth so my second conclusion is a more positive one economists should continue to develop multiple theories that inform public policies but we should also focus our efforts on identifying and testing the critical assumptions that drive the results of these theories recognizing that the validity of any assumptions will depend intimately on specific circumstances i illustrate these two main conclusions with specific examples from my own work i conclude with some best practices recommendations of my own recognizing the obvious irony of such an effort

dynamic interfeed substitution implications for incorporating ethanol byproducts into feedlot rations abstractthis study examines interfeed substitution with a focus on the relationship between distiller s dried grain with solubles ddgs and traditional feed grains the dynamic linear logit model is used for the empirical analysis of interfeed substitution the estimation results reveal that an increase in livestock and poultry outputs reduces the relative shares of corn and soybean meal to ddgs the estimated adjustment rate indicates that the demand for feed grains is responsive in the short run with about 37 of the long run response this study also finds that the demand for corn and soybean meal remains inelastic even in the long run showing the possibilities that livestock and poultry producers face high feed costs in response to an increase in the prices of corn and soybean meal the pressures on feed costs can be alleviated by the substitutable relationship between ddgs and corn but the substitution of ddgs for corn has a potential to provide livestock and poultry with different nutritional con

stock option grants to target ceos during private merger negotiations abstract unscheduled stock options to target chief executive officers ceos are a nontrivial phenomenon during private merger negotiations in 920 acquisition bids during 1999 2007 over 13 of targets grant them these options substitute for golden parachutes and compensate target ceos for the benefits they forfeit because of the merger targets granting unscheduled options are more likely to be acquired but they earn lower premiums consequently deal value drops by 62 for every dollar target ceos receive from unscheduled options conversely acquirers of targets offering these awards experience higher returns therefore deals involving unscheduled grants exhibit a transfer of wealth from target shareholders to bidder shareholders

the effect of unionism on fringe benefits this study analyzes the impact of unionism on fringes paid to production workers using data on individual establishments it compares fringe expenditures in establishments having the same level of compensation per hour and finds that unionism raises the share of compensation allotted to fringes particularly to pensions vacation pay and life accident and health insurance in addition since unionism also raises the straight time wage rate itself a prime determinant of expenditures on fringes unionism has a very sizeable impact on total fringe expenditures as well as on the fringe share of compensation the union fringe effect exceeds in percentage terms the union wage effect and is sufficiently large to suggest that standard union wage studies understate the union effect on total compensation the study also compares the fringe expenditures of production and non production workers within the same establishment controlling for within establishment pay policies the findings suggest that the pres

can small firms find and defend strategic niches a test of the porter hypothesis a number of studies have found a positive relation between market share and profitability michael porter argues that this need not hold when small firms find strategic niches protected by mobility barriers this paper examines that hypothesis by comparing the profitability of large and small lines of business when the activities of the two groups proxied by the allocation of sales across submarkets differ on average the authors find that in heterogeneous product mix industries profits of large lines of business are no longer significantly greater than profits of smaller rivals except that market leaders maintain their advantage regardless of product mix copyright 1989 by mit press

tax evasion inflation and stabilization abstract this paper focuses on the public resort to tax evasion in developing countries as an adjustment tactic during economic downturn we show using a theoretical model of intertemporal consumption that tax compliance declines when current income declines expectations about future income improve or inflation rises we then apply the model empirically to the cases of argentina brazil and chile three countries which have long experience with tax evasion and inflation over the last 40 years and find confirmation

seeing the big picture the influence of industry diversification and business strategy on performance much of the strategic management literature separates industry corporate and business levels of analysis and empirical studies tend to examine these levels independently not addressing how indu

how elastic is the firm s demand for health insurance abstract we investigate the impact of tax subsidies on the firm s decision to offer insurance and on conditional firm spending on insurance we do so using the micro data underlying the employment cost index which has a major advantage for this exercise the matching of very high quality compensation data with information on a sample of workers in the firm we find that overall there is a moderately sized elasticity of insurance offering with respect to after tax prices 0 25 and a larger elasticity of insurance spending 0 7 we also find that the elasticities are driven primarily by small firms for whom the elasticity is larger and we find that there is significant value added to this employer based data replicating methods from standard micro data sources in our data lead to misleading estimates of these key parameters our simulation results suggest that major tax reform could lead to an enormous reduction in employer provided health insurance spending

unions and the capture of economic rents an investigation using british firm level data this paper considers the relationship between unions and profitability in a sample of large british firms in 1984 and 1985 the initial finding is that unionised firms have significantly lower profit margins than otherwise comparable non union firms tests of whether the ability of unions to influence profit margins varies with the product and labour market characteristics of the firms in which they are located are then conducted the ability of unions to capture economic rents is seen to be significantly greater in firms which have a high market share and or operate in highly unionised industries

what are occupational pension plan entitlements worth in britain the acquisition of rights by workers in private pension plans underpins retirement behaviour recruitment policy and wage structure but there is controversy as to how these individual pension rights should be valued the paper combines four data sets to calculate pension entitlements for a sample of 3000 british workers in 1987 expected scheme tenure is a key variable in valuation younger workers and women face greater initial uncertainty as to their pension outcomes which is resolved as job tenure lengthens given the distribution of tenure durations many employees would obtain higher returns in defined contribution schemes than in a typical final salary defined benefit plan

union nonunion compensation differentials across plant sizes evidence from cps 1983 previous empirical work on the relationship between plant size and union nonunion differentials has focused either on wages podgursky 1986 or benefits bramley wunnava and robinson 1989 freeman 1981 this note extends this research by simultaneously focusing on both wages and benefits there are several arguments that can be made in explaining union nonunion differentials across plant sizes 1 union threat effects 2 efficiency wage effects and 3 wage dispersion effects our study focuses on measuring the union nonunion differential in total compensation for this end estimates of total compensation are obtained using mellow s suggestion 1982 for combining hourly wage information with qualitative data on pensions and health insurance and ross s imputations 1989 for holidays and vacations benefits our results based on the may 1983 cps supplemented by bls data on pensions health insurance holidays and vacation benefits indicate significant union nonunion total compensation differentials exist only for workers in establishments with less than 500 workers these results are consistent with podgursky s wage differential findings

tax structure and tax compliance a model of individual tax compliance behavior including evasion and avoidance is developed and estimated the model recognizes the importance of marginal income tax rates payroll tax contributions and benefits and the probabil ity of detection and the penalty on unpaid taxes share equations for avoidance evasion and reported income are estimated using individual level data the estimation results indicate that the tax base rises with higher benefits for payroll tax contributions and falls with higher marginal tax rates the base also falls with more severe penalties and more certain detection of evasion as individuals substitute towards avoid ance income t he methods by which individuals reduce their tax liabilities take a variety of legal and illegal forms all of which are influenced at least in part by incentives created by the tax structure these methods can be broadly classified as avoid ance and evasion tax avoidance is any legal activity that lowers taxes such as worker substitu tion between wage and nonwage compensation tax evasion is the reduction in tax liabilities by illegal means such as underreporting income on tax returns despite extensive but separate literatures on avoidance and evasion we know very little about the tax base response to changes in tax structure it is the purpose of this paper to examine the role that the tax structure plays in compliance there are several reasons for the persistence of the compliance puzzle most prominent is the absence of detailed individual data that would allow a full empirical specification of all factors affecting compliance this difficulty is most evi dent when searching for individual data on the evasion compliance decision even when avail able data have never allowed in the same work the construction of both tax and audit variables 1 clearly data availability is even more problem atic when looking at the choice among evasion avoidance and reported income in addition pre vious work has not looked at the avoidance evasion compliance decision as a joint process even though these decisions are made simultane ously 2 further both strands of the literature have ignored another factor that may affect the compliance decision the benefits that accrue from participation in payroll programs if benefits are tied only to taxable income then their presence gives individuals an incentive to pay taxes in short there has been no empirical work that analyzes the effects of tax rates probabilities penalties and payroll benefits on avoidance and evasion choices of individuals in this paper we provide such an analysis we first develop a theory of individual choice among the three types of compensation we then esti mate the resulting share demand equations using a unique data set which has detailed information on the compensation paid to roughly one quarter of the labor force in jamaica in 1983 from these data we are able to derive measures of reported taxable income evasion income and avoidance income for individual workers in the formal sec tor we are also able to construct measures of the marginal income tax rate marginal payroll taxes and benefits the probability of detection and the penalty on evasion for individual workers we are therefore able to estimate for the first time the responses of workers to the full range of tax structure parameters section i presents the theoretical model of worker compensation choice and the empirical specification of the model section ii discusses the jamaican tax system data and variable con struction are discussed in section iii estimation results are presented in section iv the final section summarizes the main results

asymmetric adjustment of dynamic factors at the firm level presents a study which addressed the deficiencies of previous studies the specification and estimation in the modeling of asymmetry and zero gross investment in the agricultural industry reference to previous studies on asymmetry information on the standard dual model results of the study

product aggregation bias as a specification error in demand systems inherent in all demand studies is some form of product aggregation which can lead to product aggregation bias this article develops a simple procedure for incorporating product aggregation bias in demand systems that permits testing of product aggregation bias with a standard likelihood ratio test an empirical illustration of the procedure demonstrates the importance of proper product aggregation

the income tax and nonwage compensation d ramatic changes in the division of labor compensation between wage and nonwage payments have occurred since world war ii voluntary employer contributions to private pension and welfare funds have risen from 1 2 of wage and salary compensation in 1947 to 8 3 in 1979 with half the increase taking place since 1969 see table 1 major changes in the composition of the fringe benefit package have also taken place during this period employer contributions to group health insurance plans have risen from 24 of total fringe benefits in 1947 to 40 o in 1979 if this growth continues group health insurance will replace pension and profit sharing plans as the largest fringe benefit expenditure by employers these trends in the compensation mix have long been noted by researchers and various factors have been offered as explanations including the favorable tax treatment of fringe benefits demographic changes such as increased life expectancy and unionization rice 1966 ture 1976 mabry 1973 freeman 1978 however most explanations have not been subjected to rigorous empirical testing and the few results that have been published are both questionable and dated for example rice 1966 estimated that changes in the tax rate structure had little influence on the relative increase in fringe benefits from world war ii to 1963 more recent studies schiller and weiss 1979 1980 have examined a specific fringe benefit the private pension plan for its impact on turnover and its role as an equalizing difference but these studies have not analyzed the determinants of the compensation mix this paper discusses the theoretical determinants of the division of labor compensation between fringe benefits and cash income and empirically estimates their importance it concentrates on the impact of taxation on the compensation mix for several reasons first the assumption that rising tax rates encourage individuals to substitute fringe benefits for cash income underlies estimates of the welfare cost of tax preferences browning 1979 second proposals to fully tax employee fringe benefits under a comprehensive9 income tax have surfaced in recent years nolan 1977 clotfelter 1979 finally current federal tax policy is calling for large tax rate reductions to increase supply incentives unlike the determinants of the compensation mix that change slowly over time such as life expectancy tax rate changes can occur rapidly through legislative action reducing tax rates might enlarge the tax base by increasing the fraction of labor income received as taxable cash wages and salaries section ii outlines the tax treatment of various forms of labor compensation and in section iii other factors thought to influence the choice between wage and nonwage compensation are discussed empirical analyses of the compensation mix are presented in section iv a brief summary and implications of the major findings for the future growth of fringe benefits follow in section v

multiproduct supply and input demand in u s agriculture two sets of u s agricultural output supply and input demand relationships including cross price effects are reported for five commodity groups and four variable input groups for the 1951 82 period they are obtained by direct econometric estimation on u s data and by geographic aggregation from published econometric estimates for each of ten regions comprising the contiguous forty eight states the supply and demand formulations are specified on the assumptions of competitive behavior and an underlying normalized quadratic profit function the effects of upward sloping input supply curves are examined at the national level

capital intensity and the firm s cost of capital recent reports of negative capital intensity coefficients in struct ure performance equations support allegations of gross measurement error in accounting based measures of economic profitability this paper explores whether specification errors rather than measurement errors alone may explain this anomalous empirical result within a simultaneous equations model of capital intensity cost of capital and price cost margins the author employs hausman specification tests to demonstrate a negative bias on capital intensity and a positive bias on concentration when one omits firm specific cost of capital from price cost margin equations the roles of cost of capital and capital intensity are derived from formal structure performance theory copyright 1988 by mit press

the welfare economics of a biofuel tax credit and the interaction effects with price contingent farm subsidies a framework is developed to analyze the effects of a biofuel consumer tax exemption and the interaction effects with a price contingent farm subsidy ethanol prices rise above the gasoline price by the amount of the tax credit corn farmers gain directly while gasoline consumers only gain from any reduction in world oil prices due to the extra ethanol production domestic oil producers lose historically the intercept of the ethanol supply curve is above the gasoline price hence part of the tax credit is redundant and represents rectangular deadweight costs that dwarf triangular deadweight cost measures of traditional farm subsidies copyright 2007 oxford university press

cooperation v rivalry price cost margins by line of business fl c bureau of economics working papers are preliminary materials circulated to stimulate discussion and critical comment all data contained in them are in the public domain this includes information obtained by the commission which has become part of public record the analyses and conclusions set forth are those of the authors and do not n essarily ref1 t the views of other members of the bureau of economics other commission staff or the commission itself upon request single copies of the paper will be provided references in publications to fit bureau of economics working papers by ffc economists other than acknowledgement by a writer tnat ne has access to such unpublished materials should be cleared with the author to prot t the tentative character of these papers

search for nonwage job characteristics a test of the reservation wage hypothesis previous structural models of job search behavior have been based upon the reservation wage property this article provides estimates of a more general search model that nests models with the reservation wage property the estimates lead to rejection of the reservation wage property the model includes hours of work in the utility function but other nonwage job characteristics can be included as well an experiment based on the estimated parameters indicates that a significant proportion of job offers would be mistakenly predicted to be accepted or rejected under the restrictions implied by the reservation wage property

public goods hidden income and tax evasion some nonstandard results from the warm glow model abstract a large literature explores crowd out in situations where public goods are jointly provided work in this area typically depicts a tax system where individuals take taxes as given but in some settings such as those in developing economies efforts to evade or avoid taxes may be widespread using the canonical warm glow model this paper considers joint public good provision in a setting where individuals can evade taxes by hiding their income the model s implications change significantly in this setting with hidden income stronger warm glow will lead to greater crowd out not less using research on crowd out and inter family transfers i present suggestive evidence that the model s results may help to reconcile divergent estimates of crowd out in the literature

impacts of ethanol policy on corn prices a review and meta analysis of recent evidence abstract the literature on the impacts of biofuels on agricultural commodity prices is characterized by contradictory findings we review studies published between 2007 and 2014 that estimate the effects of u s corn ethanol policy on corn prices and find estimates ranging from nil to over 80 such divergent results make it difficult to assess the merits of alternative biofuel policies to bring more clarity to the issue and facilitate comparisons across studies we assemble a database of over 150 medium to long run estimates of the effect of corn ethanol production on corn prices from 29 published studies we first normalize corn price impacts by the change in corn ethanol volume to control for the large differences in ethanol quantities across scenarios we then conduct a meta analysis to identify the factors that drive the remaining variation in corn price impacts across studies in addition to ethanol volumes we find that modeling framework projection year inclusion of ethanol co products and biofuel production from other feedstocks explain much of the differences in price effects the results indicate that a one billion gallon expansion of the us corn ethanol mandate in the year 2015 would lead to a three to four percent increase in corn prices with smaller price changes projected in future years

taxes fringe benefits and faculty the growth of employee benefits in academe has closely paralleled their economy wide growth this study estimates a complete system describing the demand for benefits and wages using panel data on 1477 institutions of higher learning the demand for benefits is very responsive to changes in real income and the tax price of benefits these conclusions are robust with respect to varying definitions of the tax price treating it as endogenous and accounting for unmeasured individual effects on demand simulations suggest that the tax reform act of 1986 sharply reduced the demand for benefits extrapolating the impact to the entire economy the annual flow of compensation shifted away from benefits by at least 15 billion copyright 1992 by mit press

duality the output effect and applied comparative statics except for kako agricultural production studies using cost functions have analyzed technology via allen elasticities technological change parameters and homotheticity tests kako used a transcendental logarithmic translog cost function to decompose empirically changes in derived factor demand into three separate components output level factor substitution effects and technical change kako s work allows further investigation of technical change on derived factor demands however kako s output effect is different from the traditional concept the production analog of the income effect in consumer theory this note outlines a theoretical and econometric approach for measuring the output effect the output effect is important because it presents a more complete picture of factor employment adjustments than do demand elasticities generated from cost functions elasticities generated from cost functions restrict the producer to a given level of output producers however may also adjust output as factor prices change the output effect captures this adjustment this paper demonstrates a method for deriving the output effect from the cost function first the general assumptions and the model are outlined then the cost function is related to the indirect production function and the output effect obtained results are presented for the special case of a homothetic production function the paper concludes with an empirical application to the u s meat products industry

codetermination as a strategic advantage abstract a theoretical model of codetermination is considered where consistent with german institutions firm owners bargain with employees representatives about employment but not about wages a duopoly and a more general oligopolistic situation are analyzed for some range of bargaining power a prisoner s dilemma exists codetermination leads to increased profits if the other firm is a traditional profit maximizer bargaining is the dominant strategy although joint profits would be maximized with unrestricted profit maximization the theory is tested with data from 22 german firms who operate in the same markets over 23 years codetermined firms actually show a different behavior than other companies

escape from the usa government debt to gdp ratio country tax competitiveness and us oecd cross border m as statutory tax rates of a country do not reflect a country s true tax competitiveness we propose and show that government debt to gdp ratio govdebt of a country is a better proxy for its tax competitiveness using a comprehensive sample of 1 884 completed cross border acquisition transactions from the u s to other oecd countries we document that the u s target country govdebt difference is significantly and positively related to both deal announcement return and post deal tax saving of the acquirer the govdebt difference is also significantly and positively related to u s target country deal flow the findings remain robust when we control for the potential endogeneity of govdebt difference our findings strongly suggest that tax avoidance is an important driver of u s oecd cross border deal flow and it increases shareholder wealth for u s acquirers

unions and the financial performance of british private sector establishments summary this paper considers the relationship between unions and financial performance using data from the 1980 and 1984 workplace industrial relations surveys a qualitative indicator of financial performance is utilized and ordered probit estimates presented these indicate that unionized establishments are characterized by lower performance levels than are non union concerns the interface between union effects and relative market power is also explored and the ability of unions to extract a share of the available rents is found to be greater if the plants in which they are located possess a higher market share

the excess burden of tax evasion an experimental detection concealment contest abstract tax evasion may cause social welfare losses due to the incentives of taxpayers to invest in the concealment and of tax authorities to invest in the detection of tax evasion reducing the investment of both parties at the same time would then lead to a pareto improvement given that concealment and detection costs are hardly measurable in reality we show in a controlled laboratory experiment that the welfare losses from a concealment detection contest depend positively on the prevailing tax rate but not on the penalty which is imposed in case of detected tax evasion hence policy makers who are concerned about socially inefficient concealment and enforcement costs should focus on tax rates rather than penalty rates

food vs fuel the effect of biofuel policies the rise in food commodity prices since 2004 which reached record highs in 2008 has coincided with the tripling of corn ethanol production from 15 billion liters bl to 50 bl over the 2004 2010 period this has spurred the food vs fuel debate and raised questions about the extent to which biofuels have contributed to the increase in food crop prices estimates of the impact of observed levels of biofuel production differ widely across studies and lie between 20 and 60 hochman et al 2011 biofuel production in the united states us has surged as a result of government policies like the renewable fuel standard rfs volumetric ethanol excise tax credit veetc for blenders of ethanol and tariffs that restrict the imports of sugarcane ethanol the rfs authorized by the energy independence and security act eisa of 2007 has set ambitious targets of increasing biofuel production sixfold to 136 bl by 2022 with over 60 of it to be met by advanced biofuels produced using non corn starch based feedstocks a 0 12 liter veetc is provided to blenders of ethanol to reduce their costs of meeting the rfs while a tariff of 0 14 liter and an ad valorem tariff of 2 5 were enacted to prevent transfer of the tax credit to ethanol producers in brazil the current veetc and import tariff expired in 2011 with increasing federal debt and concerns about the impact of these policies on food and feed prices political support for the

the structure performance relationship at the firm level abstract this letter provides an explanation for recent empirical results that suggest that market concentration has a negative effect on profitability at the firm level it also casts doubts on traditional interpretations of high market shares as evidence of market power

substitution between wage and nonwage benefits you gotta be kidding ollie you re just robbing yourself schuylkill mutual offers a terrific deal on keogh and we could plug you in in fact we advise plugging you in on the corporate end so not a nickel comes out of your personal pocket it comes out of the corporate pocket and there s that much less for uncle to tax these poor saps carrying their own premiums with no company input are living in the dark ages there s nothing shady about rigging it this way we re just using the laws the government has put there they want people to take advantage it all works to up the gross national product you know what i mean by keogh don t you you re looking kind of blank john updike p 296

employer tax evasion in the unemployment insurance program we use unique data to analyze employer tax compliance with unemployment insurance ui provisions the data indicate that employers may have underreported 728 million of ui taxes nationally in 1987 alone to formally examine this noncompliance a theoretical model of payroll tax evasion is developed showing that increasing payroll tax rates among other things likely increases noncompliance by risk neutral firms this prediction is empirically verified the finding that ui tax evasion is systematically related to various firm characteristics suggests that ui audits may be effectively targeted by statistical profiles derived from our model thereby improving compliance