the litigious plaintiff hypothesis case selection and resolution the process through which cases are selected for litigation cannot be ignored because it yields a set of lawsuits and plaintiffs that is far from a random selection either of potential claims or of potential claimants we present a theoretical framework for understanding the operation of this suit selection process and its relationship to the underlying distribution of potential claims and claimants the model has implications for the trial rate and the plaintiff win rate at trial our empirical analysis using data on over 200 000 federal civil litigations yields results that are strongly consistent with the theory

estimating the employer switching costs and wage responses of forward looking engineers this article estimates worker switching costs and how much the employer switching of experienced engineers responds to outside wage offers i use data on engineers across swedish private sector firms to estimate the relative importance of employer wage policies and switching costs in a dynamic programming discrete choice model of employer choice the differentiated firms are modeled in employer characteristic space and each firm has its own age wage profile a majority of engineers have moderately high switching costs and a minority of experienced workers are responsive to outside wage offers younger workers are more sensitive to outside wage offers

the role of patent rights in mergers consolidation in plant biotechnology few micro level empirical papers have addressed the impact of the patent system on industry structure using firm level patent data for public and private firms in plant biotechnology we develop a measure of patent enforceability duration models show that patent statistics are a useful predictor of the timing of merger activity we find that patent enforceability is an important factor influencing the likelihood of mergers mergers in plant biotechnology may be partially motivated by the enforcement of patent rights when firms have overlapping technologies some of the merger activity may be explained by attempts to avoid mutually blocking technology as exemplified in the case of roundup ready corn

estimating the firm s labor supply curve in a new monopsony framework school teachers in missouri in the context of certain dynamic models it is possible to infer the elasticity of labor supply to the firm from the elasticity of the quit rate with respect to the wage using this property we estimate the average labor supply elasticity to public school districts in missouri we leverage the plausibly exogenous variation in prenegotiated district salary schedules to instrument for actual salary these estimates imply a labor supply elasticity of about 3 7 suggesting that school districts possess significant market power the presence of monopsony power in this teacher labor market may be partially explained by its institutional features

intergenerational transfers and liquidity constraints a growing body of evidence indicates that liquidity constraints could affect a substantial proportion of u s consumers but little is known about why these constraints might exist an important but little explored issue is the relationship between inter vivos intergenerational transfers and liquidity constraints these transfers can ease borrowing constraints empirical transfer patterns match those predicted from a model in which transfers are allocated to liquidity constrained consumers in particular the distinction between current and permanent incomes of potential recipients is a key aspect of private transfer behavior the findings have important implications for our understanding of consumer behavior

bargaining with asymmetric information an empirical study of plea negotiations this paper empirically investigates how sentences to be assigned at trial impact plea bargaining the analysis is based on the model of bargaining with asymmetric information by bebchuk 1984 i provide conditions for the nonparametric identification of the model propose a consistent nonparametric estimator and implement it using data on criminal cases from north carolina employing the estimated model i evaluate how different sentencing reforms affect the outcome of criminal cases my results indicate that lower mandatory minimum sentences could greatly reduce the total amount of incarceration time assigned by the courts but may increase conviction rates in contrast the broader use of non incarceration sentences for less serious crimes reduces the number of incarceration convictions but has a very small effect over the total assigned incarceration time i also consider the effects of a ban on plea bargains depending on the case characteristics over 20 percent of the defendants who currently receive incarceration sentences would be acquitted if plea bargains were forbidden

inter vivos transfers and intergenerational exchange the surge of interest in intergenerational transfers in the past decade has sparked a debate over the motivation for them are transfers given out of altruism or part of an exchange while each motive is probably at work to some extent we know little about whether one motive predominates the question is relevant for issues concerning public income redistribution and inequality in the family but despite its importance empirical evidence about motives is scarce because of limited data we investigate a new data set the national survey of families and households which remedies many of the shortcomings of other data sets containing private transfer information we find that empirical patterns for inter vivos transfers i e transfers between living persons are more consistent with exchange than altruism

labor market monopsony there has been a renewed interest in monopsony in labor markets in recent years that includes both the traditional static approach to monopsony ably reviewed by boal and ransom 1997 and the new approach to monopsony with more attention paid to dynamic issues developed in detail by manning 2003 the articles presented in this supplement highlight both approaches and illustrate the range of labor market settings in which the exercise of monopsony power may be important the first use of the term monopsony in economics is widely attributed to robinson 1969 robinson conceived of monopsony as analogous to monopoly whereas monopoly refers to the case of a single seller confronted in a market by many buyers monopsony refers to the case of a single buyer confronted in a market by many sellers just as the monopolist faces a downward sloping demand curve for his product and

it based technical change and job instability we investigate the impact of it diffusion on the stability of employment we document the evolution of different components of job instability over a panel of 348 cities in france from the mid 1970s to the early 2000s the evidence goes against the view that the diffusion of it has spurred job instability yet analysing long term differences in the occupational structure we find that it diffusion has increased the share of high skill occupations at the expense of low skill occupations this is consistent with french firms reliance on their internal labour market to meet the new skill requirements associated with it diffusion

the urban wage premium in imperfect labor markets mit administrativen verknupften betriebs beschaftigtendaten fur westdeutschland untersucht diese studie ob ein teil des urban wage premiums durch eine geringere lohnsetzungsmacht von arbeitgebern auf dichteren arbeitsmarkten erklart werden kann wir zeigen zunachst dass das arbeitsangebot an firmen in dichteren arbeitsmarkten lohnelastischer ist die lohnsetzungsmacht der arbeitgeber also weniger ausgepragt ist diese unterschiede lassen eine lohnpramie von 1 1 bis 1 6 prozent bei einem anstieg der bevolke rungsdichte um 100 log punkte erwarten anschliesend zeigen wir dass die geschatzte lohnpramie bei kontrolle fur unbeobachtete zeitkonstante personenheterogenitat um 1 1 bis 1 4 prozentpunkte fallt wenn wir auf die regionalen suchfriktionen bedingen unsere ergebnisse legen nahe dass ein wesentlicher teil des urban wage premiums auf geringere suchfriktionen in dichteren arbeitsmarkten zuruckzufuhren ist

generational accounting in the uk this paper presents the first set of generational accounts for the united kingdom we find that under our baseline scenario in which pensions are price indexed and health expenditure grows modestly the imbalance in uk generational policy is small when compared with other leading industrial countries like the united states japan and germany however under an alternative policy scenario where all social benefits are wage indexed and health care spending is increased there is a larger fiscal bill left for future generations to pay in this case achieving generational balance would require much stronger medicine

recruitment restrictions and labor markets evidence from the postbellum u s south this article studies the effect of recruitment restrictions on mobility and wages in the postbellum u s south i estimate the effects of criminal fines charged for enticement recruiting workers already under contract on sharecropper mobility tenancy choice and agricultural wages i find that a 13 10 increase in the enticement fine lowered the probability of a move by black sharecroppers by 12 daily wages by 1 cent 1 and the returns to experience for blacks by 0 6 per year these results are consistent with an on the job search model where the enticement fine raises the cost of recruiting an employed worker

the causes of bargaining failure evidence from major league baseball abstract final offer arbitration in major league baseball provides an ideal setting for examining the empirical regularities that are associated with bargaining failure since final offers salaries and player statistics which provide the fundamental facts for the case are all readily available using data for players eligible for arbitration for 1990 93 we conduct a wide variety of empirical tests regarding the relationship between aggressive offers and arbitration outcomes we find that aggressive offers by players trigger arbitration and that more aggressive offers are associated with inferior financial outcomes in arbitration overall clubs appear to outperform players in arbitration unexpectedly high or low offers are less common for players who have previously been through arbitration which suggests that learning occurs our results are inconsistent with simple one sided asymmetric information models of arbitration the results are more consistent with an optimism model or a model in which so

saving and liquidity constraints this paper is concerned with the theory of saving when consumers are not permitted to borrow and with the ability of such a theory to account for some of the stylized facts of saving behavior the models presented in the paper seem to account for important aspects of reality that are not explained by traditional life cycle models copyright 1991 by the econometric society

academic wage structure by gender the roles of peer review performance and market forces we focus on understanding the role of productivity in determining wage structure differences between men and women in academia the data arise from a pay equity study carried out in a single midwestern u s university over the 1996 1997 academic year econometric results confirm that external market forces exert influence over both male and female salary but peer review ratings play a significant role in male but not female earnings determination with similar results for objective measures of research teaching and service

monopsony in the low wage labor market evidence from minimum nurse staffing regulations this paper provides direct evidence on the extent of monopsony power in the low wage labor market by estimating the firm level elasticity of labor supply for nurse aides in the long term care nursing home industry using exogenous variation in hiring induced by the passage of a state minimum nurse staffing law i find that facilities initially out of compliance with the new law did not have to raise their wage offers relative to their competitors in order to hire more nurses while this is consistent with perfect competition in simple monopsony models of the labor market i discuss how the results may be more ambiguous in more complicated models

trade and the geographic spread of the great recession abstract i study the role of trade between u s states in the regional propagation of local consumer demand shocks during the great recession to identify the trade channel empirically i make use of heterogeneity in the direction of trade flows across industries in the same state industries that depended relatively more on final demand from states with housing boom bust cycles grew by more before the crisis and declined faster from 2007 to 09 a one standard deviation difference in the exposure to demand shocks during the recession explains a 2 9 percentage point difference in employment growth

the elasticity of labor supply at the establishment level monopsonistic wage setting power requires that the supply of labor directed toward individual establishments is upward sloping this study utilizes institutional features to identify the supply curve the elasticity of labor supply is estimated using data for the norwegian teacher labor market in a period where the only variation in the wage level was determined centrally and with information on whether there is excess demand or not at the school level in fixed effects models the supply elasticity faced by individual schools is estimated to about 1 4 and is in the range 1 0 1 9 in different model specification

the selection hypothesis and the relationship between trial and plaintiff victory this paper develops implications of the selection hypothesis of priest and klein for the relationship between trial rates and plaintiff win rates i find strong evidence for the selection hypothesis in estimated relationships between trial rates and plaintiff win rates at trial across case types and judges i then structurally estimate the model on judge data yielding estimates of the model s major parameters the decision standard the degree of stake asymmetry and the uncertainty parameter for each of three major case types contracts property rights and torts

risk sharing between and within families this paper uses the panel study of income dynamics to test whether risk sharing is complete between or within american families the tests accommodate a wide variety in the configuration and availability of family data the test results reject inter as well as intra family full risk sharing even assuming that leisure is endogenous or that leisure and consumption are nonseparable

minimum wage effects on employment substitution and the teenage labor supply evidence from personnel data using personnel data from a large us retail firm i examine the firm s response to the 1996 federal minimum wage increase compulsory increases in average wages had negative but statistically insignificant effects on overall employment however increases in the relative wages of teenagers led to significant increases in the relative employment of teenagers especially younger and more affluent teenagers further analysis suggests a pattern consistent with noncompetitive models where the legislation affected mainly the wages of teenagers and so was only moderately binding it led both to higher teenage labor market participation and to higher absolute employment of teenagers

myopia liquidity constraints and aggregate consumption a simple test this note conducts a simple test for myopia and liquidity constraints in aggregate u s consumption the test exploits the fact that under myopia consumption should be equally sensitive to predictable income declines and increases while under liquidity constraints consumption should be more sensitive to predictable income increases than to declines using quarterly postwar data the author shows that aggregate consumption is in fact more sensitive to predictable income declines than increases this perverse asymmetry is inconsistent with both myopia and liquidity constraints but is qualitatively consistent with recent theoretical work incorporating loss aversion into intertemporal preferences

export price shocks and rural labor markets the role of labor market distortions abstract to what extent can workers in developing countries seize gains from trade to answer this question we resort to a unique exogenous labor demand shock triggered by a surge in the world market price of cotton in 2010 11 by capitalizing on tajikistan s geographic variation in the suitability for cotton production we identify the effect of the export price hike on wages of rural workers the shock induces agricultural firms to shift towards labor intensive cotton production the subsequent greater labor demand doubles wages for female cotton pickers on small entrepreneurial private farms but does not affect their wages on large parastatal farms we present evidence that parastatal farms recruit workers for low wages based on monopsony power and expand employment based on labor coercion of children and public sector workers our results highlight the importance of accounting for competitive structures in local labor markets when assessing the wage pass through of world market prices to workers in developing countries

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

trial and settlement a study of high low agreements this paper presents the first systematic theoretical and empirical study of high low agreements in civil litigation a high low agreement is a private contract that if signed by litigants before the conclusion of a trial constrains the future damages payment to lie between a minimum and a maximum amount whereas the existing literature describes litigation as a choice between trial and settlement our examination of high low agreements a relatively new phenomenon in civil litigation introduces partial or incomplete settlements in our theoretical model trial is both costly and risky when litigants have divergent subjective beliefs and are mutually optimistic about their trial prospects cases may fail to settle in these cases high low agreements can be in the litigants mutual interest because they limit the risk of outlier damages awards while still allowing for an optimal degree of speculation using unique insurance claims data from a national insurance company we describe the features of these agreements and empirically investigate the factors that may influence whether litigants discuss or enter into high low agreements our empirical findings are consistent with the predictions of the theoretical model we also explore extensions and alternative explanations for high low agreements including their use to mitigate excessive offsetting trial expenditures

court politics the political economy of tort awards abstract we investigate the forces that explain why trial awards differ across the united states in 23 states judges are elected and in 10 they are elected via partisan elections elections have two important effects first defendants are often out of state nonvoters while plaintiffs are typically in state voters we predict therefore that elected judges will redistribute wealth from out of state businesses to in state plaintiffs second the realities of campaign financing require judges to seek and accept campaign funding from trial lawyers who uniformly are interested in larger awards we hypothesize that these two forces cause awards to be larger in states where the judiciary is elected rather than appointed we also hypothesize that the demand for redistribution will increase as poverty increases and thus that awards will be larger in states with greater poverty using a sample of over 7 000 cases across 48 of the 50 states we find significant evidence in support of these hypotheses

is there monopsony in the labor market evidence from a natural experiment recent theoretical and empirical advances have renewed interest in monopsonistic models of the labor market however there is little direct empirical support for these models we use an exogenous change in wages at department of veterans affairs va hospitals as a natural experiment to investigate the extent of monopsony in the nurse labor market we estimate that labor supply to individual hospitals is quite inelastic with short run elasticity around 0 1 we also find that non va hospitals responded to the va wage change by changing their own wages

differences in labor supply to monopsonistic firms and the gender pay gap an empirical analysis using linked employer employee data from germany this article investigates women s and men s labor supply to the firm within a semistructural approach based on a dynamic model of new monopsony using methods of survival analysis and a large linked employer employee data set for germany we find that labor supply elasticities are small 1 9 3 7 and that women s labor supply to the firm is less elastic than men s which is the reverse of gender differences in labor supply usually found at the level of the market our results imply that at least one third of the gender pay gap might be wage discrimination by profit maximizing monopsonistic employers

generational accounting around the globe generational accounting is a relatively new method of long term fiscal planning and analysis this paper presents a selection of the latest generational accounting results for 22 countries this abstract was borrowed from another version of this item

new market power models and sex differences in pay in the context of certain models it is possible to infer the elasticity of labor supply to the firm from the elasticity of the quit rate with respect to the wage we use this strategy to estimate the elasticity of labor supply for men and women workers at a chain of grocery stores identifying separation elasticities from differences in wages and separation rates across different job titles within the firm we estimate that women have lower elasticities so a robinson style monopsony model can explain reasonably well the lower relative pay of women in the retail grocery industry

ricardian equivalence in the presence of capital market imperfections abstract it is a common claim that ricardian equivalence fails if capital markets are imperfect the validity of this claim is examined for the case of informationally imperfect capital markets we present three alternative models of adverse selection and analyze the effects of debt finance in these models it is shown that a debt financed tax cut can lead to pareto improvement in some cases in the theoretically most preferable model however ricardian equivalence survives in spite of genuine imperfections in the capital market the results point to the importance of specifying the exact nature of imperfection

do employers have more monopsony power in slack labor markets this article confronts monopsony theory s predictions regarding workers wages with observed wage patterns over the business cycle using german administrative data for the years 1985 to 2010 and a

generational accounts aggregate saving and intergenerational distribution are generational accounts informative about the effect of the budget on the intergenerational distribution of resources and on aggregate saving first the usefulness of generational accounts lives or dies with the strict life cycle model of household consumption second even if the life cycle model holds generational accounts ignore the intergenerational redistribution associated with the government s provision of public goods and services and with intergenerational externalities third generational accounting ignores the effect of the budget on tax and transfer bases and on before tax and transfer quantities and prices that is it does not handle incidence or general equilibrium repercussions

monopsony in the labor market this paper surveys recent theoretical and empirical research on monopsony in labor markets broadly defined as upward sloping labor supply to an employer we compare older monopsony models based on small numbers of employers with newer models based on labor market frictions such as moving costs and search we also compare older econometric approaches that focus on static wage concentration relationships with newer approaches that focus on dynamics our review of empirical estimates suggests that monopsony power based on small numbers of employers is probably rare but occasionally large while monopsony power based on frictions is probably widespread but small on average

generational accounting a new approach for understanding the effects of fiscal policy on saving working pa er 9107 generational accounting a new approach for understanding the effects of fiscal policy on saving by alan j auerbach jagadeesh gokhale and laurence j kotlikoff alan j auerbach is a professor of economics at the university of pennsylvania and an associate of the national bureau of economic research jagadeesh gokhale is an economist at the federal reserve bank of cleveland and laurence j kotlikoff is a professor of economics at boston university and an asso ciate of the national bureau of economic research working papers of the federal reserve bank of cleveland are preliminary materials circu lated to stimulate discussion and critical comment the views stated herein are those of the authors and not necessarily those of the federal reserve bank of cleveland or of the board of governors of the federal reserve sys tem may 1991

timing disturbances in labor market contracting roth s findings and the effects of labor market monopsony this paper addresses alvin roth s findings of market contracting at times earlier than optimal for market participants which roth describes as market unraveling a market failure he proposes to solve by designing centralized buyer seller matching programs this paper shows that while roth s engineering solutions are ingenious the early contracting phenomena derive from labor market monopsony under monopsony price is unavailable to clear the market time of contract becomes the currency for working out market forces roth s matching serves to shore up the monopsony and would be unnecessary if the monopsony were removed a superior solution is to end the monopsony

estimating a bargaining model with asymmetric information evidence from medical malpractice disputes this article uses a unique data set on medical malpractice disputes in florida to estimate the parameters of a bargaining game with asymmetric information the main findings of the article suggest that the bargaining game can replicate most of the qualitative and quantitative features of the data the article also simulates alternative policy regimes to quantify the effects of possible tort reforms such as imposing limits on contingency fees and caps on jury awards

training opportunities in monopsonistic labour markets this paper studies the empirical relationship between the extent of monopsonistic power observed in occupational labour markets and the training opportunities available to workers in those markets