local government structure and public expenditures the law of 1 n postulates a positive relationship betweenthe number of democratically electedrepresentative districts and governmentspending strong support for thisrelationship exists in legislatures in theunited states at both the state andnational level and across countries fewstudies have examined this relationship atthe local level despite the fact that localgovernments operate under constraintssimilar to those faced by representativelegislatures using a sample of georgiacounties we find the number of countycommissioners to be positively correlatedwith county government expenditures indicating support for the law of 1 nat the local level

the mineral economy a model for the shape of oil production curves abstract the production and the depletion of mineral resources and especially oil and fossil fuels has been an object of extensive predictive modeling these predictions are often derived from hubbert s model which is based on the fitting of the experimental data to a symmetric bell shaped curve although this model describes several historical cases in particular crude oil production in the lower 48 us states not all theoretical models for the mineral economy are based on symmetric curves also not much attention has been dedicated so far to the mechanisms which lead to such a behavior in particular scarce attention has been dedicated to the factors which may make the production curve asymmetric e g a decline in production more abrupt than the growth in the present paper the author uses a stochastic model to examine factors affecting these phenomena the results of the simulations indicate that the production curves of a non renewable resource may be asymmetric in dependence on factors such as the search strategy or the presence of technological improvements considering worldwide oil production the simulations indicate that the after peak downward slope might turn out to be considerably more steep than the upward slope something that could have unpleasant effects on the economy

the assignment of workers to tasks with endogenous supply of skills this paper presents a general equilibrium assignment model of workers to tasks with endogenous supply of skills in the model skills are endogenous and multidimensional and two types of assignment occur workers self select the type of skills to supply and firms assign workers to tasks the model shows that the impact of any skill biased technical change on wage inequality is tightly related to the distribution of skills in the population when the supply of skills is endogenous productivity effects can be overestimated or underestimated by wage data and johnson s 1997 distinction between intensive and extensive technical change is impossible

nonrenewable resource scarcity nonrenewable resource theory often is summarized by hotelling s rule this paper reviews theoretical extensions and empirical investigations of resource extraction models observed data are often inconsistent with the hotelling rule suggesting that other characteristics of nonrenewable resource supply including exploration heterogeneous ore quality technological progress and capital investment are important determinants of the dynamic behavior of resource prices given the persistent recurrence of concern about nonrenewable resource scarcity measures of nonrenewable resource scarcity and the empirical evidence for the time trends of those measures are reviewed finally the implications of nonrenewable resource scarcity for economic growth are examined

taxation in matching markets what is the impact of taxation in matching markets in matching markets because agents have heterogeneous preferences over potential partners welfare depends on which agents are matched to each other in equilibrium taxes in matching markets can generate inefficiency by changing who is matched to whom even if the number of workers at each firm is unaffected for markets in which workers refuse to match without a positive wage higher taxes decrease match efficiency however in more balanced matching markets where transfers may flow in either direction such as the student college market lowering taxes may decrease match efficiency because an agent can transfer enough to buy an inefficient partner only to be bought back when taxes are lowered further simulations show that in matching markets traditional deadweight loss estimates based on the change in taxable income can be substantially biased in either direction jel classification h20 j24 c78 d13

constrainedly fair job assignments under minimum wages a number of jobs are to be assigned to a greater number of workers while having to abide by the law of minimum wages firms must determine who should be assigned which job and at what salary in such situations fair envy free allocations usually fail to exist to cope with this situation this paper proposes a new concept of fairness called constrained fairness among the set of constrainedly fair allocations the so called constrainedly fair and minimal allocations are of particular interest the reason for this is that the salaries are not only compatible with the minimum wages they are also optimal from the standpoint of cost minimizing firms and the assignment of jobs is efficient from the viewpoint of workers a convergent dynamic procedure that identifies constrainedly fair and minimal allocations is proposed furthermore strategic properties of the mechanism are derived and two notions of efficiency are evaluated

revisiting wage earnings and hours profiles abstract for the youngest cohorts whose entire working life can be observed hours start falling much earlier than wages wages do not fall if they fall at all until one s late 60s the data suggest that many workers start a smooth transition into retirement by working progressively fewer hours while still facing an upward sloping wage profile this pattern is not an artifact of staggered abrupt retirement or selection this evidence imposes restrictions on dynamic models of the aggregate economy and provide updated numerical profiles that can be readily used in quantitative macroeconomic analysis to incorporate this new pattern into aggregate models

a note on the room mates problem and a related revenue allocation problem we introduce in this note the consistent organizational structure cos problem which can be viewed as a generalization of the college admission and room mates problems both the room mates problem and the cos problem may have no stable solution when side payments are allowed the cos problem but not the room mates problem always has a nonempty core we further study some nucleoli of the cos problem with side payments

information in production this paper presents a simple model of the manner in which person specific information on productive capabilities is put to use in the firm the analysis is then employed to examine the impact of improved information quality on equilibrium output wage rates and degree of specialization much effort has been devoted to studying the process through which personspecific information is accumulated burdett mortensen 1 macdonald 8 prescott visscher 10 hartog 3 and johnson 5 examine the process of learning about person specific parameters through investment of resources in activities that yield information jovanovic 6 analyses the more specific problem of inferring the quality of a particular job worker match little attention has been given to the question of just how the firm utilizes this kind of information for information to play an interesting role in production two things are necessary one is that workers be heterogeneous in a meaningful sense that is in the space of productive characteristics workers must not all be simply scalar multiples of one another second the firm must have some choice about the kind of activities in which workers are engaged if either of these conditions fails the optimal assignment of workers is not a problem 2

internet advertising and the generalized second price auction selling billions of dollars worth of keywords we investigate the generalized second price gsp auction a new mechanism used by search engines to sell online advertising although gsp looks similar to the vickrey clarke groves vcg mechanism its properties are very different unlike the vcg mechanism gsp generally does not have an equilibrium in dominant strategies and truth telling is not an equilibrium of gsp to analyze the properties of gsp we describe the generalized english auction that corresponds to gsp and show that it has a unique equilibrium this is an ex post equilibrium with the same payoffs to all players as the dominant strategy equilibrium of vcg

the strategy structure of some coalition formation games in coalitional games with side payments the core predicts which coalitions form and how benefits are shared the predictions however run into difficulties if the core is empty or if some coalitions benefit from not blocking truthfully these difficulties are analyzed in games in which an a priori given collection of coalitions can form as the collection of pairs of buyer seller in an assignment game the incentive properties of the core and of its selections are investigated in function of the collection furthermore the relationships with vickrey clarke groves mechanisms are drawn

on the correspondence of contracts to salaries in many to many matching abstract in this note i extend the work of echenique 2012 to show that a model of many to many matching with contracts may be embedded into a model of many to many matching with wage bargaining whenever 1 all agents preferences are substitutable and 2 the matching with contracts model is unitary in the sense that every contractual relationship between a given firm worker pair is specified in a single contract conversely i show that unitarity is essentially necessary for the embedding result

on the portents of peak oil and other indicators of resource scarcity economists have studied various indicators of resource scarcity but largely ignored the phenomenon of peaking due to its connection to non economic physical theories of resource exhaustion i consider peaking from the economic point of view where economic forces determine the shape of the equilibrium extraction path within that framework i ask whether the timing of peak production reveals anything useful about scarcity i find peaking to be an ambiguous indicator if someone announced the peak would arrive earlier than expected and you believed them you would not know whether the news was good or bad however i also show that the traditional economic indicators of resource scarcity price cost and rent fare no better and argue that previous studies have misconstrued the connection between changes in underlying scarcity and movements in these traditional indicators

inequality control rights and rent seeking sugar cooperatives in maharashtra this paper presents a theory of rent seeking within farmer cooperatives in which inequality of asset ownership affects relative control rights of different groups of members the two key assumptions are constraints on lump sum transfers from poorer members and disproportionate control rights wielded by wealthier members transfers of rents to the latter are achieved by depressing prices paid for inputs supplied by members and diverting resulting retained earnings the theory predicts that increased heterogeneity of landholdings in the local area causes increased inefficiency by inducing a lower input price and a lower level of installed crushing capacity predictions concerning the effect of the distribution of local landownership on sugarcane price capacity levels and participation rates of different classes of farmers are confirmed by data from nearly 100 sugar cooperatives in the indian state of maharashtra over the period 1971 93

world oil market or mayhem the world oil market is regarded by many as a puzzle why are oil prices so volatile what is opec and what does opec do where are oil prices headed in the long run is peak oil a genuine concern why did oil prices spike in the summer of 2008 and what role did speculators play any attempt to answer these questions must be informed and disciplined by economics such is the purpose of this essay to illuminate recent developments in the world oil market from the perspective of economic theory

testing for ability in a competitive labor market 1 introduction the seminal works of akerlof 1 and spence 13 141 have stimulated much research on what may be loosely termed the economics of infor mation creation although studies in this area have considered various markets the majority have concentrated on the creation of information about workers abilities see for example arrow 2 riley 61 and stiglitz 171 the purpose of the present study is to specify conditions on the information structure that guarantee efficiency of a competitive market for worker ability information that information structure is termed symmetric as it satisfies the following maxim what is known to one is known to all if the infor mation structure is asymmetric it does not satisfy this maxim a competitive equilibrium will not be efficient in general two asymmetric information models are specified which illustrate this point in both these models a planner can obtain an efficient solution in principle there is an intimate relationship between the market for information about abilities and the labor market which utilizes this information surprisingly there are very few studies in the labor economics literature that deal with a labor market where the abilities of some workers may not be known with certainty as a labor market of this type is required to study a market for information about abilities one is specified in some detail in section 2 being primarily interested in the information structure and because we have

mismatch in the spanish labor market overeducation the objective of this article is to explain the job match which is assessed by comparing attained education and job required education as reported by workers we frame our empirical work according to the occupational mobility theory using a cross section of workers from a representative survey of the spanish labor force we consider overeducated workers to be those who report that the level of education their jobs require is below the level of education they have attained our results indicate that overeducated workers have less experience decreased on thejob training and higher turnover than other comparable workers we also observe an improvement in the job match over age and mobility

forward contracts or international buffer stocks a study of their relative efficiencies in stabilising commodity export earnings the commodities debate of the last decade has not been very successful in creating new international agreements but it has led to many advances in the economic theory of stabilisation the early work such as that of massell i969 assumes that complete stabilisation of price is the objective and uses the marshallian measures of surplus to suggest that producers would gain and consumers would lose from price stability the later work such as that of newbery and stiglitz i98i assumes that complete stabilisation of prices is neither feasible nor desirable they show that a reduction in the dispersion of prices is likely to leave producers with lower average earnings while having little significant impact on consumers the question from the producers view point is whether the risk benefits are sufficient to offset this loss of earnings an alternative to collective action by producers would be for each of them individually to make forward contracts this strategy will tend to stabilise earnings mainly to the extent that the contract price fluctuates less from year to year than the actual or spot price since forward prices are likely to be lower than eventual spot prices such forward contracting also leads to lower average earnings

distribution of ability and earnings in a hierarchical job assignment model we examine the mapping of the distribution of ability onto earnings in a hierarchical job assignment model workers are assigned to a continuum of jobs in fixed proportions ordered by sensitivity to ability the model implies a novel marginal productivity interpretation of wages we derive comparative statics for changes in technology and in the distribution of ability we find conditions under which a more unequal distribution of ability maps onto a more less unequal distribution of earnings we also analyze an assignment model with variable proportions and find that in the cobb douglas case a rise in the inequality of ability always narrows the range of earnings

the vp function a survey of the literature on vote and popularity functions after 25 years vp functions explain the support for the government at votes and polls by economic and political variables most studies analyze macro time series we also cover studies of individual voters socio economic groups and regional cross sections the theory starts from the responsibil ity hypothesis voters hold the government responsible for economic conditions it works in two party block systems but not else voters in most countries are found to be sociotropic egotropic voting also occurs voters myopia is well established voting is retrospective as expectations are static it costs the average government almost 2 of the vote to rule

economic indicators of resource scarcity a critical essay abstract the theoretical arguments of the conceptual and empirical literature on economic indicators of long run resource scarcity are logically flawed if resource allocators were informed of the nature of resource scarcity their behavior and the economic indicators it generates would reflect the scarcity but if they were so informed we could simply ask them if resources were scarce if they are not informed their behavior and economic indicators are as likely to indicate their ignorance as the reality unfortunately there is no way of knowing whether they are informed or not unless we already know whether resources are scarce

managerial defections promotion criteria and firm growth abstract junior managers learning decisions and career expectations promotion criteria and parent firms growth strategies are interdependent we study this interdependence in a two stage game where a junior manager invests in unobservable industry specific learning in response to the firm s growth strategy in the absence of a credible promotion criterion the firm is unable to insure itself fully against defections growth is low and ex post regrettable managerial promotions may occur higher growth relaxes promotion decisions and erodes managers learning incentives whereas lower growth generates the opposite effect but increases the likelihood of defections

factor pricing in the assignment problem the income distribution theory inherent in the linear programming assignment problem i analyzed in a context in which workers are assigned to machines dual prices correspond to worker wages and machine rents the principle which guides the assignment is contrasted with comparative advantage using factor analysis wage differences are shown to depend on both worker and machine properties the determination of wage differences is illustrated in a numerical example the assignment theory is then compared with neoclassical and human capital theories

matching with contracts comment the theory of two sided matching markets has interested researchers for its theoretical appeal and its relevance to the design of real world institutions the medical residency matching mecha nism in the united states the national resident matching program nrmp and student assign ment systems in new york city and boston are important mechanisms designed by economists using the theory 1 hatfield and paul r milgrom 2005 present a unified framework of matching with contracts which includes the two sided matching and package auction models as well as a simplified version of a labor market model of alexander kelso and vincent p crawford 1982 as special cases they introduce the substitutes condition of contracts which is an adaptation of the substitutability condition in the matching literature roth and marilda a oliveira sotomayor 1990 to matching with contracts they show that there exists a stable allocation if contracts are substitutes for hospitals and that a number of other results in matching generalize to problems with contracts they further claim that the substitutes condition on individual hospitals prefer ences is necessary to guarantee the existence of a stable allocation for all possible singleton preferences of others that is if contracts are not substitutes for a hospital then there exists a preference profile of other hospitals with single job openings and doctors such that there exists no stable allocation we show that this last claim of hatfield and milgrom 2005 does not hold in general the counterexample we present involves a hospital which has two different kinds of positions and the preferences of the hospital are a combination of preferences of these two positions while the substitutes condition does not hold for that hospital we adopt a technique developed by bettina klaus and flip klijn 2005 and show that there exists a stable allocation we then present the weak substitutes condition which we show is necessary to guarantee existence of stable allocations the modified result we present as well as the original contribu tion of hatfield and milgrom 2005 suggest a connection between the substitutes condition and stability 2

a test of the theory of exhaustible resources an empirical test of the theory of exhaustible resources requires an estimate of the time path of the shadow price of the unextracted resource that generally is not observable because of the prevalence of vertical integration in natural resource industries in this paper we use duality theory to derive an econometric model that provides a statistical test of the theory of exhaustible resources a restricted cost function is used to obtain estimates of the shadow prices of unextracted resources the procedure is illustrated with data for the canadian metal mining industry for this industry the empirical implications of the theory of exhaustible resources are strongly rejected

exploration and scarcity noting that a suggested measure of natural resource scarcity resource rent is unobservable we show that rent is linked to observable marginal exploration cost a two period model of extraction and exploration reveals that rent is equal to this cost when discovery is certain under risky exploration cost data can be used to bound rent the model also indicates how exploration uncertainty affects the competitive firm s extraction and exploration decisions finally the behavior of u s oil and gas exploration costs suggests that these costs were rising in the postwar era which has different implications for scarcity than indicated by other measures of scarcity

human capital pricing equations with an application to estimating the effect of schooling quality on earnings this paper formulates and estimates alternative models for the pricing of labor services we present economic models that rationalize empirical specifications in the literature and we offer evidence on the validity of those specifications widely used efficiency units models of labor services are inconsistent with evidence from the u s labor market a model of heterogeneous skills provides a more accurate description of earnings data we present evidence that the pursuit of comparative advantage and selective migration are important features of the u s labor market when these features are included in the model the only support for an effect of schooling quality on earnings is through the return to college education three interactions are empirically important in explaining log wage equations a between schooling quality and education b between regional labor market shocks and education and c between region of residence and regionof birth because of this third interaction which can arise from comparative advantage in the labor market no unique quality effect on returns to education can be defined independently of the market in which it is used

rent sharing in an equilibrium model of matching and turnover this article characterizes labor markets in which the heterogeneity of workers and firms results in thin markets and rents neoclassical marginal analysis and matching are blended into a computable general equilibrium model of trade in efficiency units of labor although workers bargaining problems are interrelated a simple wage contract generates wage flexibility and efficient matching in the model s equilibrium equilibrium wages are predicted to vary with the diversity of firms the scarcity of skills and the costliness of search the model is applied to superstar markets union bargaining in sports interindustry wage differentials and the relationship between pay and profit

the mineral economy how prices and costs can falsely signal decreasing scarcity abstract natural resource prices and costs of extraction have declined simultaneously with increasing quantities of extraction for a long time in a hotelling sense this indicates decreasing scarcity since low cost resources normally would be used first and quantities of extraction normally would decrease over time the main reason for the trend being opposite to hotelling characteristics is usually thought to be due to technological innovation however an alternative reason for decreasing costs and prices and increasing quantities of extraction may be due to georgescu roegen s georgescu roegen nicholas 1972 energy and economic myth in georgescu roegen nicholas ed energy and economic myths institutional and analytical economic essays published 1976 pergamon press new york pp 3 36 concept of bonanza where there is only the appearance of decreasing scarcity norgaard s norgaard r b 1990 economic indicators of resource scarcity a critical essay j environ econ manage 19 1 19 25 mayflower problem can be used to model an alternative neo classical approach to resource extraction and scarcity in this paper a model of resource exploration is developed where the explorer does not know total reserves of the resource base as he searches for and extracts the natural resource the explorer never entirely knows how big the resource base is but does gain information about the potential location of new reserves as discovery proceeds that reduces exploration costs the lower exploration costs can cause the price to fall over time until eventually scarcity of the resource causes the price to rise the true scarcity is only revealed towards the end of exhaustion the model shows that it is possible to have several years of increasing production simultaneous with lower prices and costs until a sudden intense price rise occurs with a huge cut in production when technology is able to cut costs and increase the reserve base the decline in prices and costs and the increase in production can last longer however even with better technology it is still possible for a sharp increase in price as long as demand is growing faster than technological innovation the problem is that the true size of the resource base is never known society does not know if technology is actually overcoming scarcity or not until demand for a resource outstrips supplies it is even possible for a price shock of incredible magnitude to surprise an economy within one or two years after a hundred years of declining prices and increasing production

the package assignment model we study assignment problems where individuals trade packages consisting of several rather than single objects although buyers reservations values are non additive efficient assignments can be formulated as a linear programming problem in which the pricing functions expressing duality may be non linear in the objects constituting the packages the interconnections among the linear programming formulation walrasian equilibrium and the core are established in the single seller auction version a necessary and sufficient condition is given for the vickrey payoff point to be implementable by a pricing equilibrium journal of economic literature classification numbers c62 d44 d51

on the role of job assignment in a comparison of education systems abstract this paper re examines how differences in systems for financing education influence gdp by highlighting a neglected function of education policy it affects the magnitude of gains from job assignment when more productive jobs demand more skill privately financed education can increase productivity gains from matching between jobs and skill by increasing the availability of highly educated people this differs from the standard argument that publicly financed education increases the total amount of human capital by equalizing educational opportunities it is shown that if job opportunities have large variations in productivity education policy may face a serious efficiency equity trade off

on ascending vickrey auctions for heterogeneous objects abstract we construct an ascending auction for heterogeneous objects by applying a primal dual algorithm to a linear program that represents the efficient allocation problem for this setting the auction assigns personalized prices to bundles and asks bidders to report their preferred bundles in each round a bidder s prices are increased when he belongs to a minimally undersupplied set of bidders this concept generalizes the notion of overdemanded sets of objects introduced by demange gale and sotomayor for the one to one assignment problem under a submodularity condition the auction implements the vickrey clarke groves outcome we show that this type of condition is somewhat necessary to do so when classifying the ascending auction literature in terms of their underlying algorithms our auction fills a gap in that literature we relate our results to various ascending auctions in the literature

another look on earnings functions abstract in this paper we examine three different specifications of earnings functions based on human capital thurow s version of a segmented labor market and assignment theory using french data and considering education as an endogeneous variable contrary to hartog 1985 the human capital and assignment approaches are rejected in favor of the thurow s version of a segmented labor market

earnings functions testing for the demand side abstract to analyze labor market phenomena one may simultaneously grade workers by education and jobs by level of difficulty and complexity human capital theory predicts earnings based on only worker quality thurow s version of a segmented labor market theory predicts that only the job level is relevant and the assignment theory predicts that both variables are relevant using three different data sets for the netherlands testing demonstrates convincingly the superiority of the assignment theory

stability of matchings when individuals have preferences over colleagues in the standard two sided matching models agents on one side of the market the institutions can each be matched to a set of agents the individuals on the other side of the market and the individuals only have preferences defined over institutions to which they can be matched we explicitly study the consequences for stability when the composition of one s coworkers or colleagues can affect the preferences over institution

a simple selling and buying procedure abstract for the assignment game we analyze the following mechanism sellers simultaneously fix their prices first then buyers sequentially decide which object to buy also each buyer may report his or her indifferences along with the previous buyers indifferences to the following buyer the first phase determines the potential prices while the second phase determines the actual matching reporting truthfully the indifferences is always a dominant strategy for the buyers moreover when buyers state their true indifferences the subgame perfect equilibria outcomes of the mechanism correspond to the maximum equilibrium price vector together with optimal matchings journal of economic literature classification numbers c78 d78

the political economy of benefits and costs a neoclassical approach to distributive politics this essay offers a rational political explanation for the notorious inefficiency of pork barrel projects with an optimization model of legislative behavior and legislative institutions the model emphasizes the economically arbitrary from a welfare point of view importance of the geographic incidence of benefits and costs owing to the geographic basis for political representation we explore the implications of a legislator s objective function and derive conditions under which a representative legislature will select an omnibus of projects each of which exceeds the efficient scale

segmented or competitive labour markets a normal roy model with four sectors is developed it allows to derive tests of several assumptions on the working of the labor market strongly or weakly competitive or segmented it shows that more important a feature of labor markets than segmentation is the presence of comparative advantages for individuals between the various economic sectors the model is applied to data on women s labor force participation in the main towns of colombia in 1980 it uses multivariate probit and tobit techniques copyright 1991 by the econometric society

big is ugly how large scale institutions prevent famines in western india summary for centuries recurrent droughts have caused severe famines in the deccan region of western india by 1920 large scale institutions integrated this region into an industrial and globalizing world ending famines and causing a rapid decline in mortality rates hence a rise in human welfare these results are contrary to the small is beautiful discourse of some anti globalization theorists yet as these theorists suggest big institutions also often make inefficient use of vital resources institutions such as the deccan irrigation canals can be essential to survival yet require careful redesign to ensure future food security

bargaining in stationary networks we study an infinite horizon game in which pairs of players con nected in a network are randomly matched to bargain players who reach agreement are replaced by new players at the same positions in the network we show that all equilibria are payoff equivalent the payoffs and the set of agreement links converge as players become patient several new concepts mutually estranged sets partners and shortage ratios provide insights into the relative strengths of the positions in the network we develop a procedure to deter mine the limit equilibrium payoffs for all players characterizations of equitable and nondiscriminatory networks are also obtained jel c78 d85 competitive equilibrium theory assumes large and anonymous markets in which every buyer can trade with every seller underlying these assumptions are standard goods and services that may be traded at low transaction costs by agents who are not in specific relationships with one another however in many markets goods and services are heterogeneous e g cars apartments or need to be tailored to particular needs e g manufacturing inputs technical support furthermore trad ing opportunities may depend on transportation costs social relationships infor mation advertising trust technological compatibility joint business opportunities free trade agreements etc in such cases it is natural to model the market using a network where only pairs of connected agents may engage in exchange new theories are needed to explore the influence of the network structure on market outcomes many questions arise how does an agent s position in the net work determine his bargaining power and the local prices he faces who trades with whom and on what terms when are prices uniform in the network one possible conjecture is that an agent s bargaining power is determined by his relative number of connections in the network however this simple theory is implausible consider the network of four sellers located at the top nodes and nine buyers located at the bottom nodes depicted in figure 1 assume that each seller supplies one unit of a homogeneous indivisible good each buyer demands one unit of the good and all buyers have identical values for the good the buyer located in the middle has the largest number of links in the network as he is connected to each

deviations from constituent interests the role of legislative structure and political parties in the states this paper investigates the determinants of state spending over 1960 1990 recent empirical studies suggest that state government expenditure is greater than the electorate desires our main finding is that expenditure was positively related to the number of seats in a state s legislature this is consistent with the hypothesis that logrolling leads representatives to spend more than their constituents would like we also find that political parties do not have a pronounced effect on overall levels of expenditure but do influence the composition of spending in particular democratic control of state government is associated with higher levels of welfare spending

on the inevitable return of higher oil prices abstract must oil prices eventually return to or rise above their 1980 peak levels or will history record that high oil prices were a passing phenomenon this article argues that their return to higher levels is inevitable many perhaps most energy analysts apparently accept this view but some do not among those who expect higher oil prices there is a split on the question of when most look to the 1990s but some say it will be a century or more

unilateral substitutability implies substitutable completability in many to one matching with contracts abstract we prove that the unilateral substitutability property introduced in hatfield and kojima 2010 implies the substitutable completability property from hatfield and kominers 2014 this paper provides a novel linkage between these two sufficient conditions for the existence of a stable matching in many to one matching markets with contracts a substitutable completion of a preference is a substitutable preference created by adding some sets of contracts to the original preference order we provide an algorithm which when operated on the unilaterally substitutable preferences produces such a substitutable completion thus it provides a constructive proof of the connection between the two properties

some further properties of the cumulative offer process we investigate extension resource monotonicity and respecting improvements properties of the cumulative offer process cop extension monotonicity says that no doctor is to be better off whenever others start preferring more contracts to being unmatched resource monotonicity on the other hand requires that no doctor becomes worse off whenever hospitals start hiring more doctors the cop becomes extension and resource monotonic whenever contracts are unilateral substitutes us satisfying an irrelevance of rejected contracts condition irc this result implies that the cop is population monotonic under us and the irc we then turn to the respecting improvements property which states that no doctor should be harmed if some of his contracts become more popular with an additional law of aggregate demand condition we show that the cop respects improvements

two sides of the same coin u s residual inequality and the gender gap abstract we show that the narrowing gender gap and the growth in earnings inequality are consistent with a simple model in which skills are heterogeneous and the growth in skill prices has been particularly strong for skills with which women are well endowed empirical analysis of dot cps and nlsy79 data finds evidence to support this model a large increase in the prices of cognitive and people skills skills with which women are well endowed and a decline in the price of motor skills account for up to 40 percent of the rising inequality and 20 percent of the narrowing gender gap

managing quantity quality and timing in indian cane sugar production ex post marketing permits or ex ante production contracts private sugar processors in andhra pradesh india use an unusual form of vertical coordination they issue permits to selected cane growers a few weeks before harvest these permits specify the amount of cane to be delivered during a narrow time period this article investigates why processors create uncertainty among farmers using ex post permits instead of ex ante production contracts the theoretical model predicts that ex post permits are more profitable than ex ante contracts or the spot market under existing government regulations in the sugar sector which include a binding price floor for cane and the designation of a reserve area for each processor wherein it has a legal monopsony for cane the use of ex post permits creates competition among farmers to increase cane quality which increases processor profits and farmer costs empirical analysis supports the hypothesis that farmers operating in private factory areas have higher unit production costs than do their counterparts who patronize cooperatives

learning by doing adverse selection and firm structure abstract much of the literature devoted to explaining the existence of firms has focused on the firm as either a transactions cost economizing institution or as a means of allocating residual property rights to output contrastingly this paper explores the implications for firm structure of a particular form of learning by doing which arises because of the relationship between jobs it implies that a worker s productivity in some of these jobs depends on whether the worker had previously performed certain other jobs this issue is analyzed using an overlapping generations model the analysis shows that when firms are specialized as to jobs there is a misallocation of workers across productive activities the allocation of workers is efficient when firms are integrated across the jobs further when firm structure is an endogenous choice the equilibrium is characterized by all firms being integrated across jobs

a competitive partnership formation process a group of heterogeneous agents may form partnerships in pairs all single agents as well as all partnerships generate values if two agents choose to cooperate they need to specify how to split their joint value among one another in equilibrium which may or may not exist no agents have incentives to break up any existing partnerships or form new partnerships this paper proposes a dynamic competitive adjustment process that always either finds an equilibrium or exclusively disproves the existence of any equilibrium in finitely many steps when an equilibrium exists partnership and revenue distribution will be automatically and endogenously determined by the process moreover several fundamental properties of the equilibrium solution and the model are derived

extraction costs and the economics of nonrenewable resources the study questions the fundamental assumption of the standard aggregate exploration extraction model of nonrenewable resources that extraction costs and the level of reserves are inversely related it also raises questions about the model s conclusions regarding exploration incentives and the valuation of reserves an empirically tested disaggregate model is presented that suggests that exploration activity occurs from firms attempting to balance marginal extraction plus user costs at the intensive and extensive margins exploration is carried out until the marginal discovery cost of a deposit equals its present asset value and a u shaped price path is indicated

common and conflicting interests in two sided matching markets abstract this paper reviews and synthesizes some of what is now known about what i will call two sided matching markets a number of such models which arise naturally in the study of certain labor markets have been shown to have surprising implications about the common and conflicting interests of the agents and about the incentives they face

the time path of scarcity rent in the theory of exhaustible resources there is now a consensus in the literature on resource economics that a depletable resource should command a price in excess of its marginal extraction cost simply to reflect the opportunity cost of using a unit of it today rather that conserving it for the future but how this excess is to change along an optimal or competitive equilibrium path of resource use is still an unresolved question this might at first seem puzzling since according to the fundamental theorem of economics of exhaustible resources or hotelling i 93 i rule on an optimal path price minus marginal extraction cost also termed interchangeably as scarcity rent user cost or royalty should steadily grow over time at the social rate of discount however the literature contains sharply contrasting views on the subject for example kay and mirrlees 1975 have argued that since along an optimal path the scarcity rent grows exponentially as a finite stock of a resourcexnears exhaustion then situations in which the resource stock is still very large and yet the price greatly exceeds the marginal extraction cost should indicate that the price is significantly above its optimal level and that the resource is overconserved in stark contrast to this view heal i976 has argued that as the resource stock nears exhaustion the difference between price and marginal cost or what he termed social cost of extraction falls monotonically to zero hanson i980 analyses the same model as heal s but unlike heal who assumes the unit extraction cost to be convex he postulates it to be concave and yet like heal concludes that the scarcity rent will be monotonically declining over time solow and wan i976 analyse a still different situation where resource deposits differ in quality and the unit extraction cost increases as higher grade deposits are exhausted and extraction proceeds to lower grades they show that along an optimal path the shadow price of a resource must rise at the real rate of interest despite differential extraction costs but that the difference between price and the marginal extraction cost or what they call degradation charge declines monotonically over time to zero these sharply differing conclusions suggest that far from being resolved the question of how scarcity rent changes over time is much in want of a close scrutiny the need for such a scrutiny becomes even stronger once it is noted

legislative organization and government spending cross country evidence abstract the law of 1 n posits that an increase in the number of elected representatives fuels excessive government spending despite its wide acceptance as a stylized fact the law of 1 n has received only limited empirical scrutiny and the existing evidence for the american states provides mixed support for the thesis this paper examines the law of 1 n in bicameral and unicameral legislative structures using a cross section of democratic countries the results indicate that legislative size matters under both legislature structures but bicameralism dampens the 1 n effect relative to unicameralism

aggregation bias in elasticities of substitution and the minimum wage paradox while the employment effects of minimum wages are usually reported to be small suggesting low substitutability between skill types direct estimates suggest a much larger degree of substitutability this article argues that this paradox is largely due to a bias induced by the aggregation of skill types into broad categories an assignment model is applied where skilled workers have a comparative advantage in complex jobs the implied pattern of substitutability reveals the sources of the bias estimation results for the united states show elasticities of complementarity to be underestimated by up to a factor 2 5 the methods laid out likewise can be applied to other markets where different quality types are close substitutes such as the housing market

the wage distribution in a model of the assignment of skills to jobs this paper discusses a general equilibrium model of the assignment of heterogeneous workers to heterogeneous jobs both jobs and workers are measured along a continuous one dimensional scale the c

trends in natural resource commodity prices an analysis of the time domain abstract this paper attempts to reconcile the theoretical predictions of increasing real prices for nonrenewable natural resource commodities obtained from hotelling style models with the empirical findings of falling prices for these commodities a theoretical model for relative price movements is derived for the case of exogenous technical change and endogenous change in the grade of ores mined the model suggests a u shaped time path for relative prices the implied price movements are tested for all the major metals and fuels and the model parameters are found to be statistically significant for 11 out of the 12 commodities tested

economic engineering and the design of matching markets the contributions of alvin e roth alvin roth s research on and design of new economic systems has had a wide and large impact on human welfare from the matching of residents to medical programs to the assignment of students to schools to the manner in which kidneys are allocated to patients needing transplants this article discusses his important contributions to the understanding and improvement of matching markets highlighting roth s key roles in some of the most prominent successes of market design and the ascension of economic engineering

technological change and the dynamics of resource scarcity measures abstract within a general competitive model of resource extraction this paper investigates the effect of technological change on the time paths of resource scarcity measures cost price and rent and the possible relationship between them it shows that the effect of technological change depends crucially on whether it is extraction biased or depletion biased it derives conditions under which the three measures move together and when they do not it argues in favor of rent as a more reliable indicator of scarcity change the theoretical insights obtained here help to explain both the sharp contrast of empirical results regarding the time trend of a specific measure as well as the observed lack of harmony among the time paths of the measures

union membership determination and industry characteristics recent literature on the economics of unionism has expanded beyond its customary focus on the wage and nonwage effects of collective bargaining and given increased attention to the determinants of union membership previous union membership studies have been couched primarily within an individual choice framework whereby utility maximizing individuals choose either to join or not to join a union empirical work typically treats membership as a function of some vector of personal characteristics 1 2 10 11 21 it is our contention that such studies can best be interpreted as explaining the determination of the union status of jobs and that several industry and firm characteristics in addition to personal characteristics can be expected to affect significantly union membership in this paper theory and evidence relating to the effects of firm and industry characteristics on union membership are presented industry level data are bridged with a large microdata set containing individual characteristics in order to examine the determinants of unionism among workers in manufacturing utilizing a simultaneous model and controlling for sample selection bias we find that product market concentration capital intensity establishment size and job risk significantly affect the likelihood of union membership

information and exhaustible resources a bayesian analysis abstract we develop a continuous time bayesian model of investment in information about an exhaustible resource because of the way that information affects expectations the deterministic hotelling rule turns out to be more appropriate as a description of how resource owners forecast the value of their stocks than as a predictor of observed changes in the resource price a flow of information generates both unanticipated changes in expectations which cause the mean rate of change in the resource price to deviate systematically from the deterministic hotelling rule and reductions in uncertainty which do not affect the hotelling prediction

does competition help co operation co operative sugar factories in western india are economically successful even though rife with factional politics since they are not heavily subsidised what makes them operate efficiently political competition between elected leaders of neighbouring factories drives them to compete economically this in turn drives them to expand innovate and diversify production nothing in the standard rhetoric of co operation explains this tendency toward competitive risk taking likewise standard economic theories of competition overlook the political forces which drive these industrial leaders

hedonic prices and implicit markets estimating demand and supply functions for differentiated products in choosing the level of quality to purchase the buyer of a differentiated product also chooses a point on the marginal price schedule for that product hence in general the demand functions for product characteristics cannot be consistently estimated by ordinary least squares market equilibrium results in a matching of characteristics of demanders and suppliers this matching restricts the use of buyer and seller characteristics as instruments when estimating demand and supply functions for product characteristics the paper develops these issues a stochastic structure for hedonic equilibrium models is then proposed identification results are presented and estimation procedures are outlined

sugar co operatives in maharashtra a political economy perspective abstract the origins of the powerful sugar lobby in maharashtra date back to the 1950s post independence cooperatives formed an integral part of the congress vision of rural development with local initiative a special status was accorded to the sugar cooperatives and the government assumed the role of a mentor by acting as a stakeholder guarantor and regulator persistence of the maze of regulations instituted five decades ago despite its stated rationale being thwarted suggests that it is maintained by entrenched vested interests this paper calls for a fresh start with minimal regulations the teething problems and initial market failures that may occur cannot be worse than the continuing saga of government failure

on measuring natural resource scarcity conclusions concerning trends in natural resource scarcity may depend critically on the choice of scarcity index unfortunately the prevalence of vertical integration in natural resource industries has hindered the use of some otherwise desirable scarcity measures in this paper duality theory is used to derive an econometric procedure for estimating one such measure the shadow price of the resource in situ empirical results for the canadian metal mining industry indicate that resource scarcity as measured by this shadow price has decreased substantially over time

bidding for army career specialties improving the rotc branching mechanism motivated by the low retention rates of us military academy and reserve officer training corps graduates the army recently introduced incentives programs in which cadets could bid 3 years of additional service obligation to obtain higher priority for their desired branches the full potential of this incentives program is not utilized because of the rotc s deficient matching mechanism i propose a design that eliminates these shortcomings and mitigates several policy problems the army has identified in contrast to the rotc mechanism my design utilizes market principles more extensively and it is a hybrid between a market mechanism and a priority based allocation mechanism