learning and wage dynamics we develop a dynamic model of learning about worker ability in a competitive labor market the model produces three testable implications regarding wage dynamics 1 although the role of schooling in the labor market s inference process declines as performance observations accumulate the estimated effect of schooling on the level of wages is independent of labor market experience 2 timeinvariant variables correlated with ability but unobserved by employers such as certain test scores are increasingly correlated with wages as experience increases and 3 wage residuals are a martingale we present evidence from the nlsy that is broadly consistent with the model s predictions

amenities factor mobility and market prices policy usefulness of empirical studies examining market responses to amenity levels rests on how accurately willingness to pay wtp for amenities can be derived from these responses recent research into hedonic market techniques has focused on econometric questions of accuracy when estimating demand for amenities this paper contributes to the investigation of accuracy using a perspective distinct from strict issues of econometric methodology use is made of a general equilibrium approach to explore the implications of factor migration and multiple market price responses to amenity endowment change amenities are modeled as one component of a location specific factor bundle factor prices output levels and housing services prices are allowed to adjust in response to a one region amenity endowment increase emphasis throughout is on a stylized representation of a simplified regional economic structure

labor market returns to two and four year college the paper examines labor market returns to a two and four year college education analysis of the 1972 national longitudinal survey of youth observation that the average person who attended a two year college earned about 10 percent more than those without any college education comparison with the wages of those who attended a four year college education

sheepskin effects in the returns to education some previous discussions have dismissed screening theories of education partly on the ground that diploma years of education do not confer especially large earnings gains similarly most empirical research on earnings functions has assumed an absence of sheepskin effects we report evidence however of substantial and statistically significant sheepskin effects although this suggests that the previous dismissals of the screening hypothesis were premature our evidence of sheepskin effects is amenable to nonscreening interpretations also according to screening theories of education individuals with more schooling tend to earn more not because or at least not solely because schooling makes them more productive but rather because it credentiates them as more productive a frequently cited article by layard and psacharopoulos 1974 however dismissed the importance of the screening hypothesis on the grounds that several of its refutable predictions were not supported by available evidence one of these was the sheepskin prediction that wages will rise faster with extra years of education when the extra year also conveys a certificate after surveying a number of studies layard and psacharopoulous henceforth lp concluded that rates of return to dropouts are as high as to those who complete a course which refutes the sheepskin version of the screening hypothesis since publication of the lp paper an undergraduate labor economics textbook has cited lp s analysis of sheepskin effects as telling criticism of the screening hypothesis a prominent proponent of the screening hypothesis riley 1979 has accepted lp s summary of the empirical evidence but responded that some versions of the screening hypothesis do not imply sheepskin effects in the meantime the ongoing flood of empirical research on earnings functions typically has continued to treat the natural logarithm of the wage rate as a linear or occasionally quadratic function of years of education with no allowance for discontinuities in diploma years 2 the estimated rates of return used by lp were based on data that did not disaggregate dropouts earnings by how many years of school they had completed lp acknowledged we would have preferred to show the earnings gain associated with each year of the course including the year when it was successfully completed this note presents a reanalysis of sheepskin effects based on the type of data lp wished they had the results contain very strong evidence of sheepskin effects after all the next section describes our analysis and the following section summarizes and discusses our

beyond the hype intellectual property and the knowledge society knowledge economy this paper explores the debates surrounding whether or not we have now moved into a new knowledge economy andsor knowledge society and if so whether this shift is as significant and as far reaching as the industrial revolution in this possible transformation the place of information communications technologies has been crucial debate has occurred across both economics and sociology with differing emphases as is shown in the ranges of definitions that we review in the paper one consistent factor is the lack of clarity and consistency between them both within and across the disciplines in order to explore the issues that the debates raises in a more grounded way the paper explores them in relation to intellectual property ip and the intellectual commons in the process of innovation growth and economic development the paper is developed through an analysis first of the industrial revolution and the role within this of uncertainty technologies complementarities and elective affinities and the way ip was protected and controlled through patents secrecy being first to the market and copyright the second part of the paper examines definitions of the knowledge economy and society and the role within these of information communication technologies in order to explore whether the ways that ip is protected and controlled have changed in the debate about the knowledge economy and society the role of innovation via human capital with a greater reliance on intellectual capabilities has been emphasized the role of ip thus remains central but is now challenged by the rise of new forms of communication which make its protection harder and move much of the concern with respect to regulation to a global rather than national and local level copyright 2006 the authors journal compilation 2006 blackwell publishing ltd

entrepreneurship human capital and labor demand a story of signaling and matching in contrast to employee qualifications there is no clear evidence that entrepreneurs qualifications positively affect their income in this study we propose that entrepreneurs can benefit from using their qualification as a signal during the process of recruiting employees this is assumed to follow a process of matching equals among equals we confirm a matching of qualification levels for highly skilled employees in denmark and an indication of this in germany partial support for matching among medium skilled employees was only found in germany with no consistent evidence of matching for low skilled employees in neither country this suggests that as skill levels of employees decrease their probabilities of working for different founders converge founders qualifications are the most reliable predictor of recruitment choices over time our findings are robust to numerous control variables as well as across industries and firm age

the speed of employer learning the employer learning literature finds support for statistical discrimination on the basis of schooling how economically relevant statistical discrimination is depends on how fast employers learn about workers productive types this article is the first to estimate the speed of employer learning employers learn quickly initial expectation errors decline by 50 within 3 years this estimate places an upper bound on the contribution of signaling this bound varies with the speed of employer learning and with discount rate for a wide range of parameter values the contribution of signaling to the gains from schooling is less than 25

favorite son specialized child laborers and students in poor ldc households abstract though prior theoretical models of child labor nominally contain households with multiple children they treat all children as identical in their returns to labor market and education activities in actuality households with identical twins are the exception and inherent heterogeneity implies different returns for children we construct a theoretical model that allows child heterogeneity and bilateral altruism our model illuminates potential inefficiencies in the time allocation of children across labor market obligations and education opportunities in poor households when intra household talent differentials across children are great an inefficient reverse specialization may arise and partial bans on child labor will increase efficiency

searching for the correct benefit estimate empirical evidence for an alternative perspective this paper contrasts the results of the contingent valuation hedonic price and property damages avoided valuation techniques each technique was used to estimate the value of flood risk reduction from the construction of a flood control project voting behavior in a referendum called specifically for the provision of the project was used to further interpret the results from the three valuation studies substantial differences were found between the estimates in explaining these differences an alternative perspective on the current debate over the validity and accuracy of nonmarket value estimates is offered

the returns to schooling a selectivity bias approach with a continuous choice variable the essence of selection bias is that we do not observe nonoptimal choices this applies whether the choice variable is discrete or continuous this paper extends the selection bias methodology to the case where the choice variable is continuous and the choice set is ordered the leading practical application of this analysis is the schooling choice problem schooling is treated as a continuous choice variable and selectivity corrected rates of return are estimated the findings suggest selectivity is of considerable importance and support the comparative advantage hypothesis of willis and rosen 18

valuing non market goods using contingent valuation abstract contingent valuation is a technique being developed by economists for the valuation of environmental commodities not traded in markets this paper discusses the major problem areas associated with this method of value estimation these comprise bias strategic hypothetical and design biases the discrepancy between willingness to pay and compensation demanded the aggregation procedure the choice of question format and non use values some evidence from comparative studies is reported and comments made on the accuracy of contingent valuation answers finally the conditions under which contingent valuation seems to operate best are set out

job matching and on the job training conventional analysis predicts that workers pay part of their on the job training costs by accepting a lower starting wage and subsequently realize a return to this investment in the form of greater wage growth missing from the conventional treatment of on the job training is a discussion of the process by which heterogeneous workers are matched to jobs requiring varying amounts of training this matching process constitutes a key feature of the on the job training model presented in this article and tested with a unique data set containing extensive information concerning on the job training employer search wages and wage and productivity growth

valuing environmental commodities some recent experiments a general model of consumer behavior is proposed to assess six recent experiments that have attempted to reveal preferences for environmental goals each experiment used a mix of both the techniques and the theory of demand for non market commodities and each was designed to estimate a non market attitude associated with the environment and to analyze potential biases in the techniques the six cases show some consistency in results the linkage within the contingent market between the environmental attribute institutional setting and the bidding instrument must be realistic and accepted by the respondent to avoid biased results possibly the most important result is the replication of results using a traditional property value study and a contingent bidding approach all evidence obtained to date suggests that hedonic studies of property values or wages travel costs and survey techniques all yield values well one order of magnitude in accuracy 41 references 2 tables

factors affecting the output and quit propensities of production workers we formulate a simultaneous equation model to explain the wages output education and quit propensities of a sample of production workers our principal finding is that individuals that choose more education than we would expect from their observed characteristics have lower than expected quit propensities this relationship would bias standard estimates of rates of return to education we also find that the output of non whites was no lower than that of whites although their wages on previous jobs were lower and that workers with high levels of output were more likely to quit than were workers whose output was average

wages and labor management in african manufacturing using matched employer employee data on 10 african countries this paper examines the relationship beween wages worker supervision and labor productivity in manufacturing wages increase with rm size for both production workers and supervisors we develop a two tier model of supervision that can account for this stylized fact and we t the structural model to the data employee data is used to derive a rm speci c wage premium that is purged of the effect of worker observables we nd as trong effect of both supervision and wages on effort and hence on labor productivity labor management in sub saharan africa appears problematic with much higher supervisor to worker ratios than in morocco and a higher elasticity of effort with respect to supervision

job displacement relative wage changes and duration of unemployment using special cps data on displaced workers this article investigates the wage consequences of job displacement in a framework that emphasizes the effects of past job duration s and unemployment duration s on postdisplacement wages our model also attempts to take account of the simultaneity between unemployment duration and the postdisplacement wage it is found that duration strongly reduces subsequent earnings and that considerable overstatement of the loss in firm specific training investments is implied by conventional routes to measuring wage losses

the central role of noise in evaluating interventions that use test scores to rank schools many programs reward or penalize schools based on students average performance mean reversion is a potentially serious hindrance to the evaluation of such interventions chile s 900 schools program p 900 allocated resources based on cutoffs in schools mean test scores this paper shows that transitory noise in average scores and mean reversion lead conventional estimation approaches to overstate the impacts of such programs it further shows how a regressiondiscontinuity design can be used to control for reversion biases it concludes that p 900 had significant effects on test score gains albeit much smaller than is widely believed

human capital versus sorting the effects of compulsory attendance laws under the educational sorting hypothesis a state compulsory school attendance law will increase the educational attainment of high ability workers who are not directly affected hy the law under the human capital hypothesis such laws affect only those individuals whose hehavior is directly constrained we find that compulsory attendance laws do increase enrollment rates in age groups they do not affect directly thus our results contradict the human capital hypothesis and are consistent with the sorting hypothesis i introduction the last decade has seen considerable debate between supporters of the human capital and sorting models of education the former assert that the effect of education on wages reflects increased productivity the latter maintain that it reflects at least in part correlation between education and unobserved ability workers use education to signal their ability while employers use education to screen workers despite the importance of the debate no fully convincing tests of the hypotheses have been developed in fact many members of the profession maintain at least privately that these hypotheses cannot be tested against each other and that the debate must therefore be relegated to the realm of ideology in this paper we show that the models can be tested against each other by examining the effects of state compulsory school attendance laws we show that under the human capital hypotheis such laws will affect the educational attainment only of those who in the absence of the law would have left school prior to the minimum school leaving age on the other hand under the sorting hypothesis the effects of the law will percolate through the system increasing educational attainment even among workers not directly constrained by the law our results are consistent with the predictions of the sorting model

an equilibrium analysis of wage productivity gaps we develop a model in which each firm chooses a hiring standard as well as a wage schedule and an application fee we then characterize the set of nash equilibria and establish necessary and sufficient conditions for the existence of equilibrium if the distribution of productivities within each ability type is gaussian workers who pass the test will be paid more than the value of their marginal product while workers who fail the test will receive a wage net of the application fee below the value of their marginal product

educational screening by certificates an empirical test this paper argues that the relevant test of wage screening effects should be based on educational certificates rather than years of schooling this is because information conveyed to firms about individual productivity through years of schooling is not sufficiently refined for making individual wage offer decisions although it may be useful for making hiring decisions

field of study earnings and self selection why do individuals choose different types of post secondary education and what are the labor market consequences of those choices we show that answering these questions is difficult because individuals choose between several unordered alternatives even with a valid instrument for every type of education instrumental variables estimation of the payoffs require information about individuals ranking of education types or strong additional assumptions like constant effects or restrictive preferences these identification results motivate and guide our empirical analysis of the choice of and payoff to field of study our context is norway s post secondary education system where a centralized admission process covers almost all universities and colleges this process creates credible instruments from discontinuities which effectively randomize applicants near unpredictable admission cutoffs into different fields of study at the same time it provides us with strategy proof measures of individuals ranking of fields taken together this allows us to estimate the payoffs to different fields while correcting for selection bias and keeping the next best alternatives as measured at the time of application fixed we find that different fields have widely different payoffs even after accounting for institutional differences and quality of peer groups for many fields the payoffs rival the college wage premiums suggesting the choice of field is potentially as important as the decision to enroll in college the estimated payoffs are consistent with individuals choosing fields in which they have comparative advantage we also test and reject assumptions of constant effects or restrictive preferences suggesting that information on next best alternatives is essential to identify payoffs to field of study

demand for housing attributes in developing countries a study of pakistan the paper has applied a conventional framework of analysis of implicit markets to determine the characteristics of demand for housing attributes of quantity and quality in the urban areas of a larg

does the human capital educational sorting debate matter for development policy if education increases human capital subsidizing education can generate economic growth and combat poverty estimates of its return suggest that education is a good social investment in sorting models the return reflects in part the information about productivity revealed by the worker s education thus the social and private returns diverge it might appear that if we believe the sorting model we should be less swayed by evidence that estimated returns to education exceed the social discount rate and therefore less likely to support education based development policies this conclusion is shown to be incorrect this abstract was borrowed from another version of this item

influence of soil conservation on farm land values worldwide concern for the loss of agricultural soil has led many governments to establish programs to slow the loss of soil from farms mcconnell 1983 has shown however that in the absence of externalities farmer decisions on investment to reduce onfarm soil loss can be socially optimal and concludes p 188 as follows increasing soil loss does not imply that farmers ignore physical production relations if farmers know that the soil base affects farm resale value they will conserve it it suggests that the impact of soil depth on the value of farms be investigated earlier rausser 1980 reached a similar conclusion suggesting that land values which fail to reflect soil quality encourage the farmer to ignore his long run impact on the resource two recent studies failed to find clear cut relationships between soil erosion and farm land prices ervin and mill 1985 942 in a cross section study of farm land prices in page county iowa concluded the group of variables measuring past and future erosion damages and conservation structures did not exhibit large and reliable effects gardner and barrows 1985 studied the capitalization of the value of soil conservation practices into farm land prices in southwestern wisconsin and concluded p 946 the most reasonable conclusion is the most obvious conservation

measuring the benefits of environmental change using a duality approach the case of ozone and illinois cash grain farms abstract the measurement of the economic effects of a changing environment can be complex and costly this study uses a duality approach to quantify the relationship between ambient levels of ozone and economic damage on illinois cash grain farms econometric estimates from producers profit functions indicate a significant negative relationship between ozone and the levels of profit and output these findings are consistent with results from more traditional ecosystem assessment procedures given the data and experimentation costs associated with traditional approaches this study s results point to duality as a potentially powerful tool for assessing the economic effects of various environmental phenomena

the effect of human capital on earnings evidence from a reform at colombia s top university abstract in this paper i test whether the return to college education is the result of human capital accumulation or instead reflects the fact that attending college signals higher ability to employers i exploit a reform at universidad de los andes which in 2006 reduced the amount of coursework required to earn degrees in economics and business by 20 and 14 respectively but did not change the quality of incoming or graduating students the size of the entering class their average high school exit exam scores and graduation rates were not affected by the reform indicating that selection of students into the degrees remained the same using administrative data on wages and college attendance i estimate that wages fell by approximately 16 in economics and 13 in business these results suggest that human capital plays an important role in the determination of wages and reject a pure signaling model surveying employers i find that the reduction in wages may have resulted from a decline in performance during the recruitment process which led students to be placed in lower quality firms using data from the recruitment process for economists at the central bank of colombia i find that the reform reduced the probability of los andes graduates being hired by 17 percentage points

the economic consequences of labor mobility unlike most previous research on the relative changes in earnings of job stayers and job changers this study examines the variance in earnings changes rather than simply average changes men and women rather than only men and the five year period following job change rather than only the first year or two the author finds great variability in earnings changes both within and across race and gender groups notably men gained more from quits and except in the case of low wage workers lost less from layoffs than women also men suffered a much smaller penalty than women for repeated job changes for all groups the percentage difference between earnings before and after leaving a job generally persisted for several years

labor market returns to the ged using regression discontinuity analysis we evaluate returns to general educational development ged certification for high school dropouts using state administrative data we apply a fuzzy regression discontinuity method to account for test takers retaking the test for women we find that ged certification has no statistically significant effect on either employment or earnings for men we find a significant increase in earnings in the second year after taking the test but no impact in subsequent years ged certification increases postsecondary school enrollment by 4 8 percentage points our results differ from regression discontinuity approaches that fail to account for test retaking

estimating the labor market signaling value of the ged this paper tests the labor market signaling hypothesis for the general educational development ged equivalency credential using a unique data set containing ged test scores and social security administration ssa earnings data we exploit variation in ged status generated by differential state ged passing standards to identify the signaling value of the ged net of human capital effects our results indicate that the ged signal increases the earnings of young white dropouts by 10 to 19 percent we find no statistically significant effects for minority dropouts

static and dynamic efficiency of pollution control strategies a great deal of the economic literature on pollution control strategies concentrates on the efficiency of environmental policy instruments most analytical studies in this field show that market instruments are more efficient with respect to the cost of pollution abatement of a given number of polluters than non market instruments according to several analytical studies market instruments should also be more efficient with respect to innovation in pollution abatement equipment than non market instruments in the empirical literature a great number of case studies exist with estimations of the savings of abatement costs of market instruments in a situation without technological progress empirical studies about the impact of environmental policy market instruments on the abatement costs in situations with technological progress are lacking

signaling in higher education the effect of access to elite colleges on choice of major i introduction it is a well established fact that more educated individuals earn higher wages there are two primary theories for the source of this education wage premium the first is the human capital accumulation or full information model in which education directly enhances productivity and thereby increases an individual s wages the second is the signaling model of the labor market first proposed by spence 1973 wherein the monetary returns to schooling are partially explained by information asymmetries between individuals and employers these two models lead to strikingly similar labor market predictions which has made testing between them difficult i provide a new test of the signaling model against the full information model using individuals choices of college major this test is novel in that it focuses on the quality of an individual s education as a potential signal rather than the quantity of education furthermore while other tests have focused on high school students or other specific groups e g general education diploma takers in tyler et al 2000 and mba students in hussey 2012 this test sheds light onto the decision making process of college going students in a full information model productivity is costlessly observed by both the individual and the employer each individual chooses her optimal level of education to improve productivity and wages given her ability and the marginal cost of schooling in the signaling framework information is asymmetric such that employers cannot perfectly observe individual ability or true productivity employers use education levels to infer expected productivity while each individual chooses her level of schooling to signal a higher innate ability and potential productivity to employers the equilibrium result in both models is that higher ability individuals obtain more education and accordingly earn higher wages while the equilibria in both models appear similar the extent to which individuals sort on ability depends on the amount of information asymmetry in the labor market under the signaling model the individual s social and private returns to education do not necessarily coincide the private return is a combined effect of the social return from increased productivity and the signaling effect of being identified perhaps falsely as a high ability individual this disparity between private and social returns could lead to an inefficient allocation of schooling in the competitive labor market the implication that investment in schooling might lead to a deadweight loss for society has prompted many attempts to distinguish between these two theories bedard 2001 hussey 2012 lang and kropp 1986 riley 1979 wolpin 1977 and to measure what portion of the returns to schooling is attributable to signaling effects altonji and pierret 1997 2001 clark and martorell 2014 fang 2006 tyler et al 2000 however the empirical evidence differentiating the two models has been fairly limited and testing between the full information and signaling models of education has proven difficult i propose a new model applying the signaling framework of spence 1973 to the postsecondary environment in this model major field of study can be used by individuals to signal unobserved ability and productivity to employers i show that this leads to a prediction that geographic areas with high access to elite colleges result in fewer science technology engineering and mathematics stem majors among lower ability students at nonelite colleges this is distinct from the prediction of a full information model where the level of access to elite schools should only affect those high ability individuals who are eligible to attend an elite school using data from the national center for education statistics baccalaureate beyond survey and the geographic variation in access to elite schools across the united states i find evidence that is consistent with the signaling model prediction

the obsession for competitiveness and its impact on statistics the construction of high technology indicators abstract high technology is a concept much in vogue in oecd countries for it is a symbol of an advanced economy this paper looks at why and how the concept and its indicator acquired such fame it explains that the reason has to do with the fact that the indicator emerged in the context of debates on the competitiveness of countries and their efforts to maintain or improve their positions in world trade the first part looks at the early statistics behind the indicator r d sales statistics developed in official analyses of industrial r d surveys before the 1950s the second part traces the evolution of the r d sales ratio in the 1960s through its use as an indicator of research or technological intensity the third part discusses the internationalization of the indicator via the oecd

the welfare economics of land use planning abstract this paper presents an empirical methodology for the evaluation of the benefits and costs of land use planning the technique is applied in the context of the town and country planning system of the uk and examines the gross and net benefits of land use regulation and their distribution across income groups the results show that the welfare and distributional impacts can be large

a dynamic analysis of educational attainment occupational choices and job search this article examines career choices using a dynamic structural model that nests a job search model within a human capital model of occupational and educational choices wage growth occurs in the model because workers move between firms and occupations as they search for suitable job matches and because workers endogenously accumulate firm and occupation specific human capital simulations performed using the estimated model reveal that both self selection in occupational choices and mobility between firms account for a much larger share of total earnings and utility than the combined effects of firm and occupation specific human capital

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

a spillover based theory of credentialism i propose a model in which credentials such as diplomas are instrumentally valuable to workers the model avoids an important criticism of standard job market signalling models by tying a worker s wage to their output a worker s productivity is influenced by the skills of their co workers where such skills arise from an ability augmenting investment that is made prior to matching with co workers credentials allow workers to demonstrate their investment to the labour market thereby allowing them to match with high skill co workers in equilibrium despite the positive externality associated with a worker s investment i show how overinvestment is pervasive in equilibrium

job duration seniority and earnings an important stylized fact about labor markets is that workers with longer seniority with their current employer have higher earnings than other workers with the same total labor market experience this study shows that workers in longer jobs earn more throughout than workers in a series of shorter jobs and that the measured positive cross sectional return seniority is largely a statistical artifact due to the correlation of seniority with an omitted variable representing the quality of the worker the job or the worker employer match the implication is tha t earnings do not in fact rise very much with seniority copyright 1987 by american economic association

economic efficiency v energy efficiency do model conservation standards make good sense abstract the incremental market value of higher thermal efficiency standards in new houses and the resulting energy savings are estimated using linear regression techniques based on the empirical findings a homebuyer discount rate is calculated and cost effectiveness tests are performed the findings indicate that the real estate market operates efficiently in capitalizing the value of energy savings into sale prices it appears that under current pricing mechanisms the thermal performance improvements provide net benefits to the homebuyer and to the sponsoring utility

housing market capitalization of energy saving durable good investments energy conservation in the residential sector depends in large measure upon the willingness of builders and homeowners to invest in the durable goods which result in an energy efficient house since these durable goods generally become attached permanently to the dwelling unit and since ownership of the unit is likely to change within the expected lifetime of the installed equipment the incentive to invest in conservation measures depends upon the efficiency of the housing market in capitalizing the financial benefits of future fuel savings this paper examines housing market efficiency in this regard by first estimating an hedonic price index with the annual fuel bill included as an explicit attribute of the structure then from the estimated hedonic price of a one dollar reduction in annual fuel costs and assumed fuel price escalation rates and remaining lifetimes of the equipment implicit housing market discount rates are calculated the relatively low estimated discount rates indicate that the housing market performs efficiently in capitalizing future fuel savings

unobservables in consumer choice residential energy and the demand for comfort a model of consumption of residential energy in dwellings is developed distinguishing between attributes of housing that provide direct benefits to consumers and attributes that serve as inputs in the production of final goods for example the thermal comfort of dwellings empirical estimates are made of the mode based upon the annual housing survey and the results are used to calculate the effects of changes in energy prices on the consumption of housing residential energy and other goods the analysis suggests that the adjustment process within the housing market permits a great deal of substitution in response to energy price changes copyright 1989 by mit press

does advertising serve as a signal evidence from a field experiment in mobile search we develop a field experiment that assesses whether advertising can serve as a signal that enhances consumers evaluations of advertised goods we implement the experiment on a mobile search platform that provides listings and reviews for an archetypal experience good restaurants in collaboration with the platform we randomize about 200 000 users in 13 asian cities into exposure of ads for about 600 local restaurants within the exposure group we randomly vary the disclosure to the consumer of whether a restaurant s listing is a paid ad this enables isolating the effect on outcomes of a user knowing that a listing is sponsored a pure signalling effect we find that this disclosure increases calls to the restaurant by 77 holding fixed all other attributes of the ad the disclosure effect is higher when the consumer uses the platform away from his typical city of search when the uncertainty about restaurant quality is larger and for restaurants that have received fewer ratings in the past on the supply side newer higher rated and more popular restaurants are found to advertise more on the platform and ratings of those that advertised during the experiment are found to be higher two years later taken together we interpret these results as consistent with a signalling equilibrium in which ads serve as implicit signals that enhance the appeal of the advertised restaurants to consumers both consumers and advertisers seem to benefit from the signalling consumers shift choices towards restaurants that are better rated at baseline in the disclosure group compared to the no disclosure group and advertisers gain from the improved outcomes induced by disclosure

the demand for housing characteristics in developing countries this paper develops and estimates an econometric model of the household demand for housing characteristics the model is estimated using data from five cities and three developing countries overall the procedures employed work well in a wide variety of circumstances more specifically it is found that 1 household willingness to pay for living space increases with income but at a less than proportionate rate 2 willlingness to pay for living space declines as household size increases 3 willingness to pay for several quality measures structural quality wall roof and floor quality is quite responsive to income

does compulsory school attendance affect schooling and earnings we establish that season of birth is related to educational attainment because of school start age policy and compulsory school attendance laws individuals born in the beginning of the year start school at an older age and can therefore drop out after completing less schooling than individuals born near the end of the year roughly 25 percent of potential dropouts remain in school because of compulsory schooling laws we estimate the impact of compulsory schooling on earnings by using quarter of birth as an instrument for education the instrumental variables estimate of the return to education is close to the ordinary least squares estimate suggesting that there is little bias in conventional estimates every developed country in the world has a compulsory schooling requirement yet little is known about the effect these laws have on educational attainment and earnings 1 this paper exploits an unusual natural experiment to estimate the impact of compulsory schooling laws in the united states the experiment stems from the fact that children born in different months of the year start school at different ages while compulsory schooling laws generally require students to remain in school until their sixteenth or seventeenth birthday in effect the interaction of school entry requirements and compulsory schooling laws compel students born

does the g e d improve earnings estimates from a sample of both successful and unsuccessful g e d candidates the author uses a unique data set constructed from florida general education development certificate ged and unemployment insurance ui administrative records to estimate the relative earnings of two groups of male high school dropouts who took the ged exams in 1995 those who passed the exams obtaining the credential and those who failed the exams estimates from several different specifications all show greater mean quarterly earnings growth among those who obtained a ged than among unsuccessful candidates the advantage was small in dollar terms only about 1 400 annually six years after the exams but given the very low initial earnings of these school dropouts it was large in relative terms growing from zero immediately after the 1995 exams to 13 20 six years later most of these gains appear to reflect not differential wage growth between the two groups but a differential rate of movement from non employment to employment

does school quality matter returns to education and the characteristics of public schools in the united states this paper estimates the effects of school quality measured by the pupil teacher ratio average term length and relative teacher pay on the rate of return to education for men born between 1920 and 1949 using earnings data from the 1980 census we find that men who were educated in states with higher quality schools have a higher return to additional years of schooling rates of return are also higher for individuals from states with better educated teachers and with a higher fraction of female teachers holding constant school quality measures however we find no evidence that parental income or education affects average state level rates of return

using contingent valuation to value environmental improvements alternative methods available to economists for valuing non market goods are outlined contingent valuation is then used to value a ban on straw burning

valuing public goods a comparison of survey and hedonic approaches although the theory of public goods has progressed rapidly since paul samuelson s seminal article the empirical measurement of the value of demand for public goods only recently has received increased attention perhaps the best known and most widely accepted empirical approach has been the use of hedonic prices wherein for example it is assumed that either wages or housing values reflect spatial variation in public good characteristics of different communities this indirect approach based on theoretical work of charles tiebout kelvin lancaster sherwin rosen and others has proven quite successful among public goods or bads which have been valued using the hedonic approach are climate i hoch air pollution robert anderson and thomas crocker d harrison and d rubinfeld social infrastructure r cummings et al and other community characteristics such as noise level j nelson and ethnic composition ann schnare an alternative approach is to directly ask households or individuals to state their willingness to pay for public goods using survey techniques despite arguments that strategic bias will invalidate survey results there exists the need for an alternative to the hedonic approach as an example consider the case of a remote and unique scenic vista valuable to recreators which is threatened by air pollution from a proposed coal fired plant a typical situation in the western united states although it is possible in principle to impute the value of clean air and visibility from the relative decline in local visitation which might follow construction of a power plant information on the value of visibility at the site is needed prior to construction for socially optimal decision making on plant location and pollution control equipment the hedonic approach is unavailable both because the scarcity of local population as opposed to recreators makes use of wage or property value data impossible and because scenic vistas may themselves be unique for these reasons a randall et al first applied survey methods for valuing visibility and other environmental effects of large coal fired power plants in the four corners region of new mexico since this initial application the survey approach has been widely used to value environmental commodities where market data for hedonic analysis is difficult to acquire see for example brookshire ives and schulze rowe et al brookshire et al other early attempts to value public goods using the survey approach include r davis peter bohm and j hammack and g brown although results of using the survey approach for estimating the value of public goods appear to be internally consistent replicable and consistent with demand theory see schulze et al little work on external validation has been reported thus the purpose of this paper is to report on an experiment designed to validate the survey approach by direct comparison to a hedonic property value study the los angeles metropolitan area was chosen for the experiment because of the well defined air pollution problem and be assistant professor university of wyoming assistant professor university of missouri rolla associate professor university of wyoming and professor university of wyoming respectively the research reported here was funded under a grant methods development for assessing air pollution control benefits from the u s environmental protection agency we would like to give special thanks to alan carlin and shelby gerking for their helpful suggestions and contributions additional helpful comments were received from a myrick freeman iii john tschirhart and james murdoch all conclusions are of course our sole responsibility

pay differences among the highly paid the male female earnings gap in lawyers salaries this article uses very detailed information on graduates of the university of michigan law school to examine male female pay differences in that population men and women in this population have virtually identical human capital on graduation from law school allowing us to examine carefully the different impact of children and work history on men s and women s careers and earnings taking time from work in order to care for children reduces wages significantly but a rich set of controls including childcare work history school performance and job setting measures still leave one fourth to one third of the earnings gap unexplained

do wages rise with job seniority many previous studies have found a strong positive effect of job seniority tenure on wages this paper re examines the evidence using a simple instrumental variables scheme to deal with the fact that tenure is likely to be related to unobserved individual and job characteristics that affect the wage we use the variation of tenure over a given job match as the principal instrumental variable for tenure the variation in tenure over the job is uncorrelated by construction with the fixed individual and job match specific components of the error term of the wage equation our main finding is that the partial effect of tenure on wages is small and that general labour market experience and job shopping account for most wage growth over a career the strong cross section relationship between tenure and wages is due primarily to heterogeneity bias prior researchers see mincer and jovanovic 1981 bartel and borjas 1981 borjas 1981 cline 1979 and mellow 1981 and many others have established that job seniority has a strong positive relationship with wage rates in a cross section or a cross section time series of individuals in this paper we re evaluate the evidence concerning the partial effects on wages of job seniority tenure and total labour market experience the extent to which wages rise with tenure is important for several reasons first and foremost the wage tenure profile is a fundamental question about the structure of earnings over careers second the wage tenure profile is a key determinant of the extent to which the earnings power of individuals is tied to specific jobs and it is important for assessment of the losses suffered by displaced workers hamermesh 1984 third evidence that wages rise with job tenure has been used to explain the decline in quits with tenure since the wage growth on the current job lowers the probability that the worker will locate a superior alternative a growing theoretical literature surveyed in parsons 1984 has taken the evidence of a strong wage tenure profile at face value and sought to provide an explanation for the relationship the most prominent explanation is the theory of specific human capital oi 1962 becker 1962 mincer 1974 parsons 1972 kuratani 1973 and hashimoto 1980 in which the growth of wages with tenure holding experience constant is attributed to the worker s share of investments in firm specific skills more recently lazear 1981 has presented a supervision model of wage growth in which firms defer compensation as a means of inducing workers not to shirk freeman 1977 and harris and holmstrom 1982 provide an explanation for wage growth based on an insurance motive salop and salop 1976 nickell 1976 and guasch and weiss 1982 present adverse selection models of wage growth in which firms use a wage tenure profile as a

taste or reputation what drives market prices in the wine industry estimation of a hedonic model for italian premium wines the aim of this article is to provide new evidence on the factors affecting wine prices on both methodological and factual grounds on the methodological ground this study is the first to apply a general box cox transformation within the context of hedonic models which exploit all the variables objective and sensorial characteristics reputation pointed out by previous literature as relevant in driving market prices on the factual ground the article fills the lack of empirical evidence on the issue for italy one of the leading wine producers by using a large data set on two premium quality wines barolo and barbaresco covering the 1995 1998 vintages our results support the evidence obtained using data from other countries showing that sensorial traits the reputation of wines and producers as well as objective variables are all important factors influencing the consumers willingness to pay more importantly by resorting to a nonnested statistical test vuong 1989 we compare two alternative

does the measurement of environmental quality affect implicit prices estimated from hedonic models hedonic property value models are often used to derive point estimates for identifying the relationship between environmental quality and property prices the measurement of the environmental quality variable is often selected based on convenience but variables reflecting different perceptions about environmental quality may result in implicit prices that vary substantially this case study derives implicit prices for nine measures of water clarity using hedonic property value models of lakefront properties in maine results show that water clarity variables based on different perceptions may result in differences in implicit prices large enough to potentially affect policy decisions

workers trust funds and the logic of wage profiles this paper defines a concept a worker s trust fund which is useful in analyzing optimal age earnings profiles the trust fund represents what a worker loses if dismissed from a job for shirking in considering whether to work or shirk a worker weighs the potential loss due to forfeiture of the trust fund if caught shirking against the benefits from reduced effort this concept is used to show that the implicit bonding in upward sloping age earnings profiles is not a perfect substitute for an explicit up front performance bond or employment fee it is also shown that the second best optimal earnings profile in the absence of an up front employment fee pays total compensation in excess of market clearing in a variety of stylized cases

hedonic prices demands for urban housing amenities and benefit estimates abstract this paper uses a rosen two step hedonic price trait demand approach to estimate demand functions for a vector of urban amenities to ascertain whether this theoretically preferred approach yields benefit estimates which differ from the oft used ridker henning one step hedonic approach we conduct a sensitivity analysis we find that the two step approach does yield different benefit estimates and that the differences are large for some amenities the estimates are sensitive to the functional form of the hedonic equation when the forms are significantly different according to modified box cox results but are not particularly sensitive to specification of the amenity demand equation

institutional determinants of university spin off quantity and quality a longitudinal multilevel cross country study the creation of spin off firms from universities is seen as an important mechanism for the commercialization of research and hence the overall contribution from universities to technological development and economic growth governments and universities are seeking to develop framework conditions that are conductive to spin off creation the most prevalent of such initiatives are legislative changes at national level and the establishment of technology transfer offices at university level the effectiveness of such initiatives is debated but empirical evidence is limited in this paper we analyze the full population of universities in italy norway and the uk three countries adopting differing approaches to framework conditions to test whether national and university level initiatives have an influence on the number of spin offs created and the quality of these spin offs building on institutional theory and using multilevel analysis we find that changes in the institutional framework conditions at both national and university levels are conductive to the creation of more spin offs but that the increase in quantity is at the expense of the quality of these firms hence the effect of such top down changes in framework conditions on the economic impact from universities seems to be more symbolic than substantive

policy making in science policy the oecd model unveiled abstract this article addresses the issue of the development of national science policies in oecd countries in the 1960s it argues that the organisation for economic and co operation and development oecd acted as a policy innovator playing a central role in the development and adoption of what we call the oecd model of science policy making through a detailed analysis of the oecd country reviews we reveal the oecd model and its seven key functions horizontal coordination and advice planning and budgeting priority setting resources allocation and administration through analysis of oecd archives we extract the reasons why oecd changed its role in the absence of a reference point against which to benchmark national situations it highlights the ways the pre existing mode of operation of oecd centred on country reviews and peer pressure was modified and how effective these changes have been in the diffusion of the model among oecd members

science accounting and statistics the input output framework abstract statistics on science are often framed within an input output framework inputs are invested into research activities that produce outputs this framework is a pure accounting framework based on the anticipated economic benefits of science this paper asks where the framework comes from it shows that the semantics on input and output in science can be traced back to the economic literature and its analyses of growth via an econometric equation called the production function used extensively by economists in the mid 1950s to study science and its relationship to the economy the semantics immediately offered official statisticians a conceptual framework for organizing statistics on science this is due to the fact that the framework was perfectly aligned with policy discussions on the efficiency of the science system

work education mismatch an endogenous theory of professionalization we model the education workforce pipeline and offer an endogenous theory of professionalization and ever higher degree attainment we introduce two mechanisms that act on the education enterprise causing the number of educated people to increase dramatically with relatively short term changes in the job market using our illustrative dynamic model we argue that the system is susceptible to small changes and the introduced self driving growth engines are adequate to over incentivize degree attainment we also show that the mechanisms magnify effects of short term recessions or technological changes and create long term waves of mismatch between workforce and jobs the implication of the theory is degree inflation magnified pressures on those with lower degrees underemployment and job market mismatch and inefficiency

landscape amenities and local development a review of migration regional economic and hedonic pricing studies abstract with rapid urban expansion and loss of open space attractive local landscapes will continue to gain importance in location decisions and on political agendas the present study reviews the evidence on the local economic role of landscape amenities from two major strands of empirical research migration and regional economic models and hedonic pricing models following common amenity definitions we identify 71 relevant peer reviewed studies and systematically assess the reported effects of the landscape amenity variables the migration and regional economic studies suggest that migrants are attracted by amenities nearly as often as by low taxes reported effects of amenities on income and employment are less consistent the hedonic studies suggest that nature reserves and land cover diversity have mostly open space and forest often and agricultural land rarely positive effects on housing prices studies at larger geographic scales and studies involving urban areas were more likely to identify significant amenity effects some limitations of the evidence may be overcome with better datasets and modeling approaches however in line with other recent work the limitations also highlight the need for complementary information from the analysis of political preferences for land use management

the effect of job tenure on wage offers a wage offer can be either acceptable or unacceptable to a worker but in cross sectional and panel data only acceptable wage offers are observed an ols wage equation will not reveal how job tenure affects wage offers but rather will reveal how tenure affects acceptable wage offers by jointly modeling the firm s determination of the wage offer and the worker s decision to accept or reject the offer we are able to estimate the effect of job tenure on wage offers consistently in contrast to the usual ols results we find that job tenure has no statistically significant effect on wage offers

the new economy what the concept owes to the oecd abstract in the last two decades concepts have appeared that have influenced and even defined entire science and technology policies in western countries high technology national system of innovation information economy knowledge based economy and the new economy in all these policy developments the oecd acting as a think tank for its member countries has been an important promoter of the concepts turning them into buzzwords this article looks at the concept of the new economy as the culmination of decades of work on technology and productivity and explores the crucial role of the oecd in its dissemination and above all the role statistics have played in shaping science and innovation policies

testing in models of asymmetric information this paper explores the role of testing in models of asymmetric information we demonstrate conditions under which testing for underlying characteristics can overcome adverse selection problems and lead to a full information competitive equilibrium this paper provides a more general statement of mirrlees result on the optimal use of infinite fines where testing cannot fully resolve the problems associated with asymmetric information we outline the source of the difficulties our results developed in the context of a labour market can be directly extended to other environments in problems with asymmetric information testing to discover an agent s chosen action or underlying characteristics may significantly reduce the cost of moral hazard and adverse selection

is land leasing a solution to unaffordable housing the increase in u s mortgage rates from nine per cent in 1976 to fifteen per cent in 1982 raised monthly mortgage payments by about sixty per cent even before rising house prices in the united states over this period are taken into account not surprisingly attention has been focused on ways and means of counteracting spiralling housing costs one proposed solution is land leasing under such an arrangement the homebuyer purchases the house but leases the land there may be an option to buy the land at some time in the future land leasing reduces the overall purchase price and hence lowers the minimum down payment and the initial monthly mortgage payment in hawaii land leasing has been a readily available alternative to land owning throughout the postwar period the analysis of residential housing prices in hawaii provides some quantitative estimates of the relative prices of leasehold versus fee simple properties the average price differential is surprisingly small one explanation of these small price differentials for which a model is developed and tested here is that borrowing constrained households use high discount rates to calculate the present value of the future land price that they will in effect have to pay at the expiration of the lease these discount rates are estimated in a nonlinear hedonic property price equation the results are then employed to answer the question under what conditions would a leaseholder buy the land outright before the expiration of the lease

why do wages increase with tenure on the job training and life cycle wage growth observed within firms empirical results in this paper indicate that firm specific wage growth occurs almost exclusively during periods of on the job training this finding suggests that within firm wage growth is mainly determined by contemporaneous productivity growth the results provide no evidence that contractual considerations are an important source of firm specific wage growth copyright 1989 by american economic association

human capital vs signalling explanations of wages increases wages by directly increasing the worker s productivity this learning explanation is usually associated with human capital theory however it seems unlikely that learning explains all the wage differences associated with schooling and work history better educated workers are not a random sample of workers they have lower propensities to quit or to be absent are less likely to smoke drink or use illicit drugs and are generally healthier it is unlikely that employers make full use of differences in propensities to quit or to be absent or sick when hiring workers these characteristics are often not directly observed and the americans with disabilities act precludes firms from using either poor health or the likelihood of future sickness as a hiring criterion unless it is directly related to job performance however if low levels of education are associated with these unfavorable employee characteristics and employers are allowed to take education into account when hiring workers we would expect employers to favor better educated workers as a means of reducing their costs of sickness and job turnover in turn students will take these hiring criteria into account when deciding how long to stay in school students will choose a length of schooling to signal their ability to employers and employers will demand a minimum level of schooling

mobility and wages abstract we show that even for the simplest job search model the effect of mobility on wages depends on the distribution of wage offers and the cost of job changes the effect for symmetric wage distributions is derived

hedonic prices property values and measuring environmental benefits a survey of the issues this paper provides a review of the theoretical basis and the assumptions required in order to use hedonic price equations derived from property value data to obtain measures of the prices and the inverse demand functions for environmental amenities such as air quality it also includes a review and assessment of existing empirical applications of the technique to problems of air and water quality and urban noise

on employer specific information and internal labor markets the human capital literature of which becker s 2 paper is the seminal work stresses the productivity enhancing effects of schooling and on the job training later work by spence 21 and others emphasizes the fact that it is difficult for employers to ascertain the productivity of potential employees and suggests that activities such as schooling may provide employers with signals as to workers productivities in the signalling literature it is assumed that information generated concerning an individual s abilities is general in that it is known to all potential employers yet the information that an employer gathers concerning his workers abilities is not likely to be completely transferable to other employers as a consequence as rosen 18 249 points out there are limitations on the ability of the price system to achieve efficient assignments if the price system is incomplete there is a role for entrepreneurial activity of assembling an optimal work force this paper analyzes the employment relations that arise when employers information concerning new workers abilities is incomplete until after a period of employment the acquisition of such employer specific information is shown to lead to what has been referred to in the literature as internal labor markets internal labor markets as identified by dunlop 5 32 are the complex of rules which determine the movement of workers among job classifications within administrative units these movements may be transfers promotions demotions or layoffs to the exterior labor markets doeringer and piore 3 emphasize skill specificity and on the job training as the key factors in the emergence of the internal labor market along similar lines williamson wachter and harris 22 point out that job idiosyncracy can result in employment relations with attributes like those of internal labor markets by way of contrast this paper emphasizes the role of employer specific information in generating internal labor markets the theory provides an explanation as to why employers dismiss current employees at the same time that new employees are hired evidence that dismissal rates are not insignificant is presented in section iv the theory also provides a new rationale for long term em

the role of human capital in earnings differences between black and white men d uring the past 50 years the earnings of black men have increased substantially both in absolute terms and relative to those of white men as shown in figure 1 in 1940 the black white weekly earnings ratio among men ages 25 34 was 49 percent by 1980 it had increased to 79 percent during the 1980s however the overall black white earnings gap did not narrow and at younger ages the gap actually widened although the 1980s is not the first decade since 1940 in which black men made little or no gains in relative earnings the 1950s was another the lack of progress in the 1980s is nevertheless puzzling and a source of concern this article examines the factors underlying the differential in earnings between black men and white men with a focus on the role of human capital since 1940 successive generations of black men entering the labor force have been increasingly more educated relative to white men both in terms of years of school completed and in the quality of schooling obtained as the education and income levels of black parents increased racial differences in the transmission of human capital in the home were also likely to have narrowed this convergence in educational differences combined with the migration of blacks out of the south contributed to the narrowing in the racial gap in earnings over the 1940 80 period particularly in the first half of the period but human capital factors education and migration were not the only source of convergence in black white differences in earnings the patterns of change in the earnings gap support the contention that declining labor market discrimination against blacks has also contributed to the rise in the black white earnings ratio moreover the acquisition of human capital itself has been strongly affected by societal and governmental discrimination since blacks were long provided with greatly inferior schooling resources

a model of the natural rate of unemployment since the publication of edmund phelps volume the new macroeconomics has treated the labor market as a dynamic process of rational search by unemployed workers for available vacancies wages are viewed as at least potentially flexible though free contracting between workers and firms may lead to fixed wages in the short run imperfect information is a crucial element of the theory for it implies both a need for contracting and a need for rational search rather than simple market clearing in each period a positive rate of frictional unemployment may exist in equilibrium denoted as the natural rate this unemployment is due to the frictions in the search process and imperfections in information rather than to any deficiency in aggregate demand milton friedman defined the natural rate as the level that would be ground out by the walrasian system of general equilibrium equations provided there is embedded in them the actual structural characteristics of the labor and commodity markets including market imperfections stochastic variability in demands and supplies the cost of gathering information about job vacancies and labor availabilities the costs of mobility and so on p 8 this paper reexamines the micro foundations of the natural rate in a model of labor market equilibrium in which turnover flows and imperfect information are explicitly considered workers may quit their current jobs to enter the unemployment pool in order to search among available vacancies for a more preferred position firms economize on turnover by an appropriate wage policy

labor market signaling and self confidence wage compression and the gender pay gap i extend spence s signaling model by assuming that some workers are overconfident they underestimate their marginal cost of acquiring education and some are underconfident firms cannot observe workers productive abilities and beliefs but know the fractions of high ability overconfident and underconfident workers i find that biased beliefs lower the wage spread and compress the wages of unbiased workers i show that gender differences in self confidence can contribute to the gender pay gap if education raises productivity men are overconfident and women underconfident then women will on average earn less than men finally i show that biased beliefs can improve welfare

child auctions in nineteenth century sweden an analysis of price differences during the nineteenth century destitute and or orphan swedish children were boarded out as a part of that time s public assistance the families to which they were allocated were determined by means of english auctions this paper studies the price differences among such children using empirical data from 601 auctions price is regressed on variables related both to the buyer and to the child the results suggest that variables related to the children s characteristics were important and that the willingness to take a poor or orphan child was dependent on the foster parents uses for a child in the household children who were old enough to be used as shepherd boys or girls were easily placed it was worse with those who were feeble incapacitated blind sick mentally deranged or confined to their beds they were useless to farmers and others as a rule the most miserable were boarded out to the poorest of the non property owners julius ejdestam 1969 the poor s sweden my translation