wage employment contracts this paper studies the efficient agreements about the dependence of workers earnings on employment when the employment level is controlled by firms the firms superior information about profitability conditions is responsible for this form of contract governance under plausible assumptions such agreements will cause employment to diverge from efficiency as a byproduct of their attempt to mitigate risk it is shown that if leisure is a normal good and firms are risk neutral employment is always above the efficient level such a one period implicit contracting model cannot therefore be used to explain unemployment as a rational byproduct of risk sharing between workers and a risk neutral firm under conditions of asymmetric information

strategic labour contracts labor contracts affect a firm s cost function and for this reason they can be used as a recommitment device to gain a strategic advantage against other firms in a model that is otherwise neutral it is found that if firms compete in prices then strategic considerations alone yield results similar to those obtained by c azariadis 1983 workers are underemployed and worse off in more adverse states of nature on the other hand if firms compete in quantities then the equilibrium contracts resemble those of j green and c kahn 1983 workers are overemployed and better off in more adverse states

monotone stochastic choice models the case of risk and time preferences suppose that when evaluating two alternatives x and y by means of a parametric utility function low values of the parameter indicate a preference for x and high values indicate a preference for y

real rigidities and the non neutrality of money rigidities in real prices are not sufficient to create rigidities in nominal prices and real effects of nominal shocks and by themselves small frictions in nominal adjustment such as costs of changing prices create only small non neutralities but this paper shows that substantial nominal rigidity can arise from a combination of real rigidities and small nominal frictions the paper shows the connection between real and nominal rigidity given the presence of nominal frictions both in general and for two specific sources of real rigidity one arising from goods market imperfections and the other from labour market imperfections

inter industry wage differentials job content and unobserved ability the authors estimate inter industry wage differentials using the bureau of labor statistics s national compensation survey ncs dataset the ncs dataset has a number of distinct advantages over ho

optimal employment contracts with bankruptcy constraints abstract consider the optimal incentive compatible contract offered by a firm with private information to its risk averse employees if the firm is subject to a binding limited liability or bankruptcy constraint then the contract will yield underemployment in low productivity states relative to full information efficiency such contracts either yield underemployment in all states or excessively high variability in employment

a simple search model with procyclical quits abstract a simple two state model of search is constructed which consistent with empirical studies engenders procyclical quits

on the simple economics of advertising marketing and product design we propose a framework for analyzing transformations of demand such transformations frequently stem from changes in the dispersion of consumers valuations which lead to rotations of the demand curve in many settings profits are a u shaped function of dispersion high dispersion is complemented by niche production and low dispersion is complemented by mass market supply we investigate numerous applications including product design advertising marketing and sales advice and the construction of quality differentiated product lines we also suggest a new taxonomy of advertising distinguishing between hype which shifts demand and real information which rotates demand

corporate environmental and resource management in search of a new managerial paradigm abstract sustainable development is close to becoming the catchword of the 1990s but it is still far from being an operational concept for individual companies this paper attempts to transform the brundtlandian contradictory of sustainable development into a corporate and more operational concept as it is argued economists interest in the environment is not new whether to implement sustainable corporate environmental and resource management practices or not is no longer a real choice for industrialists today given the ultimate limitations of nature limitations that are close to being reached the implications of such a new corporate development philosophy will be far reaching however the new managerial paradigm which is outlined here challenges not only the way in which industry is run today but attacks the very bedrock on which mainstream economics is based

unemployment with observable aggregate shocks a general equilibrium model of optimal employment contracts is developed where firms have better information about labor s marginal product than workers it is optimal for the wage to be tied to the level of employment to prevent the firm from falsely stating that the marginal product is low and cutting the wage it is shown that an observed aggregate shock that leads to an interindustry shift in labor demand and that would have no effect on total employment under symmetric information leads to a reduction in employment when firms and workers have asymmetric information

comparative advantage learning and sectoral wage determination we develop a model in which a worker s skills determine the worker s current wage and sector the market and the worker are initially uncertain about some of the worker s skills endogenous wage changes and sector mobility occur as labor market participants learn about these unobserved skills we show how the model can be estimated using nonlinear instrumental variables techniques we apply our methodology to study wages and allocation of workers across occupations and industries using individual level panel data from the national longitudinal survey of youth we find that high wage sectors employ high skill workers and offer high returns to workers skills

bumping layoffs and worksharing this paper deals with an interesting but often neglected labor practice prevalent in large north american firms with well developed internal labor markets large north american firms typically respond to a decline in demand for their products by first reducing the number of hours worked or worksharing as the demand continues to fall however they begin to make skilled workers bump onto unskilled jobs displacing unskilled workers skilled workers are laid off only after a considerable number have bumped i develop an implicit contract model and explain the practice

economics of sustainability or the sustainability of economics different paradigms this article reviews different views of neo classical and ecological economics on the sustainability of economic growth and welfare neo classical economics concludes that due to substitution and technical progress consumption can be sustained even if production depends on a natural resource that is being depleted if production depends on an essential renewable resource there is a level of consumption that can be sustained forever pollution lowers the level of consumption that can be sustained if production depends on an exhaustible resource recycling of waste is insufficient for sustaining consumption unless 100 recycling is possible sustainable economic development is possible if the resource growth potential exceeds the sum of the discount rate minus the rate of exogenous technical progress and if resource productivity is sufficiently high in addition intial levels of environmental quality a composite of pollution and natural resources and man made capital influence the possibilities for sustainable economic development if the resource stock itself affects utility or if irreversibilities occur optimal consumption and extraction are lowered ecological economics states that substitution possibilities are restricted full recycling of waste is impossible and the limited influx of solar energy poses an additional constraint on the level of production that can be sustained since the functions of the environment production factor consumer good and waste sink are intertwined this life support function poses a restriction on economic growth as well in ecological economics development is viewed as an evolutionary process with continuous feedbacks between a changing economy and environment welfare is not merely the sum of discounted individual preferences but requires environmental compatibility and the explicit collective formulation of policies regarding the conservation of species ecosystems and natural resources

labor contracts in a model of imperfect competition we propose a definition of involuntary unemployment which differs from that traditionally used in implicit labor contract theory we say that a worker is involuntarily unemployed if the marginal wage implied by the optimal contract exceeds the marginal rate of substitution between leisure and consumption we construct a model where risk neutral firms have monopoly power and show that such monopoly power is necessary for involuntary unemployment to arise in the optimal contract we numerically compute examples and show that such unemployment occurs for a wide range of parameter values

entry deterrence under trade unions this paper argues for the integration of labor unions in the analysis of industrial organization such a linkage is important for at least two reasons first unions are often concentrated in big firms which tend in general to face an imperfectly competitive environment in their product markets second unions are usually able to extract in the form of higher wages some rents which result from the market power of firms see for example freeman and medoff 1984 on the impact of unions on firm profitability in the u s a firms should thus take union behavior into account and in particular realize that strategies toward rival firms will tend to affect unions ability to extract rents we illustrate here the impact of unions in industrial organization by focusing on the topic of entry deterrence ed in section 2 we first argue that unions tend to lower the profitability of two standard widely studied ed strategies limit pricing under incomplete information and the use of sunk costs section 3 then turns to union contracts as a possible alternative ed strategy available to incumbent tirms finally section 4 assesses the welfare impact of unions in these settings while section 5 suggests directions for research

unobserved ability efficiency wages and interindustry wage differentials interindustry wage differentials in wage regressions estimated for individuals have been interpreted as evidence consistent with efficiency wage models a principal competing explanation is that these differentials are generated by differences across workers in unobserved ability this paper tests the unobserved ability hypothesis by incorporating test scores into standard wage regressions as error ridden indicators of unobserved ability the results indicate that differences in unobserved ability explain relatively little of interindustry or interoccupation wage differentials this abstract was borrowed from another version of this item

niche diversification in environmental ecological economics abstract this paper is devoted to the identification and comparison of the niches of neoclassical environmental economics nee and ecological economics eco it is presented in four sections section 1 argues that the existing literature does not make the differences and relations between the sister disciplines neatly transparent section 2 critically examines the antecedents of the subjects with reference to three structural dimensions such as scarcity perception problem solving orientation and range of integration section 3 collates the elements and reformulates the definitions section 4 is coda on the essay the divide between the paradigms which came to the surface during the 1960s became prominent through the growth controversy of the subsequent decade the controversy over the need for change of economic theory to cope with the growing intensity of environmental uncertainty makes the disciplines sore about each other the neoclassical paradigm comprising of elements like relative scarcity allocative approach market correction and technological optimism characterises nee the distinguishing characteristics of eco include thermodynamic irreversibility absolute scarcity economy ecosystem symbiosis biophysical approach ecological stewardship and prudent pessimism the niches are competitive and complementary in some respects and thus provide a unique example of fruitful niche diversification within environmental ecological economics we have a feeling that the economics profession can trace out the interface of the disciplines in some policy areas and raise the effectiveness of prescriptions so that this academic species diversity can serve humankind to its full potential

marx s reproduction schemes and the environment abstract ecological economists have argued that marx s reproduction schemes are self contained circular flows that downgrade the importance of natural conditions the present paper evaluates this criticism in light of both marx s methodology and his response to quesnay s tableau economique it is shown that marx follows quesnay in clearly distinguishing monetary circular flows from material throughput and that his schemes encapsulate the dependence of capitalist production on natural conditions as developed elsewhere in capital at the same time the purpose of marx s schemes is not to theorize environmental crises but to set out the basic exchanges necessary for capitalist reproduction as a material and social class process marx s analyses of capitalist environmental crises are developed at other points in capital

oil and the macroeconomy since world war ii all but one of the u s recessions since world war ii have been preceded typically with a lag of around three fourths of a year by a dramatic increase in the price of crude petroleum this does not mean that oil shocks caused these recessions evidence is presented however that even over the period 1948 72 this correlation is statistically significant and nonspurious supporting the proposition that oil shocks were a contributing factor in at least some of the u s recessions prior to 1972 by extension energy price increases may account for much of post opec macroeconomic performance

the concept of joint production and ecological economics joint production is suggested as one of the conceptual foundations of ecological economics the notion of joint production springs immediately from the application of thermodynamics and has a long history in economic analysis considerations of joint production give rise to philosophical concerns relating to responsibility and knowledge the concept of joint production is easily comprehensible and is also constitutive and supportive of a range of concepts current in ecological economic thought 2001 elsevier science b v all rights reserved

bioeconomics and post keynesian economics a search for common ground abstract this paper is concerned with the links between two schools of economic thought which challenge the neoclassical synthesis bioeconomics refers to that school of economics stressing the fact that the human species is a part of the larger biosystem of the planet and ultimately subject to the same laws and limitations as other life forms post keynesian economics is a specific school of macroeconomics stressing the fundamental ideas of keynes marx and kalecki concerning uncertainty the nature of production and the role of government in economic affairs bioeconomics and post keynesian economics have much in common in terms of their methodological framework their emphasis on production rather than exchange and their interpretation of the social rate of discount a potential area of conflict between the two schools is their attitude toward economic growth the areas of commonality between the two schools are discussed and a research and policy program which combines the insights of both approaches is suggested

a theory of wage dynamics a dynamic equilibrium model of long term implicit labour contracts under incomplete but symmetric information is developed workers are assumed to be risk averse and of unknown ability or productivity risk neutral firms learn as do workers about each worker s productivity by observing the worker s output over time it is shown that equilibrium contracts provide for wages which never decline with age and increase only when the worker s market value increases above his current wage in addition to characterizing the equilibrium wage contract we also derive some of its implications for the behaviour of aggregate wages across various groups of workers these implications explain some findings in the recent empirical literature on ageearnings profiles in particular our model can explain why earnings may be positively related to experience even after controlling for productivity as some empirical studies have indicated

compensation for state and local government workers are state and local government workers overcompensated this question has re state and local government workers overcompensated this question has taken on considerable heat in the last year or two as many states and localitaken on considerable heat in the last year or two as many states and localities face budgetary stress in this paper we step back from the highly charged ties face budgetary stress in this paper we step back from the highly charged rhetoric and address this question with the two primary data sources for looking at rhetoric and address this question with the two primary data sources for looking at compensation of state and local government workers the current population survey compensation of state and local government workers the current population survey cps conducted by the bureau of the census for the bureau of labor statistics cps conducted by the bureau of the census for the bureau of labor statistics and the employer costs for employee compensation ecec microdata collected as and the employer costs for employee compensation ecec microdata collected as part of the national compensation survey ncs of the bureau of labor statistics part of the national compensation survey ncs of the bureau of labor statistics the fundamental difference between these two sources of data is that the cps is the fundamental difference between these two sources of data is that the cps is a household survey while the ecec is a survey of employers data from the ncs a household survey while the ecec is a survey of employers data from the ncs have been used in studies of union nonunion interindustry and occupational wage have been used in studies of union nonunion interindustry and occupational wage differentials gittleman and pierce 2007 2011 levenson and zoghi 2011 and in differentials gittleman and pierce 2007 2011 levenson and zoghi 2011 and in studies of compensation inequality pierce 2001 2010 however while ncs publistudies of compensation inequality pierce 2001 2010 however while ncs publications regularly present tabulations separately for the private sector on the one cations regularly present tabulations separately for the private sector on the one hand and state and local government on the other the microdata from the ncs hand and state and local government on the other the microdata from the ncs have not been previously used to compare compensation in the private sector to that have not been previously used to compare compensation in the private sector to that in the state and local government sectors in the state and local government sectors we begin by presenting some tabulations on pay differences across sectors we begin by presenting some tabulations on pay differences across sectors from these two data series both raw pay differences between public and private from these two data series both raw pay differences between public and private sectors and also some breakdowns by education level of workers for the current sectors and also some breakdowns by education level of workers for the current population survey and skill level of the job for the employer costs for employee population survey and skill level of the job for the employer costs for employee

selection on observed and unobserved variables assessing the effectiveness of catholic schools in this paper we measure the effect of catholic high school attendance on educational attainment and test scores because we do not have a good instrumental variable for catholic school attendance we develop new estimation methods based on the idea that the amount of selection on the observed explanatory variables in a model provides a guide to the amount of selection on the unobservables we also propose an informal way to assess selectivity bias based on measuring the ratio of selection on unobservables to selection on observables that would be required if one is to attribute the entire effect of catholic school attendance to selection bias we use our methods to estimate the effect of attending a catholic high school on a variety of outcomes our main conclusion is that catholic high schools substantially increase the probability of graduating from high school and more tentatively attending college we find little evidence of an effect on test scores

operationalizing sustainable development dynamic ecological economic models abstract since the mid eighties a vast literature has evolved around the concept of sustainable development it shows a wide support for changes in policy making and decision making for instance to integrate environmental interests in national and international political processes remarkably recommendations of contours and new elements of research methods and policy analysis for sustainable development are rare although this is just as essential as the renewed attention for the political dimension a clear view on how to use and change adequately existing techniques and models for sustainable development will contribute to a more satisfactory operationalization of it this paper examines the implications of ecologically sustainable economic development for integrated dynamic modelling after a concise discussion of sustainable development it is suggested that five concepts are central to it intergenerational equity the regional scale multiple use long term uncertainty and economic ecological integration the discussion of each of these issues is focused on the implications for model elements and uses thereby old ideas are reviewed and new ones are proposed the aim is not to come up with a rigid framework for dealing with sustainable development but rather to suggest which alternatives are available to deal with the central concepts although in a section on economic ecological integration general requirements for dynamic economic ecological models are mentioned explicitly in order to offer a general frame of reference these requirements are fairly general and may be taken up in ensuing discussions of the methodological aspects related to sustainable development the main conclusions are the following we view economic ecological integration in the sense of combining processes instead of one process and a variable to deal with intergenerational equity one may choose objectives various constraints or a combination of both for regional models one may consider various types of conditions on cross boundary flows and external factors of regional processes multiple use can be modelled as an intermediate stage between single resource models with a partial view and complex models with a general view sensitivity probability and scenario analyses can be used to deal partially with the various types of long term uncertainty although this remains difficult for the very important class of unexpected events or catastrophes such surprises can at best be turned into risk by scenario analyses and examination of dynamic behaviour of the system as a whole

malthus vs wordsworth perspectives on humankind nature and economy a contribution to the history and the foundations of ecological economics abstract in this paper the view of humankind and nature upon which the thinking of malthus is founded will be reflected on and contrasted with the opposed understanding of his contemporary wordsworth we show that the economic considerations of both are based decidedly on the premise of these views and that their alternative interpretations of the contemporary economy and the relationship between economy and nature may thus be explained from the comparison of malthus and wordsworth we draw conclusions for modern ecological economics identifying its malthusian understanding of nature and reflecting on the capacities and limits implied for further research we ascribe a central role in the conceptual history of ecological economics to wordsworth and present his philosophical presumptions as a fruitful alternative for ecological economics finally attention will be drawn to the principle importance of the philosophical foundations underpinning this field of research

credit rationing and implicit contract theory an empirical study abstract this paper investigate whether or not implicit contract relations predominate in the japanese bank loan market and produce equilibrium credit rationing the empirical evidence suggests that risks are shared between banks and firms through interest rate arrangements this implies that commercial banks in japan operate in a market dominated by implicit contract relations however the evidence does not support the view that japanese commercial banks execute credit rationing in the sense of fried and howitt 1980 furthermore the results show that large banks differ from small banks in the risk consideration of loan contracts these empirical results are completely consistent with the intermarket business group hypothesis such that the group formation aims to share risks and profits among members

on modelling the natural rate of unemployment with indivisible labour this analysis investigates modelling the natural rate of unemployment in settings where labour s utilization has some lumpy aspect to it specifically the introduction of various nonconvexities into tastes and technology lead to unemploy ment in general equilibrium equilibria can emerge where 1 those currently unemployed have higher probabilities of being unemployed in the future than those currently employed 2 some agents are jobless while others work overtime and 3 seniority rules seemingly arise whereby old workers cannot be laid off so long as either new workers are being hired or some workers are doing overtime the relative welfare levels of employed and unemployed agents are analysed

towards an ecological economics of sustainability abstract persistent disagreement both as to the interpretation to be given to sustainability and as to the relation between ecological and economic sustainability has hindered the development of an ecological economics of sustainable resource use this paper identifies the main concepts of sustainability deriving from the two disciplines in order to explore the difference implied by an ecological approach to the problem it is argued that present economic and ecological approaches are largely disjoint and that they address basically different phenomena by combining the efficiency requirements of what is usually thought of as economic sustainability with the stability requirements of an ecological approach it is shown that an intertemporally efficient allocation of resources that satisfies the conditions for constant levels of consumption is not necessary to assure ecological sustainability ecological sustainability requires that the allocation of economic resources should not result in the instability of the economy environment system as a whole

the approach of ecological economics this paper discusses the major tenets of ecological economics including value pluralism methodological pluralism and multi criteria policy assessment ecological economics offers viable alternatives to the theoretical foundations and policy recommendations of neoclassical welfare economics a revolution in neoclassical economics is currently taking place and the core assumptions of welfare economics are being replaced with more realistic models of consumer and firm behaviour this paper argues that these new theoretical and empirical findings are largely ignored in applied work and policy applications in environmental economics as the only heterodox school of economics focusing on the human economy both as a social system and as one imbedded in the biophysical universe and thus both holistic and scientifically based ecological economics is poised to play a leading role in recasting the scope and method of economic science

employment with asymmetric information in an economy without informational and other distortions entrepreneurs and workers can write labor contracts that support a pareto optimal allocation of resources this paper is an attempt to characterize contracts when enterpreneurs are better informed about the state of nature than are their workers asymmetric information generally results in a suboptimal allocation of both risk and worker effort in particular if consumption and leisure are perfect substitutes employment will be less than fully pareto optimal in all but the most favorable states of nature

some issues in agrarian and ecological economics in memory of georgescu roegen abstract ecological critics of economics have argued for over one hundred years that economists should study the flow of energy and materials in the economy the services nature offers to the human economy cannot be adequately valued in the accounting system of neoclassical environmental and resource economics today s ecological economics does not only critizice it also tries to provide physical indicators in order to judge whether the economy is ecologically sustainable beyond its decisive role in strengthening such ecological economics georgescu roegen s work currently still holds sway in two additional fields consumption theory as analysed by gowdy 1993 and agrarian economics are there relations between such fields of study and ecological economics in this article i shall first focus on the agrarian question and then on intra and inter generational ecological distribution

production and environmental resources a prelude to an evolutionary framework the paper advances a framework to study the evolution of technology and institutions it is based on two simple tenets first the quality and quantity of environmental resources are defined and constrained by the regime of technology and institutions second the character and extent of innovations are informed and limited by the regime as well the framework is contrasted with neoclassical and ecological economics while the framework assimilates ideas from both paradigms it departs from them by stressing the importance of the technological institutional regime tir the two views ignore in different ways the significance of tir 46 the neoclassical program conceives the flow of innovations as tir independent while the ecological agenda regards the fund of resources as tir independent 1 consequently both camps fail to provide an endogenous account of the observed punctuated character of the evolution of tir neoclassical economists maintain that as a resource depletes its price rises which induces switching to a cheaper one encourages exploration or spurs invention harold barnett and chandler morse 7 11 state that nature imposes particular scarcities not an inescapable general scarcity the responses to environmental resource limitation are supposedly singular activities stripped from any underpinning regime the neoclassical disregard of tir heuristically resembles the fable of marie antoinette s folly in response to the scarcity of bread at the eve of the french revolution she advised according to legend buying cake instead ecological economists offer a different view of resource limits 48 for herman daly 21 8 nature really does impose an inescapable general scarcity while neoclassical economists emphasize relative limitation scarcity pricing ecological economists stress malthusian general limitation for ecological economists substitution can solve relative allocation but cannot solve general limitation general limitation can be avoided only if economic activity proceeded within certain boundaries or as put by martin o connor 69 within appropriate cyclical structure of resource transformations under the motto sustainable development a low pace production activity supposedly enables a population to replicate indefinitely ecological economists conceive

intertemporal valuation in an unpredictable environment abstract the inherent unpredictability of ecological systems is a vital feature for the development of theories at the interface between economics and ecology such unpredictability is caused by instabilities that are intrinsic parts of ecosystem function succession and evolution the complexity of ecological dynamics undermines the simple probabilistic treatment of uncertainty based on the equilibrium paradigm common in traditional environmental economics we investigate an important alternative by representing the dynamics of the biogeophysical system as an infinite sequence of instabilities this leads to a stochastic process exhibiting an exponentially growing variance our analysis is carried out in a macroeconomic setting in a situation where the value system here formalized in terms of risk averse social welfare functions contains at least two distinct aspects consumption rate and the state of the environment the central variables for intertemporal valuation i e the time dependent expected values of the two welfare function components are calculated using the probability distribution describing the environmental dynamics one result is that if the unpredictability of the environmental dynamics is taken into account then the social discount rate for environmental existence values may well be negative

do peers influence occupational preferences evidence from randomly assigned peer groups at west point abstract there is substantial variation across occupations in outcomes such as earnings job satisfaction and health yet little is known about how occupational preferences are shaped and evolve this paper assesses a channel that may influence occupational preferences peer effects by exploiting unique institutional features and a natural experiment at west point to document the way students i e cadets occupational preferences evolve and to test for peer effects after graduation cadets must enter the u s army as an officer in one of 16 occupational branches and are required to rank order their preferences for the branches repeatedly over four years west point randomly assigns cadets to social groups both at broad company and narrow roommate levels we leverage the timing of the randomization and preference elicitations to test for peer effects at the company roommate and older peer levels with the possible exception of the first few weeks of exposure we find little evidence of peer effects we also use a survey of cadets to explore mechanisms and find evidence that peer information may not be credible in this case but rather cadets rely on mentors and job characteristics when making this decision

feminism ecology and the philosophy of economics abstract the contemporary discipline of economics pays little heed to either the natural environment or to the work of women a review of the literature on the historical development of western concepts of self and science shows that this is not coincidental rather than suggesting that ecological economics reinforce the identification of women with nature however feminist thought suggests that dualistic thinking about men and women humans and nature can be should be replaced with a fuller picture of human identity and knowledge

ecological economics and sustainable governance of the oceans abstract this paper is an introduction and synthesis of the papers that appear in this special issue devoted to the sustainable governance of the oceans the special issue contains papers on various aspects of the problem including the ecological and economic importance of the oceans the problems facing the oceans from an ecological economics perspective the links between science and policy the rationale for sustainable ocean governance and examples of sustainable institutions and governance structures we developed the lisbon principles of sustainable governance responsibility scale matching precaution adaptive management full cost allocation and participation as a core set of guidelines for sustainable ocean governance we then describe the major problems facing the oceans in terms of how the principles are violated and evaluate some suggested institutions in terms of how the principles are incorporated

finding common ground between ecological economics and post keynesian economics abstract post keynesian economics and ecological economics have in common that they are considered to be heterodox schools of thought aside from that there has not been a strong connection between them previous books on post keynesian economics contain no chapter on environmental or ecological issues this neglect has led leading ecological economists to criticize post keynesians for succumbing to the same growth paradigm as the neoclassical school this paper argues that the two approaches are complementary in the sense that they each have different strong points ecological economics has correctly pointed out that the growth of the global economy may not be welfare improving anymore whereas post keynesians have gained valuable insights into the functioning of the capitalist growth process to determine the feasibility of a synthesis between the two schools the paper compares their approaches to the problems of production consumption and economic dynamics as well as the associated policy recommendations it shows that on a theoretical level the two schools have much in common but their policy conclusions differ with regard to the desirability of further growth the paper concludes that a synthesis of both approaches may lead to a better understanding of how a capitalist economy operates in a natural environment with limits to growth and to better informed policy advice

trends in the growth and distribution of skills in the u s workplace 1960 1985 using new measures of job skills and standard measures of education and earnings the authors examine the effects of changing occupational and industry employment patterns on the skill composition of work between 1960 and 1985 the results show a strong upgrading of cognitive and interactive skills combined however with a substantial slowdown in the rates of growth of those skills and a declining demand for motor skills the earnings mix of jobs did not show the same high correlation with employment growth as skill and education levels because high wage low skill jobs declined in the goods industries while low wage jobs requiring at least moderate skill levels grew rapidly in the services

pareto optima and competitive equilibria with adverse selection and moral hazard this paper explores the extent to which standard general equilibrium analysis of pareto optima and of competitive equilibria can be applied to environments with moral hazard and adverse selection problems allowing for lotteries contracts with random components we first establish that an adverse selection insurance economy a moral hazard insurance economy a signaling economy and a private information labor market economy are all special cases of a simple general structure we then show that techniques for characterizing pareto optimal contracts as solutions to concave programming problems are useful and nice and appear to be broadly applicable allowing for lotteries we show how to characterize the optimal allocations for the adverse selection insurance and labor market economies we then show that standard existence and optimality theorems for competitive equilibria apply in the linear space containing lotteries if agents with characteristics which are distinct and privately observed at the time of initial trading enter the economy wide resource constraints in a homogeneous way other kinds of diversity are not critical for economies with moral hazard which satisfy the homogeneity condition competitive contract markets single out a subset of the optima and thus can be consistent with apparent unemployment and with a random allocation of labor supplied though all households are averse to risk the adverse selection insurance and signaling economies however do not satisfy the homogeneity condition and are difficult to decentralize efficiently with a price system

does unmeasured ability explain inter industry wage differentials this paper provides empirical assessments of the two leading explanations of measured inter industry wage differentials 1 true wage differentials exist across industries and 2 the measured differentials simply reflect unmeasured differences in workers productive abilities first we summarize the existing evidence on the unmeasured ability explanation second we construct a simple model which shows that if matching is important then endogenous job change decisions can create important self selection biases even in first differenced estimates of industry wage differentials third we analyze a sample that approximates the experiment of exogenous job loss we find that i the wage change experienced by a typical industry switcher closely resembles the difference in the relevant industry differentials estimated in a cross section and ii pre displacement industry affiliation plays an important role in post displacement wage determination

interindustry wage differentials and the gender wage gap using data from the march 1988 current population survey the authors find that the wages of female workers differ significantly by industry even when the analysis controls for workers productivity related characteristics although these interindustry wage differentials are at least as large as men s and are highly correlated with them as well there are statistically significant differences between the two of the overall gender wage gap the average female worker earns about 65 as much as the average male worker 12 22 can be explained by differences between the patterns of interindustry wage differentials of men and women and 15 19 by differences in the distribution of male and female workers across industries thus the combined industry effects explain about one third of the overall gender wage gap

an equilibrium model of quits under optimal contracting abstract this article develops an equilibrium model of quits in a labor market and examines the effect of contracting under asymmetric information when compared with symmetric information and noncontractual base lines we demonstrate that quits increase in periods of high output without postulating exogenous price rigidity

a characterization of employment distortions in labor contracts with asymmetric information abstract employment distortions are characterized for different combinations of firm s risk aversion and the degree of normality of leisure in worker s preferences using a novel method all previously established results are derived and the previously unresolved cases are worked out

risk aversion and the choice between risky prospects the preservation of comparative statics results most results in what can be termed the comparative statics of risk aversion are obtained when there is only one source of uncertainty the primary example which originally motivated the definition of risk aversion is that more risk averse people are willing to pay a higher premium for insuring against risk it is known that the results do not generally carry over when there is another source of uncertainty the paper develops conditions under which comparative statics results are robust against the introduction of additional sources of uncertainty

dynamic contractual enforcement a model of strikes this paper provides a theory of strikes as part of a constrained efficient enforcement mechanism for an implicit contractual agreement a firm possessing contemporaneously private information about demand engages in an enduring relationship with its workforce if the information becomes perfectly observable subsequently then modulo discounting the first best is implementable but strikes are always off the equilibrium path if the observations of the workforce are imperfect strikes occur in equilibrium the dynamic contracting problem is modeled as a repeated game with imperfect monitoring the equilibrium exhibits production inefficiency and incomplete insurance to mitigate the inefficiencies caused by strikes

changing concepts of land in economic theory from single to multi disciplinary approaches abstract the role of land in economic theory is surveyed both from a conceptual and historical perspective land has been incorporated in economic theories in various ways originally land used by agriculture was the main motivation for an economic treatment of land this was gradually extended with various other land use categories neoclassical economic theory gave less attention to land use generally regarding land as a production factor of relatively little importance nevertheless specialized sub fields within economics such as regional and urban economics met the demand for explicit spatial analysis including land use considerations attention for environmental and resource problems has stimulated new perspectives on and conceptualizations of land in economic analysis this involves the interaction with other disciplines as well as the use of spatially disaggregated methods of analysis awareness of the richness of ideas on land in economic theory can contribute to enhanced environmental research

dynamic labor contracts under asymmetric information abstract this paper discusses the distortion of employment within a two period asymmetric information contracting model in which an exogenous demand shock is serially correlated and is known only to firms the obtained results show that serial correlations of the state of nature can cause not only underemployment but also overemployment even when overemployment never occurs in the context of a static asymmetric information contracting model

historical roots for ecological economics biophysical versus allocative approaches abstract a number of economists today are aware that the results of their science are more or less at variance with concrete fact and are alive to the necessity of perfecting it they go wrong rather in their choice of means to that end they try obstinately to get from their science alone the materials they know are needed for a closer approximation to fact whereas they should resort to other sciences and go into them thoroughly not just incidentally for their bearing on the given economic problem until economic science is much farther advanced economic principles are less important to the economists than the reciprocal bearings of the results of economics and the results of the other social sciences many economists are paying no attention to such interrelations for mastery of them is a long and fatiguing task requiring an extensive knowledge of facts whereas anyone with a little imagination a pen and a few reams of paper can relieve himself of a chat on principles pareto 1935 para 2022

heterogeneous information and the theory of the business cycle the inability to observe the money supply and price level has been an essential ingredient of informational based equilibrium models of cycles here we assume these data are available but show that heterogeneous information about the productivity of capital can lead to a monetary theory of fluctuations in equilibrium each agent s investment depends on the difference between his own productivity and the perceived real rate in the presence of money demand shocks the nominal rate is noisy signal of the real rate this leads to greater fluctuations in output than if all agents had the same information

pay for performance and compensation inequality evidence from the ecec this article examines the relationship between performance based pay and widening wage inequality using data from the employer costs for employee compensation ecec the results suggest that jobs

reinterpreting industry premiums match specific productivity this article builds a simple model of worker sorting and matchspecific productivity to explain interindustry wage differentials high skilled workers sort themselves into the industries offering more jobs that are better matched to them and those industries pay higher wages on average in job transition following an exogenous job separation the likelihood of industry switching is higher among marginal workers low high skilled workers in high low wage industry empirical findings from a sample of exogenous job separations created from the displaced worker surveys are generally consistent with the implications of the model

optimal severance pay with incomplete information this paper contrasts optimal employment contracts in a world of full information and in a world in which the worker s alternative employment possibilities cannot be observed by the firm the difference between income and severance pay that is the opportunity cost of separating will be higher in more productive states of nature with complete wage insurance no longer possible we therefore have an explanation of higher ability individuals receiving high wages in the short run in long term contracts the explanation does not rely as past explanations have done on the imperfections in bonding arrangements or in loan markets

labor contracts under asymmetric information when workers are free to quit this paper examines the impact of workers ability to quit on the performance of labor contracts between workers and privately informed firms while the need to induce workers to remain with the firm necessarily lowers total welfare the effect on employment levels is to reduce the magnitude of the inefficiency due to asymmetric information whether this inefficiency is under or overemployment the model predicts that employment distortions increase with the strength of lock in effects on workers a prediction which contrasts with the results of efficiency wage models and which may help in empirical testing of labor contract theory

limits to substitution and irreversibility in production and consumption a neoclassical interpretation of ecological economics abstract there are many methodological approaches within ecological economics one of the principal modes of analysis is a modified version of the standard neoclassical model this paper examines the parallels which emerge between the ideas of some ecological economists concerning production and the ideas of others concerning consumption when these ideas are interpreted in the neoclassical paradigm it is well known that ecological economics is characterized by arguments concerning limits to substitution between inputs energy natural capital etc vs manufactured capital labor etc in production and the implications these have for sustainability however various authors have also expressed concerns regarding limits to substitution in consumption either between environmental assets and other goods or between basic needs commodities and other goods though the specific reasons for non substitution are different in the production and consumption cases the underlying theme is that individual commodities and other inputs have unique physical or other properties which make them poor substitutes ideas about irreversibility in production and economic development are also prominent in ecological economics likewise many authors have argued for similar irreversibilities in consumption behavior in analogy to the term technological change i coin the term preferential change to describe these phenomena the linking themes in this case are that the economy environment system is evolutionary in character and that external effects intended and unintended consequences of actions or processes imposed on other parties or resources are all pervasive

workplace compensation practices and the rise in benefit inequality this article aims to explain why inequality in fringe benefits has grown faster than wage inequality over the past four decades we depart from previous income inequality research by studying benef