do minority white unemployment differences really exist we develop a model of labor force status federal employment nonfederal employment unemployment and out of the labor force that depends on human capital variables local labor market conditions and personal characteristics according to the estimated model for white non hispanic males and females a substantial difference exists between blacks and white non hispanics even after correction for the control variables however the control variables explain almost all of the difference between hispanics and white non hispanics

asset fixity and investment asymmetry in agriculture fixed asset theory implies that it is more difficult to dispose of capital specific to agricultural production than to add to the stock of specialized capital this theory is tested by determining whether transitions between states of disinvestment are as likely as transitions between states of investment of the twenty four annual capital stock series analyzed evidence of asymmetry between investment and disinvestment is strong in eight cases weak in four and insignificant in twelve there is considerable although mixed evidence of asymmetry for tractors farm and nonfarm and other specialized vehicles since world war ii and for agricultural machinery

international diversification of investments in climate change mitigation abstract numerous studies have shown that international emissions trading can significantly lower the costs of greenhouse gas ghg abatement economic models however ignore the substantial economic and political risks associated with investments in developing countries where according to these models a large share of global ghg abatement takes place we use a mean variance approach to compute international portfolios of carbon abatement activities that balance low abatement costs and investment risks expected returns are derived from marginal abatement cost curves the volatility of the growth rate of regional carbon dioxide emissions is used as an indicator of investment risk we find first that well diversified portfolios can significantly reduce investment risks second the least risk portfolio is distinct from the cost efficient allocation based on equalization of marginal abatement costs and much more costly to implement this indicates that existing models which neglect investment risks overestimate the cost savings due to international emissions trading

production and investment decisions under sunk cost and temporal uncertainty building on glenn johnson s asset fixity theory this article introduces sunk cost and temporal uncertainty in jorgenson s neoclassical theory of investment under the assumption of risk neutrality we show sunk cost and temporal risk affect the implicit rental value of capital and investment and entry exit decisions results suggest there are important interactions between sunk cost and the effects of temporal uncertainty on production behavior

carbon abatement and international spillovers carbon abatement policies in large open economies affect both the allocation of domestic resources and international market prices a change in international prices implies an indirect secondary burden or benefit for all trading countries based on simulations with a large scale computable general equilibrium model of global trade and energy use we show that international spillovers have important welfare implications for carbon abatement policies designed to meet exogenous emission reduction targets we present a decomposition of the total welfare effect of carbon abatement policies into a primary domestic market effect at constant international prices and a secondary international spillover impact as a result of changes in international prices this decomposition reveals the extent to which domestic abatement costs are increased or decreased as a result of the impact of carbon abatement on international prices

economic implications of using a mean var model for portfolio selection a comparison with mean variance analysis abstract we relate value at risk var to mean variance analysis and examine the economic implications of using a mean var model for portfolio selection when comparing two mean variance efficient portfolios the higher variance portfolio might have less var consequently an efficient portfolio that globally minimizes var may not exist surprisingly we show that it is plausible for certain risk averse agents to end up selecting portfolios with larger standard deviations if they switch from using variance to var as a measure of risk therefore regulators should be aware that var is not an unqualified improvement over variance as a measure of risk

testing asset fixity for u s agriculture comment whether a farmer considers an asset fixed or variable as plans are made for managing the farm depends on current opportunity costs three opportunities are particularly relevant at the time a farm management decision is made the value of an asset in use on the farm the cost of acquiring more of the asset and the benefits of disposing of some of the asset already owned by the farmer in the event that an asset can be disposed of at the same price that it can be acquired that asset is not subject to fixity and the three costs will equal one another on an optimally organized farm consider a pair of shoes acquired on a department store charge account if after taking them home the buyer finds they pinch his feet he may return them the next day and get his money back the difference between acquisition cost and salvage value at this time is negligible it is only the inconvenience of making another trip to the store suppose he discovers that the shoes pinch as he wears them at work the next day the use value is now below the acquisition cost of another pair of shoes but the salvage value of this pair has dropped precipitously his current salvage opportunities now include giving the shoes to a relative selling them to a used clothing merchant or taking an income tax deduction by giving them to charity shoes were considered a variable asset when the buyer shopped for them he expected them to be worth more to him than he paid for them they were not subject to fixity until after he wore them but that bit of history becomes irrelevant whether the shoes are a fixed or variable asset depends on whether the buyer can salvage them for more than the value he might get by tossing them in the closet with the expectation of wearing them occasionally in the event that the current salvage value of an owned asset is below the acquisition cost of an additional and comparable one the asset is subject to fixity whether it is fixed or not in a given situation depends on a comparison among opportunity costs that apply at the time the decision is made if the opportunities for using the asset on the farm exceed the cost of acquiring more of the asset the asset is variable and the profit maximizing farmer will acquire more of it if the opportunities for selling the asset in the salvage market exceed the value in use on the farm the asset is variable and the profit maximizing farmer will dispose of some or all of it when the level of use of an asset is not worth changing the farmer considers it fixed the use value is less than or equal to the acquisition cost so expansion is not profitable and the use value equals or exceeds the salvage value so it is not profitable to sell it the three relevant costs have the following relationship on an optimally organized farm acquisition cost equals or exceeds the opportunity cost of using the asset on the farm and on farm opportunity cost equals or exceeds the salvage value these ideas are readily incorporated into economic analyses of individual farms a farm manager need not decide prior to analysis what is to be fixed and what is variable the list of fixed assets is determined endogenously as part of the farm management plan the list of fixed assets varies with the initial farm organization in place at the time the planning process begins and with opportunity costs associated with buying selling and using assets subject to fixity the difficulty with fixed asset theory is in its aggregation from firm to industry problems the uniqueness of each individual farm organization is lost in the aggregation to all farms and the off farm opportunity costs which are appropriate to individual farm situations are not included in the aggregate price series used by economists to analyze the allocation of natural resources and purchased farm inputs among alternative uses the aggregation problems and data limitations make fixed asset analysis difficult at the aggregate level despite its complete simplicity at the farm level for example farm machinery is subject to fixity during a given interval the level of machinery use may increase on some farms decrease on some and remain fixed on others the net change in the aggregate whether positive negative or zero says little about the role of the fixed asset in aggregate production some degree of disaggregation is required but these difficulties do not make the consideration of fixed assets in the supply response of u s agriculture any the less important as chambers and vasavada put it asset fixity must exist at the aggregate level p 764 inasmuch as asset fixity affects the supply functions of individual farms it requires no great leap of imagination to suppose that asset fixity affects the aggregate supply function as well the difficulty arises in trying to measure and test the statistical significance of asset fixity in the aggregate supply function to illustrate for a situation of price reversal supclark edwards is an economist with the economic research service u s department of agriculture review was coordinated by peter berck associate editor

dynamic labour demand schedules for us agriculture labour in us agriculture is performed by diverse workers including farm operators unpaid family workers and hired workers who work anywhere from a few days per year to the entire year agricultural labour literature has drawn distinctions between these different types of workers but these distinctions are frequently ignored in input demand studies in recent studies seasonal and full time hired labour are invariably treated as a single input and hired labour is frequently aggregated with family operator labour this study maintains seasonal hired labour full time hired labour and family operator labour as three separate inputs and evaluates input substitutability and technical change in a dynamic framework empirical evidence of differences in demand characteristics for the three types of workers is presented

clean development investments an incentive compatible cge modeling framework the clean development mechanism established under the kyoto protocol allows industrialized annex i countries to offset part of their domestic emissions by investing in emissions reduction projects in developing non annex i countries computable general equilibrium analysis of the clean development mechanism s impacts so far mimics the clean development mechanism as a sector emissions trading scheme thereby overstating its potential to save climate change mitigation costs this study develops a novel approach that represents the clean development mechanism more realistically by compensating clean development mechanism implementing sectors for additional abatement cost and by endogenizing clean development mechanism credits as a function of investment compared with previous representations the proposed approach is more consistent in its incentive structure and investment characteristics at the sector level an empirical application of the new methodology demonstrates that the economy wide cost savings from the clean development mechanism tend to be lower than suggested by conventional modeling approaches while clean development mechanism implementing sectors do not lose in output

an adjustment cost rationalization of asset fixity theory this article integrates a classic concept in production economics g l johnson s asset fixity theory with the dynamic adjustment cost model until now the literature has considered these two to be incompatible by relaxing the smoothness assumption of the adjustment cost function at the origin the theory of costs of adjustment can provide a rigorous endogenization of asset fixity g l johnson and edwards results are then obtained when the linearity assumption of the adjustment cost function is imposed the work reported here also indicates that both smoothness at the origin and symmetry of adjustment cost function should be subject to empirical tests

market power and hot air in international emissions trading the impacts of us withdrawal from the kyoto protocol ten years after the initial climate change convention from rio in 1992 the industrialized world is finally likely to ratify the kyoto protocol which will impose legally binding greenhouse gas emission reductions on the developed world however the kyoto protocol will enter into force without the usa which withdrew under president bush in march 2001 accounting for hot air and market power of the former soviet union on emission permit markets it is shown that us withdrawal has important consequences on environmental effectiveness compliance costs and excess costs of market power under the kyoto protocol non compliance of the usa implies a dramatic decrease in environmental effectiveness as well as compliance costs of oecd countries whereas the former soviet union and transitional economies in eastern europe suffer from a huge decline in permit sales revenues excess costs of market power in permit trade increase in relative terms but decline substantially in absolute terms due to us withdrawal pol

explaining the racial unemployment gap race region and the employment status of men 1940 although the substantial and persistent gap between the unemployment rates of african americans and whites in the united states first emerged in aggregate statistics covering the 1940s and 1950s disaggregation reveals that the gap already existed in urban areas before 1940 using individual level data on male workers from the 1940 census the author analyzes the causes of the unemployment gap he finds that racial differences in measured human capital and other characteristics can explain all of the racial gap in the south but less than half of the gap in the north this result contrasts with results from studies of wages which have found a larger racial residual in the south than in the north

valuing farmland with multiple quasi fixed inputs this study examines the impact of multiple quasi fixed assets on the imputed returns to farmland the results indicate that the presence of additional quasi fixed assets causes the true shadow value of farmland to deviate from its imputed value the results also indicate that when the potential existence of multiple quasi fixed assets is explicitly modelled the shadow value of farmland approaches reported cash rental values

robust error specification in a production system economists estimating demand and supply systems face the question of using shares or quantities as dependent variables this article finds that inconsistent estimates are obtained if one makes the wrong choice a robust structure is presented to let the data choose the preferred form empirical applications to u s and texas agriculture using the generalized method of moments suggest that shares and quantities are rejected in favor of a more general functional form the texas application provides some evidence for fixed capital but not for labor copyright 2013 oxford university press

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

farmer behavior under risk of failure cudari c department of agricultural and resource economi division of agriculture and natural resources l university of california ut workingpaperno 488 j re v farmer behavior under risk of failure by william e foster and gordon c hausser giannini foundation of agricultural economics uerary cr california agricultural experiment station giannini foundation of agricultural economics october 1990

transaction costs and tradeable permits abstract tradeable permit systems are at the center of current interest and activity in market based reforms of environmental policy because these systems can offer significant advantages over conventional approaches to pollution control unfortunately claims made for their relative cost effectiveness have often been exaggerated transaction costs which may be significant in these markets reduce trading levels and increase abatement costs in some cases equilibrium permit allocations and hence aggregate control costs are sensitive to initial permit distributions providing an efficiency justification for politicians typical focus on initial allocations

testing asset fixity for agriculture reply the observations made by lee and baumel lb on our previous effort appear to cast some doubt on the methodology employed to test the asset fixity hypothesis for u s agriculture as their criticism is of a fundamental nature we welcome the opportunity to address the points they raise to do so it is only proper at the outset to sort out the major charges leveled against the chambers and vasavada cv asset fixity study and analyze them in sequence the lb critique hinges on two types of objections these are a that the asset fixity hypothesis cannot be tested under constant returns to scale and b that the terms asset fixity and putty clay are not freely interchangeable as cv suppose the arguments advanced to justify these positions roughly adopt the following lines of reasoning under the cost minimization hypothesis constancy of inputoutput ratios under constant returns to scale is consistent with variation in both inputs and output hence rejection of the putty clay hypothesis does not necessarily imply rejection of asset fixity since putty clay merely requires constancy of inputoutput ratios while asset fixity requires no change in input quantities for example say labor output ratios are somehow optimally determined to be ten hours per bushel of corn then ex post price variation may keep this ratio unchanged while the actual labor and output quantities demonstrate some variation the second objection appears to take a broader view while not necessarily abandoning the constant returns to scale criticism that the asset fixity and putty clay hypotheses are not one and the same thing a graphical illustration of the behavior of a representative profit maximizing firm not a fixed output cost minimizing firm is provided to supplement this position of course since profits are unbounded under constant returns to scale lb point out that their illustration of the comparative static behavior does not adopt this assumption it would appear therefore from their arguments that not only is asset fixity untestable under constant returns to scale both under cost minimization and profit maximization but that any acceptable test procedure must invoke a distinction between the putty clay and asset fixity hypotheses our efforts to address these criticisms proceed in two stages first it is shown that the asset fixity hypothesis can be tested under the constant returns to scale assumption this lb contention is without theoretical or empirical content second the broader objection relating to distinguishing between characteristics of technology putty clay and economic responses asset fixity is discussed this discussion reveals no major inconsistency between the position taken by lb and cv their concept of asset fixity corresponds to the weaker form of asset fixity individual factor fixity tested in the original cv formulation our conclusions are noted in the final section and they justly reflect significantly greater optimism regarding the original cv study in comparison with those shared by lb

labor market impacts of u s tight oil development the case of the bakken abstract there has been a recent boom in natural gas and oil production in the us due to high energy prices and technological advances in hydraulic fracturing and horizontal drilling while north dakota oil production has increased significantly since 2005 with the development of bakken formation the impact on the rest of the economy including agriculture historically the largest industry in north dakota has received little attention we employ a variant of the corden neary resource development model to test the impact of the oil boom in north dakota caused by technical change on employment and wages in two tradable sectors of the state economy agriculture and energy alongside the rest of the state s economy using a vector error correction vec model marking the very first use of the dynamic vector autoregression var analysis in this theoretical framework it was determined that the oil boom as represented by the number of rigs in the state led to an increase in employment and wages in energy sector as expected but also in the rest of the economy oil development activity had no significant impact on agricultural wages both energy sector equations employment and wage suggest relative independence of these variables from the movements in agriculture and the rest of the economy and being impacted mostly by the changes in energy sector itself seasonality does not play significant role in energy sector employment and wages unlike in agriculture and the rest of the economy

climate policy induced investments in developing countries the implications of investment risks international climate policy has assigned the leading role in emissions abatement to the industrialized countries while developing countries remain uncommitted to binding emission reduction targets however cooperation between the industrialized and the developing world through joint implementation of emission abatement promises substantial economic gains to both parties in this context the policy debate on joint implementation has addressed the question of how investment risks to project based emission crediting between industrialized countries and developing countries affect the magnitude and distribution of such gains in our quantitative analysis we find that the incorporation of country specific investment risks induces rather small changes vis a vis a situation where investment risks are neglected only if investors go for high safety of returns is there a distinct decline in the overall volume of emission crediting and the associated total economic benefits while the welfare effects of risk incorporation for industrialized countries are unequivocally negative the implications across developing countries are ambiguous whereas low risk developing countries attract higher project volumes and benefit from higher effective prices per emission credit compared to a reference scenario without risk the opposite applies to high risk countries sensitivity analysis with respect to higher risk estimates show that shifts in the comparative advantage of emission abatement against high risk countries may become dramatic as only very low cost mitigation projects will be realized driving down the country s benefits from emission crediting to the advantage of low risk developing countries this result is supported by empirical evidence on regional imbalances of activities implemented jointly under the pilot phase of the kyoto protocol

estimating investment rigidity within a threshold regression framework the case of u s hog production sector this article addresses the issues of investment disinvestment asymmetry and a possible existence of a sluggish regime in the demand for a quasi fixed input in the u s hog production sector adopting a new threshold estimation procedure quarterly data from 1970 through 2002 are used to estimate a regimedependent investment demand equation for a quasi fixed input taking sows as a proxy the results support the existence of three regimes over alternative specifications precluding the sluggish regime confirming the existence of asset fixity in hog production the results also highlight the importance of accounting for investment rigidity when estimating hog supply and variable input demands the importance of the u s swine industry is far reaching and can be highlighted by its economic contribution to different sectors along the supply chain involving hog producers pork processors and consumers according to the national pork producers council nppc 2002 the industry supported an estimated 800 000 domestic jobs in 2002 and generated more than 72 billion in total domestic economic activities furthermore the united stated is a leading pork exporter with its exports valued at 1 5 billion in 2002 of the 72 billion worth of domestic economic activities receipts from hog sales account for more than 11 billion per year the hog sector also contributes an additional 27 billion from the utilization of corn soybean and other inputs nppc the structure of the hog production sector has changed dramatically during the past decade with large hog operations becoming increasingly dominant between 1994 and 2004 the proportion of hog operations with more than 2 000 hogs has doubled from 38 to 79 of all hogs

testing asset fixity for u s agriculture two problems which have concerned agricultural economists since the great depression are low farm resource returns and agriculture s tendency to maintain high aggregate production in the face of declining real product prices the latter phenomenon referred to as irreversibility of supply has spawned a significant literature on approaches to estimating and testing irreversible supply curves houck tweeten and quance while there are numerous explanations of these problems it is widely accepted that both are at least partially due to some asset fixity within agriculture that is in the aggregate there are certain productive factors which are trapped in agriculture attempts to explain asset fixity are not new galbraith and black early argued that high fixed costs contribute to a lumpiness of important factors which makes their temporary reduction or reorganization so expensive as to be unprofitable in the short run later g l johnson hypothesized that productive assets are trapped in agriculture because of a divergence between acquisition costs and salvage value formal developments are in edwards hathaway and johnson and quance both explanations have been challenged d g johnson concluded that available empirical evidence did not support galbraith and black s high fixed cost hypothesis he argued instead that the data were consistent with inelastic supply of agricultural inputs johnson and pasour criticized inferring asset fixity from a divergence between acquisition costs and salvage values they argued that the appropriate concept for investigating resource allocation is that of the resource s opportunity cost although they criticized g l johnson s fixed asset theory they still concluded that asset fixity theory can contribute toward an understanding of why the supply function whether firm or industry is not reversible

the emergence persistence and recent widening of the racial unemployment gap census data show that the ratio of black to white unemployment rates currently in excess of 2 1 was small or nonexistent before 1940 widened dramatically during the 1940s and 1950s and widened again in the 1980s the authors decompose changes in the unemployment gap over the years 1880 1990 to identify the separate contributions of changes in observable worker characteristics and shifts in labor demand nearly all of the widening of the gap during the 1940s and 1950s can be attributed to regional shifts of workers and declining demand in markets where black workers were concentrated after 1970 improvements in the relative educational status of black workers would have narrowed the unemployment gap slightly but demand shifts adverse to black workers more than canceled out these gains

the effects of tax policy on investment in agriculture the effects of tax policy on agricultural investment are investigated by estimating a dynamic interrelated input demand system net investment is specified to give rise to increasing internal costs of adjustment resulting in capital inputs being quasi fixed the system of demand equations is derived by incorporating a quadratic normalized restricted cost function into a long run dynamic optimization framework copyright 1991 by mit press

explaining black white wage convergence 1940 1950 during the 1940s racial differences in wages narrowed at an unusually rapid pace using a decomposition technique different from that of previous studies the author shows that wage compression be

joint implementation strategic reactions and possible remedies this paper investigates the promising proposal of joint implementation ji to mitigate greenhouse gas emissions this was ultimately the only concrete outcome of the conference on climate change in berlin albeit restricted to a pilot phase the basic idea given the public s awareness of global warming sounds economically plausible the industrialized countries the only ones required to stabilize and lower carbon emissions can search for cheaper reductions of greenhouse gas emissions in developing countries and economies in transition however this proposal leads to strategic reactions by developing countries reinforced by the fact that this cheating coincides with the interest of the industrialized country in short this proposal will lead to cheating given asymmetric information and will thus produce largely faked reductions in emissions on the constructive side an efficient mechanism retaining the spirit of ji is derived which deters strategic reactions this differs from a usual principal agent problem through an additional hierarchical layer a global authority e g the conference of parties on climate change an industrialized country and a developing country the unavoidable loss that is even associated with an optimal scheme due to strategic behavioural reality the first best optimum is unattainable except at the top leads of course to much less glamorous predictions in emission reductions moreover the implicit subsidization scheme focuses and favours on already efficient partners

processing industry capacity and the welfare effects of sugar policies normally analysis of policies affecting commodities such as sugar employs long run comparative statics under certainty and ignores processing industries like cane sugar refining under the implicit assumption that the capital is malleable in both the short and long run we present a dynamic model calibrated to world sugar and solved with numerical dynamic programming that includes the specific capital of the refining industry when compared to an otherwise identical static model the dynamic model suggests that some 20 of welfare losses may be misattributed to cane sugar producers instead of refiners in contrast the difference between certainty and uncertainty proves to be unimportant

incorporating the causes of occupational differences in studies of racial wage differentials this study provides a basic framework for incorporating the causes of occupational differences into analyses of racial wage differentials separating the influences of personal characteristics occupational choice and hiring discrimination on occupational attainment provides measures of the contributions of each to the racial pay gap the paper also considers the potential for bias in the wage equation estimates arising from self selection into occupations there are two generalfindings first correcting for self selection increases the importance of occupational distribution in explaining racial wage differentials second a proper accounting of the causes of these occupational differences yields discrimination measures that are higher than those that arise when occupational dummy variables are included in the wage equations and all the difference in occupational distribution is treated as nondiscriminatory

an economic analysis of technology in the meat products industry the meat products industry underwent significant structural change during the last two decades the relocation and expansion of commercial cattle feeding stimulated development of new single species slaughtering facilities to replace older multi species plants an essentially new processing industry arose specializing in breaking and packaging carcasses this forward integration has significantly changed distribution methods of slaughtering and fabricating firms increased emphasis on coordination of inputs led to interest in backward integration from packing into cattle feeding the steer and heifer slaughtering sector which was decentralized and competitive in the 1950s has turned toward centralization and concentration although the largest firm accounted for only 13 of total u s steer and heifer slaughter in 1977 it had more than doubled its share since 1970 in 1978 this firm slaughtered more than twice as many steers and heifers as its nearest competitor in addi

dynamic input demand an application to agriculture a theoretically consistent analytical framework for examining dynamic agricultural input demand is developed and applied results from duality theory on restricted variable profit functions are incorporated into a long run dynamic optimization framework input use is affected by external adjustment costs which permits sluggish factor adjustment

school quality and black white relative earnings a direct assessment the wage differential between black and white men fell from 40 percent in 1960 to 25 percent in 1980 it has been argued that this convergence reflects improvements in the relative quality of black schools to test this hypothesis we assembled data on pupil teacher ratios annual teacher pay and term length for black and white schools in the eighteen segregated states from 1915 to 1966 these data are linked to estimated returns to education for southern born men from different cohorts and states in 1960 1970 and 1980 improvements in the relative quality of black schools explain 20 percent of the narrowing of the black white earnings gap between 1960 and 1980

uniform and non uniform second best input taxes we investigate second best input based taxes foragricultural nonpoint pollution control when marketprices are endogenous and production isheterogeneous theoretically we derive the optimalforms of taxes which take account of heterogeneity non uniform taxes and a tax which does not auniform tax empirically we use a multi factor market equilibrium simulation model to determineoptimal tax rates and associated equity effects particularly differences in landowner gains lossesacross a heterogeneous region when market prices areendogenous second best tax policies result inpecuniary externalities that affect existingenvironmental externalities in particular thepecuniary externalities amplify the effect of producerheterogeneity on determination of sub regionaldifferences in tax rates and returns to land particularly for the uniform policy with endogenousprices the uniform tax rate is considerably higherthan any of the non uniform rates and ironically thenon uniform taxes result in less dispersion oflandowner gains across sub regions than the uniformtax

the differential effects of output shocks on unemployment rates by race and gender 1 introduction the issues of unemployment and output are central to many macroeconomic policy debates a major source of disagreement among policymakers deals with the maximum sustainable level of output growth that is consistent with the absence of inflation when the economy s rate of output growth exceeds the maximum sustainable rate there will be upward pressure on the economy s overall price level traditional macroeconomic theory emphasizes the role that tight labor markets play in this inflationary pressure the commonly held belief is that in a tight labor market firms must bid workers away from other firms if they wish to expand the size of their workforce hence labor costs in the economy will tend to rise since labor is a major input in the production of virtually all goods and services an increase in labor costs without an accompanying increase in productivity will tend to increase the economy s overall price level conversely when the economy contracts labor costs in the economy will tend to fall inducing a downward movement in the economy s overall price level the labor market is therefore linked to changes in economic activity and to changes in the economy s price level a common feature in many macroeconomic models is the connection between departures from the equilibrium rate of unemployment i e the natural or normal rate and the business cycle these macroeconomic models suggest that unanticipated departures from a steady state in the output market should be related to departures of the actual unemployment rate from the normal rate however the economy s aggregate unemployment rate is actually a weighted average of the unemployment rates of various demographic groups the rate of each demographic group is influenced by that group s flows into and out of unemployment since many of the factors that determine these flows have been found to differ by demographic group it is expected that a given aggregate output shock may have differential effects on the unemployment rates of various groups this article focuses on how unanticipated changes in real output affect the unemployment rate of different demographic groups we examine the time series behavior of black male white male black female and white female monthly unemployment rates over the january 1972august 1999 period specifically we estimate a vector autoregression var and then conduct simulations in the form of impulse responses to determine the extent to which each of these unemployment rates is affected by an aggregate output shock i e an unanticipated change in aggregate output we compare and contrast the magnitude and the persistence of these responses across the groups because the traditional impulse response function generated from a var is sensitive to how the researcher chooses to order the variables with different orderings often giving vastly different results we employ the recently developed generalized impulse response function koop pesaran and potter 1996 pesaran and shin 1998 this technique allows researchers to examine impulse responses that are robust to changes in ordering in the following sections we highlight the major literature that this article builds upon and then we discuss the basics behind the nature of the relationship between the unemployment rate and output a discussion of the data the methodology and the results follows the article closes with concluding remarks and policy implications 2 related literature a number of studies have examined racial differences in unemployment rates and in factors that may affect unemployment rates using data on displaced workers fairlie and kletzer 1998 examine racial differences in job displacement over the years 1984 1992 and find that black males experienced greater rates of job displacement and lower rates of reemployment than white males petterson 1998 uses data from the national longitudinal survey of youth for the 19791986 period to examine the reservation wages of black males compared with those of white males and contrary to earlier research argues that these differences do not explain much if any of the racial employment gap

investment in u s agriculture resource adjustment problems in u s agriculture are motivated against the background of the farm problem the adjustment cost hypothesis is invoked to specify and estimate consistently a system of dynamic investment demand and output supply equations by utilizing recent advances in dynamic duality theory the investment demand equations assume the form of a multivariate flexible accelerator results indicate that labor capital services and land exhibited quasi fixity while intermediate materials were a variable factor this can be construed as a form of asset fixity within aggregate u s agriculture the univariate flexible accelerator hypothesis is rejected

can the risks of the kyoto mechanisms be reduced through portfolio diversification evidence from the swedish aij program through joint implementationand the clean development mechanism reductionsof greenhouse gas emissions achieved abroad canbe credited to domestic firms however thetechnical economic and political risksinvolved may prevent the private sector frominvesting in such projects this paperdescribes three types of risks which emissionreduction projects are exposed to eleven pilotprojects carried out under the activitiesimplemented jointly aij program and financedby sweden are evaluated actual project costsare found to exceed projected costs in allcases annual emission reductions also deviatefrom their expected values and vary stronglyover time supporting the hypothesis that suchprojects are risky business the riskmanagement tool portfolio diversification isapplied to a sample of swedish aij projects the results indicate that diversification canreduce the risks of greenhouse gas mitigationprojects significantly thus carbon funds area promising way of lowering the risks of thekyoto mechanisms for private sector investors

an opportunity cost view of fixed asset theory and the overproduction trap in fixed asset and exit barrier theories durable asset valuation is based upon acquisition prices yielding downwardly biased rate of return estimates and erroneous implications that excess resources become trapped in production when product price expectations fall conventional asset valuation based on opportunity cost shows that excess resource applications are incompatible with rational producer behavior market failure conclusions of overproduction trap models are shown to be unfounded a review of recently published agricultural economics texts illustrates how use of fixed asset theory in the college classroom obscures the concept of choice influencing cost and the rule of resource allocative efficiency

discrimination human capital and black white unemployment evidence from cities neither human capital theory nor the declining discrimination hypothesis can account for the failure of the black white employment gap to fall along with the wage gap however the weakness of the labor market since 1970 suggests that sustained employment discrimination in the context of restrictions on compensatory wage discrimination can explain these trends this hypothesis is assessed with a cross sectional model employing 1980 census summary data on smsas the innovative feature of this model is the use of complaints of job discrimination received by the equal employment opportunity commission as proxies for actual discrimination results support the contention that the forms of discrimination have undergone a compositional shift and that employment discrimination reduces the probability of black employment