crime and punishment and skin hue too this paper considers whether the disadvantages that accrue to black americans with a dark skin hue also induce a transition into criminal activity an outcome consistent with standard economic models of crime we also examine whether or not prison terms are conditioned on skin hue with data on black offenders in the state of mississippi we estimate cox proportional hazard specifications of the transition into criminal activity and find that it is conditioned on the darkness of skin hue our parameter estimates are consistent with a theoretical framework in which being black and having a dark skin hue induces a transition into criminal activity by limiting the set of legitimate opportunities for an individual given a conviction we also find that the severity of punishment for black offenders as measured by the length of sentence is an increasing function of the darkness of skin hue jel classification j0 j7 k4 z0 professor and chair department of economics college of business administration 4202 e fowler ave bsn 3403 tampa florida 33620 5500 email kgyimah coba usf edu tel 813 974 6520 corresponding author director mississippi urban research center jackson state university p o box 17309 jackson mississippi 39217 email gprice murc org tel 601 979 1428 this paper was prepared for presentation at the annual meeting of the allied social science association joint aea nea paper session on skin tone discrimination and economic outcomes january 7 2006 in boston massachusetts conditional on being black there is evidence that skin hue matters for a wide array of socioeconomic outcomes for example relative to blacks with a light skin hue there is evidence that blacks with a dark skin hue fare worse in terms of wages goldsmith hamilton and darity 2005 occupational prestige hill 2000 unemployment hunter allen and telles 2001 access to health resources bodenhorn 2002 and intergenerational wealth accumulation bodenhorn 2003 such findings suggest that the distribution of advantage and disadvantage in american life is conditioned not just on being black but given that one is black skin hue as well that skin hue conditions economic outcomes for blacks suggests that profit maximizing firms and utility maximizing individuals optimize across a preference for blacks with light skin hues goldsmith hamilton and darity 2005 if so the distribution of disadvantage among blacks will fall along a continuum of gradations in skin hue with disadvantage increasing with respect to the darkness of skin hue one possible manifestation of disadvantage is crime in the canonical economic model of crime of becker 1968 and as extended by ehrlich 1973 disadvantaged individuals can be viewed as those with constrained opportunities for engaging in legitimate activities relative to illegitimate activities to the extent that conditional on being black opportunities for engaging in legitimate activities are inversely proportional to the darkness of skin hue the probability of participating in illegitimate activities crime may also be conditioned on skin hue despite the apparent importance of skin hue in the distribution of advantage and disadvantage the economics of crime literature tends to view blacks as one homogeneous group to the extent that skin hue matters aggregating across black americans in this manner could lead to biased estimates of the effects of being black on participation in criminal activity and to inferences that being black is associated with higher stocks of criminal capital relative to non blacks however given that race and skin hue determine the distribution of disadvantage among black americans the effects of being black on criminal activity may instead reflect the disadvantages that accrue to being black conditional on skin hue in this paper we consider the effects of skin hue both on the likelihood of participation in criminal activities and on sentencing for black americans conditional on being convicted for crime to the extent that individuals firms and social institutions optimize across preferences for blacks with a light skin hue it is plausible that blacks with a dark skin hue face relative to those with a light skin hue constraints on opportunities for legitimate activities that motivate illegitimate activities and once arrested are punished more severely than black offenders with a light skin hue see for example ehrlich 1973 and gyimah brempong 1997 the only evidence that we are aware of that links skin hue among blacks with criminal justice issues is that provided by johnson farrell and stoloff 2000 they found that among black men with prior criminal records in los angeles the jobless rate for those with a dark skin hue was 54 percent in contrast to 41 7 for those with a light skin hue

status in markets this project tests for the effect of social status in a laboratory experimental market we consider a special box design market in which a vertical overlap in supply and demand ensure that there are multiple equilibrium prices we manipulate the relative social status of our subjects by awarding high status to a subset of the group based on one of two procedures in the first a subject s score on a trivia quiz determines his or her status in another subjects are assigned randomly to a higher status or lower status group in both treatments we find that average prices are higher in markets where higher status sellers face lowerstatus buyers and lower when buyers have higher status than sellers across all sessions the higher status side of the market captures a greater share of the surplus earning significantly more than their lower status counterparts

the socioeconomic consequences of teen childbearing reconsidered we present new estimates of the consequences of teen childbearing that take into account observed and unobserved family background heterogeneity comparing sisters who have timed their first births at different ages the estimation is conducted using data from the u s national longitudinal survey of young women excerpt

what went wrong the erosion of relative earnings and employment among young black men in the 1980s this paper shows a widening in black white earnings and employment gaps among young men from the mid 1970s through the 1980s earnings gaps increased most among college graduates and in the midwest while gaps in employment population rates grew most among dropouts we attribute the differential widening to shifts in demand for subgroups due to shifting industry and regional employment the falling real minimum wage and deunionization the growing supply of black to white workers that was marked among college graduates and to increased crime among dropouts the different factors affecting subgroups highlight the economic diversity of black americans

beauty and the labor market the authors examine the impact of looks on earnings using interviewers ratings of respondents physical appearance plain people earn less than average looking people who earn less than the good looking the plainness penalty is 5 to 10 percent slightly larger than the beauty premium effects for men are at least as great as for women unattractive women have lower labor force participation rates and marry men with less human capital better looking people sort into occupations where beauty may be more productive but the impact of individuals looks is mostly independent of occupation suggesting the existence of pure employer discrimination copyright 1994 by american economic association

endogeneity in brand choice models applications of random utility models to scanner data have been widely presented in marketing for the last 20 years one particular problem with these applications is that they have ignored possible correlations between the independent variables in the deterministic component of utility price promotion etc and the stochastic component or error term in fact marketing mix variables such as price not only affect brand purchasing probabilities but are themselves endogenously set by marketing managers this work tests whether these endogeneity problems are important enough to warrant consideration when estimating random utility models with scanner panel data our results show that not accounting for endogeneity may result in a substantial bias in the parameter estimates

a probabilistic choice model for market segmentation and elasticity structure marketing scholars commonly characterize market structure by studying the patterns of substitution implied by brand switching though the approach is useful it typically ignores the destabilizing

cohabitation marriage and divorce in a model of match quality the objective of this research is to further our understanding of how and why individuals enter and leave coresidential relationships we develop and estimate an economic model of nonmarital cohabitation marriage and divorce that is consistent with current data on the formation and dissolution of relationships jovanovic s journal of political economy 87 1979 972 90 theoretical matching model is extended to help explain household formation and dissolution behavior implications of the model reveal what factors influence the decision to start a relationship what form this relationship will take and the relative stability of the various types of unions the structural parameters of the model are estimated using longitudinal data from a sample of female high school seniors from the united states new numerical methods are developed to reduce computational costs associated with estimation the empirical results have interesting interpretations given the structural model they show that a significant cause of cohabitation is the need to learn about potential partners and to hedge against future bad shocks the estimated parameters are used to conduct several comparative dynamic experiments for example we show that policy experiments changing the cost of divorce have little effect on relationship choices

investigating heterogeneity in brand preferences in logit models for panel data in analyzing panel data the issue of heterogeneity across households is an important consideration if heterogeneity is present but is ignored in the analysis it will result in biased and inconsi

from dark to light skin color and wages among african americans this paper develops and tests a theory referred to as preference for whiteness which predicts that the interracial white black and intraracial wage gap widens as the skin shade of the black worker darkens using data drawn from the multi city study of urban inequality and the national survey of black americans we report evidence largely consistent with the theory moreover we decompose the estimated interracial and intraracial wage gaps and find that favorable treatment of lighter skinned workers is a major source of interracial and intraracial wage differences as predicted by the theory

inequality income growth and mobility the basic facts during the 1950s and 1960s mean wages in the united states grew rapidly and the dispersion around this growing mean changed very litde starting in the 1970s and continuing into the 1980s and 1990s these patterns were reversed mean wages grew slowly and inequality increased rapidly these changes in labor markets were reflected in changes in the distribution of family income the mean of the distribution of family income did increase after 1973 in spite of the near constancy of mean real wages as family members increased the number of hours they worked however the increase in inequality of wages was mirrored by an increase in the dispersion of family income a large descriptive literature has documented the rise in inequality while a smaller behavioral literature has sought to delineate the causes of this rise these changes in the distribution of family income a fected rates of poverty directly during the 1950s and 1960s temporary increases in poverty during recessions were more than offset by declines in poverty during economic expansions as long as the poor gained along with everyone else fi om the secular growth in the mean one could be confident that poverty rates would ratchet down this is exactly what happened as poverty rates fell from 22 4 percent in 1959 to 11 1 percent in 1973

competitive price discrimination strategies in a vertical channel using aggregate retail data we explore opportunities for targeted pricing for a retailer that only tracks weekly store level aggregate sales and marketing mix information we show that it is possible using these data to recover essential features of the underlying distribution of consumer willingness to pay knowledge of this distribution may enable the retailer to generate additional profits from targeting by using choice information at the checkout counter in estimating demand we incorporate a supply side model of the distribution channel that captures important features of competitive price setting behavior of firms this latter aspect helps us control for the potential endogeneity generated by unmeasured product characteristics in aggregate data the channel controls for competitive aspects both between manufacturers and between manufacturers and a retailer despite this competition we find that targeted pricing need not generate the prisoner s dilemma in our data this contrasts with the findings of theoretical models due to the flexibility of the empirical model of demand the demand system we estimate captures richer forms of product differentiation both vertical and horizontal as well as a more flexible distribution of consumer heterogeneity

a likelihood approach to estimating market equilibrium models this paper develops a new likelihood based method for the simultaneous estimation of structural demand and supply models for markets with differentiated products we specify an individual level discrete choice model of demand and derive the supply side assuming manufacturers compete in prices the proposed estimation method considers price endogeneity through simultaneous estimation of demand and supply allows for consumer heterogeneity and incorporates a pricing rule consistent with economic theory the basic idea behind the proposed estimation procedure is to simulate prices and choice probabilities by solving for the market equilibrium by repeating this many times we obtain an empirical distribution of equilibrium prices and probabilities the empirical distribution is then smoothed and used in a likelihood procedure to estimate the parameters of the model the advantage of this method is that it avoids the need to perform a transformation of variables if the tastes of consumers are independent across market periods our approach yields maximum likelihood estimates otherwise it yields consistent but not fully efficient partial likelihood estimates

measuring market power in the ready to eat cereal industry the ready to eat cereal industry is characterized by high concentration high price cost margins large advertising to sales ratios and numerous introductions of new products previous researchers have concluded that the ready to eat cereal industry is a classic example of an industry with nearly collusive pricing behavior and intense nonprice competition this paper empirically examines this conclusion in particular i estimate price cost margins but more importantly i am able empirically to separate these margins into three sources i that which is due to product differentiation ii that which is due to multi product firm pricing and iii that due to potential price collusion the results suggest that given the demand for different brands of cereal the first two effects explain most of the observed price cost margins i conclude that prices in the industry are consistent with noncollusive pricing behavior despite the high price cost margins leading firms are able to maintain a portfolio of differentiated products and influence the perceived product quality it is these two factors that lead to high price cost margins

marriage and class here we consider a matching model where agents are heterogeneous and utilities nontransferable we utilize this framework to study how equilibrium sorting takes place in marriage markets we impose conditions that guarantee the existence of a steady state equilibrium and then characterize it several examples are developed to illustrate the richness of equilibria the model reveals an interesting sorting externality that can support multiple steady state equilibria even with constant returns to matching excerpt

on the blurring of the color line wages and employment for black males of different skin tones abstract we evaluate the role skin color plays in earnings and employment for black males in the nlsy97 by applying a novel scaled measure of skin tone to a nationally representative sample and by estimating the evolution of labor market differentials over time we bridge a burgeoning literature on skin color with more established literatures on wage differentials and labor market discrimination we find that while intraracial wage gaps widen with experience gaps between the lightest skinned black workers and whites remain constant suggesting that a blurring of the color line elicits subtle yet meaningful variation in earnings differentials over time

structural analysis of manufacturer pricing in the presence of a strategic retailer consumer goods manufacturers usually sell their brands to consumers through common independent retailers theoretical research on such channel structures has analyzed the optimal behavior of channel members under alternative assumptions of manufacturer retailer interaction vertical strategic interaction research in empirical industrial organization has focused on analyzing the competitive interactions between manufacturers horizontal strategic interaction decision support systems have made various assumptions about retailer pricing rules e g constant markup category profit maximization the appropriateness of such assumptions about strategic behavior for any specific market however is an empirical question this paper therefore empirically infers 1 the vertical strategic interaction vsi between manufacturers and retailer 2 the horizontal strategic interaction hsi between manufacturers simultaneously with the vsi and 3 the pricing rule used by a retailer the approach is particularly appealing because it can be used with widely available scanner data where there is no information on wholesale prices researchers usually have no access to wholesale prices even manufacturers who have access to their own wholesale prices usually have limited information on competitors wholesale prices in the absence of wholesale prices we derive formulae for wholesale prices using game theoretic solution techniques under the specific assumptions of vertical and horizontal strategic interaction and retailer pricing rules we then embed the formulae for wholesale prices into the estimation equations while our empirical illustration is using scanner data without wholesale prices the model itself can be applied when wholesale prices are available early research on the inference of hsi among manufacturers in setting wholesale prices using scanner data e g kadiyali et al 1996 1999 made the simplifying assumption that retailers charge a constant margin this assumption enabled them to infer wholesale prices and analyze competitive interactions between manufacturers in this paper we show that this model is econometrically identical to a model that measures retail price coordination across brands hence the inferred cooperation among manufacturers could be exaggerated by the coordinated pricing category management done by the retailer we find empirical support for this argument this highlights the need to properly model and infer vsi simultaneously to accurately estimate the hsi when using data at the retail level functional forms of demand have been evaluated in terms of the fit of the model to sales data but recent theoretical research on channels lee and staelin 1997 tyagi 1999 has shown that the functional form has serious implications for strategic behavior such as retail passthrough while the logit and linear model implies equilibrium passthrough of less than 100 lee and staelin call this vertical strategic substitute vss the multiplicative model implies optimal passthrough of greater than 100 vertical strategic complement vsc because passthrough rates on promotions have been found to be below or above 100 chevalier and curhan 1976 armstrong 1991 we empirically test the appropriateness of the logit vss and the multiplicative vsc functional form for the data we perform our analysis in the yogurt and peanut butter categories for the two biggest stores in a local market we found that the vss implications of the logit fit the data better than the multiplicative model we also find that for both categories the best fitting model is one in which 1 the retailer maximizes category profits 2 the vsi is manufacturer stackelberg and 3 manufacturer pricing hsi is tacitly collusive the fact that the retailer maximizes category profits is consistent with theoretical expectations the inference that the vsi is manufacturer stackelberg reflects the institutional reality of the timing of the game retailers set their retail prices after manufacturers set their wholesale prices note that in the stores and product categories that we analyze the two manufacturers own the dominant brands with combined market shares of about 82 in the yogurt market and 65 in the peanut butter market the result is also consistent with a balance of power argument in the literature the finding that manufacturer pricing is tacitly collusive is consistent with the argument that firms involved in long term competition in concentrated markets can achieve tacit collusion managers use decision support systems for promotion planning that routinely make assumptions about vsi hsi and the functional form the results from our analysis are of substantive import in judging the appropriateness of assumptions made in such decision support systems

modeling multiple sources of heterogeneity in multinomial logit models methodological and managerial issues we offer a framework to specify and estimate various sources of heterogeneity in multinomial logit brand choice models we let each brand specific intercept and each parameter of the explanatory variable vector vary randomly across households in addition we distinguish loyal households from the rest our results suggest that incorporating multiple sources of heterogeneity improves the model fit and suggests higher impact of marketing mix elements on brand choice we highlight the importance of incorporating multiple sources of heterogeneity the model we implement yields valuable managerial insights

nonparametric regression techniques in economics this introduction to nonparametric regression emphasizes techniques that might be most accessible and useful to the applied economist the paper begins with a brief overview of the class of models under study and central theoretical issues such as the curse of dimensionality the bias variance trade off and rates of convergence the paper then focuses on kernel and nonparametric least squares estimation of the nonparametric regression model and optimal differencing estimation of the partial linear model constrained estimation and hypothesis testing is also discussed empirical examples include returns to scale in electricity distribution and hedonic pricing of housing attributes

investigating dynamic multifirm market interactions in price and advertising diagnosing the nature and magnitu de of competitive interactions among firms is important for developing effective marketing strategies in this paper we formulate a game theoretic model of firm interaction to analyze the dynamic price and advertising competition among firms in a given p roduct market firm or brand level demand functions account for the contemporaneous and carry over effects of these marketing activities and also allow for the effects of competitor actions firms take into consideration the actions of their rivals as well as their own demand and cost functions both production and advertising when determining the profit maximizing price and advertising levels our formulation enables us to quantify not only the direction and magnitude of competitive reactions but also to identify the underlying form of market conduct that generates the particular pattern of interaction we specify and estimate a fully structural econometric model for three firms constituting a distinct sub market within a personal care product category we estimate the demand and competitive interaction parameters as well as the production and advertising cost functions for each firm we then derive implications for competitive interactions and market structure interestingly we find that while firms seem to compete on advertising they price cooperatively thereby enhancing their price cost margins

black white wage inequality in the 1990s a decade of progress mary c daly using current population survey data we find that the gap between the wages of black and white males declined during the 1990s at a rate of about 60 percentage point per year wage convergence was most rapid among workers with less than 10 years of potential experience with declines in the gap averaging 1 40 percentage points per year using standard decomposition methods we find that greater occupational diversity and reductions in unobserved or residual differences are important in explaining this trend general wage inequality tempered the rate of wage convergence between blacks and whites during the 1990s jel j15 j31 i introduction following the passage of the civil rights act of 1964 and other measures aimed at reducing labor market discrimination during the 1960s the differential in average weekly wages between black and white men in the united states narrowed substantially among male workers aged 18 64 the black white wage gap fell from 50 in 1967 to 30 in 1974 or by about 1 per year 1 after 1974 however the proportional difference in black and white wages remained essentially constant at 30 through the end of the 1980s following more than a decade of stasis the black white wage gap once again began to decline during the 1990s narrowing at an average annual rate of about 60 percentage point per year a great deal of past research has focused on why the black white wage gap did not continue to decline following the initial progress made through the mid 1970s see for example bound and freeman 1992 and juhn et al 1991 hereafter jmp the results point to a number of important factors including shifts in industry demand greater occupational crowding relative deterioration of unobservable skills among blacks and rising overall male wage inequality see altonji and blank 1999 for a detailed review of this literature in this article we investigate the role that each of these factors played in the wage convergence observed in the 1990s we begin by documenting the recent progress in black white wage convergence placing the 1990s in the context of the past 30 years following previous researchers we then use standard decomposition techniques to examine the role of individual characteristics the employment structure and overall male wage inequality in reducing the racial gap in earnings during the decade of the 1990s we find that greater occupational diversity and reductions in unobserved or residual differences are important in explaining this trend general wage inequality tempered the rate of wage convergence between blacks and whites during the 1990s ii data we use data from the march current population survey cps for the years 1969 1999 as administered by the u s census bureau for the u s bureau of labor statistics these files provide information on earnings hours and related variables for the calendar year prior to the survey date thus our analyses apply to income years 1968 1998 in the formal decomposition analysis we focus on three periods 1968 1979 1979 1989 and 1989 1998 these years span our sample and generally coincide with three business cycles our sample consists of black and white males ages 18 64 who participated in the labor force at least 39 weeks worked at least 1 week during the year and usually worked full time workers who are enrolled in school are excluded from the analysis throughout the analysis we focus on two groups our full sample and men with less than ten years of potential experience i e min age education 6 age 18 2 our empirical analysis focuses on weekly earnings calculated as the ratio of annual earnings to weeks worked during the year weekly earnings are deflated using the personal consumption expenditure deflator from the national income and product accounts to avoid problems associated with changes in cps top coding procedures over the years our sample excludes individuals in the top and bottom 1 of the weekly earnings distribution

determining the impact of federal antidiscrimination policy on the economic status of blacks a study of south carolina this paper evaluates alternative explanations for the dramatic increase in black employment in south carolina manufacturing that occurred in the mid 1960s black progress in traditionally segregated sectors of manufacturing in operation at the time jim crow laws were passed cannot be attributed to tight labor markets the decline of agriculture or the growth of education of the black workforce the only plausible explanation is federal government civil rights and affirmative action policy for newer industries that entered the state on a large scale after world war ii the growth of skills among blacks accounts for black economic progress copyright 1989 by american economic association

skin tone effects among african americans perceptions and reality hourly wage and employment status using the nsba and the mcsui lighter skin tone is clearly associated with higher employment rates for women and higher educational attainment for both women and men the employment rate for women with very dark skin tone in the nsba is strikingly lower than for women with lighter skin tone in contrast evidence that skin tone affects wages is limited for both sexes in both datasets those in the light category have the highest average hourly wage but this value is significantly different from those with darker skin only for men in the nsba furthermore the pattern for women based on the mcsui does not show an increasing wage from darker to lighter skin tone but instead shows that women in the medium skin tone category have the lowest average wage

beyond the endogeneity bias the effect of unmeasured brand characteristics on household level brand choice models we investigate the role of potential weekly brand specific characteristics that influence consumer choices but are unobserved or unmeasurable by the researcher we use an empirical approach based on the estimation methods used for standard random coefficients logit models to account for the presence of such unobserved attributes using household scanner panel data we find evidence that ignoring such time varying latent to the researcher characteristics can lead to two types of problems first consistent with previous literature we find that these unobserved characteristics may lead to biased estimates of the mean price response parameters this argument is based on a form of price endogeneity if marketing managers set prices based on consumer willingness to pay then the observed prices will likely be correlated with the latent to the researcher brand characteristics we resolve this problem by using an instrumental variables procedure our findings suggest that simply ignoring these attributes may also lead to larger estimates of the variance in the heterogeneity distribution of preferences and price sensitivities across households this could overstate the benefits from marketing activities such as household level targeting we resolve the problem by using weekly brand intercepts embedded in a random coefficients brand choice model to control for weekly brand specific characteristics while accounting for household heterogeneity overall our results extend the finding on the endogeneity bias from the mean of the heterogeneity distribution i e the price effect to include the variance of that distribution

evidence on discrimination in employment codes of color codes of gender there is substantial racial and gender disparity in the american economy as we will demonstrate discriminatory treatment within the labor market is a major cause of this inequality the evidence is ubiquitous careful research studies that estimate wage and employment regressions help wanted advertisements audit and correspondence studies and discrimination suits that are often reported by the news media yet there appear to have been periods of substantial reductions in economic disparity and discrimination for example donohue and heckman provide evidence that racial discrimination declined during 1965 1975 1 gottschalk has produced statistical estimates that indicate that discrimination against black males dropped most sharply between 1965 and 1975 and that discrimination against women declined during the interval 1973 1994 2 but some unanswered questions remain why did the movement toward racial equality stagnate and eventually decline after the mid 1970s what factors are most responsible for the remaining gender inequality what is the role of the competitive process in the elimination or reproduction of discrimination in employment

logit demand estimation under competitive pricing behavior an equilibrium framework discrete choice models of demand have typically been estimated assuming that prices are exogenous since unobservable to the researcher product attributes such as coupon availability may impact consumer utility as well as price setting by firms we treat prices as endogenous specifically prices are assumed to be the equilibrium outcomes of nash competition among manufacturers and retailers to empirically validate the assumptions we estimate logit demand systems jointly with equilibrium pricing equations for two product categories using retail scanner data and cost data on factor prices in each category we find statistical evidence of price endogeneity we also find that the estimates of the price response parameter and the brand specific constants are generally biased downward when the endogeneity of prices is ignored our framework provides explicit estimates of the value created by a brand i e the difference between consumers willingness to pay for a brand and its cost of production we develop theoretical propositions about the relationship between value creation and competitive advantage for logit demand systems and use our empirical results to illustrate how firms use alternative value creation strategies to accomplish competitive advantage

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

simultaneous equations bias in disaggregated econometric models with the language of econometrics agents may be said to take prices as exogenously given which suggests that prices are econometrically exogenous in individual behavioural equations this involves semantic confusion between different meanings of the word exogenous simultaneity problems cannot generally be dispelled by working with disaggregated data in particular nothing is gained by disaggregating the dependent variable in a regression equation if the micro and macro equations use the same regressors however there may be substantial gains from disaggregation of the regressors in the theory of competitive markets agents act as if they do not affect equilibrium market prices by analogy with the language of econometrics agents may be said to take prices as exogenously given having thus stated the price taking assumption it may seem that prices are econometrically exogenous in behavioural equations for individual agents such as labour demand curves this involves semantic confusion between two different meanings of the word exogenous for example even if each buyer has a negligible influence on the market price there may still be an important correlation between the price and the disturbance in an individual demand equation so that treating price as econometrically exogenous gives biased coefficient estimates the price taking assumption has been used to justify ols estimates of import demand functions for small countries leamer and stern 1970 pointed out that the estimated slope in an import demand function is generally an average of the slopes of the demand and supply functions for imports but

how desirable is the south asian free trade area a quantitative economic assessment the proliferation of preferential trading agreements ptas in different regions of the world has been a significant development over the last two decades south asian countries have been slowly moving towards a south asia free trade area safta in recent years the desirability of safta has been questioned by some observers recently will safta create gains for its members or not is it better for south asian countries to promote non discriminatory trade liberalisation rather than safta the main objective of this paper is to address the above questions especially the desirability of safta using a global computable general equilibrium cge model from the existing empirical and theoretical studies we have identified three viewpoints on the desirability or viability of safta pessimistic optimistic and moderate the results from two policy scenarios unilateral liberalisation and safta confirm the pessimistic view by showing that unilateral liberalisation would benefit south asian countries much more than preferential liberalisation safta in fact under preferential liberalisation small countries in the region would gain little or even lose the present political climate in south asia also seems to support the pessimistic view

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

the effect of male wage inequality on female age at first marriage a model in which women search for husbands characterized by their wages predicts increasing within group male wage inequality raises the expected value of continued marital search and so lowers female marriage propensities using 1970 1980 and 1990 census data i test this hypothesis within geographically racially and educationally defined marriage markets the estimates suggest rising male wage inequality accounted for 7 to 18 of the decline in the propensity to marry between 1970 and 1990 for white women and more educated black women growing wage inequality appears to have had little effect on the marriage behavior of less educated black women

the political economy of trade integration in south asia the role of india the south asian regional trade integration process to date has generated only limited enthusiasm it suffers from significant shortcomings primarily on account of a very cautious approach adopted to achieve the ultimate objective of free trade within the region in turn this has led to a fragmentation of the integration process with some of the partners of the south asian association for regional cooperation saarc bloc opting for a speedier and more liberal bilateral process with india india s engagement remains the critical feature as the single most important trading partner for almost all the other south asian countries however the dynamics of indian economic integration initiatives too have been changing rapidly whereby it is looking increasingly to strengthen its economic relations with the wider asian region in this context the question of india s willingness to give leadership to carry the rest of south asia as the bridge that connects the region to east asia needs to be examined the current evidence suggests that india has attempted to do so via a host of bilateral and regional arrangements but that the divergences in strategic interests amongst saarc countries has left pakistan on the margins of an evolving scheme of overlapping trade initiatives in south asia thus while something approximating free trade in south asia appears to be taking shape it is unlikely to take the form of an inclusive south asian regional integration process envisaged by saarc