bluuebunny/crossref_metadata_2025 huggingface dataset:
2½ Proposals to Save Social Security*
Authors: Fretz Deborah , Veall Michael R.
Published: July 2021

This is a review article of three books that deal with the problems facing the U.S. Social Security system. One deals with the OASDI (Old‐Age, Survivors and Disability Insurance) financial shortfall and proposes an alternative plan with both a tier one benefit and a tier two provision based on personal saving accounts. A second considers the social insurance system more comprehensively, arguing for a grand reform that would include new programs, particularly in the areas of child care and housing. A third largely confines itself to arguing against those who wish to change the OASDI plan because of the financial projections, although it also argues for a more comprehensive health care insurance system. The review concludes that key differences expressed in the books, particularly between the first and third, rest on different value judgments regarding intergenerational equity and the role of government.
Welfare‐to‐Work Outcomes: The Role of the Employer
Authors: Lane Julia , Stevens David
Published: July 2021

This paper sets out to explore the role of the employer in successful welfare‐to‐work transitions. We demonstrate the uses of administrative records in identifying the types of firms that repeatedly hire welfare recipients. We also develop sets of criteria to identify “successful” outcomes. Our results suggest that there is substantial untapped potential for using administrative data to identify not simply which industries hire welfare recipients but those that are most likely to provide recipients with long‐lasting jobs, or jobs accompanied by sustained removal from welfare dependency.
Trade and Convergence: A Dynamic Panel Data Approach
Authors: Ulusoy Veysel
Published: July 2021

The objective of this paper is to provide, theoretically and empirically, an interpretation of comovement between the scale of an economy and its growth rate. I paid special attention to human capital accumulation and international trade environment and emphasized their spillover effects on growth and convergence among countries. 1 employed a technique using a cross‐sectional and time series panel. The estimations in my empirical models were done using the nonlinear least‐squares method in which I applied a dynamic procedure for an economy along its balanced growth path. I arrived at mixed results. The empirical results show that international spillover effects of human capital accumulation and intermediate goods production have positive and significant effects on the growth process of a nation. The national level of human capital, however, has negative and insignificant effects on this process.
Two‐Part Pricing with Costly Arbitrage
Authors: McManus Brian
Published: July 2021

This paper considers the optimal two‐part pricing strategy of a monopolist whose customers collude when they purchase the firm's product. In contrast to the sentiment in the existing price discrimination literature, I find that a monopolist's profit can actually increase when consumers share its good. When transaction costs for collusion are zero the firm can extract the full consumer surplus through two‐part prices. When transaction costs are positive or there are a substantial number of consumers without access to resale, the firm may be hurt by arbitrage.
Does Maternity Leave Induce Births?
Authors: Averett Susan L. , Whittington Leslie A.
Published: July 2021

Alleviating the tension between the conflicting responsibilities women may face as mothers and as workers is a topic of current policy interest. Expansion of guaranteed maternity leave to all employed women in the United States is suggested as one possible “family‐friendly” solution. Controversy surrounding the issue of increased maternity leave centers around the potential cost to firms of widespread access to leave. One specific concern is that the availability of maternity leave will actually increase births among eligible working women. In this paper we use data from the National Longitudinal Survey of Youth to examine the impact of maternity leave on fertility. We explore two possible routes through which maternity leave may influence fertility. We first estimate the impact of desired fertility on the probability of being in a job offering maternity leave. We then estimate the impact of maternity leave and desired fertility on the probability of a birth. We find no evidence that women sort by fertility desires into firms on the basis of their maternity leave policy. We do find that the probability of a birth increases as a result of maternity leave, and that the fertility effect of maternity leave increases with birth parity.
Further Long Memory Properties of Inflationary Shocks
Authors: Baillie Richard T. , Han Young Wook , Kwon Tae‐Go
Published: July 2021

Several previous studies have found fractionally integrated, or long memory behavior, in the conditional mean of inflation. This paper notes that extremely similar phenomena are also apparent in the squared and absolute values of residuals from fractionally filtered inflation series. Hence, the inflation process appears to have a dual long memory feature in both its first and its second conditional moments. We suggest a parametric model of long memory in both the conditional mean and the conditional variance. Some Monte Carlo evidence is presented that supports estimation of the model by approximate maximum likelihood methods. We then report estimated models for the inflation series for several different industrialized countries, including the United States. For nearly all of the countries in our study, there is strong evidence of statistically significant long memory parameters in both the conditional mean and the variance. We note some of the implications for modeling inflation.
A Positive Political Model of Supreme Court Economic Decisions
Authors: Caporale Tony , Wintert Harold
Published: July 2021

We develop a positive political model of the U.S. Supreme Court. Looking at the Court's economic cases for the period 1953‐1993, we find a significant larger fraction of conservative decisions under Republican presidents and more conservative leadership of the House and Senate Judiciary Committees. Conservative decisions are also found to be positively correlated with the fraction of the Court appointed by Republican presidents and the rate of price inflation. We argue that our findings cast serious doubt on the common view of the Supreme Court as a completely independent, apolitical institution.
Vent for Surplus: A Case of Mistaken Identity
Authors: Elmslie Bruce , Sedgley Norman
Published: July 2021

Adam Smith's theory of the gains from trade has caused a great deal of controversy among economic theorists. Throughout much of his work Smith argues that markets efficiently allocate resources. Smith's treatment of the gains from trade, however, is considered inconsistent with his system of natural liberty. This paper offers a new interpretation of the vent‐for‐surplus model. It is argued that Smith's theory of trade should be considered as an extension of his domestic theory of markets and his theory of productive and unproductive labor. Once interpreted in this light, no inconsistency is found between Smith's theory of trade and his system of natural liberty.
Trade and GDP Growth: Causal Relations in the United States and Canada
Authors: Zestos George K. , Tao Xiangnan
Published: July 2021

Causal relations between the growth rates of exports, imports, and the GDP of Canada and the United States are studied using the vector error correction (VEC) model. Utilizing time‐series annual data (1948‐1996), Granger causality tests are performed within the framework of the VEC model. Bidirectional causality is supported for Canada from the foreign sector to GDP and vice versa. A weaker relationship between the foreign sector and GDP is statistically supported for the United States. These results are also supported by comparing the total trade (exports plus imports) shares to GDP of the two neighboring economies. The Granger causality tests suggest that Canada is a more open economy than the United States and more trade dependent.
Institutions, Freedom, and Technical Efficiency
Authors: Adkins Lee C. , Moomaw Ronald L. , Savvides Andreas
Published: July 2021

The impact of institutions on economic performance is currently the subject of much research. In this study we use panel data to estimate a stochastic production frontier and the sources of inefficiency for a broad set of countries. A maximum‐likelihood procedure is used to estimate the parameters for the stochastic production frontier and the determinants of inefficiency simultaneously. Our results show that institutions that promote greater economic freedom in turn promote efficiency.
Upstream Intergenerational Transfers
Authors: Sloan Frank A. , Zhang Harold H. , Wang Jingshu
Published: July 2021

This study analyzes upstream intergenerational transfers from middle‐aged children to their elderly parents. We formulate a model in which the middle‐aged child transfers both money and time to an elderly parent based on an altruistic motive. We examine substitution between financial transfers and time transfers using data from the Health and Retirement Study (HRS). Empirical results support the assumption that upstream transfers are motivated by altruism, particularly financial transfers. Parents financially worse off than their middle‐aged children receive more money. They are more likely to live nearby if not coresident. Overall, the results for time transfers provide weaker support for our model than financial transfers. A child with a high wage tends to transfer money rather than time, suggesting that the two types of transfers are partial substitutes.
Money Growth, Output Growth, and Inflation: Estimation of a Modern Quantity Theory
Authors: Moroney John R.
Published: July 2021

This paper develops a long‐run version of the quantity theory of money growth, real GDP growth, and inflation. Inflation rates, averaged for the years 1980‐1993, are computed for 81 countries. These cross‐section inflation rates are explained almost entirely by average M2 growth rates. In countries marked by high money growth and inflation, the estimated coefficients of M2 growth are strikingly close to one, strongly confirming the quantity theory. By contrast, in countries with relatively low money growth and inflation, the estimated money growth coefficient is only 0.69; the quantity theory offers a less complete explanation of inflation. Money growth and GDP growth are nearly orthogonal, consistent with long‐run monetary superneutrality. The quantity theory is a reliable model of inflation for most countries, but not for those experiencing slow long‐run money growth.
Home Schooling: An Alternative School Choice
Authors: Houston Robert G. , Toma Eugenia F.
Published: July 2021

There is a fairly large, evolving literature on school choice. This literature addresses the factors that influence the choice between schools in the public and private sectors. Overlooked by this literature, however, is the growing segment of school enrollment in home schools. This article empirically examines the decision to educate children at home. The empirical results suggest that the decision to home school depends on the expected quality of schooling the home unit can produce relative to that available from alternatives. More specifically, our results indicate that women's educational attainment helps explain home school enrollment, that greater heterogeneity of income within a public school district increases home enrollment, and that stricter regulations decrease home school enrollment.
Identification Problems in the Social Sciences and Everyday Life
Authors: Manski Charles F.
Published: July 2021

Econometricians have found it useful to separate the problem of empirical inference into statistical and identification components. Studies of identification determine the conclusions that could be drawn if a researcher were able to observe a data sample of unlimited size. Statistical inference seeks to characterize how sampling variability affects the conclusions that can be drawn from samples of limited size. This Association Lecture to the Southern Economic Association describes the broad themes of a research program on identification that I began in the late 1980s and continue today. I show how these themes have played out in my analysis of the selection problem, a fundamental and pervasive identification problem. I examine how the selection problem manifests itself in the econometric analysis of market demand.
The Determinants of Bank Rates in Local Consumer Lending Markets: Comparing Market and Institution‐Level Results
Authors: Feinberg Robert M.
Published: July 2021

Most previous studies of banking markets have given little attention to the potential competitive discipline provided by credit unions on consumer loan rates. After presenting a theoretical framework for understanding the impact credit unions should be expected to have, this article analyzes two pooled cross‐section time‐series samples—56 U.S. markets over the 1992‐1998 period and 81 banks (within those markets) over the same period—with the focus on explaining bank rates for two types of consumer loans. Results confirm the previously observed role of market structure and strongly point to a significant role for credit unions in disciplining the exercise of market power by banks. At the institution level, where the impact of bank size, market share, and holding company status can be analyzed, the evidence supports both market power and scale economy rationales for bank loan pricing and hints at a multimarket contact influence.
Can Beer Taxes Affect Teen Pregnancy? Evidence Based on Teen Abortion Rates and Birth Rates
Authors: Sen Bisakha
Published: July 2021

Economists have investigated the effects of increased alcohol taxes on various alcohol‐related phenomena like traffic fatalities, but to my knowledge, this study is the first to investigate the effects of beer taxes on teen pregnancy outcomes, namely abortion and birth rates. The study employs state‐level data for 15‐19‐year‐old women for the years 1985, 1988, 1992, and 1996. The smallness of the panel imposes some constraints on the statistical methods used. Results indicate that higher beer taxes have statistically significant negative effects on teen abortion rates, though the magnitudes of the effects are quite small. Effects on birthrates are statistically insignificant. This suggests that increased beer taxes may help prevent some unwanted pregnancies that would typically be terminated via abortions rather than culminating in live births. However, the small magnitudes of the effects strongly caution against relying on increased beer taxes to noticeably reduce teen pregnancy rates.
Congressional Memberships as Political Advertising: Evidence from the U.S. Senate
Authors: Mixon Franklin G. , Ressler Rand W. , Gibson M. Troy
Published: July 2021

The present article analyzes signaling by elected officials of moderate or centrist legislative behavior from a benefits/costs perspective. To do so, we provide statistical evidence regarding the tendency of senators to join the U.S. Senate Centrist Coalition, a congressional membership organization of moderate legislators. We find that changes in party loyalty, perhaps due to changes in constituent preferences, and U.S. Senate tenure are both important determinants of membership in the Centrist Coalition. Tests also point out that freshman senators are more likely than more senior senators to seek membership as a form of information provision.
The Emancipation Proclamation, Confederate Expectations, and the Price of Southern Bank Notes
Authors: Pecquet Gary , Davis George , Kanago Bryce
Published: July 2021

We examine the behavior of a semimonthly series of the Confederate dollar price of bank notes. These notes traded at par with Confederate dollars from October of 1861 until November 5, 1862. We use a model of the demand for two currencies to argue that this departure from par results from altered Southern expectations after the 1862 Congressional elections assured the enactment of the Emancipation Proclamation. Previously, Southerners believed a win or a negotiated settlement would allow a return to the Union intact. When these expectations changed, bank notes appreciated against Confederate dollars. In addition, our empirical work shows that notes appreciated following Northern victories.
The Effect of Public Policies and Prices on Youth Smoking
Authors: Ross Hana , Chaloupka Frank J.
Published: July 2021

This article empirically tests the effects of various tobacco control measures on youth cigarette demand using a 1996 nationally representative survey among U.S. high school students. Our measures of public policies allow more precise estimates of their impact compared to previous studies. The two‐part model corrects for heteroscedasticity and features a novel approach to evaluating youth access laws based on actual compliance rates. This resolves the difficulty of measuring their active enforcement, the lack of which is frequently blamed for insignificant findings with respect to their effectiveness. We found youth access laws to have a negative effect on smoking probability. Relatively strong clean indoor air laws may also reduce the probability of smoking. The presence of all tobacco control policies combined and higher cigarette prices lower both smoking participation and smoking intensity. The teen‐specific cigarette price has a larger impact on cigarette demand than commonly tested state average price.
Poverty and Other Determinants of Child Labor in Bangladesh
Authors: Amin Shahina , Quayes M. Shakil , Rives Janet M.
Published: July 2021

In this research we examine poverty and other determinants of child labor in Bangladesh. We define income quintiles as a means of measuring family poverty and add child and family characteristics to our model. We estimate the likelihood that a child will work, using separate logistic regression models for younger and older boys and girls in urban and rural areas. Our results support the notion that a family's poverty affects the probability that a child will work; keeping children away from work is a luxury these families cannot afford. Moreover, it is important to examine separate demographic groups in order to fully understand the determinants of child labor in Bangladesh since the effects of child and family variables on the probability that a child will work differ among these groups.
Maternal Depression and the Production of Infant Health
Authors: Conway Karen Smith , Kennedy Lisa DeFelice
Published: July 2021

Depression is most prevalent among women of childbearing age and among low‐income women, and the medical literature shows it to have adverse effects on infant health. Yet maternal depression has been overlooked in economic studies of infant health production. This research incorporates maternal depressive symptoms into a standard infant health production model and estimates both structural and reduced‐form birth weight equations using samples of non‐Hispanic white and black women from the National Maternal and Infant Health Survey. A byproduct of this research is an empirical investigation into factors associated with maternal depressive symptoms. All results show that depressive symptoms have a negative effect on birth weight and that they may operate through several channels such as smoking and prenatal care.
Explaining International Variations in Self‐Employment: Evidence from a Panel of OECD Countries
Authors: Parker Simon C. , Robson Martin T.
Published: July 2021

Organisation for Economic Cooperation and Development (OECD) data from 1972 to 1996 reveals substantial differences in the levels and trends of self‐employment rates across countries. This article uses recently developed panel integration and cointegration techniques to explore the determinants of aggregate self‐employment rates. We find that within the panel, self‐employment rates are positively and significantly related to personal income tax rates and negatively and significantly related to the unemployment benefit replacement rate. This accords a central role to government tax and transfer policies, in contrast to nonrobust influences from macroeconomic variables, which have been widely used in previous studies.
Cultures of Illegality in the National Hockey League
Authors: Allen W. David
Published: July 2021

When people commit illegal acts, are they influenced by the wider culture of illegality around them, or do personal incentives matter most? If someone experiences a more pronounced culture of illegality, whether he increases his illegality depends greatly on his historical involvement with illegality and how his wealth also changes. The National Hockey League provides a useful setting for empirical analysis of these issues. Using a constructed panel data set, which tracks player behavior on a game‐by‐game basis over the course of a season, we examine how various aspects of the wider culture of illegality affect individual illegality. We also take advantage of what amounts to a natural experiment in exogenous cultural change, by examining the behavior of players traded during the season under analysis. The empirical results are consistent with the economic model of crime, but cultural factors generally appear less influential and robust than individual‐level incentives.
Dispute Rates and Contingency Fees: An Analysis from the Signaling Model
Authors: Fanner Amy , Pecorino Paul
Published: July 2021

We analyze contingency fees in the Reinganum and Wilde (1986) signaling model of litigation. The effect of contingency fees on settlement depends on the details of the contingency fee contract and the nature of the informational asymmetry assumed in the model. Introducing bifurcated fee contracts where the contingency percentage is higher at trial changes the selection of disputes at trial but has ambiguous effects on the overall dispute rate when an informed plaintiff makes the offer. For reasonable parameter values, it increases settlement in the model where the informed defendant makes the offer. Introduction of a unitary contingency fee in which the contingency percentage is the same in a pretrial settlement as at trial unambiguously increases the incidence of trial in both variations of the signaling model. The interaction of fee shifting with contingency fees is also analyzed.
The Campus Parking Game: A Demonstration of Price Discrimination and Efficiency
Authors: Michael Jeffrey , Zillante Arthur , Stafford Sarah , Buchholz Greg , Guthrie Katherine , Heath Julia
Published: July 2021

This article presents a classroom game that allows students to directly experience the welfare improvements that can result from price discrimination. The demonstration uses a very familiar decision‐making scenario, campus parking, to introduce the concept of price discrimination as well as reinforce the concepts of opportunity cost, consumer surplus, and search costs. This game can be used in a variety of classes, including principles, intermediate theory, industrial organization, or environmental economics, and can be conducted in a 50‐minute class period with follow‐up discussion in the next class.
The Causal Effects of Participation in the American Economic Association Summer Minority Program
Authors: Price Gregory N.
Published: July 2021

This article examines whether participation by underrepresented minority groups in the American Economics Association Summer Minority Program (AEASMP) has causal effects on outcomes associated with success as academic economists. We estimate both propensity score weighted and Heckit parameter estimates of (1) the average effect of treatment and (2) the effect of treatment on the treated. Our results, which vary across specifications of potential outcomes and propensity score truncated samples, suggest that AEASMP participation by black American Ph.D. economists has a positive and causal impact on 4 outcomes associated with success as an academic economist. However if the probability of selection into the treatment by the nontreated is similar to that of the treated, the results suggest that AEASMP participation by black American Ph.D. economists has a positive and causal effect on research productivity and in gaining access to research funding.
Overcoming Information Asymmetries in Low‐Income Lending: Lessons from the “Working Wheels” Program
Authors: Holmes Jessica , Isham Jonathan , Wasilewski Jessica
Published: July 2021

Without access to transportation, the welfare‐to‐work transition is nearly impossible, yet little is known about the effectiveness of programs designed to improve credit access. Since 1998, Vermont's TANF funds have provided automobile loans through the “Working Wheels” program. We use microlevel data from this program to explore how to cost‐effectively provide loans to clients who cannot obtain affordable loans elsewhere. Our results verify the importance of relationship lending, particularly among those without documented credit histories. In the presence of information asymmetries about credit history, our results justify the increased trust placed in clients with whom the bank has a stronger relationship; such clients, ceteris paribus, are less likely to default. We conclude that in the current climate of welfare reform, policymakers should consider programs that encourage welfare recipients to establish and maintain relationships with financial institutions in order to facilitate access to credit and minimize the risk of default.
Environmental Taxation in Open Economies: Unilateralism or Partial Harmonization
Authors: Cremer Helmuth , Gahvari Firouz
Published: July 2021

There are two reasons why countries might set weak environmental policies: transboundary pollution and concerns for competitiveness. This article explores the full interactions between these two features within a unified general equilibrium framework. First, we show that competitive concerns change the structure of output taxes but not that of emission taxes. They lead to a lowering of output taxes, lower polluting good prices, an increase in emission taxes, adoption of less (or same) polluting technologies, increased aggregate emissions, and lower overall welfare levels. Second, we show that partially harmonizing commodity taxes, above their unrestricted Nash equilibrium value, can potentially hurt as well as improve the pollution technology, overall quality of the environment and welfare. The three attributes move positively together. On the other hand, harmonizing of emission taxes above their Nash equilibrium values appear to always lead to improvements in the environment and welfare via adoption of cleaner technologies.
Illustrating Adverse Selection in Health Insurance Markets with a Classroom Game
Authors: Mellor Jennifer M.
Published: July 2021

This paper describes a classroom game that illustrates the effects of asymmetric information and adverse selection in health insurance markets. The first part of this game simulates a market in which buyers can purchase insurance from sellers; in some periods, government regulation prevents sellers from using information about buyer type to determine premiums. The results demonstrate the classic prediction that asymmetric information will result in adverse selection. Here, low‐risk buyers will forego the purchase of insurance at a measurable loss of potential earnings. In the second part of the game, sellers and buyers can trade two different types of health insurance policies, one moderate and another generous. Under government‐mandated community rating and limits on premium increases, no buyers will purchase the generous plan. Questions are provided to stimulate discussion of the causes and consequences of adverse selection for consumers and insurers and possible solutions for employer‐ and government‐sponsored programs.
Games in Fuzzy Environments
Authors: Aristidou Michael , Sarangi Sudipta
Published: July 2021

A noncooperative model of a normal form game is developed using tools from fuzzy set theory. The paper extends the decision theory framework of Bellman and Zadeh (1970) to a game‐theoretic setting. We identify conditions for the existence of equilibrium in this setting and provide a duopoly example. The paper also provides a review of the existing literature on noncooperative fuzzy games and their applications.
Some Evidence on the Relationship between Performance‐Related Pay and the Shape of the Experience‐Earnings Profile
Authors: Brown Sarah , Sessions John G.
Published: July 2021

We investigate the relationship between performance‐related pay (PRP) and the shape of workers' experience‐earnings profiles. In particular, we argue that the slope of the profile depends critically upon the degree of ‘equity’ held by workers in their enterprise as measured by the extent of PRP. The implication is that the slope of the profile for PRP workers falls between those of their zero‐equity fixed‐wage, and one hundred per cent equity self‐employed, counterparts. Our empirical analysis of three British data sets, namely the British Social Attitudes Survey, the British Household Panel Survey, and the British Family Expenditure Survey, supports this prior.
Alcohol Prices, Consumption, and Traffic Fatalities
Authors: Young Douglas J. , Bielinska‐Kwapisz Agnieszka
Published: July 2021

We examine the relationships among alcohol prices, consumption, and traffic fatalities using data across U.S. states from 1982 to 2000. Some previous studies have found large, negative associations between alcohol taxes and fatalities. However, commonly used price data suggest little or no connection between alcohol prices and fatalities. These apparently conflicting findings may result from measurement error and/or endogeneity in the price data, which biases ordinary least squares estimators toward a finding of no price effects. Using alcohol taxes as instrumental variables, fatalities are found to be negatively related to prices. In addition, alcohol consumption is strongly positively related to fatalities. However, biases may still remain, because taxes are not entirely suitable as instruments.
Agricultural Productivity and Economic Growth: Role of Tax Revenues and Infrastructures
Authors: Chang Jing Jun , Chen Been‐Lon , Hsu Mei
Published: July 2021

To encourage economic growth in a developing economy, higher agricultural productivity has been believed to enhance the manufacturing sector's development, which provides the transition into industrialization. Although this positive linkage between agricultural productivity and economic growth has been judged to be incorrect, based upon the comparative advantage argument in a model of small‐open economies by Matsuyama (1992), this article revisits the linkage by extending Matsuyama's model by introducing the revenue‐generating effect, which is missing in his model. As agriculture is an important source of taxation in an early stage of economic development, higher agricultural productivity generates more tax revenues and facilitates spending on infrastructure. By introducing government taxation and infrastructure expenditure, we show that under proper conditions, higher agricultural productivity creates a positive growth effect via the revenue generation that dominates the negative growth effect through the comparative advantage. Moreover, introducing infrastructure expenditure may shift the manufacturing sector's original comparative disadvantage into comparative advantage, thereby enabling a trapped economy to take off and eventually industrialize. From the early stages of economic development in Japan, Taiwan, and Korea, we can quantitatively assess an obvious net positive effect of agricultural productivity upon labor allocation and economic growth.
Inter‐vivos Transfers and Exchange
Authors: Norton Edward C. , Houtven Courtney Harold Van
Published: July 2021

Most parents divide their bequests equally among their children, whereas inter‐vivos transfers are usually unequal. We propose that exchange is better for inducing inter‐vivos transfers than bequests. Inter‐vivos transfers can be adjusted quickly to the amount of care, are less costly than writing a will, and can be kept secret from other family members and the public. The results from national longitudinal data show that, as expected, if a parent gives any inter‐vivos transfers, she is more likely to give to children who provide informal care. Informal care has no effect on the equality of intended bequests.
Government Expenditures and Revenues: Evidence from Asymmetric Modeling
Authors: Ewing Bradley T. , Payne James E. , Thompson Mark A. , Al‐Zoubi Omar M.
Published: July 2021

In this article, we examine the relationship between U.S. federal revenues and expenditures while relaxing the assumption of a symmetric adjustment process underlying the conventional cointegration and error correction model. Threshold autoregression and momentum threshold autoregression models are used to ascertain the empirical link between the two variables of the budgetary process. Our results suggest that revenues and expenditures are cointegrated and that the adjustment process of the budgetary disequilibrium is asymmetric. The application of the asymmetric error correction model indicates that revenues and expenditures respond to the long‐run requirements of the budgetary balance only when the budget is worsening.
Spatial Cournot Competition among Multi‐Plant Firms in a Circular City
Authors: Pal Debashis , Sarkar Jyotirmoy
Published: July 2021

We characterize equilibrium plant locations for a spatial multi‐plant Cournot oligopoly in a circular city. Previous work demonstrates that for a two‐plant duopoly, all four plants are equally spaced. We establish that the equilibrium location pattern is unique if there are two firms with an equal number of plants. In most other scenarios, multiple equilibria arise. Next, we endogenously determine both the number of plants per firm and plant locations for a duopoly. It is shown that the subgame perfect Nash equilibrium may not be unique, and for identical set‐up costs, the firms may choose different numbers of plants.
Earnings on the Information Technology Roller Coaster: Insight from Matched Employer‐Employee Data
Authors: Hotchkiss Julie L. , Pitts M. Melinda , Robertson John C.
Published: July 2021

This article uses matched employer‐employee data for the State of Georgia to examine workers' earnings experience through the information technology (IT) sector's employment boom of the mid‐1990s and bust in the early 2000s. The results show that even after controlling for pre‐boom individual characteristics, transitioning out of the IT sector to a non‐IT industry generally resulted in a large wage penalty. However, IT service workers who transitioned to a non‐IT industry still fared better than workers who took a non‐IT employment path. For IT manufacturing workers, there is no benefit to having been touched by technology, likely because of the nontransferability of manufacturing experience to other industries.
Where Are They Now? Tracking the Ph.D. Class of 1997
Authors: Stock Wendy A. , Siegfried John J.
Published: July 2021

We report early career outcomes of economics Ph.D.s by tracking the U.S. class of 1996‐1997. We examine employment outcomes, work activities, salaries, and graduates' attitudes toward their jobs. By 2003, all of the respondents were employed, although almost half changed employers during the six years. Salaries of the cohort increased at an average annual rate of 8.2% from 1997 through 2003. Academic‐year salaries rose about 5.7% per year, whereas private sector salaries skyrocketed at 15% per year. Finally, the median salaries of first‐year full‐time permanent 9‐ to 10‐month academic economists hired in 2002‐2003 actually exceed the median 2003 salaries of their counterparts initially hired in 1997‐1998. Some of this apparent salary inversion reflects a different mix of employers and departments between the two cohorts, with the younger group securing relatively more jobs at higher‐paying institutions.
The Choice of Employment Arrangement in the Market for Hospitalist Services
Authors: David Guy , Helmchen Lorens A.
Published: July 2021

Hospitalists specialize in the management of patients who are hospitalized. Despite a uniformity of work sites, educational backgrounds, and tasks, however, newly available survey data from the American Hospital Association and the Society of Hospital Medicine reveal substantial diversity in employment arrangements. We reconcile these observations by noting that the two principal players on the health care continuum—primary care physicians who refer their patients and hospitals who admit them—have strong but differing motives for using hospitalists. We show how strategic interaction between the two players may give rise to multiple equilibria in which either the primary care physician group or the hospital ends up being the sole employer of hospitalists in a given market. Over time, the growing infrequency of hospitalization and variation in the cost of setting up a hospitalist program may explain the shifting predominance of different employment arrangements.
Economic Freedom and Migration Flows between U.S. States
Authors: Ashby Nathan J.
Published: July 2021

A modified gravity model is estimated using a cross section of data drawn from the U.S. Census Bureau survey of 2000 in order to analyze the impact of economic freedom on gross migration flows among the lower 48 states. Spatial econometric methods are utilized in order to capture spatial effects not detected by distance. In addition, the Economic Freedom of North America Index is decomposed to determine the individual impact of various policies. Results show that states with higher relative economic freedom experience greater migration inflow through its direct impact on income and employment growth. In aggregate, the findings indicate that individuals migrate toward states with relatively higher government consumption expenditures, relatively lower tax burdens, and states with more freedom with respect to labor decisions in the form of less restrictive minimum wages, less concentration of unions, and less dependence on public employment.
Does Central Bank Transparency Impact Financial Markets? A Cross‐Country Econometric Analysis
Authors: Tomljanovich Marc
Published: July 2021

Blinder et al. (2001) argues that more open public disclosure of central bank policies may enhance the efficiency of markets. We examine this claim by studying for a set of seven industrialized countries whether selected central banks' moves toward more open disclosure during the 1990s improved or worsened the predictability of the corresponding national financial markets. Employing methodologies analogous to Campbell and Shiller (1991), we find that for all countries, the forecasting error has decreased for interest rates on the respective government bonds across most maturity lengths, and that the expectations hypothesis has generally performed better at the short end of the yield curve. Our results also tentatively show that the effects are stronger for central banks that made the move to greater disclosure, compared to those banks that resisted increasing the public's information set. These findings are consistent with Tabellini's (1987) view that central bank secrecy will hinder the smooth functioning of financial markets.
The Effect of Body Weight on Adolescent Academic Performance
Authors: Sabia Joseph J.
Published: July 2021

A recent study by Cawley found consistent evidence of a negative relationship between body weight and wages for white women, even after controlling for fixed individual‐level unobserved heterogeneity and reverse causality. Building on this work, I estimate the relationship between adolescent body weight and academic achievement to examine whether early human capital accumulation is adversely affected by obesity. Using data from the National Longitudinal Study of Adolescent Health, I estimate ordinary least squares, instrumental variables, and individual fixed effects models. The pattern of findings across models suggests consistent evidence of a significant negative relationship between body mass index and grade point average (GPA) for white females aged 14‐17. Estimates reflect that a difference in weight of 50 to 60 pounds (approximately two standard deviations) is associated with an 8 to 10 percentile difference in standing in the GPA distribution. For nonwhite females and males, there is less convincing evidence of a causal link between body weight and academic performance after controlling for unobserved heterogeneity.
A Tale of Two Gate‐Sharing Plans: The National Football League and the National League, 1952‐1956
Authors: Surdam David G.
Published: July 2021

Do professional sports leagues design revenue‐sharing rules primarily to help financially weaker teams, or do such organizations view revenue‐sharing rules as ways to reward teams for being competitive? Baseball's National League and the National Football League provide evidence from the 1950s that revenue‐sharing plans may have surprising effects. If strong teams draw well on the road, revenue‐sharing plans may provide modest succor to teams in smaller cities and may benefit teams in larger cities. The two leagues' experiences also suggest that owners are willing to enact regressive aspects in their revenue‐sharing plans, possibly to forestall moral hazard possibilities arising from automatically helping teams that remain poor draws or that fail to improve.
Equilibrium Contingent Compensation in Contests with Delegation
Authors: Baik Kyung Hwan
Published: July 2021

We consider two‐player contests in which each player hires a delegate who expends his effort to win a prize on the player's behalf. Endogenizing delegation contracts, we focus on the equilibrium contracts between the players and their delegates. We first show that each player's equilibrium contract is a no‐win‐no‐pay contract. Then, we examine the delegates' equilibrium compensation spreads, effort levels, probabilities of winning, expected payoffs, and the players' equilibrium expected payoffs. We show that economic rents for the delegates may exist.
Decomposing Wage Gaps between Ethnic Groups: The Case of Israel
Authors: Levanon Gad , Raviv Yaron
Published: July 2021

Past investigations of the income gaps between Jews and non‐Jews in Israel treat non‐Jews as one group. In this paper we separate the non‐Jewish group into three main religious minorities: Muslims, Christians, and Druze and focus on the northern part of Israel, where most minorities live. Using the latest Israeli census, we find significant explained and unexplained income gaps in favor of Jews. The unexplained gaps tend to be larger the more educated the individual. Jews have much higher representation in the more lucrative occupations, and earn significantly more in them. Muslims generally suffer from the largest income gaps, while Druze have the lowest income gaps, reflecting direct and indirect benefits reaped from serving in the army. Among minorities, Christians are the most educated and most concentrated in the top occupations, which explains why they have the lowest gaps in the highest percentiles of the income distribution.
Bank Runs in Emerging‐Market Economies: Evidence from Turkey's Special Finance Houses
Authors: Starr Martha A. , Yilmaz Rasim
Published: July 2021

Recent banking crises in emerging‐market countries have renewed debates about deposit insurance. Because insurance erodes banks' incentives to manage risks prudently, some argue that its elimination would improve bank stability. Yet eliminating insurance could be destabilizing if it recreates risks of self‐fulfilling runs. This paper examines dynamics of depositor behavior during a set of runs on Turkey's Special Finance Houses, an uninsured sub‐sector of Islamic banks. Detailed data on withdrawals are analyzed in a vector autoregressive framework that enables us to distinguish between informational and self‐fulfilling elements of runs. We found that both types of dynamics were at work during the runs, suggesting a role for deposit insurance, judiciously used, in ruling out expectational problems that fuel tendencies to run.
Explaining the Rain:The Rise and Decline of Nationsafter 25 Years
Authors: Heckelman Jac C.
Published: July 2021

In the quarter century since the publication of Mancur Olson'sRise and Decline of Nations, a large literature has evolved testing the central hypothesis regarding Olson's thesis on institutional sclerosis. These tests have taken the form of both econometric regression analysis involving a sample of various nations and detailed narrative case studies of specific nations. Tests have appeared in both economics and political science journals as well as in collected volumes and independent books, performed primarily by authors from America and Europe. A review of over 50 separate works reveals that, on the whole, the theory of institutional sclerosis is generally but certainly not universally supported. No systematic bias in favor of or opposition to Olson is found to have arisen on the basis of methodology, publication outlet, or authorship location.
Model Uncertainty, Political Learning, and Institutions: A Broader View on Mancur Olson's Theory of Institutional Sclerosis
Authors: Bischoff Ivo
Published: July 2021

In his Rise and Decline of Nations, Mancur Olson argues that politically stable countries suffer from declining growth rates caused by the growing influence of distributional coalitions that accumulate over time. The empirical literature supports the notion of a negative relationship between a country's duration of political stability and its growth rates but finds only weak support for a negative influence of distributional coalitions on growth. This paper sketches a simple model of party competition under model uncertainty, which may explain this mixed empirical picture. It shows that politically stable democracies are less well equipped to adjust to shifts in their economic environment than democracies with a shorter history of political stability. In a further step, the paper relates the major theme of this theory and Olson's theory to the more recent literature on institutions and growth. Directions for further research are discussed.
Distributional Coalitions, the Industrial Revolution, and the Origins of Economic Growth in Britain
Authors: Mokyr Joel , Nye John V. C.
Published: July 2021

From the late 1600s to the mid 1800s, Britain was able to transform from a divided kingdom with a fragmented, often stagnant economy into a powerful and stable state that simultaneously saw an expansion in the power, wealth, and stability of the central government while encouraging an economic transformation that gradually allowed both industrial technology and liberal commerce to flourish and break out of its mercantilist straitjacket. We explain how rent‐seeking elites who might normally have opposed such sweeping transformations promoted institutional changes that, in the long run, expanded the economy and encouraged innovation even at the expense of class interests. In the short run, this meant that rent‐seeking in the 18th century was not so much reduced as redirected from local monopolies to state authorities and Parliament. But in the longer run, the process of professionalization made possible greater liberalism in general, even at the expense of general rent‐seeking itself. The position of Parliament as a meta‐institution for reforming and weakening rent‐creating restrictions as needed was pivotal to this process. Ideological changes—particularly the Scottish enlightenment—transformed the terms of the debate but could only be operationalized once interests were aligned so that gainers from industrialization could compensate or overcome traditional interests.