bluuebunny/crossref_metadata_2025 huggingface dataset:
LEVIATHAN AT BAY: CONSTITUTIONAL VERSUS POLITICAL CONTROLS ON GOVERNMENT
Authors: SUTTER DANIEL
Published: January 2010

I integrate constitutional constraints in a model of electoral control of politicians. Two types of politicians compete for office: angels, who never misuse power, and knaves, who abuse delegated power. Political theory suggests that constitutional constraints and elections are substitutes; I find a more complicated relationship. Elections sometimes substitute for constraints, while constraints complement and strengthen electoral controls based on politicians' payoffs. Elections must work perfectly to generally allow constraints to be dispensed with. Knaves might self‐select out of politics with constitutional constraints, which consequently appear inconsistent with the observed character of politicians. (JEL H1, D72)
A DIRECT TEST OF THE EFFICIENT MARRIAGE MARKET HYPOTHESIS
Authors: Suen Wing , Lui Hon‐Kwong
Published: January 2010

This paper takes Becker's efficient marriage market hypothesis at face value, and directly confronts it with data from Hong Kong. The theory of optimal assignment is used to develop an empirical model of spouse selection, which resembles a Tobit model. This model can address positive or negative assortative matching as well as marginal product pricing in marriage markets. We also use a computer algorithm to solve the assignment problem for imputed marital output. The degree to which the actual pairing of husbands and wives corresponds to the optimal pairing provides a goodness‐of‐fit test of the efficient marriage market hypothesis. (JEL C51, C61, C78, J12)
UNIFORM TWO‐PART TARIFFS AND BELOW MARGINAL COST PRICES: DISNEYLAND REVISITED
Authors: Cassou Steven P. , Hause John C.
Published: January 2010

This paper completely characterizes the demand and cost parameters which induce a constant cost monopolist charging a uniform two‐part tariff to choose a marginal price less than marginal cost when selling to two types of consumers with different linear demands. It also provides a quantitative assessment of the potential significance of such pricing. Pricing below marginal cost maximizes profits in large regions of the model parameter space, contrary to widely held beliefs. If fixed costs are zero, pricing below marginal cost can increase profits by a factor of √2, although for most parameters the profit increase is much smaller. (JELD42, L11)
PHYSICIAN PAYMENT AND PRENATAL CARE ACCESS FOR HETEROGENEOUS PATIENTS
Authors: Travis Karen M.
Published: January 2010

Changes in prospective payments to reimburse physicians for serving Medicaid patients have been rising in many States. Policy makers anticipate that higher fees will increase access to services. This paper explores whether physicians respond to the increased payment by increasing access differentially by patient type. Physicians may gain from serving only those patients expected to be of low medical risk and cost. Empirical tests using Medicaid data from 1988 to 1991 for prenatal care provision in Washington State show fees are significant in improving access to care for the average patient with significantly greater improvement for Hispanics and single patients. (JEL I11, I18)
THE SOLOW RESIDUAL FOR AUSTRALIA: TECHNOLOGY SHOCKS OR FACTOR UTILIZATION?
Authors: Otto Glenn
Published: January 2010

This paper presents evidence which implies that fluctuations in the Solow residual for Australia do not solely reflect technology shocks. Recent work suggests that the Solow residual is a noisy measure of technology shocks. One source of noise in the standard measure of the Solow residual is changes in factor utilization. In this paper a structural vector autoregression model for capacity utilization and the Solow residual is estimated. A transitory shock is identified that accounts, for about 30% of the short term variation in the Solow residual and virtually 100% of the variation in capacity utilization at all horizons. (JEL E3, E32, O4)
A FISCAL THEORY OF GOVERNMENT'S ROLE IN MONEY
Authors: Selgin George , White Lawrence H.
Published: January 2010

As an alternative to market failure explanations, we draw on theory and historical evidence to argue that fiscal considerations explain the roles governments typically play in producing and regulating money. Public monopoly production of coins and banknotes, substitution offiat for commodity standards, and restrictions on substitutes for government money all generate revenue and especially provide means for meeting fiscal emergencies. We argue that these arrangements do not reflect conscious design so much as the evolutionary survival of the fiscally advantageous. (JEL E5, E6, H1, N1)
INFORMATION SHARING AND TACIT COLLUSION IN LABORATORY DUOPOLY MARKETS
Authors: Cason Timothy N. , Mason Charles F.
Published: January 2010

This paper reports 45 laboratory duopoly markets that examine the importance of information sharing in facilitating tacit collusion under conditions of demand uncertainty. Sellers in these repeated laboratory markets generally shared information when possible to reduce their demand uncertainty, which led to output reductions in some demand states. Risk aversion is a likely explanation for this sharing, but some sellers also appeared to employ a strategy of information concealment to punish non‐colluding rivals. Nevertheless, output choices were similar in control treatments that forced sellers to share or conceal information, so the information sharing itself did not substantially increase tacit collusion. (JEL C92, D80, L13)
LABOR MARKET REGULATION AND THE WINNER'S CURSE
Authors: Bilginsoy Cihan
Published: January 2010

This paper analyzes the impact British Columbia's 1992 Skill Development and Fair Wage Policy (SDFWP) on bid price determination. Econometric analysis of the public school projects tendered between 1989 and 1995 shows that prior to the SDFWP, the common values auction model applied, and bidders facing higher competition surcharged cost estimates in order to avoid the winner s curse. After the SDFWP, collective uncertainty concerning wages declined, and the independent values model became relevant. During this period, bidders responded to rising competition by lowering their bids. This adjustment explains, at least in part, why wage regulation did not raise bid prices. (JEL D44, J38, L74, H57)
THE SUPPLY OF INFANTS RELINQUISHED FOR ADOPTION: DID ACCESS TO ABORTION MAKE A DIFFERENCE?
Authors: Gennetian Lisa A.
Published: January 2010

Motivated by a theory of desired fertility I use three years of aggregate state level data to examine the impact of abortion access on the supply of infants relinquished for adoption. I show evidence that abortion access affected the supply of infants relinquished during the 1980s in two different ways. First, the availability of abortion providers has the expected effect of reducing the supply of infants relinquished, particularly relative to the demand for abortion. Second, abortion law has an unexpected negative effect. This suggests that as abortion laws become more restrictive the total number of unwanted births may decrease. (JEL J13)
EMPIRICAL FEATURES OF THE SECOND‐GENERATION TARGET ZONE MODELS: MEAN‐REVERTING FUNDAMENTALS AND ENDOGENOUS DEVALUATION RISK
Authors: Knot Klaas H. W. , Dijkstra Theo K. , Haan Jakob De
Published: January 2010

We show that within Bertola and Svensson's second‐generation target zone model, mean‐reverting interventions and endogenous devaluation risk are closely interrelated. Over the period 1983–93 we analyze the degree of mean reversion in the underlying fundamental process as well as the term structure of interest rate differentials vis‐à‐vis Germany for six Exchange Rate Mechanism currencies. For Austria, Denmark and the Netherlands, and for Belgium after 1990 our estimates are broadly in line with the first‐generation target zone model, whereas those for France and Italy are in accordance with the model that allows for endogenous devaluation risk. (JEL F3 1, E43)
WAGE DIFFERENTIALS ACROSS LABOR MARKETS AND WORKERS: DOES COST OF LIVING MATTER?
Authors: Dumond J. Michael , Hirsch Barry T. , Macpherson David A.
Published: January 2010

Wage differential studies rarely account for interarea differences in cost of living, owing both to data limitations and theoretical ambiguity. This study develops a price index for 185 metropolitan areas comprising about 70% of the U.S. labor force. Current Population Survey data for 1985–95 and data on site‐specific amenities are used to estimate earnings differentials based on nominal wages, wages fully adjusted for measured cost of living, and a simple approximation of “real” wages with partial adjustment for price‐level differences. Dispersion in approximate real wages across 185 labor markets and differentials by region and city size are substantially lower than dispersion in nominal or full adjustment wages. Estimates of racial and ethnic differentials display moderate sensitivity to choice of a wage measure, whereas other standard differentials do not. Both nominal wages and wages fully adjusted for cost of living may provide misleading estimates of real wage differentials. Absent data on interarea prices and amenities, researchers should include detailed controls for region and city size in nominal wage equations.(JELJ31, R23)
THE COST‐PER‐LIFE‐SAVED CUTOFF FOR SAFETY‐ENHANCING REGULATIONS
Authors: Lutter Randall , Morrall John F. , Viscusi W. Kip
Published: January 2010

This article develops a model of the conditions under which risk regulations that are too expensive have net adverse health effects. Two principal components of this relationship are the implicit value of life and the income elasticity of risky behaviors. Using new empirical estimates for the income elasticity of many of the most consequential risk‐related behaviors, our results imply that a $15 million decrease in income is associated with the loss of an additional statistical life. Regulations that cost more than $15 million per expected life saved will have counterproductive effects on individual mortality.(JEL LSI, 112, J17)
THE DYNAMIC EFFECTS OF U.S. FOOD AID
Authors: Barrett Christopher B. , Mohapatra Sandeep , Snyder Donald L.
Published: January 2010

Although food aid may have important medium‐ to long‐term effects, there is a glaring absence of empirical research on food aid dynamics. This paper applies vector autoregression methods to data from 18 countries over the period 1961–95. We find evidence that food aid has a pronounced J‐curve effect on recipient country per capita commercial food imports but only negligible negative effects on recipient country per capita food production. The commercial export gains are primarily enjoyed, however, by the donors' competitors, revealing heretofore unrecognized positive pecuniary trade externalities associated with foreign assistance. (JEL F14, O13, Q17, Q18)
LIQUIDITY CONSTRAINTS WITH ENDOGENOUS INCOME
Authors: Zhao Yucong , Dutkowsky Donald H. , Dunsky Robert M.
Published: January 2010

This article examines liquidity constraints within the household's intertemporal model with nonseparable consumption and leisure. The model includes wage income in the minimum wealth constraint. We derive an estimable equation for employed households that holds whether or not the family is credit constrained. The formulation enables direct testing for liquidity constraints. Empirical findings using the Panel Study of Income Dynamics strongly support the existence of debt constraints. Credit constrained households have significantly lower levels of consumption, disposable income, saving, and wage rates, a higher average propensity to consume, and smaller labor hours for the spouse but not the head. (JEL D91, J22)
Dynamic effects of financial intermediation over the business cycle
Authors: Lehr CS , Wang P
Published: January 2010

This paper provides a empirical evidence that the financial intermediation disturbances can generate business cycles. We examine three countries whose financial sectors are fully developed but quite distinct in their institutional and regulatory circumstances; thus, we can infer whether financial intermediation disturbances differ across dissimilar financial environments. We find that the dynamic responses of output to financial intermediation shocks exhibit similar patterns in all cases studied. However, the various institutional and regulatory circumstances have generated different propagation mechanisms transmitting the financial disturbance to output in ways that lead the magnitudes of the responses to deviate across economies.
Job queues, discrimination, and affirmative action
Authors: Bisping TO , Fain JR
Published: January 2010

If employers have different Becker‐type discrimination coefficients for different demographic groups, then the implementation of affirmative action may have a differential impact on those groups. We estimate two vector autoregressive models of the U.S. economy, including the unemployment rates of four demographic groups. We find that a job queue existed before the implementation of affirmative action and that affirmative action changed the ordering of the job queue in manner that had a negative impact on nonwhite males. We find evidence that affirmative action may have increased the unemployment rate of nonwhite males by increasing their duration of unemployment.
Loan performance and race
Authors: Martin RE , Hill RC
Published: January 2010

Recent studies find evidence of racial discrimination in mortgage markets. Although these studies explore loan approval rates for whites versus minorities, they do not specifically consider loan performance, either in the form of default rates or loan administration costs. This study considers discrimination in the used car credit market, where the collateral is not subject to location externalities, collateral value and quality do not vary as much as in real estate, and the loan terms are shorter. We find administration costs and default rates are higher for minorities than for whites, controlling for age, income, home ownership, wealth, occupation, loan terms, and geographic location.
Firm outsourcing decisions: evidence from U.S. foreign trade zones
Authors: Swenson DL
Published: January 2010

This article examines the operations of firms located in U.S. foreign trade subzones to study the responsiveness of outsourcing to international cost changes. I find that firms reduce their reliance on foreign inputs when dollar depreciation increases the relative price of imported inputs. The effect is pervasive across industries and is economically significant. In addition, firms that rely more heavily on imported intermediate inputs reduce their overall shipments when dollar depreciation elevates their imported, input costs. However, the magnitude of the shipments effect is economically small, suggesting that firms respond to exchange rate movements by adjusting their operations on other dimensions.
A cross‐country panel analysis of currency substitution and trade
Authors: Milner C , Mizen P , Pentecost E
Published: January 2010

Attention that has been directed toward the effect of trade on foreigner's holdings of domestic currency comes exclusively from time‐series evidence. Here we extend a model of currency substitution that incorporates a trade motive for foreigners to hold domestic currency. It uses time‐series and cross‐sectional information for a panel of 17 industrialized countries testing two‐way fixed‐effects models against pooled and random‐effects alternatives. The cross‐sectional information is significant, revealing that pooling of data could result in misleading inferences, since country‐specific effects, regional group effects, and distance are all important determinants of domestic currency holding by foreigners.
Financial development, investment, and economic growth
Authors: Xu Z
Published: January 2010

In this article, I use a multivariate vector‐autoregressive (VAR) approach to examine the effects of permanent financial development on domestic investment and output in 41 countries between 1960 and 1993. The VAR approach permits the identification of the long‐term cumulative effects of financial development on the domestic variables by allowing for dynamic interactions among these variables. The results reject the hypothesis that financial development simply follows economic growth and has very little effect on it. Instead, there is strong evidence that financial development is important to growth and that investment is an important channel through which financial development affects growth.
Team effects on compensation: an application to salary determination in the National Hockey League
Authors: Idson TL , Kahane LH
Published: January 2010

Studies of salary determination largely model pay as a function of the attributes of the individual and the workplace (i.e., employer size, job characteristics, and so forth). This article empirically investigates an additional factor that may influence individual pay, specifically coworker productivity. Data from professional sports are used to evaluate this question because both salary and teammate performance measures are readily available. We find that team attributes have both direct effects on an individual's pay, and indirect effects through altering the rates at which individual player productive characteristics are valued.
The publishing of recent economics Ph.D. recipients
Authors: Collins JT , Cox RG , Stango V
Published: January 2010

We present publication data for recent graduates of 50 economics Ph.D. programs. The data show that publishing output is highly concentrated among graduates of the top programs; the top three programs, for example, generate more than 25% of aggregate publishing output in our sample. We use the data to construct a set of program rankings based on both per capita and aggregate graduate publication and a comparison of faculty performance to graduate performance. The graduate/faculty comparison reveals that programs may be identical in the output of their faculties but starkly different in the output of their graduates.
Enter at your own risk: HMO participation and enrollment in the Medicare risk market
Authors: Abraham J , Arora A , Gaynor M , Wholey D
Published: January 2010

We examine HMO participation and enrollment in the Medicare risk market for the years 1990 to 1995. We develop a profit‐maximization model of HMO behavior, which explicitly considers potential linkages between an HMO's production decision in the commercial enrollee market and its participation and production decisions in the Medicare risk market. Our results suggest that the payment rate is a primary determinant of HMO participation, while the price of a supplemental Medicare insurance policy positively affects HMO Medicare enrollment. We also find empirical support for the existence of complementarities in the joint production of an HMO's commercial and Medicare products.
Cross‐state variation in Medicaid programs and female labor supply
Authors: Montgomery E , Navin JC
Published: January 2010

Using a pooled cross‐section data set from the 1980 through 1993 Current Population Survey March Supplements, we test if different Medicaid benefit levels across states impact the labor supply behavior of female heads of households. The ordinary least square (OLS) results support the prediction that Medicaid expenditures reduce labor supply. Controlling for state fixed or random effects alters the effect of both AFDC and Medicaid on the decision to participate as well as the number of hours worked. We also find that while the effects of program generosity are sensitive to the inclusion of state effects those of variation in eligibility thresholds are not.
Using the Medicare buy‐in program to estimate the effect of Medicaid on SSI participation
Authors: Yelowitz AS
Published: January 2010

This article assesses the importance of receiving supplemental health insurance on participation in Supplemental Security Income (SSI) for the elderly. The implementation of the Qualified Medicare Beneficiary (QMB) program offered a substitute for Medicaid, and expanded health insurance eligibility to a higher income level. Using a sample of elderly respondents aged 66 to 75, I find that the QMB program reduced SSI participation. More than half of the QMB participants were previously covered by SSI and Medicaid. The calculations suggest that the QMB program was not as expensive as it might first appear because of reductions in SSI expenditure.
Fiscal austerity and public servant quality
Authors: Haque NU , Montiel P , Sheppard S
Published: January 2010

In this article we use a simple model to analyze the forces that determine the size of the public sector and the quality of workers employed in that sector. Workers are heterogeneous, and the public sector chooses an employment strategy which maximizes a utility function U(s, Y) that depends on the share of the labor force employed in public service s and private sector output Y. The government is fully informed about worker productivity. We characterize the behavior of the public sector, and explore the efficiency and employment consequences of imposing fiscal constraint on the government.
Environmental governance in federal systems: the effects of capital competition and lobby groups
Authors: Fredriksson PG , Gaston N
Published: January 2010

We argue that centralized and decentralized environmental governance yield equivalent environmental regulations. We model worker, environmental, and capital owner lobby groups that seek influence by offering political contributions. Worker lobbying in the decentralized case has an effect on environmental regulations identical to that of capital owner lobbying in the centralized case. This is because the aggregate effects of environmental regulations on income are equivalent under two institutional designs. Whereas workers carry the full burden in the decentralized case when capital competition occurs, the burden is shared with the capital owners in the centralized case. We present evidence consistent with our theory.
ASCAP versus BMI (versus CBS): modeling competition between and bundling by performance rights organizations
Authors: Kleit AN
Published: January 2010

Building has been a long‐standing issue in industrial organization. In recent years, bundling has gained renewed controversy as it has been employed by computer software manufacturers. This article examines BMI v. CBS (1979), which dealt with bundling by performance rights organizations (PROs). A model of competition between PROs using blanket licenses is presented. The usage of blanket licenses is shown to generate both higher profits for PROs and higher costs for the users of musical compositions when there are a small number of competing PROs. In addition, the model explains why blanket licenses are observed in unregulated PRO markets.
Alternative measures of the marginal cost of funds
Authors: Browning EK , Gronberg T , Liu L
Published: January 2010

This article reconciles the use of two different marginal cost‐of‐funds (MCF) measures by resorting to alternative marginal benefit measures. It demonstrates how the alternative MCF measures can be properly applied to two classic problems in expenditure analysis: local cost‐benefit project evaluation and the second‐best public good level question. Relative strengths of the two MCF approaches in addressing the two problems are identified.
Inflation and the misallocation of resources
Authors: Frenkel M , Mehrez G
Published: January 2010

This paper analyzes the effects of inflation on the resource allocation between the financial sector and the manufacturing sector. We develop a model with heterogeneous workers who can be employed either in the manufacturing sector, which produces a consumption good, or the financial sector, which provides liquidity services. A rise in inflation reduces the demand for labor in the manufacturing sector and increases the demand for financial services. This induces a shift of resources from the manufacturing sector to the financial sector and reduces consumption opportunities. An empirical investigation using 55 countries strongly supports the result that higher inflation increases the relative size of the financial sector.
Gender and industry differences in employment cyclicality: evidence over the postwar period
Authors: Shin D
Published: January 2010

This paper explains how cyclical patterns of employment vary between genders and across industries and how these two factors are related by gender differences in the industry distribution of workers. Evidence shows that men's employment is more procyclical than women's and that men's overrepresentation in highly volatile industries more than accounts for the gender gap in employment cyclicality.
The demand for leisure time in the presence of constrained work hours
Authors: Feather PM , Shaw WD
Published: January 2010

This article presents a labor supply model designed to address situations of overemployment or underemployment in the labor market. Previous labor supply models have taken the possibility of work hour constraints into consideration but typically assumed that the existence of fixed work hours only influenced the decision of labor force participation. This ignores situations in which individuals choose to be employed at fixed‐hour jobs even though these jobs do not offer the desired work hours.
What's an Oscar worth?
Authors: Nelson RA , Donihue MR , Waldman DM , Wheaton C
Published: January 2010

This article examines the impact of an Academy Award nomination and award for best picture, best actor/actress, and best supporting actor/actress on a film's (i) market share of theaters, (ii) average revenue per screen, and (iii) its probability of survival. The model is estimated using weekly box‐office data for a matched sample of nominated and non‐nominated films. The results indicate substantial financial benefits for a nomination and award for best picture and best actor/actress. The structure of rewards is consistent with that found in two‐stage, single‐elimination tournaments.
The firm and managerial misdirection of worker effort
Authors: Gwin CR
Published: January 2010

This article models how a level of management between workers and the owner of a firm can affect the owner's decision either to internally integrate a function to make inputs or to contract out to buy inputs from an independent supplier. In the model, a self‐serving manager can direct her workers to perform activities that serve her interests rather than those of the firm. This reduces the effectiveness of worker performance incentives intended to promote efforts that benefit the owner. Incentives may have to be increased to a level such that the owner prefers to buy inputs rather than make them internally.
Auctions of companies
Authors: Hansen RG
Published: January 2010

Auctions of companies are conducted in ways that contradict received auction theory. The major puzzles are: (1) sellers restrict the number of bidders; (2) sellers restrict the number of bidders; (3) bidders are screened by an initial round of non‐binding bids; and (4) bidders offer ‐ and sellers sometimes accept ‐ preemptive bids. Puzzles (1), (2), and (4) are explained by assuming that some information concerning the company can, if released, reduce the value of the company. Puzzle (3) is explained as a way for sellers to select the highest‐valued bidders; equilibrium is maintained by using the initial bids to set a reserve price for the final bidding round.
Tax rates and economic growth in the OECD countries
Authors: Padovano F , Galli E
Published: January 2010

This article proposes refined econometric estimates of effective marginal income tax rates for 23 OECD countries from 1951 to 1990. Panel regressions find such measures negatively correlated with economic growth. These results are consistent with endogenous growth theories and opposite to those of most empirical literature, which relies on measures of effective average tax rates. The negative correlation is also robust to consideration of other growth determinants.
Monetary aggregation and the neutrality of money
Authors: Serletis A , Koustas Z
Published: January 2010

This article tests the long‐run neutrality of money proposition using quarterly U.S. data over the period from 1960:1 to 1996:2 and the methodology suggested by King and Watson (1997), paying particular attention to the integration and cointegration properties of the variables. Comparisons are made among simple sum, Divisia, and currency equivalent (CE) monetary aggregates using the Anderson et al. (1997a, 1997b) series of Divisia and CE monetary aggregates.
Exchange rate regimes and the cross‐country distribution of the 1997 financial crisis
Authors: Grier KB , Grier RM
Published: January 2010

We study variations in the severity of the 1997 financial crisis in a sample of 25 developing countries. We use both currency depreciation and stock market returns as crisis measures. Our key findings are that countries that started 1997 with an exchange rate peg experienced significantly greater currency depreciation and significantly lower stock returns than would be predicted from the levels of various macroeconomic indicators.
Spouse selection and earnings: evidence of marital sorting
Authors: Nakosteen RA , Zimmer MA
Published: January 2010

This article investigates economic bases for individuals’selection of marriage partners. Its central focus is matching of spouse pairs based on unobservable components of hourly earnings. Using a data extract from the Panel Study of Income Dynamics, we have observations of individuals’wages before and immediately after marriage, along with their spouses’earnings after marriage. We exploit the data to estimate the relation between spouses’wage residuals. The evidence supports positive marital matching on the basis of earnings. The results are robust with respect to variations in the statistical framework of the model.
Simple and complex gift exchange in the laboratory
Authors: Van Der Heijden ECM , Nelissen JHM , Potters JJM , Verbon HAA
Published: January 2010

We examine an experimental gift exchange game in which the players can improve on the unique no‐gifts equilibrium by two different types of gift exchange: simple and complex exchange, respectively. Complex exchange gives higher payoffs than simple exchange, but it requires not only mutual trust, like with simple exchange, but also a substantial degree of coordination. We examine whether players are able to conclude simple and complex exchanges and how this is affected by the move and matching structure of the game. We find that the so‐called partners treatment is a precondition for the occurrence of complex exchange.
A CLOSER LOOK AT LONG‐RUN U.S. MONEY DEMAND: LINEAR OR NONLINEAR ERROR‐CORRECTION WITH M0, M1, OR M2?
Authors: HAUG ALFRED A. , TAM JULIE
Published: January 2010

We study annual U.S. data from 1869 or 1900 to 1999. We find evidence for a well‐specified and stable model of money demand with data from 1946 to 1999. We carry out diagnostic and stability tests, including linearity tests. A linear error‐correction model with the monetary base performs better than a model with M1. A specification with M2 is not supported. We use real gross national product as the scale variable and a short‐term interest rate as the opportunity cost measure. We estimate an income elasticity of 0.86 and an interest rate elasticity of −0.44 for the monetary base. (JELE41)
MULTINATIONALS’ PRODUCTIVITY ADVANTAGE: SCALE OR TECHNOLOGY?
Authors: GIRMA SOURAFEL , GÖRG HOLGER
Published: January 2010

This study decomposes the productivity advantage of foreign multinationals into a technology and a scale effect and analyses the causal relationship between foreign ownership and these two components. This is done by analyzing the effects of an acquisition of a domestic establishment by a foreign multinational, using a combined propensity score matching and difference‐in‐differences estimation. The main results show that any positive impact of acquisition is predominantly due to changes in technical efficiency and not in scale and that the preacquisition productivity of the target plays a role in mediating the rate of technology transfer from the multinational. (JEL F23, L22)
HOW DOES HEALTH INSURANCE AFFECT WORKERS’ COMPENSATION FILING?
Authors: LAKDAWALLA DARIUS N , REVILLE ROBERT T , SEABURY SETH A
Published: January 2010

About half of injured workers choose not to file workers’ compensation claims. This is thought to result from their use of health insurance instead of workers’ compensation. However, the data suggest that insured workers are actually less likely to file than their more vulnerable uninsured counterparts. We found that this relationship emerges as the result of employer characteristics and, in particular, that employers who offer health insurance to employees are more likely to have workers who file claims; this is much more important than the insurance status of workers themselves or fixed worker characteristics. (JEL I1, J3)
LABOR MARKET EFFECTS OF EMPLOYER‐PROVIDED HEALTH INSURANCE
Authors: SHERSTYUK KATERINA , WACHSMAN YOAV , RUSSO GERARD
Published: January 2010

This is an experimental study in economics of mandated benefits. Most individuals who have health insurance in the United States obtain it through their employer. Some states require employers to provide insurance to certain types of workers. We used an experimental laboratory to investigate possible effects of alternative health insurance regulations on the competitive labor market performance. We found that mandating the insurance for all workers creates labor market distortions, whereas mandating the insurance only for full‐time workers leads to a higher coverage than under no mandate, an increased number of part‐time workers, but does not necessarily lower market efficiency. (JEL C92, I18, J2)
BIRTHS, DEATHS, AND MARRIAGES IN THE U.S. COMMERCIAL BANKING INDUSTRY
Authors: JEON YONGIL , MILLER STEPHEN M.
Published: January 2010

Regulatory change not seen since the Great Depression swept the U.S. banking industry beginning in the early 1980s and culminated with the Interstate Banking and Branching Efficiency Act of 1994. This article examines whether deregulation affected new charter (birth), failure (death), and merger (marriage) rates of U.S. commercial banks from 1978 to 2004 after controlling for bank performance and state economic activity. We find strong evidence that intrastate and interstate deregulation stimulated marriages, but not births or deaths. Finally, temporal causality tests show that mergers temporally lead to new charters and that failures lead to mergers (a demonstration effect). (JEL G21, L51)
SINGLE MOTHERS WORKING AT NIGHT: STANDARD WORK AND CHILD CARE SUBSIDIES
Authors: TEKIN ERDAL
Published: January 2010

This article examines the effect of child care subsidies on the standard work decision of single mothers. Results suggest that child care subsidy receipt is associated with about a 7 percentage point increase in the probability of working at a standard job. When the effect of subsidy receipt is allowed to differ between welfare recipients and nonrecipients, results indicate that subsidy receipt has a large and positive effect among welfare recipients, whereas the effect on nonrecipients is much smaller. These findings underscore the importance of child care subsidies in helping low‐income parents, especially welfare recipients, gain standard employment. (JEL J13, I38)
ABORTION AND CRIME: UNWANTED CHILDREN AND OUT‐OF‐WEDLOCK BIRTHS
Authors: LOTT JOHN R. , WHITLEY JOHN
Published: January 2010

Legalizing abortion can either increase or decrease investments in children’s human capital. This article finds that abortion increases the number of out‐of‐wedlock births. Using data that more directly links the criminal with age when the crime was committed, not age when arrested, and fixing the assumption in previous research that no abortions took place prior to the Roe v. Wade decision in the 45 states affected by that decision, we find consistent significant evidence that legalizing abortions increased murders by over 7%. Linear estimates indicate that legalization increased total annual victimization costs by at least $3.2 billion. (JEL K42, K14, J24)
EFFECTS AND VALUE OF VERIFIABLE INFORMATION IN A CONTROVERSIAL MARKET: EVIDENCE FROM LAB AUCTIONS OF GENETICALLY MODIFIED FOOD
Authors: ROUSU MATTHEW , HUFFMAN WALLACE E. , SHOGREN JASON F. , TEGENE ABEBAYEHU
Published: January 2010

Food products containing genetically modified (GM) ingredients have entered the market over the past decade. The biotech industry and environmental groups have disseminated conflicting private information about GM foods. This paper develops a unique methodology for valuing independent third‐party information in such a setting and applies this method to consumers’ willingness to pay for food products that might be GM. Data are collected from real consumers in an auction market setting with randomized information and labeling treatments. The average value of third‐party information per lab participant is small, but the public good value across U.S. consumers is shown to be quite large. (JEL C91, D12, D82)
TECHNOLOGY, CAPITAL SPENDING, AND CAPACITY UTILIZATION
Authors: BANSAK CYNTHIA , MORIN NORMAN , STARR MARTHA
Published: January 2010

Capacity utilization is a closely watched macroeconomic indicator because rising utilization may signal rising inflationary pressures. However, recent technological changes have increased the flexibility of relationships between inputs and outputs, potentially eroding the predictive value of the utilization rate. This paper examines relationships between technology, capital spending, and capacity utilization. After establishing conceptually that the effect of recent technological changes on capacity utilization is ambiguous, we investigate the effect empirically using panel data on 111 manufacturing industries. Our results suggest that, for the average industry, the technological change of the 1974–2000 period lowered capacity utilization by 0.2–2.3 percentage points.(JELD24, E22, E31)
THE OPTIMAL PUBLIC EXPENDITURE FINANCING POLICY: DOES THE LEVEL OF ECONOMIC DEVELOPMENT MATTER?
Authors: BOSE NILOY , HOLMAN JILL A. , NEANIDIS KYRIAKOS C.
Published: January 2010

This paper explores how the optimal mode of public finance depends on the level of economic development. The theoretical analysis suggests that in the presence of capital market imperfection and liquidity shocks, the detrimental effect of inflation on growth is stronger (weaker) at lower (higher) levels of economic development. Consequently, income taxation (seigniorage) is a relatively less distortionary way of financing public expenditure for low‐income (high‐income) countries. We provide empirical support for our model’s predictions using a panel of 21 Organization for Economic Cooperation and Development countries and 40 developing countries observed over the period 1972–1999. (JEL E44, E6, H6, O42)
EFFICIENT DURABLE GOOD PRICING AND AFTERMARKET TIE‐IN SALES
Authors: KASERMAN DAVID L.
Published: January 2010

The conditions under which a durable good supplier employs a tying arrangement that binds aftermarket purchases to the original sale was a central issue in the Kodak case. Two competing theories were presented in that case. Importantly, neither of these provides an efficiency‐based explanation for the observed behavior. Subsequent theories provide several efficiency‐driven motivations for aftermarket tying. None of these, however, rely upon efficient contracting between the buyer and the seller of the durable good. This article demonstrates the conditions under which such a contract will contain an aftermarket tie‐in provision. (JEL L42)
RENT SEEKING AND DEMOCRACY: EMPIRICAL EVIDENCE FOR URUGUAY
Authors: CALDERÓN CÉSAR , CHONG ALBERTO
Published: January 2010

We provide evidence for Granger causality between rent‐seeking behavior and democracy in Uruguay, where both rent‐seeking behavior and political shifts have varied widely in the past 80 yr but ethnolinguistic heterogeneity and inequality have remained low. This helps identify “pure” interactions and their link with rent‐seeking outcomes. The presence and duration of democracy appear to have been conducive to a decrease in rent seeking, although the reduction in rent seeking does not appear to have had a bearing on the quality of democratic regime. While the duration of democratic regime may impact rent‐seeking behavior, rent seeking also displays a Granger causality to democratic duration. (JEL O10, O1)
STRUCTURAL CHANGE, COMPETITIVE BALANCE, AND THE REST OF THE MAJOR LEAGUES
Authors: FORT RODNEY , LEE YOUNG HOON
Published: January 2010

Analyzing North American major sports leagues other than baseball, we find no break points in competitive balance time series corresponding to rule changes, the draft, free agency, salary caps, or labor disputes except for the 1998 basketball lockout. Some expansion and team relocation correspond with break points. Mergers that do correspond with break points all enhance competitive balance. But not all expansions, moves, and mergers correspond with break points. Remaining explanatory challenges include a general negative trend in competitive balance in basketball and the occurrence of a break point in football, 1976–1977. (JEL C32, L83)
SURVIVE THEN THRIVE: DETERMINANTS OF SUCCESS IN THE ECONOMICS PH.D. PROGRAM
Authors: GROVE WAYNE A. , DUTKOWSKY DONALD H. , GRODNER ANDREW
Published: January 2010

This study investigates the completion of the Ph.D. in economics. We use ex ante information, based upon reviewing individual applications from former doctoral students. Students need different skills to succeed at each distinct stage of the doctoral program. Significant determinants for passing the comprehensive exams include Graduate Record Exam (GRE) verbal and quantitative scores, a Masters degree, and prior focus on economics. By contrast, research motivation and math preparation play significant roles in completing the dissertation. GRE scores become insignificant for completion in the generalized ordered logit estimates, which emphasize the sequential nature of the Economics Ph.D. program. (JEL I210)
STICKY PRICE AND STICKY INFORMATION PRICE‐SETTING MODELS: WHAT IS THE DIFFERENCE?
Authors: KEEN BENJAMIN D.
Published: January 2010

Using a partial equilibrium framework, Mankiw and Reis show that a sticky information model can generate a lagged and gradual inflation response after a monetary policy shock, whereas a sticky price model cannot. Our study demonstrates that the finding is sensitive to their model’s parameterization. To determine a plausible parameterization, we specify a general equilibrium model with sticky information. In that model, we find that inflation peaks only one period after a monetary disturbance. A sensitivity analysis of our results reveals that the inflation peak is delayed by including real rigidities when the monetary policy instrument is money growth, whereas inflation peaks immediately when the policy instrument is the nominal interest rate. (JEL E31, E32, E52)
COLLUSION AND OVERLENDING
Authors: HWANG JINYOUNG , JIANG NEVILLE , WANG PING
Published: January 2010

This study provides a theoretical background for collusion‐induced overlending being the main cause of the 1997 Korean financial crisis. Our model consists of a lending institution, a borrowing chaebol of an unknown type, and an informed politician who can influence lending decision. We show that collusion can be formed between a low‐type chaebol and the politician, and it may not be the lending institution’s best interest to deter such collusion. This equilibrium, however, is possible only when the economic environment is favorable. When the economy deteriorates, the expectations of the fall of the collusion equilibrium can trigger financial crisis. (JEL G30, D82, O16)
SPATIAL COMPETITION AND THE PRICE OF COLLEGE
Authors: McMILLEN DANIEL P. , SINGELL LARRY D. , WADDELL GLEN R.
Published: January 2010

This article provides the first evidence that universities compete directly on price, and that the market for students depends on the proximity of competitors. Exploiting detailed data from private U.S. universities, price competition is tested by introducing geographic proximity into a spatial‐autoregressive tuition model. Standard spatial models show that list and net tuition are inversely related to distance between institutions, consistent with price competition in higher education. An extension to the spatial‐econometrics literature relaxes a constraint that estimated spatial relationships are common across all observations, implying that spatial effects differ across qualitative classes of institutions. (JEL C21, I2, L11)
ON THE LONG‐RUN EFFECTS OF FASHION
Authors: ARAUJO LUIS , MINETTI RAOUL
Published: January 2010

We investigate the long‐run dynamic interaction between fashion (brand loyalty) and industry structure. We analyze how this interaction affects the importance of fashion in the market for a product in the different stages of its life and characterize conditions under which fashion loses or preserves its relevance over time. The model can explain why some products survive fashion changes. (JEL D21, L0)
RESTRICTED STRUCTURAL CHANGE AND THE UNIT ROOT HYPOTHESIS
Authors: PAPELL DAVID H , PRODAN RUXANDRA
Published: January 2010

In a classic paper, Nelson and Plosser could not reject the unit root hypothesis in favor of trend stationarity for 13 out of 14 long‐term annual macro series. Subsequent studies, allowing for one or two structural changes, have found more rejections with a broken trend stationary alternative. Since these changes are defined to be permanent, the rejections do not provide evidence of trend stationarity. We propose new tests for a unit root in the presence of restricted structural change. Allowing for two offsetting structural changes, we reject the unit root null in favor of restricted trend stationarity for 6 out of 13 series. (JEL C22, E32)
CURBSIDE RECYCLING IN THE PRESENCE OF ALTERNATIVES
Authors: BEATTY TIMOTHY K. M. , BERCK PETER , SHIMSHACK JAY P.
Published: January 2010

We measure the extent to which curbside access affects quantity recycled. We use novel data to distinguish between new recycling and material diverted from other recycling modes. We find that the marginal impact of expanding curbside programs on total recycled quantities is small, in part because curbside programs significantly cannibalize returns from drop‐off recycling centers. Failure to account for cannibalization from other modes may substantially overestimate the benefits of curbside programs. We conclude with simple cost‐effectiveness comparisons. Results suggest that incremental expansion of curbside access may not be cost‐effective. (JEL Q53, Q58, H72)
THE DEMAND FOR CASINO GAMING WITH SPECIAL REFERENCE TO A SMOKING BAN
Authors: THALHEIMER RICHARD , ALI MUKHTAR M.
Published: January 2010

This study adds to the limited literature on the demand for casino gaming. The major focus is on the effect of a statewide smoking ban. A system of slot machine demand equations, one each for the three Delaware racinos (racetrack casinos), was developed. The number of slot machines at a racino, at competing in‐state racinos, and income were significant demand determinants. Competing out‐of‐state gaming venues had insignificant effects on gaming demand over the study period. The smoking ban had a significant negative impact on demand, which was not significantly different across the three racinos. The smoking ban reduced gaming demand 15.9%. (JEL L83)
IS STATUS QUO BIAS CONSISTENT WITH DOWNWARD‐SLOPING DEMAND?
Authors: WITTMAN DONALD
Published: January 2010

We show that status quo bias combined with downward‐sloping demand implies addictive behavior. This result does not depend on transitivity, a complete ordering, or even the existence of a preference relation that rationalizes choices. (JEL D11, D81)