Economic Inquiry

Articles from Vol. 51, No. 1, January

Accounting for the Gender Gap in College Attainment
I. INTRODUCTION One striking phenomenon in the U.S. labor market is the reversal of the gender gap in college attainment. In 1980, 57% of young men aged 25-34, compared with 46% of young women, had some college education by age 34. By 1996, however,...
A Critical Assessment of Measures of Central Bank Independence
I. INTRODUCTION The institutional relationship between central banks and government has been a subject of considerable interest ever since David Ricardo showed in the early nineteenth century how the close relationship between the Bank of England...
A Dual Definition for the Factor Content of Trade and Its Effect on Factor Rewards in Us Manufacturing Sector
I. INTRODUCTION The possible relationship between international trade and wage inequality in developed countries has been a very important and regularly debated topic for both academics and politicians in the last two decades. Unskilled workers...
Advance Production, Inventories, and Market Power: An Experimental Investigation
I. INTRODUCTION Bertrand-Edgeworth games are an important part of any industrial organization economist's toolkit. The unilateral market power created by capacity constraints represents one of economists' primary methods for modeling supra-competitive...
A Dynamic Explanation of the Willingness to Pay and Willingness to Accept Disparity
A fundamental tenet in neoclassical theory is the basic independence assumption: an individual's preferences are assumed to be measured over levels, not changes. Although most theoretical and applied economic models invoke this assumption, a wealth...
Ambiguous Solicitation: Ambiguous Prescription
I. INTRODUCTION Sample selection issues are relevant for any empirical exercise with human subjects. We study this problem directly, in the context of laboratory experiments in economics. However, the issue is at least as salient for "field experiments"...
Child Labor and Schooling Responses to Access to Microcredit in Rural Bangladesh
I. INTRODUCTION Microcredit programs have expanded rapidly in recent decades in the developing world. They have reached more than 20 million borrowers in Bangladesh, about 60% of the country's poor rural households (World Bank 2006). The United...
Common Drivers of Transnational Terrorism: Principal Component Analysis
I. INTRODUCTION Ever since the skyjackings of four wide-bodied planes on September 11, 2001 (henceforth 9/11), economists have displayed a strong research interest in terrorism. Theoretical and empirical papers have investigated myriad aspects of...
Consumption Benefits of National Hockey League Game Trips Estimated from Revealed and Stated Preference Demand Data
I. INTRODUCTION When the Baltimore Orioles moved from their 1950s-vintage home in Memorial Stadium to Oriole Park at Camden Yards in 1992, a new era in stadium and arena construction dawned in North American professional sports. The greatly enhanced...
Contract Delegation with Bargaining
I. INTRODUCTION Public procurement is a very important part of economic activity. It accounts for about 20% of gross domestic product (GDP) in the United States and 16% in the European Union (EU) countries. (1) Therefore, it is not surprising that...
Costly Intermediation and Consumption Smoothing
I. INTRODUCTION Financial intermediaries play an essential role in economies, transferring funds from agents who do not wish to use them immediately to those who do, improving the allocation of resources with consequences for efficiency and welfare....
Determinants of Trade and Specialization in the Organisation for Economic Co-Operation and Development Countries
I. INTRODUCTION Modern trade theory suggests several determinants of trade and specialization. They include technology, factor endowments, trade costs, tastes, and returns to scale. Various theories exist that explain the effects of these determinants...
Do States Free Ride in Antitrust Enforcement?
I. INTRODUCTION Recent research has examined the role of state governments in the United States in antitrust enforcement over the past 20 years. What has not been explored is the extent to which states make strategic decisions on their involvement...
Dynastic Management
I. INTRODUCTION There is broad agreement that differences in aggregate total factor productivity (TFP) constitute a large fraction of the existing cross-country differences in per-capita income. That is, not only do poor countries have fewer productive...
Dynastic Political Privilege and Electoral Accountability: The Case of U.S. Governors, 1950-2005
I. INTRODUCTION Political dynasties, which pass on public offices and other political privileges from family member to family member, have been important in the United States throughout its history. This paper investigates whether dynastic political...
Effects of Overweight on Risky Sexual Behavior of Adolescent Girls
I. INTRODUCTION Relations with the opposite sex are important social interactions in the lives of adolescent girls. A growing literature has focused on determinants and consequences of adolescent sexual activity, and this body of work has generated...
Effects of Welfare Reform on Illicit Drug Use of Adult Women
I. INTRODUCTION The landmark Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, often referred to as welfare reform, ended entitlement to welfare benefits under Aid to Families with Dependent Children (AFDC) and replaced...
Estimating Dynamic Euler Equations with Multivariate Professional Forecasts
I. INTRODUCTION Dynamic Euler equations restrict multivariate forecasts. The aim of this paper is to study an example of these restrictions applied to professional forecasts and so introduce a new way to test these key building blocks of dynamic...
Financial Development and Wage Inequality: Theory and Evidence
I. INTRODUCTION In recent years, the increase in wage inequality in the United States has received a lot of attention from economists. Researchers have documented the rise since the 1980s in overall wage inequality, differentials between wages of...
Financial Restraints and Private Investment: Evidence from a Nonstationary Panel
I. INTRODUCTION In the early 1970s, McKinnon (1973) and Shaw (1973) put forward the idea that financial repression--that is, government-imposed controls on lending and deposit rates, capital controls, and directed credit--had a negative impact on...
Firms and Flexibility
I. INTRODUCTION Differences in labor market outcomes between the United States and Europe have been well-documented. (l) One popular explanation of these observed differences has been the lack of flexibility in European countries. (2) Labor market...
Fiscal Stabilization with Partial Exchange Rate Pass-Through
I. INTRODUCTION It is well known that monetary policy can stabilize the effects of exogenous shocks in a closed economy facing nominal frictions. This task, however, becomes more complex when considering the case of an open economy. The consumption...
Foreign Direct Investment and Country-Specific Human Capital
I. INTRODUCTION The past three decades have witnessed an unprecedented increase in foreign direct investment (FDI) in the world; annual FDI flows from and to Organisation for Economic Cooperation and Development (OECD) countries have increased more...
Gender Matching and Competitiveness: Experimental Evidence
I. INTRODUCTION Men and women hold different types of jobs and are employed in different occupations. They also tend to work under different incentive systems, with women being compensated by piece rate payment schemes more frequently. (1) Relatively...
Gravity Redux: Measuring International Trade Costs with Panel Data
I. INTRODUCTION International trade has grown enormously over the last few decades, and almost every country trades considerably more today than 30 or 40 years ago. One reason for this increase in trade has undoubtedly been the decline in international...
Growth and Convergence When Technology and Human Capital Are Complements
I. INTRODUCTION Explaining the persistent productivity differences between countries has long been a focus of the theoretical and empirical growth literature. While a large body of work on the conditional convergence hypothesis emphasizes the role...
Happiness, Growth, and Public Policy: WEAI 2012 Presidential Address
I. INTRODUCTION Happiness as a measure of well-being is gradually becoming more accepted by economists and policy makers. (1) It seems appropriate, therefore, to examine some of its implications for public policy. I will address three specific questions:...
Holding Fast: The Persistence and Dominance of Gender Stereotypes
I. INTRODUCTION In any number of situations it may be necessary for one party to make judgments as to the risk preferences of another: a lawyer negotiating a plea agreement for her client; a financial advisor developing an investment plan for a...
Hold-Up: With a Vengeance
I. INTRODUCTION The hold-up literature shows how relationship-specific investments and incomplete contracts combine to hurt partnership profitability. (1) The conclusions typically build on the assumption that agents selfishly maximize own income....
Identifying the Role of Risk Shocks in the Business Cycle Using Stock Price Data
I. INTRODUCTION The finance literature on the forecastibility of stock returns has concluded that stock market movements are, by and large, not because of changes in the expected future cash flow of firms, but are primarily because of changes in...
Imported Capital Input, Absorptive Capacity, and Firm Performance: Evidence from Firm-Level Data
I. INTRODUCTION The importance of productivity growth as a primary determinant of the underlying difference in income across countries is now a well-established empirical proposition (Hall and Jones 1999). Endogenous growth theory suggests that...
Inflation Dynamics and Labor Market Specifications: A Bayesian Dynamic Stochastic General Equilibrium Approach for Japan's Economy
I. INTRODUCTION Inflation dynamics have been investigated using dynamic stochastic general equilibrium (DSGE) models with sticky prices. In the models, inflation is determined by the new Keynesian Phillips curve (NKPC), where real marginal cost...
International Trade and the Composition of Labor Market Turnover
I. INTRODUCTION Competing in foreign markets requires that firms use production techniques and a workforce that are productive enough to justify the costs of crossing borders. Technology adoption and recruiting costs are hardly one-time expenses....
Interracial Workplace Cooperation: Evidence from the NBA
I. INTRODUCTION Recent research shows that when individuals are forced to make quick decisions, they often exhibit same-race preferences, even if they are unwilling to admit to biased racial attitudes. For example, Price and Wolfers (2010) show...
Is Dishonesty Contagious?
I. INTRODUCTION The importance of individual honesty and trustworthiness in economic interactions is well known. These attributes facilitate cooperative relationships, enable contracts, strengthen legal and regulatory institutions, and, as a result,...
Labor Supply Differences between Married Heterosexual Women and Partnered Lesbians: A Semi-Parametric Decomposition Approach
I. INTRODUCTION Partnered lesbian women have substantially higher labor supply than married women (Leppel 2008; Tebaldi and Elmslie 2006). What might account for the sexual orientation gap in partnered female labor supply? Everyday conversation...
Lending Relationships and Monetary Policy
I. INTRODUCTION Currently, there is a revived interest in the impact of imperfect credit markets on business cycles and monetary policy analysis. There are three main approaches in the existing literature. The first approach focuses on the inclusion...
Limits of the Effect of Social Information on the Voluntary Provision of Public Goods: Evidence from Field Experiments
Social scientists of all ilks have examined why individuals make charitable contributions and voluntarily provide public goods. In economics, models of altruism (Becker 1974), warm-glow and warm-glow altruism (Andreoni 1989, 1990), conditional cooperation...
Living in Two Neighborhoods-Social Interaction Effects in the Laboratory
I. INTRODUCTION It is a long-standing and fundamental problem of the social sciences to understand whether and in what way humans are influenced by the behavior exhibited by the members of the social group to which they belong. We speak of a "social...
Measuring the Welfare Gain from Personal Computers
I. INTRODUCTION What is the welfare gain to consumers from the development of and improvements in personal computers (PCs)? This is the question addressed here. The answer offered is that welfare increased by somewhere between 2% and 3%, measured...
Moving Forward by Looking Back: Comparing Laboratory Results with Ex Ante Market Data
I. INTRODUCTION In this research, we address the central question of whether data obtained in an experiment with participants from the population of interest parallels market data from the same group. Utilizing information provided by our participants...
New Evidence on Credit Card Borrowing and Repayment Patterns
I. INTRODUCTION Credit cards have become a major factor in the economic life of American households. Credit card debt has been growing significantly since the 1990s, and revolving credit now stands at approximately $800 billion. (1) Problems stemming...
On Distance Metrics in Location Problems
I. INTRODUCTION The positioning of brands, placement of stores, or design of public goods is usually treated as an optimal location problem in a product space. Firms and planners have an incentive to create value by endowing goods with attributes...
On the Evolution of Total Factor Productivity in Latin America
I. INTRODUCTION Because of several policy distortions, including import-substitution industrialization, widespread government intervention, and both domestic and international competitive barriers, there has been a general presumption that Latin...
Parental Substance Use and Foster Care: Evidence from Two Methamphetamine Supply Shocks
I. INTRODUCTION From 1986 to 2010, the U.S. foster care population increased from approximately 280,000 to 408,000--a rise of over 45% due primarily to increased admissions in the 1980s and 1990s (U.S. DHHS 1999a, 2006a, 2006b, 2011). This increase...
The Booker Decision and Discrimination in Federal Criminal Sentences
I. INTRODUCTION The Sentencing Reform Act, passed by Congress in 1984, established the federal sentencing guidelines. The guidelines were designed to improve standardization in punishments handed out to convicted criminals by limiting what had been...
The Consequences of (De)regulation on Employment Duration and Efficiency: An Experimental Study
I. INTRODUCTION When little is known about the future market conditions, offering an employment contract that regulates working conditions for many periods can be dangerous. If market wages drastically decline, one may hire labor more cheaply. Furthermore,...
The Duration of Firm-Destination Export Relationships: Evidence from Spain, 1997-2006
I. INTRODUCTION The traditional trade literature that investigates aggregate trade flows emphasizes the sizeable increase in trade relationships since World War II and the remarkable persistence of trade flows. However, recent microlevel studies...
The Effect of Parental Involvement Laws on Youth Suicide
I. INTRODUCTION There is strong evidence that parental involvement laws, which require a parent's notification or consent before a minor can obtain an abortion, reduce pregnancies, abortions, and gonorrhea infections (Klick and Stratmann 2008; Levine...
The Effects of Single Mothers' Welfare Use and Employment Decisions on Children's Cognitive Development
I. INTRODUCTION In this article, we study the effects of low-skilled single mothers' welfare use and employment choices during their children's early years on their children's cognitive development. We use participation in Aid to Families with Dependent...
The Effects of Spanish-Language Background on Completed Schooling and Aptitude Test Scores
I. INTRODUCTION Does growing up in the United States in a home where Spanish is spoken affect an individual's cognitive abilities as measured by aptitude tests? Does it have any influence on how much schooling that individual eventually acquires?...
The Nature of Outsourcing Relationships: Evidence from OAP Prices
I. INTRODUCTION The dramatic growth in international outsourcing has fueled the expansion of international trade and deepened international integration. (1) Developments in outsourcing attract public attention due to concern that improvements in...
The Production Impact of "Cash-for-Clunkers": Implications for Stabilization Policy
During July and August of 2009, Americans purchased nearly 700,000 new automobiles or light trucks under the government's "cash-for-clunkers" program--officially the Car Allowance Rebate System, or CARS. Under the terms of the purchase, qualified buyers...
The State Street Mile: Age and Gender Differences in Competition Aversion in the Field
I. INTRODUCTION Gender differences in "competitiveness" are hypothesized to play a role in a wide array of economic outcomes, including the low representation of women among fortune 500 chief executive officers (Bertrand and Hallock 2001; Niederle...
The Unemployment Volatility Puzzle: The Role of Matching Costs Revisited
I. INTRODUCTION The Mortensen-Pissarides (MP) search and matching model (Mortensen and Pissarides 1994; Pissarides 1985, 2000) studies the dynamics of unemployment in an environment where jobs are continuously created and destroyed. A sequence of...
The Value of Consumer Choice and the Decline in HMO Enrollments
I. INTRODUCTION AND OVERVIEW Health insurance contracts may restrict consumers' choice of medical provider in order to minimize moral hazard. For example, consumers who are insured for their marginal healthcare expenses have no incentive to enforce...
The Welfare Effect of Access to Credit
I. INTRODUCTION In modern economies, two types of money are widely used: outside money (i.e., notes and coins issued by central banks) and inside money issued by commercial banks (e.g., checks or credit cards). Transactions do not only differ in...
Union Power, Collective Bargaining, and Optimal Monetary Policy
I. INTRODUCTION In most euro area countries labor unions and collective bargaining (1) play an important role in determining labor market dynamics. It is often argued that centralized union bargaining amplifies inefficient unemployment dynamics,...
U.S. Commercial Bank Lending through 2008:Q4: New Evidence from Gross Credit Flows
I. INTRODUCTION Debate about the behavior of the banking sector has intensified in the popular press, as well as within academia, as the financial crisis continues to gather steam. Many of the questions raised about the behavior of banks during...
Vouchers, Public School Response, and the Role of Incentives: Evidence from Florida
I. INTRODUCTION The concern over public school performance in the last two decades has pushed public school reform to the forefront of policy debate in the United States. School accountability and school choice, and especially vouchers, are among...
Wages, Rents, and Heterogeneous Moving Costs
I. INTRODUCTION The formalization of the idea that area differences in wages and rents compensate people and businesses for differences in desirable local amenities is attributable to Jennifer Roback (1982). This important formalization built on...
What Determines Family Structure?
I. INTRODUCTION The most prevalent type of family structure in which children in the United States are raised today is the traditional one, in which both biological parents are present in the home and married. But in the past 30-40 years, it has...
When Is Trade Protection Good for Growth?
I. INTRODUCTION There is a shared belief among economists, policy makers, and the general public that more open economies grow faster than closed economies. Many international organizations emphasize this correlation: for example, the World Trade...