EFFICIENCY WAGE MODELS OF UNEMPLOYMENT: A SECOND VIEW

Efficiency wage models, in which firms find it profitable to pay wages above workers' reservation wages, provide a promising explanation for unemployment and interindustry wage differentials. One criticism of such models is they imply firms should sell jobs by requiring up-front bonds from new workers. However, only some efficiency wage models imply this. Moreover, firms might not require bonds for many reasons. We show that moral hazard and adverse selection models together explain many labor market phenomena. The efficiency wage model conforms well to empirical finding, but certain anomalies suggest the need to consider rent-sharing models.     

WHY CHINA INDUSTRIALIZED AFTER ENGLAND

Although industrialization first occurred in England, it is thought that China, not England, may have been the world leader in technology at the time. Yet, China did not industrialize until 150 yr after England and nearly a century after less advanced European countries. This represents a puzzle because two‐sector neoclassical growth models, such as Hansen and Prescott (2002) , that accurately match industrialization, require that more technologically advanced countries industrialize at an earlier date. I find that a model that accounts for cross‐country heterogeneities in population density accurately predicts the timing of industrialization in China. (JEL F43, N10, N30, O11, O14, O41)     

THE PRODUCTION IMPACT OF “CASH‐FOR‐CLUNKERS”: IMPLICATIONS FOR STABILIZATION POLICY

Stabilization policies frequently aim to boost spending as a means to increase gross domestic product. Spending does not necessarily translate into production, however, especially when inventories are involved. We look at the “cash‐for‐clunkers” program that helped finance the purchase of nearly 700,000 vehicles in 2009. An analysis of auto sales and production movements reveals that the program did prompt a large spike in sales. But the program had only a modest and fleeting impact on production, as inventories buffered the movements in sales. These findings suggest caution in judging the efficacy of such policies by their impact on spending alone. (JEL E23, E65, L62)     

Children's residence patterns and educational attainment in rural South Africa, 1997

Using data collected by the Agincourt Health and Population Programme in a rural sub-district of South Africa's Northern Province, this paper describes the residential arrangements of a population in rural South Africa, and analyses the impact of these arrangements on children's educational attainment. Children with co-resident parents generally have higher levels of schooling than those who have one or no co-resident parents. However, having a father who is away from home as a migrant appears to benefit older children whereas, for girls aged 11 to 15, having a mother who is a migrant lowers educational attainment. Children who live in households headed by Mozambican refugees have lower levels of schooling than those who live in non-refugee households. Living in a household headed by a woman is not associated with lower levels of education and, for some age-sex groups, appears to be an advantage.     

WOMEN CANDIDATES IN THE NEWS: AN EXAMINATION OF GENDER DIFFERENCES IN U.S. SENATE CAMPAIGN COVERAGE

By covering male and female candidates differently, the newsmedia may influence the success of female candidates for publicoffice. A content analysis was conducted to assess potentiallyimportant differences in the newspaper coverage of a sampleof male and female U.S. Senate candidates in the elections of1982–86. The results of the study show that female candidates for the U.S. Senate are treated differently by the press.Female candidates receive less news coverage and the coveragethey do receive concentrates more on their viability and lesson their issue positions. Furthermore, female candidates' viabilitycoverage is more negative than that of their male counterparts.Given these gender differences in press treatment, we wouldexpect voters' recognition of male candidates to exceed thatof female candidates and we would also expect evaluations offemale candidates to be tied more closely to their perceivedviabil ity. Because female candidates are often considered noncompetitiveby the press, this attention to the horserace may lead votersto develop more negative evaluations of female candidates. Theseresults suggest that current patterns of press coverage mayserve as a critical obstacle for women running for the U.S.Senate.     

CUSTOMER DISCRIMINATION AND AFFIRMATIVE ACTION

This paper shows that under constant returns to scale and free entry, customer discrimination unlike employer or employee discrimination, can cause long-run wage differentials. The general equilibrium impact of affirmative action policies on wages, productivity and unemployment is contrasted under these types of discrimination. The empirical literature on affirmative action is surveyed in light of these models and some support is found for models of employer prejudice. Finally, by changing the composition of output, affirmative action policies raise the probability of a nondiscriminatory general equilibrium outcome under customer prejudice.