THE NATURE OF OUTSOURCING RELATIONSHIPS: EVIDENCE FROM OAP PRICES

This paper studies the extent and variation in production cost pass‐through for U.S. outsourcing imports. Data from 4,676 products imported through the U.S. overseas assembly program show that outsourcing imports were characterized by incomplete pass‐through of production and trade costs to import prices. Notably, pass‐through was higher for products assembled in high education countries while the response of outsourcing import prices to competing suppliers' prices was largest for products sold by firms in capital‐intense industries. The reasons for these cross‐country and cross‐industry differences, as they relate to theories of outsourcing and trade, are explored. (JEL F1, F2)     

THE ROLE OF REGULATORY ARBITRAGE IN U.S. BANKS' INTERNATIONAL FLOWS: BANK‐LEVEL EVIDENCE

I study the prevalence and profitability of regulatory arbitrage in U.S. banks' foreign activities. I analyze a publicly available bank‐level data set on bilateral lending flows to 75 countries over 2003–2013. U.S. banks' affiliates lend less to borrowers in host countries with stricter bank capital regulations, and are less likely to maintain affiliates in such countries. Banks substitute from (host‐regulated) affiliate toward (U.S.‐regulated) cross‐border lending in hosts with strict bank capital rules. This is particularly so for low‐capitalized banks with lower foreign ownership shares. Banks that reduce their exposure to stricter host capital rules are more profitable in foreign activities. (JEL F3, F4, G2)     

A LABORATORY STUDY OF DUOPOLY PRICE COMPETITION WITH PATIENT BUYERS

This article reports a duopoly experiment in which sellers compete to sell to a potentially patient buyer. Each period sellers simultaneously post prices and the buyer costlessly observes either one or both prices. The buyer can then either accept an observed price or reject all offers. Following a rejection, sellers may have an opportunity to post prices again in another round. We study how the duopolists' pricing behavior responds to changes in the likelihood of the buyer observing multiple prices, γ, and the probability of continuing to another round, δ. The unique stationary equilibrium features mixed strategies. Consistent with the equilibrium, observed prices are decreasing in γ and δ. Contrary to the equilibrium, however, buyers sometimes reject profitable price offers, and average prices are lower than predicted when only one round of offers is possible and higher than predicted in the multiple‐round game. (JEL D43, D83, L13)     

CHRISTMAS ECONOMICS—A SLEIGH RIDE

This article reviews the literature on Christmas economics. First, we present an overall picture of the debate on the potential welfare loss of gift‐giving and we show strategies that reduce the potential welfare loss and might increase the number of presents received. Second, we discuss the effect of Christmas on prices and the business cycle. We provide evidence that at Christmas stock prices and airfares increase, while food prices decrease. (JEL D6, E3, H4, Z1)     

Gift-giving and deadweight loss

Although economic theory asserts that cash is often superior to gifts in-kind for maximizing welfare, there has been no empirical consensus on whether in-kind gift-giving destroys or creates value—i.e., whether recipients value gifts less than, as much as, or more than givers pay for them. The present study introduces a simple but important methodological innovation. Whereas prior studies focused exclusively on recipients’ estimates of the costs of gifts, we obtain more objective information on actual market prices. We also compare gifts in-kind to gift cards. We find a deadweight loss that averages more than 7 percent of the market price on gifts in-kind, and more than 14 percent on gift cards.     

IMMIGRANTS' GENES: GENETIC DIVERSITY AND ECONOMIC DEVELOPMENT IN THE UNITED STATES

This paper examines the relationship between immigrants' genetic diversity and economic development in the United States during the late nineteenth and the beginning of the twentieth centuries, a period commonly referred to as the age of mass migration from Europe to the New World. Our panel model estimates show that during this period, immigrants' genetic diversity is significantly positively correlated with measures of U.S. counties' economic development. There exists also a significant positive relationship between immigrants' genetic diversity in 1870 and contemporaneous measures of U.S. counties' average income. (JEL J11, O51, Z13)     

DYNASTIC POLITICAL PRIVILEGE AND ELECTORAL ACCOUNTABILITY: THE CASE OF U.S. GOVERNORS, 1950–2005

This paper examines the impact of dynastic political privilege on the behavior of incumbents. Incumbents have opportunities to serve themselves at the expense of voters, but society can design political institutions to mitigate these principal‐agent problems. Dynastic political privilege may be one such mechanism. We argue that the possibility that opportunistic behavior in office may damage family members' political prospects disciplines incumbents. We test this hypothesis using data for 1950–2005 on U.S. governors, including a new data set on the family relationships of politicians, and find that dynastic political privilege increases incumbent accountability. (JEL H71, H10)     

A Cross-Cultural Content-Analytic Comparison of the Hookup Culture in U.S. and Dutch Teen Girl Magazines

This quantitative content analysis investigated the hookup culture in U.S. and Dutch teen girl magazines. Using Hofstede's cultural dimension of masculinity/femininity, the hookup culture (i.e., the relational context of sex, emotional context of sex, specific sexual activities, and contraceptives) was examined in 2,496 stories from all 2006 through 2008 issues of the three most popular U.S. (i.e., Seventeen, CosmoGirl! U.S. edition, and Teen) and Dutch teen girl magazines (i.e., Fancy, CosmoGirl! Netherlands edition, and Girlz!). Regarding the relational context of sex, stories about casual sex occurred more often in U.S. magazines, and Dutch magazines focused more on committed sex. Dutch magazines also emphasized sex within the emotional context of love more often than did U.S. magazines. In terms of sexual activities, coital sex was mentioned more often in U.S. coverage, while petting was mentioned more frequently in Dutch coverage. Condoms were covered more positively in U.S. magazines than in Dutch magazines. Overall, the hookup culture seems to be more visible in U.S. magazines for the occurrence of casual sex and lack of love stories, whereas it does not emerge in Dutch magazines due to the presence of committed sex and love-related articles.     

AN EXAMINATION OF LINEAR AND NONLINEAR CAUSAL RELATIONSHIPS BETWEEN COMMODITY PRICES AND U.S. INFLATION

This article uses both linear and nonlinear causality tests to examine the causal relationships between changes in commodity prices and U.S. inflation. Prior to the Great Moderation, there is evidence that changes in commodity price indices linearly lead inflation. The stability of the causal relationship appears to vary over time with a stronger bivariate link established before the Great Moderation. Further, there is evidence of significant nonlinear causality from raw industrials and metals indices to inflation with most of this detected nonlinear relationship being captured using the Baba, Engle, Kraft, and Kroner asymmetric generalized autoregressive conditional heteroskedasticity model. This implies that the observed nonlinear Granger causality is largely driven by unanticipated shocks and volatility spillovers in the run‐up of commodity prices in late 2000. (JEL C18, C22, E31)     

TO “VAPE” OR SMOKE? EXPERIMENTAL EVIDENCE ON ADULT SMOKERS

A growing share of the U.S. population uses e‐cigarettes but the optimal regulation of these controversial products remains an open question. We conduct a discrete choice experiment to investigate how adult tobacco cigarette smokers' demand for e‐cigarettes and tobacco cigarettes varies by four attributes: (1) whether e‐cigarettes are considered healthier than tobacco cigarettes, (2) the effectiveness of e‐cigarettes as a cessation device, (3) bans on use in public places, and (4) price. We find that adult smokers' demand for e‐cigarettes is motivated more by health concerns than by the desire to avoid smoking bans or higher prices. (JEL C35, I12, I18)     

THE EFFECTS OF ASSET PURCHASES AND NORMALIZATION OF U.S. MONETARY POLICY

This paper examines changes in the effects of unconventional monetary policies in the United States. To this end, we estimate a Markov-switching VAR model with absorbing regimes to capture possible structural changes. Our results detect regime changes around the beginning of 2011 and the middle of 2013. Before 2011, the U.S. large-scale asset purchases (LSAPs) had relatively large impacts on the real economy and prices, but after the middle of 2013, their effects were weaker and less-persistent. In addition, after the middle of 2013, which includes the monetary policy normalization period, the asset purchase (or balance sheet) shocks had slightly weaker effects than during the early stage of the LSAPs but stronger effects than during the late stage of the LSAPs, while interest rate shocks had insignificant effects on the real economy and prices. Finally, our results suggest that the positive responses of durables and capital goods expenditures to interest rate shocks weakened the negative impacts of interest rate hikes after the middle of 2013 including the period of monetary policy normalization. (JEL C32, E21, E52)     

TRADE,GEOGRAPHY AND THE SKILL PREMIUM IN U.S. MANUFACTURING

A number of studies have suggested that countries (or regions) with access to larger markets have higher wages. In this paper, we examine whether access to larger markets affects skilled and unskilled workers differently. We develop a model relating two key measures of market size, market and supplier access, to industry value added prices. We then estimate the effects of growth in these measures on factor returns in U.S. manufacturing industries between 1984 and 1996. We find that growth in these measures can explain around 5% of the rise in the skill premium over the sample period. (JEL F12, F16, L60)     

WHY DO U.S. PARENTS PREFER PRIVATE TO FOSTER CARE ADOPTIONS? THE ROLE OF ADOPTION SUBSIDIES,GENDER, RACE,AND SPECIAL NEEDS

We analyze the demand behavior of adoptive parents in the U.S.A. For the theory, we apply vertical product differentiation to characterize the demand for domestic private, foster care and international adoptions. Then, we use the 2007 U.S. National Survey of Adoptive Parents and apply the control-function approach to a mixed logit model. We find interesting insights into the relationship between adoption choices and an adoptive parent's preferences over gender, race, and special needs. The government needs to pay an additional $735 ($506) a month to make a parent feel indifferent between international (domestic private) and foster care adoptions. (JEL O12, D10, L13)     

LABOR MARKET OPENNESS,H‐1B VISA POLICY,AND THE SCALE OF INTERNATIONAL STUDENT ENROLLMENT IN THE UNITED STATES

International students have long comprised an important part of U.S. higher education. However, little is known regarding the factors that encourage students from across the world to enroll in U.S. colleges and universities each year. This paper examines the relationship between international enrollment and the openness of the United States' skilled labor market, currently regulated by the H‐1B program. Gravity regressions reveal that H‐1B visa issuances to a country are positively and significantly related to the number of international students from that country. Causal estimates of the impact of labor market openness are achieved by exploiting a dramatic fall in the H‐1B visa cap in October 2003. Triple difference estimates show that the fall in the cap lowered foreign enrollment by 10%. (JEL F22, I21, J11)     

Book Reviews

Book reviewed in this article: La Mujer Migrante. (Women Migrants). Elschenbroich, D., Eine Nation von Einwandern. Ethnisches Bewusstsein und Integrationspolitik in den U.S.A. Sieval, Z. Anticonceptie: bevrijding ofbedreiging? Ferreira E. de S. Reintegrao dos Emigrantes Portugueses: Integrao na CEE e Desenvolvimento Economico. Williams, C. and Westermeyer, J. (Eds.). Refugee mental health in resettlement countries. Recherches sur l'immigration, Critique régionale 10–11. Cahiers de sociologie et d'économie régionale Publications, Periodicals, Pamphlets, Statistics     

RATIONING BY SELLER'S PREFERENCE AND PACIAL PRICE DISCRIMINATION

This paper investigates the behavior of a seller who has a preference for a certain group of customers. The seller maintains stable prices over time and supplements price rationing with a nonprice rationing. In this situation the preferred buyers would have priority over nonpreferred buyers in purchasing the commodity, and if the latter purchase the commodity they may be paying higher prices. It is proposed here that the premium paid by the nonpreferred buyers is a necessary bribe to induce the seller to forego his search for the preferred buyers.     

INTEGRATED HOUSEHOLD SURVEYS: AN ASSESSMENT OF U.S. METHODS AND AN INNOVATION

We present a vision for improving household financial surveys by integrating responses from questionnaires more completely with financial statements and combining them with payments data from diaries. Integrated household financial accounts—balance sheet, income statement, and statement of cash flows—are used to assess the degree of integration in leading U.S. household surveys, focusing on inconsistencies in measures of the change in cash. Diaries of consumer payment choice can improve dynamic integration. Using payments data, we construct a statement of liquidity flows: a detailed analysis of currency, checking accounts, prepaid cards, credit cards, and other payment instruments, consistent with conventional cash flow measures and the other financial accounts. (JEL D12, D14, E41, E42)     

DURABLE GOODS PRICE CYCLES: THEORY AND EVIDENCE FROM THE TEXTBOOK MARKET

We study the pricing policy of a monopolist selling a durable good with the features of a textbook. We assume buyers differ in their valuation of the good and propensity to resell, and identify the possibility of a positive relationship between the quantity of used goods and the price of a new good, and also a higher price for new goods in the last period before a new edition is introduced. Our empirical analysis supports this model: textbook prices increase as the share of used textbooks increases and the end of the current edition approaches. (JEL D420, L120)     

DEMAND FOR DIFFERENTIATED DURABLE PRODUCTS: THE CASE OF THE U.S. COMPUTER PRINTER MARKET

This paper develops an estimation technique for analyzing the impact of technological change on the dynamics of consumer demand in a differentiated durable products industry. The paper presents a dynamic model of consumer demand for differentiated durable products that explicitly accounts for consumers' expectations of future product quality and consumers' outflow from the market that arises endogenously from their purchase decisions. The timing of consumers' purchases is formalized as an optimal stopping problem. A solution to that problem defines the hazard rate of product adoptions, while the nested discrete choice model determines the alternative‐specific purchase probabilities. Integrating individual decisions over the population distribution generates rich dynamics of aggregate and product‐level sales. The empirical part of the paper applies the model to data on the U.S. computer printer market for 1998–1999. The estimates support the hypothesis of consumers' forward‐looking behavior, allowing for better demand forecasts and improved measures of welfare gains from introducing new products. (JEL L11, C35, D91)     

Boundary Labor and the Production of Emotionless Commodities: The Case of Beef Production

This study examines cattle producers' work in conventional U.S. beef production. Producers express emotional connection to cattle, but also treat cattle as economic assets. Balancing these perspectives is central to their work. This article introduces the concept of “boundary labor” to describe the way producers' emotion management separates cattle physically and emotionally from products derived from their bodies. Producers have three central emotional skills that make this labor possible. They include (1) a sense of responsibility, (2) sentiments of dominion, and (3) faith in the cycle of production.