CAPACITY CONSTRAINED EXPORTERS: IDENTIFYING INCREASING MARGINAL COST

This study revisits a central assumption of standard trade models: constant marginal cost technology. The presence of increasing marginal costs for exporters introduces significant market interdependence across borders missing from traditional models of international trade that rely on constant marginal cost technology. Such market interdependence represents an additional channel through which local shocks are transmitted globally. To identify increasing marginal cost at the level of the firm, we build in flexible production assumptions that nest increasing, decreasing, and constant marginal cost technology to an otherwise standard international trade model. We derive an estimating equation that can be taken directly to the data. Our structural equation explicitly guides our inference on the shape of the marginal cost curve from estimated coefficients. The results suggest that increasing marginal cost is predominant at the firm level. Moreover, utilizing plant‐level information on physical and financial capacity constraints, we find that the degree of increasing marginal cost is significantly exacerbated by both types of constraints. The evidence suggests that access to larger markets through greater international integration may not have the expected welfare gains typically predicted in standard models. (JEL F12, F14)     

Adam Smith’s Economics and the Modern Minimum Wage Debate:The Large Distance Separating Kirkcaldy from Chicago

In the post-World War II period the spearhead of opposition to minimum wage (MW) legislation has been economists associated with the Chicago School, such as Friedman, Stigler, and Becker. They have captured the high ground in the debate partly by claiming their anti-MW position is grounded in the free market/invisible hand theory espoused by the founder of economics, Adam Smith. This paper shows the Chicago position rests on a skewed, one-sided, and partisan reading of Smith’s Wealth of Nations. A more inclusive, balanced, and neutral review reveals that while Smith definitely favored free trade and opposed protection as general principles, his non-competitive model of labor markets, dynamic theory of production, and humanistic social welfare criteria suggest that on both positive and normative grounds he might well have favored a minimum wage set at the poverty level. (Smith never took a position on a MW mandate). Besides balancing and correcting the historical record, the paper broadens MW analysis by reintroducing several behavioral and institutional dimensions emphasized by Smith but typically neglected in the current mainline debate which narrowly focuses on competitive versus monopsony models. A Smithian analysis also has several implications for findings from empirical MW studies.     

THE WELFARE IMPACT OF TRADE LIBERALIZATION

This paper analyzes the distributional welfare impact of trade liberalization reforms on heterogeneous households. We develop a static applied general equilibrium model, and using a Social Accounting Matrix and Household Expenditure Survey, we calibrate it to match Slovenian data. We simulate the case of Slovenia joining the EU and quantify its welfare impact on households that differ in terms of age, income, and education. Additionally, we compare this benchmark case with two alternative scenarios: (1) a free trade agreement between Slovenia and the EU and (2) a custom union arrangement where tariff revenues are rebated proportionally to the households. We find that while trade liberalization leads to falling consumer prices, increased production in the export sectors, and aggregate welfare gains, the differentiated welfare impacts across heterogeneous households vary in their degrees. (JEL D58, F14, F15)     

Bargaining cum voice

We propose a formal concept of the power of voice in the context of a simple model where individuals form groups and trade in competitive markets. Individuals use outside options in two different ways. Actual outside options reflect the possibility to exit or to join other existing groups. Hypothetical outside options refer to hypothetical groups that are ultimately not formed. Articulation of hypothetical outside options in the bargaining process determines the relative bargaining power of the members of a group, which constitutes an instance of the power of voice. The adopted equilibrium concept, competitive equilibrium with free group formation and bargaining cum voice, endogenizes the outside options as well as the power of voice. We establish existence of such equilibria and we explore their properties.     

THE THEORY OF INTERSTELLAR TRADE

This article extends interplanetary trade theory to an interstellar setting. It is chiefly concerned with the following question: how should interest charges on goods in transit be computed when the goods travel at close to the speed of light? This is a problem because the time taken in transit will appear less to an observer traveling with the goods than to a stationary observer. A solution is derived from economic theory, and two useless but true theorems are proved. (JEL F10, F30)     

Trade Dependence and Fertility in Hispanic America, 1950–1990

This paper explores Hout's (1980) conceptual model of the development–fertility relationship under trade dependency of Hispanic America, 1950–1990. The results of this study are that the effects of development and dependency on fertility are consistent with Hout's (1980) theory and his findings and that his positive development × dependency interaction term is not replicated. Thus, the well-known long-term negative effect of development might have been misspecified in Hout's model. In contrast to Hout's findings, our results based on all models support that as dependency increased, the long-term negative effect of development on fertility increased in magnitude for Hispanic America. Hence, the findings of this study suggest that the fertility transition for Hispanic America can occur based on an explanation that is alternative to what world system theorists' have so far offered.     

The Blurring Hypothesis Reconsidered: How Sector Still Matters to Practitioners

This article asks: Is sector still a useful concept for social science research on nonprofit organizations and related fields, such as social entrepreneurship? We answer that it is relevant to practitioners for whom sector boundaries remain an important orienting feature of their organizational worldviews. This observation is at odds with the recent scholarship on “blurring” sector boundaries, much of which suggests that sector is increasingly an outdated concept. Data from one uniquely blended space—the fair trade industry—coupled with insights from Scott’s (Institutions and organizations: ideas, interests, and identities, 2014) theory about the three pillars of institutions suggest that sector remains meaningful despite developments that appear to render it obsolete.     

TECHNOLOGICAL ASYMMETRY AMONG FOREIGN INVESTORS AND MODE OF ENTRY

How does the preferred entry mode of foreign investors depend on their technological capability relative to that of their rivals? This article develops a simple model of entry mode choice and evaluates its main testable implication using data on foreign investors in Eastern European countries and the successor states of the Soviet Union. The model considers competition between two asymmetric foreign investors and captures the following trade‐off: while a joint venture (JV) helps a foreign investor secure a better position in the product market vis‐à‐vis its rival, it also requires that profits be shared with the local partner. The model predicts that the efficient foreign investor is less likely to choose a JV and more likely to enter directly relative to the inefficient investor. Our empirical analysis supports this prediction: foreign investors with more sophisticated technologies and marketing skills (relative to other firms in their industry) tend to prefer direct entry to JVs. This empirical finding is robust to controlling for host country–specific effects and other commonly cited determinants of entry mode. (JEL F13, F23, O32)     

INTERNATIONAL SUPPLY CHAINS AND THE VOLATILITY OF TRADE

Were the large import fluctuations around the 2007–2009 recession because of increasing trade volatility? I show that import volatility relative to gross domestic product (GDP) increased in the 2000s and examine whether vertical specialization (VS) trade can explain this increase. I develop and calibrate a model of VS trade that generates most of the observed increase in relative import volatility from the 1960s to the 2000s. The increase is because of GDP's shift to less volatile services production. VS trade has a negligible impact. VS causes trade to fall more in recession but also increases the share of output that is traded, leaving volatility unaffected. It increases volatility by shifting trade to more volatile sectors, but this effect is quantitatively small. (JEL E3, F1)     

HIERARCHICAL TRADE

Commodity trading is typically organized hierarchically: Large‐scale trade takes place at the global price system while individuals trade at local price systems within their countries. Agencies or trading houses establish the link between these different market places. In this paper, we devise a framework to study this type of hierarchical trade. We identify the free trade and the autarky equilibrium as polar cases. We show that no other two‐stage market equilibria exist if the commodity space is two‐dimensional. An example demonstrates that other, so‐called intermediate equilibria exist for three‐dimensional commodity spaces. We then provide an explicit construction of special classes of intermediate equilibria. Moreover, we study the consequences when some countries control the agency that organizes trade at the global level and we analyze the role of international goods arbitrage. Finally, we show that profit‐maximizing agencies may not promote free trade outcomes. (JEL D43, D50, F10)     

PERSUADED UNDER PRESSURE: EVIDENCE FROM THE NATIONAL FOOTBALL LEAGUE

We exploit a natural experiment within each National Football League game, finding the first evidence in professional sports that referees succumb to the pressures of satisfying team personnel in the vicinity of possible violations. Using generalized additive models for binomial outcomes, we show that these sideline‐based differences in penalty rates, which are observed on common but influential penalties including pass interference and holding, peak near the centralized location of players and coaches on the sideline. With sizable interests in referee decisions, coaches and players often try to manipulate referee behavior with verbal and nonverbal communications; such actions appear to be persuasive. (JEL ZO, H3)     

Reintegration upon return: insights from Ecuadorian returnees from Spain

Using the ECM2 survey data on Ecuadorian migrants returning from Spain, we investigate the determinants of reintegration upon return. We study how the migration experience, but also the before‐ and after‐migration characteristics, correlate with migrants’ outcomes upon return. We adopt a broad conception of reintegration, considering jointly labour market‐related outcomes that proxy for structural reintegration and subjective indicators that provide insights on sociocultural reintegration. The determinants of these two types of outcomes appear to be different: reintegration indeed encompasses multiple dimensions which cannot be captured by a single indicator. Our results suggest that return assistance programmes’ efficiency in helping reintegration could be improved by (I) targeting, ex‐ante, returnees who plan to launch their own business, and, ex‐post, the most vulnerable workers (women, older returnees, unemployed), and (ii) facilitating the labour market integration of foreign‐educated returnees. They also call for further research to better understand the consequences of these programmes.     

Heterogeneity in Two‐Parent Families and Adolescent Well‐Being

This study highlights the heterogeneity in two‐parent families and examines how adolescents fare when they reside in simple two‐parent, blended, and stepfamilies. Using the National Longitudinal Study of Adolescent Health (N= 1,769), we find that shared biological children in blended families have worse outcomes than children in simple two‐parent families, even though they reside with both of their biological parents. These differences occur for academic performance, delinquency, school detachment, and depression. Current explanations in the family literature do not account for the poorer outcomes of shared children in blended families. We suggest that the presence of half‐siblings creates a unique family situation that is not accurately represented in the current family literature.     

INTERNATIONAL TRADE AND THE COMPOSITION OF LABOR MARKET TURNOVER

The composition of labor market turnover is shown to influence patterns of international trade. Job and worker turnover have opposing marginal effects on industry export intensity, highlighting the importance of relative turnover shares on either side of the labor market, as opposed to total volumes of labor mobility, in shaping economic outcomes. Industries with relatively greater shares of worker turnover export more of total production, and those with higher job turnover export less. Furthermore, relatively high job turnover hinders industry adjustment following trade liberalization. These predictions receive support for U.S. manufacturing industries using turnover data in the Quarterly Workforce Indicators available from the U.S. Census Bureau. (JEL F16)     

Career decision-making,career exploration behaviors,and self-regulated learning

Helping individuals make a career decision is a key aim of career counseling. Determining how to encourage self-regulated learning and behaviors needed to achieve this goal often underlies career interventions. The English version of the Career Exploration Behavior survey (CEB-E) measures activities individuals engage in to learn about career options. The present study explored the psychometric properties of the CEB and its impact on various career outcomes. In the first study (N = 498), a good-fitting second-order factor model with four group-level scales and loadings was retained as the best model. In the second study (N = 143), convergent validity and incremental validity of the CEB dimensions were explored through correlation and regression analyses. The CEB predicted commitment making, metacognitions, and vocational identity. Results suggest the CEB-E is a psychometrically sound assessment of career exploration behaviors with potential utility for theory development, program evaluation, and monitoring client progress.     

INTERNATIONAL TRANSMISSION MECHANISM AND WORLD BUSINESS CYCLE

Understanding international transmission mechanism that generates the world business cycle is of immense interest. In this paper, we compile a rich global dataset and utilize a trade‐linked structural vector autoregression (SVAR) model with a relatively realistic identification scheme to construct a worldwide dynamic interdependency system. Empirical results indicate that the trade‐linked SVAR system can largely capture the common dynamic properties of national business cycle fluctuations, providing a meaningful transmission foundation to the world business cycle derived from dynamic factor models. Based on the worldwide trade‐linked SVAR system, we further shed light on three crucial topics in international economics. The findings and methods in this paper help to evaluate the macroeconomic consequences of recent trade dispute between world major economies. (JEL F41, F44, O19)     

Axiomatic foundations for fairness-motivated preferences

Much work in social choice theory takes individual preferences as uninvestigated inputs into aggregation functions designed to reflect considerations of fairness. Advances in experimental and behavioural economics show that fairness can also be an important motivation in the preferences of individuals themselves. A proper characterisation of how fairness concerns enter such preferences can enrich the informational basis of many social choice exercises. This paper proposes axiomatic foundations for individual fairness-motivated preferences that cover most of the models developed to rationalise observed behaviour in experiments. These models fall into two classes: Outcome-based models, which see preferences as defined only over distributive outcomes, and context-dependent models, which allow rankings over distributive outcomes to change systematically with non-outcome factors. I accommodate outcome-based and context-sensitive fairness concerns by modelling fairness-motivated preferences as a reference-dependent preference structure. I first present a set of axioms and two theorems that generate commonly used outcome-based models as special cases. I then generalise the axiomatic basis to allow for reference-dependence, and derive a simple functional form in which the weight on each person’s payoff depends on a reference vector of how much each person deserves.     

Soil as Social‐Ecological Feedback: Examining the “Ethic” of Soil Stewardship among Corn Belt Farmers

In this article we examine in‐depth interviews with farmers (n = 159) from nine Corn Belt states. Using a grounded theory approach, we identified a “soil stewardship ethic,” which exemplifies how farmers are talking about building the long‐term sustainability of their farm operation in light of more variable and extreme weather events. Findings suggest that farmers' shifting relationship with their soil resources may act as a kind of social‐ecological feedback that enables farmers to implement adaptive strategies (e.g., no‐till farming, cover crops) that build resilience in the face of increasingly variable and extreme weather, in contrast to emphasizing short‐term adjustments to production that may lead to greater vulnerability over time. The development of a soil stewardship ethic may help farmers to resolve the problem of an apparent trade‐off between short‐term productivist goals and long‐term conservation goals and in doing so may point toward an emergent aspect of a conservationist identity. Focusing on the message of managing soil health to mitigate weather‐related risks and preserving soil resources for future generations may provide a pragmatic solution for helping farmers to reorient farm production practices, which would have soil building and soil saving at their center.     

Bling bling taxation and the fiscal virtues of hip hop

The article extends Ng’s (Am Econ Rev 77(1):186–191, 1987) model of optimal taxation of diamond goods—goods that are valued solely for their costliness. We extend his findings by analyzing how other goods should be taxed in the presence of pure diamond goods; modified Ramsey rules are derived in a basic single-type model as well as in a two-type model with redistribution. One key finding, that may be surprising and rather provoking, is that close complements (hip hop music) to diamond goods (bling bling) should be heavily subsidized.     

Reassessments of sociological history: The empirical validity of the conflict tradition

Conclusion The conflict tradition does not end with Max Weber, but there is room for only the barest sketch of subsequent or even contemporary developments. We have already covered many of the follow-ups of the Marx-Weber line of conflict sociology. Among these, there is the important line of influence inwhich Michels served as the link between Weber's historical theory of organizational politics and the organizational studies of the 1940–60's. Studies of stratification, although often pursued with naive theoretical categories, have gradually accumulated a great deal of evidence bolstering and refining the classical principles explained above; and some work, especially since the time of C. Wright Mills (but not necessarily influenced by him) has made a conscious effort to build on classical theory.Some other lines of conflict theory must at least be mentioned. The socialpsychological tradition of conflict theory originating with Schopenhauer and Nietzsche, of course, has Freud as its most famous representative. This level of analysis, despite various theoretical attempts, has not yet been convincingly related to the organizational/stratification level outlined above, nor has it had as much empirical support. But this social-psychological conflict tradition continues to have great potential importance. It holds out the promise of a model for the shaping of the individual psyche by the emotional and symbolic interchanges involved in struggles for interpersonal advantage to replace the artificially one-sided and relatively static models of psychological learning theory. Its premises move towards replacing adult-centered socialization theory with a two-sided view of age conflict under conditions of unequal resources. And when cast in an explicitly historical form, its insights into sexual repression become the basis of a comparative theory of sexual stratification. Many other interesting figures have been slighted in this brief history. Some, like Simmel and Pareto, appear isolated from the main stream, as they subordinated their insights about conflict to principles which led in quite different directions: neo-Kantian idealism and liberal positivism respectively. Others, like Sorel, came closer to the main line, above all, in Sorel's emphasis that conflict is the basis of moral solidarity, a point which resonates with Weber's understanding of group ceremony as the basis of legitimacy and solidarity precisely in situations of conflict and domination. From here, the possibility exists for appropriating the main achievements of the Durkheimian tradition - the understanding of the ceremonial bases of social realityconstructing - into a comprehensive conflict theory.For the arena encompassed by conflict theory is not only the moments of obvious strife in society, but the systematic explanation of the entire social structure. The central focus is on the organization of material arrangements into a system of power which divides society into interest groups struggling for control. Such material conditions operate not only through the sphere of economic production, but also directly condition the mobilization of interest groups for political action, as well as the production of ideas and of emotional ties. We need no longer rest with an abstract assertion of the determination of structure by contending interests with varying material resources; refined principles of conflict theory may explain specific outcomes in all areas of society.

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