PROCEDURAL UNFAIR WAGE DIFFERENTIALS AND THEIR EFFECTS ON UNETHICAL BEHAVIOR

In this paper, we investigate how payment procedures that are deemed unfair can spur unethical behavior towards innocent coworkers in a real-effort experiment. In our Discrimination treatment, a highly unfair payment procedure with wage differentials, half the workforce is randomly selected and paid by relative performance whereas the remaining receives no payment. A joy-of-destruction game measures unethical behavior subsequently. Non-earners in Discrimination destroy significantly more than in the non-discriminatory control treatments. In Discrimination, unethical behavior is generally high for all non-earners, independent of individual inequality aversion and relative performance beliefs. In the control treatments, inequality aversion is the main driver of destructive behavior. (JEL C91, D03, J33, J70, M52)     

IMPERFECT COMPETITION AND BASING-POINT PRICING

This article investigates the relationship between imperfect competition and basing point pricing. Basing-point pricing can emerge if firms at the base site are Bertrand competitors, firms at non-base locations are less than perfectly competitive with each other and are von Stackleberg leaders with respect to base site production, and the products produced at the base and non-base locations are perfect substitutes. Basing-point pricing is associated with competitive prices by base site firms but with markups by non-base site firms equal to their phantom freight charges.     

IMPERFECT INFORMATION AND PRICE RIGIDITY

The purpose of this paper is to present a microeconomic model of pricing behavior that is consistent with macroeconomic theory and evidence. The essential ingredient in the model is the hypothesis that imperfect information implies that firms face kinked demand curves. I provide a detailed analysis of this hypothesis and develop its empirical implications. The model provides a microeconomic rationale for the price stickiness assumed in disequilibrium macroeconomic models.     

JOB MOBILITY AND GENDER-BASED WAGE GROWTH DIFFERENTIALS

Studies of gender differences in the returns to job mobility have yielded conflicting results. We examine whether there are gender differences in mobility patterns or in the returns to different types of mobility. Our results, based on the National Longitudinal Survey of Youth, imply that there are gender differences in mobility patterns, but there are not gender differences in the wage growth associated with different types of mobility. Therefore, it appears that empirical estimates of the gender differences in the returns to job mobility may be misleading if they do not consider the cause of separation.     

OCCUPATIONAL GROWTH AND THE EXPANSION OF EDUCATIONALLY-RELATED EARNING GAPS

I develop an argument that facilitates understanding of how occupational growth impinges on the relationship between education and earnings. Much of the literature focuses on workers employed at the ends of the occupational hierarchy, whereas my contribution applies to workers positioned all along the occupational hierarchy. I argue that an undersupply of affordable, suitable labor in expanding occupations encourages a division of labor among workers who vary in educational attainment. This division of labor, in turn, leads to greater educationally-related earnings inequality—even among workers who hold similar positions in the occupational hierarchy. Such a development can become pervasive because expanding occupations exist throughout the occupational hierarchy and because educational attainment among workers varies within most occupations. In declining occupations, a different set of conditions pervades, and these conditions facilitate employers' efforts to control their wage-bill by compressing educationally-related earning gaps. A hypothesis is derived from these arguments and tested on a nationally representative sample. The findings are consistent with the hypothesis, suggesting the arguments considered here help explain how the relationship between education and earnings is influenced by whether workers are employed in expanding or in declining occupations. Consequently, this research improves our understanding of how earnings inequality among individuals is linked to structural transformations in the economy.     

UNEMPLOYMENT RISK AND COMPENSATING DIFFERENTIALS IN NEW JERSEY MANUFACTURING

We present evidence that low-skill workers received larger compensating differentials than more skilled workers when facing unanticipated unemployment in an era without unemployment insurance. Using information from surveys of New Jersey workers conducted during the 1880s, we test the theory of compensating wage differentials. We find that workers who faced a higher probability of predictable unemployment received compensating differentials and that the size of the differential differed across industries and skill levels. With few firm- or industry-specific skills, unskilled workers were less subject to "informational capture" than skilled workers who had more but less easily transferable human capital. (JEL N31 )     

INDETERMINACY AND VOLATILITY OF EXCHANGE RATES UNDER IMPERFECT CURRENCY SUBSTITUTION

We know that when currencies are perfect substitutes, exchange rates could become indeterminate. We show that even when currencies are less than perfect substitutes exchange rates could display volatility unrelated to economic fundamentals. With increases in currency substitution: (1) the exchange rate becomes more sensitive to changes in economic fundamentals, increasing its volatility; (2) the exchange rate could become indeterminate, and it is more likely to become so if governments pursue similar monetary policies; (3) currencies with high nominal interest rates would decline significantly and the exchange rate becomes more sensitive to changes in the supply of those currencies.     

FIRM MARKET SHARE, PRICE FLEXIBILITY, AND IMPERFECT INFORMATION

This paper argues that firms with larger market shares will be relatively better informed about demand conditions. The main implications are 1) more rapid price adjustments in concentrated industries, 2) price leadership in industries with dominant firms, and 3) price setting behavior by the concentrated side of the market.     

UNDERPAID and OVERWORKED: MEASURING THE EFFECT OF IMPERFECT INFORMATION ON WAGES

This paper investigates the degree of shortfall between the wages workers earn and what they could earn assuming perfect or costless information in the labor market. We use the stochastic frontier regression technique to estimate the degree of shortfall found in wages on an individual basis. The paper tests, in addition, a number of hypotheses supplied by search theory in this context. The results generally confirm the propositions from search theory and indicate that, on the average, worker wages fall short of worker potential wages by approximately 10 percent.     

COMPETING PERSPECTIVES ON CROSS-NATIONAL CRIME: AN EVALUATION OF THEORY AND EVIDENCE

Cross-national studies of crime are dominated by a Durkheimian-Modernization theoretical perspective. We evaluate this perspective and present two alternatives, the Marxian-World System and Ecological-Opportunity perspectives. Each is for its theory of social change, causal explanation of criminal behavior, conceptualization of law and crime rates, and view of the relation between collective political behavior and crime. The empirical evidence is assessed and weak support is found for the dominant perspective. The article concludes by reconsidering the concepts of economic development and crime rates.     

MALE MARITAL WAGE DIFFERENTIALS: TRAINING,PERSONAL CHARACTERISTICS,AND FIXED EFFECTS

Using the National Longitudinal Survey of Youth 1979, we replicate previous estimates of the marital wage differential for white men, extend the analysis to African American men, then explain the within and between race differentials. We first control for formal job training, then for cognitive skills, parental background, and self‐esteem with little effect. By contrast, the white differential but not the black differential disappears in fixed‐effects estimation. We reconcile the cross‐section/panel differentials by focusing on the distinct identification conditions employed by each technique. Men who never change marital status play a significant role in white cross‐sectional estimates. (JEL J31, J12)     

COMPENSATING WAGE DIFFERENTIALS FOR MANDATORY OVERTIME?

This paper examines the extent to which individuals who are employed by firms that require mandatory overtime receive a compensating wage differential for this "distasteful" working condition. While the empirical results indicate that the average worker does not receive a positive differential for this working condition, the results do indicate that unionized workers and (perhaps) newly hired workers receive a positive differential. The paper then develops a framework to determine if any observed compensating differential is, in fact, fully compensating. The application of this framework to the mandatory overtime issue reveals that the fully compensating differential would be relatively small. The methodology developed in this paper should prove useful in a variety of other contexts.     

SPATIAL MISMATCH AND RACE DIFFERENTIALS IN MALE JOBLESSNESS: Cleveland and Milwaukee, 1990

We evaluate the relationship between job proximity and male joblessness at the neighborhood level in Cleveland and Milwaukee. Using two tract-level measures of proximity to employment (i.e., physical distance and commute time), we find mixed evidence for the spatial mismatch hypothesis. As expected, we find that predominantly black neighborhoods in both cities have higher rates of male joblessness. However, contrary to the spatial mismatch hypothesis, we find that these neighborhoods are also physically closer to low-skill jobs than are predominantly white neighborhoods. In addition, predominantly black neighborhoods have higher average commute times, suggesting that spatial isolation from employment may be better characterized along a temporal rather than a physical dimension.     

CAN THE HUMAN CAPITAL APPROACH EXPLAIN LIFE‐CYCLE WAGE DIFFERENTIALS BETWEEN RACES AND SEXES?

Using data from the National Longitudinal Survey of Youth–1979 cohort (NLSY79), this paper shows the importance of postschool human capital investment in describing both gender and racial wage gaps. The empirical results suggest that male-female wage gaps, regardless of race, are mainly caused by gender differences in the human capital production process; generally, men gain more work experience and therefore have lower marginal costs of human capital production. Black-white lifetime wage differentials could partly result from higher implicit interest rates for blacks, while the deterioration of black males' relative economic status as they age can be attributed to higher depreciation rates of their human capital stock. ( JEL J24, J30, C61)     

THE REAL EXCHANGE RATE AND REAL INTEREST DIFFERENTIALS: THE ROLE OF THE TREND‐CYCLE DECOMPOSITION

We propose an alternative model and method to reconcile the puzzling feature in the relationship between the real exchange rate and real interest rate differentials. Our simple two‐country model with preset prices, along with firms' misperception about the future exchange rate, implies that the real exchange rate follows an ARIMA(0,1,p) process. This allows us to compute the exact Beveridge‐Nelson decomposition, which is a model‐consistent decomposition. In accordance with our model, unit roots in the real exchange rates are found; and statistical inference is partially found to be affirmative regarding the link between the real exchange rate detrended by the Beveridge‐Nelson decomposition and corresponding real interest differentials. (JEL F31, F41)     

PRICE DIFFERENTIALS and PRICE DISCRIMINATION: REPLY and EXTENSIONS

Precise definitions of price discrimination are analyzed in this paper as part of a reply to one of my earlier papers on a related topic. The main conclusion is that the two definitions used most frequently are appropriate only in special circumstances not recognized previously. No definition exists to cover all real-world situations.