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)     

CORRUPTION,PRODUCT MARKET COMPETITION,AND INSTITUTIONAL QUALITY: EMPIRICAL EVIDENCE FROM THE U.S. STATES

This article argues that the effect of corruption on competition is dependent on the institutional environment. When institutions are relatively efficient, observed corruption is likely to be associated with relatively less competition. Conversely, in areas with low quality institutions (e.g., excessively burdensome regulations), corruption may lead to relatively more competition. I employ unique data on competition, corruption, and institutional quality across U.S. states from 1997 to 2009 and report that a higher level of corruption is associated with relatively more competition in states with low levels of institutional quality. However, as institutional quality improves, the effect of corruption worsens. Thus, institutional quality is a fundamental determinant of the corruption‐competition relationship. Improving institutional quality, while at the same time reducing corruption, will increase competition and likely improve economic outcomes. (JEL D73, O17, L26)     

ACADEMIC PUBLICATION, MARKET SIGNALING, AND SCIENTIFIC RESEARCH DECISIONS

Publication is an essential scientific activity, but dangers arise when it is the primary signal of professional ability. This paper presents a simple model of screening in academic job markets. Signaling pressures may bias research decisions toward orthodox, low-risk projects, denying science the bold hypotheses and vigorous competition necessary for significant advance. Screening mechanisms help explain patterns of development noted by some historians of science as well as differences in these patterns across disciplines. The paper concludes with some comments on signaling and scientific change in economics.     

MONITORING OF WORKERS AND PRODUCT MARKET COMPETITION: THE ROLE OF WORKS COUNCILS

Often the consent of worker representations, such as works councils, is required before firms are allowed to install technologies that monitor workers' behavior. Absent monitoring, workers produce low output, while at the same time receiving an information rent. To gain the works council's consent to the installation of a monitoring technology, firms need to compensate workers for the lost information rent. Hence, by making it more costly to produce high output, works councils can serve firms as an instrument to commit to low output levels. This provides a rationale for why works council rights are not opposed more strongly by employers. (JEL D43, D86, J83, L13)     

MARKET INSTITUTIONS, PRODUCT IDENTITIES, AND VALUATION OF CALIFORNIA PREMIUM WINES

This study develops an institutional approach to understand how market institutions differentiate the identities and statuses of products and producers and eventually affect the valuation of products. Quantitative and qualitative evidence drawn from the California premium wine market shows that category-based product attributes that signify exclusivity, comply with a high institutional standard, or indicate a high rank in the classification system enhance wine price. Moreover, these attributes have symbolic values in social consumption particularly in a high-tier market segment and do not necessarily function as credible quality signals. These findings reveal the institutional bases of the economic order and status hierarchy in markets and have broad theoretical implications.     

EXPERIENCE-DEPENDENT INFORMATION DIFFUSION AND PRODUCT QUALITY

In a monopoly market for an experience good the diffusion of product-quality information may depend on whether or not the information is favorable. To capture this asymmetry, our model uses as its information source a quality survey which suffers from response bias. Consumers may attempt to adjust for bias, but are not required to do so correctly. As a result, quality under perfect information need not be, and usually will not be, higher than quality under imperfect information. In addition, the externality exerted by informed consumers on uninformed consumers may not be the traditional beneficial externality. (JEL L15)     

CONSTRAINED BY HOURS AND RESTRICTED IN WAGES: THE QUALITY OF MATCHES IN THE LABOR MARKET

This paper examines the explicit loss born by workers who face constraints in their working hours by analyzing differences in actual and desired hours and wages. Men tend to be underemployed while women are evenly split between over- and underemployment. Losses in surplus are generally small, but 10% of underemployed men and women experience losses of more than 34% or 50% of surplus, respectively. The loss measure is also an important determinant in predicting labor market transitions, meaning increases in surplus losses generate a higher probability of changing from workers' present jobs or changing the number of hours. ( JEL J22, J41)     

PRODUCT CHARACTERISTICS, HUMAN CAPITAL, AND LABOR MARKET SEGMENTS:

This article contends that one key to understanding different forms of work organization lies in the nature of the products being created. Product characteristics are proposed to be critical determinants of the type of human capital, either general or firm specific. Following from prior theory, labor market barriers develop based on type of human capital. These barriers then have a direct bearing on employee rewards. The nature of the product distinction is captured with a comparison of two product-types (goods and services) conceived as theoretically distinct. General skills are hypothesized to be more important in the service-producing sector, while firm-specific skills are hypothesized to be more important in the goods-producing sector. Empirical analyses using the 1991 General Social Survey compare workers in the service-producing and goods-producing sectors to illustrate differences in the salience of firm-specific and general skills. Two hypotheses are supported. Firm-specific skills have a stronger effect on earnings in manufacturing industries than in service industries. Also, skills acquired from on-the-job training, when compared with other skills, are more weakly related to service employee rewards. These distinctions between sectors suggest insights into structures unique to the service employment workplace.     

STRICT PRODUCT LIABILITY AND SAFETY: EVIDENCE FROM THE GENERAL AVIATION MARKET

This paper examines the impact of a strict product liability standard on the accident rate in the general aviation (GA) industry. Liability expenses increased by 775% between 1976 and 1986, reducing the sales of new GA aircraft by 90% and increasing the age of the GA fleet. Using both aggregate and model‐specific data, our results indicate that the increase in the age of the GA fleet increased the accident rate by 25%–35% during 1981–2000. In addition, the higher price of GA aircraft boosted sales of homebuilt planes, which have higher accident and fatality rates than GA aircraft. (JEL K13, L62, L15)     

THE EAST END, THE WEST END, AND KING'S CROSS: ON CLUSTERING IN THE FOUR-PLAYER HOTELLING GAME

We study experimentally a standard four-player Hotelling location game with a uniform density of consumers and inelastic demand. The pure strategy Nash equilibrium configuration consists of two firms located at one quarter of the "linear city," and the other two at three quarters. We do not observe convergence to such an equilibrium. In our experimental data we find three clusters. Besides the direct proximity of the two equilibrium locations, this concerns the focal midpoint. Moreover, we observe that whereas this midpoint appears to become more notable over time, other focal points fade away. We explain how these observations are related to best-response dynamics, and to the fact that the players rely on best-responses in particular when they are close to the equilibrium configuration.     

INSTITUTIONAL QUALITY AND TRADE: WHICH INSTITUTIONS? WHICH TRADE?

Using a panel of countries over 1990–2000, this paper examines the extent to which different dimensions of the institutional framework affect total exports, exports of manufactured goods, and exports of nonmanufactured goods. It is observed that exports of manufactured goods are positively affected by the quality of institutions but neither total exports nor nonmanufactured exports. The latter may even correlate negatively with the quality of institutions. The results are robust to estimation methods. ( JEL F14, F15, O17)     

INTERNATIONAL TRADE AND LABOR‐MARKET DISCRIMINATION

Discrimination reduces the matching probability and output in the skill‐intensive differentiated‐product sector so that discrimination‐induced comparative advantage may overshadow technological comparative advantage in determining the pattern of trade. Trade liberalization generates a decrease in the skilled‐worker wage gap in the country that is an exporter of goods from the simple sector but increases it in the country that is a net exporter of differentiated products. Trade liberalization has an opposite effect on firms. In the country that is an exporter of simple goods, trade liberalization reduces the profits of the nondiscriminatory firms by more than those of the discriminatory firms. (JEL F16, F66, J71)     

DETERMINANTS OF TRADE AND SPECIALIZATION IN THE ORGANISATION FOR ECONOMIC CO‐OPERATION AND DEVELOPMENT COUNTRIES

This paper empirically investigates the relative importance of productivity, factor endowments, trade costs, and tastes in determining the current pattern of trade and specialization. The results show that productivity and taste differences are the first and second most significant determinants of trade and specialization. Factor endowments are the least influential for the average country in the data set, but their effects are much greater in the poorer than richer countries. The results also show the substantial role of trade costs, which is amplified through interactions with other determinants of trade. Trade costs affect the relative costs of intermediate inputs and final goods, link preferences with specialization, and reduce the geographical range of comparative advantages. (JEL F1, F10)     

THE HOME MARKET EFFECT IN INTERNATIONAL ARMS TRADE

I show that military spending contributes to international arms proliferation through a push effect: large demand encourages production growth in the domestic market if transport costs are non‐negligible. Under increasing returns to scale, the country can then supply weapons on the global market at low prices. This is a manifestation of the home market effect (HME), which states that countries with higher demand for a differentiated good will be net exporters of that good. I construct a monopolistic competition model of international trade that accounts for differences in demand across countries, and test its predictions using post‐Cold War data. (JEL F1, H5, R1)     

SCHOOL QUALITY AND INFORMATION DISCLOSURE: EVIDENCE FROM THE HOUSING MARKET

In this article, we investigate the relationship between school quality and information disclosure in housing markets. When presented with the option of identifying their local public school in a real estate listing, we find that sellers with homes assigned to higher‐performing schools are more likely to provide this information. We find more evidence of selective disclosure in 2001–2002 than in 2006–2007, when the costs of gathering and disclosing information on school assignments and quality were lower. Furthermore, we find more evidence of strategic behavior among sellers of large single‐family units that presumably appeal to families with children. After controlling for school quality, information disclosure does not appear to affect housing prices. Taken together, our results support the findings of the education literature on the importance of school quality capitalization in residential real estate and they provide the first evidence of strategic information disclosure in housing markets. (JEL L15, I20, R31)