IN SEARCH OF THE WINNER'S CURSE

Earlier papers on the winner's curse have provided theoretical arguments that winning bidders in an auction will incur ex post losses even when all bidders use reasonable ex ante bidding strategies. This paper demonstrates that these arguments are erroneous: optimal ex ante bidders will never suffer from a winner's curse in an auction where only the winning bid is announced; furthermore, such bidders will on the average not suffer from a winner's curse in an auction where all bids are announced. Thus if a winner's curse is a behavioral reality then bidders are not generally using ex ante optimal strategies.     

NON-AGGRESSIVE BIDDING BEHAVIOR AND THE "WINNER'S CURSE"

Previous authors have noted a curious result that arises within the context of sealed-bid auctions: in certain situations it is in the bidder's interest to respond non-aggressively to increased competition. We consider a decision-theoretic formulation of the bidder's problem, and derive necessary conditions for the choice of a non-aggressive bidding strategy. The resulting conditions relate closely to a phenomenon that has been described rather loosely by bidding practitioners as the "winner's curse.' In the course of this paper we develop a specific definition of the winner's curse, and demonstrate how it affects the firm's competitive behavior.     

FIRST-PRICE COMMON VALUE AUCTIONS: BIDDER BEHAVIOR AND THE "WINNER'S CURSE"

Experimental auction markets are characterized by a strong winner's curse in early auction periods as high bidders consistently lose money, failing to account for the adverse selection problem inherent in winning the auction. With experience and bankruptcy on the part of the worst offenders, subjects earn positive average profits, but these are far below Nash equilibrium predictions as a sizable minority of bids exceed the expected value of the item conditional on having the highest estimate of value. Individual bidding behavior is explored to identify the mechanism whereby market outcomes no longer display the worst effects of the winner's curse.     

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)     

INTERMARRIAGE AND THE LABOR MARKET OUTCOMES OF ASIAN WOMEN

The impact of intermarriage with natives, on labor market outcomes of immigrants, is not homogeneous across ethnic groups. Wages of Asian women are compared with non‐Asians. Both ordinary least squares and instrumental variables estimates of the effects of intermarriage on the wages of Asian women are negative and significant. Non‐Asian women earn a wage premium that becomes insignificant when controls for selection into marriage are introduced. One possible explanation for the intermarriage penalty for Asians is an income effect of having a high‐earning native husband. Intermarriage penalties rise with husband's education. Assimilation patterns of intermarried Asians indicate that they have lower initial wages, market hours, and employment, but exhibit faster rates of growth over their years of stay. The results are robust across Asian subgroups and husband's ethnicity. (JEL J16, J12, J31, J61)     

ECONOMIC GLOBALIZATION AND WOMEN'S STATUS IN THE LABOR MARKET:

This study examines the effects of economic globalization on occupational sex segregation and occupational inequality. A theory of global economic restructuring and its impact on the quality of women's work suggests that national integration into the world economy significantly expands opportunities for women in the workplace but does not remove barriers to women's advancement or ameliorate the predominance of low-paying, menial jobs held by women. Two measures of gender occupational differentiation are employed as dependent variables in cross-sectional OLS regression analyses of fifty-six countries using data from 1970–1990. Results indicate that global economic forces reduce occupational sex segregation and inequality. However, these effects are determined by a country's world system position and region. The analyses illustrate that global economic restructuring is a gendered process that transforms and builds upon existing gender inequalities. Therefore, the inclusion of global structural characteristics into comparative research on occupational sex differentiation is essential.     

THE LONDON BOMBINGS AND RACIAL PREJUDICE: EVIDENCE FROM THE HOUSING AND LABOR MARKET

This paper investigates the impact of the London bombings on attitudes toward ethnic minorities, examining outcomes in housing and labor markets across London boroughs. We use a difference‐in‐differences approach, specifying “treated” boroughs as those with the highest concentration of Asian residents. Our results indicate that house prices in treated boroughs fell by approximately 2% in the 2 years after the bombings relative to other boroughs, with sales declining by almost 6%. Furthermore, we present evidence of a rise in the unemployment rate in treated compared to control boroughs, as well as a rise in racial segregation. (JEL J15, J71, R21)     

EMPLOYER RECRUITMENT STRATEGIES AND THE LABOR MARKET OUTCOMES OF NEW HIRES

The results in this article suggest, among other things, a strong association between recruitment choices and starting wages. The theoretical framework motivating the empirical analysis is a wage‐posting game in which firms make wage offers and choose recruitment strategies while recognizing a trade‐off between hiring speed and match quality. Introducing this theoretical framework to the recruitment literature, I present new evidence on employers' choices of recruitment methods to answer the questions “How do employer recruitment choices vary by firm and vacancy characteristics and the skill requirements of jobs?” and “How do vacancy duration and starting wages vary with recruitment choices?”(JEL MS1)     

LABOR MARKET STRUCTURE AND UNION WAGE LEVELS

This paper uses disaggregated data taken from union collective bargaining agreements to test several hypotheses on the impact of labor market structure on the wage levels of union members in U. S. manufacturing. The structure of collective bargaining, specifically the bargaining unit, is shown to play an important role in the determination of wage levels although this role is in some cases different than has generally been believed.     

SOCIAL ISOLATION AND LABOR MARKET INSULATION:

This study examines the influence of neighborhood poverty and social networks on labor market experiences of less-educated urban job seekers. Data come from the Multi-City Survey of Urban Inequality and the 1990 decennial census. Results indicate that relatively small differences in job search strategies among residents of high- and low-poverty neighborhoods are magnified in the hiring process and that supply- and demand-side factors have qualitatively different effects on earnings within these residential contexts. These results refine our understanding of social isolation by clarifying the points at which "neighborhood effects" manifest themselves in the job-matching process and suggest that social isolation is often accompanied by labor market insulation characterized by an increasing reliance upon neighbors and personal contacts for securing formal employment.     

ENGLISH PROFICIENCY AND LABOR MARKET PERFORMANCE: EVIDENCE FROM THE ECONOMICS PROFESSION

This article investigates whether the global spread of the English language provides an inherent advantage to native English speakers. This question is studied within the context of the economics profession, where the impact of being a native English speaker on future publishing success is examined. English speakers may have an advantage because they are writing in their native language, the quality of writing is a crucial determinant of publishing success, and all the top economics journals are published in English. Using a ranking of the world's top 2.5% of economists, this article confirms that native English speakers are ranked 100 spots higher (better) than similar non‐native English speakers. A variety of extensions examine and dispel many other potential explanations. (JEL A11, J44, F66)     

INTEGRATING ECONOMIC DUALISM AND LABOR MARKET SEGMENTATION:

Although the U.S. economy of the early twenty-first century is vastly different from the U.S. economy prior to the 1970s, the nature of these economic changes and their impact on U.S. workers is unclear. This article claims that despite contemporary economic shifts, differential labor and employer power continues to segment the economy, and workers' position in the labor market continues to predict their rewards, beyond the effects of gender, race, and human capital. Drawing on segmented labor market and dual economy research, we propose a four-category model of the structural factors that influence variance in work-related rewards. We examine the distribution of jobs in each of four categories between 1974 and 2000 and observe that losses and gains across categories are unevenly distributed by race and gender. While white men have experienced the greatest declines in employment and earnings, they have maintained their absolute advantage over women and nonwhites. In multivariate analyses, we find that the structural position of employment continues to be a significant determinant of wages. Although women and racial minorities have experienced sizable increases in employment in primary labor market jobs in the core of the economy, both groups remain overrepresented in low-paying jobs. Moreover women, but not nonwhite men, consistently receive significantly fewer rewards for their labor in both low-paying and high-paying jobs. Our findings suggest that structural factors continue to influence earnings inequality, especially across race and gender lines.     

LABOR MARKET SEGMENTATION AND INCOME DETERMINATION IN POLAND

The model of income determination, as introduced by labor market segmentation students, is applied to Polish data. This article argues that divisions between sectors, industries, branches, and enterprises, imposed institutionally by the Polish central management system, determine dimensions of labor market segmentation in Polish society. Research findings demonstrate a substantive effect of economic segmentation dimensions on income inequalities, with industrial divisions affecting income variation the most strongly. The second stage of anaysis shows substantive differences in the process of income determination between five industries. This article argues that industrial differentials cannot be explained away by differences in labor force composition and that there are substantial variations in how worker characteristics are rewarded. The results are interpreted as evidence of the effect of labor market segmentation on social inequalities in Poland. In addition, differences in structural mechanisms of segmentation between Poland and capitalist societies are noted.     

LABOR CONTRACTS AND FLEXIBILITY: EVIDENCE FROM A LABOR MARKET REFORM IN SPAIN

This paper evaluates the effects of a labor market reform in Spain that removed restrictions on fixed‐term or temporary contracts. Our empirical results are based on longitudinal firm‐level data that cover observations before and after the reform. We posit and estimate a dynamic labor demand model with indefinite and fixed‐term labor contracts, and a general structure of labor adjustment costs. Experiments using the estimated model show important positive effects of the reform on total employment (i.e., a 3.5% increase) and job turnover. There is a strong substitution of permanent by temporary workers (i.e., a 10% decline in permanent employment). The effects on labor productivity and the value of firms are very small. In contrast, a counterfactual reform that halved all firing costs would produce the same employment increase as the actual reform, but much larger improvements in productivity and in the value of firms. (JEL J23, J32, J41)     

THE LABOR MARKET IN THE ART SECTOR OF BAROQUE ROME

We analyze the labor market for painters in Baroque Rome using unique data on primary sales of portraits, still lifes, genre paintings, landscapes, and figurative paintings. In line with the traditional artistic hierarchy of genres, average price differentials between them were high. The matched painter‐patron nature of the dataset allows us to evaluate the extent to which price heterogeneity is related to unobservable characteristics of painters and patrons. We find that the market allocated artists between artistic genres to the point of equalizing the marginal return of each genre. Residual price differences at the employer level can be explained in terms of incentive mechanisms to induce effort in the production of artistic quality and compensating wage differentials. (JEL C23, D8, J3, Z11)     

CAPITAL MARKET IMPERFECTIONS, LABOR MARKET DISEQUILIBRIUM AND MIGRATION: A THEORETICAL AND EMPIRICAL ANALYSIS

Traditional analyses of the determinants of migration in less developed countries have focused on labor market conditions. This paper adapts a simple model to show that capital market conditions may be an important factor in individuals' migration decisions. Data from Ecuador are used to test this model, and the empirical results confirm the role of capital market imperfections—chiefly caused by financial repression—in shaping migration flows. Traditional labor market factors still matter, but the new finding may provide policy makers with new and lower-cost tools with which to affect migration outcomes.