UNEMPLOYMENT AND FINANCIAL CONSTRAINTS FACED BY SMALL FIRMS

A distinguishing feature of small firms is that most small business owners work for themselves and only employ relatives and friends. We examine conditions under which this labor market practice is an economic outcome and consider the link between this outcome and unemployment. The model is motivated by empirical evidence that suggests that small firms are subject to financial constraints that are supported by information asymmetries. I show that, in a constrained equilibrium, sole proprietorship and unemployment arise from an information imperfection in the credit market that makes infeasible the consummation of mutually beneficial contracts in the labor market.     

WHY DON'T POOR COUNTRIES CATCH UP? A CROSS-NATIONAL TEST OF AN INSTITUTIONAL EXPLANATION

Early neoclassical analyses predicted that poor countries would grow faster than wealthy countries, because of technological advances and diminishing returns to capital in the latter. The reverse has occurred: poor countries are falling back rather than catching up. We suggest here that deficient institutions underlie this divergence. Employing various indicators of institutional quality, including the rule of law, the pervasiveness of corruption, and the risk of expropriation and contract repudiation, we show that the ability of poor countries to catch up is determined in large part by the institutional environment in which economic activity in these countries takes place. (JEL O00, O10)     

INFERENCE USING QUALITATIVE AND QUANTITATIVE INFORMATION WITH AN APPLICATION TO MONETARY POLICY

I propose a framework for drawing inferences about an unobserved variable using qualitative and quantitative information. Using this framework, I study the timing and persistence of monetary policy regimes and compute probabilistic measures of the qualitative indicator's reliability. These estimates suggest that (1) it is over one and one-half times more likely that monetary policy is not restrictive at any point in time, (2) Boschen and Mills's [1995] policy index is a reliable indicator of the stance of monetary policy, and (3) certain qualitative indicators of monetary policy improve interest rate forecasts that are based on linear forecasting models. (JEL C22, E52)     

HOURS FLEXIBILITY AND RETIREMENT

Data from the Health and Retirement Study indicate that hours constraints are a common feature of jobs held by workers nearing retirement. We present a simple model that predicts that workers who are not free to lower their usual hours of work should be more likely than their unconstrained counterparts to retire by some future date. Our estimates, which are robust to various specifications, support this prediction. The amount by which being hours constrained is estimated to raise retirement probabilities is nearly as large as the effect of being in relatively poor health, suggesting an economically significant effect. ( JEL J26, J22, J14)     

DIRECT THREAT AND POLITICAL TOLERANCE AN EXPERIMENTAL ANALYSIS OF THE TOLERANCE OF BLACKS TOWARD RACISTS

Using the NORC General Social Surveys from 1972 to 1984, weconstruct a question wording experiment that tests whether questionsconcerning the rights of a threatening group affect a respondent'swillingness to extend the same rights to other unrelated groups.Our findings suggest that a threatening stimulus in fact reducesa respondent's tolerance toward unrelated groups to a considerabledegree, although the effect is smaller for more highly educatedrespondents. We conclude by discussing some potential explanationsfor this interaction effect.     

Inference for Epidemics with Three Levels of Mixing: Methodology and Application to a Measles Outbreak

Abstract. A stochastic epidemic model is defined in which each individual belongs to a household, a secondary grouping (typically school or workplace) and also the community as a whole. Moreover, infectious contacts take place in these three settings according to potentially different rates. For this model, we consider how different kinds of data can be used to estimate the infection rate parameters with a view to understanding what can and cannot be inferred. Among other things we find that temporal data can be of considerable inferential benefit compared with final size data, that the degree of heterogeneity in the data can have a considerable effect on inference for non‐household transmission, and that inferences can be materially different from those obtained from a model with only two levels of mixing. We illustrate our findings by analysing a highly detailed dataset concerning a measles outbreak in Hagelloch, Germany.     

Bringing About Changes to Corporate Social Policy through Shareholder Activism: Filers,Issues, Targets,and Success

We examine shareholder initiated social policy proposals' capacity to exert pressure on management to force it to adopt the suggested changes in policy. We show that social proposals, filed under the U.S. Securities and Exchange Commission's Rule 14a‐8, have a more limited capacity to change corporate social policy than it has been previously reported. However, the capacity to exert pressure on firms can be substantially higher for some types of filers, notably pension funds and mutual funds. The analysis also suggests that the capacity to influence management is higher for some types of issues presented in the resolution, such as those related to board diversity, energy and environment, and international laborand human rights. We also provide suggestions explaining why shareholder activism is a persistent practice despite its limited results.