Economic Theory Commons^™

International Reserves And Rollover Risk, Javier Bianchi, Juan Carlos Hatchondo, Leonardo Martinez

Leonardo Martinez

No abstract provided.

Crop Residues: The Rest Of The Story, Douglas L. Karlen, Rattan Lal, Ronald F. Follett, John M. Kimble, Jerry L. Hatfield, John A. Miranowski, Cynthia A. Cambardella, Andrew Manale, Robert P. Anex, Charles W. Rice

Douglas L Karlen

Synopsis In the February 15, 2009 issue of ES&T Strand and Benford argued that oceanic deposition of agricultural crop residues was a viable option for net carbon sequestration (43 [4], 1000−1007). In reviewing the calculations and bringing their experience to bear, Karlen et al. argue in this Viewpoint that crop residue oceanic permanent sequestration (CROPS) as envisioned by Strand and Benford will not work. They further propose alternative possibilities in agricultural methods to achieve a net decrease of CO2 emissions.

Information, Competition, And The Quality Of Charities, Silvana Krasteva, Huseyin Yildirim

Huseyin Yildirim

Drawing upon the all-pay auction literature, we propose a model of charity competition in which informed giving alone can account for the significant quality heterogeneity across similar charities. Our analysis identifies a negative effect of competition and a positive effect of informed giving on the equilibrium quality of charity. In particular, we show that as the number of charities grows, so does the percentage of charity scams, approaching one in the limit. In light of this and other results, we discuss the need for regulating nonprofit entry and conduct as well as promoting informed giving.

Debt Dilution And Sovereign Default Risk, Juan Carlos Hatchondo, Leonardo Martinez, Cesar Sosa Padilla

Leonardo Martinez

No abstract provided.

Fiscal Rules And The Sovereign Default Premium, Juan Carlos Hatchondo, Leonardo Martinez, Francisco Roch

Leonardo Martinez

No abstract provided.

"Giving" In To Social Pressure, Alvaro J. Name-Correa, Huseyin Yildirim

Huseyin Yildirim

We develop a theory of charitable giving in which donors feel social pressure from adirect solicitation. We show that equilibrium donations are concentrated around a socialnorm. Despite a higher level of the public good, relatively poor and/or low altruism giversfare worse under social pressure and would avoid the solicitor at a cost. Aggregate donorwelfare improves to the extent that the added social motive alleviates the underprovision ofthe public good; however, overprovision may result. Our theory therefore predicts a lighthandedregulation for charitable solicitations, which is consistent with their exemption fromthe popular Do Not Call list in the U.S. We further show …

An Economist's Analysis Of The Voting Paradox, Lester G. Telser

Lester G Telser

It has been said that democracy is the worst form of government except all the others that have been tried. The best argument against democracy is a five-minute conversation with the average voter. Winston Churchill

Non Profit Suppliers Of Higher Education: Corollaries, Lester G. Telser

Lester G Telser

The American Association for the Advancement of Science bills Harvard University $26,675 for a one year subscription to their weekly publication Science. That anon profit suppliers of higher education is willing to pay such amounts far above the true incremental cost of supplying it with such publications is a corollary of the economic explanation of their behavior. Nonprofit Organizations JEL L30

Wage Bargaining Under The National Labor Relations Act, Jesse Schwartz, Quan Wen

Jesse A. Schwartz

Sections 8(a)(3) and 8(a)(5) of the National Labor Relations Act (NLRA) prohibit the management of a firm from unilaterally increasing the wage during contract negotiations without the union's approval. We show how the management can strategically increase the wage during negotiations without violating the NLRA. Increasing the wage during negotiations will upset the union's incentive to strike and decrease the union's bargaining power, thereby shrinking the set of equilibrium contracts in the firm's favor. Indeed, as the union becomes more patient, the set of equilibrium wages converges to the best equilibrium outcome to the firm.

Wage Negotiation Under Good Faith Bargaining, Jesse Schwartz, Quan Wen

Jesse A. Schwartz

We study the wage negotiation model of Haller and Holden (1990) and Fernandez and Glazer (1991) under the "Good Faith Bargaining" (GFB) rule, where a party may not demand more than it has previously demanded. The GFB rule significantly restricts feasible strategies, but at the same time, makes the game non-stationary and the analysis complicated. We introduce a state-dependent backward induction that generalizes Shaked and Sutton (1984) to characterize the equilibrium payoffs. We find that the GFB rule eliminates the union's credibility to strike. Without the strikes, the union's strategic opportunities during disagreement disappear, so that there is a unique …

A Theory Of Outsourced Fundraising: Why Dollars Turn Into "Pennies For Charity", Zdravko Paskalev, Huseyin Yildirim

Huseyin Yildirim

Charities frequently rely on professional solicitors whose commissions exceed half of total donations. To rationalize this practice, we propose a principal-agent model in which the charity optimally offers a higher commission to a more "efficient" solicitor, raising the price of giving significantly. Outsourcing is, therefore, profitable for the charity only if giving is very price-inelastic. This, however, clashes with empirical evidence. We show that paid solicitations can benefit the charity if: (1) donors are unaware; (2) donors have intense "warm-glow" preferences; or (3) the charity worries mostly about watchdog ratings. Unable to regulate fundraiser contracts due to freedom of speech, …

A Note On Monitoring Costs And Voter Fraud, Philip E. Graves, Robert L. Sexton, Gary Galles

PHILIP E GRAVES

Election fraud can threaten democracy if many ineligible people are allowed to vote. The usual policy prescription is to increase monitoring cost. However, this is very costly. This paper proposes a more cost effective strategy: substitute tougher and consistent statutes across states against voter fraud.

A Volatility-Based Theory Of Fiscal Union Desirability, Jaime Luque, Massimo Morelli, José Tavares

Jaime P. Luque

Wages, Local Amenities And The Rise Of The Multi-Skilled City, Jaime Luque

Jaime P. Luque

Ricardian Rent Explains Costs Of Elite Colleges, Lester G. Telser

Lester G Telser

Adverse Selection And Incentives In An Early Retirement Program, Kenneth T. Whelan, Ronald G. Ehrenberg, Kevin F. Hallock, Ronald L. Seeber

Ronald G. Ehrenberg

We evaluate potential determinants of enrollment in an early retirement incentive program for non-tenure-track employees of a large university. Using administrative record on the eligible population of employees not covered by collective bargaining agreements, historical employee count and layoff data by budget units, and public information on unit budgets, we find dips in per-employee finance in a budget unit during the application year and higher recent per employee layoffs were associated with increased probabilities of eligible employee program enrollment. Our results also suggest, on average, that employees whose salaries are lower than we would predict given their personal characteristics and …

Economic And Statistical Analysis Of Discrimination In Hiring, Ronald G. Ehrenberg, Robert Smith

Ronald G. Ehrenberg

Legal and administrative determinations of employers' compliance with "equal employment opportunity" (EEO) requirements often hinge on the Issue of the availability of protected class members to employers. That is, courts and affirmative action review agencies compare the hire rates of protected class members (the ratio of the number of protected class members hired to the number who applied or who were potentially available) to the comparable ratio for other applicants, in assessing whether an employer's hiring policies meet the standards required of them by equal opportunity regulations. The purpose of this paper is to review what economic theory suggests affects …

An Economic Analysis Of The Market For Law School Students, Ronald G. Ehrenberg

Ronald G. Ehrenberg

This study utilizes data from a number of sources to estimate how lawyers' starting salaries relate to their ability, the quality of law school they attended, and whether the law school was a private institution. Based upon this analysis, a benefit—cost analysis is conducted of the value of attending a high-quality private institution. Analyses are also done of how the financial attractiveness of law vis-a-vis other careers has changed in recent years and a conceptual framework discussed for law schools to use in allocating their financial aid resources.

Heterogeneous Tiebout Communities With Private Production And Anonymous Crowding, Jaime Luque

Jaime P. Luque

Reaching For The Brass Ring: The U.S. News & World Report Rankings And Competition, Ronald Ehrenberg

Ronald G. Ehrenberg

[Excerpt] The behavior of academic institutions, including the extent to which they collaborate on academic and nonacademic matters, is shaped by many factors. This paper focuses on one of these factors, the U.S. News & World Report (USNWR) annual ranking of the nation’s colleges and universities as undergraduate institutions, exploring how this ranking exacerbates the competitiveness among American higher education institutions. After presenting some evidence on the importance of the USNWR rankings to both public and private institutions at all levels along the selectivity spectrum, I describe how the rankings actually are calculated, then discuss how academic institutions alter their …

Crafting A Class: The Trade-Off Between Merit Scholarships And Enrolling Lower-Income Students, Ronald G. Ehrenberg, Liang Zhang, Jared M. Levin

Ronald G. Ehrenberg

[Excerpt] It is well known that test scores are correlated with students’ socio-economic backgrounds. Hence, to the extent that colleges are successful in “buying” higher test-score students, one should expect that their enrollment of students from families in the lower tails of the family income distribution should decline. However, somewhat surprisingly, there have been no efforts to test if this is occurring. Our paper presents such a test. While institutional-level data on the dollar amounts of merit scholarships offered by colleges and universities are not available, data are available on the number of National Merit Scholarship (NMS) winners attending an …

The 1995 Nrc Ratings Of Doctoral Programs: A Hedonic Model, Ronald Ehrenberg, Peter Hurst

Ronald G. Ehrenberg

We describe how one can use multivariate regression models and data collected by the National Research Council as part of its recent ranking of doctoral programs (Research-Doctorate Programs in the United States: Continuity and Change) to analyze how measures of program size, faculty seniority, faculty research productivity, and faculty productivity in producing doctoral degrees influence subjective ratings of doctoral programs in 35 academic fields. Using data for one of the fields, economics, we illustrate how university administrators can use the models to compute the impact of changing the number of faculty positions they allocate to the field on …

The Impact Of U.S. News & World Report College Rankings On Admissions Outcomes And Pricing Policies At Selective Private Institutions, James Monks, Ronald G. Ehrenberg

Ronald G. Ehrenberg

Despite the widespread popularity of the U.S. News & World Report College rankings there has been no empirical analysis of the impact of these rankings on applications, admissions, and enrollment decisions, as well as on institutions' pricing policies. Our analyses indicate that a less favorable rank leads an institution to accept a greater percentage of its applicants, a smaller percentage of its admitted applicants matriculate, and the resulting entering class is of lower quality, as measured by its average SAT scores. While tuition levels are not responsive to less favorable rankings, institutions offer less visible price discounts in the form …

Faculty Turnover At American Colleges And Universities: Analyses Of Aaup Data, Ronald G. Ehrenberg, Hirschel Kasper, Daniel Rees

Ronald G. Ehrenberg

This paper uses institutional level data collected by the American Association of University Professors as part of their annual survey of faculty members' compensation to analyze faculty turnover. Analyses of aggregate data over almost a twenty-year period highlight how remarkably stable faculty retention rates have been nationwide and how little they vary across broad categories of institutions. Analyses of variations in faculty retention rates across individual institutions stress the role that faculty compensation levels play. Higher levels of compensation appear to increase retention rates for assistant and associate professors (but not for full professors) and the magnitude of this effect …

Advance Notice Provisions In Plant Closing Legislation: Do They Matter?, Ronald Ehrenberg, George Jakubson

Ronald G. Ehrenberg

This paper evaluates the cases for and against plant closing legislation. In spite of the growth of legislative efforts in the area, there has been surprisingly little effort devoted to analyzing what the effects are of existing plant closing legislation, of provisions in privately negotiated collective bargaining agreements that provide for advance notice in case of plant shutdowns and/or layoffs, and of voluntary employer provision of advance notice. The paper summarizes the results of previous research, and our own empirical analyses that used the January 1984 Bureau of Labor Statistics Survey of Displaced Workers, on the effects of advance notice …

Did Teachers’ Race And Verbal Ability Matter In The 1960’S? Coleman Revisited, Ronald Ehrenberg, Dominic Brewer

Ronald G. Ehrenberg

Our paper reanalyzes data from the classic 1966 study Equality of Educational Opportunity, or Coleman Report. It addresses whether teacher characteristics, including race and verbal ability, influenced "synthetic gain scores" of students (mean test scores of upper grade students in a school minus mean test scores of lower grade students in a school), in the context of an econometric model that allows for the possibility that teacher characteristics in a school are endogenously determined. We find that verbal aptitude scores of teachers influenced synthetic gain scores for both black and white students. Verbal aptitude mattered as much for black teachers …

Paying Our Presidents: What Do Trustees Value?, Ronald G. Ehrenberg, John J. Cheslock, Julia Epifantseva

Ronald G. Ehrenberg

Our study makes use of data from a panel of over 400 private colleges and universities on their presidents’ salaries and benefits. These data, reported annually to the Internal Revenue Service on Form 990, have been collected by and reported in the Chronicle of Higher Education for academic years 1992–1993 through 1997–1998. We merge these data with those from other sources including the American Association of University Professors, the American Council on Education, Who’s Who in America, the National Association of College and University Business Officers, the Council on Aid to Education, and the National Science Foundation’s CASPAR system. This …

Financial Forecasts For The Next Decade, Ronald G. Ehrenberg

Ronald G. Ehrenberg

[Excerpt] Harold Hovey pointed out that the outlook for state funding of public higher education institutions during the first decade of the 21st century might not be as rosy as it has been during the last five years. The pictures I have painted of the financial futures for American public and private higher education echo his concerns. If sustained economic growth continues, academic institutions' financial prospects will be somewhat brighter. However, it is clear that the well-being of colleges and universities nationwide depends upon their diversifying their sources of revenues. Through their efforts to do so, the publics will end …

Dissecting The Workforce And Workplace For Clinical Endocrinology, And The Work Of Endocrinologists Early In Their Careers, Claude Desjardins, Mark A. Bach, Anne R. Cappola, Ellen W. Seely, Ronald G. Ehrenberg

Ronald G. Ehrenberg

[Excerpt] No national mechanism is in place for an informed, penetrating, and systematic assessment of the physician workforce such as that achieved by the National Science Foundation (NSF) for the periodic evaluation of the nation’s scientists and engineers. Likewise, knowledge of the workforce for clinical research is enigmatic and fragmentary despite the serial recommendations of “blue-ribbon” panels to establish a protocol for the recurrent assessment of clinical investigators early in their careers. Failure to adopt a national system for producing timely, high-quality data on the professional activities of physicians limits the application of improvement tools for advancing clinical investigation and …

On Estimating The Effects Of Increased Aid To Education, Ronald G. Ehrenberg, Richard P. Chaykowski

Ronald G. Ehrenberg

[Excerpt] The 1983 report, A Nation at Risk, of the National Commission on Excellence in Education decried the state of public education in the United States and suggested a number of reforms. Among their recommendations was increased federal aid for education. The view was that this would lead to desirable outcomes such as reduced class sizes and higher teacher salaries, with the latter aiding in the recruitment and retention of high-quality teachers. Somewhat surprisingly, previous research on the economics of education provides us with very few insights about what the effects of such proposals might be. For example, while there …