Economic Theory Commons^™

Returns From Self-Employment: Using Human Capital Theory To Compare U.S. Natives And Immigrants, Nikola Popovic

Undergraduate Economic Review

The focus of this paper is to examine the economic returns from self-employment when comparing natives and immigrants. I hypothesize that returns from self-employment will increase with age and education, and that immigrants from China, India, and the Philippines will have higher returns while immigrants from Mexico will have lower returns than natives. I also hypothesize that immigrants with high levels of education will earn more than natives with the same amount of education. The OLS regressions show that human capital variables explain the differences in self-employed income between natives and immigrants, as the literature suggests.

A Critique Of The Neoclassical And A Revision Of The Keynesian Theories Of Employment, Yang Liu

Electronic Theses and Dissertations

The neoclassical theory of employment fails to apply to modern capitalism since it claims that unemployment is necessary all voluntary. Its problems are pointed out by Keynes. But, if we look at Keynes’s system, we find that an essential explanation about why modern capitalism suffers from weak demand is not provided. To answer this question an alternative consumption theory is needed. Levine’s consumption theory well explains the condition of under-consumption. Furthermore, a deep problem of capitalism reveals itself: the production format and the distribution pattern of capitalism result in a huge income discrepancy between the working-class and the capitalist-class and …

Managing A Duopolistic Water Market With Confirmed Proposals. An Experiment, Aurora García-Gallego, Nikolaos Georgantzís, Roberto Hérnan-Gonzalez, Praveen Kujal

Economics Faculty Articles and Research

We report results from experimental water markets in which owners of two different sources of water supply water to households and farmers. The final water quality consumed by each type of consumer is determined through mixing of qualities from two different resources. We compare the standard duopolistic market structure with an alternative market clearing mechanism inspired by games with confirmed strategies (which have been shown to yield collusive outcomes). As in the static case, complex dynamic markets operating under a confirmed proposals protocol yield less efficient outcomes because coordination among independent suppliers has the usual effects of restricting output and …

The Effects Of Political Institutions On Public Budgeting, Andrew Burnos

Political Science Theses and Capstones

Economics around the globe has been a growing issue of late due to the current economic crisis. This study focuses on political institutional factors that influence spending in a particular country. The variables used in this study include Gross Domestic Product (GDP), Tax Revenue as Percent of GDP, and current account balance to name a few. This research looks at the relationship between proportional representation compared to majoritarian systems as well as presidential compared to parliamentary systems and how these relate to public budgeting. This research updates the analysis of Persson and Tabellini in their book The Economic Effects of …

A Comparison Of Cardinal Tournaments And Piece Rate Contracts With Liquidity Constrained Agents, Kosmas Marinakis, Theofanis Tsoulouhas

Research Collection School Of Economics

Acelebrated result in the theory of tournaments is that relative performance evaluation (tournaments) is a superior compensation method to absolute performance evaluation (piece rate contracts) when the agents are risk-averse, the principal is risk-neutral or less risk-averse than the agents and production is subject to common shocks that are large relative to the idiosyncratic shocks. This is because tournaments get closer to the first best by filtering common uncertainty. This paper shows that, surprisingly, tournaments are superior even when agents are liquidity constrained so that transfers to them cannot fall short of a predetermined level. The rationale is that, by …

Economic Shocks, Trade And International Relations, Jack Barnes Thompson

Undergraduate Economic Review

In an interdependent world, trade has unavoidable game aspects. A model with two agents is used to determine the impact of trade and a military alliance between two major world players, North America and China, and an external non-actor, South Korea. The objective of this study is to investigate the impact of cooperative actions and outcomes by the two agents on a two-track policy for South Korea. We also study a variant to the game by considering a change in international relations. Welfare implications are also observed.

Upjohn Institute Policy Paper: Public Pension Crisis And Investment Risk Taking: Underfunding, Fiscal Constraints, Public Accounting, And Policy Implications, Nancy Mohan, Ting Zhang

Economics and Finance Faculty Publications

Public pension funds that cover retirement benefits for almost 20 million active or retired employees have been significantly underfunded. An important, though largely overlooked, issue related to pension underfunding is the excessive investment risk levels assumed by public plans. Our analysis suggests government accounting standards strongly affect public fund investment risk, as higher return assumptions (used to discount pension liabilities) are associated with higher investment risk.

Public funds undertake more risk if they are underfunded and have lower investment returns in previous years, consistent with the risk transfer hypothesis. Furthermore, pension funds in states facing fiscal constraints allocate more assets …

The Gettysburg Economic Review, Volume 6, Spring 2012

Gettysburg Economic Review

No abstract provided.

Political Legitimacy And Technology Adoption, Metin M. Coşgel, Thomas J. Miceli, Jared Rubin

Economics Faculty Articles and Research

A fundamental question of economic and technological history is why some civilizations adopted new and important technologies and others did not. In this paper, we analyze the effect that new technologies have on agents that legitimize rulers. We construct a simple political economy model which suggests that rulers may not accept a productivity-enhancing technology when it negatively affects an agent’s ability to provide the ruler legitimacy. However, when other sources of legitimacy emerge, the ruler will accept the technology as long as the new legitimizing source is not negatively affected. We use this insight to help explain the initial blocking …

Age Effects And Heuristics In Decision Making, Tibor Besedeš, Cary Deck, Sudipta Sarangi, Mikhael Shor

Economics Faculty Articles and Research

Using controlled experiments, we examine how individuals make choices when faced with multiple options. Choice tasks are designed to mimic the selection of health insurance, prescription drug, or retirement savings plans. In our experiment, available options can be objectively ranked, allowing us to examine optimal decision making. First, the probability of a person selecting the optimal option declines as the number of options increases, with the decline being more pronounced for older subjects. Second, heuristics differ by age, with older subjects relying more on suboptimal decision rules. In a heuristics validation experiment, older subjects make worse decisions than younger subjects.

An Attempt To Reshape Capitalism’S Image, Ross A. Nichols

Gettysburg Economic Review

John Stuart Mill claimed to be a disciple of both Jeremy Bentham and David Ricardo. This was a strange proclamation because each man advocated a competing theory of value; Bentham’s utilitarianism laid the foundation for the utility theory of value and Ricardo developed the labor theory of value. Mill’s goal in attempting to unify these theories of value was to provide a solution for the growing class conflict that plagued capitalism. Class conflict arose as feudalism was phased out and industrial capitalism replaced merchant capitalism as the dominant economic system. The Corn Laws symbolized this competition between classes. Capitalists were …

Resource Adequacy: Should Regulators Worry?, Hernan D. Bejarano, Lance Clifner, Carl Johnston, Stephen J. Rassenti, Vernon L. Smith

Economics Faculty Articles and Research

Regulators have proposed various institutional alternatives to secure network resource adequacy and reasonably priced electric power for consumers. These alternatives prompt many difficult questions: Does the development of Demand Response reduce the need for new capacity? How effectively can a government-mandated Capacity Market foster efficient investment? How does centralized generator commitment (with revenue guarantees) compare to a system in which Generators voluntarily commit themselves with no revenue guarantees? If exclusive distribution contracts were replaced by unregulated retail competition, what would be the effects on investment and market prices? We use laboratory experiments to address these questions.

Comment, Dean D. Croushore

Economics Faculty Publications

No abstract provided.

Ethics And Critical Thinking, Jonathan B. Wight

Economics Faculty Publications

This chapter seeks to demonstrate that investigations in positive economics rely on ethical perspectives and practices, and further, that critical thinking requires a wider ethical viewpoint than normative economics generally permits. Positive economics generally relies, for example, on the unsung virtues of the investigator who demonstrates honesty and transparency in the search for truth. Ethical failures in this regard are not uncommon (DeMartino, 2011). But another unstated ethical perspective appears in the worldview from which a researcher sets out to model behavior. Modelers almost always assume that rationality requires that an economic actor undertake an action in pursuit of a …

The Impact Of Institutional Arrangements On Educational Efficiency, Trevor Collier

Economics and Finance Faculty Publications

Per-pupil expenditures on education in the United States have grown immensely in recent decades, yet student achievement has been stagnant. An abundance of research has sought to solve this enigma, much of it centered on the incentive structure facing administrators. Some recent papers use TIMSS data to analyze the relationship between institutional arrangements—that typically do not vary within a single country—and student achievement. Similarly, we utilize TIMSS 1999 to determine if there is an indirect relationship between institutional arrangements and student achievement, via a relationship with school efficiency. Our results show that the specified link between institutional arrangements and student …

The Implications Of Migration Theory For Distributive Justice, Alexander Sager

Philosophy Faculty Publications and Presentations

This paper explores the implications of empirical theories of migration for normative accounts of migration and distributive justice. It examines neo-classical economics, world-systems theory, dual labor market theory, and feminist approaches to migration and contends that neo-classical economic theory in isolation provides an inadequate understanding of migration. Other theories provide a fuller account of how national and global economic, political, and social institutions cause and shape migration flows by actively affecting people's opportunity sets in source countries and by admitting people according to social categories such as class and gender. These empirical theories reveal the causal impact of institutions regulating …

The Herodotus Paradox, Michael R. Baye, Dan Kovenock, Casper G. De Vries

Economics Faculty Articles and Research

The Babylonian bridal auction, described by Herodotus, is regarded as one of the earliest uses of an auction in history. Yet, to our knowledge, the literature lacks a formal equilibrium analysis of this auction. We provide such an analysis for the two-player case with complete and incomplete information, and in so doing identify what we call the 'Herodotus paradox.'

The Lifeboat Problem, Kai A. Konrad, Dan Kovenock

Economics Faculty Articles and Research

We study an all-pay contest with multiple identical prizes (“lifeboat seats”). Prizes are partitioned into subsets of prizes (“lifeboats”). Players play a two-stage game. First, each player chooses an element of the partition (“a lifeboat”). Then each player competes for a prize in the subset chosen (“a seat”). We characterize and compare the subgame perfect equilibria in which all players employ pure strategies or all players play identical mixed strategies in the first stage. The partitioning of prizes can lead to coordination failure when players employ nondegenerate mixed strategies. In these equilibria some rents are sheltered and rent dissipation is …

Ex Ante Stock Flow Accounts, Anwar Shaikh Phd

Archives of Anwar Shaikh

This collection includes:

• Shaikh, A. (2012). Part III: Comments on Argentina (Unpublished manuscript notes).
• Shaikh, A. (2010). Chapter 11: Ex ante stock/flow accounts (Unpublished manuscript).

My Macro Notes, Anwar Shaikh Phd

Archives of Anwar Shaikh

This collection includes:

• Shaikh, A. (2010). Keynes notes on Tsoulfidis 2010 (Unpublished manuscript) (p. 2).
• Shaikh, A. (2012). Thessaloniki effective demand state (Unpublished manuscript) (p. 3).
• Ewing, J., & Kanter, J. (2012). EU officials take steps toward centralized banking regulation. International Herald Tribune, p. 16 (p. 3).
• Shaikh, A. (n.d.). Q Lina, unprecedented S/Y (Handwritten notes) (p. 6).
• Ahiakpor, J. C. W. (1995). No paradox of thrift in classical accumulation. Journal of the History of Economic Thought, 17(1), 16–33. Cambridge University Press (p. 7).
• Leijonhufvud, A. (1981). Information and coordination: Essays in macroeconomic theory. Oxford University …