Knowledge that Transforms

At most universities there are two types of tenured economists—those who began work at the school shortly after leaving graduate school (and were later promoted), and experienced economists who were hired with tenure. Conventional wisdom in academic circles suggests that it is easier to get tenure as an insider than it is to attract an offer as an outsider. That is, schools hold potential external senior hires to tougher standards then they do their own junior professors. In this paper, I take a first step toward showing that, at least for academic economists, there is an insider advantage. I analyze the research records of economists with ten years experience and compare the productivity of those who changed employers recently (suggesting they were hired with tenure) to those who did not (suggesting internal promotion.) I show that the productivity of “outsiders” is higher than the productivity of “insiders” at all but the top-ten economics institutions in the world. The economic significance of the estimates is substantial, but the statistical precision suggests that more work is required to draw strong conclusions. Also, I focus on average productivity of all available insiders and outsiders, whereas an ideal dataset would allow a direct comparison of marginal insiders and outsiders, (that is, those who barely met the standard). THE MARKET AND PRE-MARKET FOR GRADUATE STUDENTS IN ECONOMICS

Arguably the most aggressive affirmative action program ever implemented in the United States was a series of court-ordered racial hiring quotas imposed on municipal police departments. My best estimate of the effect of court-ordered affirmative action on work-force composition is a 14-percentage-point gain in the fraction African American among newly hired officers. Evidence on police performance is mixed. Despite substantial black-white test score differences on police department entrance examinations, city crime rates appear unaffected by litigation. However, litigation lowers slightly both arrests per crime and the fraction black among serious arrestees. (JEL H76, J15, J78, K31)

We study the effects of antitrust policy in industries with continual innovation. Antitrust policies that restrict incumbent behavior toward new entrants may have conflicting effects on innovation incentives, raising the profits of new entrants, but lowering those of continuing incumbents. We show that the direction of the net effect can be determined by analyzing shifts in innovation benefit and supply, holding the innovation rate fixed. We apply this framework to analyze several specific antitrust policies. We also show that, in some cases, the tension does not arise, and policies that protect entrants necessarily raise the rate of innovation. (JEL K21, L13, L14, L40, O30)

The Political Economy of the US Monetary Union: The Civil War Era as a Watershed by David F. Weiman and John A. James. Published in volume 97, issue 2, pages 271-275 of American Economic Review, May 2007

For two districts or countries that try to internalize externalities, I analyze a bargaining game under private information. I derive conditions for when it is efficient with uniform policies across regions—with and without side payments—and when it is efficient to prohibit side payments in the negotiations. While policy differentiation and side payments allow the policy to better reflect local conditions, they create conflicts between the regions and, thus, delay. The results also describe when political centralization outperforms decentralized cooperation, and they provide a theoretical foundation for the controversial “uniformity assumption” traditionally used by the fiscal federalism literature. (JEL C78, D72, D82, H77)

This paper analyzes the welfare costs of business cycles when workers face uninsurable job displacement risk. The paper uses a simple macroeconomic model with incomplete markets to show that cyclical variations in the long-term earnings losses of displaced workers can generate arbitrarily large cost of business cycles even if the variance of individual income changes is constant over the cycle. In addition to the theoretical analysis, this paper conducts a quantitative study of the cost of business cycles using empirical evidence on the long-term earnings losses of US workers. The quantitative analysis shows that realistic variations in job displacement risk generate sizable costs of business cycles, even though a second-moment analysis would suggest negligible costs. (JEL E21, E24, E32, J63)

Economic Review 2004.I used a bilateral "gravity" model of trade and showed that dummy variables for membership by either one or two countries in the GATT had only small effects on trade.In essence, TGR point out that a lot of countries were not formal members of the GATT but still participated in it as colonies, de facto, or provisional members.TGR argue that if one includes these other types of more informal membership, you get large positive effects.

Many view the period after the Second Industrial Revolution as a paradigm of a transition to a new economy following a technological revolution, including the Information Technology Revolution. We build a quantitative model of diffusion and growth during transitions to evaluate that view. With a learning process quantified by data on the life cycle of US manufacturing plants, the model accounts for the key features of the transition after the Second Industrial Revolution. But we find that features like those will occur in other transitions only if a large amount of knowledge about old technologies exists before the transition begins. (JEL L60, N61, N62, N71, N72, O33)

We analyze the impact of recent immigration on the employment and wages of less educated workers during the 1990s, a period of heightened geographic diffusion of immigrants across the nation. We focus on men residing in metropolitan areas, who are between the ages of 25 and 62 and are from the three major racial/ ethnic groups: white non-Hispanic, black nonHispanic, and Latino (hereafter referred to as race groups). Theory predicts that immigration will increase the wages of native workers who are complements to immigrants and decrease the wages of natives who are substitutes. Because immigrants have low education relative to natives, low-educated natives are likely to be substitutes, and high-educated natives are likely to be complements. We find negative effects of recent immigration on the employment, and especially the wages, of low-skilled workers. The wage effects are largest for Latinos, followed by blacks.