Knowledge that Transforms

We examine whether and how variations in the price of recreation goods influence men’s allocation of market work. For the United States, individual‐level data are combined with metropolitan‐area‐level price indices to estimate the male elasticity of intertemporal substitution of market work with respect to the price of recreation goods, which is found around 0.16 and statistically significant. The allocation of market work in response to changes in the price of recreation goods would create movements in the output of an economy. Moreover, it could contribute toward explaining the emerging differences in work and leisure between the United States and Europe.

This article develops a model that examines the role of cultural conflict in immigration and immigration policy. Cultural differences lead to frictions between natives and immigrants unless the latter make a costly investment to assimilate. This article’s key contribution is the joint analysis of the assimilation and migration decisions, which highlights the inefficiency of some commonly advocated policy tools to achieve the first best. U.S. data provide preliminary support for the model’s implications.

This article brings together the market for products, the market for talent, and firms’ organizational form. While the organizational design determines the allocation of blame and fame within the firm, the value of a good reputation depends on the market structure. Consequently, the market structure dictates the optimal organizational design. If competition becomes tougher and the market thicker, transparent firms decentralize while nontransparent firms concentrate control, transparency itself is improved, corporations switch from unitary to multidivisional form, and the turnover of managers increases. The model rationalizes recent trends in both executive pay and organizational design.

We model team formation as a random matching process influenced by agents’ preferences for team size and gender composition. We then test if the coauthorship pattern in articles published during 1991–2002 in three top economics journals is gender neutral, exploiting variation in female presence across subfields. Controlling for author, team, and field characteristics, we find that the gender gap in the propensity to coauthor with a woman increases in the presence of women in the subfield. We also find that women single author significantly more than men. These findings allow us to reject gender neutrality in team formation in economics.

The article embeds child labor in a standard general equilibrium, two‐sector model of a small open economy facing perfectly competitive markets, efficiency wages, and free trade. The modern sector uses skilled adult labor and capital, and the agrarian sector uses unskilled (child and adult) labor and skilled adult labor. Trade policies, foreign direct investment, or both that increase the modern‐sector output reduce the incidence of child labor. Emigration of skilled (unskilled) workers reduces (increases) the incidence of child labor. Child‐wage subsidies increase the incidence of child labor, and a ban on child labor benefits unskilled adult workers but hurts skilled workers.