Knowledge that Transforms

To control the deer population, state game commissions regulate the types of deer that can be legally harvested. These regulations, however, might have an unintended effect on hunting-related accidents by changing the care hunters take when firing their rifles—a moral hazard effect—or changing the composition of hunters. Using detailed data on hunting accidents and regulations in Pennsylvania counties from 1990 to 2005, we find compelling evidence that harvesting restrictions increase the care hunters take in a manner consistent with moral hazard. Thus, these regulations have a positive safety externality.

February 01 2009 Estimating the Variance of Wages in the Presence of Selection and Unobserved Heterogeneity Stacey H Chen Stacey H Chen Search for other works by this author on: This Site Google Scholar Author and Article Information Stacey H Chen Online ISSN: 1530-9142 Print ISSN: 0034-6535 Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology2009 The Review of Economics and Statistics (2009) 91 (1): 227. https://doi.org/10.1162/rest.91.1.227 Connected Content This is a correction to: Estimating the Variance of Wages in the Presence of Selection and Unobserved Heterogeneity Cite Icon Cite Permissions Share Icon Share Facebook Twitter LinkedIn Email Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Search Site Citation Stacey H Chen; Estimating the Variance of Wages in the Presence of Selection and Unobserved Heterogeneity. The Review of Economics and Statistics 2009; 91 (1): 227. doi: https://doi.org/10.1162/rest.91.1.227 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentAll JournalsThe Review of Economics and Statistics Search Advanced Search View Original Article Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology2009 Article PDF first page preview Close Modal You do not currently have access to this content.

Using data for North Carolina public school students in grades 3 to 8, we examine achievement gaps between white students and students from other racial and ethnic groups. We focus on cohorts of students who stay in the state's public schools for all six years. While the black-white gaps are sizable and robust, both Hispanic and Asian students tend to gain on whites as they progress in school. Beyond simple mean differences, we find that the racial gaps in math between low-performing students have tended to shrink as students progress through school, while those for high-performing students have generally widened.

We present and estimate a model with strategic complementarities in firms' choices of on-time or delayed wage payment. Linked employer-employee panel data from Russia facilitate identification of the endogenous interactions through fixed effects for firms, workers, and local labor markets, and instrumental variables based on policy interventions. The estimated reaction function displays strongly positive neighborhood effects, and the estimated feedback loops—worker quits, effort, strikes, and legal penalties—imply that costs of wage delays are attenuated by neighborhood arrears. We also study a nonlinear case with two stable symmetric equilibria: a punctual payment and a late payment equilibrium.

Chung and Cox (1994) provided an intuitively appealing stochastic model indicating that superstars may exist regardless of talent, giving rise to the Yule distribution. We adopt a different empirical approach and test its goodness of fit using a parametric bootstrap and several powerful test statistics. Just like the discrete Pareto distribution, it is overwhelmingly rejected: it is a fairly accurate approximation of the lower quantiles of the superstar distribution but overestimates the snowball effect that makes consumers purchase records of the most successful artists. In other words, the Yule distribution captures stardom, but not superstardom. A generalization of the Yule distribution provides an excellent fit in two of the three data sets.

We adopt the collective approach to consumer behavior with egoistic agents and assume that household consumption is either private or public. We then show that (1) household demand functions have to satisfy testable constraints and (2) some elements of the decision process can be retrieved from observed behavior. These results are based on a conditional demand (m-demand) framework in which household demand functions are directly derived from the individual marginal rates of substitution. Finally, we present an empirical illustration of these theoretical results using the U.S. Consumer Expenditure Survey.

Forward-looking behavior on the part of the monetary authority makes it difficult to estimate the effect of monetary policy interventions on output. We present instrumental variables estimates of the impact of interest rates on quarterly real output for several European countries, using German interest rates as the instrument. These estimates confirm a strong forward-looking bias in least squares estimates that persists even conditional on standard controls for the history of the system. Due to the potential for correlation of output shocks across countries, we interpret our estimates as lower bounds for the effect of monetary policy on real output.

This paper finds that fertility responds to productivity differently depending on the economy's stage of development. At low levels of development, productivity increases will increase fertility, while at the more advanced stages of development, productivity increases lower fertility. During the process, there may be important interaction effects between productivity and education demand. Increases in secondary education demand generate fertility declines regardless of the stage of development.

Using detailed data on traffic speeds for 12 Los Angeles freeway routes from 2001 to 2006, we investigate aggregate behavioral response to gasoline prices. If traffic is free flowing, drivers should slow to more fuel-efficient speeds as the price of gasoline rises. However, we find little evidence that drivers respond to increased fuel costs by slowing down. When congestion constrains traffic flow, freeway speeds should rise with gasoline price, and we find a $1.00 increase in price raises average freeway speeds by approximately 7% during rush-hour periods. Finally, we introduce a novel method to calculate the short-run vehicle miles traveled demand elasticity during rush hour.

This paper argues that localized price spikes should be a regular feature of competitive commodity markets. It develops a rational expectations model of physical arbitrage in which trade takes time, and shows that inventory management plays a crucial role in the way regional prices are determined. In equilibrium, arbitrageurs choose export quantities to ensure inventories in the importing center regularly fall to 0. They earn enough profits from high prices on these occasions to offset small losses at other times. An analysis of detailed data from Chicago and New York corn markets provides empirical support for the model.