Knowledge that Transforms

This volume contains the Papers and Proceed ings of the one hundred and nineteenth annual meeting of the American Economic Association.The Proceedings record the business activities of the Association in 2006, the annual membership meetings, and the April (2006) and January (2007) meetings of the Association's officers and committees.The Papers constitute the greater part of the volume.They comprise contributions that fill roughly the same number of pages as one and a half regular issues of the American Economic Review.We will take this opportunity to answer a number of commonly asked questions about the Papers.Who chooses the authors?About a year in advance, the Association's President-elect, acting as program chairman, decides on the topics for which sessions will be organized.This is done after consultation and comment, both volunteered and solicited, from a wide range of individuals.(A Call for Papers appears in the summer and fall issues of the Journal of Economic Perspectives.)The President-elect invites some sessions and, with the help of a Program Committee, selects most of the sessions from the proposals received.Each session organizer in turn invites several persons (usually three or four) to give papers on the theme of the session and asks others to give comments on the papers.The program chairman decides at the time of organization which sessions will be included in this volume.Space limitations restrict the number of printed sessions.This year we are printing 28 sessions, although a total of 180 sessions were sponsored, either solely by the American Economic Association or jointly with allied societies.Are discussants' comments published?Comments and discussions usually are not published.For all sessions, names and affiliations of commentators are printed at the start of each session, permitting readers especially interested in particular comments to write to the commentator for a copy of the discussion.

Este trabajo analiza la duración del liderazgo en la industria tomando como base las cuotas de mercado de las empresas líderes en 45 industrias japonesas a lo largo de 23 años. Para ello, se propone una nueva relación escalar entre la cuota de mercado de una empresa y la desviación estándar de los cambios en dicha cuota de mercado. Esta relación discrimina de forma poderosa entre los modelos teóricos candidatos de la dinámica de participación en el mercado. También hace posible una simplificación útil a la hora de contrastar un modelo de tipo markoviano. En relación a este modelo se halla que al menos algunas industrias muestran un sesgo “chandleriano” hacia duraciones más largas del liderazgo que la representada en el modelo de referencia.

We study a multi-sector model of growth with differences in TFP growth rates across sectors and derive sufficient conditions for the coexistence of structural change, characterized by sectoral labor reallocation, and balanced aggregate growth. The conditions are weak restrictions on the utility and production functions commonly applied by macroeconomists. Per capita output grows at the rate of labor-augmenting technological progress in the capital-producing sector and employment moves to low-growth sectors. In the limit all employment converges to two sectors, the slowest-growing consumption-goods sector and the capital-goods sector.

This paper investigates the normative criteria that guide the allocation of a policy task to an elected politician versus an independent bureaucrat. The bureaucrat is preferable for technical tasks for which ability is more important than effort, or if there is great uncertainty about whether the policymaker has the required abilities. The optimal allocation of redistributive tasks is ambiguous, and depends on how the bureaucrat can be instructed. But irrespective of the normative conclusion, the politician prefers not to delegate redistributive policies.

The Role of Labor Market Intermittency in Explaining Gender Wage Differentials by Julie L. Hotchkiss and M. Melinda Pitts. Published in volume 97, issue 2, pages 417-421 of American Economic Review, May 2007

We extend William Rogerson's (2003) intriguing analysis of simple procurement contracts to settings where the supplier's innate production cost is not necessarily distributed uniformly. Although the simple contract that Rogerson analyzes performs remarkably well when the smaller cost realizations are relatively likely, it can perform poorly when the larger cost realizations are relatively likely. We show that in all settings under consideration, a simple pair of contracts – one that involves linear cost sharing and one that involves full cost reimbursement – can always secure more than 73 percent of the gain achieved with a fully optimal contract.

Reputation effects and other-regarding preferences have both been used to predict cooperative outcomes in markets with inefficient equilibria. Existing reputationbuilding models require either infinite time horizons or publicly observed identities, but cooperative outcomes have been observed in several moral hazard experiments with finite horizons and anonymous interactions. This paper introduces a full reputation equilibrium (FRE) with stereotyping (perceived type correlation) in which cooperation is predicted in early periods of a finitely repeated market with anonymous interactions. New experiments generate results in line with the FRE prediction, including final-period reversions to stage-game equilibrium and noncooperative play under unfavorable payoff parameters.

This paper investigates the normative criteria that guide the allocation of a policy task to an elected politician versus an independent bureaucrat. The bureaucrat is preferable for technical tasks for which ability is more important than effort, or if there is great uncertainty about whether the policymaker has the required abilities. The optimal allocation of redistributive tasks is ambiguous, and depends on how the bureaucrat can be instructed. But irrespective of the normative conclusion, the politician prefers not to delegate redistributive policies.

Women Helping Women, Men Helping Women? Same-Gender Mentoring, Initial Job Placements, and Early Career Publishing Success for Economics PhDs by Christiana Hilmer and Michael Hilmer. Published in volume 97, issue 2, pages 422-426 of American Economic Review, May 2007