The paper examines labor-market returns to a two- and four-year college education. Analysis of the 1972 National Longitudinal Survey of Youth; Observation that the average person who attended a two-year college earned about 10-percent more than those without any college education; Comparison with the wages of those who attended a four-year college education

This paper establishes an empirical link between firm capital structure and product-market competition using data from local supermarket competition. First, an event-study analysis of supermarket leveraged buyouts (LBOs) suggests that a LBO announcement increases the market value of the LBO chain's local rivals. Second, the author shows that supermarket chains were more likely to enter and expand in a local market if a large share of the incumbent firms in the local market undertook LBOs. The study suggests that leverage increases in the late 1980s led to softer product-market competition in this industry

The authors report the first results for Japanese firms on the effects of employee stock-ownership plans (ESOPs) and bonuses by estimating production functions using new panel data. They find that the introduction of an ESOP will lead to a 4-5 percent increase in productivity; this productivity payoff takes three to four years. There is a modest productivity gain from the bonus system. The authors also find evidence that the productivity effect of bonuses is enhanced by the existence of ESOPs, suggesting that ESOPs may create a climate conducive to profit-sharing by enhancing long-term commitment and peer monitoring.

That firms employ internal labor markets, in which wages and careers are partly shielded from the vagaries of external labor markets, seems well accepted. Yet, Peter Doeringer and Michael Piore's (1985) seminal work on internal labor markets has had a rather limited impact on the economics profession. In contrast to textbooks on human-resource management, which have adopted their paradigm wholeheartedly, labor economics texts tend to pay only cursory attention to internal labor markets. The competitive model, in which wages reflect an individual's marginal product, remains the paradigm of choice. There are many reasons for this lackluster reception, including intellectual convenience. A more acceptable excuse is that while Doeringer and Piore's study, which was based on interviews with 75 companies, identified several key regularities (ports of entry, career ladders, etc.) that have come to shape our perception of internal labor markets, the book never presented a theory to explain these findings. With the advent of information economics and contract theory, models of internal labor markets-or at least selected features of these markets-have begun to emerge. The objective of these theories is to show that internal-labor-market outcomes can be construed as second-best solutions to contracting problems under incomplete information. For instance, tournament theory (Edward Lazear and Sherwin Rosen, 1981) sees the attachment of wages to jobs as part of an efficient incentive scheme. Michael Waldman (1984) explains the same phenomenon as an insurance arrangement against variations in individual productivity. Seniority rules in promotion and wagesetting can be understood as responses to problems of collusion or influence activities (Paul Milgrom and John Roberts, 1988). The list could be extended. At this point, there is hardly any feature of internal labor markets that cannot be given some logical explanation using the right combination of uncertainty, asymmetric information and opportunism. Doeringer and Piore (1985), in the preface to the second printing of their book, take exception with this line of theoretical research. They believe that internal labor markets are inherently a social (group) phenomenon and that something fundamental is missed by pursuing individualistic models. Be that as it may, we think there is another, more serious problem with the direction that this research has taken: too much of it relies on the old empirical stereotype. The original study was done 25 years ago and focused almost exclusively on blue-collar, male, unionized, manufacturing workers. One might rightly wonder how relevant these findings are in today's environment and whether they extend to white-collar work as most discussions seem to assume. Before proceeding with the theory, it is prudent to ask: do we have the facts right? In this paper we report on two recent case studies of individual firms that use personnel records to analyze wage and career paths of managerial workers: Lazear (1992) and Baker et al. (1994a,b).1 Person

This paper shows that altruism provides an efficiency rationale for public provision of insurance to the poor. The framework is one in which there are rich altruists and risk-averse poor who face some possibility of loss. The government represents the rich and makes transfers on their behalf. With unconditional transfers, the poor may forgo insurance and rely on private charity to bail them out in the event of loss. This reliance on private charity has adverse efficiency effects. These may be avoided if the government makes in-kind transfers of insurance

The frequency of foreign conflict initiations in the United States is found to be significantly greater following the onset of recessions during a president's first term than in other periods. The authors develop an economic theory of the political use of wars which links the election cycle, war decisions, and economic performance consistent with the observed relationships among these events. An incumbent leader with an unfavorable economic performance record may initiate a war to force the learning of his war leadership abilities and thus salvage, with some probability, his reelection. This obtains despite voter rationality and informational symmetry.