Large productivity gains have been observed in Chinese agriculture following the transition from collective farming to household contracting. Using a model of mutual monitoring in an egalitarian production team, we estimate that labor supervision absorbed about 10-20 percent of total labor time for a sample of Chinese agricultural teams during 1970-76. These agency costs are lower than comparable estimates derived from aggregate data.
This paper introduces the "separate spheres" bargaining model, a new model of distribution within marriage. It differs from divorce threat bargaining models (e.g., Manser-Brown, McElroy-Horney) in that the threat point is not divorce but a noncooperative equilibrium within marriage; this noncooperative equilibrium reflects traditional gender roles. The predictions of our model thus differ from those of divorce threat bargaining models; in the separate spheres model, cash transfer payments to the mother and payments to the father can--but need not--imply different equilibrium distributions in existing marriages. In the long run, the distributional effects of transfer policies may be substantially altered by changes in the marriage market equilibrium.
A single seller of an indivisible good operates in a market with many consumers who differ in their ability to process information. The consumers' constraints are modeled in two submodels: the first in terms of the limits on the number of sets in the partition of the price space, and the second in terms of the limits on the complexity of the operation he can use to process a price offer. For the construction of the second submodel, the tool of a "perceptron" is borrowed from the parallel computation literature. Assuming a negative correlation between the seller's cost of supply of the good and the consumer's ability to process information, I demonstrate that the heterogeneity of consumer's abilities can be used by the seller to profitably discriminate among them.
Official measures of poverty in the United States are compiled by the Bureau of the Census by comparing a household's income level to a prespecified threshold. From a theoretical perspective it is more appropriate to evaluate the level of poverty using a consumption-based measure of household welfare. In this paper I evaluate the level of poverty using expenditure data from the Consumer Expenditure Survey. I find that consumption-based poverty rates are much lower than those based on income. The trend in the poverty rate in the United States is sensitive to the price index and equivalence scales used to adjust the poverty thresholds.
The factor price equalization hypothesis is widely at odds with the large variation in factor prices across countries. Similarly, the Heckscher-Ohlin-Vanek (HOV) theorem constitutes an incomplete description of trade in factor services: its predictions are always rejected empirically. These two issues are examined using a modification of the HOV model that allows for factor-augmenting international productivity differences. The empirical results are stark: this simple modification of the HOV theorem explains much of the factor content of trade and the cross-country variation in factor prices.
Product liability ideally should promote efficient levels of product safety, but misdirected liability efforts may depress beneficial innovations. This paper examines these competing effects of liability costs on product R & D intensity and new product introductions by manufacturing firms. At low to moderate levels of expected liability costs, there is a positive effect of liability costs on product innovation. At very high levels of liability costs, the effect is negative. At the sample mean, liability costs increase R & D intensity by 15 percent. The greater linkage of these effects to product R & D rather than process R & D is consistent with the increased prominence of the design defect doctrine.
This study finds a significant negative effect of proportional income taxation on human capital. Of the few earlier studies to address this issue, most suggested a negligible effect of taxation on investment in human capital. This earlier conclusion is shown to be incorrect by using a model that is more general in several respects than the models used previously.
Trade theorists continue to puzzle over their surprisingly small estimates of the impact of trade liberalization on imports. All explanations of the puzzle treat trade liberalization as a given. But the level of trade protection is not exogenous. The theory of endogenous protection predicts that higher levels of import penetration will lead to greater protection. This paper finds that when trade protection is modeled endogenously, its restrictive impact on imports is large, 10 times the size obtained from treating protection exogenously.