The paper presents a positive model of policy formation in federal legislatures when delegates engage in the strategic exchange of policy-relevant information. Depending on the type of policy under consideration, communication between delegates generally suffers from a bias that makes truthful communication difficult and sometimes impossible. This generates inefficient federal policy choices that are often endogenously characterized by overspending, universalism, and uniformity. Building on these findings, I develop a theory of fiscal (de-)centralization, which revisits the work of Oates in a world of incomplete information and strategic communication. Empirical results from a cross section of US municipalities are consistent with the predicted pattern of spending.

The labor supply of taxi drivers is consistent with the existence of intertemporal substitution. My analysis of the stopping behavior of New York City cabdrivers shows that daily income effects are small and that the decision to stop work at a particular point on a given day is primarily related to cumulative daily hours to that point. This is in contrast to the analysis of Camerer et al., who find that the daily wage elasticity of labor supply of New York City cabdrivers is substantially negative, implying large daily income effects. This difference in find-ings is due to important differences in empirical methods and to problems with the conception and measurement of the daily wage rate used by Camerer et al. I.

This paper analyzes the daily labor supply behavior of food and beverage vendors at a single stadium over an entire baseball season. This labor market is attractive for the study of labor supply both because the vendors unilaterally decide whether to participate on each game date and because changes in product demand conditions across days are large and highly predictable, generating exogenous game‐to‐game variation in the vendor “Wage.” I exploit the observable shifts in product demand conditions across games to estimate the labor supply (participation) elasticity of stadium vendors. Estimates that recognize that demand conditions and vendor labor supply decisions simultaneously determine the vendor wage always find substantial labor supply elasticities, typically in the .55–.65 range. In contrast, estimates that ignore the endogeneity of the vendor wage yield severely downward-biased labor supply elasticities. These results highlight the importance of using demand shift instruments to identify labor supply elasticities in specific labor markets.