This paper presents evidence that autocrats use state-owned firms to prevent unrest via employment provision, a role that helps explain these low-productivity firms' favorable treatment and persistence across settings. I use variation in a regional conflict in Xinjiang to establish that Chinese state firms respond to threats of ethnic unrest by hiring minority men. Concurrently, wages rise and private employment falls among this group. These patterns are consistent with a theoretical framework of governmentsubsidized, pacification-motivated state employment, and I use the framework to quantify the implicit subsidy that state firms receive for hiring male minorities.

We applied the VARMA test to examine the dynamic relation between prices and interest rates. The dynamic relation, which is important to characterize the nature of the Gibson paradox, provides economists new insight in discriminating against competing theories. In light of our empirical findings, all theories in the literature lose their persuasiveness. We found some evidence of unidirectional relation from prices to interest rates, but we found no evidence of unidirectional relation from interest rates to prices. Hence, the business cycle explanations advanced by Wicksell (1907), Keynes (1930), Lee and Petruzzi (1986), and Barsky and Summers (1988) are especially in jeopardy. A century and a half after its birth, this paradox is more puzzling than ever.

This paper analyzes the Gibson paradox, a strong positive correlation between prices and interest rates over the past 250 years. The phenomenon of Gibson's paradox is significant in Britain but not significant in the United States. However, there is a significant correlation between British interest rates and U.S. price levels. The price movements show a strong characteristic of random walk under the gold standard, but appear not to be random walk under the non-gold standard. Based on (a) the price random walk assumption and (b) the real return arbitrage assumption, this paper constructs a simple model to explain the above interesting empirical results.

Mean and variance measures of health information about cholesterol and saturated fat are included in a demand system for fats and oils. A Bayesian model of health risk belief and consumer awareness surveys are the basis for computing these measures. The empirical demand model shows that health information has resulted in significant increases in consumption for corn, cottonseed, and soybean oils and decreased consumption for butter and lard. The predicted demand effects based on the Bayesian information model are more reasonable than predictions from using either a time trend or a simple cumulative cholesterol information index.

The intergenerational earnings mobility of Canadians born to immigrants is examined using the 2001 Census. A detailed portrait of the Canadian population is offered as are estimates of the degree of generational mobility among the children of immigrants from seventy countries. The degree of intergenerational persistence is about the same for immigrants as for the entire population, and there is more generational mobility among immigrants in Canada than in the United States. We also use quantile regressions to distinguish between the role of social capital from other constraints limiting mobility and find that these are present.

Do progressive marginal income tax rates discourage self-employment? We assume risk neutrality to construct an implicit surtax on stochastic income relative to steady income, arising from a convex tax schedule. It is computed as part of a structural probit model with earnings equations and a tax simulator. The tax convexity variable and the net-of-tax income difference between self- and paid employment have the predicted signs and high levels of statistical significance for the probability of self-employment. A simulated flat tax reform suggests the tax effects are small.