Knowledge that Transforms

The paper contributes to the debate on top performance in research productivity, its persistence over time, and the impact of gender. It uses a panel data set comprising the publications of all biomedical and exact scientists at the University of Leuven in the period 1992 to 2001. We find that women have a significant lower probability of reaching top performance for the first time in their career, particularly for top performance measured through citations, but there is no evidence for a gender bias hindering repeated top performance. On the contrary, women seem to persist in top performance more easily than men do.

Agglomeration is a location pattern frequently observed in service industries such as hotels. This paper empirically examines whether agglomeration facilitates tacit collusion in the lodging industry using a quarterly data set of hotels in Texas. We jointly model a price and occupancy rate equation under a switching regression model to identify a collusive and noncollusive regime. The estimation results indicate that clustered hotels have a higher probability of being in the potential collusive regime than isolated properties in the same town. The identification of a collusive regime is also consistent with other factors considered to affect the sustainability of tacit collusion.

Analyzing data from a unique survey of managers of Chinese private firms, we investigate how family ties with firm heads affect managerial compensation and job assignment. We find that family managers earn higher salaries and receive more bonuses, hold higher positions, and are given more decision rights and job responsibilities than nonfamily managers in the same firm. However, family managers face weaker incentives than professional managers, as seen in the lower sensitivity of their bonuses to firm performance. Our findings are consistent with the predictions of a principal-agent model that incorporates family trust and endogenous job assignment decisions.

We provide empirical evidence that automobile manufacturers use cash incentives to offset how gasoline price fluctuations affect the expected fuel expenses of automobile buyers. Regressions based on a database of incentives over 2003 to 2006 suggest that on average, manufacturers offset 40% of the change in relative fuel costs between vehicles due to gasoline price fluctuations. The results highlight that carbon taxes and emissions trading programs likely would generate substantial substitution within vehicle classes, and studies that ignore manufacturer discounting likely underestimate consumer demand for fuel economy. The results also have implications for the optimal design of feebate programs.

Earnings nonresponse in the Current Population Survey is roughly 30% in the monthly surveys and 20% in the March survey. If nonresponse is ignorable, unbiased estimates can be achieved by omitting nonrespondents. Little is known about whether CPS nonresponse is ignorable. Using sample frame measures to identify selection, we find clear-cut evidence among men but limited evidence among women for negative selection into response. Wage equation slope coefficients are affected little by selection, but because of intercept shifts, wages for men and, to a lesser extent, women are understated, as are gender gaps. Selection is least severe among household heads.

We examine whether the magnitude of an anticipated income change affects consumption smoothing (the magnitude hypothesis). Although this hypothesis has been discussed for fifty years, we are one of the first to provide formal statistical evidence to support it. We consider the natural experiment of an individual's final mortgage payment, an anticipated income change, and examine how it affects credit card expenditure. We can identify causality because the dates of final mortgage payments across individuals are uncorrelated with unobserved determinants of consumption. Using an event study methodology, we provide evidence to support the magnitude hypothesis.

This paper evaluates the efficacy of a structural model of oligopoly used for merger review. Using premerger data, we estimate several demand systems and use a static Bertrand model to simulate the price effects of two mergers. Using pre- and postmerger data, we directly estimate the price effects. The direct estimates imply that one merger resulted in moderate price increases, while the second left prices essentially unchanged. While some simulations are similar to the directly estimated price effects, overall simulations overstate the price effects in one case and understate them in the other. Explanations for the discrepancies are explored.

Standard economic theory predicts that if property rights to pollute are clearly established, equilibrium outcomes in an efficient emissions permit market will be independent of how the emissions permits are initially distributed. This so-called independence property has important implications for policy design and implementation. Past studies document a strong positive correlation between the initial permit allocation and firm-level emissions, raising concerns that the independence property is failing to hold in real-world settings. We exploit the random assignment of firms to different permit allocation cycles in Southern California's RECLAIM program in order to test the independence of permit allocation and emissions. Our results lend empirical support to the independence hypothesis.

This paper studies the innovation response of upstream technology suppliers when their downstream buyers transition from regulation to competition. By modeling the impact of the 1990s U.S. electricity deregulation on patenting, we find that after deregulation, the net competition effect (comprising the pure competition and the escape competition effect) decreased innovation by 18.3% and the appropriation effect increased innovation by 19.6%. Other deregulation factors have led to a 20.6% decline. In aggregate, after deregulation, innovation by the upstream technology suppliers has declined by 19.3%, and upstream innovation quality and generality have declined as well.

We present theory and evidence to suggest that, in the context of analyzing global poverty, the EKS approach to estimating purchasing power parities yields more appropriate international comparison of real incomes than the Geary-Khamis approach. Our analysis of the 1996 and 2005 International Comparison Project data confirms that the Geary-Khamis approach substantially overstates the relative incomes of the world's poorest nations, and this leads to misleading comparisons of poverty across regions and over time. The EKS index of real income is much closer to being a true index of economic welfare and is therefore preferred for assessment of global poverty.