Knowledge that Transforms

This paper examines the effect of foreign acquisition on wages and employment of different skill groups using panel data on Finnish establishments for 1988–2001. Exploiting the availability of a rich set of preacquisition controls, we use various regression and propensity-score matching methods. The results indicate that foreign acquisition has a positive effect on wages. The magnitude of this effect increases with the level of schooling of the workers. The wage increase is not immediate, but occurs within one to three years from the acquisition. The results also indicate that the acquisition decreases the share of highly educated workers in the plant's employment.

Peer effects have figured prominently in debates on school vouchers, desegregation, ability tracking, and antipoverty programs. Compelling evidence of their existence remains scarce for plaguing endogeneity issues such as selection bias and the reflection problem. This paper is among the first to firmly establish the link between peer performance and student achievement, using a unique data set from China. We find strong evidence that peer effects exist and operate in a positive and nonlinear manner; reducing the variation of peer performance increases achievement; and our semiparametric estimates clarify the trade-offs facing policymakers in exploiting positive peer effects to increase future achievement.

Using a normalized CES function with factor-augmenting technical progress, we estimate a supply-side system of the U.S. economy from 1953 to 1998. Avoiding potential estimation biases that may have occurred in earlier studies and putting a high emphasis on data consistency, we obtain robust results not only for the aggregate elasticity of substitution but also for the parameters of labor and capital augmenting technical change. We find that the elasticity of substitution is significantly below unity and that technical progress shows an asymmetrical pattern where the growth of labor-augmenting technical progress is exponential, while that of capital is hyperbolic or logarithmic.

This paper shows that the United Kingdom since 1975 has exhibited a pattern of job polarization with rises in employment shares in the highest- and lowest-wage occupations. This is not entirely consistent with the idea of skill-biased technical change as a hypothesis about the impact of technology on the labor market. We argue that the “routinization” hypothesis recently proposed by Autor, Levy, and Murnane (2003) is a better explanation of job polarization, though other factors may also be important. We show that job polarization can explain one-third of the rise in the log(50/10) wage differential and one-half of the rise in the log(90/50).

This paper uses Consumer Expenditure Survey data and a seminonparametric statistical model to estimate life-cycle profiles of consumption, controlling for demographics, cohort, and time effects. We construct age profiles for total and nondurable consumption as well as expenditure patterns for consumer durables. Special emphasis is placed on the comparison of different approaches to control for changes in demographics over the life cycle. We find significant humps over the life cycle for total, nondurable, and durable expenditures. Changes in household

This volume contains the Papers and Proceed ings of the one hundred and nineteenth annual meeting of the American Economic Association.The Proceedings record the business activities of the Association in 2006, the annual membership meetings, and the April (2006) and January (2007) meetings of the Association's officers and committees.The Papers constitute the greater part of the volume.They comprise contributions that fill roughly the same number of pages as one and a half regular issues of the American Economic Review.We will take this opportunity to answer a number of commonly asked questions about the Papers.Who chooses the authors?About a year in advance, the Association's President-elect, acting as program chairman, decides on the topics for which sessions will be organized.This is done after consultation and comment, both volunteered and solicited, from a wide range of individuals.(A Call for Papers appears in the summer and fall issues of the Journal of Economic Perspectives.)The President-elect invites some sessions and, with the help of a Program Committee, selects most of the sessions from the proposals received.Each session organizer in turn invites several persons (usually three or four) to give papers on the theme of the session and asks others to give comments on the papers.The program chairman decides at the time of organization which sessions will be included in this volume.Space limitations restrict the number of printed sessions.This year we are printing 28 sessions, although a total of 180 sessions were sponsored, either solely by the American Economic Association or jointly with allied societies.Are discussants' comments published?Comments and discussions usually are not published.For all sessions, names and affiliations of commentators are printed at the start of each session, permitting readers especially interested in particular comments to write to the commentator for a copy of the discussion.

Este trabajo analiza la duración del liderazgo en la industria tomando como base las cuotas de mercado de las empresas líderes en 45 industrias japonesas a lo largo de 23 años. Para ello, se propone una nueva relación escalar entre la cuota de mercado de una empresa y la desviación estándar de los cambios en dicha cuota de mercado. Esta relación discrimina de forma poderosa entre los modelos teóricos candidatos de la dinámica de participación en el mercado. También hace posible una simplificación útil a la hora de contrastar un modelo de tipo markoviano. En relación a este modelo se halla que al menos algunas industrias muestran un sesgo “chandleriano” hacia duraciones más largas del liderazgo que la representada en el modelo de referencia.

We study a multi-sector model of growth with differences in TFP growth rates across sectors and derive sufficient conditions for the coexistence of structural change, characterized by sectoral labor reallocation, and balanced aggregate growth. The conditions are weak restrictions on the utility and production functions commonly applied by macroeconomists. Per capita output grows at the rate of labor-augmenting technological progress in the capital-producing sector and employment moves to low-growth sectors. In the limit all employment converges to two sectors, the slowest-growing consumption-goods sector and the capital-goods sector.

This paper investigates the normative criteria that guide the allocation of a policy task to an elected politician versus an independent bureaucrat. The bureaucrat is preferable for technical tasks for which ability is more important than effort, or if there is great uncertainty about whether the policymaker has the required abilities. The optimal allocation of redistributive tasks is ambiguous, and depends on how the bureaucrat can be instructed. But irrespective of the normative conclusion, the politician prefers not to delegate redistributive policies.