We study the role of labor inputs in religious attendance using data on Oklahoma Methodist congregations from 1961 to 2003. Pastors play a significant role in church growth: replacing a 25th percentile pastor with a 75th percentile one increases annual attendance growth by 3%. A pastor’s performance in his or her first church (largely the result of random assignment) predicts future performance, suggesting a causal effect of pastors on growth. The deployment of pastors by the church indicates efficient use of labor: low-performing pastors are more likely to be rotated or exit the sample, and high-performing pastors are moved to larger congregations.

This paper examines the impact of the Federal Reserve's founding on seasonal pressures and contagion risk in the interbank system. Deposit flows among classes of banks were highly seasonal before 1914; amplitude and timing varied regionally. Panics interrupted normal flows as banks throughout the country sought funds from the central money markets simultaneously. Seasonal pressures and contagion risk in the system were lower by the 1920s, when the Fed provided seasonal liquidity and reserves. Panics returned in the 1930s, due in part to shocks from nonmember banks and because the Fed's decentralized structure hampered a vigorous response to national crises.

The question of whether controls on the importation of foreign oil into the United States should take the form of tariffs or quotas has been a topic of recent public debate and investigation bv econonmists. Under static competitive conditions it is well known that equivalent tariffs and quotas can be constrtucted. Hence in this context, there is no choice to be mlade on economic efficiency grounds.' Hlowever, in a recent isstue of this Review, George Hay poinlts out that the actual market for oil in the United States differs fromii the required textbook conditions for equivalence. Under the U.S. oil import program which prevailed until recentl-, each refiner's quota for inmport of foreign oil is a positive function of his refinery input. Since import tickets are allocated free of charge, rather than auctioned, the form of the quota lowers the marginal cost of domestic refiners. Hay goes on to show that when combined with other static competitive assumptions, this quota mechanismi could generate greater consumer benefits in terms of lower prices than would an equivalent tariff (equivalent in the sense that the same percentage of imports is admitted).2 Hay expresses a preference for tariffs in a real world context and warns that his analysis of the price effects of the U.S. oil quota system holds only under very restrictive conditions. However, he does not address what is perhaps an even more important deviation of the domestic oil industry from the standard textbook model: crude oil production in the United States was limited in the major producing states by regulatory commissions that practiced market demand prorationing under the old oil quota program. Under this system, an-y price set by the industry is ratified by the commissions by limiting production to a level that will not result in the accumulation of undesired inventories.' We are not addressing the issue of the level of price in the oil industry in this paper. Rather, we wish to review the effects of tariffs and quotas on resource allocation, an issue which Hay omits from his analysis; and, for this purpose we make use of the simple model of a profit-maximizing monopolv as a characterization of the domestic oil industry. The assumption of profit maximiza-

ABSTRACT We use events related to a proxy access rule passed by the Securities and Exchange Commission in 2010 as natural experiments to study the valuation effects of changes in shareholder control. We find that valuations increase (decrease) following increases (decreases) in perceived control, especially for firms that are poorly performing, have shareholders likely to exercise control, and where acquiring a stake is relatively inexpensive. These results suggest that an increase in shareholder control from its current level would generally benefit shareholders. However, we find that the benefits of increased control are muted for firms with shareholders whose interests may deviate from value maximization.

ABSTRACT Deloitte's 2007 PCAOB Part II report identifies, among other issues, concerns related to the audit firm's quality controls with respect to auditing income tax accounts. We investigate whether Deloitte's actions to remediate the PCAOB's concerns are associated with changes to their clients' financial reporting for income taxes. We find that Deloitte's clients increased the reported valuation allowance on deferred tax assets and increased the reported reserve for uncertain tax benefits (UTBs) in response to increased auditor scrutiny over income tax accounts. Additionally, we find that in subsequent periods, Deloitte's clients report valuation allowances and UTB balances that are not significantly different than other annually inspected auditors, consistent with Deloitte changing the quality controls related to audits of income tax accounts after the failed remediation of the 2007 Part II report.

We investigate the impact of family control on corporate social responsibility (CSR) performance. Using newly collected data on the ultimate ownership structure of publicly traded firms in nine East Asian economies, we find that family-controlled firms exhibit lower CSR performance, consistent with the expropriation hypothesis of family control. The negative relationship between family control and CSR is robust to alternative measures of family control, different components of CSR, as well as to endogeneity tests, subsample tests, and alternative estimation methods. We further find that CSR underperformance concentrates in family firms with greater agency problems and in countries with weaker institutions. Moreover, the underperformance of East Asian family firms holds when controlling for the effects of other large shareholders and when comparing with family firms from other countries. These findings contribute to understanding the determinants of CSR and highlight the importance of corporate governance and the institutional environment in improving CSR performance of family-controlled firms.

Results of recent empirical and theoretical research have shown the applicability of consumer demand theory in describing and predicting choices of nonhuman consumers (see A. Covich, D. Rapport and J. Turner, Battalio et al., Kagel et al., 1975, 1980). Commodities used in these studies have been largely limited to different kinds of edibles: food grains, water, and sweet tasting (preferred) fluids. A natural extension of the commodity choice model is to consider leisure as a good. This paper presents results of experiments showing that nonhuman workers (pigeons) are willing to trade off income for leisure if the price is right. More specifically our results show that the Slutsky-substitution effect is positive for (exactly) compensated wage decreases, and that leisure is a normal good at all points in the choice space. In addition to demonstrating the pervasiveness of income-leisure tradeoffs, the experiments show strong regularities in the size of the substitution and income effects at varying wage rates; with increases in real wages both income and substitution effects get smaller, but the substitution term decreases more rapidly than the income term resulting in a backward bending labor supply curve at higher wages. The plan of the paper is as follows. In Section I we characterize the procedures employed in the laboratory for studying labor supply, and summarize well-established characteristics of this behavior as it is relevant to the present experiments. Sections II and III describe the hypotheses tested and the experimental procedures employed in the tests. Results of the experiments are given in Section IV. Some of the implications of these results are discussed in a brief concluding section. Space considerations do not permit a detailed discussion of the reasons why economists should take seriously the investigation of economic theories using nonhuman subjects (see Kagel and Battalio for this argument). For the more skeptical reader we simply note that if one defines economics as .. . .the study of the allocation of scarce resources among unlimited and competing uses (Albert Rees, 1968, p. 472), then animal psychologists, ecologists and biologists have been involved in studying economic behavior for some time now (Rapport and Turner; Jack Hirschleifer; H. Rachlin). It is but a small step to take the technologies of these related disciplines and apply them to behavior of interest to economists, for example labor supply behavior. At a minimum, such studies expand considerably the scope for comparative economic analysis. At a maximum they provide a laboratory for identifying, testing, and better understanding general laws of economic behavior. Use of this laboratory is predicated on the fact that behavior as well as structure vary continuously across species, and that principles of economic behavior would be unique among behavioral principles if they did not apply, with some variation, of course, to the behavior of nonhumans.

There has been a great deal of discussion about whether the marginal utility of income rises with income. Most notably, Milton Friedman and Leonard J. Savage argued in their classic paper that the willingness to gamble implies that the marginal utility of income is rising over a range. The discussions of rising marginal utility and of Friedman-Savage gambles have proceeded independently of the literature on time preference, although the issues are in fact related logically. Drawing on this logical relationship we shall show 1) that at least when intertemporal utility is separable, the stable levels of consumption that are usually observed imply that the marginal utility of income decreases as income rises. 2) Even if the marginal utility of income does increase, Friedman-Savage gambles normally will not maximize utility; saving and dissaving can attain the levels of consumption which generate the most utility per dollar of income at a lower cost than gambles unless imperfections in the capital market are severe. 3) Even when the utility function is not temporally separable, repeated gambling cannot be a rational way of dealing with a rising marginal utility of income. We therefore conclude that observed gambling is seldom if ever explained by the logic set out in Friedman and Savage's seminal paper. In view particularly of the stability of consumption levels and the lack of FriedmanSavage gambles, we conclude that marginal utility of income does not rise with income. I. A Conceptual Framework

Since the work of Robert M. Solow (1957), it has been known that technological change accounts for a significant portion of GNP growth in industrialized economies. This technological change has been measured either by the estimated time trend in regressions of aggregate output on inputs or by indexes of total factor productivity. Since under either method productivity is measured as a residual, it incorporates all factors that influence GNP growth other than the increase in measured inputs. Despite various refinements to the measurement of total factor productivity, there still is no convincing explanation for its source (see Dale W. Jorgenson and Zvi Griliches, 1967; Solow, 1988). Recent literature has suggested a potential source of productivity gains: the creation of new inputs under monopolistic competition. Wilfred Ethier (1982) has argued that the development of new intermediate inputs leads to greater specialization in the use of resources and to higher productivity (see also Markusen, 1989). Subsequent authors, including Paul M. Romer (1990) and Gene Grossman and Elhanan Helpman (1991), have examined models in which continuous growth is made possible by the creation of new inputs. Romer (1987) has considered the form of the aggregate production function in such an economy and has argued that conventional growth accounting, assuming constant returns to scale, may be incorrect. In this paper we shall examine how to account for growth when new inputs are being created. In particular, we are interested in obtaining a decomposition of growth into that due to a higher quantity of existing inputs, and that due to a greater range of inputs. In Section I, we show how this decomposition can be obtained for a constantelasticity-of-substitution (CES) production function, obtaining an exact quantity index in the presence of new inputs. In Section II we examine the CES cost function, and show how an implicit quantity index is constructed. In Section III we consider an empirical application to the productivity growth of industries within the major business groups (chaebol) of South Korea. We find that productivity is significantly correlated with the entry of new input-producing firms into the chaebol, as expected from our theoretical results.