Knowledge that Transforms

Twenty-five years ago, married women's retirement decisions were strongly influenced by their husbands' health and retirement status, factors determining the value of women's nonmarket time. In contrast, their own economic opportunity set (wages, Social Security entitlements, and employer pension benefits) appeared to have little effect on their decisions to leave the labor force.' Married women currently forming expectations regarding retirement differ in important ways from this earlier generation. They have spent more time in the labor force, earned higher wages, and accumulated substantial pension rights, both private and public. They also have lower probabilities of remaining married. In 1970, 82 percent of U.S. women aged 45-54 were manried, while 5 percent were divorced. By 1992, only 73 percent were married, while 16 percent were divorced. Thus, husbands' pension and Social Security benefits are less likely to provide economic security in retirement for the current generation of preretirement married women. Their expectations regarding retirement should reflect these changing conditions. Relative to earlier cohorts, married women's retirernent plans should be more strongly influenced by considerations of their own economic returns from continued employment. While of interest for its labor-supply implications, this issue is a matter of public concern because of growing evidence that divorce has wide-ranging consequences for the economic well-being of postretirement women (William H. Crown et al., 1993). Findings from the new Health and Retirement Survey indicate that older married women's expectations of working after age 62 are strongly influenced by their expected wage, nonwage compensation such as employer-provided health and disability insurance, and pension income. Expected Social Security entitlements also appear important, although the evidence for their effect is weaker. Like the earlier generation, wives are also influenced by their husbands' plans, suggesting a tendency toward joint retirement.

Holdouts (the continuation of negotiations beyond the contract expiry date) are the most common form of disputes in labor contract negotiations. The authors model holdouts as a delaying tactic employed by unions to obtain information about other bargaining outcomes in their industry. Novel implications of their model include a positive association between holdout duration and the number of bargaining pairs negotiating contracts simultaneously; bunching of holdout durations within these 'negotiating groups'; and fewer strikes among holdouts which end later in groups. Using a large panel of contract negotiations in Canadian manufacturing, the authors find considerable support for these predictions. Copyright 1998 by American Economic Association.

Following the completion of microand macroeconomics principles courses, for which the majority of students are enrolled to fulfill requirements for other majors, economics majors take two intermediate micro and macro courses, a course in statistics/econometrics, and some field courses that may or may not include more quantitative methods (John Siegfried et al., 1991). In a national survey, Michael Watts and I found some differences between the way statistics and econometrics courses are taught and the way the other undergraduate economics courses are taught (Becker and Watts, 1996). In particular, problem sets are used more in statistics and econometrics than in other undergraduate economics courses. Curiously, however, those applications are not based on events reported in newspapers, magazines, and journals that economists read. How timely and relevant can problem sets be if they are not documented in current events? Ideally instructors set problems raised by their own research and consulting; problems students can expect to see on their jobs. After all, the rationale for teaching statistics and econometrics outside a mathematics department rests on a belief that there is something special about economic analyses. That is, economists' use of statistics is tied to the issues they face. Although the calculation of a mean and a median, for example, is the same in medicine and economics, a discussion of the average duration of economic expansions since World War II is more pertinent to those majoring in economics than is a discussion of average blood pressure or average time to dementia with mad-cow disease. The importance of economic tleory is often lost when mathematicians attempt to make situations real, as seen for example in the Chance Course (J. Laurie Snell and John Finn, 1992), where a potpourri of statistical applications are presented with no disciplinegrounded analyses. To teach students to apply the tools of statistics to actual situations and data encountered by economists, there is little justification for examples involving the drawing of balls from urns, flickng of spinners, tossing of coins, or contrived card and dice tricks. Yet these methods of generating data continue to be found in the activity-based teaching and assessment Discussants: William Greene, New York University; Robin Lumsdaine, Brown University; Kim Sosin, University of Nebraska-Omaha.

The work presented here has attempted to test the hypothesis that changing [U.S.] demographic structure has been a major factor in the changes in relative wages that have occurred over the last 30 years leading to the observed sharp decline in the wages of young adults and those approaching retirement relative to prime-age workers as well as to the decline and then steep increase in the wages of the college-educated relative to high-school graduates.... The analysis has identified pronounced effects of changing age structure on wages.... (EXCERPT)

In economics, the standard mechanism for allocating scarce resources is the market. A smoothly functioning market, however, is built upon legally enforceable contracts and property rights. In the absence of law, it is likely that violence (or the threat thereof), rather than prices, is the means by which resources will be allocated. Interactions among animals provide clear evidence for this claim. Dominance hierarchies based on fighting ability, also sometimes known as pecking orders, have been documented across a wide variety of species (e.g., primates, chickens and other birds, reptiles, lobsters) and a broad range of resources including food, nesting sites, and access to mates (Warder C. Allee, 1938; John Alcock, 1993). Evidence suggests that violence also plays a critical role in human interactions when property rights are not legally enforceable (e.g., drug dealing and extortion) (see e.g., Peter Reuter, 1983; Geoffrey Canada, 1995). In this paper, we analyze the determinants of the efficiency with which illegal markets allocate scarce resources. We develop a stylized model in which players compete for a fixed prize, with the winner determined by fighting ability. Efficiency in this context is determined by the amount of resources spent on fighting. Two factors affecting efficiency emerge from the model: lethality and predictability. Perhaps surprisingly, the use of more lethal mechanisms for resolving disputes does not have a clear impact on the social costs of violence. The intuition underlying this result is that, as the costs of losing a fight rise, the willingness to fight falls. We show that holding other factors constant, the resources spent on fighting are lowest when the cost of losing is either very low or very high (e.g., nuclear deterrence), but over a wide range of lethality levels, the overall social costs of fighting are fairly stable. In contrast, the costs of violence are critically linked to the predictability of dispute outcomes (i.e. the certainty with which potential combatants know who will be victorious ex ante). When the outcome of a conflict is highly correlated with observable characteristics such as strength or size, there is little need to actually fight. Thus unpredictability, all else equal, increases the expected payoff to fighting for the lower-ranked member, leading to more conflicts.