Knowledge that Transforms

While research has demonstrated that farm households in developing economies are able to protect consumption from idiosyncratic crop shocks, little evidence shows how this is achieved. This paper examines the extent to which labor markets allow households to shift labor from farm to off-farm employment, and the extent to which such a shift explains the observed lack of correlation between consumption and idiosyncratic crop shocks. The empirical analysis uses a novel measure of the idiosyncratic crop income shock which utilizes information on start-of-season cropping choices to more accurately estimate household expectations of weather.

The standard wage decomposition methodology produces arbitrary results when attempting to estimate the separate contributions of sets of dummy variables to the unexplained portion of the wage decomposition: the estimates are not invariant with respect to the choice of reference groups. However, the estimated separate contributions of sets of dummy variables to the explained portion and the overall decomposition are shown not to be dependent upon the choice of left-out reference groups. A similar identification problem applies to continuous variables, although this may not be as likely to cause problems in practice.

This study presents estimates of the effect of parental income on children's cognitive, social, and emotional development. The effect of current income is small, especially when income is treated as endogenous. The effect of “permanent” income is substantially larger, but relatively small when compared to the magnitude of recent policy-induced changes in income. Family background characteristics play a more important role than income in determining child outcomes. Policies that affect family income will have little direct impact on child development unless they result in very large and permanent changes in income.

We hope to answer three questions: Has there been a structural break in postwar U.S. real GDP growth towards stabilization? If so, when? What is the nature of this structural break?We employ a Bayesian approach to identify a structural break at an unknown changepoint in a Markov-switching model of the business cycle. Empirical results suggest a break in GDP growth toward stabilization, with the posterior mode of the break date at 1984:1. Furthermore, we find a narrowing gap between growth rates during recessions and booms that is at least as important as any decline in the volatility of shocks.

Through a survey, private economic value estimates were obtained on 964 inventions made in the United States and Germany and on which German patent renewal fees were paid to full-term expiration in, 1995. A search of subsequent U.S. and German patents yielded counts of citations to those patents. Patents renewed to full-term were significantly more highly cited than patents allowed to expire before their full term. The higher an invention's economic value estimate was, the more the patent was subsequently cited.

Many incentives in organizations arise not through explicit formal incentive contracts but rather implicitly through career concerns. This paper models career concerns through agents trying to manipulate the market assessment of their future productivity. The information flow from current actions to market assessment is therefore crucial in determining the nature of these incentives. Improved information may either increase or reduce incentives. The impact of information provides a major distinction between the explicit and implicit incentives model. The paper derives general results on comparisons of information structures which serve as counterparts to the standard results on information structures in the principal-agent model: sufficient statistic, impact of a Blackwell garbling, comparison of inclusive information structures.

The front matter of the March 1999 issue contains the Table of Contents.

The front matter of the May 1999 issue contains the Table of Contents.