Knowledge that Transforms

In this research, we investigate the informational role of financial analysts. Using a trade-based empirical technique, we estimate the probability of information-based trading for a sample of NYSE stocks that differ in analyst coverage. We determine how this probability differs across stocks followed by many analysts, and we investigate whether analysts increase or create the flow of information. We also determine the `normal' level of noise trading in each sample stock, thereby giving us the ability to assess the depth of the market for stocks with differing analysts followings. Our most important empirical result is that the number of financial analysts is not a good proxy for information-based trading.

A model of the “new growth theory” type is applied to the persistence of racial income differentials in the presence of community segregation. When community human capital affects human capital accumulation by individuals, differences between groups can persist indefinitely, even in the absence of current discrimination. Intercommunity mobility can benefit advantaged minority workers, who leave behind an impoverished ghetto. Workplace integration without community integration may not lead to equality even in the long run. We examine various policies and show that a large, temporary intervention may be successful in achieving racial equality while a smaller permanent one fails.

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The proportion of women in state government jobs and applicant pools is well explained by a model emphasizing supply‐side factors. Relative to men, women's supply is least sensitive to wages in predominantly male jobs and most sensitive to wages in predominantly female jobs. These results suggest that comparable worth policies that shift relative pay toward traditionally female jobs and away from traditionally male jobs will increase the proportion of females in male‐dominated, female‐dominated, and total state government jobs. The implication is that supply side responses need not prevent comparable worth pay adjustments from raising total female compensation.

Over the years there have been frequent changes in unemployment insurance (UI) benefits. Such changes could influence spells in progress as well as future spells. If individuals anticipate changes, they are likely to adjust their behavior. The effect of changes in benefits on unemployment duration, therefore, will be difficult to predict accurately without accounting for individual expectations. This article investigates the extent to which individuals anticipate changes in UI entitlement. The results suggest that individuals have significant, although not perfect, foresight about changes in UI provisions. Assuming perfect foresight might represent actual expectations more closely than assuming no foresight.

Prior to trade liberalization in the 1980s, New Zealand heavily protected low‐wage industries. Consequently, trade liberalization was desirable from the perspective of both traditional and new trade theories. While liberalization decreased employment in protected industries somewhat, it also significantly affected wages, noticeably diminishing the effect of liberalization on employment in previously protected industries and thus reducing the postliberalization shift in the industrial composition of employment. The small effect of liberalization on the composition of employment suggests that the effect of tariffs on wages and firms' monopoly power substantially eliminated any effect of protection on the distribution of employment.