Knowledge that Transforms

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American Economic Association Universal Academic Questionnaire Summary Statistics by Charles E. Scott and John J. Siegfried. Published in volume 104, issue 5, pages 603-07 of American Economic Review, May 2014

Reserve (FR) documents. We virtually pounce on them. We criticize everything from the frailest economic argument to the color scheme and quality of the binding. Except for newsy details necessary to keep our preachments up to date, the issues we raise seldom change. Decade after decade, we upbraid the Fed about the responsibilities for economic statesmanship that accompany its statutory independence; its unwillingness to specify an explicit model of how it believes that its policies impact on economic variables; its special concern for cushioning its effects on the money markets; the inevitable ineptness of its interventions into specific markets; and its extraordinary penchant for humbug. Fed officials must long have wondered

The traditional economic analysis of is based on Gary Becker's study of taste by employers, employees, and consumers. More recent work by Kenneth Arrow (1972, 1973) has attempted to interpret intergroup wage differences in an alternative framework as a rational reaction to uncertainty in labor markets. His model of statistical discrimination demonstrates that when the screening process used to determine a worker's qualifications is costly, and prior expectations of productivity differ across race or sex groups, then wage differentials may arise between workers of identical productivity. By implicitly assuming a perfect screening process, Arrow ignores a potentially important source of wage differentials, namely the fact that the screening process might be a more reliable predictor of productivity for one group than for another.' Our paper generalizes the Arrow model in two ways. First, in contrast to Arrow, we assume that all groups have identical distributions of productivity. Secondly, the screening process used by the firm to determine an applicant's productivity is biased in the sense that: a) members of various groups may pass the test in different proportions despite their identical productivity distributions; and b) the predictive power of the test might vary across groups. Our objective is to analyze the effects of these types of biases in the screening process on the wage differentials between different population groups.

Endowment payouts have become an increasingly important component of universities' revenues in recent decades. We study how universities respond to financial shocks to endowments and thus shed light on a number of existing models of endowment behavior. Endowments actively reduce payouts relative to their stated payout policies following negative, but not positive, shocks. This asymmetric behavior is consistent with “endowment hoarding,” especially among endowments whose current value is close to the benchmark value at the start of the university president's tenure. We also document the effect of negative endowment shocks on university operations, such as personnel cuts.