In this article, we measure the impact of on‐site safety inspections on the frequency of work‐related injury and death in the Alberta construction sector, 1987–92. The data are disaggregated by subindustry allowing different risk levels to be associated with different work activities. In our sample, there is a dramatic decrease in inspection activity which alows us to assess the necessity for continuing with current levels of inspection effort. We find that on‐site safety inspections have no effect on the risk of accident and injury but do have a positive effect in reducing the number of work‐related fatalities.

We show that if firms statistically discriminate among young workers on the basis of easily observable characteristics such as education, then as firms learn about productivity, the coefficients on the easily observed variables should fall, and the coefficients on hard-to-observe correlates of productivity should rise. We find support for this proposition using NLSY79 data on education, the AFQT test, father's education, and wages for young men and their siblings. We find little evidence for statistical discrimination in wages on the basis of race. Our analysis has a wide range of applications in the labor market and elsewhere.

This paper analyzes the impact of automatic enrollment on 401(k) savings behavior. We have two key findings. First, 401(k) participation is significantly higher under automatic enrollment. Second, a substantial fraction of 401(k) participants hired under automatic enrollment retain both the default contribution rate and fund allocation even though few employees hired before automatic enrollment picked this particular outcome. This “default” behavior appears to result from participant inertia and from employee perceptions of the default as investment advice. These findings have implications for the design of 401(k) savings plans as well as for any type of Social Security reform that includes personal accounts over which individuals have control. They also shed light more generally on the importance of both economic and noneconomic (behavioral) factors in the determination of individual savings behavior.

We analyze the duration of bank relationships using a unique panel data set of listed firms and their banks from the bank-dominated Norwegian market. We find that firms are more likely to leave a bank as the relationship matures. Small, profitable, and highly leveraged firms maintain shorter bank relationships, as do firms with multiple bank relationships. These findings are robust to censoring, alternate specifications for the distribution of relationship duration, and other control variables relevant to the Norwegian market. Overall, our results cast doubt on theories suggesting that firms become locked into bank relationships.

This study examines the relation between the change in operating performance of firms which merge and whether the acquiring firm offered cash or stock as the method-of-payment. We examine how operating performance changed for a sample of 413 combinations. The results indicate that the change in performance of the merged firms is significantly larger for cases in which the acquiring company offered cash as compared to stock offers. The results are not sensitive to whether the combination involved a tender offer or a negotiated merger, to offer size, industry relatedness between the bidder's and the target's businesses or bidder leverage.

Profits a tax-exempt organization earns from business activities that are not related to the organization's exempt purpose are subject to the unrelated business income tax (UBIT). This paper shows that when the taxable and tax-exempt activities are substitutes, taxable income exceeds the incremental pretax financial return from the unrelated business activity because the exempt organization cannot deduct the opportunity cost of lost exempt function revenues when computing UBIT. As a result, the exempt organization may: (1) reduce or eliminate its unrelated business activity, or (2) change the way it uses its assets for unrelated business purposes by licensing the use of its assets to an unrelated taxable organization in exchange for nontaxable royalties. The model shows that although UBIT may distort the way in which an exempt organization uses its assets, this distortion can increase social welfare.

We develop a series of cross-sectional regression specifications to forecast skewness in the daily returns of individual stocks. Negative skewness is most pronounced in stocks that have experienced (1) an increase in trading volume relative to trend over the prior six months, consistent with the model of Hong and Stein (NBER Working Paper, 1999), and (2) positive returns over the prior 36 months, which fits with a number of theories, most notably Blanchard and Watson's (Crises in Economic and Financial Structure. Lexington Books, Lexington, MA, 1982, pp. 295–315) rendition of stock-price bubbles. Analogous results also obtain when we attempt to forecast the skewness of the aggregate stock market, though our statistical power in this case is limited.

Data from downtown Boston in the 1990s show that loss aversion determines seller behavior in the housing market. Condominium owners subject to nominal losses 1) set higher asking prices of 25–35 percent of the difference between the property's expected selling price and their original purchase price; 2) attain higher selling prices of 3–18 percent of that difference; and 3) exhibit a much lower sale hazard than other sellers. The list price results are twice as large for owneroccupants as investors, but hold for both. These findings suggest that sellers are averse to realizing (nominal) losses and help explain the positive price-volume correlation in real estate markets.

An asymptotic theory is developed for nonlinear regression with integrated processes. The models allow for nonlinear effects from unit root time series and therefore deal with the case of parametric nonlinear cointegration. The theory covers integrable and asymptotically homogeneous functions. Sufficient conditions for weak consistency are given and a limit distribution theory is provided. The rates of convergence depend on the properties of the nonlinear regression function, and are shown to be as slow as n 1/4 for integrable functions, and to be generally polynomial in n 1/2 for homogeneous functions. For regressions with integrable functions, the limiting distribution theory is mixed normal with mixing variates that depend on the sojourn time of the limiting Brownian motion of the integrated process.

This paper examines the price and volume effects of underlying stocks around the announcement date of derivative warrants issued in Hong Kong. In general, the results indicate that underlying stocks are subject to extra buying pressure a few days before the new derivative warrant issuance, which is consistent with our hypothesis about the hedging effect created by the merchant banks that initiate the warrant issuance. Since the prices of underlying stocks peak on the first day after the warrant announcement and are stable thereafter, the information effect associated with the warrant issuance appears to be weak and does not last long. In addition, we find that underlying stocks have abnormal increases in price and volume during the last 5 minutes of trading on the warrant issuance day. This might be due to investors’ buying behavior precipitated by information leakage about the successful warrant issuance and/or to the price manipulation by merchant banks in order to attain a better payoff from the warrant issuing business.