The Quarterly Journal of Economics

Peltzman,, Sam

doi: 10.2307/2118475pmid: N/A

Abstract Voters penalize federal and state spending growth. This is the central result of my analysis of voting behavior in Presidential, Senatorial, and gubernatorial elections from 1950–1988. The composition of federal spending growth seems irrelevant. The vote loss to the President's party from an extra dollar of defense or nondefense spending is the same. However, in gubernatorial elections, expansion of state welfare spending exacts a disproportionate political price. Deficit financing of federal or state spending does not appear to matter politically. I conclude by discussing the obvious question of why government budgets have grown in the face of this voter hostility. * I want to thank Michael Ward, Nolan McCarty, and Karen Lombard for research assistance and the Center for the Study of the Economy and State for financial support from grants from the Lynde and Harry Bradley Foundation and the Sarah Scaife Foundation. An anonymous referee provided helpful comments on a previous draft. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College

Weitzman, Martin, L.

doi: 10.2307/2118476pmid: N/A

Abstract An oft-repeated goal in many contexts is the “preservation of diversity.” But what is the diversity function to be optimized? This paper shows how a reasonable measure of the “value of diversity” of a collection of objects can be recursively generated from more fundamental information about the dissimilarity-distance between any pair of objects in the set. The diversity function is shown to satisfy a basic dynamic programming equation, which in a well-defined sense generates an optimal classification scheme. A surprisingly rich theory of diversity emerges, having ramifications for several disciplines. Implications and applications are discussed. * " I would like to express my gratitude to Andrew Solow for introducing me to this type of problem and to Michael Manove for helping me to clarify a number of concepts and statements. Sergiu Hart deserves special thanks because he suggested the idea of looking at spanning trees in the first place and was especially generous in sharing his time and intellect. Avinash Dixit gave useful, constructive advice on presentation. I alone bear responsibility for the possible errors and confusions that remain. The research on which the paper is based was supported by a grant from the National Science Foundation. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College

Mankiw, N., Gregory;Romer,, David;Weil, David, N.

doi: 10.2307/2118477pmid: N/A

Abstract This paper examines whether the Solow growth model is consistent with the international variation in the standard of living. It shows that an augmented Solow model that includes accumulation of human as well as physical capital provides an excellent description of the cross-country data. The paper also examines the implications of the Solow model for convergence in standards of living, that is, for whether poor countries tend to grow faster than rich countries. The evidence indicates that, holding population growth and capital accumulation constant, countries converge at about the rate the augmented Solow model predicts. * We are grateful to Karen Dynan for research assistance, to Laurence Ball, Olivier Blanchard, Anne Case, Lawrence Katz, Robert King, Paul Romer, Xavier Sala-i-Martin, Amy Salsbury, Robert Solow, Lawrence Summers, Peter Temin, and the referees for helpful comments, and to the National Science Foundation for financial support. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College

Topel, Robert, H.;Ward, Michael, P.

doi: 10.2307/2118478pmid: N/A

Abstract Using longitudinal data, we study the processes of job mobility and wage growth among young men. During the first ten years in the labor market, a typical worker will hold seven jobs, about two thirds of his career total. The evolution of wages plays a key role in this transition to stable employment: wage gains at job changes account for at least a third of early-career wage growth, and the wage is the key determinant of job changing decisions among young workers. Job changing is a critical component of workers' movement toward the stable employment relations of mature careers. * " We acknowledge partial research support from the United States Department of Labor. Points of view or opinions expressed here are those of the authors, and do not necessarily reflect the official position of the Department of Labor. Topel also acknowledges financial support from the National Science Foundation. John Abowd, Gary Becker, Dale Mortensen, Kevin Murphy, Melvin Reder, Sherwin Rosen, and David Ross provided valuable comments. We also thank seminar participants at the University of Chicago, Massachusetts Institute of Technology, New York University, and the University of Toronto. David Ross and Brooks Pierce provided very capable assistance. Remaining errors are ours. Working data sets used in this paper are available from the University of Michigan archives. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College

Kahn, James, A.

doi: 10.2307/2118479pmid: N/A

Abstract This paper argues that the macroeconomically interesting features of inventory behavior are well captured by a model in which firms face only demand uncertainty with a nonnegativity constraint on inventories. Empirical implications of the “stockout-avoidance” model of inventory behavior are derived and then tested on disaggregated automobile industry data. The results largely support the model, though they suggest a small role for production-smoothing as well. Subsidiary evidence on the relative variance of demand and cost shocks suggests that demand shocks are indeed more important. * This paper is a revised version of an earlier paper titled “Some Theory an Evidence on Inventory Fluctuations.” The research was supported by Nations Science Foundation Grant SES87-04682, and part of it was undertaken while I wa a National Fellow at the Hoover Institution. Bumjin Jang, Manuel Galan, and Le Ohanian provided valuable research assistance. Mark Bus, Olivier Blancharc Kenneth West, and David Wilcox provided valuable comments. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College

Schotter,, Andrew;Weigelt,, Keith

doi: 10.2307/2118480pmid: N/A

Abstract This paper assesses whether affirmative action programs and equal opportunity laws affect the output of economic agents. More precisely, we find that equal opportunity laws and affirmative action programs always benefit disadvantaged groups. Equal opportunity laws also increase the effort levels of all subjects and hence the profits of the tournament administrator (usually the firm). The effects of affirmative action programs depend on the severity of a group's cost disadvantage. When the cost disadvantage is severe, these programs significantly increase effort levels (and hence profits). The opposite is true when the disadvantage is slight. * The authors would like to thank Clive Bull for his work in early stages of this project, Ken Rogoza for his assistance, and the valuable comments of anonymous referees. The research was made possible by a grant from the C. V. Starr Center for Applied Economics, to whom the authors are grateful. Andy Schotter's participation was made possible in part by grant no. N00014-84-K-0450 of the Office of Naval Research. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College

Matsusaka, John, G.

doi: 10.2307/2118481pmid: N/A

Abstract This paper develops a theory of direct legislation to explain (i) why some issues are resolved by popular vote and others by elected representatives, and (ii) why citizens vote on some ballot propositions and abstain on others. Evidence is provided by a new data set describing 871 California propositions. The main findings are the following. “Good government” issues were usually resolved by legislative measures and distributional issues by initiatives. Citizen-initiated legislation was more common when representatives were unresponsive to the electorate. Voter turnout was higher on distributional propositions than good government propositions. Voter participation on ballot measures has been increasing over time. * The paper benefited substantially from the comments of Barbara McCutch-eon, Filip Palda, Sherwin Rosen, Jeffrey Smith, James Snyder, Andrei Shleifer (editor), and an anonymous referee and editor. I thank Jaffer Qamar for initially posing one of the questions to which this paper is addressed, and the Bradley Foundation and the University of Chicago for financial support. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College

Loewenstein,, George;Prelec,, Drazen

doi: 10.2307/2118482pmid: N/A

Abstract Research on decision making under uncertainly has been strongly influenced by the documentation of numerous expected utility (EU) anomalies—behaviors that violate the expected utility axioms. The relative lack of progress on the closely related topic of intertemporal choice is partly due to the absence of an analogous set of discounted utility (DU) anomalies. We enumerate a set of DU anomalies analogous to the EU anomalies and propose a model that accounts for the anomalies, as well as other intertemporal choice phenomena incompatible with DU. We discuss implications for savings behavior, estimation of discount rates, and choice framing effects. * We thank Wayne Ferson, Brian Gibbs, Jerry Green, Richard Herrnstein, Robin Hogarth, Mark Machina, Howard Rachlin, and, especially, Colin Camerer and Joshua Klayman for useful suggestions. The assistance of Eric Wanner, the Russell Sage Foundation, the Alfred P. Sloan Foundation, the IBM Faculty Research Fund at the University of Chicago Graduate School of Business, and the Research Division of the Harvard Business School is also gratefully acknowledged. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College

Bowen, Harry, P.;Sveikauskas,, Leo

doi: 10.2307/2118483pmid: N/A

Abstract Recent theory casts doubt on the frequently used interindustry regression method of inferring a country's abundant factors. This paper examines the empirical importance of these theoretical qualifications by comparing regression-derived estimates of factor abundance with both revealed and actual factor abundances for 35 countries and 12 resources. We demonstrate the theoretical importance of trade imbalances for the reliability of the regression estimates and therefore propose and implement a theoretically consistent trade imbalance correction. The results indicate that, despite valid theoretical concerns, the regression estimates are generally reliable indicators of revealed factor abundance. Therefore, the innumerable regression studies conducted over the past 30 years can be considered to provide reliable evidence concerning the validity of the factor abundance theory. * We acknowledge the helpful comments of Bob Cumby, two anonymous referees, and seminar participants at the NBER Summer Institute in International Studies, Erasmus University, and Catholic University, Leuven. Preliminary work on the issues addressed here is contained in a earlier paper [Bowen and Sveikauskas, 1989b] presented at the Annual Middlebury Conference on Economic Issues where participant comments helped sharpen our ideas. The views expressed here do not necessarily reflect those of the U. S. Department of Labor. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College

Beaulieu, J., Joseph;MacKie-Mason, Jeffrey, K.;Miron, Jeffrey, A.

doi: 10.2307/2118484pmid: N/A

Abstract We show that there is a strong, positive correlation across countries and industries between the standard deviation of the seasonal component and the standard deviation of the nonseasonal component of aggregate variables. After documenting this stylized fact, we discuss possible explanations and develop a model that generates our empirical finding. The main feature of the model is that firms endogenously choose their degree of technological flexibility as a function of the amounts of seasonal and nonseasonal variation in demand. Although this model is intended to be illustrative, we find evidence supporting one of its key empirical implications. * We thank Robert Barsky, Olivier Blanchard, Charlie Brown, Tom Cooley, David Cutler, Eric Ghysels, Ned Gramlich, Phil Howrey, James Kahn, Miles Kimball, Andrew Oswald, Charles Plosser, Danny Quah, Larry Summers, Steve Zeldes, and seminar participants at the NBER Economic Fluctuations Winter Program Meeting, the NBER Summer Institute, the Summer Econometric Society Meetings, the MIT Macro Lunch Group, the Board of Governors, Maryland, University of California, San Diego, Massachusetts Institute of Technology, Virginia, Western Ontario, Dartmouth, and the University of Washington for comments, Ed Glaeser for research assistance, and Todd Clark and Larry Katz for help with data. Beaulieu acknowledges financial support from an NSF Graduate Fellowship; MacKie-Mason and Miron are grateful for financial support from NSF Grant SES-8921506; and Miron thanks the John M. Olin Foundation for a fellowship at the National Bureau of Economic Research. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College