The Quarterly Journal of Economics

Becker, Gary, S.;Murphy, Kevin, M.

doi: 10.2307/2118383pmid: N/A

Abstract This paper considers specialization and the division of labor. A more extensive division of labor raises productivity because returns to the time spent on tasks are usually greater to workers who concentrate on a narrower range of skills. The traditional discussion of the division of labor emphasizes the limitations to specialization imposed by the extent of the market. We claim that the degree of specialization is more often determined by other considerations. Especially emphasized are various costs of “coordinating” specialized workers who perform complementary tasks, and the amount of general knowledge available. * We had valuable comments from Ronald Findlay, Sergio Rebello, Andrei Shleifer, Robert Tamura, Robert Vishny, two referees, and from participants in seminars at the University of Chicago, Duke University, the University of Iowa, Queens University, Pennsylvania State University, the Stockholm School of Economics, and the Conference on Human Capital and Economic Growth, Institute for the Study of Free Enterprise Systems, University of Buffalo, May 26 and 27, 1989. Support from the Lynde and Harry Bradley Foundation, NICHD grant #1 Ro1 HD22054, and NSF grant #SES85-20258 is gratefully acknowledged. David Meltzer and Rebecca Kilborn provided very useful research assistance. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Warner, Andrew, M.

doi: 10.2307/2118384pmid: N/A

Abstract There is now a large literature that attributes the investment decline in heavily indebted countries to the effects of the international debt crisis which began in 1982. However, these countries also faced falling export prices and high world real interest rates in the early 1980s, and these shocks could have directly caused investment to decline. One way to test for debt effects is to see whether equations without any debt-related information can nevertheless forecast the investment declines that these countries experienced. This paper shows that such equations can forecast investment in many indebted countries, and thus casts doubt on many debt-related explanations for the investment declines. * This is a revised version of Chapter 1 of my dissertation [1991a]. Special thanks are due to my two main advisors, Lawrence Summers and Jeffrey Williamson. I am also grateful to Olivier Blanchard, Jeremy Bulow, Susan Collins, Neil Ericsson, Maria Hanratty, Lawrence Katz, Ian McLean, Jeffrey Sachs, and seminar participants at Harvard University and the Division of International Finance, Federal Reserve Board for comments and discussions. This paper represents the views of the author and should not be interpreted as reflecting the views of the Board of Governors of the Federal Reserve System or other members of its staff. Errors are my own. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Geronimus, Arline, T.;Korenman,, Sanders

doi: 10.2307/2118385pmid: N/A

Abstract Teen childbearing is commonly believed to cause long-term socioeconomic disadvantages for mothers and their children. However, earlier cross-sectional studies may have inadequately accounted for marked differences in family background among women who have first births at different ages. We present new estimates that take into account unmeasured family background heterogeneity by comparing sisters who timed their first births at different ages. In two of the three data sets we examine, sister comparisons suggest that biases from family background heterogeneity are important, and, therefore, that earlier studies may have overstated the consequences of teen childbearing. * We are indebted to John Bound for many helpful discussions and invaluable comments. We would also like to thank Irene Butter, Mary Corcoran, Jane Miller, George Pickett, James Trussell, Ken Warner, and seminar participants at the University of Michigan, the University of Pennsylvania, Princeton University, Columbia University, and the NBER for comments on earlier drafts, and Barbara Okun for research assistance. We gratefully acknowledge the support of the Russell Sage Foundation. Korenman wishes to acknowledge additional support from the John M. Olin Program for the Study of Economic Organization and Public Policy, Woodrow Wilson School, Princeton University. An earlier version of this paper appeared as NBER Working Paper No. 3701. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Kotlikoff, Laurence, J.;Gokhale,, Jagadeesh

doi: 10.2307/2118386pmid: N/A

Abstract In hiring new workers, risk-neutral employers equate the present expected value of a worker's compensation to the present expected value of his/her productivity. Data detailing how present expected compensation varies with the age of hire, therefore, embed information about how productivity varies with age. This paper infers age-productivity profiles using data on the present expected value of earnings of new hires of a Fortune 1000 firm. For each of the five occupation/sex groups considered, productivity falls with age, with productivity exceeding earnings when young and vice versa when old. * We are grateful to the Hoover Institution and the National Institute of Aging grant #1P01AG05842-01 for research support. Jinyong Cai provided excellent research assistance. We thank Jinyong Cai, Lawrence Katz, Kevin Lang, Edward Lazear, Chris Ruhm, Lawrence Summers, and the referee for very helpful comments. A summary of some of the results of this study as well as the diagrams appear in Kotlikoff [1988]. This material is reprinted here with the permission of the Hoover Institution Press. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Saint-Paul,, Gilles

doi: 10.2307/2118387pmid: N/A

Abstract In a neoclassical growth model, it is possible to make a case for public debt, because a balanced growth path may be dynamically inefficient. This paper shows that this possibility no longer holds in an endogenous growth model with constant external returns to capital. It is shown that an increase in public debt reduces the growth rate, so there always exists a future generation that will be harmed, and that a reduction in public debt, although it increases the growth rate, cannot be Pareto-improving: one current generation must be harmed. * " I thank participants at seminars at the Universidad Carlos III in Madrid and at the Service d'étude de l'activité économique in Paris, two anonymous referees, and one of the editors of this Journal for helpful comments, and Daniel Cohen in particular for an enlightening discussion. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Cover, James, Peery

doi: 10.2307/2118388pmid: N/A

Abstract This paper examines whether positive and negative money-supply shocks have symmetric effects on output. The results are consistent with the hypothesis that positive money-supply shocks do not have an effect on output, while negative money-supply shocks do have an effect on output. This finding is independent of whether or not expected money is assumed to affect output. The results reported in this paper imply that the Fed could increase the growth rate of real output by reducing the standard deviation of unexpected changes in the money supply. * The author gratefully acknowledges research assistance by Ruth Obar, helpful comments from an anonymous referee, David VanHoose, Donald Hooks, Lawrence Summers, and Olivier Blanchard, as well as helpful discussion from David Schutte, Myung J. Kim, and Stefan Norrbin. This research was supported by grant #1439 from the University of Alabama's Research Grants Committee. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Waldmann, Robert, J.

doi: 10.2307/2118389pmid: N/A

Abstract Comparing two countries in which the poor have equal real incomes, the one in which the rich are wealthier is likely to have a higher infant mortality rate. This anomalous result does not appear to spring from measurement error in estimating the income of the poor, and the association between high infant mortality and income inequality is still present after controlling for other factors such as education, medical personnel, and fertility. The positive association of infant mortality and the income of the rich suggests that measured real incomes may be a poor measure of social welfare. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Seyhun, H., Nejat

doi: 10.2307/2118390pmid: N/A

Abstract This paper documents that, for the period from 1975 to 1989, the aggregate net number of open market purchases and sales by corporate insiders in their own firms predicts up to 60 percent of the variation in one-year-ahead aggregate stock returns. This study also examines whether the ability of aggregate insider trading to predict future stock returns can be attributed to changes in business conditions or movements away from fundamentals. Evidence suggests that both explanations contribute to the predictive ability of aggregate insider trading. * I thank Michael Bradley, K. C. Chan, Larry Dann, Douglas Diamond, Eugene Fama, Thomas George, Kathleen Hanley, Stanley Kon, Dennis Logue, David Mayers, Wayne Mikkelson, Merton Miller, Edward Rice, Andrei Shleifer, Robert Vishny, and other participants at Chicago, Michigan, Ohio State, Oregon, and Washington finance workshops, and an anonymous referee for comments on earlier drafts. Rebecca Bradley and Kathy Hulik provided editorial comments. This paper was partially supported by a University of Michigan summer research grant. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Hardouvelis, Gikas, A.;Peristiani,, Stavros

doi: 10.2307/2118391pmid: N/A

Abstract An increase in margin requirements in the First Section of the Tokyo Stock Exchange is followed by a decline in margin borrowing, trading volume, the proportion of trading performed through margin accounts, the growth in stock prices, and the conditional volatility of daily returns. The nonmarginable Second Section stocks show a smaller change in volatility and only a delayed weak price response. The hypothesis that margin requirements restrict the behavior of destabilizing speculators can explain these correlations but cannot explain the observation that individuals, the most active users of margin funds, appear to be good market timers. * We would like to thank Messrs. Yoshihiro Ito, Masao Takamori, and particularly, Shigeo Imakiire of the Tokyo Stock Exchange for helpful lengthy discussions on the Japanese margin regulation and the administration of margin changes. We would also like to thank the seminar participants at the Fall 1989 Federal Reserve System meetings in Philadelphia, the Summer 1990 European Finance Association meetings in Athens, the Fall 1990 University of Iowa conference on volatility and risk in the financial system, the Winter 1992 AFA Meetings in New Orleans, Baruch College, Temple University, and Rutgers University for their comments; and Valerie Laporte for editorial assistance. Special thanks go to an anonymous referee for his (her) insightful observations. Support for this research was provided by the Federal Reserve Bank of New York, where Hardouvelis is a research adviser and Peristiani an economist in the research department. The views expressed in this article are those of the authors and do not reflect the views of the Federal Reserve Bank of New York or the Federal Reserve System and its staff. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Pissarides, Christopher, A.

doi: 10.2307/2118392pmid: N/A

Abstract This paper shows that when unemployed workers lose some of their skills, the effects of a temporary shock to employment can persist for a long time. The key mechanism is a thin market externality that reduces the supply of jobs when the duration of unemployment increases. The paper develops an overlapping-generations model of search equilibrium and shows that different patterns of persistence and multiple equilibria are possible even with constant returns production and matching technologies. * This paper is part of the Centre for Economic Performance programme on National Economic Performance. Financial assistance from the British ESRC is gratefully acknowledged. An earlier version was presented at the conference on Instability and Persistence in Paris, January 1990. When revising the paper, I benefited from the comments of two referees and Olivier Blanchard. This content is only available as a PDF. © 1992 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology