A MATCHED PAIRS ANALYSIS OF STATE GROWTH DIFFERENCES

The American states have provided a rich laboratory in which to examine influences on economic growth, physical capital, human capital, and a variety of policy variables. Existing studies typically use broad cross sections of all states or particular regional subsamples. Pairwise matching is an alternative design for better controlling of omitted variables. We estimate a growth model of U.S. states for 1997–2005 before and after applying different pairwise matching techniques. Our results indicate that sample estimates based on pairwise matching substantially improve the overall ability of the growth model to identify the growth‐enhancing effects of lower tax burdens in general and lower individual income‐tax rates in particular. These effects are more pronounced with narrower matching criteria. (JEL H00, C29, O40)     

Racial Differences in Consumer Environmental Concern

Past research has suggested that black and white consumers differ in their concern for the environment. The general consensus has been that whites are significantly more concerned than blacks about environmental issues. Most of this research, however, Is limited in scope and fails to account for variables, such as education and income, which may help to explain these differences. This study investigates and analyzes black and white consumer environmental concern. Results of this study indicate that there are significant differences between African-Americans and white Americans in their environmental concern at lower income and educational levels. However, as income and education rise, the gap in environmental concern between blacks and whites significantly decreases. These findings provide important implications for policy makers in making decisions related to environmental education and protection as well as for businesses intending to target consumers with environmentally focused promotional campaigns.     

PATENT LENGTH AND THE TIMING OF INNOVATIVE ACTIVITY

The standard result in patent policy, as demonstrated by Gilbert and Shapiro (1990), is that infinitely lived but very narrow patents are optimal as deadweight losses are minimised and spread through time but inventors can still recover their R&D expenditures. By extending their innovative environment to include timing as an important choice, we demonstrate that a finitely lived, but broader, patent can be socially desirable. This is because a patent breadth is a better instrument than length to encourage socially optimal timing. Thus, patents need not be infinitely long in order to encourage a greater number of inventions     

How Do Firms Respond to Political Uncertainty? Evidence from U.S. Gubernatorial Elections

We examine the joint response to political uncertainty along two margins: changes in real activity and voluntary disclosure. We focus on within-firm variation in exposure to ex ante competitive U.S. gubernatorial elections using data on preelection poll margins and firms’ state exposures. Despite real activity falling in the years leading up to a close election, we find that voluntary disclosure increases both in frequency and content, including mentions of risk in filings that reference states holding elections. Our tests use a decomposition of 8-K filings into real activity and voluntary disclosure to address the endogenous complementarity between these two responses. These results hold when using alternative ex ante measures of political uncertainty based on term-limited incumbents, historically competitive offices, or state legislature gridlock. Both effects of political uncertainty are stronger for firms in highly regulated industries and weaker for those least exposed to the local market, linking the real activity and disclosure responses to uncertainty.     

ORGANIZATIONAL AND OCCUPATIONAL COMMITMENT: KNOWLEDGE WORKERS IN LARGE CORPORATIONS*

Previous discussion of knowledge work and workers tends to overlook the importance of contextual knowledge in shaping the organizational form of knowledge workers who are employees in large corporations. This paper proposes a model to understand the way knowledge base and organizational form are related to the work commitment, effort and job satisfaction of knowledge workers. The model is derived from (1) a critical examination of the market model of knowledge work organization, and (2) the results of empirical research conducted in two large corporations. We argue that contextual knowledge is important in the relationships between the corporation and knowledge workers. A dualistic model and an enclave organizational form are suggested to examine the relationships between the commitment, work effort and job satisfaction of knowledge workers. We noted from our empirical cases that enclave‐like work teams enhanced the expertise and job autonomy of knowledge workers vis‐à‐vis management. These work teams together with the performance‐based pay system, however, led to unmet job expectations including limited employee influence over decision‐making and careers, and communication gaps with senior management. Under these circumstances, and in contrast to the impact of occupational commitment, organizational commitment did not contribute to work effort. The study highlights the importance of management’s strategy in shaping the organizational form of knowledge work. The paper concludes by noting general implications of our study for the management of expertise and for further research.     

Low Income Dynamics in 1990s Britain

This paper analyses low income dynamics in Britain using the first four waves of the British Household Panel Survey. There is much low income turnover: although there is a small group of people who are persistently poor, more striking is the relatively large number of low income escapers and entrants from one year to the next. Simulations using estimated low income exit and re-entry rates demonstrate the importance of repeated low income spells for explaining a person's experience of low income over a given period. We also document the characteristics of low income stayers, escapers and entrants.     

Keynesian Inefficiency and Optimal Policy: A New Monetarist Approach

A simple model of monetary/labor search is constructed to study Keynesian indeterminacy and optimal policy. In the model, economic agents have trouble splitting the surplus from exchange appropriately, and we consider monetary and fiscal policies that correct this Keynesian inefficiency. A Taylor rule neither implies determinacy, nor does it support an efficient outcome. An optimal policy yields an efficient and determinate allocation of resources, but equilibrium policy actions, wages, and prices are indeterminate at the optimum.