Supervision, Working Conditions, and the Employer Size-Wage Effect

Two hypotheses for the employer size-wage effect are explored using data from the 1980 Survey of Job Characteristics. We found that there is a strong establishment size effect in both medium-size and large companies and that employee-reported frequency of supervision has a negative relationship to pay but makes no difference in the effect. While 26 working conditions reduce the establishment size effect by one-third, it remains strong and significant.     

CURRENCY SUBSTITUTION, U.S. MONEY DEMAND, AND INTERNATIONAL INTERDEPENDENCE

A number of writers have argued in recent years that massive international currency substitution has been a major cause of exchange rate volatility and monetary instability in the United States and other major countries. Such analysis is frequently coupled with recommendations for a return to pegged exchange rates. This paper critically examines the evidence presented for this currency substitution view. It argues that the weight of latest research suggests that direct international currency substitution has not been of major quantitative importance for the U.S. However, empirical evidence supports traditional views that international capital mobility can generate substantial short-run monetary interdependence even under flexible exchange rates. Thus, even though international currency substitution is of little importance to U.S. monetary conditions, a broader range of international considerations may be of considerable importance for the U.S. economy.     

THE IMPACT OF INFLATION ON NEW HOUSE PRICES

It is often stated that real house prices respond to inflation in ways similar to assets infixed supply, such as gold or antiques. This paper proposes that, instead, house prices are determined primarily by the cost of producing new houses. Thus, inflation affects price mainly through input markets and through expansion in housing starts. This proposition is supported in an examination of annual changes in house prices between 1965 and 1982 in 12 sub regions of the United States     

Inferring Transactions from Financial Statements*

In this paper, we embed the double entry accounting structure in a simple belief revision (estimation) problem. We ask the following question: Presented with a set of financial statements (and priors), what is the reader's “best guess” of the underlying transactions that generated these statements? Two properties of accounting information facilitate a particularly simple closed form solution to this estimation problem. First, accounting information is the outcome of a linear aggregation process. Second, the aggregation rule is double entry.     

The Role of Cost Allocations in the Acquisition and Use of Common Resources*

Abstract. For a common resource, we suggest that the benefits of fixed cost allocations lie not in inducing optimal utilization of available capacity but in deciding how much capacity to acquire. In the presence of sequential information asymmetry between the owner and two symmetric users of the resource, we show that cost allocations form a part of the optimal incentive contract. We derive an optimal cost allocation scheme and provide an explicit link between the allocated costs under this scheme and the fixed costs of the resource. Résumé. Selon les auteurs, pour une ressource commune, les avantages de la répartition des coûts fixes résident non pas dans l'induction d'une utilisation optimale de la capacité disponible, mais dans la décision relative à la capacité devant être acquise. En présence d'asymétrie de l'information séquentielle entre le propriétaire et deux utilisateurs symétriques de la ressource, les auteurs démontrent que la répartition des coûts est un élément qui entre dans le contrat d'intéressement optimal. Ils dérivent un plan optimal de répartition des coûts et établissent un lien explicite entre les coûts répartis au moyen de ce plan et les coûts fixes de la ressource.     

Decision‐Making about Workplace Disputes: A Policy‐Capturing Study of Employment Arbitrators,Labor Arbitrators,and Jurors

Firms are increasingly turning to the controversial practice of employment arbitration to resolve workplace disputes. Yet little is know about how decisions are made by employment arbitrators or how their decisions compare to those made in traditional dispute‐resolution forums. This study uses a policy‐capturing design and hierarchical linear modeling to compare how decisions about termination cases are made by employment arbitrators, labor arbitrators, and jurors. The results indicate significant differences in the overall willingness to uphold termination, with labor arbitrators being the most likely to rule in favor of the employee, followed by jurors, employment arbitrators judging statutory and for‐cause claims, and employment arbitrators judging statutory‐only claims. Significant differences were also observed between categories of decision makers in the weight given to procedural compliance, evidence of discrimination, employee work history, and stress‐inducing personal circumstances.     

Liquidity Shortages and Banking Crises

We show in this article that bank failures can be contagious. Unlike earlier work where contagion stems from depositor panics or contractual links between banks, we argue that bank failures can shrink the common pool of liquidity, creating, or exacerbating aggregate liquidity shortages. This could lead to a contagion of failures and a total meltdown of the system. Given the costs of a meltdown, there is a possible role for government intervention. Unfortunately, liquidity and solvency problems interact and can cause each other, making it hard to determine the cause of a crisis. We propose a robust sequence of intervention.