ZERO INFLATION: TRANSITION COSTS AND SHOE LEATHER BENEFITS

The idea that the monetary authority cannot achieve price stability except at the cost of a recession is the most common and convincing argument against price stability. This paper presents calculations showing that the resource costs of a recession that might result from eliminating a 4 percent inflation are approximately equal to the "shoe leather" costs incurred when inflation is stable at 4 percent.     

Trade Unions, Collective Voice and Fringe Benefits*

The exit/voice model of the labour market predicts that unionized workers will enjoy a greater level of fringe benefits, both absolutely and as a share of total compensation, than non-unionists. This is because unions can, through the medium of collective voice, communicate to management a picture of the preferences of the median worker. In non-union settings, however, management responds to the perceived preferences of the young, mobile workers at the hiring margin and these typically place a low priority on fringe benefits relative to money wages. Using data from the A ustralian Longitudinal Survey it is found that the hypothesis is supported by the evidence for Australia.     

Teacher Unions and Black Students' Scores on College Entrance Exams

Using data from the National Assessment of Economic Education survey, this paper examines the influence of teachers' unions and students' race on college entrance examination scores. An "education production function" is estimated for a sample of white and black high school seniors. The model accounts for variations in school distrits and student inputs and controls for the self-selection nature of taking an entrance exam. The results indicate that students in unionized schools score higher on the SAT than like students in nonunion schools, ceteris paribus. Black students who attend unionized schools are estimated to score 13.11 percent above the black SAT mean. These findings suggest a positive productivity effect of collective bargaining for teachers which significantly benefits minority students.     

U.S. Union Membership in Future Decades: A Trade Unionist's Perspective

Slower workforce growth, more gradual industrial restructuring, a tighter labor market, and the gradual emergence of a more efficient organizing capability will help to stem the projected decline in private-sector union membership. A broad array of consumer benefits and the development of new form of union membership, such as those that do not necessarily result in exclusive recognition, should also help stem that decline     

Inferring Trade Direction from Intraday Data

This paper evaluates alternative methods for classifying individual trades as market buy or market sell orders using intraday trade and quote data. We document two potential problems with quote-based methods of trade classification: quotes may be recorded ahead of trades that triggered them, and trades inside the spread are not readily classifiable. These problems are analyzed in the context of the interaction between exchange floor agents. We then propose and test relatively simple procedures for improving trade classifications.     

Moral Hazard and Optimal Subsidiary Structure for Financial Institutions

Banks and related financial institutions often have two separate subsidiaries that make loans of similar type but differing risk, for example, a bank and a finance company, or a “good bank/bad bank” structure. Such “bipartite” structures may prevent risk shifting, in which banks misuse their flexibility in choosing and monitoring loans to exploit their debt holders. By “insulating” safer loans from riskier loans, a bipartite structure reduces risk‐shifting incentives in the safer subsidiary. Bipartite structures are more likely to dominate unitary structures as the downside from riskier loans is higher or as expected profits from the efficient loan mix are lower.