TRENDS IN RURAL WAGES,WEST JAVA, 1977–83

This paper examines monthly wage data collected by the Agro Economic Survey from seven villages in the Cimanuk River Basin of West Java, where data on agricultural and non-agricultural wages and prices of nine essential commodities were collected twice monthly between 1977 and 1983. Movements in money wages deflated by both the rice price and a weighted index of basic commodities are analysed in detail and differences between lowland and upland villages are discussed.     

A Personal Agenda for the Next Decade

The paper sets a broad agenda touching several areas of policy. It starts from the least likely policy at this point of time, the use of the tax system for redistribution. It discusses prudent macroeconomic coordination without the strings of the Maastricht Treaty in business troughs. Regulation of financial markets, agricultural policies, and health issues are coming up on a desirable agenda of the United States, but are probably important for all countries, as are social security policy and climate change.     

Competitive equilibria with limited enforcement

We show how to decentralize constrained efficient allocations that arise from enforcement constraints between sovereign nations. In a pure exchange economy these allocations can be decentralized with private agents acting competitively and taking as given government default decisions on foreign debt. In an economy with capital these allocations can be decentralized if the government can tax capital income as well as default on foreign debt. The tax on capital income is needed to make private agents internalize a subtle externality. The decisions of the government can arise as an equilibrium of a dynamic game between governments.     

Uncertainty Associated with Future Environmental Costs and the Market's Differential Response to Earnings Information

This study examines whether the uncertainty arising from a firm's exposure to future environmental costs (environmental uncertainty) affects the market's price sensitivity to reported earnings. Specifically, when environmental uncertainty is significantly high, are investors more responsive to reported earnings released by 'high-polluting' firms than reported earnings announced by 'low-polluting' firms within the same industry? The initial impact of Title IV (the acid rain provisions) of the 1990 Clean Air Act Amendments (1990 CAAA) on the US electric utility industry provides the research setting required to isolate the effects of environmental uncertainty while addressing this question. Consistent with theoretical predictions, we find that the earnings response coefficients (ERCs) of high-polluting electric utilities are significantly greater than those of their low-polluting counterparts during a predicted period of elevated environmental uncertainty. In adjoining sample years associated with lower environmental uncertainty, we observe no statistical difference in the magnitude of the ERCs between these two groups. In addition, the study's findings suggest that the magnitude of the ERC is increasing in the firm's exposure to future environmental costs, after controlling for other factors that potentially affect ERCs.     

Internal labour markets in the Australian banking industry: their nature prior to the Second World War and their recent decline

This paper uses evidence from late nineteenth-and early twentieth-century personnel records of two Australian banks to examine the nature of internal labour markets prior to the Second World War. It is argued that the industry possessed all the classic features of internal labour markets: limited ports of entry, internal promotion, long careers, and assignment of wages by well-defined rules. The paper then examines the reasons why banks adopted internal labour markets. Finally, the paper examines the recent decline of internal labour markets and examines the role of technological and social changes in this decline.     

PRODUCTIVITY GROWTH IN AGRICULTURE (REVISITED): A MEASUREMENT FRAMEWORK AND SOME EMPIRICAL RESULTS

This paper explores the methodology of sectoral productivity growth measurement within the framework of input-output analysis. A method which ensures that sectoral productivity growth rates are consistent with productivity growth rates for the economy as a whole (as well as allowing for external trade) is suggested. New estimates are presented on total factor productivity in UK agriculture using a Tornqvist index procedure. In addition, new estimates of agricultural labour productivity growth are presented, taking account not only of labour employed in agriculture but also of labour employed in ancillary industries on the supply side. The empirical results confirm that part of the labour previously employed on farms has shifted “upstream” to industries providing agriculture with fertilises, machinery and other inputs.     

Overcompensation as a Partial Solution to Commitment and Renegotiation Problems: The Case of Ex Post Moral Hazard

In a Costly State Verification world, an agent who has private information regarding the state of the world must report what state occurred to a principal, who can verify the state at a cost. An agent then has what is called ex post moral hazard: he has an incentive to misreport the true state to extract rents from the principal. Assuming the principal cannot commit to an auditing strategy, the optimal contract is such that: (1) the agent's expected marginal utility when there is an accident (high‐ and low‐loss states) is equal to his marginal utility when there is no accident; (2) the lower loss is undercompensated, while the higher loss is overcompensated; and (3) the welfare of the agent is greater under commitment than under no‐commitment. Result 2 is contrary to the results obtained if the principal can commit to an auditing strategy (higher losses underpaid and lower losses overpaid). The reason is that by increasing the difference between the high and the low indemnity payments, the probability of fraud is reduced.