BEAUTY PREMIUM AND MARRIAGE PREMIUM IN SEARCH EQUILIBRIUM: THEORY AND EMPIRICAL TEST

We propose a theoretical explanation for the so‐called beauty premium. Our approach relies entirely on search frictions and the fact that physical appearance plays an important role in attracting a marriage partner. We analyze the interaction between frictional labor and marriage markets, making use of what we label constrained job search. The optimal strategy entails different reservation wages for different men, and we establish the existence of a search equilibrium characterized by a beauty premium and/or marriage premium. Predicted profiles of premia allow for potential falsification tests and point to relevant empirical evidence in support of our theory.     

Sterling's Persistence as a Reserve Currency: Australia and Reserves Pooling, 1950–68

Financial historians have noted sterling's persistence as a reserve currency after the Second World War. Yet they regard Australia, the leading ‘sterling area’ country, as an early diversifier, substituting other assets for sterling, and the sterling area as an irrelevance by the 1960s. This is an archive-based account of Australia's reserve management in 1950–68, emphasising the persistence of reserves pooling. Acquisition of non-sterling assets in 1951–61 was limited to gold production and undermined by Australia's balance-of-payments volatility. Diversification only began in 1962, largely through the International Monetary Fund ‘gold tranche’. Diversification was gradual, hidden, and constrained by sterling area membership.     

Not so different from non-traders

This paper uses a unique, comparable firm-level dataset covering more than 80 developing middle-income economies to provide a novel set of stylized facts on firms engaging in international trade, focusing on the Middle East and North Africa (MENA) region. We show that firms in MENA are more likely to export and/or import than their counterparts elsewhere. However, we only find the expected positive and significant productivity premia for exporters outside of MENA. While MENA's larger exporters are indeed more productive than non-exporters, a large share of exporters – the comparatively low-volume ones – are not. We also confirm positive and significant size and productivity premia for manufacturers that import only, with productivity premia in MENA at least double of those in middle-income economies elsewhere. In contrast, we find no size or productivity premia for MENA's manufacturers that export, but do not import. These patterns are consistent with substantial distortions in the relative fixed and variable costs of trading, likely a reflection of selectively applied policies.