Adjustment costs and time-to-build in factor demand in the U.S. manufacturing industry

In order to explain cyclical behavior of factor demand, the static neoclassical model of the firm has been extended to include either adjustment costs (e.g. Lucas (1967)) or time-to-build considerations as in Kydland and Prescott (1982). This paper presents an intertemporal factor demand model which accounts for adjustment costs and gestation lags. The closed form solution of the model is a highly restricted vector ARMA-process that is estimated using quarterly data for the manufacturing industry in the U.S., 1960–1988. The main conclusion is that both sources of dynamics of factor demand are identifiable and found to be empirically of importance.     

Will the (German) NAIRU Please Stand Up?

Abstract. This paper deals with a critical assessment of the ‘non‐accelerating inflation rate of unemployment’ (NAIRU) for Germany. There are quite a few obstacles to perceiving the NAIRU as an easy‐to‐use analytical instrument: the possibility of a non‐vertical Phillips curve, the occurrence of shocks and hysteresis effects, and the (mis‐)measurement of important variables, cointegration issues and a time variability of the NAIRU. A new attempt is made to estimate a NAIRU for Germany using direct measures of inflationary expectations. However, by any method, the NAIRU is very hard to determine and subject to considerable arbitrariness.     

Persistent Advantage or Disadvantage?: Evidence in Support of the Intergenerational Drag Hypothesis

By utilizing the Integrated Public Use Microdata Series (IPUMS) and a measure of occupational prestige (OCCSCORE) as a labor market outcome, the authors examine variations in the degree of labor market discrimination faced by several ethnic and racial groups in the United States between 1880 and 1990. Results demonstrate that the sharpest decline in labor market discrimination against blacks occurred between 1960 and 1980. For black males the extent of labor market discrimination was greater in all census years in IPUMS after 1880 until 1970, evidence contradicting the conventional expectation that market-based discrimination will decline progressively over time by dint of competitive pressure. Finally, after replicating George Borjas' ethnic capital exercise, the authors pool the 1880, 1900, and 1910 data to determine the relative magnitude of a group's gains and losses in occupational prestige due to group advantage or disadvantage in human capital endowments and due to favorable or unfavorable treatment (nepotism or discrimination) of those endowments in the labor market. The authors then examine statistically whether the group human capital advantage or disadvantage and group exposure to nepotism or discrimination at the turn of the century affects labor market outcomes for their descendants today. Results indicate strong effects of the past on present labor market outcomes. Hence, the essence of the study is the statistical demonstration that there are significant and detectable effects on current generations of the labor market experiences of their racial/ethnic ancestors.     

Conceptualizing Professionalism

A bstract The main argument presented here is that economics provides a necessary but not sufficient analysis of professionalism. A sufficient analysis can only be generated by recognizing the sociological significance of professionals, and in particular the institutionalization of a professional ethic. In this way we suggest that economics needs sociology to provide an effective conceptualization of professionalism as a form of organization and as a mode of behavior. Equally, however, sociology needs economics, because while the sociological context provides an explanation of the way power is institutionalized, an economic focus is necessary to maintain a role for individual agency. These arguments are illustrated with a discussion of the historical and institutional complexities of professional organization; we look particularly at nursing and certain routinized areas of legal work and accountancy.     

Beyond survival: the implementation of new forms of work organization in the UK and German steel industries

This paper outlines and analyses the major changes in work-force organization that have been introduced by British and German steel producers in the past decade, against a backcloth of retrenchment in the industry, new product development and technological change. Including multiskilling, a reduction in demarcation and team–working, these changes have had a major effect upon the composition of the work–force and the nature of work undertaken at the shopfloor level.

While these changes have had a common broad trajectory, they have been introduced at a different pace and in different forms. The contrasts are provided not only at the international level, but between plants in the same countries. The paper further outlines the response of trade unions to these changes and the implications for industrial relations at the shopfloor level.     

Energy Prices and Carbon Taxes under Uncertainty about Global Warming

This paper extends the strategic interactions between producers of fossil fuels concerned about their profits and a taxing government concerned about the consumers’ welfare for uncertainty: global warming follows an Itô -process. Stochasticity requires to differentiate between reversible and irreversible emissions in contrast to the deterministic version. The unconstrained (= reversible) case allows for a closed form solution but not the more realistic and constrained case. Nevertheless interesting analytical properties (e.g. about when to stop emissions, implicit conservation due to monopolistic supply) are derived and complemented by a numerical example.