POLITICAL AFFILIATION AND PERCEPTIONS OF TRADE: EXAMINING SURVEY DATA FROM THE STATE OF GEORGIA

We examine the influences of political party affiliation and self-identification as politically conservative, centrist, or liberal on individuals' trade preferences. Majority support for trade is reported for all political classifications, with Republicans found to be 13.7%–15.1% more likely than Democrats and independents to support trade. Similarly, conservatives are 14.8%–21% more likely to support trade than are centrists and liberals; however, distinctions exist between "very conservative" and "somewhat conservative" cohorts. ( JEL F13)     

Unemployment-Risk Differentials Between Immigrant and Native Workers in Sweden

This article analyzes the subsequent unemployment risk of a sample of Swedish employees in 1991. We find that non-European immigrants face an unemployment risk twice as large as the corresponding risk for native workers despite controls for employee characteristics, the 1991 wage rate, and sorting across establishments with varying unemployment risks. Although all employees enjoy higher job security with higher seniority, large differences in unemployment risk by region of birth remain for workers with similar seniority levels. This suggests that labor unions and employers deviate from seniority rules established by the Swedish Security of Employment Act in favor of native workers.     

Aggregative Public Good Games

We exploit the aggregative structure of the public good model to provide a simple analysis of the voluntary contribution game. In contrast to the best response function approach, ours avoids the proliferation of dimensions as the number of players is increased, and can readily analyze games involving many heterogeneous players. We demonstrate the approach at work on the standard pure public good model and show how it can analyze extensions of the basic model.     

WHAT ARE EMPLOYERS DOING TO CREATE A COMPETITIVE MARKET FOR HEALTH CARE IN THE TWIN CITIES?

Employers' willingness to control costs is a critical aspect of pro-competition strategies for the health-care market. Here, we present some of the first quantitative evidence of what employers do to control health-care costs. Our sample is 44 large private and public employers in Minnesota.
We develop a theoretical model in which the employer chooses cost-control "innovations"—along with wages, fringe benefits, and labor-force size—to maximize profits. The role of innovations is to reduce unit costs of offering fringe benefits.
Our data are from a 1982 survey. Eighty percent of the surveyed employers, representing nearly 200,000 employees, responded. Most respondents offer both indemnity insurance plans and health-maintenance organizations (HMOs). Many firms and individual health-insurance plans conduct cost-control activities, but less than half of the firms which offer HMOs have adopted level-dollar premium contributions for their family health-insurance policies. Few plans have increased their coinsurance and deductible requirements in the past five years.
We use probit equations to estimate the probability that a firm or a health plan will adopt cost-control activities. Our analysis suggests that many firms may soon make major plan-design changes to control health-care costs, although they have not yet done so.     

Macroeconomic Implications of “Deep Habits” in Banking

Recent empirical evidence shows that price‐cost margins in the market for bank credit are countercyclical in the U.S. economy and that this cyclical behavior can be explained in part from the fact that switching banks is costly for customers (i.e., from a borrower hold‐up effect). Our goal, in this paper, is to study the “financial accelerator” role of these countercyclical margins as a propagation mechanism of macroeconomic shocks. To do so, we apply the “deep habits” framework in Ravn, Schmitt‐Grohé, and Uribe (2006) to financial markets to model this hold‐up effect within a monopolistically competitive banking industry. We are able to reproduce the pattern of price‐cost margins observed in the data, and to show that the real effects of aggregate total factor productivity shocks are larger the stronger the friction implied by borrower hold‐up. Also, output, investment, and employment all become more volatile than in a standard model with constant margins in credit markets. An empirical contribution of our work is to provide structural estimates of the deep habits parameters for financial markets.     

Toward Consumer Efficiency: A Model for Improved Buymanship

This paper suggests that changes in the economic, marketing, and social environments call for alternative approaches to the traditional models of buymanship. The authors propose a shopping model that incorporates four main tenets: (1) search is conceived as a continuous process; (2) consumers take advantage of retail price competition at one point in time and over time; (3) an acceptable set of brands and stores is integral to purchase decisions; and (4) low price on an acceptable brand triggers purchase. Implications for consumer buying, research, and consumer education are identified.     

Rental-Purchase Agreements: A Preliminary Investigation of Consumer Attitudes and Behaviors

Customers are attracted to rental-purchase agreements by claims of low payments and by the promise of eventual ownership. This study found that customers were frequently confused and generally dissatisfied with the agreements. Participants had poor credit histories and appeared to be using rental-purchase agreements as substitutes for conventional forms of credit. These results are interpreted in the context of possibilities for expanded consumer protection and of the changes taking place in the market for consumer credit.