Project Labor Agreements' Effect on School Construction Costs in Massachusetts

This paper investigates the impact of Project Labor Agreements (PLAs) on school construction cost in Massachusetts. Although simple models exhibit a large positive effect of PLAs on construction costs, such effects are absent from more completely specified models. Further investigation finds sufficient dissimilarity in schools built with and without PLAs that it is difficult to distinguish the cost effects of PLAs from the cost effects of factors that underlie the use of PLAs.     

New Hope for the Expectations Hypothesis of the Term Structure of Interest Rates

Survey data on interest rate expectations permit separate testing of the two alternative hypotheses in traditional term structure tests: that the expectations hypothesis fails, and that expected future interest rates are ex post inefficient forecasts. We find that the source of the spread's poor predictions of future interest rates varies with maturity. At short maturities the expectations hypothesis fails. At long maturities, however, changes in the yield curve reflect changes in expected future rates one-for-one, an implication of the expectations hypothesis. This result confirms earlier findings that long rates underreact to short rates, but now it cannot be attributed to term premia.     

Automation versus Intermediation: Evidence from Treasuries Going Off the Run

This paper examines the choice of trading venue by dealers in U.S. Treasury securities to determine when services provided by human intermediaries are difficult to replicate in fully automated trading systems. When Treasury securities go “off the run” their trading volume drops by more than 90%. This decline in trading volume allows us to test whether intermediaries' knowledge of the market and its participants can uncover hidden liquidity and facilitate better matching of customer orders in less active markets. Consistent with this hypothesis, the market share of electronic intermediaries falls from 81% to 12% when securities go off the run.     

CEO Contracting and Antitakeover Amendments

This article examines incentives for adopting antitakeover charter amendments (ATAs) that are associated with compensation contracts. The evidence is consistent with the hypothesis that antitakeover measures such as ATAs help managers protect above-market levels of compensation. Chief executive officers (CEOs) of firms that adopt ATAs receive higher salaries and more valuable option grants than CEOs at similar firms that do not adopt them. Furthermore, the magnitude of this difference increases following ATA adoption. The evidence is inconsistent with the hypothesis that ATAs facilitate the writing of efficient compensation contracts.     

Major Matters: A Comparison of the Within‐Major Gender Pay Gap across College Majors for Early‐Career Graduates

I use data from the 1993 National Survey of College Graduates and appended 1990 Census on about 11,000 men and women college graduates (8400 with bachelor's degrees only, and 2800 with graduate degrees) who earned degrees in a 5‐year period (1984–1988), to address questions regarding the link between college major and early‐career gender pay differentials. I look at within‐major gender pay differentials for two groups of college graduates: those whose highest degrees are bachelor's and those who hold graduate degrees. Among those whose highest degrees are bachelor's, I find that within‐major gender pay penalties are virtually zero for professional majors. Gender pay penalties are large for general studies majors: social sciences, history, and humanities, and business administration (except accounting). For these, jobs account for a large portion of the unexplained gap. Among individuals who hold graduate degrees, I find that within‐major gender pay penalties are zero for all fields. My findings suggest that pay penalties to women in the aggregate can be traced to relatively large penalties in a couple of key fields (bachelor's degree–level general studies fields): social sciences and humanities, and business administration (except accounting). These findings are important, as they contradict the prevailing view. Existing empirical research suggests that women are uniformly disadvantaged compared to men regardless of field of study and, thus, field of study explains little or none of the gender gap in pay. I conclude that supply‐side mechanisms are important factors in producing gender inequality among college graduates, and suggest that we further focus our attention on the “supply side” in understanding segregation and gender pay inequality.     

The Importance of Asymmetric Tax Policy and Dangers of Aggregation

Existing tax policies have many complex features that make distinctions across goods, factors, and financial structures that distort economic allocations. Their importance is ignored when tax policy is summarized by an “effective” tax rate. In fact, the losses due to asymmetries are often larger than the losses due to the level of taxation.     

IMPLICATIONS OF LIBERALISED EUROPEAN LABOUR MARKETS

This paper reviews the alternative labour market scenarios open to European policymakers in the current movement towards enhanced economic and political integration. To clarify the various issues, the paper dichotomises the policy alternatives into two camps: "euro-liberalists" and "euro-regulators." The paper concludes that the latter offers the best path towards convergence, with the proviso that the subject of regulation is a Pan-European system of labour market objectives rather than institutions.     

THE DEFECTIVE DESIGN OF FEDERAL DEPOSIT INSURANCE

Deposit insurance funds, especially the Federal Savings and Loan Insurance Corporation, are currently in visible trouble. Two central defects of the existing deposit insurance system are identified: (1) mispricing of the insurance premiums and (2) incentives for both the industry and the insurance agencies to postpone recognizing and realizing losses.
Insurance premiums are mispriced because they are assessed at the same rate for all institutions, which creates a bias for banks to take greater risks. Practical difficulties of setting an appropriate risk-based premium for each bank are real but not necessarily insurmountable. In particular, the sale by the bank of unsecured and uninsured debt could provide a market measure of default risk, under a given failure rule.
The choice of a failure rule is also a critical matter. Current failure rules are poorly defined and permit insolvent institutions to continue in operation. Specifying a market value test of insolvency in the statutes would be helpful, but it would have to be supported by market-value accounting requirements and stronger pressures on banking authorities not to defer action.     

The Cross-Section of Expected Stock Returns

Two easily measured variables, size and book-to-market equity, combine to capture the cross-sectional variation in average stock returns associated with market β, size, leverage, book-to-market equity, and earnings-price ratios. Moreover, when the tests allow for variation in β that is unrelated to size, the relation between market β and average return is flat, even when β is the only explanatory variable.