SHOULD I STAY OR SHOULD I GO? CAREER CHOICES FOR YOUNG WORKERS IN LATIN AMERICA

This paper presents the first estimates of the returns to formal labor market experience and tenure in a developing country context. We take advantage of rich matched employer–employee data from Brazil and Chile, exploiting job displacement as a source of identification. We find positive returns to both dimensions in these countries, with larger returns to tenure in Brazil and larger returns to experience in Chile. Our findings suggest the more rigid Brazilian labor legislation may encourage firms to invest in young workers' specific skills. Chile's institutions, on the contrary, might promote the acquisition of general skills. (JEL J24, J31, M50)     

STILL FEELING PROUD TO BE WORKING FOR YOUR EMPLOYER? LONGITUDINAL CHANGES IN WHITE COLLAR EMPLOYEES' MORALE IN A TIME OF ORGANIZATIONAL RESTRUCTURING

Using two panels of employer-employee matched datasets, this study investigates the changes in work morale for white-collar employees—managerial, professional, and technical (MPT) workers—and how such changes are related to organizational restructuring. Findings suggest little changes in work morale of white-collar workers—more MPT workers in the 2002 data strongly agreed that they “feel proud to be working for their employers” than did their counterparts in 1991, but fewer of them agreed to the statement. Moreover, managerial employees have been increasingly akin to the tall organizational hierarchy, but display some resentment toward teamwork. In contrast, work morale of professional/technical workers is not related to the changes in organizational hierarchy and teamwork, but their positive reaction to internal labor markets has significantly declined from 1991 to 2002. The conclusion section summarizes major findings and discusses implications for future studies on this subject.     

TO DETER OR TO MODERATE? ALLIANCE FORMATION IN CONTESTS WITH INCOMPLETE INFORMATION

We consider two players' choice about the formation of an alliance ahead of conflict in a framework with incomplete information about the strength of the potential ally. When deciding on alliance formation, players anticipate the self‐selection of other players and the informational value of own and other players' choices. In the absence of these signaling effects, strong players have an incentive to stand alone, which leads to a separating equilibrium. This separating equilibrium can be destabilized by deception incentives if beliefs are updated on the basis of endogenous alliance formation choices. Weak players may find it attractive to appear strong in order to deter competitors from positive effort choices. Strong players may find it attractive to appear weak in order to give their competitors a false sense of security and then beat them with little effort. Moreover, appearing weak allows players to free‐ride when alliances are formed. (JEL D72, D74)     

TALENT AND/OR POPULARITY: WHAT DOES IT TAKE TO BE A SUPERSTAR?

We show that both talent and popularity significantly contribute to stars' market values in German soccer. The talent‐versus‐popularity controversy on the sources of stardom goes back to Rosen (1981) and Adler (1985) . All attempts to resolve the controversy empirically face the difficulty of accurately identifying talent. In professional sports, rank‐order tournaments help in ascertaining talent. Analyzing a team setting, we use 20 different performance indicators to estimate a player's talent according to his ability to increase the team's winning probability. (JEL J31, J44, L83)     

MARCH MADNESS? UNDERREACTION TO HOT AND COLD HANDS IN NCAA BASKETBALL

The hot hand bias is the widely documented bias toward overestimation of positive serial correlation in sequential events. We test for the hot hand bias in a novel real‐world context, the seeding of National Collegiate Athletic Association (NCAA) basketball tournament teams. That is, we examine whether teams that perform relatively well heading into “March Madness” are seeded too high, and/or teams with poor recent performance are seeded too low. The seeds are determined by a 10‐member committee that only has implicit incentives, but these incentives are still substantial as the committee's decisions are highly scrutinized by the media, fans, and other stakeholders. We find that, contra the hot hand bias, the committee underreacts to signals of momentum heading into the NCAA tournament. Various results indicate this behavior can be attributed to both: (1) inattention to relatively detailed information indicating momentum; and (2) under‐appreciation of the predictive value of this information. Betting markets incorporate this information efficiently, but neglect some additional information that is predictive of winning NCAA tournament games but not of beating the spread. We note that the NCAA tournament has been highly popular and lucrative partly due to the “madness” (high frequency of wins by lower‐seeded teams), which the bias we document contributes to, making the persistence of bias less surprising. (JEL D83, L83)     

WHEN WlLL I GET A COMPUTER?

Ihaven't bought a computer yet, but I have been dreaming about it for a long time. In the 1980s, when my friends and neighbors returned from abroad and brought back computers, I didn't admire them because I didn't think they would be very useful. Of course I couldn't afford it, either.     

FROM OLD SOUTH TO NEW SOUTH? BLACK-WHITE RESIDENTIAL SEGREGATION IN MICROPOLITAN AREAS

This article examines black-white residential segregation in micropolitan areas across the South. Micropolitan areas are newly defined urban clusters with a core population that ranges from 10,000 to 50,000. By shifting the focus to the nonmetropolitan South, we take debates about the “American dilemma” back to a historically important terrain of black-white relations that few scholars have systematically examined in the post-Civil Rights era. Using the most recent census, we find that the dynamics of residential segregation in our sample of micropolitan areas reflect both important opportunities and constraints. In contrast to their counterparts in metropolitan areas, blacks in the nonmetropolitan South face “only” moderate levels of segregation. Surprisingly, southern micropolitan areas afford greater opportunities for spatial assimilation to the least economically advantaged blacks as well as those who are more advantaged. Perhaps most importantly, this finding holds for micropolitan areas located in the historic Black Belt as well as elsewhere; however, several patterns emerge that suggest a set of barriers to spatial assimilation similar to those facing African Americans in metropolitan areas. In sum, our analysis clarifies the complexities of black-white segregation in the “New South/Old South,” pushing scholars to more systematically map the distinct trajectories of “American Apartheid” across time and place in the United States.     

WILL GIRLS BE GIRLS? RISK TAKING AND COMPETITION IN AN ALL‐GIRLS' SCHOOL

We conduct an experiment that examines the relationship between girls only schooling and risk taking and competitive behavior. In it, we compare decisions made by students in an all‐girls' school to those made by students in a closely matched coeducational school. We further investigate the developmental nature of this behavior by comparing choices made by younger students (Grades 7 and 8) with those of older students (Grades 11 and 12). We focus on the differences between those who select into the all‐girls' school, and find that although girls educated in a single sex environment are the most risk averse, they are also among the most competitive. These results lend texture to the hypothesis that “nurture matters” in the gender differences debate. (JEL C93, J16, I21)     

WHEN IS TRADE PROTECTION GOOD FOR GROWTH?

The empirical relationship between trade protection and economic growth is surprisingly fragile, as shown in a number of other papers. We address one possible explanation for these findings: that the relationship is contingent on the pattern of comparative advantage, following the endogenous growth literature. Our findings suggest that such contingencies do in fact exist—in particular, the correlation between tariffs and growth is strong and positive for skill‐abundant countries—and are robust to the choice of control variables. (JEL F13, F43, O19, O24)     

THE PATH OF CHINESE WOMEN TO PARTICIPATE IN POLITICS

In 1994, there were two Vice-Chairwomen of the Standing Committee of the NPC, one woman State Councillor, 19 women ministers and vice ministers, 18 women provincial governors and vice governors and 308 women mayors and vice mayors.     

SHOULD WE TAKE DON'T KNOW FOR AN ANSWER?

Much attention has been given to the problem of non-attitudes,that is, people expressing opinions while lacking an underlyingattitude (false positives). In comparison, the potential problemof false negatives, people with an attitude who decline to expressan opinion, has been neglected. Using a survey on nuclear powerfrom Sweden, we examine whether people who answer "don't know"but are induced subsequently to give an opinion really haveattitudes. The attitudes these people express on follow-up questionspredict behavior to a significant extent. This implies thatthe usual don't know category includes some false negatives,that is, people who really have attitudes but refrain, at leastinitially, from expressing them.     

ARE WORKERS WILLING TO PAY TO JOIN A BETTER TEAM?

Using data from the Major League Baseball free‐agent market, this study is the first to show that the productivity expected of the team a worker will join produces a significant, negative compensating wage differential. The younger workers in the sample drive this result, trading 25% of their wages to join teams with an expected productivity one standard deviation higher. This investment can be recouped if a reasonable increase in human capital occurs. These results are robust to contract length‐wage simultaneity and indicate that investment in human capital motivates the observed tradeoff, suggesting a new pathway through which human capital accumulation can affect wages. Reliable measures of workers' own past productivity and the productivity expected of a worker's future team provide key advantages to identifying these effects. (JEL J31, J24, M54)     

THE GUNS OF AUTUMN?: AGE DIFFERENCES IN SUPPORT FOR INCOME TRANSFERS TO THE YOUNG AND OLD

Data from the 1973 and 1986 General Social Surveys are usedto test the hypothesis that elderly individuals favor publicspending patterns that support their own interests and not thoseof children. Support for educational spending and welfare bythe elderly is found to be less than within other age groups.Age patterns of support for Social Security spending are mixed.Responses to a series of "vignettes" depicting low-income familieswith young children and elderly women living alone showed thatelderly respondents are slightly more supportive than averageof transfers to low-income families with children and less supportivethan average of transfers to low-income members of their owncohort. Elderly respondents appear more generous once theirmore frugal notions of what it takes to "get along" are takeninto account. Support for transfers to young families is moreclosely related to income than age and is not consistent withthe hypothesis that the elderly support programs that benefitthemselves at the expense of programs that benefit the young.     

DO REAL ESTATE BROKERS ADD VALUE WHEN LISTING SERVICES ARE UNBUNDLED?

This paper measures the effects of real estate brokerage services provided to sellers, other than MLS listings, on the terms and timing of home sales. It is not obvious that sellers benefit from those services. On the one hand, brokers offer potentially useful knowledge and expertise. On the other hand, because the relationship between the homeowner and the broker resembles a classical principal‐agent problem, the broker may not deploy services in ways that promote the seller's interests. Yet as long as valuable MLS listings are bundled with brokerage services, homeowners may use brokers even if the agency costs exceed the benefits of brokers' knowledge and expertise. Thus, quantification of the net value of brokerage services other than MLS listings bears directly on the recent policy debate over the desirability unbundling of MLS listings. We estimate the effect of a seller's decision to use a broker on list prices, selling prices, and speed of sale for a real estate market with an unusual and critical characteristic: it has a single open‐access listing service that is used by essentially all sellers, regardless of whether they employ brokers. Our central finding is that, when listings are not tied to brokerage services, a seller's use of a broker reduces the selling price of the typical home by 5.9% to 7.7%, which indicates that agency costs exceed the advantages of brokers' knowledge and expertise by a wide margin. (JEL D12, R31, L85)     

TO LEAN OR NOT TO LEAN AGAINST AN ASSET PRICE BUBBLE? EMPIRICAL EVIDENCE

Since the Global Financial Crisis of 2007–2009, economists are reconsidering the appropriate role of monetary policy towards equity bubbles. This paper contributes to these deliberations by estimating the response of the stock market to monetary policy tightening by using a Bayesian time-varying VAR model. By introducing the cyclically adjusted price/earnings ratio, we propose a method that estimates its fundamental and bubble components. We find that asset prices will initially fall and eventually rise again but without the risk of feeding the bubble. Counterfactual policy experiments provide additional evidence that monetary policy can lean against equity and housing prices. (JEL E50, E52, E58)     

IS PEER REVIEW IN DECLINE?

Over the past decade, there has been a decline in the fraction of papers in top economics journals written by economists from the highest‐ranked economics departments. This paper documents this fact and uses additional data on publications and citations to assess various potential explanations. Several observations are consistent with the hypothesis that the Internet improves the ability of high‐profile authors to disseminate their research without going through the traditional peer‐review process. (JEL A14, O30)     

WHAT DO UNIONS DO TO PENSION PERFORMANCE?

Unions can have either positive or negative effects on risk‐adjusted returns in pension plans. On the positive side, a union can improve monitoring of pension advisors and asset managers. On the negative side, the union may sacrifice returns by making investments that promote union goals. This paper discusses how the structure of the pension plan affects the union's ability and willingness to sacrifice returns to promote union goals. Using panel data on over 38,000 pension plans drawn from IRS Form 5500 filings between 1988 and 2008, we find the lowest performing plans are unionized multi‐employer plans. Among defined contribution plans, the underperformance of multi‐employer union plans disappears when the pension is controlled by individual participants. (JEL J32, J51)     

DOES BEAUTY MATTER IN UNDERGRADUATE EDUCATION?

Physically attractive individuals achieve greater success in terms of earnings and status than those who are less attractive. However, whether this “beauty premium” arises primarily because of differences in ability or confidence, bias, or sorting remains unknown. We use a rich dataset from a women's college to evaluate each of these three mechanisms at the college level. We find that students judged to be more attractive perform significantly worse on standardized tests but, conditional on test scores, are not evaluated more favorably at the point of admission, suggesting that more attractive people do not possess greater abilities at the beginning of college. Controlling for test scores, more attractive students receive only marginally better grades in some specifications, and the magnitudes of the differences are very small. Finally, there is substantial beauty‐based sorting into areas of study and occupations. (JEL J16, I21, I23)     

MORTGAGE LENDING TO MINORITIES: WHERE'S THE BIAS?

This paper examines mortgage lending and concludes that studies based on data created by the Boston Fed should be reevaluated. A detailed examination of these data indicates that irregularities in these data, when combined with the most commonly used research methodology, appear to have biased previous research toward a finding of discrimination against minority applicants. When the most severe data irregularities are eliminated, evidence to support a hypothesis of discrimination disappears. The currently fashionable flexible underwriting standards of mortgage lenders may have the unintended consequences of increasing defaults for the beneficiaries of these policies. (JEL J7, G28)