Labor Choice Research Articles

Solving, Estimating and Selecting Nonlinear Dynamic Economic Models without the Curse of Dimensionality

A welfare analysis of policies for risk averse preferences is handicapped within linear or linearized models and their certainty equivalence property. I calculate the optimal policy in a nonlinear stochastic dynamic general equilibrium model. Then I estimate the posterior density of structural parameters and the marginal likelihood within a nonlinear state space model. The computational challenges are considerable and I concentrate on the numerics and statistics for a simple model of dynamic consumption and labor choice. It is estimated on simulated data in order to test the routines with known true parameters. The code is written for a general model class. The policy function is approximated by Smolyak Chebyshev polynomials and the rational expectation integral by Smolyak Gaussian quadrature. The Smolyak operator is used to extend univariate approximation and integration operators to many dimensions. It is also called boolean method, hyperbolic cross points, discrete or sparse grids, fully symmetrical integration rules or complete polynomials. It reduces the curse of dimensionality from exponential to polynomial growth. The likelihood integrals are evaluated by a Gaussian quadrature and Gaussian quadrature particle filter. The bootstrap or sequential importance resampling particle filter, based on a Monte Carlo integration, is used as an accuracy benchmark. The posterior is estimated by the Gaussian filter and a Metropolis-Hastings algorithm. I propose a genetic extension of the standard Metropolis-Hastings algorithm by parallel random walk sequences. The candidate parameter vectors are constructed by innovation from the parallel sequences in addition to the usual random walk shocks. This improves the robustness of start values and the global maximization properties. Moreover it simplifies a cluster implementation and the random walk variances decision is reduced to only two parameters so that almost no trial sequences are needed. Finally the marginal likelihood is calculated as a criterion for nonnested and quasi-true models in order to select between the nonlinear estimates and a first order perturbation solution combined with the Kalman filter.

Indivisible-labor, lotteries and idiosyncratic productivity shocks

This paper extends the indivisible-labor model by Hansen [J. Monet. Econ. 16 (1985) 309] and Rogerson [J. Monet. Econ. 21 (1988) 3] to include multiple consumers who differ in initial wealth and whose labor productivities are subject to idiosyncratic shocks. In the presence of idiosyncratic uncertainty, the optimal allocations for the individual employment probabilities are at corners: agents work with probability one (zero) when their productivities are high (low). As in Hansen [J. Monet. Econ. 16 (1985) 309], each agent in our indivisible-labor economy behaves as if her labor choice was divisible and her utility function was linear in hours worked. However, the quasi-linearity of the social preferences, established in Hansen [J. Monet. Econ. 16 (1985) 309] for the homogeneous-agent case, does not survive after the introduction of idiosyncratic shocks.

Child Labor and School Attendance: Two Joint Decisions

In this paper, a variety of potentially explanatory indicators for child labor and school attendance in Zambia is scrutinized. By analysing the results from a bivariate probit model, new doubt is raised with regard to the income sensitivity of the child labor choice. Different factors in the model influence the child labor and schooling choice. Based on the results, sensitization, narrowly targeted subsidies or stipends are suggested to at-risk households in selected provinces, provided that children are sent to school.

The Convergence of Labor and Public Health: A Natural and Critical Alliance

The reorganization of a Labor Caucus in APHA provides an opportunity to reflect on the community of methods and interests between the public health and labor communities. The nature of both movements is examined and the factors (knowledge base, political will, and social strategy) that define the actions of both movements are addressed. The antagonism between the prevailing political dogma of market individualism and the two movements is also discussed, with special emphasis of the need for strong government involvement to support the functioning of both labor and public health. Important issues that currently affect labor and public health are discussed. Constructive disagreements on policy choices of labor on national health insurance and occupational safety and health are examined. A warm endorsement of a critical alliance of labor and public health is made, and the revitalization of a labor caucus is cordially welcomed.

The social basis of interdependent preferences

Most economists are sympathetic to the idea that concerns for relative position are an important aspect of many economic problems. There has traditionally been a reluctance to include such concerns primarily because models that included them often allow such a broad range of behavior that there are few, if any, restrictions on equilibrium behavior and, hence, such models would have little or no predictive power. In this paper we discuss how reduced form models may naturally give rise to utility functions that depend, in part, on relative standing. There are several advantages of modelling concern for relative standing in reduced form utility functions even when there is no similar concern in the `deep' preferences. It provides structure and constraints on the way that relative standing affects utility, and further, it can yield testable implications about the way that changes in the underlying environment affect the concern for relative standing. We discuss the advantages and disadvantages of modelling social concerns in this way and provide examples that illustrate how concerns for relative standing can affect savings, investment and labor choice decisions.

The interaction of investment and financing decisions under moral hazard

This paper examines how debt-induced risk shifting arising in the labor choice contributes to the interaction between investment and financing decisions. Due to equity's limited liability, increased use of debt leads to labor over-utilization compared with all-equity financing. In turn, increasing leverage to finance investment has no effect on the cost but, via labor, influences the expected benefit of marginal investment by affecting the size of shareholders' claim while reducing its likelihood. If the equity claim is reduced, investment and debt are inversely related; otherwise they could be positively related. The linkage between debt and investment exists because both are chosen anticipating the subsequent optimal labor choice, all three decisions are made before price uncertainty is resolved, and equity flotation costs exist.

A model of a professional sports league

This paper considers a multi-firm analysis of a cartel. It examines the individual owner's choice of labor, the primary factor of production, and the cartel's choice of revenue sharing and salary cap policies in both a profit maximizing model and a utility maximizing model. The effect of decision making outcomes on labor market issues such as talent distribution and wages is explored. Cartel innovation and stability are discussed, especially the likelihood of adoption of institutional policies. The effect of the degree of the salary cap restriction (from unbinding to partially binding to completely binding) is examined. The optimal revenue sharing agreement and salary cap level are generally found to be 100% and 0%, respectively, from the owners' perspective. Wages are found to decrease with increases in revenue sharing and decreases in the salary cap level.

A Model of a Professional Sports League

This paper considers a multi-firm analysis of a cartel. It examines the individual owner's choice of labor, the primary factor of production, and the cartel's choice of revenue sharing and salary cap policies in both a profit maximizing model and a utility maximizing model. The effect of decision making outcomes on labor market issues such as talent distribution and wages is explored. Cartel innovation and stability are discussed, especially the likelihood of adoption of institutional policies. The effect of the degree of the salary cap restriction (from unbinding to partially binding to completely binding) is examined. The optimal revenue sharing agreement and salary cap level are generally found to be 100% and 0%, respectively, from the owners' perspective. Wages are found to decrease with increases in revenue sharing and decreases in the salary cap level.

Modelling labour decisions of French agricultural households

A joint model of labour decisions for farm couples is presented. Attention is given to operator and spouse participation decisions in the off-farm labour market as well as the decision to use hired farm labour. Farm household labour choices, which include both on-farm and off-farm work decisions, and hired labour decisions, are thus modelled as a household joint process. The model is applied to a sample of French farm households. Empirical results illustrate the importance of spouse decisions on off-farm labour participation and supply function structure. They also show that operator labour and hired farm labour are complementary, but wife labour and hired farm labour are substitutable.

Modelling occupational choice in blue-collar labor markets

This paper presents rational, adaptive, and naive expectations models of the occupational choice of students in vocational and technical schools. The models were estimated using the method of Seemingly Unrelated Regressions. None of the three models consistently out-performed the other two. Vocational and technical school students were found to be responsive to the opportunity cost of their occupational choice. They were not necessarily responsive to the level of demand. The results are consistent with the hypothesis that the students occupational choice is influenced in large part by variables such as parental occupations and attitudes toward vocational and technical education.

Geographical Inquiry and American Historical Problems

Introduction: the practice of geographical history 1. The ecological causes of the Virginia mortality crisis, 1607-1624 2. Why the Puritans settled in New England: the problematic nature of English colonization in North America, 1580-1700 3. Why tobacco stunted the growth of towns and wheat built them into small cities: urbanization south of the Mason-Dixon line, 1650-1790 4. Boston, vanguard of the American Revolution 5. The industrial Revolution as a response to cheap labor and agricultural seasonality, 1790-1860: a reexamination of the Habakkuk thesis 6. To enslave or not to enslave: crop seasonality, labor choice, and the urgency of the Civil War 7. The myth of the southern soil miner|: macrohistory, agricultural innovation, and environmental change 8. A tale of two cities: the ecological basis of the threefold population differential in the Chicago and mobile urban systems, circa 1860 9. The split geographical personality of Americna labor: labor power and modernization in the Gilded Age 10. The last great chance for an American working class: spatial lessons of the general strike and the Haymarket riot of early May 1886 11. Spoiling the 'roast beef and apple pie' version of American exceptionalism: the agricultural-geographic origins of working-class division and the failure of American socialism 12. The periodic structure of the American past: rhythms, phases, and geograph conditions Index.

Prostaglandin inhibitors the only choice for preterm labour

Prostaglandin inhibitors the only choice for preterm labour

Class Segmentation and Divided Labor: Asian Workers in the Gulf of Mexico Seafood Industry

The growth of refugee and immigrant enclaves in the United States despite pressures for assimilation highlights the persistence of ethnic identity over other loyalties. Because ethnically distinct immigrants are often concentrated (whether by choice or discrimination) in particular labor markets, researchh among refugee populations provides an opportunity to evaluate theories of class and ethnicity in the work place. This article examines the class segmentation mode of ethnicity with respect to the seafood processing industry in Bayou La Batre, Alabama, a small coastal community located on the northern Gulf of Mexico. Since the mid-1970s, Bayou La Batre has witnessed an influx of Vietnamese, Cambodian, and Laotian immigrants, most of whom have been incorporated, albeit unevenly, in the work force of the seafood processing industry. The article assesses the extent to which the changing ethnic composition of the work force has affected processors' hiring practices, and whether employment patterns conform to the predictions of class segmentation theory. Examination of hiring practices in the seafood industry will suggest some important modifications of the model; notably, that employers' decisions are not governed soley by the imperative of controlling the work force, but are also constrained by preexisting cultural perceptions of ethnically distinct workers. CLASS SEGMENTATION THEORY A good deal of research affirms that ethnic identity is usually far stronger than class ideology in most industrial capitalist societies (Smith 1981; Horowitz 1985; Williams 1989). This fact defies the assumptions of both classical economists and early Marxists, who postulated an increasingly homogenous industrial labor force. Asserting that business utilizes labor most efficiently when hired on the basis of cost, skill, and demand rather than noneconomic factors, neoclassical economists argue that work force segregation raises the costs of production. For this reason, Friedman (1962:108) and others contend that discrimination in the work place would be eliminated under conditions of market competition. For their part, Marx and Engels (1977a:228) initially concurred that ethnic or national ideologies would disappear as workers of different backgrounds experienced similar conditions in the work place.(1) Yet in most advanced capitalist societies, ethnicity continues to take precedence over class identification. It is within the putatively homogenous working class that such loyalties are at their strongest, and occasionally most virulent. The comparative weakness of class identity in the United States, and the fact taht the working class is often divided by exclusivist ethnic sentiments, are frequently cited for the failure of coherent working class politics in the U.S. (Flacks 1988:111). To account for the persistence of ethnic divisions within the labor force, neo-Marxists have advanced a class segmentation theory of industrial relations (Reich et a. 1981). Contrary to the assumptions of early political economy and neoclassical economics, the class segmentation model does not hold that hiring practices are governed merely by the supply and demand for labor. Far from being color blind, firms utilize racial and ethnic distinctions within the work force to accentuate their control over the labor process. To prevent unionization, strikes, or other political challenges to class relations, employers promote divisions within the work place thaht impede workers' identification of common interests. While alternative loyalties may assume different forms (employer paternalism being one such variant [see Burawoy 1979; Gartman 1986]), divisive ethnic loyalties within a work force often preclude common action against employers. When employers maintain a dual wage structure for similar kinds of work, utilize ethnically distinct workers as strikebreakers, or accentuate communication barriers between workers, collective resistance is significantly lessened within the work force. …

Anaesthesia for preterm labour and delivery

Prematurity is the leading cause of perinatal morbidity and mortality. Obstetric management is outlined and the implications that enable the anaesthesiologist to provide optimal care are reviewed. Regional anaesthesia is the method of choice for labour and vaginal or Caesarean delivery. However, when indicated one should not fear using general anaesthesia.

Welfare cost of import restraints in the presence of domestic taxes

This article provides a geometric analysis of the welfare consequences of import tariffs and quotas that takes into account the effect of domestic taxes that distort labor's choice between work and leisure. The model is applied to estimate the welfare cost of a uniform tariff set at the weighted average of the actual tariffs for Canada and for the United States. It is found that the effect of domestic taxes should loom large in the welfare calculations for import restraints and that, because they ignore this effect, the existing estimates are likely to be very misleading.

STOCHASTIC TECHNOLOGY IN A PROGRAMMING FRAMEWORK: A GENERALISED MEAN‐VARIANCE FARM MODEL

Production uncertainty is important in studying behaviour of risk‐averse firms and developing successful agricultural policies. A model that extends the standard Mean‐Variance (E‐V) method to incorporate stochastic technology in a proscriptive programming framework is developed, and risk effects of factor inputs are measured for the irrigated multi‐crop farming system in the Sudan. Hired labour is found to be risk increasing in cotton and sorghum but risk reducing in groundnuts. Operator labour is found to be risk reducing in cotton and sorghum but risk increasing in groundnuts. Supply responses are derived from a nonlinear programming model of agricultural producer decisions and it is found that supply responses are more elastic when labour choices are allowed to influence production risks.

The optimal choice of inputs under time-of-use pricing and fixed-proportions technology: An application to industrial firms∗

In this paper we describe the optimal choice of capital, labor and electricity during a representative day of a firm operating under time-of-use (TOU) pricing of electricity and labor. The objective of the firm is to minimize production costs over the day subject to a given output level and several scheduling constraints on the availability of capital and labor. While the underlying theoretical production process of the firm may be ‘flexible’, possibly with substantial substitution among the inputs, most firms find it difficult if not impossible to specify the production process analytically. Thus, we assume that the technology is represented by a set of fixed-proportions activities. This representation is easy to apply in actual situations since the optimal choice of inputs can be formulated as a linear programming (LP) problem. Our analysis shows that the use of a small number of fixed-proportions production activities can result in a good approximation of the optimum. The LP formulation is applied to data sets for two manufacturing firms, and the optimal quantities of output and inputs are close to those actually observed.

A Public Ownership Resolution of the Tragedy of the Commons

Imagine a society of fisherfolk, who, in the state of nature, fish on a lake of finite size. Fishing on the lake is characterized by decreasing returns to scale in labor, because the lake's finite size (and finite fish stock) imply that each successive hour of fishing labor is less effective than the previous one, as the remaining fish become less dense in the lake. In the state of nature, the lake is commonly owned: each fishes as much as he pleases, and, we might suppose, calculates his fishing plan by taking the labor of the others as given, as he sees it. Each knows that the distribution of fish will be proportional to labor expended among the fisherfolk: if I fish twice as long as you, I will end up with twice as much fish as you. This is not due to some kind of concern with equity (or the labor theory of value) among the fisherfolk; it is a technological fact, implied by the assumption that fishing labor is homogeneous, and all are equally likely to catch a fish in a unit of time. An equilibrium under common ownership can be thought of as a Nash equilibrium of the game where each computes his optimal fishing plan, given the labor of the others and knowing what the consequent distribution of fish would be. (A Nash equilibrium is an allocation of labor and fish to each fisherman, with the property that no one can increase his utility by deviating in his choice of labor, given what the others are doing.)

Book Review: Economic and Social Security and Substandard Working Conditions: Pensions, Labor, and Individual Choice

Book Review: Economic and Social Security and Substandard Working Conditions: Pensions, Labor, and Individual Choice

Pensions, Labour and Individual Choice

Pensions, Labour and Individual Choice