Free Agencies
Tax Avoidance: How Income Tax Rates Affect the Labor Migration Decisions of NBA Free Agents
Nolan Kopkin
Journal of Sports Economics, forthcoming
Abstract:
By using a data set of professional basketball players' free agent contracts from the National Basketball Association (NBA) between the 2001-2002 and 2007-2008 seasons, which has rich data on worker productivity, the author is able to identify the effect that changes in income tax rates have on the labor migration decisions of NBA free agents. After controlling for other observable characteristics of teams, cities, and states, the author finds that an increase in the marginal income tax rate faced by NBA basketball players that play for a given team leads to a decrease in the average skill of the NBA free agents that migrate to that team.
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Richard Burkhauser et al.
Review of Economics and Statistics, forthcoming
Abstract:
Although most US income inequality research is based on public-use March CPS data, a new wave of research using IRS tax-return data reports substantially faster inequality growth for recent years. We show that these apparently inconsistent estimates are largely reconciled when the income distribution and inequality are defined the same way. Using internal CPS data for 1967-2006, we show that CPS-based estimates of top income shares are similar to IRS data-based estimates reported by Piketty and Saez (2003). Our results imply that income inequality changes since 1993 are largely driven by changes in incomes of the top 1 percent.
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Why fears about municipal credit are overblown
Daniel Bergstresser & Randolph Cohen
Harvard Working Paper, June 2011
Abstract:
Highly publicized predictions of 50-100 municipal defaults have caused anxiety among municipal bond investors. While there is some chance that negative investor sentiment will lead to further spread widening, the probability of the kind of widespread default that would be required to justify current municipal bond yields is low. In this paper we document the reasons why the fears of widespread municipal default during the current recession are overblown.
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Solving the Problem of Bailouts: A Theory of Elective Shareholder Liability
Peter Conti-Brown
Stanford Law Review, forthcoming
Abstract:
Government bailouts undermine the core principles of capitalism. They are also expensive, unjust, unpopular, and usually represent dramatic deviations from the rule of law. However, they are also, in some cases, necessary. The "problem of bailouts," then, is that they are almost always inimical to the interests of society, except when they are not. This complexity is ignored under the recent Dodd-Frank Act, which improbably guarantees an end of taxpayer bailouts. Indeed, much of the Act makes bailouts more likely, not less, making the wrong kind of bailouts available far too often. This Article proposes to solve the problem of bailouts by retaining governmental ability to make the right kinds of bailouts possible by forcing the bailed out firms to internalize the costs of such bailouts. The proposal - called elective shareholder liability - allows bank shareholders, according to their own internal risk analyses, the option of either changing their capital structure to include dramatically less debt, consistent with a consensus recommendation of leading economists; or, alternatively, adding a bailout exception to the banks' limited shareholder liability status to require shareholders - not taxpayers - to cover the ultimate costs of their failure. This liability would be structured as a governmental collection, similar to a tax assessment, for the recoupment of all bailout costs against the shareholders, on a pro-rata basis. It would also include an up-front stay on collections to ensure that there are, in fact, taxpayer losses to be recouped, and to mitigate government incentives for over-bailout, political manipulation, and crisis exacerbation. The proposed structure would also give the government the authority to declare the shareholders' use of the corporate form to evade liability null and void, and require that shareholders who litigate against collection and subsequently lose to pay the government's litigation expenses. Among the many benefits of elective shareholder liability, the proposal anticipates the development of a derivatives market that would insure shareholders against liability, the price of which will contain more relevant market information than any other asset price presently available. After explaining the structure and other benefits of elective shareholder liability, the Article addresses several potential objections. Close inspection of these objections, however, reveals that the overall case for elective shareholder liability is strong as a matter of history, law, and economics, though, perhaps, not politics.
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Conflict and Compromise: Changes in U.S. Strike Outcomes, 1880 to 1945
Thomas Geraghty & Thomas Wiseman
Explorations in Economic History, forthcoming
Abstract:
Before about 1900, most strikes in the United States were either won or lost by the workers who called them. Relatively few strikes ended in any sort of compromise. Sometime during the last decade of the 19th century, however, the pattern begins to change, with the fraction of strikes ending in compromise peaking at nearly half during World Wars I and II. What explains these changes in strike outcomes between the late 19th century and 1945? We explore the effects of macroeconomic conditions, industrial organization and product markets, labor organization, law and public policy, and immigration and trade on the costs and benefits of achieving strike compromises. We find that temporary government intervention in settling strikes during World War I helped move labor and management away from an adversarial equilibrium, and thus allowed growing acceptance of organized labor to be reflected in a permanent increase in the rate of compromise. We conclude that changes in the nature of strike outcomes represent an important and neglected aspect of broader changes in the place of organized labor in the American political economy.
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Exploring the Link Between Procedural Fairness and Union Membership in the Federal Government
Ellen Rubin
Review of Public Personnel Administration, June 2011, Pages 128-142
Abstract:
Little research focuses on how management in the public sector influences outcomes relevant to unions, such as membership rates. Membership is a particularly vexing union problem in right-to-work environments, such as the federal government, where no requirements exist for any dues payments. This research addresses the association between perceptions of the fairness of management decisionmaking procedures and the propensity to pay union dues in the federal government. An increase in the perception that management makes decisions fairly is associated with a decreased likelihood that a federal employee will choose to be a member of a union. Likewise, minorities appeared more likely than non-minorities to be union members, when controlling for other factors.
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The Impact of Minimum Lot Size Regulations on House Prices in Eastern Massachusetts
Jeffrey Zabel & Maurice Dalton
Regional Science and Urban Economics, forthcoming
Abstract:
There has been an increased focus on zoning as a cause of high house prices in many metropolitan areas in the United States. But isolating the direct causal impact of zoning on house prices is difficult. This study overcomes the problems in the existing literature by investigating the effect of minimum lot size restrictions (MLRs) on house prices using data on transactions of single-family homes in the greater Boston area from 1987 to 2006. We estimate a model of house prices that include changes in minimum lot size at the zoning district level, variables that account for possible spillover effects in the same town and in nearby towns, and zoning district fixed effects. We estimate price effects due to MLR of 20% or more at the upper end of the impact distribution. We find evidence of significant spillover effects within towns that are similar to those in the zoning district in which the MLR changed. The impact on house prices in nearby towns is significant and as high as 5%. Finally, we find that the impact increases over time with effects as large as 40% occurring 10 years after the change in MLR.
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The Demarcation of Land and the Role of Coordinating Property Institutions
Gary Libecap & Dean Lueck
Journal of Political Economy, June 2011, Pages 426-467
Abstract:
We use a natural experiment in nineteenth-century Ohio to analyze the economic effects of two dominant land demarcation regimes, metes and bounds (MB) and the rectangular system (RS). MB is decentralized with plot shapes, alignment, and sizes defined individually; RS is a centralized grid of uniform square plots that does not vary with topography. We find large initial net benefits in land values from the RS and also that these effects persist into the twenty-first century. These findings reveal the importance of transaction costs and networks in affecting property rights, land values, markets, and economic growth.
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The Impact of Regulations on the Supply and Quality of Care in Child Care Markets
Joseph Hotz & Mo Xiao
American Economic Review, forthcoming
Abstract:
We examine the impact of state child care regulations on the supply and quality of care in child care markets. We exploit panel data on both individual establishments and local markets to control for state, time, and, where possible, establishment-specific fixed effects to mitigate the potential bias due to policy endogeneity. We find that the imposition of regulations reduces the number of center-based child care establishments, especially in lower income markets. However, such regulations increase the quality of services provided, especially in higher income areas. Thus, there are winners and losers from the regulation of child care services.
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Jared Llorens & Edmund Stazyk
Review of Public Personnel Administration, June 2011, Pages 111-127
Abstract:
In recent years, public management research has made great strides in explaining the drivers of employee turnover in the public sector, with key findings related to the role of employee loyalty, organizational satisfaction, person-organization fit, and compensation. This article contributes to this growing body of literature by assessing the influence of a previously untested driver of employee turnover at the state level of government: public-private wage equity. Contrary to conventional wisdom, results suggest that public-private wage equity does not significantly influence voluntary separation rates, whereas state government unionization and the average age of state government employees are found to be indirectly related to voluntary separation. Results also point to the potential implications of ethnicity, gender, and public service motivation in state government employee turnover and provide key insights for those seeking to further understand the impact of reduced expenditures on public sector wages and shifting age distributions in public sector employment.
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Does Government Performance Matter? The Effects of Local Government on Urban Outcomes in England
Stephen Greasley, Peter John & Harold Wolman
Urban Studies, July 2011, Pages 1835-1851
Abstract:
This paper applies an extensive literature that argues that political leadership and local government activity enhance urban performance. Using the State of the Cities Database of 56 Primary Urban Areas in England, it tests for the impact of consolidated governance, political stability, planning performance, average service performance, local government capacity and planning development expenditure on jobs and population growth from 1995 to 2005. The regression analysis finds that the competence of service delivery is weakly associated with full-time jobs growth and that a consolidated governance structure is weakly associated with greater population growth. None of the other tests is statistically significant. Overall, the findings place doubt on the salience of the political determinants of economic performance in English cities for the period in question.
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The impact of minimum wages on wages, work and poverty in Nicaragua
Enrique Alaniz, T.H. Gindling & Katherine Terrell
Labour Economics, forthcoming
Abstract:
In this paper we use an individual- and household-level panel data set to study the impact of changes in legal minimum wages on a host of labor market outcomes including: a) wages and employment, b) transitions of workers across jobs (in the covered and uncovered sectors) and employment status (unemployment and out of the labor force), and c) transitions into and out of poverty. We find that changes in the legal minimum wage affect only those workers whose initial wage (before the change in minimum wages) is close to the minimum. For example, increases in the legal minimum wage lead to significant increases in the wages and decreases in employment of private covered sector workers who have wages within 20% of the minimum wage before the change, but have no significant impact on wages in other parts of the distribution. The estimates from the employment transition equations suggest that the decrease in covered private sector employment is due to a combination of layoffs and reductions in hiring. Most workers who lose their jobs in the covered private sector as a result of higher legal minimum wages leave the labor force or go into unpaid family work; a smaller proportion find work in the public sector. We find no evidence that these workers become unemployed. Our analysis of the relationship between the minimum wage and household income finds: a) increases in legal minimum wages increase the probability that a poor worker's family will move out of poverty, and b) increases in legal minimum wages are more likely to reduce the incidence of poverty and improve the transition from poor to non-poor if they impact the head of the household rather than the non-head; this is because the head of the household is less likely than a non-head to lose his/her covered sector employment due to a minimum wage increase and because those heads that do lose covered sector employment are more likely to go to another paying job than are non-heads (who are more likely to go into unpaid family work or leave the labor force).
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Parsing Public/Private Differences in Work Motivation and Performance: An Experimental Study
Gene Brewer & Gene Brewer Jr.
Journal of Public Administration Research and Theory, July 2011, Pages i347-i362
Abstract:
This article echoes recent calls for public management research to focus on core questions and utilize multiple methods to advance the state of knowledge in the field. In this article, we call for more experimental research on the public/private distinction, which is a core public management research topic. We then conduct a pilot experimental study that provides new insights-and what seem to be major implications-about this important topic. Specifically, we study individuals' vigilance when performing work in a government funded research project compared with a business funded research project. Our results show that individuals are significantly faster, more accurate, and more vigilant when their work is funded by a government agency rather than a private business firm. Two major implications are (1) government provision of goods and services that require faster, more accurate, and more vigilant workers (e.g., airport security or emergency responders) may be superior to private provision, ceteris paribus; and (2) our participants in this study, who are college students, seem to perform better when working for government rather than for the private sector. This is heartening because, with the "quiet crisis" looming over government, many seasoned public servants will soon be replaced by these younger workers. The strengths and limitations of the study are discussed.
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Stephan Goetz et al.
Environment and Planning C: Government and Policy, May/June 2011, Pages 428-456
Abstract:
In attempting to promote economic development, states often pursue either a race-to-the-bottom approach focused on lowering business costs or a more investment-based, race-to-the-top approach that aims to increase productivity, innovation, and entrepreneurship. Whether either approach promotes growth and produces broad-based economic gains across the population is the subject of this paper. The novelty of our approach is that an extensive array of variables representing examples of the two economic development approaches are examined for their effects on various indicators of state economic performance, including income distribution, over the 2000- 07 period. We find that lower taxes are statistically insignificant in explaining state economic performance, and that targeted tax incentives and financial assistance-as currently practised-are more likely to harm growth and income inequality. Some support exists for state and local governments to encourage entrepreneurship and to enhance Internet connectivity.