Do We Know Why Earnings Fall with Job Displacement?

After being displaced from their jobs, workers experience reduced earnings for many years and are at greater risks of other problems as well. The ills suffered by displaced workers motivated several recent expansions of government programs, including the unemployment insurance system, and have spurred calls for wage insurance that would provide longer-run earnings replacement. However, while the average size and the individual characteristics associated with the losses are relatively clear, the theory of displacement-induced earnings loss is scattered. Much of the policy discussion appears to interpret displacement-induced losses through the lens of specific human capital theory, in which skills are specific to jobs, locations, industries, or occupations, and that model has considerable empirical support. Assistance for displaced workers may improve well-being in that model since it insures workers against the risk that their consumption of goods and services might fall for idiosyncratic reasons and, as a consequence, allows workers to make more productive but higher-risk career choices. But there are other credible theories of costly job displacement that have different causal mechanisms, different interpretations and different policy implications. This paper reviews theories of costly job displacement and discusses their consistency with the available empirical evidence. We find that while specific human capital is important, we cannot rule out important roles for other theories

The Dynamic Behavior of Efficient Timber Prices

The problem of when to optimally harvest trees when timber prices evolve according to an exogenous stochastic process has been studied extensively in recent decades. However, little attention has been given to the appropriate form of the stochastic process for timber prices, despite the fact that the choice of a process has important effects on optimal harvesting decisions. We develop a simple theoretical model of a timber market and show that there exists a rational expectations equilibrium in which prices evolve according to a stationary ARMA(1,1) process. Simulations are used to analyze a model with a more general representation of timber stock dynamics and to demonstrate that the unconditional distribution for rational timber prices is asymmetric. Implications for the optimal harvesting literature are: 1) market efficiency provides little justification for random walk prices, 2) unit root tests, used to analyze the informational efficiency of timber markets, do not distinguish between efficient and inefficient markets, and 3) failure to recognize asymmetric disturbances in time-series analyses of historical timber prices can lead to sub-optimal harvesting rules.

Cognitive modeling of social behaviors

To understand both individual cognition and collective activity, perhaps the greatest opportunity today is to integrate the cognitive modeling approach (which stresses how beliefs are formed and drive behavior) with social studies (which stress how relationships and informal practices drive behavior). The crucial insight is that norms are conceptualized in the individual mind as ways of carrying out activities. This requires for the psychologist a shift from only modeling goals and tasks —why people do what they do—to modeling behavioral patterns—what people do—as they are engaged in purposeful activities. Instead of a model that exclusively deduces actions from goals, behaviors are also, if not primarily, driven by broader patterns of chronological and located activities (akin to scripts). To illustrate these ideas, this article presents an extract from a Brahms simulation of the Flashline Mars Arctic Research Station (FMARS), in which a crew of six people are living and working for a week, physically simulating a Mars surface mission. The example focuses on the simulation of a planning meeting, showing how physiological constraints (e.g., hunger, fatigue), facilities (e.g., the habitat’s layout) and group decision making interact. Methods are described for constructing such a model of practice, from video and first-hand observation, and how this modeling approach changes how one relates goals, knowledge, and cognitive architecture. The resulting simulation model is a powerful complement to task analysis and knowledge-based simulations of reasoning, with many practical applications for work system design, operations management, and training

MARKETING MECHANISMS IN GM GRAINS AND OILSEEDS

A number of challenges exist for genetically modified (GM) crop development at the production level. Contract strategies can resolve these challenges. Contracts can be designed to induce legal adoption of GM wheat by varying technology fees, violation detection, and penalties. The primary objective of this research is to analyze contracting strategies to determine terms to minimize technology agreement violation and to induce legal adoption of GM wheat. A simulation model of a crop budget for Hard Red Spring wheat was developed. Results illustrate that contracts can be designed to induce desired behavior. Technology fee, probability of detection, and the level of non-GM premium were the most notable factors influencing adoption decisions.Producer Decisions, Risk, Genetically Modified, Contract Terms, Wheat, Crop Production/Industries,

INCENTIVE CONTRACTS TO MEET FUNCTIONAL CHARACTERISTICS IN WHEAT PURCHASING

Consistency of functional characteristics in hard red spring (HRS) wheat is a concern confronting sellers and buyers. This research analyzes contract incentives for importers with respect to cost and potential risk of acceptance. A principal-agent framework is utilized to examine contract incentives. In the principal-agent contract, the principal offers the contract, the agent rejects or accepts the contract, and then decides how much effort to apply. All this is subject to risk for the agent and moral hazard for the principal. An example is presented, for which equilibrium contract terms are a base price of 454 cents per bushel for low quality wheat and a premium of 36 cents per bushel if high quality is achieved. The premium for high quality is unchanged as the agent's outside option increases, but increases as the probability of conformance with high effort declines or as the agent's cost of high effort increases. Small changes in several of the parameter values (agent's outside option, agent's cost of high/low effort, principal value for high/low effort, and principal's outside options if the contract was not extended or if the agent rejects the contract) result in the principal not offering a contract.Incentive Contact, Functional Characteristic, Wheat, Principal-Agent, Crop Production/Industries,

OPTIMAL TESTING STRATEGIES FOR GENETICALLY MODIFIED WHEAT

A stochastic optimization model was developed to determine optimal testing strategies, costs, and risks of a dual marketing system. The model chooses the testing strategy (application, intensity, and tolerance) that maximizes utility (minimizes disutility) of additional system costs due to testing and quality loss and allows simulation of the risk premium required to induce grain handlers to undertake a dual marketing system versus a Non-GM system. Cost elements including those related to testing, quality loss, and a risk premium were estimated for a model representing a grain export chain. Uncertainties were incorporated and include test accuracy, risk of adventitious commingling throughout, and variety declaration. Sensitivities were performed for effects of variety risks, penalty differentials, re-elevation discounts, import tolerances, variety declaration, risk aversion, GM adoption, and domestic end-user.Segregation, Testing, Tolerance, Genetically Modified, Wheat, Risk Premium, Crop Production/Industries, Research and Development/Tech Change/Emerging Technologies,

\u3ci\u3eLeucanthiza Dircella\u3c/i\u3e (Lepidoptera: Gracillariidae): A Leafminer of Leatherwood, \u3ci\u3eDirca Palustris\u3c/i\u3e

Leatherwood, Dirca palustris (Thymelaeaceae), is an understory shrub ranging throughout most of the eastern and central United States and adjacent Canada. During 1997-1999, we conducted studies to identify and assess the impact of a leafminer that was causing significant damage to leather- wood plants in eastern Gogebic County, Michigan. Leucanthiza dircella was identified as the only insect responsible for the leaf mining activity on leatherwood. In northern Michigan, L. dircella completed one generation per year. Adult moths were captured on yellow sticky panels suspended from leatherwood branches. In 1997 and 1998, most adults were captured during the first sampling period of each year: 6-12 June 1997 and 3-19 May 199B. In 1999, no moths were collected during 5-29 April but adults were collected between 30 April and 22 June 1999. In 1999, initiation of adult flight coincided with D. palustris leaf flush. In 1997, leaf mines were very noticeable by 30 June. The mean number of live L. dircella larvae per mine was 3.5 on 17 July 1997 and then decreased as the season progressed, with most larvae having exited the mines by late August to pupate in the soil. In late August 1997, the mean surface area of a single leaf was 17.8 cm2 and the mean surface area of a single mine was 5.9 cm2. At the end of the 1997 growing sea­son, 31% of the leatherwood leaves contained L. dircella mines, and 11% of the total leaf surface area had been mined. In 1999, only 8% of the leaves in the study area contained L. dircella mines. No leatherwood mortality was evident as a result of L. dircella leaf mining. Seven species of hymenopteran parasitoids were reared from L. dircella larvae, including one braconid in the genus Pholetesor and six eulophids in the genera Chrysocharis, Closterocerus, Pnigalio, and Sympiesis. Three coleopterans that were commonly observed on leatherwood plants during all years included: Glyptina brunnea (Chrysomelidae), Phyllobius oblongus (Curculionidae) and Polydrusus sericeus (Curculionidae)