Education and Labor-Market Discrimination

We propose a model that combines statistical discrimination and educational sorting that explains why blacks get more education than do whites of similar cognitive ability. Our model explains the difference between blacks and whites in the relations between education and AFQT and between wages and education. It cannot easily explain why, conditional only on AFQT, blacks earn no more than do whites. It does, however, suggest, that when comparing the earnings of blacks and whites, one should control for both AFQT and education in which case a substantial black-white wage differential reemerges. We explore and reject the hypothesis that differences in school quality between blacks and whites explain the wage and education di%uFB00erentials. Our findings support the view that some of the black-white wage di%uFB00erential reflects the operation of the labor market.

A review of the Energy Productivity Center's Least-Cost Energy Strategy study

The Mellon Institute's Energy Productivity Center (EPC) has recently completed a study asking the question, "How would the nation have provided energy services in 1978 if its capital stock had een reconfigured to be optimal for actual 1978 energy prices?" Interest in this question is motivated by the unanticipated increases in oil prices since 1973. If policy makers are to learn from history it is important to know what would have happened if the increases in energy prices had been foreseen and if the nation had taken full advantage of that knowledge to minimize costs.EPC concludes that if the 1978 capital stock had been transformed in conformance with a least-cost principal for providing energy services, then, given actual 1978 energy prices and energy service demands, per capita energy service costs would have been reduced by 17%. Market shares of the various energy types would also have been affected substantially. For example, while the gas share of total energy service demand would have increased slightly from actual 1978 levels, the share of purchased electricity would have fallen from 30% to 17% of total energy service demand, and improvements in energy efficiency would have increased from 10% to 32%.EPC's findings have received considerable attention, both from the press and from policy makers. EPC interprets its results as indicating "... the direction in which we coul move to begin realizing some of the benefits of a least-cost strategy." The purpose of this report is to assess and evaluate the EPC methodology, data base, and results. Here we briefly summarize our principal findings

The Effect of Bank Competition on the Bank's Incentive to Collateralize

It has been argued that competing banks make inefficiently frequent use of collateralization in situations where they are better able to evaluate a project's risk than entrepreneurs. We study the bank's choice between screening and collateralization in a model where banks do not have this superior screening skill. In particular, we study the effect of bank competition on this choice. We find that competing banks use collateral less often than a monopolistic bank because competition will intensify if both banks collateralize. Moreover, bank competition is welfare improving if collateralization is rather costly

Allocation under dictatorship : research in Stalin’s archives

We survey recent research on the Soviet economy in the state, party, and military archives of the Stalin era. The archives have provided rich new evidence on the economic arrangements of a command system under a powerful dictator including Stalin’s role in the making of the economic system and economic policy, Stalin’s accumulation objectives and the constraints that limited his power to achieve them, the limits to administrative allocation, the information flows and incentives that governed the behavior of economic managers, the scope and significance of corruption and market-oriented behavior, and the prospects for economic reform