Why Only Some Industries Unionize: Insights from Reciprocity Theory

This paper argues that the degree to which a given industry’s labor contracts are complete or incomplete is the major factor determining whether its workforce will be unionized. For instance, assembly line industries feature complete labor contracts because of the nature of the production technology: Either a worker keeps up with the line, or he does not. In such a situation, there is no chance for a reciprocal gift exchange under which firms offer high wages in exchange for high effort levels. The result is low wages that make workers prone to unionization. By contrast, jobs that feature incomplete contracts (lawyers, computer programmers, economists) already have reciprocity and gift exchange in place. Such benefits guarantee to workers that their better interests will be looked after by a management that wishes to maintain a positive and productive labor-management interaction.

The Portfolio Allocation Effects of Investor Sentiment about the Ability of Managers to Beat the Market

I present a model that can transform discounts on closed-end mutual funds into a measure of investor sentiment about the ability of fund managers to beat the market. This measure of sentiment varies positively with capital flows into actively managed open-end mutual funds, but negatively with capital flows into passively managed index funds. Investors appear to re-allocate their portfolios between actively and passively managed investment vehicles based on expectations about by how much managers will beat or trail the market.

Closed-end Fund Discounts and Interest Rates: Positive Covariance in US Data after 1985

Previous papers find no relationship between interest rates and the discounts of US closed-end funds before 1985. This is taken as evidence against management fees being a cause of discounts because a negative relationship is expected: if interest rates rise, you would expect to see discounts fall as the present value of future fees is reduced. But from 1985 forward, there has been a strong positive relationship between interest rates and discounts. This supports an alternative view in which the discount varies positively with interest rates because bond yields are an alternative return against which closed-end funds must compete.

Noise-trading, Costly Arbitrage, and Asset Prices: Evidence from US Closed-end Funds

The behavior of US closed-end funds is very different from that of the UK funds studied by Gemmill and Thomas (2002). There is no evidence that their discounts are constrained by arbitrage barriers, no evidence that higher expenses increase discounts and no evidence that replication risk increases discounts—but strong evidence that noise-trader risk is priced. The differences between US and UK funds may be due to the fact that small investors dominate US funds while institutional investors dominate UK funds, or because the sample selection method for the UK funds chooses only funds that are relatively easy to arbitrage.

Noise-trader Risk: Does it Deter Arbitrage, and Is it Priced?

Arbitrage positions that benefit from the reversion of closed-end fund discounts to rational levels show excess returns that increase in magnitude the more funds are mispriced. At the same time, fund trading volumes and bid-ask spreads more than double as funds become increasingly mispriced. These behaviors suggest that non-diversifiable noise-trader risk increases the more funds are mispriced and that market participants are not only aware of this unique risk factor but demand a compensatory rate of return that varies with its magnitude.

ACTA\u27s Constitutional Problems: The Treaty is Not a Treaty

On the eve of the United States’ entry into the Anti-Counterfeiting Trade Agreement (“ACTA”), there is considerable confusion as to just what legal effect the agreement will have. In written answers to Senator Ron Wyden, the United States Trade Representative (“USTR”) went to lengths to describe ACTA as non-binding, asserting that “ACTA does not constrain Congress’ authority to change U.S. law,” and that it would operate only as an “Executive Agreement” that “can be implemented without new legislation.” But European negotiators have described the agreement to their legislature in very different terms, asserting that ACTA is “a binding international agreement on all its parties, as defined and subject to the rules of the Vienna Convention on the Law of Treaties (1969).” ACTA is not a binding international agreement under U.S. law. The U.S. Constitution describes a limited number of ways in which the United States can be bound to international law. The subjects of ACTA — the regulation of intellectual property and domestic and foreign commerce — are Article I powers under the U.S. Constitution, meaning they can be regulated only with congressional participation. Yet, according to the USTR, ACTA will be entered by the United States as a sole executive agreement without congressional authorization or approval. Because the entry of ACTA unilaterally exceeds the President’s constitutional authority, ACTA cannot bind U.S. law. The statements of the USTR as described above are thus correct: ACTA cannot change, or prevent the change of, U.S. law. Under international law ACTA is a treaty. Customary international law recognizes the right of every state to bind itself to international law through the consent of its executive. If the President or a delegate signs ACTA without reservations — that is, if he expresses the intent of the United States to be bound — then the lack of congressional approval is unlikely to prevent the agreement from being binding under international law. The lack of constitutional authority of the executive to enter ACTA on its own accord may not prevent the United States from being bound. ACTA will thus be a treaty under international law, although not a treaty under U.S. domestic law. This article explains these points in more depth. Part I gives a brief background of ACTA and its mandatory framework for minimum legislative standards that would alternatively pledge the United States to change, or to rigidly maintain, current U.S. law. Part II explains the U.S. Constitutional requirements for entry into binding international agreements and shows how the current plan for entering ACTA fails to abide by those norms. Part III describes the international law on treaty-making, which would render ACTA a binding international treaty even absent congressional consent. The article concludes with a few thoughts on why this state of affairs is a problem from the perspective of good governance and democratic accountability

Brief of AARP and the National Legislative Association on Prescription Drug Prices as Amici Curiae in Support of Petitioners

This brief was written in support of Vermont’s Prescription Confidentiality Law, which regulates the confidentiality of prescription records and protects them from being used by pharmaceutical companies as a “targeting tool” to identify doctors most susceptible to sales messages