Specialization and the skill premium in the 20th century

The skill premium fell substantially in the first part of the 20th century, and then rose at the end of the century. I argue that these changes are connected to the organization of production. When production is organized into large plants, jobs become routinized, favoring less skilled workers. Building on the notion that numerically controlled machines made capital more “flexible” at the end of the century, the model allows for changes in the ability of capital to do a wide variety of tasks. When calibrated to data on the distribution of plant sizes, the model can account for between half and two-thirds of the movement in the skill premium over the century. It is also in accord with a variety of industry level evidence.Technological innovations

The scale of production in technological revolutions

Many manufacturing industries, including the computer industry, have seen large increases in productivity growth rates and have experienced a reduction in average establishment size and a decrease in the variance of the sizes of plants. A vintage capital model is introduced where learning increases productivity on any given technology and firms choose when to adopt a new vintage. In the model, a rise in the rate of technological change leads to a decrease in both the mean and variance of the size distribution.Productivity

Informationally Efficient Trade Barriers

Why are trade barriers often used to protect home producers, even at the cost of introducing deadweight losses from higher commodity prices? We add an informational friction to the standard textbook argument in favor of free trade, and show that trade restrictions may be a more effcient policy than a lump sum transfer to the displaced producers. Trade barriers, while generating deadweight losses, have the benefit that they do not generate a need for compensation. When the policy maker does not know the amount that should be transferred, the risk of over- compensating may make trade barrier more efficient.Trade barriers, Distortionary policies

Innovation Fertility and Patent Design

It may be advantageous to provide a variety of kinds of patent protection to heterogenous innovations. Innovations which benefit society largely through their use as building blocks to future inventions may require a different scope of protection in order to be encouraged. We model the problem of designing an optimal patent menu (scope and length) when the fertility of an innovation in generating more innovations cannot be observed. The menu of patent scope can be implemented with mandated buyout fees. Evidence of heterogeneous fertility and patent obsolescence, keys to the model, are presented using patent data from the US.

A Theory of Factor Allocation and Plant Size

In this paper we develop a theory of how factors interact at the plant level. The theory has implications for: (1) the micro foundations for capital skill complementarity (2) the relationship between factor allocation and plant size and (3) the effects of trade and growth on the skill premium. The theory is consistent with certain facts about factor allocation and factor price changes in the 19th and 20th centuries.

A theory of factor allocation and plant size

In this paper we develop a theory of how factors interact at the plant level. The theory has implications for (1) the micro foundations for capital-skill complementarity, (2) the relationship between factor allocation and plant size, and (3) the effects of trade and growth on the skill premium. The theory is consistent with certain facts about factor allocation and factor price changes in the 19th and 20th centuries.Human capital ; Labor supply

Rewarding sequential innovators: prizes, patents and buyouts

This paper presents a model of cumulative innovation where firms are heterogeneous in their research ability. We study the optimal reward policy when the quality of the ideas and their subsequent development effort are private information. The optimal assignment of property rights must counterbalance the incentives of current and future innovators. The resulting mechanism resembles a menu of patents that have infinite duration and fixed scope, where the latter increases in the value of the idea. Finally, we provide a way to implement this patent menu by using a simple buyout scheme: The innovator commits at the outset to a price ceiling at which he will sell his rights to a future inventor. By paying a larger fee initially, a higher price ceiling is obtained. Any subsequent innovator must pay this price and purchase its own buyout fee contract.Patents

Why Do Incumbent Senators Win? Evidence from a Dynamic Selection Model

Since 1914, incumbent U.S. senators running for reelection have won almost 80% of the time. We investigate why incumbents win so often. We allow for three potential explanations for the incumbency advantage: selection, tenure, and challenger quality, which are separately identified using histories of election outcomes following an open seat election. We specify a dynamic model of voter behavior that allows for these three effects, and structurally estimate the parameters of the model using U.S. Senate data. We find that tenure effects are negative or small. We also find that incumbents face weaker challengers than candidates running for open seats. If incumbents faced challengers as strong as candidates for open seats, the incumbency advantage would be cut in half.

Plant interactions are unimportant in a subarctic-alpine plant community

We investigated whether plant interaction intensity in a subarctic-alpine meadow is important for determining community structure and species abundance. Using two common species as phytometers, we measured interaction intensity using a neighbor removal approach. Eight biotic and abiotic variables known to influence species abundance and community structure were measured, with regression trees used to examine how plant interactions and the biotic and abiotic variables were related to species evenness, richness, and phytometer spatial cover. A range of interactions was present, with both strong competition and facilitation present over small-scale abiotic and biotic gradients. Despite the variation in interaction intensity, it was generally unrelated to either community structure or phytometer cover. In other words, plant interactions were intense in many cases but were not important to community structure. This may be due to the prevalence of clonal species in this system and the influence of previous year's interactions on plant survival and patterns of community structure. These results also suggest how conflicting theories of the role of competition in unproductive environments may be resolved. Our findings suggest that plant interactions may be intense in reducing individual growth, while simultaneously not important in the context of community structure. Plant interactions need to be viewed and tested relative to other factors and stresses to accurately evaluate their importance in plant communities, with continued differentiation between the intensity of plant interactions and their relative importance in communities

Aerodynamic Roughness Length Estimation with Lidar and Imaging Spectroscopy in a Shrub-Dominated Dryland

The aerodynamic roughness length (Z0m) serves an important role in the flux exchange between the land surface and atmosphere. In this study, airborne lidar (ALS), terrestrial lidar (TLS), and imaging spectroscopy data were integrated to develop and test two approaches to estimate Z0m over a shrub dominated dryland study area in south-central Idaho, USA. Sensitivity of the two parameterization methods to estimate Z0m was analyzed. The comparison of eddy covariance-derived Z0m and remote sensing-derived Z0m showed that the accuracy of the estimated Z0m heavily depends on the estimation model and the representation of shrub (e.g., Artemisia tridentata subsp. wyomingensis) height in the models. The geometrical method (RA1994) led to 9 percent (~0.5 cm) and 25% (~1.1 cm) errors at site 1 and site 2, respectively, which performed better than the height variability-based method (MR1994) with bias error of 20 percent and 48 percent at site 1 and site 2, respectively. The RA1994 model resulted in a larger range of Z0m than the MR1994 method. We also found that the mean, median and 75th percentiles of heights (H75) from ALS provides the best Z0 m estimates in the MR1994 model, while the mean, median, and MLD (Median Absolute Deviation from Median Height), as well as AAD (Mean Absolute Deviation from Mean Height) heights from ALS provides the best Z0m estimates in the RA1994 model. In addition, the fractional cover of shrub and grass, distinguished with ALS and imaging spectroscopy data, provided the opportunity to estimate the frontal area index at the pixel-level to assess the influence of grass and shrub on Z0m estimates in the RA1994 method. Results indicate that grass had little effect on Z0m in the RA1994 method. The Z0m estimations were tightly coupled with vegetation height and its local variance for the shrubs. Overall, the results demonstrate that the use of height and fractional cover from remote sensing data are promising for estimating Z0m, and thus refining land surface models at regional scales in semiarid shrublands