Essays
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Economics of Privacy and User‐Generated Content - Tucker, Catherine
The Internet has allowed an unprecedented expansion of the data firms can collect and the amount of content users can upload. Understanding the forces that shape the demand and supply of this content is critical for understanding the likely evolution of the Internet. We review foundational and cutting‐edge research on the economics of privacy and user‐generated content (UGC), and sketch out issues for future research. -
Emerging Trends: Asset Pricing - Campbell, John Y.
The modern field of asset pricing is organized around the concept of the stochastic discount factor. This essay uses this framework to discuss the literature on predictability of asset returns in the short and long run, the influence of irrational investor expectations on asset prices, and the cross‐section of stock returns. Future progress will require microeconomic data on investor actions and ideally survey evidence on their risk preferences and beliefs. -
Empirical Models of Bilateral Contracting - Lee, Robin S.
This essay briefly surveys the empirical literature on bilateral contracting. The focus is on contracting between firms in vertical markets, and I discuss recent approaches to modeling their determination and the impact of contractual restrictions on competition, industry structure, and welfare. I also highlight challenges facing future research in this area. -
Financialization of the US Economy - Davis, Gerald (Jerry) F.
“Financialization” describes the increasing centrality of finance and financial considerations to the workings of the economy. This essay reviews the evidence that (i) creating shareholder value became a predominant concern for corporations since 1980, particularly in the United States, and (ii) the financial sector gained increasing prominence and power in the economy, with a number of consequences for the operations of corporations and the organization of society. Opportunities for future research are discussed including documenting the rise of securitization and its effect on the finance industry; understanding the emergence of new noncorporate forms of organization not tied to financial markets; finance and social movements; and finance and culture. -
Household Wealth Effects and the US Macroeconomy - Dynan, Karen
The effect of wealth on consumption is an issue of long‐standing interest to economists. Analysts believe that fluctuations in household wealth have driven major swings in economic activity. This essay considers the so‐called “wealth effects”—the impact of changes in wealth on household consumption and the overall macroeconomy. There is an extensive existing literature on wealth effects, but there are also many unanswered issues and questions. This essay reviews the important issues regarding the role wealth plays in the macroeconomy and argues that there is a need for much more wealth effect research as well as better data sources for conducting such analysis. -
Innovation - Jaffe, Adam B.
Innovation is the creation and commercial implementation of a new product or process, often (but not necessarily) based on new technology. Innovation is a major source of private business success and competitive advantage, and is the major long‐term source in growth in per capita income in an economy. The innovation process is characterized by a high level of uncertainty, long lead times, and “spillovers” of economic benefits whereby innovators capture only a portion of the benefits created by an innovation. Intellectual property rights such as patents mitigate, but do not completely solve the problem of firms' inability to appropriate all of the benefits of their innovations. As a result, the private incentive to invest in innovation is lower than the social benefit, and so the private economy will invest too little in innovation in the absence of government intervention. Governments in developed economies support innovation both directly and indirectly. -
Macroeconomic Effects on Mortality: Issues, Controversies, and Directions for Research - Granados, José A. Tapia
This essay examines the development of ideas on the macroeconomic effects on mortality. It surveys some nineteenth century views, the early twentieth century contributions of Ogburn and Thomas, the 1970s–1980s debates of Brenner and Eyer, and the modern views, contributions, and controversies involving Ruhm and other authors who have tried to demonstrate the empirical support—or the lack of it—for the contentious hypothesis of the procyclical oscillation of mortality. That is the pattern, now clearly established for many, but unproved for more than a few skeptics, that once long‐term trends are taken away, mortality oscillates with the business cycle, rising in expansions and declining in recessions. Potential sources of discrepancies, hypothesized or proven mechanisms for procyclical mortality, and related policy issues are discussed, and the essay concludes by suggesting five questions that future research should aim to answer. To the memory of Joe Eyer, 1944–2017 -
Rent, Rent‐Seeking, and Social Inequality - Bird, Beth Red
The compensation paid out to workers reflects (i) the value of their contribution to their firm or organization and (ii) a possible premium because of restrictions on competition. The latter restrictions, which may take the form of corruption or monopolies that preclude labor from freely flowing throughout the economy, allow for various types of rent to be extracted. This essay addresses the way in which rents may arise, the sectors of the labor market that are gaining new opportunities to extract rent, and the sectors of the labor market that are losing the capacity to extract rent. Although it is typically argued that all forms of rent are gradually withering away, the available evidence suggests, to the contrary, that rent destruction is mainly occurring at the bottom of the class structure. At the top of the class structure, new opportunities to collect rent appear to be emerging, opportunities that raise earnings among the already privileged and thus increase income inequality. The foregoing characterization of the evidence, although not without support, is necessarily controversial because of intrinsic difficulties in distinguishing the true marginal contribution of workers from returns that are attributable to market failure. -
The Future of Employment, Wages, and Technological Change - Handel, Michael J.
The United States and other advanced economies enjoyed a remarkable period of sustained growth and broadly‐shared prosperity from the late 1940s to the early 1970s. After a series of crises from the mid‐1970s to mid‐1980s the character of jobs and the structure of earnings changed markedly but the causes continue to be debated. Most workers' inflation‐adjusted wages have stagnated since the early 1980s, employment security has fallen, and inequality has grown. One set of explanations emphasizes structural and institutional forces, such as employment shifts from manufacturing to services, deunionization, import competition, declining value of the minimum wage, macroeconomic shocks, and changing wage norms. Others stress the interplay of the supply of and demand for human capital, citing rising returns to education and skills, which they attribute to the spread of computer technology. The debate has significant implications for understanding the likely course of future labor market trends. -
The Great Recession and Young Adults' Labor Market Outcomes around the World - Mont'Alvao, Arnaldo
In this essay, we consider the impacts of the Great Recession on youth labor market prospects around the world. Young adults were especially affected by the crisis, experiencing heightened levels of unemployment, underemployment, and idleness. We highlight how variations in social context as well as youth status characteristics and skill levels matter in how youth fare in the labor market. We also draw connections to other important outcomes, such as college enrollments and migration. Our discussion points to important lines of inquiry needing development, especially regarding the plight of youth in developing countries and much needed evaluation of institutional and policy changes that have been designed to promote successful transitions to adulthood despite the economic challenges youth face. -
The Reorganization of Work - Heckscher, Charles
In recent decades, the bureaucratic organization of work in stable hierarchies of “jobs” and “offices” has come under increasing fire, seen as unresponsive and resistant to innovation. Practice has turned to two major alternatives: freeing individual “stars” to take independent initiative and building cooperative teamwork. Academic research has lagged far behind practice, often stuck in narrow positivist frames that miss the systemic and evolving nature of these organizational shifts. The emerging paradigm is not yet clear, but it certainly involves major modifications of the Weberian principles of bureaucratic efficiency. -
Transformation of the Employment Relationship - Kalleberg, Arne L.
Employment relations are implicit or explicit contractual arrangements that specify the reciprocal expectations and obligations linking employers and employees. They encompass a wide range of phenomena, including work organization, governance, evaluation, and rewards. During the past quarter century, the standard employment relationship that was normative in much of the world during the twentieth century declined in favor of various nonstandard employment relations involving more tenuous employer–employee linkages. The transformation of employment relations has been associated with a wide range of phenomena including growth in economic and social inequality, shifting career patterns, and changes in the organization of work. -
Transnational Work Careers - Verwiebe, Roland
This essay deals with transnational work careers, an issue that is relatively new in social‐scientific research and is discussed here in particular against the background of recent migration and management research. Both disciplines consider the emergence of transnational work careers in connection with economic globalization. In terms of methodology, most of the studies that are relevant to this issue are based on qualitatively oriented analyses and deal empirically with a variety of regions and nations (e.g., China, India, the United States, Canada, Germany, and Scandinavia). -
US Union and Workers' Movements, Past and Future - Schneider, Daniel
The last half century of US labor movement history is characterized by dramatic decline in both density and (since 1979) real numbers. While unions and union federations in the mainstream union movement have attempted to adjust, developments outside their sphere have been especially prominent: the rise of independent unions and the initiation of alternative forms of workers movements. With union decline, community labor organizations [typified by Association of Community Organizations for Reform Now (ACORN)], worker centers, and living wage campaigns have risen to fill the void. These alternate paths for worker representation, like other forms developed in the past, bring new tactics, new activists, and new links to labor struggles and may yet contribute to the future of labor movements in the United States.