Table Of Content

THE AMERICAN ECONOMIC REVIEW VOLUME LXXXIx BOARD OF EDITORS JAMES ANDREONI Ropert A. Morritt Davip P. BARON CurISTINA H. Paxson SuSANTO Basu WOLFGANG PESENDORFER THEODORE C. BERGSTROM MICHAEL R RANSOM FRANCINE D. BLAU SERGIO T. REBELO Cuar.es C. BROowN JENNIFER F, REINGANUM ALLAN DRAZEN Peter C. REiss Dennis N. Eppe Micuacv H. RiorDAN TimotHy S. Fuerst RICHARD E. ROMANO JEFFREY C. FUHRER Davip H. RoMER Don FULLERTON ANDREW R. SCHOTTER Jorpi GALi Rosert W. STAIGER Martin S. GAYNOR Curtis R. TAYLor Davip GENESOVE W. Kip Viscusi Gorpon H. Hanson Cart E. WaLsH Cuarces A. Hoit Davip N. WEIL ADAM B. JAFFE KENNETH D. WEST Tracy R. Lewis Micuaet D. Wooprorp RosBert A. Marco RANDALL WRIGHT Pau R. MILGROM EDITOR ORLEY ASHENFELTER CO-EDITORS TIMOTHY J. BESLEY R. PRESTON McAFEE VALERIE A. RAMEY MANAGING EDITOR LYNN FLEISHER THE AMERICAN ECONOMIC ASSOCIATION Executive Office: Nashville, Tennessee Editorial Office: 209 Nassau Street, Princeton, NJ 08542-4601 Copyright 1999 All Rights Reserved AMERICAN EcoNoMIC ASSOCIATION CONTENTS OF ARTICLES AND SHORTER PAPERS R. W. Fogel: Catching Up with the Economy .. . 1 CRG 5s enc Gy Rees2 A. Tornell and P. R. Lane: The Voracity Effect . 22 E. Dinopoulos and P. Segerstrom: A Schumpe- H. Lloyd-Ellis: Endogenous Technological Change terian Model of Protection and Relative Wages and Wage Inequality 47 F. Caselli: Technological Revolutions 78 Crises: The Causes of Banking and Balance-of- T. O’Donoghue and M. Rabin: Doing It Now or Payments Problems G. M. Grossman and E. Helpman: Competing for Y.-K. Che and D. B. Hausch: Cooperative Invest- Endorsements ments and the Value of Contracting R. Shachar and B. Nalebuff: Follow the Leader: M. Lettau and H. Uhlig: Rules of Thumb versus Theory and Evidence on Political Participation Dynamic Programming J. Bulow and P. Klemperer: The Generalized War S. Tadelis: What’s in a Name? Reputation as a Tradeable Asset G. Maggi: The Role of Multilateral Institutions in C. Avery, P. Resnick, and R. Zeckhauser: The International Trade Cooperation Market for Evaluations K. Bagwell and R. W. Staiger: An Economic The- S. W. Salant and G. Shaffer: Unequal Treatment of ory of GATT Identical Agents in Cournot Equilibrium . . . J. Gali: Technology, Employment, and the Business B. J. Aitken and A. E. Harrison: Do Domestic Cycle: Do Technology Shocks Explain Aggre- Firms Benefit from Direct Foreign Investment? gate Fluctuations? ............... Evidence from Venezuela C. J. Morrison Paul and D. S. Siegel: Scale Econ- J. G. Fernald: Roads to Prosperity? Assessing the omies and Industry Agglomeration Externali- Link Between Public Capital and Productivity ties: A Dynamic Cost Function Approach . . A. Corns and A. Schotter: Can Affirmative Action J. A. Bennett and L. Young: International Stock Be Cost Effective? An Experimental Examina- Market Equilibrium with Heterogenous Tastes tion of Price-Preference Auctions C. Camerer and D. Lovallo: Overconfidence and Excess Entry: An Experimental Approach . . Estimates for Environmental Goods: A Cheap J. C. Cox, S. H. Dinkin, and V. L. Smith: The Talk Design for the Contingent Valuation Winner’s Curse and Public Information in Common Value Auctions: Comment A. Levinson: State Taxes and Interstate Hazardous C. M. Campbell, J. H. Kagel, and D. Levin: The Waste Shipments Winner’s Curse and Public Information in C. M. Capra, J. K. Goeree, R. Gomez, and C. A. Common Value Auctions: Reply Holt: Anomalous Behavior in a Traveler’s Di- I. Bohnet and B. S. Frey: Social Distance and Other-Regarding Behavior in Dictator Games: M. R. Baye and O. Shin: Strategic Behavior in Comment Contests: Comment E. Hoffman, K. McCabe, and V. L. Smith: Social A. Dixit: Strategic Behavior in Contests: Reply . . Distance and Other-Regarding Behavior in Dic- tator Games: Reply G. B. Dahl and M. R Ransom: Does Where You Stand Depend on Where You Sit? Tithing Do- R. M. W. J. Beetsma and H. Jensen: Optimal nations and Self-Serving Beliefs Inflation Targets, “Conservative” Central Banks, and Linear Inflation Contracts: Com- W. N. Evans, M. C. Farrelly, and E. Montgomery: Do Workplace Smoking Bans Reduce Smok- ing? A. Sen: The Possibility of Social Choice A. E. Roth and E. Peranson: The Redesign of the J. A. Frankel and D. Romer: Does Trade Cause Matching Market for American Physicians: Some Engineering Aspects of Economic De- S. Berry, J. Levinsohn, and A. Pskes: Voluntary Export Restraints on Automobiles: Evaluating a D. J. Cooper, J. H. Kagel, W. Lo, and Q. L. Gu: Gaming Against Managers in _ Incentive M. Yano and J. B. Nugent: Aid, Nontraded Systems: Experimental Results with Chinese Goods, and the Transyer Paradox in Smail Students and Chinese Managers C. D. Wolfram: Measuring Duopoly Power in the J. Milyo and J. Waldfogel: The Effect of Price British Electricity Spot Market Advertising on Prices: Evidence in the Wake of J. Cawley and T. Philipson: An Empirical Exami- 44 Liquormart nation of Information Barriers to Trade in In- I. Hendel and A. Lizzeri: Adverse Selection in Durable Goods Markets J. Duffy and J. Ochs: Emergence of Money as a D. Mitra: Endogenous Lobby Formation and Endog- Medium of Exchange: An Experimental Study enous Protection: A Long-Run Model of Trade Policy Determination L. Danziger: A Dynamic Economy with Costly Price P. k. Goldberg and G. Maggi: Protection for Sale: Adjustments An Empirical Investigation M. Baxter and U. J. Jermann: Household Produc- P. Krusell and J.-V. Rios-Rull: On the Size of U.S. tion and the Excess Sensitivity of Consumption Government: Political Economy in the Neoclas- to Current Income sical Growth Model R. Cooper, J. Haltiwanger, and L. Power: Machine D. Diermeier and R. B. Myerson: Bicameralism Replacement and the Business Cycle: Lumps and Its Consequences for the Internal Organi- zation of Legislatures N. S. Souleles: The Response of Household Con- D. Altig and C. T. Carlstrom: Marginal Tax Rates sumption to Income Tax Refunds and Income Inequality in a Life-Cycle Model J. A. Parker: The Reaction of Household Consump- tion to Predictable Changes in Social Security S. L. Parente and E. C. Prescott: Monopoly Rights: A Barrier to Riches Y.-Q. Wang: Commodity Taxes Under Fiscal Com- S. J. Davis and J. Haltiwanger: On the Driving petition: Stackelberg Equilibrium and Optimal- Forces Behind Cyclical Movements in Employ- ment and Job Reallocation A. Ades and R. Di Tella: Rents, Competition, and D. Acemoglu: Changes in Unemployment and Wage Inequality: An Alternative Theory and Some R. N. Stavins: The Costs of Carbon Sequestration: A Evidence Revealed-Preference Approach W. K. Viscusi and J. T. Hamilton: Are Risk Reg- O. S. Mitchell, J. M. Poterba, M. J. Warshawsky, ulators Rational? Evidence from Hazardous and J. R. Brown: New Evidence on the Mon- Waste Cleanup Decisions ey’s Worth of Individual Annuities A. Atkeson and P. J. Kehoe: Models of Energy Use: J. B. Berk: A Simple Approach for Deciding When Putty-Putty Versus Putty-Clay to Invest J. Quiggin and J. K. Horowitz: The Impact of S. Coate and S. Morris: Policy Persistence ... . Global Warming on Agriculture: A Ricardian Analysis: Comment G. H. Hanson and A. Spilimbergo: [legal Immi- gration, Border Enforcement, and Relative R. Mendelsohn and W. Nordhaus: The Impact of Wages: Evidence from Apprehensions at the Global Warming on Agriculture: A Ricardian U.S.-Mexico Border Analysis: Reply W. H. Dow, T. J. Philipson, and X. Sala-i-Martin: R. Darwin: The Impact of Global Warming on Ag- Longevity Complementarities Under Compet- riculture: A Ricardian Analysis: Comment . . ing Risks R. Mendelsohn and W. Nordhaus: The Impact of L. F. Ackert and W. C. Hunter: Intrinsic Bubbles: Global Warming on Agriculture: A Ricardian The Case of Stock Prices: Comment Analysis: Reply B. D. Peletier, R. A. J. Dur, and O. H. Swank: X. Lin: Central-Bank Independence, Economic Be- Voting on the Budget Deficit: Comment .. . havior, and Optimal Term Lengths: Comment K. A. Swinnerton and C. A. Rogers: The Econom- D. Lucking-Reiley: Using Field Experiments to Test ics of Child Labor: Comment Equivalence Between Auction Formats: Magic K. Basu and P. H. Van: The Economics of Child on the Internet Labor: Reply CONTENTS OF THE PAPERS AND PROCEEDINGS (May Issue) Richard T. Ely Lecture K. Bayard and K. R. Troske: Examining the Em- F. Welch: In Defense of Inequality ployer-Size Wage Premium in the Manufactur- ing, Retail Trade, and Service Industries Using Economic Well-Being in the United States: Employer-Employee Matched Data How Much Improvement? T. L. Idson and W. Y. Oi: Workers Are More D. H. Weinberg, C. T. Nelson, M. I. R , and Productive in Large Firms E. J. Welniak, Jr.: Fifty Years of U.S. Income Data from the Current Population Survey: Al- Productivity Growth: Current Recovery and ternatives, Trends, and Quality Longer-Term Trends R. I. Lerman: U.S. Wage-Inequality Trends and D. W. Jorgenson and K. J. Stirok: Information Recent Immigration Technology and Growth J. C. Weicher: Some Income-Measurement Issues J. Greenwood and B. Jovanovic: The Information- and Their Policy Implications Technology Revolution and the Stock Market Trends in Worker Pay: What Do the Data R. J. Gordon: U.S. Economic Growth Since 1870: Show? One Big: Waveitw sicala e K. G. Abraham, J. R. Spletzer, and J. C. Stewart: Why Do Different Wage Series Tell Different New Ideas on Economic Growth X. Gabaix: Zipf's Law and the Growth of Cities . C.-T. Hsieh: Productivity Growth and Factor Prices in East Asia C. L- Jones: Growth: With or Without Scale Effects? The “Natural Rate” and the NAIRU After Four Years of Low Inflation Population and Economic Growth R. M. Coen, R. Eisner, J. T. Marlin, and S. N. G. S. Becker, E. L. Glaeser, and K. M. Murphy: Shah: The NAIRU and Wages in Local Labor Population and Economic Growth O. Galor and D. N. Weil: From Malthusian Stagna- R. C. Fair: Does the NAIRU Have the Right Dy- tion to Modern Growth E. S. Phelps: Behind This Structural Boom: The M. Kremer and D. Chen: Income-Distribution Dy- Role of Asset Valuations namics with Endogenous Fertility New Developments in Price Dynamics Generational Accounting Around the World O. Blanchard and L. F. Katz: Wage Dynamics: L. J. Kotlikoff and B. Raffelhiischen: Generational Reconciling Theory and Evidence Accounting Around the Globe J. E. Stiglitz: Toward a General Theory of Wage and B. Raffelhiischen: Generational Accounting in Eu- Price Rigidities and Economic Fluctuations . . rope A. Lindbeck and D. J. Snower: Price Dynamics and N. Takayama and Y. Kitamura: Lessons from Gen- Production Lags erational Accounting in Japan Firm Size and Wages A. J. Auerbach and P. Oreopoulos: Analyzing the Fiscal Impact of U.S. Immigration R. Winter-Ebmer and J. Zweimiiller: Firm-Size Wage Differentials in Switzerland: Evidence Immigration Policy and Immigrant Quality from Job-Changers B. R. Chiswick: Are Immigrants Favorably Self- J. C. Haltiwanger, J. I. Lane, and J. R. Spletzer: SONRGORIET 1s, cn’: ana aed teen cers es Productivity Differences Across Employers: The Roles of Employer Size, Age, and Human H. O. Duleep and M. C. Regets: Immigrants and Capital Human-Capital Investment P. W. Miller: Immigration Policy and Immigrant Income Distribution in China Quality: The Australian Points System . D. Benjamin and L. Brandt: Markets and Inequality in Rural China: Parallels with the Past ... . Topics in Labor Economics A. R. Khan, K. Griffin, and C. Riskin: Income M. Baker and N. M. Fortin: Women’s Wages in Distribution in Urban China During the Period Women’s Work: A U.S./Canada Comparison of of Economic Reform and Globalization . . . . the Roles of Unions and “Public Goods” Sector M. Ravallion and J. Jalan: China’s Lagging Poor L. Goldberg, J. Tracy, and S. Aaronson: Exchange Rates and Employment Instability: Evidence D. T. Yang: Urban-Biased Policies and Rising In- from Matched CPS Data come Inequality in China S. Chan and A. H. Stevens: Employment and Re- tirement Following a Late-Career Job Loss . . Evolution of the Geographic Concentration of Industry Prospects for the Long-Term Reform of Medi- G. Ellison and E. L. Glaeser: The Geographic Con- care centration of Industry: Does Natural Advantage J. R. Antos and L. Bilheimer: Medicare Reform: Explain Agglomeration? ............ Obstacles and Options T. J. Holmes: Scale of Local Production and City M. Feldstein: Prefunding Medicare D. M. Cutler and L. Sheiner: The Geography of D. Black and V. Henderson: Spatial Evolution of Population and Industry in the United States Child Welfare A. Case, I. Lin, and S. McLanahan: Household The Reliability of Aggregate Statistics Resource Allocation in Stepfamilies: Darwin Reflects on the Plight of Cinderella C. Corrado and L. Slifman: Decomposition of Pro- ductivity and Unit Costs C. Paxson and J. Waldfogel: Parental Resources and Child Abuse and Neglect I. Shapiro, M. D. Shapiro, and D. W. Wilcox: Quality Improvement in Health Care: A Frame- J. Currie and R. Hyson: Is the Impact of Health work for Price and Output Measurement . . . Shocks Cushioned by Socioeconomic Status? The Case of Low Birthweight R. C. Feenstra, W. Hai, W. T. Woo, and S. Yao: Discrepancies in International Data: An Ap- Wity Has Fertility Fallen Below Replacement plication to China-Hong Kong Entrepét Trade in Industrial Nations, and Will It Last? D. N. Weil: Population Growth, Dependency, and The State of Economic Education Consumption W. E. Becker and M. Watts: How Departments of J. Bongaarts: Fertility Decline in the Developed Economics Evaluate Teaching World: Where Will It End? .......... W. Walstad and S. Allgood: What Do College Se- J. A. Klerman: U.S. Abortion Policy and Fertility niors Know About Economics? ........ M. K. Salemi and J. J. Siegfried: The State of Agriculture and Transition: The First Decade Economic Education A. Valdes: Measures of Agricultural Support Poli- cies in Transition Economies: 1994-1997 Financial Services in the Black Community Z. Lerman: Land Reform and Farm Restructuring: G. Dymski and L. Mohanty: Credit and Banking What Has Been Accomplished to Date? . . . Structure: Asian and African-American Experi- ence in Los Angeles History’s Largest Labor Flow: Understanding G. Flowers: What Can We Expect from Community- China’s Rural Migration Based Lending for the District of Columbia F. Wang and X. Zuo: Inside China’s Cities: Insti- tutional Barriers and Opportunities for Urban C. C. Henderson: The Economic Performance of African-American-Owned Banks: The Role of Y. Zhao: Leaving the Countryside: Rural to Urban Loan Loss Provisions Migration Decisions in China N. S. Chiteji and F. P. Stafford: Portfolio Choices S. Rozelle, J. E. Taylor, and A. deBrauw: Migra- of Parents and Their Children as Young Adults: tion, Remittances, and Agricultural Productiv- Asset Accumulation by African-American ity in China Families Gender and Economic Transactions J. Eaton and M. Engers: Sanctions: Some Simple R. Schubert, M. Brown, M. Gysler, and H. W. Analytics Brachinger: Financial Decision-Making: Are P. I. Levy: Sanctions on South Africa: What Did R. Croson and N. Buchan: Gender and Culture: International Experimental Evidence from The Soft Budget Constraint Trust Games E. S. Maskin: Recent Theoretical Work on the Soft J. M. McDowell, L. D. Singell, Jr., and J. P. Ziliak: Budget Constraint Cracks in the Glass Ceiling: Gender and Pro- motion in the Economics Profession J. Y. Lin and G. Tan: Policy Burden, Accountabil- ity, and the Soft Budget Constraint D. K. Ginther and K. J. Hayes: Gender Differences in Salary and Promotion in the Humanities . . C.-E. Bai and Y. Wang: The Myth of the East Asian Miracle: The Macroeconomic Implications of Ineffectiveness of Economic Sanctions Soft Budgets K. A. Elliott and G. C. Hufbauer: Same Song, Same H. Huang and C. Xu: Institutions, Innovations, and Refrain? Economic Sanctions in the 1990’s . . .