Avi Weiss

On the effects of schooling vintage on experience-earnings profiles: Theory and evidence☆

Abstract In this paper a distinction is made between human capital depreciation related to a workers aging and depreciation due to the obsolescence of the workers education. Schooling-specific obsolescence of human capital is incorporated in the Mincerian model of earnings, and it is shown how this obsolescence affects the workers earnings profile. Using the Israeli 1983 Census we show that for ‘high-tech’ oriented industries (for which obsolescence is relatively important) obsolescence effects are more significant than for ‘low-tech’ oriented industries, and, consequently, the experience-earnings peak falls faster with increasing education in the former.

The Optimal Size for a Minority

We investigate a setting in which members of a population, bifurcated into a majority and a minority, transact with randomly matched partners. All members are uniformly altruistic, and each transaction can be carried out cooperatively or through a market mechanism, with cooperative transactions saving on transaction costs. Externalities are introduced, whereby cooperation by members of one group and the

Conscientious regulation and post-regulatory employment restrictions

Abstract In this paper we address the issue of regulatory capture. Firms can seek to capture regulators by offering them ‘post-regulatory’ jobs at a higher wage than the regulator would otherwise receive. The firm is interested in such an arrangement if the profits from endogenous lax regulation exceed the cost incurred in higher wage payments. We show how the wage paid in the public-sector and a ‘cooling-off’ period for regulators can be used in tandem to preempt such ‘capture’ of regulators. The legislator can choose to make ongoing public-service employment more attractive than employment in the regulated industry, or can ‘convince’ the regulator to leave the public-sector but remain conscientious during the regulatory period. The choice depends on the legislators preferences between levying taxes to pay civil servants, and the curtailment of the civil liberties of the regulator. We apply the model to explaining the policies that are observed in different Western countries.

Beneficiaries from federal transfers to municipalities: The case of Israel

Summary and conclusionsIn this paper we have shown which variables affect the size of grants given by the government to cities in Israel. We have also shown that aside from demographic variables, which alone account for a very large portion of the variance, there is also a political residual effect, where cities with mayors who are members of the “in” political party fared better than other cities. This effect is felt mainly through the general, and not the earmarked, portion of the grant, and was more prevalent when the Likud was in power than when Labor ruled.

The Role of Firm-Specific Capital in Vertical Mergers

A VERTICAL merger occurs when two firms that merge produce output or supply services that are used in successive stages of production. Many theories have sought to explain such mergers, and each explanation is probably correct for some subset of all vertical mergers.1 Often, these theories have diametrically opposed implications. There are, however, two common strands. First, the models assume that the merger will benefit the parties involved. In fact, the new method of organization should be superior to (or at least as good as) other (achievable) forms of organization. Second, these theories are, in general, not firm specific: that is, they propose reasons for why a firm might merge with a subset of the vertically linked industry but offer no explanation for how the subset should be (or is) chosen. Indeed, in most of the theories, the choice of merger partner

The Economics of Religion, Jewish Survival, and Jewish Attitudes Toward Competition in Torah Education

This paper examines the attitude of Jewish law to competition in light of the economists understanding of the benefits of competition and the beneficiaries from intervention in the competitive process. The punchline of this paper is simple. Although Judaism has used a whole host of restrictions on competition and has had its share of legislation to promote private interests, there has been one area that has generally been a consistent exception to impediments to competition—the teaching of Torah. This exception is all the more remarkable because those who were in a position to influence the legislation often stood to benefit from such restrictions. From this stress on teaching, we show that the foundation was laid for the survival and perpetuation of Judaism.

Absenteeism: A comparison of incentives in alternative organizations

Abstract This paper uses a game-theoretic model to analyze the incentives workers may have to play “hookey” from work given that there is an outwardly unobservable probability of being sick and thus being unable to work. We compare incentives and equilibria in labor-managed firms (LMFs) and in profit-maximizing firms (PMFs), both in single-period and repeated games. We show, among other things, that in an egalitarian LMF there are circumstances under which members will not work when it is optimal to work, while the PMF suffers from the opposite problem; daily paid workers will work even when it would be better if they did not.

Price Response, Asymmetric Information and Competition

We compare predictions from a theoretical model based on the structure of the main outdoor retail market in Jerusalem with the results of an empirical analysis of price response to changes in cost. We find that firms without adjacent competition exhibit both upward and downward price rigidity, an outcome we ascribe to asymmetric information between the consumer and the firm. Given that previous studies have focused on downward price rigidities of firms with market power, our findings highlight the importance of accounting for transitory information asymmetries between the consumer and the firm when studying price rigidity.

An Empirical Analysis of Search Costs and Price Dispersion

We exploit cross-sectional and temporal differences in search intensity in order to examine the relationship between search costs and price dispersion using a hand-collected panel data set from Jerusalem’s Shuk Mahane Yehuda outdoor market. We present empirical evidence that price dispersion increases with the cost of search using several different measures of price dispersion, however, our interpretation of this finding is sensitive to the search proxy in question. We also address several acute difficulties facing empiricists seeking to test theoretical price-dispersion models in which consumers are heterogeneous in their search behavior.

Red Tape: Oiling the Hinges of the 'Revolving Door'

This paper presents a behavioral model of regulators. In our model, the regulator creates red tape - bureaucratic rules and regulations that complicate procedures in an industry. As the enactor of these rules and regulations, the regulator has better knowledge of the ins-and-outs of the system and any possible loopholes. Such knowledge is valuable to the firms in the industry, and thus, after leaving public service, the regulator can cash-in on the red tape he has created. Comparative statics show a negative relationship between the amount of red tape generated and the duration of the cooling-off period. Analysis of the data yields results compatible with this outcome.