Eliakim Katz

INVESTMENT IN GENERAL TRAINING: THE ROLE OF INFORMATION AND LABOUR MOBILITY*

Following the seminal work of Becker (I964), it is widely accepted in the literature that firms will be unwilling to finance training which workers may use in other firms. This paper takes issue with this prediction and suggests that firms will frequently share in the cost of such general training.1 Becker argues that a firm which pays for the training of workers in skills of potential use to other firms will lose these workers: since other firms bear none of the costs of general training, they can attract a worker with such training by outbidding the firm which trained him. Recognising this absence of property rights over an investment in general training, firms will refuse to provide it. Hence, if general training is to take place, the trainee will have to pay for it. If potential trainees are unwilling or unable to pay, general training will not take place. A shortage in general training is likely to emerge; this may be especially pronounced in developing countries.2 In contrast, the outlook for

Labor Migration and Risk Aversion in Less Developed Countries

In this paper we question the pioneering work of Todaro, which states that rural-to-urban labor migration in less developed countries (LDCs) is an individual response to a higher urban expected income. We demonstrate that rural-to-urban labor migration is perfectly rational even if urban expected income is lower than rural income. We achieve this under a set of fairly stringent conditions: an individual decision-making entity, a one-period planning horizon, and global risk aversion. We obtain the result that a small chance of reaping a high reward is sufficient to trigger rural-to-urban labor migration.

Rent-Seeking for Pure Public Goods

In this paper we present a formal analysis of rent-seeking for public goods by two or more groups with different numbers of individuals. We begin by considering equally wealthy groups under risk neutrality, a case which constitutes our basic model. Several surprising and interesting results emerge from the analysis of this basic case. The problem is then extended to deal with (a) groups with different wealth levels, and (b) risk aversion. This last extension brings about a further crop of interesting and useful results.

Seeking Rents by Setting Rents: The Political Economy of Rent Seeking

In recent years, there has been a large number of papers on the subject of rent seeking. Most such works on rent seeking have taken the rent as exogenously determined by regulators. Regulators, howeve r, may also be expected (and indeed have been shown) to be rent seeke rs and hence the determination of the rent itself should be endogeniz ed to reflect the fact that the rent setters are, themselves, rent se ekers. In this paper, the authors do this by presenting an analysis o f the interaction of regulators, firms, and consumers within a rent-s eeking framework where all three groups are assumed to be self-motiva ted. The analysis is carried out under alternative assumptions regard ing the nature of the market and the reaction functions of the partic ipants. Policy implications are drawn where appropriate. Copyright 1987 by Royal Economic Society.

Group competition for rents

Abstract This paper examines rent dissipation in a two-stage group rent-seeking contest without a predetermined distribution rule. the rent in this setting exhibits both public and private good characteristics depending on the stage of the contest. Focusing on the relationship between group size and aggregate rent seeking we find that social waste depends not only on total numbers but also on the distribution of population across groups. We show that group size asymmetry acts to reduce rent dissipation.

International Migration under Asymmetric Information

International migration under asymmetric information usually differs from international migration under symmetric information and often quite dramatically so and in counterintuitive ways. Since in real life information is indeed asymmetric it is somewhat surprising that hitherto the study of international migration has by and large proceeded without explicit recognition of the effect of informational asymmetry. In this paper we show that when at the lowest skill level migration is desirable; i.e. if the (discounted) wage differential is positive for the lowest skill level the introduction of asymmetric information results in a reduction of the quality and quantity of international migration or has no effect at all. When at the lowest skill level migration is not desirable--the (discounted) differential is not positive at the lowest skill level--the introduction of asymmetric information may either result in migration by all or none. When under asymmetric information workers can at some cost to themselves report to foreign employers their individual skill--thus dissociate themselves from the group effect--then provided the cost is small either a U pattern of migration with respect to skill level emerges or migration is uniformly pursued by all though some do and some do not invest in signalling. When the source consists of more than 1 (poor) country it is impossible to predict migration under asymmetric information from a given country without explicitly accounting for changes in the parameters of the other. For example a favorable change (encouraging less migration) taking place in 1 country will through a distinct impact on the overall composition of migration reduce migration from the other country. Finally allowing employers to discover after a while the true productivity of individual migrant workers we obtain the somewhat surprising result that (under a reasonable set of assumptions) eventual discovery may increase the quantity and quality of migration and also increase the wage enjoyed by the low quality migrants. Eventual discovery serves to mitigate the impact of group averaging that deters migration by the high skill workers. Due to migration of some such workers the prediscovery wage of the low skill workers arises in our case sufficiently to outweigh the effect of the future wage decline due to discovery. (authors)

Transfer seeking and avoidance: On the full social costs of rent seeking

In accordance with certain of its aspects, this invention relates to a process for the preparation of an electrodeposit which contains iron and at least one metal selected from the group consisting of nickel and cobalt which comprises passing current from an anode to a cathode through an aqueous plating solution containing an iron compound and at least one member selected from the group consisting of cobalt compounds and nickel compounds providing cobalt or nickel ions for electrodepositing alloys of iron with cobalt and/or nickel and containing in combination an effective amount of:

The effect of forward markets on exporting firms

Abstract This note suggests that exchange rate uncertainty does not affect exports if firms can insure their revenue in forward markets.

Rent-seeking for budgetary allocation: Preliminary results for 20 countries

Concluding commentsIn this paper we present quantitative measures of the ‘proneness’ of different countries to respond to pressure groups in determining the composition of their spending. These, in turn, help us to derive simple measures of the rent-seeking done in relation to the governments spending pie.Despite the fact that these measures are indicative rather than conclusive they do provide some means of comparing the extent of this rent-seeking waste (or at least its rank distribution) across countries. Also, with the appropriate provios the measures may be used as first approximations for the actual waste generated by rent-seeking activities for government spending.Such measures may be of considerable importance when the question of the optimality of government intervention in a given country is considered. Alternatively, it may be of use when an aid package to a given country from an international agency or a major economy is being considered. At least the rank of a given economy in Tables 1 and 2 can profitably be taken as an additional decision parameter in such cases.But over and above the specific results and methodology used herein we consider the contribution of this paper to be in hopefully stirring interest in the important but much neglected issue of macroeconomic rent-seeking.We feel that this paper has shown that the problem of estimating rent-seeking at the macro level can be attempted. Of course, we expect that our approach will eventually be superseded by further work in the area. Nonetheless, this paper will have achieved its main aim if it stimulates further developments in this hereto barren field.

On education, screening and human capital

Abstract The paper tests the hypothesis that educational attainment acts, inter alia, as a screening device for worker selection by comparing the average educational level of pairs of screened and non-screened groups within similar occupational categories. The results, based on Israeli data, support the view that strong screening effects are at work.