Yishay D. Maoz

Intergenerational Mobility and the Process of Development

This paper offers an explanation for some evidence that intergenerational earnings mobility is higher in more developed economies and that mobility is positively correlated with wage equality. In the model mobility promotes economic growth via its effect on the accumulation and allocation of human capital. Growth influences mobility via its effect on incentives to acquire education and its effect on liquidity constraints upon such acquisition. In the process of development mobility increases and the distribution of education becomes better correlated with ability. Redistributive policy has a negative effect on growth in developed economies and a positive effect in developing economies.

Women's Labor Force Participation and the Dynamics of Tradition

We present a model in which the social norms regarding women’s labor force participation (LFP) differ from the norms concerning men’s. Assuming that these norms depend on past rates of women LFP creates a gradual increase in women LFP.

SOCIAL STRATIFICATION, CAPITAL–SKILL COMPLEMENTARITY, AND THE NONMONOTONIC EVOLUTION OF THE EDUCATION PREMIUM

This paper presents a model that generates a non-monotonic evolution of the return to education. The model highlights the role played by socioeconomic stratification in the joint determination of the supply of educated labor and the supply of physical capital. The recent theoretical literature attributes the increased education premium of the last decades to skill-biased technological progress. In contrast, our explanation is based on capital-skill complementarity and endogenous accumulation of physical and human capital in an environment characterized by credit constraints.

LABOR HOURS IN THE UNITED STATES AND EUROPE: THE ROLE OF DIFFERENT LEISURE PREFERENCES

Since 1900, annual working hours per worker have been generally declining in the UnitedStates and in the main European economies. During this simultaneous decline theEuropeans initially worked fewer hours than their American counterparts, worked morethan the Americans starting in the early 1930s, and once again worked less than theAmerican from the early 1970s on. Using a two-country model, this article argues that thisdynamic pattern can be brought about by differences in the valuation of leisure byindividuals in the compared economies.

TAX, STIMULI OF INVESTMENT AND FIRM VALUE

Pennings (2000) has shown that the government can speed-up investment by subsidizing the potential investing firms entry cost while taxing the future proceeds from the investment, so as to render the net expected value of its subsidy program zero. This note argues that while speeding-up the investment timing, this subsidy-tax program also lowers the value of the firm and therefore will be rejected by it.

Time-to-Build and the Inverse U-Shape Investment-Uncertainty Relationship

The effect that investment lags have on the uncertainty-investment relationship is studied by modifying the Bar-Ilan and Strange (1996) model to enable an analytical solution. The following results emerge: (i) If the time lag is sufficiently small, uncertainty affects investment negatively; (ii) A sufficiently large time lag gives rise to an inverse U-shape uncertainty-investment relationship; (iii) When such an inverse U-shape exists, the longer the time lag (or the larger the degree of profit convexity), the wider the range of a positive uncertainty-investment relationship.

Tax, Stimuli of Investment and Firm Value

Pennings (2000) has shown that the government can speed-up investment by subsidizing the potential investing firms entry cost while taxing the future proceeds from the investment, so as to render the net expected value of its subsidy program zero. This note argues that while speeding-up the investment timing, this subsidy-tax program also lowers the value of the firm and therefore will be rejected by it.

More on Bernanke's 'Bad News Principle'

The role that Bernanke’s Bad News Principle plays in the modern theory of investment under uncertainty is analyzed. The analysis shows that the actual investment dilemma is that by delaying investment firms trade off a higher present value of earnings for a lower present value of the investment cost, in contrast to previous interpretations of this dilemma. The economic interpretation of the Smooth Pasting Condition is clarified too: it represents the trade-off mentioned above. I also show that investment triggers may stay intact despite changes in the profit process, if the changes are restricted to the range of sufficiently high profits.

Women's Lifetime Labor Supply and Labor Market Experience

The pattern of joining the labor force only at an advanced stage of the life-cycle was widespread among American women in the 1960s and 1970s, but not since the 1980s. To explain this change we conduct a theoretical analysis of the interrelation between womens lifetime labor supply choices and the dynamic macroeconomic environment. In our model women choose the late-entry pattern only at early stages of the growth process when wages are sufficiently low and grow sufficiently rapidly. As the economy grows, this lifetime labor profile vanishes and women either join the labor force either early in life or not at all.We present a model in which the gender gap in wages displays non-monotonic dynamics of the type observed in the US during the twentieth century. We show that the dynamics of the gender gap depend on the number of women that work at home in the early stage of their life and join the labor force late in life with low skills and little labor market experience. Consistent with empirical findings, we conclude that the gender gap increases when this dynamic labor profile is sufficiently widespread, and vice versa. We argue that this profile abounds when wages grow sufficiently rapidly

Shiftwork, Adjustment Costs and Uncertainty

I study the dynamics of shiftwork when the demand for the output of the firm is stochastic and adjusting the number of shifts entails irreversible costs. The analysis reveals the existence of a gap between the level of demand that triggers activation of a shift and the level of demand that triggers shutting it off. The higher the uncertainty about future demand, the wider this gap. I also analyze in detail the pro-cyclical labor productivity created by the use of shiftwork.