We present a simple theory of the quality of elected officials. Quality has (at least) two dimensions: competence and honesty. Voters prefer competent and honest policymakers, so high–quality citizens have a greater chance of being elected to oce. But low–quality citizens have a iacomparative advantageli in pursuing elective oce, because their market wages are lower than the market wages of high–quality citizens (competence), and/or because they reap higher returns from holding oce (honesty). In the political equilibrium, the average quality of the elected body depends on the structure of rewards from holding public oce. Under the assumption that the rewards from once are increasing in the average quality of once holders there can be multiple equilibria in quality. Under the assumption that incumbent policymakers set the rewards for future policymakers there can be path dependence in quality.
Discussion Paper 134, Institute for Empirical Macroeconomics, Federal Reserve Bank of Minneapolis, 2000.
We present a joint study of the US structural transformation (the decline of agriculture as the dominating sector) and regional convergence (of Southern to Northern average wages). We find that empircally most of the regional convergence is attributable to the structural transformation: the nation-wide convergence of agricultural wages to non-agricultural wages, and the faster rate of transition of the Southern labor force from agricultural to non-agricultural jobs.
I present a simple model of technological revolutions. A technological revolution is the introduction of a new generation of machines that can only be operated by workers who have learned a set of machine-specific skills. If learning the new skills is more (less) costly than learning the skills associated with pre-existing technologies, the revolution is skill biased (deskilling). On impact, skill-biased (deskilling) revolutions trigger a reallocation of capital from high (low) learning cost to low(high) learning cost workers, thereby reducing the relative and absolute wage of the former. Thus, the model of skill-biased revolutions replicatesthe observed recent changes in the wage structure, and constitutes a possible interpretation of the Information Technology Revolution.
It also provides insight into the future possible behavior of the wage structure, as the diffusion of information technology continues. The model of deskilling revolutions constitutes a possible interpretation of the introduction ofthe assembly line in the early 1910s. I also present some new facts from the Annual Survey of Manufacturing. The inter-industry dispersion of capital-labor ratios has increased substantially and abruptly after 1975. Increases in capital-labor ratios between 1975 and 1990 are positively correlated across industries with changes in pay per worker, changes in the proportion of non-production workers in total employment, high average-wage levels in 1975, and high non-production worker shares in 1975. I argue that my theory constitutes one possible explanation for these facts.
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