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We introduce business-to-business (B2B) relationships into an otherwise standard model to revisit two aspects of price dynamics in a unified analysis. On one side, the pass-through of cost shocks to prices is empirically incomplete. On the other side, the literature contains conjectures that long-term relationships may reduce the allocative role of price changes. After a partial equilibrium analysis of these aspects, we consider the general equilibrium effects. The formation of B2B relationships implies that the trade of intermediate goods depends on search, bargaining, and the adjustment along the intensive margin as opposed to the extensive margin. We find that, when this adjustment is costly, retailers have a relatively high bargaining power, and mismatch shocks are possible, the model can account for the second moments of the US producer price index and other variables. In this case, although its allocative role is low, the intermediate goods price affects the allocation of goods through the search externalities and is sufficiently volatile. The analysis includes several sensitivity tests and comparisons.
The paper explores mobilization to reduce the deepest inequalities in the two largest democracies, those along caste lines in India and racial lines in the United States. I compare how the groups at the bottom of these ethnic hierarchies—India's former untouchable castes (Dalits) and African Americans—mobilized from the 1940s to the 1970s in pursuit of full citizenship: the franchise, representation, civil rights, and social rights. Experiences in two regions of historically high inequality (the Kaveri and Mississippi Deltas) are compared in their national contexts. Similarities in demographic patterns, group boundaries, socioeconomic relations, regimes, and enfranchisement timing facilitate comparison. Important differences in nationalist and civic discourse, official and popular social classification, and stratification patterns influenced the two groups’ mobilizations, enfranchisement, representation, alliances, and relationships with political parties. The nation was imagined to clearly include Dalits earlier in India than to encompass African Americans in the United States. Race was the primary and bipolar official and popular identity axis in the United States, unlike caste in India. African Americans responded by emphasizing racial discourses while Dalit mobilizations foregrounded more porously bordered community visions. These different circumstances enabled more widespread African American mobilization, but offered Dalits more favorable interethnic alliances, party incorporation, and policy accommodation, particularly in historically highly unequal regions. Therefore, group representation and policy benefits increased sooner and more in India than in the United States, especially in regions of historically high group inequality such as the Kaveri and other major river Deltas relative to the Deep South, including Mississippi.
Drawing on an ethnographic study in two counties in Hunan province, this article explores how political brokerage has contributed to political order in China by facilitating contentious and non-contentious bargaining between the government and ordinary people. To account for the changing role of village leaders in rural politics, the article develops a concept of dual brokerage. This concept not only recognizes formal and informal linkages between village leaders and the two principals – the government and the community of villagers – but also underscores the interactivity between the linkages. We contend that despite the tensions between village leaders’ roles as state agents and as village representatives, these two roles in the reform era tend to be mutually beneficial. Under such an institutional configuration, village leaders in China in the reform era have strong incentives to act as dual agents and can make policy implementation more flexible and the use of state force more moderate. A comparison between the trilateral interactions before and after the tax reform in 2005 confirms that whether village leaders can effectively act as dual agents has a significant impact on the quality of rural governance in China.
Most authors who discuss willpower assume that everyone knows what it is, but our assumptions differ to such an extent that we talk past each other. We agree that willpower is the psychological function that resists temptations—variously known as impulses, addictions, or bad habits; that it operates simultaneously with temptations, without prior commitment; and that use of it is limited by its cost, commonly called effort, as well as by the person's skill at executive functioning. However, accounts are usually not clear about how motivation functions during the application of willpower, or how motivation is related to effort. Some accounts depict willpower as the perceiving or formation of motivational contingencies that outweigh the temptation, and some depict it as a continuous use of mechanisms that interfere with re-weighing the temptation. Some others now suggest that impulse control can bypass motivation altogether, although they refer to this route as habit rather than willpower.
It is argued here that willpower should be recognized as either or both of two distinct functions, which can be called resolve and suppression. Resolve is based on interpretation of a current choice as a test case for a broader set of future choices, which puts at stake more than the outcome of the current choice. Suppression is inhibiting valuation of (modulating) and/or keeping attention from (filtering) immediate alternatives to a current intention. Perception of current choices as test cases for broader outcomes may result in reliable preference for these outcomes, which is experienced as an effortless habit-- a successful result of resolve, not an alternative method of self-control. Some possible brain imaging correlates are reviewed.
COVID-19 and its associated disease control measures have greatly altered everyday life. The burden of these challenges has fallen disproportionately on women. Drawing on qualitative inquiry in agrarian north India and Nepal, this research note analyzes how South Asian COVID-19 lockdowns have affected women's labor responsibilities in sometimes surprising ways. We find increased responsibilities for caregiving within the household, substantial stress in responding to food insecurity, and growing expectations to fulfill public roles in disease response measures. However, we also find that the return of male migrants and youth has, in some cases, reduced women's farming responsibilities and created opportunities for household togetherness at a time of great uncertainty. We conclude that more research is needed to examine the nuanced aspects of COVID-19's gendered labor impacts to create comprehensive policy responses to address the multiple and sometimes conflicting effects the lockdown has had on agrarian women's informal labor and well-being.
The effects of bicameral legislatures on government formation have attracted scholarly attention since Lijphart’s (1984) seminal contribution. Previous research found support for the ‘veto control hypothesis,’ showing that bicameralism affects coalition governments’ composition and duration. However, the effects of bicameralism on the duration of the bargaining process over government formation have yet to be explored. Our work contributes to this area of research by focusing on the impact of bicameralism on bargaining delays. We show that the duration of the bargaining process over government formation decreases at increasing levels of partisan incongruence of the two chambers, especially in those legislative assemblies in which the upper chamber plays a relevant role in the policy-making process. Such empirical evidence is in contrast with the conventional expectation according to which bicameralism should delay the government formation process, as it introduces an additional element of complexity in the bargaining environment. We test our hypothesis by using a novel data set about the partisan composition of upper and lower chambers in 12 Western and Eastern European democracies over the postwar period.
As more women attain executive office, it is important to understand how gender dynamics affect international politics. Toward this end, we present the first evidence that gender stereotypes affect leaders’ abilities to generate audience costs. Using survey experiments, we show that female leaders have political incentives to combat gender stereotypes that women are weak by acting “tough” during international military crises. Most prominently, we find evidence that female leaders, and male leaders facing female opponents, pay greater inconsistency costs for backing down from threats than male leaders do against fellow men. These findings point to particular advantages and disadvantages women have in international crises. Namely, female leaders are better able to tie hands—an efficient mechanism for establishing credibility in crises. However, this bargaining advantage means female leaders will also have a harder time backing down from threats. Our findings have critical implications for debates over the effects of greater gender equality in executive offices worldwide.
Contemporary studies of conflict have adopted approaches that minimize the importance of negotiation during war or treat it as a constant and mechanical activity. This is strongly related to the lack of systematic data that track and illustrate the complex nature of wartime diplomacy. I address these issues by creating and exploring a new daily-level data set of negotiations in all interstate wars from 1816 to the present. I find strong indications that post-1945 wars feature more frequent negotiations and that these negotiations are far less predictive of war termination. Evidence suggests that increased international pressures for peace and stability after World War II, especially emanating from nuclear weapons and international alliances, account for this trend. These original data and insights establish a dynamic research agenda that enables a more policy-relevant study of conflict management, highlights a historical angle to conflict resolution, and speaks to the utility of viewing diplomacy as an essential dimension to understanding war.
Finance is often considered a constraining or compelling force in war. This article examines an alternative role of finance in war, asserting that investors can inform states about adversarial intentions and resolve under certain conditions. This signaling mechanism can reduce information asymmetry between states and decrease the probability of conflict. In the context of these theoretical expectations, I examine the case of Austria and the Rothschild Bank in the nineteenth century. I find that instead of being a constraining force on Austrian foreign policy, the Rothschilds helped inform Austria and other European powers during interstate crises. The information provided by the Rothschilds helped Europe avert war in several cases during the nineteenth century.
This essay addresses those aspects of the anti-union argument that focus exclusively on the public sector. First, the claim that the public sector is different than the private sector and whatever reasons we may have to support unionization in the latter do not apply in the former. Second, the claim that public sector unionization increases the size of government, yet government is already far too big. Third, the claim that because public employees provide essential services, public sector unions can extort excessive salaries and benefits out of government. Fourth, the claim that public sector unionization undermines democracy, for it gives public employees undue influence in the electoral process. Fifth, the claim that regardless of whether unionization of the public sector is good for public employees, it is bankrupting the rest of us. And finally, the claim that even if public sector unionization is permissible, workers must be free to refuse to join, and forcing those who do not join to pay dues in any form would be an unconstitutional form of compelled speech. In response, I show that each of these claims are wrong not only on the facts but more importantly on the underlying moral claims they invoke.
This chapter analyzes the expansion and collapse of labor union power in the United States from the postwar era to the administration of President Donald Trump. Union membership peaked in the mid-1940s and gradually declined until the early 1980s. It then slipped precipitously over that decade and in 2017 fell to levels not seen for nearly a century. Explanations for the decline include employer opposition, American social and political culture, and technological development. As union membership fell, income inequality rose. Research suggests that the economic condition of middle-class American workers is linked with union membership and collective bargaining. In 2016, white male American workers without college degrees strongly supported Donald Trump’s presidential candidacy, and his policies had a significant impact on them.
This chapter covers internal constraints on pay, as opposed to the external constraints (namely labor law) covered in Chapter 4. Much is said about collective bargaining agreements in unionized settings, and the effect of unions on pay and pay dispersion. From the standpoint of managers, internal and external constraints are nearly identical in that both are sets of rules that must be followed to avoid negative consequences. One difference is that internal constraints are often more amenable to managerial influence; for example, collective bargaining agreements are renegotiated every few years, and management participates. The 3 Cs of compensation constraints are revisited in the context of internal constraints, as are compensation floor and ceilings. Pay compression is discussed, given its prevalence in unionized settings. Diverse preferences in the union membership are addressed in the context of a vote on seniority-based layoffs versus across-the-board temporary wage cuts, i.e., furloughs. Other (non-union) internal constraints are covered, such as those imposed on individual establishments by corporate headquarters, and company-wide design of the benefits package in pay plans.
This chapter covers a core problem that managers regularly face (i.e., negotiating with current or prospective employees over pay). The topic is usually omitted from compensation texts and is covered in separate courses in business programs. But negotiation over pay is such an integral part of strategic compensation and talent management that it cannot be omitted from a book that aims to train managers to think strategically about pay. For example, talent retention (Chapter 12) requires managers to respond correctly when employees receive outside offers from competitors, which immediately triggers bargaining and negotiation over pay. The chapter opens by stressing the importance of defining your objective. The most important ingredient to successful negotiation is information, so the questions of when and how to reveal and collect information are addressed in depth. Sections 14.4 and 14.5 examine threats and bluffs as negotiating tools, as well as how managers should think about and respond to counteroffers. As discussed in the final section, sometimes employers can gain the upper hand during bargaining by complicating the discussion, whereas other times simplification is better.
This article argues that federal labor policy was a factor in causing the Great Compression, the dramatic compression of skill-based wage differentials that occurred in the 1940s, and in bringing it to an end. By giving the National Labor Relations Board the power to determine the appropriate collective-bargaining unit, New Dealers gave industrial unions the means with which to build a more egalitarian wage structure. Unskilled and semiskilled workers seized the opportunity and voted themselves big pay raises. Skilled craftsmen responded by petitioning the NLRB for permission to form their own craft bargaining units, a process known as “craft severance.” As conservatives gained influence in Washington in the 1940s, the board adopted a bargaining-unit policy more favorable to craft unions. By the early 1950s, skilled craftsmen had regained control of their wage demands and thereby helped bring the Great Compression to a halt.
This paper shows that the ability of the credible wage bargaining model to match the observed unemployment volatility hinges on an unrealistic assumption about disagreement payoffs to the firm. Relaxing this assumption can lead to the substantial wage flexibility. As a consequence, the model is unable to capture the observed unemployment volatility.
The recent proliferation of China's railways has posed challenges to the dominance of the national-level railway authority on railway development. Since the 2000s, the planning of new railways has evolved into a politics of scale in which actors across multiple scales of government have bargained over railway alignment and station siting for their respective interests. This politics is shaped by the uneven bargaining powers of the contending state agents over railway planning. Interscalar division of regulatory oversight over strategic resources for railway development enables state agents at some scales to bargain more successfully, whereas variations in administrative and economic standing further differentiate the interscalar bargaining powers of municipal governments. Different results of bargaining across scales for each city have produced, as intercity railway planning in the Pearl River Delta illustrates, significant intercity variations in average travel times to the stations for the new railways that these cities share. Owing to the peculiar scalar distribution of the costs and benefits of the new railways, municipal governments with greater bargaining power have, contrary to traditional wisdom, bargained for less accessibility to intercity railway stations.
Recent work on optimal monetary and fiscal policy in New Keynesian models has tended to focus on policy set by an infinitely lived benevolent policy maker, often with access to a commitment technology. In this paper, we explore deviations from this ideal, by allowing (time-consistent) policy to be set by a process of bargaining between two political players with different weights on elements of the social welfare function. We characterize the (linear) Markov perfect equilibrium and, in a series of numerical examples, we explore the resultant policy response to shocks which cannot be perfectly offset with the available instruments due to their fiscal consequences. We find that, even although the players, on average, have the socially desirable objective function, the process of bargaining implies an outcome which deviates from the time-consistent policy chosen by the benevolent policy maker. Moreover, the range of instruments available mean that policy makers will bargain across the entire policy mix, sometimes implying outcomes which are quite different from those that would be chosen by a single policy maker. These policy outcomes depend crucially on the nature of the conflict and also the level of government debt.
According to the ‘Madman Theory’ promoted by Richard Nixon and early rationalist scholars, being viewed as mentally unstable can help a leader coerce foreign adversaries. This article offers the first large-N test of this theory. The author introduces an original perception-based measure of leaders' reputations for madness, coded based on news reports, and analyzes its effect on both general deterrence and crisis bargaining. The study also tests several hypotheses about the conditions under which perceived madness is expected to be more or less helpful. The author finds that perceived madness is harmful to general deterrence and is sometimes also harmful in crisis bargaining, but may be helpful in crisis bargaining under certain conditions. The analysis suggests that the harmful effect of perceived madness results from a commitment problem.
The empirical literature on plea decisions shows that rational motives and coercion may coexist, but there is uncertainty with regard to whether accused feel that their decision is voluntary or made under considerable pressure. However, in most jurisdictions, the legitimacy of the plea bargaining process rests on the Court’s obligation to ensure that the guilty plea is entered voluntarily and knowingly. This study proposes to understand how the accused interpret the rational or coercive elements of their decision-making process and the extent to which their decision to plead guilty is voluntary. Based on semi-structured interviews with twenty convicted individuals, we describe the different decision-making processes, from free and informed decisions to forced decisions to plead guilty while innocent.