We assess the empirical importance of income and price effects for structural transformation in the postwar US. We explain two natural approaches to the data: sectors may be categories of final expenditure or value added; e.g., the service sector may be the final expenditure on services or the value...

Consider a principal-agent relationship in which more effort by the agent raises the likelihood of success. Does rewarding success, i.e., paying a bonus, increase effort in this case? I find that bonuses have not only an incentive but also an income effect. Overall, bonuses paid for success may...

This paper uses a model of trade in vertically differentiated products to examine the effects of excessive wage increases (i.e. above productivity) on the volume of commodity imports. The model predicts that for commodities, in which the country has comparative advantage in high quality...

This paper considers trade agreements in a sufficiently general framework to encompass both imperfectly competitive market structures and income effects in government objectives. We show that governments choose globally efficient policies if they act as if they do not value the impact of their...