This paper develops a simple model that provides a unified explanation of the increased skewness of wage income distribution based on differences in flexibility of skills--modeled as differences in the setup costs required to combine/perform a given number of tasks. Our numerical experiments in...

This study proposes an approximation of European option prices under arbitrary diffusion processes of the spot price. The key is to approximate the characteristic function of the log spot price process as the solution to ordinary differential equations. The option price is then obtained by the...

As part of public procurement, many governments adopt small business programs to pro- vide contract opportunities for businesses often with preferences for firms operated by mem- bers of groups designated as disadvantaged. The redistribution arising from such programs, however, can introduce...

A rising skill premium in two countries can be explained by the Heckscher-Ohlin model assuming a "skill intensity reversal." This assumption, however, poses an empirical challenge since past research has found little evidence for the so-called "factor intensity reversal." We now show clear-cut...

The Stolper-Samuelson theorem predicts that the relative wage of high-skilled to low-skilled labor will increase in the high-skill abundant U.S. but decrease in low-skill abundant Mexico after trade liberalization, while it actually began to rise in both countries in the late 1980s. We present a...

This paper examines how forest and marine resources serve as insurance against a tropical cyclone using original household data gathered in rural Fiji. The fixed-effects estimator for a censored dependent variable controls for unobservable household heterogeneity that can cause bias. I propose a...

Learning by doing convinced the Japanese government to create in 1882 a relatively transparent and credible central bank, Bank of Japan, and adopted the gold standard in 1898 to prove it. Unfortunately, the government did not see it fit to enforce transparency on other financial and non...

It can be theoretically shown that imports of new foreign varieties--an increase in the extensive margin of imports--can be a possible channel for increased skill premium in wages. No past studies, however, have quantified how much of the increase in skill premium can be accounted for by the...

This paper investigates targeting of cyclone relief within the village in Fiji. We focus on two issues, the link of relief allocation with informal risk sharing and elite capture, both of which are directly related to kinship. We find the following. First, food aid is first targeted toward kin...

This paper demonstrates that the Fijian kava ritual emerges as insurance against cyclone risk, as women's production of ritual handicraft gifts is linked with risk sharing. The cyclone tightens female-heads' constraints on intra-household male labor allocation in the gendered Fijian society....