Documento de Trabajo

On the Optimality of One-size-fits-all Contracts: The Limited Liability Case

In this paper I study a multi-task principal agent model with a risk-neutral principal and a risk neutral agent subject to limited liability in an environment with adverse selection and moral hazard. The main results are as follows: (1) the optimal contracts in each possible case is a bonus-type contract that pays a bonus only

Self Governance in Social Networks of Information Transmission

This paper studies the problem of self governance in a model in which information flows are governed by the community structure. In each round of an infinitely repeated game, an agent and an investor, who is selected from a finite set of investors, play a trust game. Investors receive information only from their own social

Job Design and Incentives

This paper studies the problem of how to allocate n ≥2 independent tasks among an ndogenously determined number of jobs in a setting with risk neutral workers subject to limited liability and ex-post asymmetric information. The main message is that firms narrow down the scope of their jobs to deal with workers’ incentives to game

Unemployment, Participation and Worker Flows Over the Life Cycle

We estimate and report life cycle transition probabilities between employment, unemployment and inactivity for male workers using Current Population Survey monthly files. We assess the relative importance of each probability in explaining the life cycle profiles of participation and unemployment rates using a novel decomposition method. A key robust finding is that most differences in

Public-Private Partnerships and Infrastructure Provision in the United States

Spending on necessary infrastructure is likely to be cut back in coming decades, as the federal and state governments struggle with large debt burdens. This will hamper future growth, particularly given the dismal state of current infrastructure. The American Society of Civil Engineers estimates that, as a result of decades of insufficient investment, the infrastructure

Sovereign Ceilings “Lite”? The Impact of Sovereign Ratings on Corporate Ratings

Although credit rating agencies have gradually moved away from a policy of never rating a corporation above the sovereign (the `sovereign ceiling`), it appears that sovereign credit ratings remain a significant determinant of corporate credit ratings. We examine this link using data for advanced and emerging economies over the period of 1995-2009. Our main result

Rollover risk and corporate bond spreads

Using a new data set on corporate bonds placed in international markets by advanced and emerging market borrowers, this paper demonstrates that the impact of debt market illiquidity on corporate bond spreads is exacerbated with a higher proportion of short-term debt. This effect is stronger in speculative-grade bonds and is smaller in the banking sector

Participation in Organizations, Trust, and Social Capital Formation: Evidence from Chile

This paper introduces an ordinal rational choice model for multiple kinds of social participation intensities to empirically investigate the relevance of several theoretical determinants of formation of Social Capital (SC) introduced in the literature. The framework is rich enough to investigate the importance of demographic individual variables, social/peer effects interactions, endogenous trust, and politico-institutional factors

Neutral Mergers Between Bilateral Markets

We study the consequences of bilateral market mergers. We first characterize the relationship between the M-optimal stable matching in the original markets with the M-optimal stable matching in the new market formed after the merger of the original markets. Then, we characterize the conditions under which the Cartesian product of the set of stable matching

Teachers’ Salaries in Latin America. How Much are They (under or over) Paid?

How much are teachers paid in comparison to those in other professions in Latin America? How have these differences evolved in recent years? Is teachers’ underpayment more pronounced in certain segments of the labor markets? This paper documents answers for those questions using data for thirteen Latin-American countries circa 1997 and circa 2007. After controlling

Acyclicity and Singleton Cores in Matching Markets

This paper analyzes the role of acyclicity in singleton cores. We show that the absence of simultaneous cycles is a sufficient condition for the existence of singleton cores. Furthermore, acyclicity in the preferences of either side of the market is a minimal condition that guarantees the existence of singleton cores. If firms or workers preferences