Standardized enforcement: Access to justice vs. contractual innovation

We model the effect of contract standardization on the development of markets andthe law. In a setting in which biased judges can distort contract enforcement, we findthat the introduction of a standard contract reduces enforcement distortions relative toreliance on precedents, exerting two effects: i) it statically expands the volume of trade,but ii) it crowds out the use of open-ended contracts, hindering legal evolution. We shedlight on the large-scale commercial codification undertaken in the nineteenth centuryin many countries (even common-law ones) during a period of booming commerce andlong-distance trade.

Cities, skills, and regional change

One approach to urban areas emphasizes the existence of certain immutable relationships, such as Zipf's or Gibrat's Law. An alternative view is that urban changereflects individual responses to changing tastes or technologies. This paper examinesalmost 200 years of regional change in the U.S. and finds that few, if any, growth relationships remain constant, including Gibrat's Law. Education does a reasonable jobof explaining urban resilience in recent decades, but does not seem to predict countygrowth a century ago. After reviewing this evidence, we present and estimate a simple model of regional change, where education increases the level of entrepreneurship.Human capital spillovers occur at the city level because skilled workers produce moreproduct varieties and thereby increase labor demand. We find that skills are associatedwith growth in productivity or entrepreneurship, not with growth in quality of life, atleast outside of the West. We also find that skills seem to have depressed housing supplygrowth in the West, but not in other regions, which supports the view that educatedresidents in that region have fought for tougher land-use controls. We also present evidence that skills have had a disproportionately large impact on unemployment duringthe current recession.

Shrouded costs of government: The political economy of state and local public pensions

Why do public-sector workers receive so much of their compensation in the formof pensions and other benefits? This paper presents a political economy model inwhich politicians compete for taxpayers' and government employees' votes by promising compensation packages, but some voters cannot evaluate every aspect of promisedcompensation. If pension packages are "shrouded", so that public-sector workers better understand their value than ordinary taxpayers, then compensation will be highlyback-loaded. In equilibrium, the welfare of public-sector workers could be improved,holding total public-sector costs constant, if they received higher wages and lowerpensions. Centralizing pension determination has two offsetting effects on generosity:more state-level media attention helps taxpayers better understand pension costs, andthat reduces pension generosity; but a larger share of public-sector workers will votewithin the jurisdiction, which increases pension generosity. A short discussion of pensions in two decentralized states (California and Pennsylvania) and two centralizedstates (Massachusetts and Ohio) suggests that centralization appears to have modestlyreduced pensions, but, as the model suggests, this is unlikely to be universal.

Political centralization and government accountability

This paper studies fiscal federalism when regions differ in voters' ability to monitor publicofficials. We develop a model of political agency in which rent-seeking politicians providepublic goods to win support from heterogeneously informed voters. In equilibrium, voterinformation increases government accountability but displays decreasing returns. Therefore,political centralization reduces aggregate rent extraction when voter information varies acrossregions. It increases welfare as long as the central government is required to provide publicgoods uniformly across regions. The need for uniformity implies an endogenous trade off between reducing rents through centralization and matching idiosyncratic preferences throughdecentralization. We find that a federal structure with overlapping levels of government canbe optimal only if regional differences in accountability are sufficiently large. The modelpredicts that less informed regions should reap greater benefits when the central governmentsets a uniform policy. Consistent with our theory, we present empirical evidence that lessinformed states enjoyed faster declines in pollution after the 1970 Clean Air Act centralizedenvironmental policy at the federal level.

Can eukaryotic cells monitor the presence of unreplicated DNA?

Completion of DNA replication before mitosis is essential for genome stability and cell viability. Cellular controls called checkpoints act as surveillance mechanisms capable of detecting errors and blocking cell cycle progression to allow time for those errors to be corrected. An important question in the cell cycle field is whether eukaryotic cells possess mechanisms that monitor ongoing DNA replication and make sure that all chromosomes are fully replicated before entering mitosis, that is whether a replication-completion checkpoint exists. From recent studies with smc5–smc6 mutants it appears that yeast cells can enter anaphase without noticing that replication in the ribosomal DNA array was unfinished. smc5–smc6 mutants are proficient in all known cellular checkpoints, namely the S phase checkpoint, DNA-damage checkpoint, and spindle checkpoint, thus suggesting that none of these checkpoints can monitor the presence of unreplicated segments or the unhindered progression of forks in rDNA. Therefore, these results strongly suggest that normal yeast cells do not contain a DNA replication-completion checkpoint.

The Smc5/6 complex is required for dissolution of DNA-mediated sister chromatid linkages

Mitotic chromosome segregation requires the removal of physical connections between sister chromatids. In addition to cohesin and topological entrapments, sister chromatid separation can be prevented by the presence of chromosome junctions or ongoing DNA replication. We will collectively refer to them as DNA-mediated linkages. Although this type of structures has been documented in different DNA replication and repair mutants, there is no known essential mechanism ensuring their timely removal before mitosis. Here, we show that the dissolution of these connections is an active process that requires the Smc5/6 complex, together with Mms21, its associated SUMO-ligase. Failure to remove DNA-mediated linkages causes gross chromosome missegregation in anaphase. Moreover, we show that Smc5/6 is capable to dissolve them in metaphase-arrested cells, thus restoring chromosome resolution and segregation. We propose that Smc5/6 has an essential role in the removal of DNA-mediated linkages to prevent chromosome missegregation and aneuploidy.