The Adolescent Psychopathology Scale – Short Form (Part 2)

May 20th, 2010 Comments off


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Although the clinical items do no cover a formal scale they are in fact derived from the following scales: Conduct Disorder, Posttraumatic Stress Disorder, Eating Disturbance, Conduct Disorder, Substance Abuse Disorder, Major Depression, Anger/Violence Proneness, Academic problems, Suicide, and interpersonal problems.

The Development of the APS-SF

The original APS was the source of the items on the APS-SF. The majority of the items were generated to evaluate specific DSM-IV symtomology of personality and clinical disorders, as well as reflect the time frame associated with relevant symptoms. Preliminary version of the APS was scrutinized by a panel of experts, after which there was an initial field test with a small sample ‘adolescent psychiatric inpatients and out patients’. Items were scrutinized by the experts for prospective gender bias, clearness of the implications of the items, as well as the content Validity of the items. After which, a sample of 9 adolescent psychiatric out patients and in patients finished this particular version and were then interviewed about the comprehensibility of the items and instructions. Items were then dropped or modified accordingly.

While selecting the scales to be included in APS-SF, a survey, asking for information on which scales would be best suited was sent out to over 1,000 psychologists and mental health professionals. The standardization, construction and the validation of the Adolescent Psychopathology Scale- Short form involved standardized samples of over 3,300 individuals from school settings and adolescent inpatients and outpatients from clinical sites.

The total school sample included 2,834 adolescents residing in Arizona, California, Georgia, Michigan, Minnesota, Texas, Wisconsin or Washington. The sample was varied in characteristics such as socioeconomic status, ethnic background, sex, grade and residence (Urban, Suburban, Rural or Farm). The Clinical sample was made up of 506 adolescents from 22 states and 31 clinical sites.

Development of Norms for the APS-SF

A total of 1827 students made up the standardized sample used in development of the norms for APS-SF. This included (and separately normed as well) males (n=900), females (n=927), adolescents aged 12 to 14 years (n=749), adolescents 15-19 years (n=1076) and, moreover, gender-by age group with in these samples. T scores were computed from raw APS-SF scores and have a mean of 50 and a standard deviation of 10. See Figure 1, 2 & 3 for break downs.

Scoring and Administration

The APS-SF was developed for use in evaluation of adolescent’s ages 12 to 19 years. It was created at third grade level reading ability; caution should be implemented when testing individuals whose first language is not English.

Administration and scoring of the test is quite simple and can be accomplished by technicians and other trained personnel. Interpretation of the APS-SF profiles and test scores is the sole responsibility of qualified professionals.

The test can be administrated to an individual or a group and should be completed within 15 to 20 minutes. There are a minimum number of completed items needed to score the test. This includes the critical items and as well as items from other specified scales. The APS-SF must be scored by the APS-SF Scoring Program, prices for the program and other items are detailed in Figure 4.


Generally, examiners and interpreters should use caution when scores fall close to a cutoff due to the standard error of measurement associate with each scale. When considering the descriptions of clinical severity levels of psychopathology associated with APS-SF T scores, a T score range below 60 is considered a normal range as far as clinical interpretation. T score range between 60 and 64 is deemed subclinical symptom range. A T score range encompassing 65 trough 69 is considered Mild Clinical symptom range. 70-79 is a moderate clinical symptom range and 80 and above is considered the severe clinical symptom range.

Validation and Reliability Studies

The Adolescent Psychopathology Scale- Short form ’s scales include: Conduct Disorder, Oppositional Defiant Disorder, Substance Abuse Disorder, Generalized Anxiety Disorder, Posttraumatic Stress Disorder and Major Depression that are all designed with items which correspond to DSM IV symptom specification for precise disorders. In so doing, a single item’s contribution to the scale (as in the case of item-with-total scale correlation) indicates content validity. The APS –SF item with total scale correlation coefficient are between 40 to 70 ranges.

Considering criterion related validity Correlation, between MMPI scales and the APS-SF scales varied between 20 and 70. Correlation between specific Reynolds Adolescent Depression scales, Beck Depression Inventory, and Suicide ideation Questionnaire are demonstrated in Figure 5.

Internal Consistency Reliability in standardized sample ranged from 80 to 91. Test-Retest Reliability for clinical scales ranged from 76 to 91 (14 day interval with a sample of 64 adolescents 26 male and 38 females)

Clinical Caveats

There are two main issues of clinical importance when considering the use of the Adolescent Psychopathology Scale- Short form scale. Firstly, the APS-SF is a self report measure. This means that test takers may not respond honestly and hence mask actual symptoms. On the other hand, test takers may over-endorse symptoms and represent themselves in an excessively negative light.

Secondly, it must be stressed that the APS-SF does not provide a definitive DSM-IV diagnosis. Essentially, the scales provide clinical levels of symptology and not the underlying disorder or absence of any disorder. Once, the APS-SF is used to identify individuals with relevant levels of symptoms a follow up with a mental health professional is required to establish the existence, type and degree of an adolescent’s psychiatric disorder.

Another point must be made in the usage of the APS-SF; the clinician is required to maintain standards of ethical decorum. This entails a thorough understanding of the appropriate use of the scale and to appreciate its current limitations.

As with other assessment tools at the professional’s disposal the results of the APS-SF should always be accompanied with clinical interviews, observations, information from parents, schools and clinical records.

Applications of the APS-SF

The APS-SF is suitable in Clinical and non-clinical environments such as schools, juvenile detention halls, correction facilities and substance abuse treatment programs.

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Categories: psychology, summaries Tags:

The Adolescent Psychopathology Scale – Short Form

May 20th, 2010 Comments off


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The Adolescent Psychopathology Scale was the basis for the Adolescent Psychopathology Scale- Short form. The author of the concept, William M. Reynolds, PhD. developed the scale to assess the indicators of Psychological disorders in adolescents in a manner which is correlated with DSM-IV stipulations. The purpose of this paper is provide a critical review of the literature related to the use of the specific psychological instrument known as the Adolescent Psychopathology Scale- Short form.


Purpose of the Adolescent Psychopathology Scale- Short form

The Adolescent Psychopathology Scale- Short form was developed in 1998 and is made up of 12 clinical scales and 2 validity scales. Half of the APS-SF clinical scales are directed towards specific indicators covered in the DSM-IV. These particular scales were intended to model critical DSM-IV symptoms related with these disorders: General Anxiety Disorder, Conduct disorder, Major Depression, Post Traumatic Stress Disorder, Oppositional Defiant Disorder, and Substance Abuse Disorder.

The other six APS-SF clinical scales are not associated with specific DSM IV disorders; however, they do assess significant spheres of adolescent psychosocial issues. Defensiveness and Consistency are the two validity scales which look at characteristics of response validity.

All in all the APS-SF was intended to be a short, dependable and legitimate measure of a number of psychopathological and psychological problems pertinent to the mental adjustment of adolescents.

The Adolescent Psychopathology Scale- Short form Clinical Scales

The APS-SF clinical scales, as mentioned above, include the Conduct Disorder Scale (CND). 15 items appraise a number of antisocial behaviors such as lying, fighting, stealing, cruelty to animals, destruction of property, use of a weapon in a fight, fire setting, refusal to abide by rules at home and at school, issues with police and other problems dealing with behavior. The past six months is the timeline for which the symptoms are considered as to be present or absent.

Oppositional Defiant Disorder (OPD) is another scale. Nine items appraise a negative-contrary behavior, hostility and defiant actions & activities. Symptoms are evaluated as to the incidence of occurrence during the past six months. Substance Abuse Disorder (SUB) includes nine items detailed to a substance, Such as alcohol, cannabis, cocaine etc. And in such are gauged as to the rate of use over the past 6 months. Anger/Violence Proneness (AVP) is covered by 14 items that contend with comprehensive anger and violence against others. Symptoms are evaluated as to ‘presence or absence’ and rate of incidence through out the duration of a set number of time intervals. Academic Problems (ADP) assess a wide spectrum of issues dealing with academic obstacles in school. Nine items appraise ADP; once again symptoms are evaluated as to the incidence of occurrence during the past six months. As is Generalized Anxiety Disorder (GAD), which is made up of 11 items that measure the broad level of anxiety severity.

The 11 items which make up the Posttraumatic Stress Disorder (PTS) consider the symptomology associated with negative or traumatic events. Most of the PTS items are evaluated on the basis of the presence/absence or rate of occurrence during the last six months. Major Depression (DEP) is another scale which includes 14 items that measures symptoms of Major Depressive Disorder. Symptoms are appraised as to the rate of occurrence during the past two weeks.

The Eating Disturbance (EAT) scale evaluates symptoms of Bulimia Nervosa and Anorexia Nervosa, the five items within this scale deal with secretive eating, excessive eating, and purging over the past three months. The Suicide Scale (SUI) comprises of 6 items which contends with suicidal behavior and ideation. This scale examines behaviors varying from mild suicide ideation to more somber beliefs of killing oneself.

Additionally, the Self-Concept (SCP) scale is made up of nine items that take stock of basic outlook of self worth and self concept. Symptoms are taken into consideration during a number of time intervals. Finally the Interpersonal Problem (IPP) scale makes use of 11 items to assess interpersonal problems. These problems range from social withdrawal and social isolation to friendship problems. Symptoms are also taken into consideration during a number of time intervals.

The Adolescent Psychopathology Scale- Short form Validity Scales

When making use of the APS-SF (or any other test), the examiner would be advised to supplement validity scales with his/her own assessment of an adolescent’s test taking attitude (Reynolds, 1998). The APS-SF has two validity scales which include the Defensiveness Scale (DEF) and the Consistency Response Scale (CNR). DEF scale encompasses six items that shows a highly unlikely or overly positive action or response. In general, DEF considers the examinee’s sincerity and willingness to give truthful answers. The CNR scale contains 14 item pairs that either is contradictory in their subject matter so that like answers signify inconsistent reporting, or have analogous content so that different answers on the two items signify inconsistent reporting.

The Adolescent Psychopathology Scale- Short form Critical Items

26 items within the 115 APS-SF items are deemed critical items because of their subject matter and/or their capacity to distinguish clinical from nonclinical individuals.

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Categories: psychology, summaries Tags:

Cash 4 Clunkers: Scam 4 Taxpayers

August 6th, 2009 No comments

If you’ve been following the news at all, you have probably heard your fair share of Obama PropagandaRama. One such item on the ObamAgenda is the Cash for Clunkers scheme, where the government puts up the funds for a $4500 credit toward the purchase of a new car if someone brings in a “clunker” to the dealership. The objective, so the Obamanauts say, is to put more fuel efficient cars on the road AND save the auto industry in America.

Bollocks. What a massive load of bollocks. If you think that paying someone to destroy wealth is beneficial to anyone except the payee (and anyone else sitting on the gravy train along the way), you need to seriously reevaluate whether you should be forming opinions on economic issues at all.

Read more…

FAQ: Anarchy in Somalia and its relevance to Anarchism/Statelessness (Part 2)

May 9th, 2009 Comments off


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It’s not a country full of enlightened people; it’s a country full of highly superstitious people (hence the Islam). Yet despite this, the freedom offered by the large vacuum of power has offered comparative gains, even in country plagued by villainous warlords. Remember, it’s almost the same exact Somalis, except without a state; when there was a state, the bad guy was at the top and calling all the shots with the army and police at his disposal.

By removing that state, the bad guys now have to compete on a more level playing field with the actually decent and well-meaning people of Somalia. And while some of the bad guys are still around (we can’t expect them to disappear overnight with a history like Somalia’s), the decent people have shown the success a voluntary society can bring, even among individuals who don’t necessarily have the most rational beliefs.

Irrational religious people, as much nonsense as they believe, have to eat, drink, and do basically most things that other humans do, too. As long as you want to live and prosper, you are bound by rationality to some degree.   And Somalia has simply become a better place to live and prosper as a result of greater economic freedom.

Q: But. pirates!

Ah yes, the infamous pirates of Somalia. Lions, and tigers, and bears, oh my!

The pirate story is as follows: in the Gulf of Aden, pirate groups have formed to capture merchant ships traveling nearby in order to collect a hefty ransom on the crew and cargo. Certainly, this is a clear cut case of theft. We all certainly agree that the pirates aren’t entitled to using violence and stealing for any reason whatsoever.

What’s really suspect is any criticism of what they’re doing by, well, anyone. Commonly ignored is the history behind these pirates: notably, the pillaging of the Somali fish stocks by foreign trawlers, endangering the livelihood of the very fishermen who form the pirates’ top recruiting pool, and the dumping of toxic wastes off of Somali shores by EU countries on the cheap (for the full story, read Johann Hari’s piece in the Independent).

Surely, two wrongs don’t make a right. I don’t believe in collectives, and hence don’t believe that an merchant of some European nationality has to pay for the actions of “his” government, which doesn’t necessarily represent any of the moral obligations he has generated as an individual.

The problem  is really the criticism by countries which do the very same thing that the Somali pirates are doing, but only in a more organized fashion. According to the mainstream view of these Somali pirates espoused by said countries, it’s immoral for Somalis to do it because a) they’re black, and b) they don’t have uniforms. This isn’t explicitly stated, of course; everything is couched in terms of “theft” and “international law” and so on.

What types of ships are the pirates attacking? Sometimes those ships are carrying foreign aid none other than money stolen from taxpayers to be given toward causes they probably wouldn’t agree with if they knew about them. This is the same foreign aid that strengthened the Biarre regime in Somalia as it strengthened regimes all across Africa by destroying domestic agriculture and giving the powers that be complete control over the food supply. While the pirates don’t care about this, it’s ironic that the West accuses Somali pirates of theft and destruction, when that is exactly what foreign aid is made of and accomplishes.

But the hypocrisy is much deeper than just foreign aid. Toxic waste dumping and fish poaching off the coast of New York would result in a severe American military response. According to the mainstream view, the Somalis don’t have a central government sanctioning their patrolling of territorial waters, so when they do it, it’s illegal piracy.

So let’s say, for simplicity’s sake, that Somali piracy is not about patrolling territorial waters and that it’s about arbitrary acts of seizure. I’m sure the pirates would advocate these acts of seizure as indeed being in some collective Somali interest. So when American ships interdict and seize ships in accordance with American environmental protection standards, trade embargoes, customs taxes, outright prohibitions (e. g. narcotics), etc. those too are arbitrary acts of seizure done in the name of national interest. When AMERICA does it, it’s national defense. When blacks without uniforms do it, it’s illegal piracy. The only thing justifying both acts is someone’s say-so. The only reason that this one-sided and hypocritical story wins out in our supposedly “objective” media is that one party is holding all of the guns.

Q: If you like anarchy so much, why don’t you move to Somalia?

Because it sucks there (for a wide variety of reasons beyond its political organization, as outlined above).

Typically, anything that isn’t one of the limited and mainstream “CNN” choices of political philosophy is going to hear these types of accusations of hypocrisy. These accusations naturally fail to respect the nuances of the view being attacked a crude form of sophistry that is often met with thunderous applause. (Kinda like this exchange between Ron Paul and Rudy Giuliani way to miss the point, Rudy applauding morons! )

The simplest thing to point out is that “anarchism” denotes a wide variety of very different views. One mostly false stereotype of anarchism is that it is a political philosophy, much like socialism, communism, or fascism. While this may be true of some strains, it’s important for any rational person to sufficiently differentiate the person with whom he/she is speaking. After all, you wouldn’t want a Muslim you were arguing with to stereotype you as a warmongering Westerner just because you say that you’re American.

The anarchism I espouse is merely a consequence of the philosophy of rationality and personal freedom that comes first. It is not a prescribed system that should be imposed it is just the state of affairs that arises once people start behaving rationally. That the state of affairs in my ideal world would be stateless, and can thus be termed “anarchy,” is more of an afterthought than a central goal. The individual’s pursuit of happiness comes first, in a way that also universally respects the rights of others.

Unfortunately, we live in a world filled with irrationality and coercion, but that doesn’t mean that there aren’t rational choices to be made. There’s certainly nothing rational about putting the cart before the horse. A voluntary society (i. e. “anarchy”) is not an end in itself; it’s just that living in one would make one live a happy and moral life. ANARCHY IS NOT THE GOAL. GLOBAL UTOPIA IS NOT THE GOAL. A happy and moral life is the goal. So moving to Somalia certainly wouldn’t be much help to anyone trying to live a happy and moral life, given the misery and poverty there.

In summation, the central thesis of this FAQ is not that Somalia is utopia; it is most certainly not that Somalia meets every rational standard of respect for human freedom; it is that Somalia’s unique condition of statelessness has enabled Somalia to attain equal, if not superior, levels of stability and prosperity compared to its similarly-situated African neighbors. This success is, again, despite a number of factors that would otherwise make it another African hellhole (history of colonial domination and post-colonial meddling and intervention, irrational and dogmatic mysticism (i. e. Islam and general tribalistic baggage), hostile neighbors, etc. )

Given that taxpayers observing successful living without a massive government is a threat to massive governments, lots of resources are mobilized to frame world issues as if there is a speeding train coming for us which can only be stopped by government superheroes. Next time you hear about anything anarchy-related in the news, expect a healthy dose of vilification from the mainstream media. Soon enough, you’ll be watching cartoons rather than CNN.

[Special thanks for this article go to Wikipedia, one of the world’s greatest time-savers in terms of research aggregation. The benefits of decentralization even helped to write this article!

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FAQ: Anarchy in Somalia and its relevance to Anarchism/Statelessness

May 9th, 2009 Comments off


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[First revision. Please use the comments form to send your suggestions for addition, removal, or revision!

For very informative videos about Somalia echoing the information contained herein and much more, please see Stefan Molyneux of FreedomainRadio’s 2-part “True News: Somalia” series, available on YouTube: Part 1, Part 2. ]

Every now and then, Somalia pops into the news for one reason or another. The mainstream media’s view is that it is a place where chaos and warlords reign, and poverty is widespread. In the public eye, it is probably imagined to be a place with AK47-armed militiamen in the backs of pickup trucks, with child soldiers, genocide, and the like. Yet little is known by Westerners about what the real picture in any 3rd world country is like, much less one with institutions as rich as those in Somalia especially institutions which threaten the dominant international political paradigm. “Peace in Somalia” is interpreted by most to mean the restoration of Somalia’s national government this is what the paradigm commands!

Yet in the 15 years between the collapse of Somalia’s government and the first attempts to truly reinstate the federal government via military campaign, the gains Somalia has made without a state have been ignored. Further, nearly all recent major military conflicts in Somalia have been the direct result of the attempts of external forces (the U. N. Ethiopia, etc. to impose a new government created in exile. Unsurprisingly, it is these conflicts that appear in the news as the consequence of anarchy, intended to scare you, the viewer, into further accepting your own submission to your own government. If you do not submit, the news tells you, it will be like living in Somalia. –more–>

Q: What exactly makes/made Somalia anarchistic, or stateless?

Since the fall of the tyrannical government of Siad Barre in 1991, Somalia has not had a permanent national government. Despite this, much of Somalia can not really be adequately characterized as truly stateless. In recent years, control over Somalia has primarily been a battle between 2 major factions, the externally backed Transitional Federal Government and the internally-grown and ambitious Islamic Courts Union. However, the following facts about Somali society suggest some reality of statelessness.

Across the whole of Somalia, laws are neither created nor enforced by any central authority. In fact, the laws are based on the Xeer, a traditional set of laws unique to Somalia. Legal behaviors are defined in terms of property rights, which also means that the legal system is restitutive (or compensatory) rather than retributive (or punitive).

Furthermore, the Xeer completely stands against any form of taxation. Enforcement is carried out either by traditional clan structures or private police forces, both of which are voluntarily funded. While the more primitive elements of Somali life (clan allegiance, religion, etc. are obviously evident in these seemingly anarcho-capitalistic institutions and thus do not make them the best model for a voluntary society, the simple existence of this state of affairs contradicts common notions about the necessity of the state.

Q: Isn’t Somalia a totally messed up place?

By most absolute measures, yes. But so are many other countries in the world, including those even directly modeled after “Western Democracies,” the supposedly ‘best’ forms of government. The real question to ask is.

Q: How has Somalia improved since its central government collapsed in 1991?

Here’s a brief roundup of the positives that have persisted in Somalia, despite political conditions that many critics of statelessness claim would entail an uninhabitable state of nature. While some improvements may be attributable to world technology trends rather than statelessness, something must regardless be said for the fact that improvement is even taking place in the dreaded state of anarchy threatened by those in power if we abandon them.

Law and Order:

  • Some urban areas of Somalia, like Mogadishu, have private police forces.
  • Other areas rely on traditional clan-based legal structures to serve in the function of both criminal and civil law.
  • Taxation is conspicuously absent, yet customary resolution methods still resolve disputes between individuals.


  • Electricity is available in less populated areas that lacked electricity before 1991.
  • The prior regime, as in many 3rd-world countries, had a state-backed telecom monopoly that became unenforceable after the regime collapsed. Now, Somalia has telecom services among the best in Africa. A mobile phone call in Somalia is typically less expensive and higher quality than any other in Africa.
  • Mail service is also provided privately.


  • The majority of schools are privately provided, sustained by fees (around $10/month).
  • The number of primary schools has nearly doubled since before the Somali civil war.
  • Primary school enrollment increased by 28% between 2002 and 2005.


  • The post-Barre Somali currency has been stable compared to its prior performance; the obvious reason for this is that currencies are most often debased by government-powered inflation in the form of money printing. Indeed, the arrival of the Transitional National Government to Somalia in 2000 was accompanied by the importation of 30 billion foreign-printed shillings, which caused a currency collapse.
  • Somalia’s media industry has grown rapidly since 1991, growing competing newspapers and radio stations in almost every major area.
  • Prior to the collapse of the government, the Somali national airline had only one airplane. At present, there are fifteen airlines and over sixty aircraft.
  • Overall, two studies (Leeson and Powell et al. conclude that Somalia’s economy has improved favorably in its stateless condition, particularly relative to other African nations.

This isn’t intended to be a thorough representation of all of the good that has come about in Somalia as a result of the central government’s collapse, though it can be at some point.

Q: But if anarchy is so good, how come Somalia is still messed up (and doesn’t look like it’s becoming utopia any time soon)?

The first and most important point in response to this is that in any situation, the absence of government merely represents freedom from centralized coercion. But countries and societies aren’t made up of systems; they’re made up of people first. The collapse of a coercive national government can easily be replaced by many small organizations that use the same level of coercion, and it’s no surprise that warlords sprung up to fill the void in Somalia. The people of Somalia didn’t suddenly change overnight; they were still the same people from that same messed up African nation’s history.

Here are some of the factors stacked against Somalia being a fully peaceful and voluntaristic society:

  • Centuries of Islamic rule, and later partial Ottoman rule (2 things which did not bode well for a society’s stability and modernity after the 17th century).
  • Colonial predations, first by the Portuguese; then by Britain, France, and Italy in the late 19th century. The level of British investment into improving the portion of Somalia they controlled was small in comparison to that of the Italians, creating a rift that would contribute to the tension that would result in later civil war.
  • The makeup of post-World War II Somalia being the result of the regular arbitrary partitions, the consequences of which we know well from similar partitioning in the Middle East.
  • Powerful influence of Soviet aid and ideology, which was assisted greatly by U. S. military aid to hostile neighbor Ethiopia.
  • Almost textbook 3rd-world “revolution” in 1969 under the leadership of Siad Barre, resulting in a powerful central government and the elimination of all things “counter-revolutionary. With it came an attempt to also destroy Somalia’s traditional clan-based dispute resolution methods (which uncoincidentally play an important stabilizing role in Somali anarchy today).
  • Destructive, socialistic economic policies that, as in most similar cases, left the economy of Somalia in shambles following the withdrawal of Soviet aid. (The Soviet Union actually shifted its support in 1978 to rival Ethiopia, abandoning Somalia. )
  • American support for brutal dictator Siad Barre following Somalia’s abandonment by the Soviet Union.
  • International aid attempts creating Somali dependence on the foreign dole, and undermining domestic agriculture (as is the case with nearly every case of foreign food aid). This food aid also became a political weapon for Barre, whose engineered famines helped solidify his power as the distributor of food aid.
  • Misguided attempts at foreign aid following governmental collapse; deployment of “peacekeepers” resented by Somalis; shifting of food aid powers from central government to clan warlords. Foreign aid may very well have continued to provided the resources to fuel a conflict that would have otherwise ended.
  • The 2000 creation and attempted installation of a new government in Somalia in exile backed by the U. N. (currently known as the Transitional Federal Government), whose arrival has ultimately strengthened the Islamic Courts Union by creating yet another reason to fight.

So hopefully that gives you a general idea of just how screwed up Somalia is.

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Labor Mobility and Industry Agglomeration: Silicon Valley (Part 5)

April 5th, 2009 Comments off


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One last case where we observe greater symmetry of information is in the automobile industry, particularly during its early period. During its initial stages, employees could easily learn innovations within the firm. One clear example of this was the set of knowledge spillovers relating to the assembly line. Henry Ford is usually credited with the invention of the assembly line; however, it was actually Ransom E. Olds, the founder of Olds Motor Vehicles Company, who invented it. Ford, who was actually a partner of Olds at some point and not an employee, copied the method and perfected it. Thus, we can conclude that at least in the early automobile industry, there was greater symmetry of information between employer and employees. However, as it is well known, the U. S. automobile heavily agglomerated in the Detroit area, and this agglomeration grew and persisted through time. Again, this fact contradicts the result that greater symmetry should result in less agglomeration.

Thus, we have that after relaxing the assumption of asymmetry made by Franco and Mitchell, less agglomeration should be the result in any industry, all other things being equal. However, three cases of industries with greater symmetry and highly agglomerated seem to contradict this result.

Data Source for Labor Mobility

Future investigation to test for the different attributes of agglomeration will require a rich data set, particularly with regards to labor mobility. Rebitzer (2006) uses the U. S. Census Bureau Current Population Survey, but it is merely a monthly survey and lacks the advantages of a longitudinal data set. Another data set, The Longitudinal Employer – Household Dynamics (LEHD) Program at the Census Bureau, has a collection of infrastructure files that provide detailed information of workers, employers, and their interaction in the US economy. Since 2003, the Census Bureau has published the Quarterly Workforce Indicators (QWI). This is a new collection of data series that offers details on the local dynamics of labor markets across industries (http://lehd. did. census. gov/led/datatools/qwiapp. html).

For each state, there are data on total employment, net job flows, job creation, new hires, separations and turnover sorted by industry, year, sex, and age group. For example, in California, the net job flows in software publishers industry was -1,090 in the fourth quarter of 2004. If more detailed information is needed, the variables can be narrowed down over particular subsets of the data. For example, in the California example, we can narrow the set down to only male workers aged from 25 to 34. The net job flow was then -269. Quite significantly for the purposes of studying agglomeration, the data have information for 20 industries under which there are a number of selectable sub-industries. The LEHD serves as an excellent data source from which to construct general panel data on labor mobility.


Burdett, Ken, and Melvyn Coles, (Sep 2003): “Equilibrium Wage-Tenure Contracts,” Econometrica,Vol. 71, No. 5. pp. 1377-1404

Franco, April F. and Matthew F. Mitchell “Covenants not to compete, labor mobility, and industry dynamics,” working paper, University of Iowa.

Rebitzer, James (2006): “Job hopping in Silicon Valley: The microfoundations of a high tech industrial district. ” Review of Economics and Statistics, Vol. 88, No. 3, Pages 472-481.

Richard B. Freeman (1981) “The Effect of Unionism on Fringe Benefits”

Industrial and Labor Relations Review, Vol. 34, No. 4, pp. 489-509

James E. Long, Albert N. Link (1983) “The Impact of Market Structure on Wages, Fringe Benefits, and Turnover”, Industrial and Labor Relations Review, Vol. 36, No. 2, pp. 239-250

Olivia S. Mitchell (1983) “Fringe Benefits and the Cost of Changing Jobs”,

Industrial and Labor Relations Review, Vol. 37, No. 1, pp. 70-78

Dickens, F, Katz, A (1987) “Inter-industry Wage Differences and Industry Characteristics”, NBER WP: 2014

Pakes, Ariel and Saul Nitzan (1984), “Optimal Contracts for Research Personnel, Research Employment and Establishment of ‘Rival’ Enterprises,” Journal of Labor Economics, 1 (4), 345-65.

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Labor Mobility and Industry Agglomeration: Silicon Valley (Part 4)

April 5th, 2009 Comments off


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iii) The third possible direction is to introduce degrees of learning or differing degrees of employee ability. Here, one might think of a standard signaling story in which ex ante only the employee’s ability is known with some precision. Hence, the learning will be a function of ability and will not be known to the employer (he would only be able to estimate it based on the signal). In that case, high enough variance in the signals may also drive back the results to resemble those of Franco and Mitchell. Here, yet again, there may be a need for CNCs to move closer to the unachievable, otherwise first-best contract.

Instances of Production Knowledge Information Symmetry

The hypothesis proposed by Franco and Mitchell implies that if information asymmetry (regarding the knowledge that an employee has of the production technology developed by the firm) were reduced in an industry, that industry should show less agglomeration. This result is based on the crucial assumption made by the authors that the employer does not know whether his employee has learned the technology developed at the firm. Thus, if the assumption of asymmetry is relaxedclip_image003 and CNCs are not allowed, the optimal contract becomesclip_image006. If the combined employer’s and employee’s profits given by the employee having learned and left the firm is less than the employer’s profit given by the employee having learned and stayed with the firm clip_image009, and if the employer’s profit given by the employee having learned and staying with the firm is greater than the profits given by the opposite case clip_image012, the employer has the incentive to offer an incentive for the employee not to leave. As long as clip_image015 holds, the employer will be able to offer compensation that eliminates the employee’s incentive to leave the firm. Thus, greater symmetry should reduce the number of spinouts, and hence, reduce industry agglomeration.

However, observation of agglomeration effects in industries with arguably greater symmetry than the Silicon Valley industry does not always imply this. The shoe manufacturing industry is one that does not require highly skilled labor. One can deduce that workers higher in the management hierarchy or with better training can easily learn any innovation within the firm, and the employer will have knowledge of this. Thus, the greater symmetry of information in the shoe industry should result in less agglomeration, and one that is diminishing over time. However, Olav Sorenson and Pino G. Audia show in their paper entitled “The Social Structure of Entrepreneurial Activity: Geographic Concentration of Footwear Production in the United States” that the agglomeration in the shoe manufacturing industry is significant and persistent through time.

A similar case is that of the watch manufacturing industry. Historically, the best watches have been those made by hand. This process involved highly trained laborers who were involved in most of the manufacturing process. Again, it is reasonable to conclude that an experienced watchmaker in a firm will learn any innovations, and the employer will know it. In this case greater symmetry should result in less agglomeration; however, in Europe, for example, the watch making industry has historically been concentrated in Switzerland.

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Labor Mobility and Industry Agglomeration: Silicon Valley (Part 3)

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However, what the studies above do not address is the effect of specific industry characteristics on the endogenous choice of fringe benefit costs by firms. We would expect the industries with fast innovative processes without a legal framework that restricts labor mobility -would reflect higher levels of fringe benefit-related costs, and likely have better-defined promotion structures that discourage labor turnover.

Implications of relaxing the assumption of asymmetric information in Franco and Mitchell (2005 working paper).

Generally, an assumption of informational asymmetry often has two factors that seem to matter: the asymmetry itself, and the timing of the availability of information. In detail:

a) The case of no asymmetry- namely that it is common knowledge whether employee in question has learned something in his first period of employment or not – lies outside Franco and Mitchell’s exploration. It is clear that if their asymmetry assumption is being relaxed, then the implications of their theory change. One study has examined the nature of public information and optimal contracting by research institutions (Pakes and Nizan). In their inquiry they model publicly available information with ex post realization of learning outcome. The model implied that there are implementable first-best contracts (unlike the asymmetric information of Franco and Mitchell) that do not distort contracting equilibrium and profits. In that case, the CNCs (covenants not to compete) do not matter since they do not provide an additional enforcement mechanism necessary to move closer to the first best contract. However, Pakes and Nitzan use a mixed reward scheme composed of both monetary compensation and stock. It is seems that the stock compensation is necessary to produce a reward for the employee, which is high enough in order to prevent the employee from going to a competitor or forming a competing firm himself. This is mainly driven by uncertainty (according to Pakes and Nitzan) of invention’s future realization.

b) Relating to the timing of the available information, we will focus on two cases: 1) The ex ante information case and 2) the ex post information case.

1) In the case of ex ante information available to everyone, everything is simplified. One of the mathematical simplifications of the Franco and Mitchell model is that the incumbent firm’s profit is zero if the employee does not learn. Hence, hiring the employee which will not increase the profits will not be beneficial for any company and the optimal contract with this individual is no contract.

2) In the case of ex post information, both employer and the employee know that the employee learned in the first period. Thus, there would be some re-negotiation such that the employer offers a wage just high enough to prevent the employee from either going to the competitor or forming his own firm. In the instance that the re-negotiation is not possible the employer will offer a wage high enough to cover his (employer’s) expectation. Here, the stock scheme may be necessary (as in Pakes and Nitzan) to get to the contract that keeps the employee from leaving.

There are three possible extensions of this framework:

i) One may introduce uncertainty about the future realization of employee learning. This may cause a high enough distortion, such that the firm will not be able to offer the employee the optimal contract. In that case, CNCs may be necessary to force the employee to stay and we may very well see the results of Franco and Mitchell materialize again.

ii) The second extension is one in which the employer is not able to compensate the employee, not due to the uncertainty about future realization, but rather due to belief-differentials. Under that construction, the disagreements are likely to be a driving force behind employee’s choice to leave and future realization of these beliefs will provide different efficiency implications.

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Labor Mobility and Industry Agglomeration: Silicon Valley (Part 2)

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If non-compete contracts are unenforceable, their elimination can lead to more turnover and more competitive entrepreneurs, assisting local firms in competing with out of state industries. Comparing Silicon Valley to Massachusetts’ Route 128, Franco and Mitchell (2005) found that Massachusetts’ Route 128 was more productive initially, but was eventually overtaken by Silicon Valley.

If non-compete contracts were unenforceable in Silicon Valley, it would be interesting to see if firms in Silicon Valley tended to backload wages more than Massachusetts’ Route 128, since the non-compete contracts in Massachusetts’ Route 128 were enforceable. If this is the case, the results by Franco and Mitchell may not have come about because of different non-compete regulations.

Burdett and Coles (2003) model a similar scenario of non-compete contracts, but they instead use wage-tenure contracts that give employees an incentive to remain in the firm and not move to a competing firm. In their story, each firm offers a wage-tenure contract that implies any employee’s wage smoothly increases with tenure. We can also compare the tenure policies of firm in Silicon Valley and Massachusetts’ Route 128, and see if the results of the model by Burdett and Coles (2003) are consistent with the data.

Wage Structuring

Wage-based policies can also serve as an alternative to non-compete contracts for reducing labor mobility-based knowledge spillovers. During a training period, for example, a worker gets paid less than his outside option (moving to other firms). However, depending on the importance of the information and the enforceability of the non-compete contracts, promising satisfactorily high wages to workers after their training period will stop them from changing employers. This kind of policy seems to successfully prevent spillovers across companies in the industry, but it does not affect industry clustering or profitability. It may even be the case that these policies can be more efficient than enforcing a legal framework for non-compete contracts. Fosturi and Ronde (2002), in their study “High-tech clusters, technology spillovers, and trade secret laws” theoretically demonstrate that even though information spillovers caused by labor mobility are prevented, industry clusters and profitability remain undisturbed.

One avenue of investigation to pursue would be to find a data set including wages, labor mobility, and the density of cluster in a region to test the assumptions given above. There is an industry cluster of biotech companies in San Diego, which is also supported by the educational system in the region; several educational institutions provide education from the undergraduate to doctorate level in biotechnology, providing a local labor pool. There are a large number of high quality workers who are educated and trained by the companies, though labor mobility among firms is high in this industry.

Fringe Benefits

Different legal frameworks for labor mobility-reducing contracts in different states prompts a search for other strategies that might be undertaken by firms to prevent labor-related information leakages to competing firms. Facing a lack of legal framework (like non-compete contracts) that can prevent workers from quitting and working in competitor companies overnight, firms need to utilize economic incentives to reduce information spillovers. Though the spillovers have a second level benefit through clustering, they also may have first level costs manifested by forgone opportunities for new innovations, for example. For the workers, one of the costs of labor mobility is an income loss due to foregone fringe benefits (Mitchell, 1983).

Controlling for other variables like unionization (Freeman, 1981), market concentration, regulations setting minimum prices and restricting entry, and profit regulations (Long and Link, 1983), we find that a substantial amount of variation in individual wage and fringe benefits is accounted for by industry differences. Dickens and Katz (1987) argue that high wage industries have lower quit rates, high labor productivity, more educated workers, longer work weeks, a higher ratio of non-wage (fringe benefits) to wage compensation, high unionization rates, bigger initial sizes and bigger average size of firms, higher concentration ratios, and more profits.

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Labor Mobility and Industry Agglomeration: Silicon Valley

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A frequent example used in the study of industry agglomeration is the hi-tech electronics agglomeration in Silicon Valley, California. The general problem to investigate relates to what advantages either the agglomeration in itself or Silicon Valley confers to businesses that result in agglomeration. The next-largest agglomeration in the same industries, Massachusetts’ Route 128, eventually fell far behind Silicon Valley. Franco and Mitchell (2005), citing the labor mobility-restricting legal tool of non-compete contracts (also known as covenants not to compete, or CNCs), support the earlier Gilson (1998) and Hyde (2003) argument that a legal prohibition on the enforcement CNCs in California was responsible for the differences between Silicon Valley and Route 128. Because of the innovation-dependent nature of the industry, employees working at one company could easily migrate to other companies or create their own new companies (“spin-outs” as opposed to “spin-offs”) as a result of the knowledge spillovers caused by their labor mobility. Non-compete contracts serve the function of allowing employers and employees to agree in advance to legally restrict such mobility. –more–>Using an optimal contracting model, Franco and Mitchell compare their model’s predictions when CNCs are allowed and when they are prohibited. They conclude some important things: the model explains the higher turnover in places where CNCs are prohibited; enforcement of CNCs in a region encourages greater firm numbers in early industry stages, especially where innovation is a key factor, thus explaining the early advantage of Route 128 which was eventually overcome by Silicon Valley; and we should expect to see in the data that concentrated industries seek CNC-enforcing areas, while competitive industries should be less likely to seek out such protection.

Their model, however, makes two key assumptions: first, that wages can’t be “backloaded”- in other words, employees can’t agree to be paid less than they would in their alternative option (to form a spin-out) for one period, and then get paid more to compensate in a later period; and second, that the level of the employee’s knowledge of the production process is known only by the employee. These may be generous assumptions that, when changed, could possibly alter Franco and Mitchell’s results drastically. One way to test their “backloading” assumption is by exploring the ways in which companies (especially in CNC-prohibiting regions) create economic incentives to depress labor mobility, and how often they do so. If wage backloading plays a significant role in those companies’ hiring practices, Franco and Mitchell’s model may be leaving out an essential explanatory variable. Their information asymmetry assumption also requires testing. On one hand, its importance can be explored by relaxing it in their model and testing its implications; on the other, instances in which employers actually have information about what their employees know about the production process should also be helpful in determining whether the assumption is unmerited.

Substitutes for Non-Compete Contracts

If non-compete contracts are illegal, one alternative means of restricting labor mobility is by “backloading” wages. In order for a firm to keep its employees from moving to a competing firm, the firm may decide to backload the wages, often in the form of pensions, options, health insurance, and other benefits that could only be captured if the employee stays with the firm over a certain time period. Franco and Mitchell (2005) assume backloading as impossible in their model. Rebitzer (2006) overlooks it.

A non-compete contract can initially be helpful in the early stages of an industry. As described by Rebitzer (2006), if employees were to “hop” around to other firms, the likelihood that knowledge acquired in one firm would be employed in another firm increases. These knowledge spillovers can hurt innovation by reducing the rewards to investing in human capital. On the other hand, abolishing non-compete contracts can be more helpful to local firms in the long run.

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