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We develop a reduced-form model of price transmission in a vertical sector, allowing for refined asymmetric, contemporaneous and lagged, own and cross-price effects under time-varying volatility. The model is used to investigate the wholesale-retail price dynamics in the U.S. butter market. The analysis documents the nature of nonlinear price dynamics in a vertical sector. It finds strong evidence of asymmetric retail price responses, both in the short term and the longer term, but only weak evidence of asymmetric wholesale price responses. Asymmetric retail responses play a major role in generating a skewed distribution of butter prices. The empirical results indicate the presence of imperfect competition at the retail level. Copyright 2004, Oxford University Press.

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In the absence of data measuring the number of years of schooling required to perform particular jobs, we propose a new approach to testing for increases in overeducation. Such increases are confirmed by rising education levels in menial jobs that offer very low returns to education. Overeducation is deemed a systemic problem if these jobs absorb a growing share of the educated labor force. Normatively, overeducation should sometimes be seen as a shortage of skilled jobs, not as a surplus of educated workers. We find substantial evidence of overeducation in the Philippines, mild evidence of it in India, and none in Thailand. We validate our approach by applying it alongside traditional approaches involving "objective" measures of required education to Mexican census data. [JEL: I21, J24, J33]