http://lists.repec.org/mailman/listinfo/nep-all All new papers 2009-11-14 Marco Novarese http://d.repec.org/n?u=RePEc:ter:wpaper:0057&r=all This paper addresses two hot topics of the contemporary debate, social capital and economic growth. Our theoretical analysis sheds light on decisive but so far neglected issues: how does social capital accumulate over time? Which is the relationship between social capital, technical progress and economic growth in the long run? The analysis shows that the economy may be attracted by alternative steady states, depending on the initial social capital endowments and cultural exogenous parameters representing the relevance of social interaction and trust in well-being and production. When material consumption and relational goods are substitutable, the choice to devote more and more time to private activities may lead the economy to a “social poverty trap”, where the cooling of human relations causes a progressive destruction of the entire stock of social capital. In this case, the relationship of social capital with technical progress is described by an inverted U-shaped curve. However, the possibility exists for the economy to follow a virtuous trajectory where the stock of social capital endogenously and unboundedly grows. Antoci Angelo, Sabatini Fabio, Sodini Mauro 2009-10 Relational goods, social capital, economic growth, technical change http://d.repec.org/n?u=RePEc:iis:dispap:iiisdp301&r=all We examine the nature, extent and possible causes of bank contagion in a high frequency setting. Looking at six major European banks in the summer and autumn of 2008, we model the lower coexceedances of these banks returns. We find that market microstructure, volatility (measured by range based measures) and limited general market conditions are key determinants of these coexceedances. We find some evidence that herding occurred. Brian Lucey* School of Business and Institute for International Integration Studies,Trinity College Dublin Aleksandar Ševic, School of Business, Trinity College Dublin 2009-09-30 http://d.repec.org/n?u=RePEc:ebg:essewp:dr-09007&r=all Many observers argue that the abnormal accumulation of risk by banks has been one of the major causes of the 2007-2009 financial turmoil. But what could have pushed banks to engage in such a risk race? The answer brought by this paper builds on the classical signaling model by Spence. If banks’ returns can be observed while risk cannot, less efficient banks can hide their type by taking more risks and paying the same returns as the efficient banks. The latter can signal themselves by taking even higher risks and delivering bigger returns. The game presents several equilibria that are all characterized by excessive risk taking as compared to the perfect information case. Besancenot, Damien, Vranceanu, Radu 2009-10 Banking Sector; Imperfect Information; Risk Strategy; Risk/return Tradeoff; Signaling http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0792&r=all Offshoring has received wide attention lately. Its potential effects, mainly to be materialized in employment and productivity dislocations, are yet to be fully assessed. However, some consensus has been attained as to how to proxy its theoretical definition at an aggregate level. Here we review the most conventional indices the economic literature has so far produced, and employ them to provide an overview of the extent of the phenomenon for a group of countries. Contrary to common belief, our data reveal that offshoring is not exclusive to large developed economies. Further, we highlight the continuing prominence of the manufacturing over the services sector, and observe that, while services offshoring is on the rise, it still represents a small fraction of total offshoring. This is not to deny the employment creation brought about by this higher value-added offshoring or its potential to create more jobs in the future. Agnese, Pablo, Ricart, Joan E. 2009-08-03 offshoring; intermediate trade; aggregate data; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0799&r=all We analyze the optimal strategy of a high-quality incumbent that faces a low-quality ad-sponsored competitor. In addition to competing through adjustments of tactical variables such as price or advertising intensity, we allow the incumbent to consider changes in its business model. We consider four alternative business models, two pure models (subscription-based and ad-sponsored) and two mixed models that are hybrids of the two pure models. We show that the optimal response to an ad-sponsored rival often entails business model reconfigurations, a phenomenon that we dub "competing through business models." We also find that when there is an ad-sponsored entrant, the incumbent is more likely to prefer to compete through a pure, rather than a mixed,business model because of cannibalization and endogenous vertical differentiation concerns. We discuss how our study helps improve our understanding of notions of strategy,business model, and tactics in the field of strategy. Casadesus-Masanell, Ramon, Zhu, Feng 2009-06-19 Ad-sponsored; economy; products; services; business; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0793&r=all First moves towards a real understanding of the offshoring phenomenon date back only to very recent times, with employment and productivity effects occupying much of the literature around the subject. In particular for Japan, the studies conducted so far focus on the disaggregate level and put the stress on the productivity side alone. Here I analyze both the employment and the productivity effects at the aggregate industry level, covering the years 1980-2005. Moreover, I consider all industries within the economy and take account of both materials and services offshoring. The results presented here suggest that we should expect a positive effect of services offshoring on employment, and a positive effect of materials offshoring on the growth rate of productivity. Agnese, Pablo 2009-07-03 offshoring; employment; productivity; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0797&r=all This paper examines how the distribution of prices changes with the number of competitors in the market. Using gasoline price data from the Netherlands we find that as competition increases, the distribution of prices spreads out: the low prices go down while the high prices go up, on average. As a result, competition has an asymmetric effect on prices. These findings, which are consistent with a theoretical model where consumers differ in the information they have about prices, imply that consumers' gains from competition depend on their shopping behavior. In our data, all consumers, irrespective of the number of prices they observe, benefit from an increase in the number of gas stations. The magnitude of the welfare gain, however, is greater for those consumers that are aware of more prices. We conclude that an increase in the number of gas stations has a positive but unequal effect on the welfare of consumers in the Netherlands. Lach, Saul, Moraga, Jose L. 2009-06-15 Asymmetric; Price; Effects; Competition; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0817&r=all This paper contains 100 questions that students, alumni and other persons (judges, arbitrageurs, clients¿) have posed to me over the past years. They were recompiled so as to help the reader remember, clarify and, in some cases, discuss some useful concepts in finance. Most of the questions have a clear answer but others can receive several emphasis. A short answer to all of the questions is provided at the end of the paper. Fernandez, Pablo 2009-09-01 flow; net income; required return; simple return; weighted return; market premium; value creation; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0821&r=all We argue that the equity premium puzzle may be explained by the fact that most market participants (equity investors, investment banks, analysts, companies¿) do not use standard theory (such as a standard representative consumer asset pricing model) for determining their Required Equity Premium, but rather, they use historical data and advices from textbooks and finance professors. Consequently, ex-ante equity premia have been high, market prices have been consistently undervalued, and the ex-post risk premia has been also high. Professors use in class and in their textbooks high equity premia (average around 6%, range from 3 to 10%), and investors use higher equity premia for valuing companies (average around 6%). The overall result is that equity prices have been, on average, undervalued in the last decades and, consequently, the measured ex-post equity premium is also high. As most investors use historical data and textbook prescriptions to estimate the required and the expected equity premium, the undervaluation and the high ex-post risk premium are self fulfilling prophecies. Fernandez, Pablo, Aguirreamalloa, Javier, Liechtenstein, Heinrich 2009-09-07 equity premium puzzle; required equity premium; historical equity premium; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0802&r=all Studies of competitiveness tend to focus on a local economy's global interactions, particularly its international trade. But for countries that are at least mid-sized (such as Spain), interregional trade tends to be as large as or significantly larger than international trade. The case of Catalonia illustrates the importance of interregional flows in truly analyzing and devising strategies for a region's external competitiveness. Accounting for interregional trade changes and performing analyses of Catalonia's overall merchandise trade balance, which sectors generate external surpluses as opposed to deficits, and who Catalonia's key trading partners are, and the use of a gravity-model approach to estimate external border effects at the regional level for Catalonia and the rest of Spain, reveal significant variations by sector and by trading partner, generally higher external border effects for exports than imports, and declines in border effects over time - but with a discernible flattening in recent years. Ghemawat, Pankaj, Llano, Carlos, Requena, Francisco 2009-07-11 Border Effect; Gravity Model; Interregional trade; transport flows; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0806&r=all Science has been shown to be an important driver of economic growth and performance. In this chapter we take a careful look at a key ingredient of this driver for Catalonia: the link between science and business. We argue that the Catalan innovation system faces three important challenges in order to better connect science to business: 1) the need for a sufficient supply of high quality science; 2) the need for a sufficient demand for science by companies, and 3) the ability to connect science and business, i.e., science needs different channels to connect with business and requires coordinated efforts between the different players in the innovation system. We find that the science landscape at Catalan (Spanish) scientific institutions has improved considerably in the last decade. Demand for science by Catalan firms, on the contrary, is still very weak. Nevertheless, we do find that industry and universities use a large variety of channels for knowledge interaction. In addition, we show that the three large Catalan universities have very different profiles in their interactions with industry. However, our analysis does indicate that there is currently a lack of basic information about the Catalan innovation system to help inform and direct such important policy measures. Some coordination on recording this information systematically would improve matters considerably. Cassiman, Bruno, Mas, Jordi 2009-07-17 Competitiveness; Catalonia; Science; Business; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0807&r=all The competitiveness of a country is the result of the competitiveness of its firms. The competitiveness of firms is partly determined by how their business models interact with the environment to produce offerings with added value. This chapter contributes to the reflection on Catalonia's competitiveness by using the business model concept to highlight the need to adapt business models to new realities in the Catalan environment. Catalan firms have made little effort to reconfigure their business models after being affected by important external shocks. We derive recommendations by presenting and analyzing examples of companies that have innovated in their business models. Business models sit at the core of competitiveness and should be the focus of managers willing to create efficient firms that foster sustained wealth in Catalonia. Casadesus-Massanell, Ramon, Ricart, Joan E. 2009-07-17 Strategy; Business; Innovation; Internationalization; competitiveness; Firms; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0801&r=all This article analyzes competition between two asymmetric networks, an incumbent and a new entrant. Networks compete in non-linear tariffs and may charge different prices for on-net and off-net calls. Departing from cost-based access pricing allows the incumbent to foreclose the market in a profitable way. If the incumbent benefits from customer inertia, then it has an incentive to insist on the highest possible access markup even if access charges are reciprocal and even in the absence of actual switching costs. If instead the entrant benefits from customer activism, then foreclosure is profitable only when switching costs are large enough. Lopez, Angel L., Rey, Patrick 2009-07-09 Networks; benefits; costs; customer; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0825&r=all We compute the correlations of the annual stock returns (1989-2008) of the Dow Jones companies with a) Rm; and with b) Rm; and find that the second correlation (assuming beta = 1 for all companies) is higher than the first one, on average, and for all companies except Caterpillar and General Motors. Rm is the return of the S&P 500. Beta = 1 works better than calculated betas! Not surprisingly, Adjusted betas (0.67 calculated beta + 0.33) have higher correlation than calculated betas. But Adjusted betas have lower correlation than beta = 1. We do the exercise with 4 calculated betas every year end vs. the S$P 500, using: a) monthly data of last 5 years; b) monthly data of last 2 years; c) weekly data of last 5 years; d) daily data of last 5 years. We find similar results with the four betas. Despite this results, Fernandez (2009) reports that 97.3 % of the professors that justify the betas use regressions, webs, databases, textbooks or papers (the paper specifies which ones), although many of them admit that calculated betas "are poorly measured and have many problems". Only 0.9% of the professors justified the beta using exclusively personal judgments. Fernandez, Pablo, Bermejo, Vicente 2009-09-15 historical beta; calculated beta; adjusted beta; common sense; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0795&r=all We contribute to the knowledge about the capital flow from institutional investors, via Venture Capital (VC) funds as intermediaries, to their final destination, entrepreneurial ventures. Therefore, we run a world-wide survey among 1,079 institutional investors to determine the importance of several criteria when they select VC funds. The expected deal flow and access to transactions, a VC fund's historic track record, its local market experience, the match of the experience of team members with the proposed investment strategy, the team's reputation, and the mechanisms proposed to align interest between the institutional investors and the VC funds are the top criteria. The level of fees payable to the funds is not an important selection criterion. The VC relationship is based on a complex structure of (several) principals and agents, and is functional only if the interests of all participants are aligned. Fees are an important element of this alignment. Overall, the sorting criteria of institutional investors are very similar to what we know about the criteria applied by VC funds themselves, when selecting entrepreneurial ventures: the institutions have to mitigate the same kind of agency conflicts that VC funds and entrepreneurs are exposed to. Groh, Alexander P., Liectenstein, Heinrich 2009-05-17 Entrepreneurial Finance; Venture Capital; Asset Allocation Criteria; Institutional Investor; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0808&r=all Exporting firms are typically the more productive firms in an economy. Based on this observation, policy makers typically enact policies to stimulate exportation by domestic firms. In this chapter, we argue that firms make productivity enhancing investments and as a result the more productive firms start an export activity, which might make these firms even more productive. We find evidence of two types of productivity enhancing investments made by Catalan firms: both the fact that a firm imports some of its inputs and that the firm has innovated in the previous year seem to positively affect productivity and, hence, the decision to start exporting. We also find that there is an important difference between the effects of product innovations versus process innovations: product innovations seem to matter more for the export decision of Catalan firms while process innovations have little or no effect on this decision. Overall, we find that importing, innovating and exporting are strongly complementary activities. At the same time, firms develop these activities sequentially. Therefore, it seems that stimulating firms to become active in the international sourcing market and generate (product) innovations might be more productive policy measures than stimulating firms to enter the export market directly. Cassiman, Bruno, Golovko, Elena 2009-07-17 Firms; Productivity; Catalonia; Innovation; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0805&r=all Biotechnology is considered one of the key engines to achieving long-term sustainable growth. Catalonia is the main player in the Spanish biotechnology market, boasting 35 percent of the Spanish biotech R&D and 24 percent of its firms. In this report, we analyze the state of the Catalan biotechnology sector, focusing on its competitive advantages and disadvantages relative to other European biotech clusters. Our findings indicate that, in Catalonia, the biotechnology sector has the potential to affect sectors that represent 10 percent of the Catalan GDP and that employ 9.3 percent of the Catalan workforce. However, Catalan biotech is still quite small in relation to the top European bioclusters and it is only slowly catching up in some of its strategic components. The main advantages of the Catalan biotechnology sector are, first, its research effort, which has been improving steadily, thus allowing Catalonia to start closing the gap with Europe, especially in industrial biotechnology. Second, the attractiveness of Barcelona to draw key staff. The main challenge it faces is access to funding and the fact that the size of related industries in the area is smaller than their size in the top European biotech regions. Finally, 65 percent of Catalan biotechnology firms are devoted to the health sector, while the performance of biotech research in the industrial sector has been particularly competitive. Mas, Nuria 2009-07-15 Biotechnology; clusters; sector http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0822&r=all We report 2,510 answers from professors from 65 countries and 934 institutions. 1,791 respondents use betas, but 107 of them do not justify the betas they use. 97.3% of the professors that justify the betas use regressions, webs, databases, textbooks or papers (the paper specifies which ones), although many of them state that calculated betas "are poorly measured and have many problems". Only 0.9% of the professors justify the beta using exclusively personal judgement (named qualitative, common sense, intuitive, and logical magnitude betas by different professors). The paper includes interesting comments from 160 professors. We all admit that different investors may have different expected cash flows, but many of us affirm that the required return should be equal for everybody: That is a kind of schizophrenic approach to valuation. Most professors teach that the expected cash flows should be computed using common sense and good judgement about the company, its industry, the national economies¿ However, many professors teach a formula to calculate the discount rate (instead of using again common sense). Fernandez, Pablo 2009-09-09 historical beta; calculated beta; common sense; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0824&r=all Este documento resume 1.466 respuestas a una encuesta por e-mail realizada a directivos de empresas y a profesores de finanzas europeos. 1.143 personas utilizan rentabilidad exigida y 824 utilizan betas para calcularlas. La mayoría (717) de estas 824 personas justifican las betas que utilizan con regresiones, webs, bases de datos, libros o artículos. Solamente 70 personas justifican las betas que utilizan empleando únicamente el sentido común. La proporción de directivos que utilizan rentabilidad exigida pero no utilizan betas para su cálculo (44%) es muy superior a la de los profesores (8%). La proporción de directivos que utilizan sólo el sentido común para justificar las betas que utilizan (15%) es muy superior a la de los profesores (2%). Sorprende que, con los problemas que presentan las betas calculadas por regresión, un gran porcentaje de los profesores y directivos todavía las utilicen para calcular la rentabilidad exigida. La mayoría admite que hay muchos problemas en su determinación, pero continúan enseñándola y utilizándola por diversas razones: "ha obtenido el Premio Nobel en Economía", "se utiliza mucho", "permite defender una valoración, impresionar a la dirección y parecer un gurú financiero" Fernandez, Pablo, Bermejo, Vicente 2009-09-13 beta; beta histórica; beta calculada; sentido común; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0800&r=all We question the broad applicability of the assumption of profit maximization as the goal of the firm and investigate how variance in objective functions across different ownership structures affects competitive behavior. While prior work in agency theory has argued that firms may fail to engage in profit maximizing behaviors due to misalignment between the goals of owners and managers, we contend that we are unlikely to observe pure profit maximizing behavior even in the case of the perfect alignment of goals that exists in owner-managed firms. We compare the competitive behaviors of owner-managed and professionally managed firms and find that, contrary to the expectations of agency theory, professionally managed firms are more likely to engage in behaviors consistent with profit-maximization goals. Consistent with the view that owner-managers are less concerned with maximizing profits, we observe that the entry, exit, and pricing decisions of owner-managed firms are all relatively less responsive to the underlying economic attractiveness of the markets in which they operate. Vroom, Govert, Mccann, Brian T. 2009-07-07 profit; behavior; goals; firms; market; http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0798&r=all Katz and Shapiro (1985) study systems compatibility in settings with one-sided platforms and direct network externalities. We consider systems compatibility in settings with two-sided platforms and indirect network externalities to develop an explanation why markets with two-sided platforms are often characterized by incompatibility with one dominant player who may subsidize access to one side of the market. We find that incompatibility gives rise to asymmetric equilibria with a dominant platform that earns more than under compatibility. We also find that incompatibility generates larger total welfare than compatibility when horizontal differences between platforms are small. Casadesus-Masanell, Ramon, Ruiz-Aliseda, Francisco 2009-06-17 network; industries; platforms; markets; http://d.repec.org/n?u=RePEc:ucn:wpaper:200921&r=all The beleaguered progress of the Doha Development Agenda of the WTO presents something of a puzzle for economic theory: if multilateralism is an effective forum for liberalisation (as it has been in the past), then why have the current round of talks faltered amid the proliferation of preferential trade negotiations? Several authors have argued that the consensus decision-making and single-undertaking principles of the WTO have lead to coordination failures amongst an increasingly expanded and diverse membership which has caused frustrated WTO members to form PTAs. This paper constructs a formal model which shows that the combination of the single-undertaking and consensus decision-making principles with an expanded and more diverse membership can lead to more than just coordination failure; it can render multilateralism less desirable for some parties than bilateralism. It is argued that these principles give countries de facto veto power meaning that their threat point during multilateral negotiations is a reversion to bilateral negotiations between all parties. Accordingly, countries with relatively less to gain from multilateralism can use their veto power to extract gains from those that would benefit substantially from the WTO. If an expanding membership has increased the number of such countries, then the benefits of multilateralism versus regionalism from the perspective of their negotiating partners may have been diminished to such an extent that they are no longer willing to wait for the conclusion of the Doha round before engaging in regional negotiations. This result adds credence to the idea that ‘variable geometry’ be introduced into the WTO system, such that it acts as an umbrella organisation for a web of sub-agreements. Euan MacMillan 2009-11-01 http://d.repec.org/n?u=RePEc:ucn:wpaper:200923&r=all This paper analyses how international outsourcing affects plant productivity, with the major contribution lying in the identification of heterogeneous effects for firms with differing internationalisation status. The results point to a striking pattern: the status of being an outsourcer matters strongly for indigenous non-exporters, while for exporters and foreign affiliates, tfp increases are lower, insignificant and sometimes negative. On the other hand, a higher intensity of outsourcing matters for both exporters and foreign affiliates, but not for indigenous non-exporters. Similarly, in dynamic analysis, indigenous non-exporters are found to increase tfp for two periods after entering into international outsourcing, while indigenous exporters experience one more weakly significant period of growth. The key message of the paper is thus: outsourcing's role as a channel of technology diffusion is most pronounced when it serves as a first exposure to international markets. Fergal McCann 2009-11-01 Outsourcing, Productivity, Firm Structure http://d.repec.org/n?u=RePEc:ucn:wpaper:200924&r=all Do students benefit from compulsory schooling? In an important article, Oreopoulos (2006) studied the 1947 British compulsory schooling law change and found large returns to schooling of about 15% using the General Household Survey (GHS). Reanalysing this dataset, we find much smaller returns of about 3% on average with no evidence of any positive return for women and a return for men of 4-7%. Additionally, we utilize the New Earnings Survey Panel Data-set (NESPD) that has earnings information superior to that in the GHS and find similar estimates: zero returns for women and returns of 3 to 4% for men. Paul J Devereux, Robert A Hart 2009-11-01 Compulsory Schooling, Returns to Education http://d.repec.org/n?u=RePEc:ucn:wpaper:200922&r=all The impact of international trade on firm productivity is tested by accounting for firms' import as well as export status for a large panel of Irish manufacturing firms. Two-way traders and exporters-only are found to be the most productive firms, with a significant gap between them and importers-only and non-traders. tfp is calculated using a modified version of the Olley and Pakes (1996) estimator, taking account of a four-category trade status. Selection of the most productive firms into exporting or importing is not found in any robust sense. Fixed effects, as well as Propensity Score Matching with Difference in Differences, are used to calculate productivity improvements from entering into international trade. These improvements are found to be highly contingent on export status, with import status being unimportant. The key finding of the paper is that the gains from trade, for Ireland at least, appear to lie on the export side. Interestingly, quitting trade leads to a mirror image effect to that of entry for all trade statuses. Fergal McCann 2009-11-01 Trade orientation, heterogeneous firms, productivity http://d.repec.org/n?u=RePEc:oxf:wpaper:459&r=all We propose to measure inequality of well-being with a multidimensional generalization of the Gini coefficient. We derive two inequality indices from their underlying social evaluation functions. These functions are conceived as a double aggregation functions: one across the dimensions of well-being, and another across the individuals. They differ only with respect to the sequencing of aggregations. We argue that the sequencing that does not exclude the Gini index to be sensitive to the correlation between the dimensions is more attractive. We illustrate both Gini indices using Russian household data on three dimensions of well-being: expenditure, health and education. Koen Decancq, Maria Ana Lugo 2009 Multidimensional inequality, Single parameter Gini Index, Correlation increasing majorization, Russia http://d.repec.org/n?u=RePEc:oxf:wpaper:460&r=all Recent attempts to incorporate optimal fiscal policy into New Keynesian models subject to nominal inertia, have tended to assume that policy makers are benevolent and have access to a commitment technology. A separate literature, on the New Political Economy, has focused on real economies where there is strategic use of policy instruments in a world of political conflict. In this paper we combine these literatures and assume that policy is set in a New Keynesian economy by one of two policy makers facing electoral uncertainty (in terms of infrequent elections and an endogenous voting mechanism). The policy makers generally share the social welfare function, but differ in their preferences over fiscal expenditure (in its size and/or composition). We use this model to examine three issues that arise from either literature. First, we consider the extent to which electoral competition gives rise to a debt or deficit bias, as one party seeks to win elections and tie the hands of a potential successor, when all debt is defined in nominal terms. Second we examine the extent and nature of the electoral cycle introduced by having two parties reflecting different preferences over either the composition or amount of government spending. Third, we examine whether electoral competition has any impact on the conventional business cycle stabilisation policy, compared to the standard analysis that assumes a single benevolent government. Campbell Leith, Simon Wren-Lewis 2009 New Keynesian model, Government debt, Monetary policy, Fiscal policy, Electoral uncertainty, Time consistency http://d.repec.org/n?u=RePEc:oxf:wpaper:461&r=all Carbon leakage is a major concern for policymakers involved with environmental initiatives such as the European Union’s emissions trading scheme and similar cap-and-trade proposals in the United States, Australia, and elsewhere. This paper provides a framework for understanding the drives underlying carbon leakage at the level of an individual sector in which only a subset of firms is covered by such regulation. It provides simple formulae to estimate leakage rates using information on industry characteristics that is typically available to the analyst. Illustrative estimates for the steel industry in the EU ETS suggest carbon leakage of 25-30% or (much) higher - unless environmental-efficiency improvements by regulated firms are substantial. Robert A. Ritz 2009 Abatement, Cap-and-trade, carbon tax, Cost pass-through, Emissions trading, Free allocation, Market structure http://d.repec.org/n?u=RePEc:mal:wpaper:2009-5&r=all This paper reports an experimental study on three well-known solutions for problems of adjudicating conflicting claims: the constrained equal awards, the proportional, and the constrained equal losses rules. We first let subjects play three games designed such that the unique equilibrium allocation coincides with the recommendation of one of these three rules. In addition, we let subjects play an additional game, that has the property that all (and only) strategy profiles in which players coordinate on the same rule constitute a strict Nash equilibrium. While in the first three games subjectsÕ play easily converges to the unique equilibrium rule, in the last game the proportional rule overwhelmingly prevails as a coordination device, especially when we frame the game as an hypothetical bankruptcy situation. We also administered a questionnaire to a different group of students, asking them to act as impartial arbitrators to solve (among others) the same problems played in the lab. Also in this case, respondents were sensitive to the framing of the questions, but the proportional rule was selected by the vast majority of respondents. Carmen Herrero, Juan D. Moreno-Ternero, Giovanni Ponti 2009-11 Claims problems, Proportional rule, Experimental Economics http://d.repec.org/n?u=RePEc:mal:wpaper:2009-7&r=all We investigate the implications and logical relations between progressivity (a principle of distributive justice) and merging-proofness (a strategic principle) in taxation. By means of two characterization results, we show that these two principles are intimately related, despite their different nature. In particular, we show that, in the presence of continuity and consistency (a widely accepted framework for taxation) progressivity implies merging-proofness and that the converse implication holds if we add an additional strategic principle extending the scope of merging-proofness to a multilateral setting. By considering operators on the space of taxation rules, we also show that progressivity is slightly more robust than merging-proofness. Biung-Ghi Ju, Juan D. Moreno-Ternero 2009-11 taxation, progressivity, merging-proofness, consistency, operators http://d.repec.org/n?u=RePEc:mal:wpaper:2009-6&r=all We investigate how to extend bankruptcy rules to the more general setting in which agentsÕ claims may refer to different issues. We consider two natural procedures and show that, among all bankruptcy rules, the proportional rule is the only one whose extensions according to the two procedures yield the same outcomes. Juan D. Moreno-Ternero 2009-12 Multi-issue bankruptcy problems, proportional rule, characterization result http://d.repec.org/n?u=RePEc:diw:diwwpp:dp925&r=all We analyse the convergence and heterogeneity of living standards between East and West Germany since unification. Based on data from the German Socio-Economic Panel (GSOEP), we compare total individual income of permanent adult residents, including retirees and the unemployed, of East and West Germany over the fifteen years for which data are available. Using a fixed effects vector decomposition method, we estimate the gross total income difference between East and West Germans taking unobserved heterogeneity into account. Our analysis demonstrates that the negative income gap has decreased from 33 per cent in 1992 to 22 per cent in 2002, rising again to 26 per cent in 2007. Hence some convergence took place in nominal terms since unification. Constructing income gaps by decennial cohorts, we discover that the most recent cohorts have the highest negative income gap. This probably reflects out-migration from East Germany by the young and highly skilled. On the basis of quantile regressions we find a positive income gap at the beginning of the 1990s for the lower income deciles (that is higher incomes in East Germany). This was due to retirees in the East with relative long employment histories receiving transfer payments by western standards. The income gap is insignificant when accounting for heterogeneity at the area level by including area level variables to our regression. Tilman Brück, Heiko Peters 2009 Unification, living standards, income inequality, distribution, GSOEP, Germany http://d.repec.org/n?u=RePEc:diw:diwwpp:dp930&r=all The Arrow index of a fuzzy choice function C is a measure of the degree to which C satisfies the Fuzzy Arrow Axiom, a fuzzy version of the classical Arrow Axiom. The main result of this paper shows that A(C) characterizes the degree to which C is full rational. We also obtain a method for computing A(C). The Arrow index allows to rank the fuzzy choice functions with respect to their rationality. Thus, if for solving a decision problem several fuzzy choice functions are proposed, by the Arrow index the most rational one will be chosen. Irina Georgescu 2009 Fuzzy choice function, revealed preference indicator, congruence indicator, similarity http://d.repec.org/n?u=RePEc:diw:diwwpp:dp942&r=all This paper examines global (mature market) and regional (emerging market) spillovers in local emerging stock markets. Tri-variate VAR GARCH(1,1)-in-mean models are estimated for 41 emerging market economies (EMEs) in Asia, Europe, Latin America, and the Middle East. The models capture a range of possible transmission channels: spillovers in mean returns, volatility, and cross-market GARCH-in-mean effects. Hypotheses about the importance of different channels are tested. The results suggest that spillovers from regional and global markets are present in the vast majority of EMEs. However, the nature of cross-market linkages varies across countries and regions. While spillovers in mean returns dominate in emerging Asia and Latin America, spillovers in variance appear to play a key role in emerging Europe. There is also some evidence of cross-market GARCH-in-mean effects. The relative importance of regional and global spillovers varies too, with global spillovers dominating in Asia, and regional spillovers in Latin America and the Middle East. John Beirne, Guglielmo Maria Caporale, Marianne Schulze-Ghattas, Nicola Spagnolo 2009 Volatility spillovers, contagion, stock markets, emerging markets http://d.repec.org/n?u=RePEc:diw:diwwpp:dp938&r=all In this paper, we make multi-step forecasts of the annual growth rates of the real GRP for each of the 31 Chinese provinces simultaneously. Beside the usual panel data models, we use panel models that explicitly account for spatial dependence between the GRP growth rates. In addition, the possibility of spatial effects being different for different groups of provinces (Interior and Coast) is allowed. We find that both pooling and accounting for spatial effects helps substantially improve the forecast performance compared to the benchmark models estimated for each of the provinces separately. It was also shown that effect of accounting for spatial dependence is even more pronounced at longer forecasting horizons (the forecast accuracy gain as measured by the root mean squared forecast error is about 8% at 1-year horizon and exceeds 25% at 13- and 14-year horizon). Eric Girardin, Konstantin A. Kholodilin 2009 Chinese provinces, forecasting, dynamic panel model, spatial autocorrelation, group-specific spatial dependence http://d.repec.org/n?u=RePEc:diw:diwwpp:dp939&r=all The aim of this work is to evaluate the impact of domestic and global biofuel policies on Germany's agricultural sector. The central part of our study is divided into four sections. Section 2 presents in detail the issues that make biofuels a debated topic in today's economic policies. Fundamental aspects of our energy consumption patterns and the geographic location of our natural resources are highlighted together with a quantitative analysis of the recent surge in biofuels output capacity and estimates of their near-future deployment. An introduction to current and future biofuels production technologies is coupled with an overview of recent studies that assess their net contribution to harmful gaseous emissions and energy efficiency. The concerns associated with rising food prices and their likely causes are then briefly examined. Section 3 provides a thorough description of the subsidy, taxation and protection measures granted to biofuels across the world. Current governmental policies in the EU and its member states are given special attention. Section 4 presents the current literature on economic modelling and focuses on partial equilibrium (AGLINK-COSIMO, Impact, Esim, etc.) and general equilibrium frameworks (EPPA, GTAP, etc.). Section 5 simulates the impact of domestic and global biofuel policies in Germany within a Computable General Equilibrium framework. The LEITAP model is introduced. A description of the analysed scenarios is given on the basis of the envisaged biofuel blending mandates described in section 3. The simulation results are then evaluated with respect to production, prices, international trade and land use of the relevant commodities. The outcome clearly indicates that current biofuels policies significantly affect food markets as well as land allocation. The conclusion summarizes the main findings of our study and draws a comparison with results of other publications. Giovanni Sorda, Martin Banse, Claudia Kemfert 2009 http://d.repec.org/n?u=RePEc:diw:diwwpp:dp935&r=all In this paper we develop a structural model of female employment and fertility which accounts for intertemporal feedback effects between the two outcomes. We identify the effect of financial incentives on the employment and fertility decision by exploiting variation in the tax and transfer system which differs by employment state and number of children. To this end we simulate in detail the effects of the tax and transfer system including child care costs. The model provides estimates of structural preferences of women which can be used to study the effect of various policy reforms. In particular, we show that increasing child care subsidies conditional on employment increases labor supply of all women as well as fertility of the childless and highly educated women. Peter Haan, Katharina Wrohlich 2009 Employment, fertility, financial incentives http://d.repec.org/n?u=RePEc:diw:diwwpp:dp932&r=all This paper applies the Phillips and Sul (2007) method to test for convergence in stock returns to an extensive dataset including monthly stock price indices for five EU countries (Germany, France, the Netherlands, Ireland and the UK) as well as the US over the period 1973-2008. We carry out the analysis on both sectors and individual industries within sectors. As a first step, we use the Stock and Watson (1998) procedure to filter the data in order to extract the long-run component of the series; then, following Phillips and Sul (2007), we estimate the relative transition parameters. In the case of sectoral indices we find convergence in the middle of the sample period, followed by divergence, and detect four (two large and two small) clusters. The analysis at a disaggregate, industry level again points to convergence in the middle of the sample, and subsequent divergence, but a much larger number of clusters is now found. Splitting the cross-section into two subgroups including Euro area countries, the UK and the US respectively, provides evidence of a global convergence/divergence process not obviously influenced by EU policies. Guglielmo Maria Caporale, Burcu Erdogan, Vladimir Kuzin 2009 Stock Market, Financial Integration, European Monetary Union Convergence, Factor Model http://d.repec.org/n?u=RePEc:diw:diwwpp:dp927&r=all It has previously been shown that civil conflict influences many economic factors, including education, which play an important role in development and economic growth. Previous authors working on the influence of conflict on education have, however, always focused strongly on the supply-side effects, whereas this paper examines the influence of conflict on the demand for education. It is theoretically shown that, under relatively general conditions, individuals living in a conflict area have an incentive to increase their level of education and that this effect depends on the individual's skill level. This hypothesis is then tested using the conflict in the Basque Region as a case study, which is an example of a conflict in which one would not expect strong supply-side effects. Using the other Spanish regions, an artificial region is created in which the population has a similar educational distribution as in the Basque Region. When comparing the true and artificial regions, it can clearly be seen that for individuals with a medium level of education, there is a strong incentive to increase their education level, which is in concordance with the theoretical model. Olaf J. de Groot, Idil Göksel 2009 Conflict, Education, Matching, Spain http://d.repec.org/n?u=RePEc:diw:diwwpp:dp928&r=all This study questions the popular stereotype that women are more risk averse than men in their financial investment decisions. The analysis is based on micro-level data from large-scale surveys of private households in five European countries. In our analysis of investment decisions, we directly account for individuals' self-perceived willingness to take financial risks. The empirical evidence we provide only weakly supports the gender differences argument. We find that women are less likely to invest in risky financial assets. However, when the probability of investing is controlled for, males and females are found to allocate equal shares of their wealth to risky assets. Oleg Badunenko, Nataliya Barasinska, Dorothea Schäfer 2009 Gender, risk aversion, financial behavior http://d.repec.org/n?u=RePEc:diw:diwwpp:dp929&r=all There is by now a lot of evidence showing a sharp increase in cross-sectional wage and earnings inequality during the 2000s in Germany. Our study is the first to decompose this cross-sectional variance into its permanent and transitory parts for years beyond 2000. Using data from the German Socio-Economic Panel on fulltime working individuals for years of 1994 to 2006, we do not find unambiguous empirical support for the frequent claims that recent increases in inequality have been driven mainly by permanent disparities. From 1994 on, permanent inequality increases continuously, peaks in 2001 but then declines in subsequent years. Interestingly the decline in the permanent fraction of inequality occurs at the time of most rapid increases in cross-sectional inequality. It seems therefore that it is primarily the temporary and not the permanent component which has driven the strong expansion of cross-sectional inequality during the 2000s in Germany. Michal Myck, Richard Ochmann, Salmai Qari 2009 Variance decomposition, covariance structure models, earnings inequality, wage dynamics http://d.repec.org/n?u=RePEc:diw:diwwpp:dp937&r=all The paper scrutinizes the role of wages and capital flows for competitiveness in the new EU member states in the context of real convergence. For this purpose it extends the seminal Balassa-Samuelson model by international capital markets. The augmented Balassa-Samuelson model is linked to the monetary overinvestment theories of Wicksell and Hayek in order to trace cyclical deviations of real exchange rates from the productivity-driven equilibrium path. Panel estimations for the period from 1993 to 2008 reveal mixed evidence for the role of capital markets for both the economic catch-up process and international competitiveness of the Central and Eastern European countries. Ansgar Belke, Gunther Schnabl, Holger Zemanek 2009 Exchange rate regime, wages, Central and Eastern Europe, EMU accession, panel model http://d.repec.org/n?u=RePEc:diw:diwwpp:dp933&r=all Global liquidity expansion has been very dynamic since 2001. Contrary to conventional wisdom, high money growth rates have not coincided with a concurrent rise in goods prices. At the same time, however, asset prices have increased sharply, significantly outpacing the subdued development in consumer prices. We investigate the interactions between money and goods and asset prices at the global level. Using aggregated data for major OECD countries, our VAR results support the view that different price elasticities on asset and goods markets explain the observed relative price change between asset classes and consumer goods. Ansgar Belke, Walter Orth, Ralph Setzer 2009 Global liquidity, inflation control, monetary policy transmission, asset prices http://d.repec.org/n?u=RePEc:diw:diwwpp:dp931&r=all In this paper, we discuss potential developments of the world natural gas industry at the horizon of 2030. We use the World Gas Model (WGM), a dynamic, strategic representation of world natural gas production, trade, and consumption between 2005 and 2030. We specify a "base case" which defines the business-as-usual assumptions based on forecasts of the world energy markets. We then analyze the sensitivity of the world natural gas system with scenarios: i) the emergence of large volumes of unconventional North American natural gas reserves, such as shale gas; ii) on the contrary, tightly constrained reserves of conventional natural gas reserves in the world; and iii) the impact of CO2-constraints and the emergence of a competing environmental friendly "backstop technology". Regional scenarios that have a global impact are: iv) the full halt of Russian and Caspian natural gas exports to Western Europe; v) sharply constrained production and export activities in the Arab Gulf; vi) heavily increasing demand for natural gas in China and India; and finally vii) constraints on liquefied natural gas (LNG) infrastructure development on the US Pacific Coast. Our results show considerable changes in production, consumption, traded volumes, and prices between the scenarios. Investments in pipelines, LNG terminals and storage are also affected. However, overall the world natural gas industry is resilient to local disturbances and can compensate local supply disruptions with natural gas from other sources. Long-term supply security does not seem to be at risk. Daniel Huppmann, Ruud Egging, Franziska Holz, Sophia Ruester, Christian von Hirschhausen, Steven A. Gabriel 2009 Natural gas, investments, reserves, climate policy http://d.repec.org/n?u=RePEc:diw:diwwpp:dp941&r=all The aim of this paper is to provide new empirical evidence on the impact of international financial integration on the long-run Real Exchange Rate (RER) in 39 developing countries belonging to three different geographical regions (Latin America, Asia and MENA). It covers the period 1979-2004, and carries out "second-generation" tests for non-stationary panels. Several factors, including international financial integration, are shown to drive the long-run RER in emerging countries. It is found that the new financial environment characterised by international financial integration leads to a depreciation of the RER in the long run. Further, RER misalignments take the form of an under-valuation in most MENA countries and an over-valuation in most Latin American and Asian countries. Guglielmo Maria Caporale, Thouraya Hadj Amor, Christophe Rault 2009 emerging economies, real exchange rate, financial integration, misalignment, second-generation panel unit-root and cointegration tests http://d.repec.org/n?u=RePEc:diw:diwwpp:dp934&r=all Taxation changes the expectations of prospective university students about their future level and uncertainty of after-tax income. To estimate the impact of taxes on university enrollment, we develop and estimate a structural microeconometric model, in which a high-school graduate decides to enter university studies if expected lifetime utility from this choice is greater than that anticipated from starting to work right away. We estimate the ex-ante future paths of the expectation and variance of net income for German high-school graduates, using only information available to those graduates at the time of the enrollment decision, accounting for multiple nonrandom selection and employing a microsimulation model to account for taxation. In addition to income uncertainty, the enrollment model takes into account university dropout and unemployment risks, as well as potential credit constraints. The estimation results are consistent with expectations. First, higher risk-adjusted returns to an academic education increase the probability of university enrollment. Second, high-school graduates are moderately risk averse, as indicated by the Arrow-Pratt coefficient of risk aversion estimated within the model. Thus, higher uncertainty among academics decreases enrollment rates. A simulation based on the estimated structural model indicates that a revenue-neutral, flat-rate tax reform with an unchanged basic tax allowance would increase enrollment rates for men in Germany because of the higher expected net income in the higher income range. Frank M. Fossen, Daniela Glocker 2009 University Enrollment, Income Taxation, Flat Tax, Income Risk, Risk Aversion http://d.repec.org/n?u=RePEc:diw:diwwpp:dp943&r=all This paper deals with the impact of the $/€ exchange rate on German exports in the period from 1995Q1 to 2008Q4. Our main aim is to identify "pain thresholds" for German exporters. We rely on a non-linear model according to which suddenly strong spurts of exports occur when changes of the EXR go beyond a kind of "play" area (analogous to a mechanical play). We implement an algorithm describing play-hysteresis into a regression framework. A unique "pain threshold" of the $/€ exchange rate does not exist, since the borders of the play area and, thus, also the "pain threshold" (as the upper border) depend on the historical path of the whole process. We come up with an estimate of a play area width of 24 US dollar cent per euro. At the end of our estimation period, the previous exchange rate movements had shifted the upper bound of the play area to about 1.55 US dollar per euro. In our interpretation, this is the current "pain threshold", where a strong spurt reaction of exports to a further appreciation of the euro is expected to start. Ansgar Belke, Matthias Göcke, Martin Günther 2009 exchange rate movements, play hysteresis, modelling techniques, switching regression, export demand http://d.repec.org/n?u=RePEc:diw:diwwpp:dp926&r=all Several German states recently introduced tuition fees for university education. We investigate whether these tuition fees influence the mobility of university applicants. Based on administrative data of applicants for medical schools in Germany, we estimate the effect of tuition fees on the probability of applying for a university in the home state. We find a small but significant reaction: The probability of applying for a university in the home state falls by 2 percentage points (baseline: 69%) for high-school graduates who come from a state with tuition fees. Moreover, we find that students with lower high-school grades react more strongly to tuition fees. This might have important effects on the composition of students across states. Nadja Dwenger, Johanna Storck, Katharina Wrohlich 2009 mobility of high-school graduates, tuition fees, natural experiment http://d.repec.org/n?u=RePEc:diw:diwwpp:dp936&r=all Why are female entrepreneurs so rare? Women have both to a lower entry rate into selfemployment and a higher exit rate in Germany. To explain the gender gap, a structural microeconometric model of the transition rates is estimated, which includes a standard risk aversion parameter. As inputs into the model, the expected value and variance of earnings from self-employment and dependent employment are estimated separately by gender, accounting for non-random selection into the employment states. The gender differential in the transition rates is decomposed using a novel extension of the Blinder-Oaxaca technique for nonlinear models. Women's higher estimated risk aversion is found to explain the largest part of their higher exit rate, but only a small part of their lower entry rate. Frank M. Fossen 2009 Entrepreneurship, self-employment, risk aversion, gender differential, Nonlinear Blinder-Oaxaca Decomposition http://d.repec.org/n?u=RePEc:diw:diwwpp:dp940&r=all This paper reviews the main features of the banking and financial sector in ten new EU members, and then examines the relationship between financial development and economic growth in these countries by estimating a dynamic panel model over the period 1994-2007. The evidence suggests that the stock and credit markets are still underdeveloped in these economies, and that their contribution to economic growth is limited owing to a lack of financial depth. By contrast, a more efficient banking sector is found to have accelerated growth. Furthermore, Granger causality test indicate that causality runs from financial development to economic growth, but not in the opposite direction. Guglielmo Maria Caporale, Christophe Rault, Robert Sova, Anamaria Sova 2009 Financial Development, Economic Growth, Causality Tests, Transition Economies http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp222&r=all We examine the effect of commuting on labour supply patterns. A labour supply model is introduced which shows that commuting distance increases daily workhours, whereas the effect on total labour supply is ambiguous. This paper addresses these issues empirically using the socio-economic panel data for Germany between 1997 and 2007. Endogeneity of commuting distance is accounted for by using employer-induced changes in commuting distance. In line<br /> with the theoretical model developed, we find that commuting distance has a slight positive effect on daily workhours. Further, we find a similar effect on weekly labour supply, but no effect on workdays. Distinguishing between males and females, it appears that the effects on labour supply are mainly through the behaviour of females, but the effects for females are still small. Eva Gutiérrez-i-Puigarnau, Jos van Ommeren 2009 Commuting, congestion tax, labour supply http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp226&r=all The present paper aims to quantify the growth and welfare consequences of changing family structures in western societies. For this reason we develop a dynamic general equilibrium model with both genders which takes into account changes of the marital status as a stochastic process. Individuals respond to these shocks by adjusting savings and labor supply. Our quantitative results indicate that the declining number of marriages coupled with increasing divorce rates had a profound effect on macroeconomic variables and long-run welfare. We find a significant increase in aggregate capital accumulation and a rising labor market participation of women. In addition, our simulations indicate that the change in the marital structure had significant negative welfare consequences for women who lost between 0.4 and 2.2 percent of aggregate resources. The impact on men’s welfare, however, could be positive or negative depending on the specific calibration. Hans Fehr, Manuel Kallweit, Fabian Kindermann 2009 family formation, stochastic general equilibrium, life cycle model http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp223&r=all Using German panel data from 1984 to 2007, we analyze the impact of labor division between husband and wife on the risk of divorce. Gary Becker's theory of marriage predicts that specialization in domestic and market work, respectively, reduces the risk of separation. Traditionally, the breadwinner role is assigned to the husband, however, female labor force participation and their wages have risen substantially. Our results suggest that there are gender-specific differences, e.g. female breadwinner-couples have a substantially higher risk of divorce than male breadwinner-couples. In contrast, the equal division does not significantly alter the probability of separation. Kornelius Kraft, Stefanie Neimann 2009 Divorce, labor division, Germany http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp225&r=all The reliability of general self-rated health status is examined using the reform of the public health insurance system of Germany in 2004 as a source of exogenous variation. Among others, the reform introduced a co-payment for ambulatory doctor visits and increased the co-payments for prescription drugs. This natural experiment allows identification of the causal impact of the program on self-assessed health and hence reveals the sensitivity of this subjective measure to a perturbation in the insurance system. Using data from the German Socio-Economic Panel, the results indicate that after the policy intervention, the respondents in the treated group perceived their own health status as better than their hypothetical untreated state even when there is no discernible impacton actual health.The reliability of general self-rated health status is examined using the reform of the public health insurance system of Germany in 2004 as a source of exogenous variation. Among others, the reform introduced a co-payment for ambulatory doctor visits and increased the co-payments for prescription drugs. This natural experiment allows identification of the causal impact of the program on self-assessed health and hence reveals the sensitivity of this subjective measure to a perturbation in the insurance system. Using data from the German Socio-Economic Panel, the results indicate that after the policy intervention, the respondents in the treated group perceived their own health status as better than their hypothetical untreated state even when there is no discernible impacton actual health. Alfredo R. Paloyo 2009 natural experiment,cognitive dissonance,self-rated health status http://d.repec.org/n?u=RePEc:pec:wpaper:2009/5&r=all Tamás Mellár 2009-05 Transition, economic policy, modernization http://d.repec.org/n?u=RePEc:inn:wpaper:2009-26&r=all For the past two decades a market model introduced by Smith, Suchanek, and Williams (1988, henceforth SSW) has dominated experimental research on financial markets. In SSW the fundamental value of the traded asset is determined by the expected value of a finite stream of dividend payments. This setup implies a deterministically falling fundamental value with a predetermined end of the life-span of the asset and extremely high dividend-payouts. We present a new market model in which we implement the fundamental value by adopting a random walk process. Compared to SSW-markets, prices in the new markets (SAVE) are more efficient and end-of-experiment imbalances common in SSW-markets are not observed. Our results demonstrate, that implicit features of the SSW market model contribute to bubble formation. Michael Kirchler, Jürgen Huber, Thomas Stöckl 2009-06 Experimental economics, asset market, bubble, market efficiency http://d.repec.org/n?u=RePEc:ros:wpaper:110&r=all The economic works of Johann Heinrich von Thünen include 1,000 unpublished pages of drafts and notes on the basis of which he prepared the second volume of his famous “Isolated State in Relation to Agriculture and Political Economy”. Thünen wrote his texts in the so-called Deutsche Kanzleischrift, a script which can be read today only by specialised histori-ans, rarely by economists. In a first part of a research project of the Thünen-Gesellschaft e.V. 300 pages were transliterated, from which the first 60 pages were reviewed until October 2009. It becomes obvious that Thünen’s work is much more far-reaching than the contributions pub-lished by himself or edited by Schumacher in 1863 and 1875 show. Its bulk was not made accessible until today. This can be easily demonstrated by the content of these first 60 pages, especially those treating monetary questions and preparing Thünen’s theory of capital and interest. Thünen starts his analysis with a description of the diminishing return of money keeping in an enterprise. He considers both the exchange and the stock function of money. He describes the pros and cons of the creation of paper money as a substitute for coins. Thünen is the first economist who develops an extended quantity theory of money by introducing the velocity of money transactions and formulating the correct algebraic formula. He anticipates the famous Newcomb-Fisher equation but with one difference: in Thünen’s opinion the prod-uct of velocity and quantity of money primarily determines the value of circulating capital goods and assets, an argument which has to be understood with the contemporary rural eco-nomic conditions in mind. He analyses the liquidity effect of positive exogenous money shocks. By describing the adap-tation processes in the case of differences between the monetary market interest rate and the real rate of return on capital goods, Thünen presents important mechanisms of Knut Wick-sell’s “Interest and Prices”, which were published 75 years later and still inspire the monetary economists today. In accordance with Henry Thornton, he adequately describes the conse-quences of liquidity preference in the case of uncertain economic situations. In our opinion Thünen’s 1823 contribution is of the same quality as the contributions of the leading monetary theorists in the early 19th century, David Ricardo and Henry Thornton. With respect to the further theoretic development in the nineteenth and twentieth century and from the perspective of modern monetary theory, Thünen’s drafts are an unexpected discov-ery and of particular interest in the current financial and economic crisis. The paper concludes with a preliminary assessment of Thünen’s text in the context of the sec-ond volume of the “Isolated State”, which was published in 1850 and which contains Thünen’s “Theory of Capital and Interest”. Ludwig Nellinger 2009 Dogmengeschichte, Kapital- und Zinstheorie, Quantitätstheorie, Verkehrs-gleichung, Geldnachfrage, Liquiditätspräferenz http://d.repec.org/n?u=RePEc:hal:journl:hal-00323346_v1&r=all We consider a class of finite Markov moment problems with arbitrary number of positive and negative branches. We show criteria for the existence and uniqueness of solutions, and we characterize in detail the non-unique solution families. Moreover, we present a constructive algorithm to solve the moment problems numerically and prove that the algorithm computes the right solution. Laurent Gosse, Olof Runborg 2008-06-06 Inverse problems, finite Markov moment problem, exponential transform. http://d.repec.org/n?u=RePEc:hal:journl:hal-00429034_v1&r=all This paper examines how transmission coordinates with generation to the long term in a liberalized power system. We rely on a modular analysis to separate the mechanisms of coordination between generation and transmission of electricity into distinct modules. The governance structure of transmission completes this analysis framework. We then show that in a logic of complementarity, this governance structure influences the options that TSO implements to manage effectively power flows. Although locational signals are necessary to guide the installation of new power plants, the governance structure explains that investment in network may be the only effective method of longterm coordination between generation and transmission. Vincent Rious, Jean-Michel Glachant, Yannick Perez, Philippe Dessante 2009-06-20 http://d.repec.org/n?u=RePEc:hal:journl:halshs-00429896_v1&r=all I discuss what the Open Method of Coordination does, not from the point of view of its procedures, but via the cognitive instruments that serve as tools for coordination, benchmarking and adjustment of national policies. This helps to connect with the analysis of conventions with regards to employment and unemployment. Robert Salais 2007-12-17 Social Europe; conventions; employment; open method of coordination http://d.repec.org/n?u=RePEc:hal:journl:halshs-00200894_v3&r=all An awareness and opinion survey on Carbon Capture and Storage was conducted on a representative sample of French aged 15 years and above. About 6\% of respondents were able to provide a satisfying definition of the technology. The key question about `approval of or opposition to' the use of CCS in France was asked twice, first after presenting the technology, then after exposing the potential adverse consequences. Approval rates, 59\% and 38\%, show that there is no a priori rejection of the technology. The sample was split in two to test for a semantic effect: questioning one half about `Stockage' (English: storage), the other about `Sequestration'. Manipulating the vocabulary had no statistically significant effect on approval rates. Stockage is more meaningful, but does not convey the idea of permanent monitoring. Minh Ha-Duong, Ana Sofia Campos, Alain Nadai 2009 Carbon capture and storage; public opinion http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00429609_v1&r=all We present a model of household behavior to explore the complex interactions between the decision-making process within the household and social norms. The household is viewed as two separate spheres – the female and the male – both linked by a public good and a "conjugal contract" trough which spouses exchange resources. The conjugal contract negotiated within the couple is partly influenced by social norms given the conformism of individuals. Social norms are endogenously determined as the average conjugal contract. We find that the closer spouses' wages are in the labor market, the more equally they share household tasks. Wage policies promoting gender wage equality lead all couples to renegotiate the terms of their conjugal contract, which in turn changes social norms. Even though spouses aim at maximizing the household's welfare, the resulting equilibrium allocation is not Pareto efficient and inefficiency increases with social conformism. Elisabeth Cudeville, Magali Recoules 2009-10 Conjugal contract ; social norms ; wage discrimination ; household behavior ; intra-household decision-making http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00429761_v1&r=all Dans cet article, nous examinons l'effet d'annonce des news relatifs aux politiques monétaires de la BCE et de la FED issus des réunions officielles du Conseil des gouverneurs et du FOMC sur la volatilité intrajournalière du taux de change euro-dollar à cinq minutes d'intervalles. Les résultats montrent que les news de la politique monétaire de la BCE relatifs à ses taux d'intérêt Target sont plus significatifs et plus influents sur le niveau de la volatilité intrajournalière que ceux de la politique monétaire de la FED relatifs à son taux des fonds fédéraux. Malgré le nombre réduit de ces news, leur effet apparaît statistiquement significatif au cours des années de l'échantillon du taux de change euro-dollar choisi. Nous avons également introduit une structure polynomiale qui permet de prendre en compte la persistance de court terme et de mettre en évidence une possible dissymétrie dans l'effet de chaque variable de signal sur la volatilité du taux de change euro-dollar. Mokhtar Darmoul, Mokhtar Kouki 2009-08 Effet d'annonce ; forex ; news ; taux de change. http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00429759_v1&r=all Dans cet article, nous étudions le comportement ainsi que les caractéristiques systématiques de l'effet calendrier perus dans la volatilité du taux de change intrajournalière de l'euro face au dollar à cinq minutes d'intervalles. Nous obtenons par le biais de cette analyse une différenciation de ces effets à travers deux types de filtres essentiels dans le traitement des rendements, tout en éliminant la forme de fourrier FFF qui condamne les structures de persistance des chocs à prendre une forme exponentielle. Ainsi, nous avons ressorti de nouvelles caractéristiques de la volatilité du taux de change euro-dollar, telle que l'heure de déjeuner en Europe. Mokhtar Darmoul, Mokhtar Kouki 2009-08 Cycle commercial ; effet calendrier ; forex ; taux de change. http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00429784_v1&r=all This paper studies the costs and benefits of delegating decisions to superiorly informed agents relative to the use of rigid, non discretionary contracts. Delegation grants some flexibility in the choice of the action by the agent, but also requires the use of an appropriate incentive contract so as to realign his interests with those of the principal. The parties' understanding of the possible circumstances in which actions will have to be chosen and their attitude towards risk and uncertainty play then an important role in determining the costs of delegation. The main focus of the paper lies indeed in the analysis of these costs and the consequences for whether or not delegation is optimal. We determine and characterize the properties of the optimal flexible contract both when the parties have sharp probabilistic beliefs over the possible events in which the agent will have to act and when they only have a set of such beliefs. We show that the higher the agent's degree of risk aversion, the higher the agency costs for delegation and hence the less profitable is a flexible contract versus a rigid one. The agent's imprecision aversion in the case of multiple priors introduces another, additional agency costs ; it again implies that the higher the degree of imprecision aversion the less profitable flexible contracts versus rigid ones. Even though, with multiple priors, the contract may be designed in such a way that principal and agent end up using "different beliefs" and hence engage in speculative trade, this is never optimal, in contrast with the case where the parties have sharp heterogeneous beliefs. Piero Gottardi, Jean-Marc Tallon, Paolo Ghirardato 2009-09 Delegation, flexibility, agency costs, multiple priors, imprecision aversion. http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00429730_v1&r=all We study in this paper the interactions between migration rates and the level of labour standards. We use an augmentee version of the Grogger and Hanson (2008) model, adding the level of working conditions into the specification. Our hypothesis is that the differential of working conditions may be a complementary determinant of migration. In a first time, we test the influence of labour standards in countries of origin using a database on emigration rates built by Defoort (2006) for the period 1975-1995. For labour standards, we built an original index with a temporal dimension. We find that labour standards in the source countries does not have a significant impact on the probability of moving abroad. In a second time, we use a bilateral migration database built by Marfouk and Docquier (2004) in order to test the influence of labour standards in destination countries. If labour standards in the source countries do not have a significant impact on migration flows, level of labour conditions in destination countries have multiple effects on bilateral migration flows. Social protection or protection of collective relations have a positive impact on migration, while job and employment protection laws have the opposite effect. We also find that high-skilled workers are much more sensitive to social security benefits while low skilled workers are more attracted by a protective job and employment legislation. Rémi Bazillier, Yasser Moullan 2009-07 Migration, labour standards, brain-drain, labour markets. http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00429894_v1&r=all This paper considers whether earned wealth affects bidding behavior in an induced-value second-price auction. We find people bid more sincerely in the auction with earned wealth given monetary incentives; earned wealth did not induce sincere bidding in hypothetical auctions. Nicolas Jacquemet, Robert-Vincent Joule, Stephane Luchini, Jason Shogren 2009 Auctions; Demand revelation; Experimental valuation; Hypothetical bias; Earned money http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00429600_v1&r=all In this article, we focus on current account dynamics in large open economies characterized by debt-constrained heterogeneous agents and endogenous monetary policies. We incorporate three key features that have bulked large in the New Open Macroeconomics literature : i) home bias in trade, ii) price rigidities, and iii) durable goods (real properties). In order to limit agents' willingness to consume and to (partially) insure creditors against the risk of default, we incorporate collateral constraints. We show that the impatience of collateral-constrained agents can be at the roots of permanent external imbalances. Indeed our model has a unique and dynamically determinate steady state, which is characterized by a positive level of debt. Our framework allows us to analyze the linkage between exchange rates, real assets and international capital flows. We focus on this mechanism so as to track the (international) transmission of shocks and the implications for the monetary policy. We show how developments hitting the house market can affect current account and exchange rate dynamics. Eleni Iliopulos 2009-10 Open economy ; durable goods ; collateral constraints ; sticky prices ; simple monetary rules http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00429725_v1&r=all In this paper, we expose the results of a voting experiment realised in 2007, during the French Presidential election. This experiment aimed at confronting the Single Transferable vote (SVT) procedure to two criteria : simplicity and the selection of a Condorcet-winner. Building on our electoral sample's preferences, we show that this voting procedure can design a different winner, depending on the vote counting process. With the vote counting process advocated by Hare, the winner is Nicolas Sarkozy, while the Coombs vote counting process has François Bayrou as winner. For these two vote counting processes, the details of the experiment are the same and it is shown that the simplicity criterion is respected. However, with regard to the Condorcet-winner criterion, the Coombs methods is the only one to elect the Condorcet-winner, i.e. François Bayrou. Etienne Farvaque, Hubert Jayet, Lionel Ragot 2009-07 Field experiments, elections, Single Transferable Vote, voting system, Condorcet Winner. http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00429732_v1&r=all Economic literature has introduced large theories on critical role of micro and small firms (MSEs) in the economic development. Particularly in developing countries, the development of the sectore has become a channel of poverty reduction by providing job opportunities and creating welfares. Besides, MSEs might be seen as embryonic form of sizable firms in the future, then contribute to the innovation process and economic growth. Consequently, promoting the growth of micro and small firms is in the center of interest of many developing countries, so does the case of Vietnam. By investigating the importance of firm characteristics with regard to the barriers that facing MSE in the growth process, this analysis brings some more light into the sector that unfortunately is still an under researched area. Using firm sample drawing from the Survey on Household's Living Standard in 2004 in Vietnam, we find that firms with different characteristics, among them : firm size, firm age, legal status, industrial sector and location, experiencing different levels of constraints. The level of signification of firm characteristics differs from barriers to barriers. In general, more sizable firms have often to face with higher level of constraints. These results enable policymakers to create more suitable MSEs fostering policies which better account for the different obstacles due to firm heterogeneity. Thi Quynh Trang Do 2009-06 Firm performance, micro-small enterprises, barriers to growth, Vietnam. http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00429573_v1&r=all We review recent advances in the field of decision making under uncertainty or ambiguity. Johanna Etner, Meglena Jeleva, Jean-Marc Tallon 2009-10 Ambiguity, ambiguity aversion, uncertainty, decision. http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00429293_v1&r=all Let N be a set of players, C the set of permissible coalitions and G an N-playerstrategic game. A profile is a coalitional-equilibrium if no coalition permissible coalition in C has a unilateral deviation that profits to all its members. Nash-equilibria consider only single player coalitions and Aumann strong-equilibria permit all coalitions to deviate. A new fixed point theorem allows to obtain a condition for the existence of coalitional equilibria that covers Glicksberg for the existence of Nash-equilibria and is related to Ichiishi's condition for the existence of Aumann strong-equilibria. Rida Laraki 2009-11-02 Fixed point theorems, maximum of non-transitive preferences, Nash and strong equilibria, coalitional equilibria http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00430051_v1&r=all Many small island states have developed economies that are strongly dependent on tuna fisheries. Consequently, they are vulnerable to the socio-economic effects of climate change and variability, processes that are known to impact upon tuna fisheries distribution and productivity. The aim of this study was to assess the impacts of climate oscillations on the tuna-dependent economy of Seychelles. Using a multiplier approach, the direct, indirect and induced economic effects of the tuna industry declined by 58%, 34% and 60%, respectively, in 1998, the year of a strong warming event in the western Indian Ocean. Patterns in tuna purse seine vessel expenditures in port were substantially modified by strong climate oscillations. A cointegration time-series model predicted that a 40% decline in tuna landings and transhipment in Port Victoria, a value commensurate with that observed in 1998, would result in a 34% loss for the local economy. Of several indices tested, the Indian Oscillation Index was the best at predicting the probability of entering a regime of low landings and transhipment. In 2007, a moderate climate anomaly was compounded by prior overfishing to produce a stronger that expected impact on the fishery and economy of Seychelles. The effects of fishing and climate variability on tuna stocks are complex and pose significant challenges for fisheries management and the economic development of countries in the Indian Ocean. Jan Robinson, Patrice Guillotreau, Ramòn Jiménez-Toribio, Frédéric Lantz, Lesya Nadzon, Juliette Dorizo, Calvin Gerry, Francis Marsac 2009 http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00422492_v2&r=all Ce papier propose une unification de la notation et de la modélisation des réseaux de transports à échelons multiples dans le but d'optimiser le coût global du système. Un modèle de programmation linéaire pour le NE-LRP est analysé et ses limites dans la recherche de solutions optimales sont définies. Les principaux méthodes heuristiques adaptés à cette famille de problèmes sont aussi décrits. Jesus Gonzalez-Feliu 2009-10-01 Optimisation combinatoire, tournées de véhicules, systèmes à échelons multiples, location routing problem, distribution de marchandises http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00426790_v1&r=all In this paper, we consider a discrete-time ruin model where experience rating is taken into account. The main objective is to determine the behavior of the ultimate ruin probabilities for large initial capital in the case of light-tailed claim amounts. The logarithmic asymptotic behavior of the ultimate ruin probability is derived. Typical pathes leading to ruin are studied. An upper bound is derived on the ultimate ruin probability in some particular case. The influence of the number of data points taken into account is analyzed, and numerical illustrations support the theoretical findings. Finally, we investigate the heavy-tailed case. The impact of the number of data points used for the premium calculation appears to be rather different from the one in the light-tailed case. Julien Trufin, Stéphane Loisel 2009-10 http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00430014_v1&r=all This paper evaluates the degree of integration between the world market and the major European marketplaces of frozen and canned tuna through both vertical and horizontal price relationships. Spatial linkages are investigated horizontally in order to estimate the connection between the European market and the world-wide market on the primary tage of the value chain. One of the key results is the high level of market integration at the exvessel stage, and the price leadership of yellowfin tuna over skipjack tuna. The same approach is applied at the ex-factory level. Basically, the European market for final goods appears to be segmented between the Northern countries consuming low-priced canned skipjack tuna imported from Asia (mainly Thailand) and the Southern countries (Italy, Spain) processing and importing yellowfin-based products sold at higher prices. France appears to be an intermediate market where both products are consumed. The former market is found to be well integrated to the world market and can be considered to be competitive, but there is a suspicion of market power being exercised on the latter. Price relationships are therefore tested vertically between the price of frozen tuna paid by the canneries and the price of canned fish in both Italy and France. The two species show an opposite pattern in prices transmission along the value chain: price changes along the chain are far better transmitted for the “global” skipjack tuna than for the more European” yellowfin tuna. The results are discussed, along with their implications for the fishing industry. Ramòn Jiménez-Toribio, Patrice Guillotreau, Rémi Mongruel 2009 http://d.repec.org/n?u=RePEc:sol:wpaper:09-045&r=all This paper is the first major and thorough study on the M&A activities in Vietnam’s emerging market economy, covering almost entirely the M&A history after the launch of Doi Moi. The surge in these activities since mid-2000s by no means incidentally coincides with the jump in FDI and FPI inflows into the nation. M&A industry in Vietnam has its socio-cultural traits that could help explain economic happenings, with anomalies and transitional characteristics, far better than even the most complete set of empirical data. Proceeds from sales of existing assets and firms have mainly flowed into the highly speculative industries of securities, banking, non-bank financials, portfolio investments and real estates. The impacts of M&A on Vietnam’s long-term prosperity are, thus, highly questionable. An observable high degree of volatility in the M&A processes would likely blow outthe high ex ante expectations by many speculators, when ex post realizations finally arrive. The effect of the past M&A evolution in Vietnam has been indecisively positive or negative, with significant presence of rent-seeking and likelihood of causing destructive entrepreneurship. From a socio-economic and cultural view, the degree of positive impacts it may result in for domestic entrepreneurship will perhaps be the single most important indicator. Quan-Hoang Vuong, Tran Tri Dung, Thi Chau Ha NguyenN 2009-11 Capital Market, Emerging Market, Entrepreneurship, Mergers and Acquisitions, Transition Economy, Vietnam. http://d.repec.org/n?u=RePEc:sol:wpaper:09-046&r=all The functioning of welfare states and tax systems is fostered by social norms to obey the rules of the system. Morale can change and react to new incentives. In particular, a deep economic crisis with increasing unemployment and reduced prospects for market income may have a norm eroding effect. This study explores the link between economic crisis and morale. Our theoretical reasoning is based on an economic approach to the evolution of norms, according to which norms are influenced by self-interest. A distinction is made between two dimensions of citizens’ morale: benefit and tax morale. Our econometric evidence based on data from the World Value Survey suggests that a sharp hike in unemployment reduces the morale standards along both dimensions. The crisis impact on benefit morale is conditional on the existence of generous benefit schemes. Friedrich Heinemann 2009-10 Social norms, tax morale, benefit morale http://d.repec.org/n?u=RePEc:sol:wpaper:09-047&r=all The unconventional monetary policies implemented in the wake of the subprime crisis and the recent increase in inflation volatility have revived the debate on medium to long-term resurgence of inflation. This paper presents the optimal strategic asset allocation of an investor seeking to hedge inflation risk in different macroeconomic regimes. Using a vector-autoregressive model (VAR) for the joint dynamics of asset returns, inflation and other state variables, we investigate in the context of a simulation that allows for serial and cross-sectional inter-temporal dependencies the relationship between asset returns and different economic variables, at different investment horizons. We then study the optimal portfolio choice for the investor seeking to attain a fixed target for real returns on his investment horizon, with a shortfall probability constraint. We show that the strategic asset allocation differs sharply across regimes. In a volatile macroeconomic environment, inflation-linked bonds, equities, commodities and real estate play all an essential role in hedging a portfolio against inflation. In a more stable economic environment (“Great Moderation”), nominal bonds play the most significant role, with equities and commodities. An ambitious investor in terms of required real return should have a larger weighting in risky assets, especially commodities. We show the optimal allocation for each investor, depending on his target real return and tolerated shortfall probability. Marie Brière, Ombretta Signori 2009-11 inflation hedge, pension finance, shortfall risk, portfolio optimisation http://d.repec.org/n?u=RePEc:imd:wpaper:wp2009-15&r=all Relatively little attention has been paid to the role that externalities play in determining the pecuniary returns to migration. This paper addresses this gap, using microeconomic data for more than 100,000 individuals living in the European Union (EU) for the period 1994-2001 in order to analyse whether the individual economic returns to education vary between migrants and non-migrants and whether any observed differences in earnings between migrants and locals are affected by household and/or geographical (regional and interregional) externalities. The results point out that while education is a fundamental determinant of earnings, European labour markets – contrary to expectations – do not discriminate in the returns to education between migrants and non-migrants. The paper also finds that household, regional, and interregional externalities influence the economic returns to education, but that they do so in a similar way for local, intranational, and supra-national migrants. The results are robust to the introduction of a large number of individual, household, and regional controls. Andrés Rodríguez-Pose, Vassilis Tselios 2009-11-03 individual earnings; migration; educational attainment; externalities; household; regions; Europe http://d.repec.org/n?u=RePEc:iso:wpaper:0115&r=all Since the Middle Ages, celibacy has been a requirement for those becoming priests in the Roman Catholic Church. In the ongoing discussions about reforms, a wide range of church members have asked for the abolishment of the celibacy requirement in order to meet the changed social and moral standards of believers and to increase the quality and quantity of priests. However, this paper shows that from a strategic point of view, there are good reasons for the Catholic Church to keep, or even to increase, the role of celibacy for its priests. Using celibacy as a resource selection device, it allows the church to credibly signal its religious orientation to believers. Based on a game theoretic model, this paper analyzes the optimal use of celibacy in the market for religious services. Additionally, we discuss the relevant impacts of higher income levels, higher opportunity costs, increased aging and changed moral standards relating to homosexuality. Men-Andri Benz, Reto Foellmi, Egon Franck, Urs Meister 2009 Religion, celibacy, strategic resource selection http://d.repec.org/n?u=RePEc:iso:wpaper:0114&r=all This paper develops a model of a professional sports league with network externalities by integrating the theory of two-sided markets into a contest model. In professional team sports, leagues function as a platform that enables sponsors to interact with fans. In these league-mediated interactions, positive network effects operate from the fan market to the sponsor market, while negative network effects operate from the sponsor market to the fan market. Clubs react to these network effects by charging higher (lower) prices to sponsors (fans). Our analysis shows that the size of these network effects determines the level of competitive balance within the league. Traditional models, which do not take network externalities into account, under- or overestimate the actual level of competitive balance, which may lead to wrong policy decisions. Moreover, we show that clubs benefit from stronger combined network effects through higher profits. Finally, we derive policy recommendations for improving competitive balance by taking advantage of network externalities. Helmut Dietl, Tobias Duschl, Egon Franck, Markus Lang 2009-11 Competitive balance, contest, multisided market, network externalities, team sports league http://d.repec.org/n?u=RePEc:iso:wpaper:0116&r=all This study provides the first econometric analysis on the dynamic dimension of establishment-level codetermination in Germany. We hypothesize that learning implies a change in the nature and scope of codetermination over time. Using unique data from small- and medium-sized establishments, our empirical analysis provides strong evidence that learning indeed plays a crucial role in the functioning of works councils. First, the probability of an adversarial relationship between management and works council is decreasing in the age of the council. Second, the council’s age is positively associated with the probability that the council has an influence even on decisions where it has no legal powers. Third, establishment output is increasing in the age of the council. Fourth, the quit rate is decreasing in the age of the council. However, our estimates also provide evidence of a codetermination life cycle. Uwe Jirjahn, Jens Mohrenweiser, Uschi Backes-Gellner 2009-09 Codetermination, Learning, Conflict, Cooperation, Performance http://d.repec.org/n?u=RePEc:sda:rerepo:200902&r=all The goal of public policies is to connect desired ends with practical means toward their achievement. How the desired ends are determined, and whose goals and objectives they incorporate, depends upon the culture and political system of the country in question. With few exceptions, policies change over time to reflect changed perspectives and understanding of the world around us. This is true regardless of the policy area in question. Thus, how societies view and manage their mineral resources has evolved in response to public attitudes, societal needs, economic circumstances, cultural perspectives, political orientations, technological advancements, and geological knowledge. In this paper we examine how the scope of concern has changed for mineral policy. We then review the overarching issues that have in recent years been considered essential components of mineral policies. We point out how neoclassical microeconomics has influenced recent policy design. We then use a market flow diagram to illustrate how policies can be focused at specific market issues. We next discuss mineral resources in the context of sustainable development. We identify issues that become relevant when the frame of reference is enlarged beyond ensuring supply and capturing economic rent. We show that policy based solely on neoclassical economics may not be able to effectively incorporate these issues. Slavko V. Šolar, Deborah J. Shields, Michael D. Miller 2009-07 mineral policy, sustainable development, environmental economics, neoclassical economics, policy, sustainability, ecological economics http://d.repec.org/n?u=RePEc:ide:wpaper:21402&r=all Farhi, Emmanuel, Tirole, Jean 2009-10 http://d.repec.org/n?u=RePEc:ide:wpaper:21322&r=all Bardey, David, Cremer, Helmuth, Lozachmeur, Jean-Marie 2009-10 http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2009_29&r=all Essentially, the impact of the currency union on member countries depends on whether the common currency area is optimal in the sense that the effect of the asymmetric shocks is small, Mundell (1961). Typically, researchers use VAR of different types to analyze the data. For robustness, we use different methodologies. First, we use different estimators to estimate a small textbook model for the panel of the Gulf Cooperation Council countries (GCC) from 1970 to 2006, where the short-run equilibrium real output and the real exchange rate are determined by the intersection of the assets and goods markets equilibrium schedules. And the central bank fixes the exchange rate by keeping the money supply at a level where the domestic interest rate is equal to the foreign interest rate. Then we test for symmetry using the nonparametric Triples test, Randles et al. (1980). Third, we introduce a nonparametric multivariate statistic to test whether the variances of the shocks (the conditional variance) are equal across countries. Weshah Razzak 2009-02-11 Optimum Currency Area, asymmetrical shocks and conditional variance http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2009_31&r=all I analyse an economy where a search labour market with an endogenous wage distribution and a matching marriage market interact. The economy is populated by homogeneous workers, firms and marriage partners (MPs). Workers simultaneously search for firms in order to work and for MPs in order to marry. Firms post wages to attract workers. MPs look for workers in order to marry. Married workers receive a pre-determined flow utility, and married MPs derive flow utility equal to the worker’s earnings. This provides the link between the markets. By interpreting workers and MPs as men and women respectively, I show that the so called married wage premium can arise purely from frictions in both markets. Also, the paper may explain the simultaneous occurrence of three stylised facts: In the model, an increase in the value of women’s option outside marriage leads to a decrease in marriage rates and an increase in the spread of the male wage distribution. Roberto Bonilla 2009-03-11 Search, Married wage premium, matching markets. http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2009_30&r=all The Economic Research Forum (ERF) produced a one-off survey of micro & small private enterprises (MSE) in a number of Middle East and North African countries (MENA). It contains sufficient information to fit a production function and additional information about the owner’s education type; the scope of the market; and the type of technology. Further, it provides information about perceived constraints to production. We test the effect of these factors on technical progress. We believe that empirical research of policy issues can help promote the making of ‘evidence-based policies’ in the MENA countries. Weshah Razzak 2009-09-30 Micro-small private enterprise; production function; stochastic dominance. http://d.repec.org/n?u=RePEc:ulp:sbbeta:2009-32&r=all Unlike the monetary and financial international organizations which where born during World War II and in the immediate post-war years, the WTO was created only in 1994. The GATT negotiated in 1947 was initially conceived as a temporary agreement while waiting for the creation of an International Trade Organization, which was finally never created. Nevertheless as like as in financial matters, some thinkers have built projects on such an organization before and during World War II. Among them there are two Americans: Cordell Hull and Percy Wells Bidwell. This paper compares both projects and investigates whether it can be said that Hull was the spiritual father of the WTO as some of the Cordell Hull Institute papers claim it. Claude Schwob 2009 Theory of International Organizations, Bilateralism, Multilateralism, History of International Organizations, International Trade Negotiations, International Trade Organization, World Trade Organization. http://d.repec.org/n?u=RePEc:ulp:sbbeta:2009-31&r=all A group of firms consider collaborating on a project which requires a combination of elements which are owned by some of them. These elements are nonrival but excludable goods i.e. public goods with exclusion like for instance knowledge, data or informations, patents or copyrights. We address the question of how firms should be compensated for the goods they own. We shown that this problem can be framed as a cost sharing game to which standard allocation rules like the Shapley value, the nucleolus or accountings formulas can be applied and compared. Our analysis is inspired by the need for a cooperation between European chemical firms within the regulation program REACH which requires them to submit by 2018 a detailed analysis of the substances they produce or import. Pierre Dehez, Daniela Tellone 2009 cost sharing, Shapley value, core, nucleolus. http://d.repec.org/n?u=RePEc:sur:seedps:123&r=all This paper attempts to quantify the impact of exogenous non-economic factors on UK transport oil demand (in addition to income, price, and fuel efficiency) by estimating the demand relationship for oil transport for 1960-2007 using the Structural Time Series Model. From this, the relative impact on UK transport oil demand from income, price, and efficiency are quantified. Moreover, the impact of the non-economic factors is also quantified, based on the premise that the estimated stochastic trend represents behavioural responses to changes in socio-economic factors and changes in lifestyles and attitudes. The estimated elasticities for income, price and efficiency are 0.6, -0.1, and -0.3 respectively and it is shown that for efficiency and price the overall contribution is relatively small, whereas the contribution from income and non-economic factors is relatively large. This has important implications for policy makers keen to reduce transport oil consumption and associated emissions, but not willing to reduce the trend rate of economic growth. Taxes and improved efficiency only have a limited impact; hence, a major thrust of policy should perhaps be on educating and informing consumers to persuade them to change their lifestyle and attitudes and thus reduce their consumption through the non-economic instruments route. David C Broadstock, Lester C Hunt 2009-05 Transport oil demand; Structural Time Series Model, STSM; Underlying Energy Demand Trend, UEDT; Exogenous Non-Economic Factors, ExNEF. http://d.repec.org/n?u=RePEc:por:fepwps:340&r=all The aim of this paper is to analyse the link between immigration and trade among EU countries, particularly, in the context of the enlargement in 2004. The study tests if increasing stock of immigrants from New Member States has any impact on the exports of EU-15 to those markets, or not. To that end the study applies an extended gravity model of international trade to panel data for three countries – Germany, Denmark and Portugal. The results show that increasing immigration from New Member States has a positive impact on the exports of both Portugal and Denmark. The results also suggest that less restrictive immigration policies have a positive impact on exports. Finally these results do not hold in the case of Germany. Nuno Gonçalves, Ana Paula Africano 2009-11 Comércio internacional, imigração, União Europeia, integração económica, modelo gravitacional http://d.repec.org/n?u=RePEc:por:fepwps:341&r=all This paper addresses the problem of scheduling economic lots in a multi-product single machine environment. A mixed integer non-linear programming formulation is developed which finds the optimal sequence and economic lots. The model takes explicit account of initial inventories, setup times, allows setups to be scheduled at arbitrary epochs in continuous time and models backorders. To solve the problem we develop a hybrid approach, combining a genetic algorithm and linear programming. The approach is tested on a set of instances taken from the literature and compared with other approaches. The experimental results validate the quality of the solutions and the effectiveness of the proposed approach. José Fernando Gonçalves, Paulo S. A. Sousa 2009-11 ELSP, Lot-sizing, Control, Production, Scheduling, Optimization, Genetic algorithm http://d.repec.org/n?u=RePEc:por:fepwps:343&r=all Given a panel of oil producing countries, we show that a higher oil concentration is associated with an increase in economic growth through capital efficiency in: (i) countries with medium and low income per head from East Asia & Pacific and Latin America & the Caribbean, classified as followers in terms of technology-convergence clubs; (ii) countries with high income inequality. In our view, the overall results reflect the broader scope for factor efficiency increases in less developed countries arising from the oil industry, which is characterised by a highly globalised know-how. Nuno Torres, Óscar Afonso, Isabel Soares 2009-11 Energy; Economic growth; Panel data http://d.repec.org/n?u=RePEc:por:fepwps:342&r=all The growing specialization of firms and the reinforcement of vertical disintegration have led to an increasing reliance on purchasing and supply management. This means that an increasing proportion of value is created outside the boundaries of the firm, namely by suppliers. In this context, the paper aims to relate the configuration of the bonds companies establish with their suppliers to the process of value creation. The paper furthers our understanding of buyer-supplier relationships as mechanisms for the coordination and development of capabilities on both sides of the dyad. Evidence was found that relationships affect not only the access and exploration of suppliers’ resources, but also the perception the buying firm has about their capabilities which is likely to condition the potential for joint value creation. The main contribution of the paper is that value co-creation involving suppliers must be regarded as a strategic option which depends on several conditions. This research puts in evidence two of these conditions: suppliers’ capabilities and the way the buyer-seller relationships are configured. Catarina Roseira, Carlos Brito 2009-11 Buyer-supplier relationships, capabilities, relationship configuration, value creation http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2009-029&r=all Period fertility rates fell to previously unseen low levels in a large number of countries beginning in the early 1990s. The persistence of Total Fertility Rates under 1.3 raised the possibility of dramatic, rapid population aging as well as population decline. In an analysis of recent trends, we find, however, a widespread turn-around in so-called “lowest-low” fertility countries. The reversal has been particularly vigorous in Europe. The number of countries with period total fertility rates less than 1.3 fell from 21 in 2003 to five in 2008, of which four (Hong Kong, Korea, Singapore and Taiwan) are in East Asia. Moreover, the upturn in the period TFR was not confined to lowest-fertility countries, but affected the whole developed world. We explore the demographic explanations for the recent rise in fertility stemming from fertility timing effects as well as economic, policy, and social factors. Although the current economic crisis may push down fertility in the short-run, we conclude that formerly lowest-low fertility countries should continue to see further increase in fertility as the transitory effects of shifts to later motherhood become less and less important. Joshua R. Goldstein, Tomáš Sobotka, Aiva Jasilioniene 2009-11 http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2009-028&r=all Maternity leave policies are designed to ease the tension between women’s employment and fertility, but whether they actually play such a role remains unclear. We analyze the individual-level effects of maternity leave on employment outcomes and on second conception rates among Russian first-time mothers from 1985-2000 using retrospective job and fertility histories from the Survey of Stratification and Migration Dynamics in Russia. During this period Russia experienced tremendous economic and political turbulence, which many observers believed would undermine policies like maternity leave and otherwise adversely affect the situation of women. Nevertheless, we find that maternity leave helped women maintain a foothold in the labor market, especially during the more turbulent post-transition period. Also, women who took extended leave in connection with their first birth had elevated rates of second conceptions once they returned to the workforce. Theodore P. Gerber, Brienna Perelli-Harris 2009-11 Russia, employment, fertility, maternity leave http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2009-026&r=all This paper investigates the role of female earnings in childbearing decisions in two very different European contexts. By applying event history techniques to German and Danish register data during 1981-2001, we demonstrate how female earnings relate to first, second and third birth rates. Our study shows that female earnings are rather positively associated with fertility in Denmark, while the relationship is the opposite in West Germany. We interpret our findings based on our observation that Danish social policies tend to encourage Danish women to become established in the labor market before having children, while German policies during the 1980s and 1990s were not designed to encourage maternal employment. Gunnar Andersson, Michaela Kreyenfeld, Tatjana Mika 2009-10 Denmark, fertility http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2009-027&r=all For studying both individual-level and small-scale contextual influences on the effects of family policies on fertility, Multilevel Event History methods are the state-of-the-art. But in many countries, these methods cannot be applied because the available individual-level data are inadequate. This paper uses an alternative methodological framework that can be of help in these cases. It utilizes small-scale macro data, which is analyzed with Exploratory Data, Cluster, and Spatial Panel Model Analysis techniques. In a case study on the western German city of Bremen, the potential of this approach, as well as its limitations, are investigated. The study analyzes the impact of the parental leave reform of 1986 and the child benefit reform of 1996 on fertility levels in different city quarters (Stadtteile) of Bremen. The results indicate that both family policy reforms had, at least in the short-term, a significant impact on fertility levels. These positive effects were stronger in economically disadvantaged quarters. The findings also suggest that the reforms affected the timing more than the quantum of fertility. With regard to the methodological framework, we can conclude that the Spatial Analysis with small-scale macro data is a useful alternative when there is no individual-level data available for carrying out a Multilevel Event History Analysis. Sebastian Klüsener 2009-10 Bremen, Germany, family policies, fertility trends, methodology, spatial analysis http://d.repec.org/n?u=RePEc:rye:wpaper:wp005&r=all A central role for economic policy involves reducing the incidence of systemic downturns, when key economic variables experience joint extreme events. In this paper, we empirically analyze such dependence using two approaches, correlations and copulas. We document four findings. First, linear correlations and copulas disagree substantially about the nation’s dependence structure, indicating correlation complexity in the US economy. Second, GDP exhibits linear dependence with interest rates and prices, but no extreme dependence with the latter. This is consistent with the existence of liquidity traps. Third, GDP exhibits asymmetric extreme dependence with employment, consumption and investment, with relatively greater dependence during downturns. Fourth, money is neutral, especially during extreme economic conditions. Cathy Q. Ning, Loran Chollete 2009-11 Asymmetric dependence; Copula; Correlation Complexity; Extreme Event; Economic Policy; Money Neutrality; Systemic Downturn http://d.repec.org/n?u=RePEc:rye:wpaper:wp010&r=all In this paper, we examine the integration of international financial markets. The integration of financial markets across countries and across asset classes is assumed to hold in most empirical studies, but has only been tested for certain countries and certain asset classes. We test for the integration of international equity, bond and foreign exchange markets. Our results indicate that the three classes of assets are segmented. Investigating potential explanations for this segmentation, we find that there are differing degrees of segmentation across these markets and that this is related to the asset returns from each class being explained by different sets of economic risk factors. In pair-wise tests we find that the bond-equity and bond-foreign exchange markets appear to be more segmented than the equity-foreign exchange market. Cathy Ning, Stephen Sapp 2009-11 Market integration; GMM; Stochastic discount factor models; Hansen and Jagannathan distance http://d.repec.org/n?u=RePEc:rye:wpaper:wp006&r=all Volatility clustering is a well-known stylized feature of financial asset returns. In this paper, we investigate the asymmetric pattern of volatility clustering on both the stock and foreign exchange rate markets. To this end, we employ copula-based semi-parametric univariate time-series models that accommodate the clusters of both large and small volatilities in the analysis. Using daily realized volatilities of the individual company stocks, stock indices and foreign exchange rates constructed from high frequency data, we find that volatility clustering is strongly asymmetric in the sense that clusters of large volatilities tend to be much stronger than those of small volatilities. In addition, the asymmetric pattern of volatility clusters continues to be visible even when the clusters are allowed to be changing over time, and the volatility clusters themselves remain persistent even after forty days. Cathy Ning, Dinghai Xu, Tony Wirjanto 2009-11 Volatility clustering, Copulas, Realized volatility, High-frequency data. http://d.repec.org/n?u=RePEc:rye:wpaper:wp007&r=all This paper presents a general equilibrium model of regional unemployment dispersion based on the Mortensen and Pissarides (1999) framework. The model economy presented here has centralized institutions, such as a single central government and central unions, but regional labor markets with differences productivity. The model assumes that unions dislike wage dispersion across regions and the government dislikes population imbalance across the regions. The set up of the model is used to interpret the economic features of the Italian economy between the mid seventies and the end of the past century. By means of calibration using Italian data collected in the year 2000 the paper shows that the model economy explains the important regional dualism between the North and the South of Italy in terms of unemployment. Moreover, the model indicates that the interaction between unions and the government also generates low wage rates in the high productivity regions accompanied by low unemployment rates, even when the Northern worker is the median worker that determines the unions policies. Vincenzo Caponi 2009-11 Italy, Regional Dualism, Mezzogiorno. http://d.repec.org/n?u=RePEc:rye:wpaper:wp008&r=all This paper investigates the structure and degree of extreme dependence in international equity markets using carefully selected tools from the theory of copulas. We examine both the static and dynamic dependence via unconditional and conditional copulas. We find significant asymmetric tail dependence in equity markets, with the overall larger lower tail dependence than upper tail dependence. Moreover, in Europe and East Asia but not in North America, the extreme dependence is time-varying in both its structure and degree. Our results also indicate a higher intra-continental than inter-continental tail dependence. Our findings have important implications in global risk management strategies. Cathy Ning 2009-11 Copulas; Tail dependence; Time varying dependence; International financial markets; Risk diversification. http://d.repec.org/n?u=RePEc:egc:wpaper:980&r=all We review the theoretical and empirical literature on commitment devices.A commitment device is any arrangement, entered into by an individual, with the aim of making it easier to fulfill his or her own future plans. We argue that there is growing empirical evidence supporting the proposition that people demand commitment devices and that these devices can change behavior. We highlight the importance of further research exploring soft commitment – those involving only psychological costs – and the welfare consequences of hard commitments – those involving actual costs – especially in the presence of bounded rationality. Gharad Bryan, Dean Karlan, Scott Nelson 2009-10 consumer/household economics, institutional and behavioral economics http://d.repec.org/n?u=RePEc:egc:wpaper:978&r=all This paper studies moral hazard in a sickness-insurance fund that provided the model for social-insurance schemes around the world. The German Knappschaften were formed in the medieval period to provide sickness, accident, and death benefits for miners. By the mid-nineteenth century, participation in the Knappschaft was compulsory for workers in mines and related occupations, and the range and generosity of benefits had expanded considerably. Each Knappschaft was locally controlled and self-funded, and their admirers saw in them the ability to use local knowledge and good incentives to deliver benefits at low cost. The Knappschaft underlies Bismarck’s sickness and accident insurance legislation (1883 and 1884), which in turn forms the basis of the German social-insurance system today and, indirectly, many social-insurance systems around the world. This paper focuses on a problem central to any insurance system, and one that plagued the Knappschaften as they grew larger in the later nineteenth century: the problem of moral hazard. Replacement pay for sick miners made it attractive, on the margin, for miners to invent or exaggerate conditions that made it impossible for them to work. Here we outline the moral hazard problem the Knappschaften faced as well as the internal mechanisms they devised to control it. We then use econometric models to demonstrate that those mechanisms were at best imperfect. Timothy W. Guinnane, Jochen Streb 2009-09 sickness insurance, moral hazard, Knappschaft, social insurance http://d.repec.org/n?u=RePEc:egc:wpaper:979&r=all The demographic transition changes the age composition of a population, affecting resource allocations at the household and aggregate level. If age profiles of income, consumption, savings and investments were stable and estimable for the entire population, they might suggest how the demographic transition would affects inputs to growth. However, existing macro and micro simulations are estimated from unrepresentative samples of wage earners that do not distinguish sex, schooling, etc. The “demographic dividend” is better evaluated through case studies of household surveys and long-run social experiments. Matlab, Bangladesh, extended a family planning and maternal and child health program to half the villages in its district in 1977, and recorded fertility in the program villages was 16 percent lower than in control villages for the following two decades until 1996. Households in program villages realized health and productivity gains that were concentrated among women, while child survival and schooling increased, and household physical assets were 25 percent greater per adult than in control villages. T. Paul Schultz 2009-10 Fertility decline, demographic transition, intergenerational transfers, gender http://d.repec.org/n?u=RePEc:lvl:lacicr:0948&r=all A large number of parameterizations have been proposed to model conditional variance dynamics in a multivariate framework. However, little is known about the ranking of multivariate volatility models in terms of their forecasting ability. The ranking of multivariate volatility models is inherently problematic because it requires the use of a proxy for the unobservable volatility matrix and this substitution may severely affect the ranking. We address this issue by investigating the properties of the ranking with respect to alternative statistical loss functions used to evaluate model performances. We provide conditions on the functional form of the loss function that ensure the proxy-based ranking to be consistent for the true one – i.e., the ranking that would be obtained if the true variance matrix was observable. We identify a large set of loss functions that yield a consistent ranking. In a simulation study, we sample data from a continuous time multivariate diffusion process and compare the ordering delivered by both consistent and inconsistent loss functions. We further discuss the sensitivity of the ranking to the quality of the proxy and the degree of similarity between models. An application to three foreign exchange rates, where we compare the forecasting performance of 16 multivariate GARCH specifications, is provided. Sébastien Laurent, Jeroen V.K. Rombouts, Francesco Violante 2009 Volatility, multivariate GARCH, Matrix norm, Loss function, Model confidence set http://d.repec.org/n?u=RePEc:lvl:lacicr:0949&r=all This paper clarifies the role of initial asset value constraints in Ramsey models of incomplete factor taxation. We show that the optimal long-run capital tax is zero in the long run if and only if there is no binding constraint on the initial capital tax rate. This finding contrasts with Armenter (2008) who argues that zero long-run capital taxes reappear in models of incomplete factor taxation as long as the government is barred from manipulating initial asset wealth. The reason for this difference is that the two constraints cannot both be binding at the same time. Hence, in Armenter’s (2008) analysis, the initial asset value constraint is necessarily more restrictive than the constraint on the initial capital tax rate. David M. Arseneau, Sanjay K. Chugh, André Kurmann 2009 Ramsey equilibrium, incomplete factor taxation http://d.repec.org/n?u=RePEc:lvl:lacicr:0947&r=all We examine the effects of famine relief efforts (food aid) in regions undergoing civil war. In our model, warlords seize a fraction of all aid and use it to feed soldiers. They hire their troops within a population of farmers heterogeneous in skills. We determine the equilibrium distribution of labor in this environment and study how the existence and allocation strategies of a benevolent food aid agency affect this equilibrium. Our model allows us to precisely predict who will fight and who will work in every circumstance. Max Blouin, Stéphane Pallage 2009 Food aid, civil war, warlords, famine http://d.repec.org/n?u=RePEc:tkk:dpaper:dp56&r=all This article provides new empirical evidence on the dynamics of price movements and transaction volume in the housing market using data from Finland. While the previous related literature studies the reactions of sales volume and prices to an interest rate shock only, we investigate the responses to income and credit shocks as well. Based on an estimated vector-error correction model, the response of prices to demand shocks is found to be substantially slower than that of sales. The effect of a demand shock on sales peaks within a quarter from the shock. The results show that the differences in the reaction patterns to demand shocks can create the kind of strong positive co-movement between price movements and sales and the kind of negative correlation between price level and sales that has been found in a number of housing markets. It is also found that the direct predictive ability of the fundamentals with respect to housing price growth and sales is overwhelmed by the predictive power of the lagged observations on price changes and sales themselves. Elias Oikarinen 2009-10 Housing, dynamics, sales, transactions, prices http://d.repec.org/n?u=RePEc:lbo:lbowps:2009_17&r=all In this paper we assess the effects of bond financing on firms' survival during the 1997-98 Asian crisis. Using a novel database covering the period 1995 to 2007 for five Asian economies most affected by the crisis - Indonesia, Korea, Malaysia, Singapore and Thailand - we find strong evidence that the Asian crisis affected both directly and indirectly (through interactions with financial indicators) the probability of survival. More importantly, we show that bond issuers, irrespective of the currency denomination, are more likely to survive compared to non-issuers. Nevertheless, only firms issuing bonds in local currency are shielded from the adverse effects of the crisis. Marina-Eliza Spaliara, Serafeim Tsoukas 2009-11 http://d.repec.org/n?u=RePEc:lbo:lbowps:2009_18&r=all We examine the differential effects of financial status and exporting activity on the likelihood of survival for firms in the UK and France - two countries with different financial systems. We aim to answer two main questions: What is the direct impact of financial characteristics and different facets of exporting activity on the likelihood of survival? Do the sensitivities of survival incidence to financial variables vary with the exporting status of firms? We find strong evidence that continuous exporters face a higher probability of survival compared to starters, continuous non-exporters and firms exiting the exporting market. Further, important sensitivities of survival prospects to financial indicators are observed for the UK firms which might be explained by the ''market based'' economy. Finally, a within and across countries comparison reveals that the survival of exporting groups varies substantially depending on firms' financial status, the financial system and the prolonged participation in the export market. Marina-Eliza Spaliara, Holger Görg 2009-11 http://d.repec.org/n?u=RePEc:sse:wpaper:200904&r=all The effects of environmental regulation on competitiveness is always a topic under debate for policymakers and practitioners. The article describes the different ways of defining and measuring the effects of environmental regulation on competition and market forces and synthesizes the most updated findings on the relationship between these dimensions. It also proposes an in depth analysis of the most recent empirical studies, with a particular focus on the buildings and construction (B&C) sector, which often is a substantial contributor to the most important countries’ economic indicators. We find that two variables have proved to be both (i) key in defining to what extent and under what conditions environmental regulation exerts adverse or positive effects on competitiveness and (ii) difficult to nail down: forms of regulation and responses by business. Fabio Iraldo, Francesco Testa, Vlasis Oikonomou, Michela Melis, Marco Frey, Eise Spijker 2009-04-01 http://d.repec.org/n?u=RePEc:sse:wpaper:200905&r=all Tiberio Daddi, Marco Frey, Fabio Iraldo, Bouchra Nabild 2009-05-01 http://d.repec.org/n?u=RePEc:sse:wpaper:200903&r=all Green Supply-Chain Management (GSCM) is an increasingly widely-diffused practice among companies that are pursuing environmental excellence. The motivation for the introduction of GSCM may be ethical (e.g. reflecting the values of managers) and/or commercial (e.g. gaining a possible competitive advantage by signalling environmental concern). Drawing upon a database of over 4,000 manufacturing facilities in seven OECD countries this paper assesses the determinants and motivations for the implementation of GSCM. We find that GSCM is strongly complementary with other advanced management practices, and that it contributes to improved environmental performance. The effects on commercial performance are more ambiguous. Francesco Testa, Fabio Iraldo, Nick Johnstone 2009-03-01 http://d.repec.org/n?u=RePEc:nbs:wpaper:2009/6&r=all In this paper we aim to analyse the dynamics of unemployment in a group of Central and Eastern European Countries (CEECs). The CEECs are of special importance for the future of the European Union, given that most of them have recently become member states, and labour flows have been seen to rise with their accession. By means of unit root tests incorporating structural changes and nonlinearities, as well as fractional integration, we find that the unemployment rates for the CEECs are mean reverting processes, which is consistent with the NAIRU hypothesis, although shocks tend to be highly persistent. Juan Carlos Cuestas, Luis A. Gil-Alana 2009-11 Unemployment, NAIRU, hysteresis, unit roots, fractional integration http://d.repec.org/n?u=RePEc:eid:wpaper:16651&r=all This article considers the relationship between active participation in sport, sports spectatorship and television viewing habits using data from the 2005 DCMS Taking Part Survey. We find robust evidence that participation and sports spectatorship are symbiotically linked. In contrast, increase TV viewing per se leads to a reduction in participation. Dawson, P., Downward, P. 2009-09 sporting participation; spectator demand; count models; http://d.repec.org/n?u=RePEc:stc:stcp3e:2009320e&r=all Do students know the education required to achieve their career objectives? Is this information related to their education pathways? To address these questions, the Youth in Transition Survey (YITS), Cohort A is used to compare high school students' perceptions of the level of education they will require for the job they intend to hold at age 30, with the level required according to professional job analysts at Human Resources and Skills Development Canada (HRSDC). The focus is on students intending to work in a job which requires a university degree, and examine the correlation between the knowledge of educational requirements and subsequent university enrolment. The results suggest that about three out of four students intending to work in a job requiring a university degree are aware of the education they will require. Evidence suggests that knowledge of educational requirements is related to academic performance and socio-economic background. Differences by intended occupation are quite small. Moreover, students who know that a university degree is required are more likely to attend university, even after accounting for differences in academic performance, sex, and socioeconomic background. In fact, the knowledge of educational requirements is as strongly related to university attendance as other well-documented correlates such as sex, academic performance and parental education. Finally, higher university attendance rates are observed when students learn earlier (rather than later), that a university degree is required for their intended job. Frenette, Marc 2009-10-29 Education, training and learning, Children and youth, Educational attainment, Education http://d.repec.org/n?u=RePEc:hcx:wpaper:0913&r=all We estimate the impact sporting events have on local crime rates using the technique developed in Arellano and Bond (2001). For events, we consider the presence of MLB, NBA, NFL, and NHL franchises as well as whether a city held one of the respective championships, the Olympics, or World Cup matches. We find little to no evidence that sporting events are correlated with either property or violent crime. Robert Baumann, Bryan Engelhardt, Victor Matheson, Taylor Ciavarra 2009-11 Crime, Sports Economics, Economic Impact http://d.repec.org/n?u=RePEc:flo:wpaper:2009-06&r=all We study a procurement auction recently analysed by Gal-Or et al. (2007). In this auction game the buyer ranks different bids on the basis of both the prices submitted and the quality of each bidder that is her private information. We emphasise the similarity between this model and existing models of competition in horizontally differentiated markets. Finally we illustrate conditions for the existence and the stability of such equilibrium. To this end we extend the model to a dynamic setting in which a sequence of independent auctions takes place. We assume bidders have bounded rationality in a twofold sense. On one hand, they use an underparametrized model of their competitors' behaviour, best responding to expectations on average bids rather than keeping track of the entire vector of competitors' bids. On the other they update expectations adaptively. In a general framework with more than two bidders the system may fail to converge to the steady state, i.e. to the symmetric Nash equilibrium of the original game. Domenico Colucci, Nicola Doni, Vincenzo Valori 2009-06 Non-binding auctions, Product differentiation, Hotelling Duopoly, Expectations, Stability of steady states http://d.repec.org/n?u=RePEc:flo:wpaper:2009-07&r=all It is impossible to prove the equivalence of double negation for the Systeme I of Godel. It is possible to deduce the equivalence of double negation with a three valued logic which is coherent with respect to symmetric implication and has the third value as invariant by negation. It is possible to annihilate the third value and switch back to the two valued boundary logic. Brouwer and Godel provide the foundation for the theory of uncertainty. Franco Birardi 2009-10 formalism, intuitionism, uncertainty http://d.repec.org/n?u=RePEc:frz:wpaper:wp2009_13.rdf&r=all The clearest expressions of Marshallian external economies are found in the life and working of compact industrial districts. However Alfred Marshall did not limit their application to such types of places, nor to their territorial scale. This paper illustrates some important extensions found in Marshall’s works, particularly in Industry and Trade, concerning firstly the advantages accruing to industrial districts within larger industrial regions and national contexts. The concept of a national capital including technical, human and social resources, or of a “Marshallian capital” as Silvio Goglio proposed to call it, plays a pivotal role in suggesting both the common nature of the different expressions and scales of Marshallian external economies, and the possible interrelation between them. Processes and conditions associated by Marshall to either non place-bound or distant trans-local contexts of external economies are considered too. An implicit and open multi-territorial framework emerges. Some of its different meanings are discussed in the conclusions of this paper with the help of interpreta-tions of industrial districts, regions, nations, and global networks developed after Mar-shall, starting from those of Austin Robinson and Giacomo Becattini. Marco Bellandi 2009 External economies; Alfred Marshall; industrial districts, regions and nations http://d.repec.org/n?u=RePEc:frz:wpaper:wp2009_12.rdf&r=all The growing presence of financial operators in the oil markets has modified oil price dynamics. The diffusion of techniques based on extrapolative expectations – such as feedback trading – leads to departures of prices from their fundamental values and increases their variability. Oil price changes are here associated with changes in stocks, bonds and effective USD exchange rate. The feedback trading mechanism is combined with an ICAPM and provides a model which is then estimated in a CCC GARCH-M framework, both the risk premium and the feedback trading components of the conditional means being nonlinear functions of the system’s conditional variances and covariances. The empirical analysis identifies a structural change in the year 2000. From then on oil returns tend to become more reactive to the remaining assets of the model and feedback trading more pervasive. A comparison is drawn between three and four asset minimum variance portfolios in the two sub-periods, 1992-1999 and 2000-2008. Oil acquires in the second period, besides its standard properties as a physical commodity, the characteristics of a financial asset. Indeed, the trade-off between risk and returns – measured here by the average return per unit of risk index – indicates that in the last decade oil diversifies away the empirical risk of our portfolio. Giulio Cifarelli, Giovanna Paladino 2009 oil price dynamics; oil price dynamics; feedback trading; multivariate GARCH-M; portfolio allocation. http://d.repec.org/n?u=RePEc:qed:wpaper:1221&r=all We report on the nature of a utility optimizing transfer from one regional government to another when local public goods are present. Computer examples reveal that small differences in regional endowments result in large differences in equilibrium outcomes for two regions, under optimal transfers. The scale effect (lower tax charge per person for the same public good in more populous regions) leads to the small region generally providing transfers to the larger region. John M. Hartwick 2009-11 intergovernmental transfers, local public goods, inter-regional resource allocation http://d.repec.org/n?u=RePEc:qed:wpaper:1220&r=all We set out a model of a two-good, small open economy exporting a traditional exportable in order to …finance capital goods rental payments. We observe that the traditional export sector declines with an exogenous increase in the country's oil export earnings, while the local goods sector expands. For input price effects to emerge, land is needed as a third input. For the "large land" case, we can have imports of capital steadily decline as oil earnings expand. Earnings from oil sales are stationary under our annuitization construction. John Hartwick, Kirk Hamilton 2009-11 Dutch disease, resource discovery, invariant earnings http://d.repec.org/n?u=RePEc:tcd:tcduee:tep0209&r=all This paper analyzes the structural change of the German dairy sector using a sector-wide optimization model. We simulate cost-optimal sectoral structures under various scenarios for different time horizons and transport cost levels. The results demonstrate that the model is able to explain the current trend towards fewer but larger dairies as currently observed in reality and also indicate, ceteris paribus, a continuation of this trend. However, this trend might level off if the importance of transport costs increases relative to other costs in dairy production. Ole Boysen, Carsten Schröder 2009-11 Capacitated facility location problem, structural change, transportation, simulation http://d.repec.org/n?u=RePEc:rsw:rswwps:rswwps89&r=all The Research Data Centre (FDZ) of the German Federal Employment Agency (BA) in the Institute for Employment Research (IAB) was founded in 2004 and is intended mainly to facilitate access to BA and IAB micro data for non-commercial empirical research using standardised and transparent access rules. Five years after its foundation the FDZ is acknowledged as producer of innovative data products and has become an visible element of the research community. Furthermore, linkages to other data producers and the internationalization of data products and data access have been promoted by the FDZ. Jörg Heining 2009 http://d.repec.org/n?u=RePEc:mib:wpaper:174&r=all This paper develops a small New Keynesian model augmented with a steady state level of public debt and a share of rule-of-thumb consumers (ROTC henceforth) as in Gali' et al. (2004; 2007). The paper focuses on the consequences for the design of monetary and fiscal rules, of the bifurcation generated by the presence of ROTC on the demand side of the economy, in the absence of Ricardian equivalence. We find that, when fiscal policy follows a balanced budget rule, the amount of ROTC determines whether an active and/or a passive monetary policy in the sense of Leeper (1991) guarantees determinacy. When short run public debt assets are introduced, the amount of ROTC determines whether equilibrium determinacy requires a mix of active (passive) monetary policy and a passive (active) fiscal policy or a mix where policies are both active or passive. This set of equilibria has the potential to explain the empirical evidence on the U.S. postwar data on monetary and fiscal policy interactions. Raffaele Rossi 2009-11 Rule-of-thumb consumers, monetary-?scal iteractions, balanced budget rule, Taylor principle, active-passive policy mix http://d.repec.org/n?u=RePEc:pot:statdp:35&r=all Finanz- und Bankenkrisen können seit Jahrhunderten beobachtet werden und gründen auf ähnlichen Verhaltensweisen der Beteiligten. Wie die vergangenen zwei Jahre gezeigt haben, variieren hingegen die den Krisen zugrundeliegenden tieferen Ursachen und Mechanismen. Durch statistische Daten wird gezeigt, wie die Immobilienpreise in den USA zunächst stiegen. Wegen erwarteter weiterer Wertentwicklung wurden Kredite auch an Schuldner geringer (subprime) Bonität gegeben und Risiken als forderungsbesicherte Wertpapiere auf globalen Märkten veräußert. Als sich die Wachstumserwartungen nicht erfüllten, vermehrten sich Rückzahlungsausfälle lavinenartig. Vom amerikanischen Hypothekenmarkt breitete sich die Krise auf die internationalen Banken und im weiteren Verlauf auf die Weltwirtschaft aus. Andreas Nastansky, Hans Gerhard Strohe 2009-11 Finanzkrise, Banken, Subprime-Krise, forderungsbesicherte Wertpapiere, Interbankenmarkt, Abschreibungen http://d.repec.org/n?u=RePEc:pot:statdp:34&r=all David Kbiladze 2009-11 http://d.repec.org/n?u=RePEc:hkg:wpaper:0917&r=all When US dollar interbank markets malfunctioned during the global financial crisis of 2008, many non-US financial institutions relied heavily on the foreign-exchange (FX) swap markets for US-dollar funds. This one-sided market induced a risk premium of the FX swap-implied US-dollar rate across a range of funding currencies, i.e. a deviation from the covered interest parity (CIP) condition. The turbulence in the global interbank markets therefore spilled over to the FX swap markets, including that in Hong Kong. This paper analyses the effectiveness of the policy actions taken by the Hong Kong Monetary Authority and the Government in responding to the dislocations and stress in the local interbank and FX swap markets. Our results show that the policy actions effectively ameliorated the FX swap market dislocations after the failure of Lehman Brothers, i.e. reducing the CIP deviations. Laurence Fung, Ip-wing Yu 2009-10 FX swaps; Covered interest parity; interbank stress; Exponential GARCH http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-088&r=all Economics and management science share the tradition of ordering risk aversion by ï¬tting the best expected utility (EU) model with a certain utility function to individual data, and then using the utility curvature for each individual as the sole index of risk attitude. (Cumulative) Prospect theory (CPT) has demonstrated various empirical deï¬ciencies of EU and introduced the weighting of probabilities as an additional component to capture risk attitude. However, if utility curvature and probability weighting were strongly correlated, the utility curvature in EU alone, while not properly describing risky behavior in general, would still capture most of the variance regarding degrees of risk aversion. This study shows, however, that such a strong correlation does not exist. Though, most individuals exhibit concave utility and convex probability weighting, the two components show no correlation. Thus neglecting one component entails a loss. Jianying Qiu, Eva-Maria Steiger 2009-11-02 risk attitudes, cumulative prospect theory, experimental study http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-089&r=all Using a choice experiment, this paper investigates how Swedish citizens value three environmental quality objectives. In addition, a follow-up question is used to investigate whether respondents ignored any attributes when responding. The resulting information is used in the model estimation by restricting the individual parameters for the ignored attributes to zero. When taking the shares of respondents who considered both the environmental and the cost attributes (52-69 percent of the respondents) into account, then the WTPs for each attribute change if the respondents who ignored the attributes have a zero WTP. At the same time, we find evidence that not all respondents who claimed to have ignored an attribute really did. However, the most commonly ignored non-monetary attributes always have the lowest rankings in terms of WTP across all three environmental objectives. Thus, our results show that instead of ignoring, respondents seem to put less weight on the attributes they claimed to have ignored. Fredrik Carlsson, Mitesh Kataria, Elina Lampi 2009-11-02 Choice experiment, environmental quality objectives, follow-up question, http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-090&r=all A unique indivisible commodity with an unknown common value is owned by group of individuals and should be allocated to one of them while compensating the others monetarily. We study the so-called fair division game (Güth, Ivanova-Stenzel, Königstein, and Strobel (2002, 2005)) theoretically and experimentally for the common value case and compare our results to the corresponding common value auction. Whereas symmetric risk neutral Nash equilibria are rather similar for both games, behavior differs strikingly. Implementing auctions and fair division games in the lab in a repeated setting under first- and second-price rule, we find that overall behavior is much more dispersed for the fair division games than for the auctions. Winners' profit margins and shading rates are on average slightly lower for the fair division game. Moreover, we find that behavior in the fair division game separates into extreme over- and underbidding. Alice Becker, Tobias Brünner 2009-11-04 common value auction, winner's curse, fair division game http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-092&r=all The present paper sheds light on how growth of young firms is affected by expansive strategies and the socioeconomic heritage of their main actors. "Socioeconomic heritage" has to do with socialization, prior socioeconomic circumstances, and regional growth conditions; the term is elaborated upon and further defined in this study. The empirical analysis is carried out both for West Germany - a mature market economy - and for East Germany, which operated under a centrally planned economy until German reunification in 1990. The main finding of the paper is that the involvement of West Germans in East German start-ups has a favourable effect on these firms' chances to grow rapidly. This effect is attributed to the fact that West Germans are more likely to possess person-related and situation-related factors necessary for growing a business in a market economy. The results are more ambiguous as to the influence of expansive strategies on fast growth. Michael Wyrwich 2009-11-06 Entrepreneurship, Rapid firm growth, Strategy, Management, West Germany, East Germany http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-087&r=all Norms play an important role in establishing social order. The current literature focuses on the emergence, maintenance and impact of norms with regard to coordination and cooperation. However, the issue of norm-related conflict deserves more attention. We develop a general theory of "normative conflict" by differentiating between two different kinds of conflict. The first results from distinct expectations of which means should be chosen to fulfil the norm, the second from distinct expectations of how strong the norm should restrain the self-interest. We demonstrate the empirical relevance of normative conflict in an experiment that applies the "strategy method" to the ultimatum game. Our data reveal normative conflict among different types of actors, in particular among egoistic, equity, equality and "cherry picker" types. Fabian Winter, Heiko Rauhut, Dirk Helbing 2009-11-02 Social norms, normative conflict, cooperation, ultimatum game, strategy method, equity http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-093&r=all This paper investigates the allocation of R&D subsidies given to start-ups. Considering the coexistence of various R&D project schemes, we take an aggregate view and analyze the determinants of the receipt of (any) R&D subsidies within the first three business years of the start-ups. We argue that policymakers and funding authorities follow a strategy of "picking the winner". Analyzing a unique data set of start-ups in the East German state of Thuringia, we conduct logistic regressions and find ambiguous support. R&D subsidies are given to start-ups with innovative business ideas, especially academic spin-offs. On the other hand, the ambitions and the patent stock of the founder(s) do not decide the receipt of R&D subsidies. These insights into the overall allocation of R&D subsidies are important since they have implications for policy effectiveness and efficiency. The implied difficulties of policy targeting fundamentally question the massive subsidization of private R&D. Uwe Cantner, Sarah Kösters 2009-11-09 Start-ups, R&D subsidies, Subsidy allocation http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers95&r=all he formal school system developed after the Europeans arrived in South Africa, but until South Africa became a Union in 1910 it was almost exclusively provided for white children. The other racial groups were incorporated into the system to a larger extent in the 20th century, but due to the higher per capita expenditure on white learners they did not receive an education of the same quality. The school system can be divided into the former Indian and white systems that operate well, while the former systems for blacks and coloureds do not operate well at all. This is confirmed in national and international studies done in the democratic era after 1994. Currently only a small part of the school system is operating efficiently. Die formele skoolstelsel het ontstaan met die aankoms van die Europeërs in Suid-Afrika, maar is tot Uniewording in 1910 bykans uitsluitlik aan Blanke leerders voorsien. In die 20ste eeu word die ander rassegroepe meer by die skoolstelsel betrek, maar omdat per capita veel meer op die Blanke stelsel spandeer is, ontvang die ander groepe nie onderwys van dieselfde kwaliteit nie. Die skoolstelsel kan opgedeel word in die voormalige stelsels vir Indiër en Blanke leerders wat goed opereer en die voormalige stelsels vir Swart en Bruin leerders wat swak funksioneer. Dit word in nasionale en internasionale studies in die demokratiese bestel na 1994 bevestig. Tans is daar net ‘n klein deel van die skoolstelsel wat effektief opereer. Pierre de Villiers 2009 History of education, Number of learners, Education finances, Flow through rates, International comparisons, Geskiedenis van onderwys, Leerdergetalle, Onderwysfinansiering, Deurvloeikoerse, Internasionale vergelykings http://d.repec.org/n?u=RePEc:rba:rbardp:rdp2009-06&r=all This paper examines the statistical properties of inflation in a sample of inflation-targeting and non-inflation-targeting countries. First, it analyses the time-varying volatility of a measure of the persistent component of inflation. Based on this measure, inflation-targeting countries (Australia, Canada, New Zealand, Sweden and the United Kingdom) have experienced a relatively more pronounced fall in the volatility of inflation than non-inflation-targeting countries (Austria, France, Germany, Japan and the United States). But it is hard to say whether inflation is more volatile in inflation-targeting or non-inflation-targeting countries. Second, it analyses whether inflation became easier to forecast after the introduction of inflation targeting. It finds that inflation became easier to forecast in both inflation-targeting and non-inflation-targeting countries; the improvement was greater for the former group but forecast errors remain smaller for the latter group. Jamie Hall, Jarkko Jääskelä 2009-10 inflation; time series econometrics http://d.repec.org/n?u=RePEc:iza:izadps:dp4497&r=all We present evidence on whether and how a household's behavior is influenced by the presence and characteristics of its extended family. Using data from the PROGRESA program in Mexico, we exploit information on the paternal and maternal surnames of heads and spouses in conjunction with the Spanish naming convention to identify the inter and intra generational family links of each household to others in the same village. We then exploit the randomized research design of the PROGRESA evaluation data to identify whether the treatment effects of PROGRESA transfers on secondary school enrolment vary according to the characteristics of extended family. We find PROGRESA only raises secondary enrolment among households that are embedded in a family network. Eligible but isolated households do not respond. The mechanism through which the extended family influences household schooling choices is the redistribution of resources within the family network from eligibles that receive de facto unconditional cash transfers from PROGRESA, towards eligibles on the margin of enrolling children into secondary school. Angelucci, Manuela, De Giorgi, Giacomo, Rangel, Marcos A., Rasul, Imran 2009-10 extended family network, PROGRESA, resource sharing, schooling http://d.repec.org/n?u=RePEc:iza:izadps:dp4544&r=all What are the impacts of labor tax reform on wage setting and employment to keep the relative tax burden per low-skilled and high-skilled workers constant in the case of heterogenous domestic labor markets, i.e. imperfect competition in low-skilled labor and perfect competition in high-skilled labor in the presence of outsourcing? A higher degree of tax progression by raising the wage tax and the tax exemption for the low-skilled workers will decrease the wage rate and increase labour demand of low-skilled workers, whereas it will decrease (increase) employment of high-skilled workers in CES utility function when the elasticity of substitution between consumption and leisure is higher (lower) than one. A higher degree of wage tax progression for the high-skilled worker will have no effect on the high-skilled wage in the presence of CES and C-D utility function so this will have no total employment effects. Koskela, Erkki 2009-11 flexible outsourcing, dual labor market, impacts of labour taxation http://d.repec.org/n?u=RePEc:iza:izadps:dp4517&r=all Where a community or group is socially excluded from a dominant group, some individuals of that group may identify with the dominant culture and others may reject that culture. The aim of this paper is to investigate this issue by empirically analyzing the potential trade-off for ethnic minorities between sticking to their own roots and labour market success. We find that the social environment of individuals and attachments to culture of origin has a strong association with identity choice. Our results also suggest that those non-whites who have preferences that accord with being "oppositional" do experience an employment penalty. Battu, Harminder, Zenou, Yves 2009-10 social networks, identity, ethnic minorities, white’s norm http://d.repec.org/n?u=RePEc:iza:izadps:dp4530&r=all In this empirical paper we assess how labour market transitions and out- and repeated migration of immigrants are interrelated. We estimate a multi-state multiple spell competing risks model with four states: employed, unemployed receiving benefits, out-of-the-labour market (no benefits) and abroad. For the analysis we use data on recent labour immigrants to The Netherlands, which implies that all migrants are (self)-employed at the time of arrival. We find that many migrants leave the country after a period of no-income. Employment characteristics and the country of origin play an important role in explaining the dynamics. Microsimulations of synthetic cohorts reveal that many migrants experience unemployment spells, but ten years after arrival only a few are unemployed. Scenarios based on microsimulation indicate that the Credit Crunch will not only increase the unemployment among migrants but also departure from the country. Scenarios also indicate that an increase in the number of migrants from the EU accession countries will lead to higher labour market and migration dynamics. Finally, based on microsimulation we do not expect that the recent simplification of the entry of high income migrants will have a lasting effect, as many of those migrants leave fast. Bijwaard, Govert 2009-10 migration dynamics, labour market transitions, competing risks, immigrant assimilation http://d.repec.org/n?u=RePEc:iza:izadps:dp4545&r=all Most studies on the role of incentives on risk attitude report data obtained from within-subject experimental investigations. This may however raise an issue of sequentiality of effects as later choices may be influenced by earlier ones. This paper reports instead between-subject results on the effect of monetary stakes on risk attitudes for small probability prospects in a laboratory experiment. Under low stakes, we find the typical risk seeking behavior for small probabilities predicted by the prospect theory. But under high stakes, we provide some evidence that risk seeking behavior is dramatically reduced. This could suggest that utility is not consistently concave over the outcome space, but rather contains a convex section for very small amounts. Lefèbvre, Mathieu, Vieider, Ferdinand M., Villeval, Marie Claire 2009-11 risk attitude, incentives, decision, experiment http://d.repec.org/n?u=RePEc:iza:izadps:dp4541&r=all The aim of this paper is to investigate whether return migrants are more likely to become entrepreneurs than non-migrants. We develop a theoretical search model that puts forward the trade off faced by returnees since overseas migration provides an opportunity for human and physical capital accumulation but, at the same time, may lead to a loss of social capital back home. We test the predictions of the model using data from Egypt. We find that, even after controlling for the endogeneity of the temporary migration decision, an overseas returnee is more likely to become an entrepreneur than a non-migrant. Although migrants lose their original social networks whilst overseas, savings and human capital accumulation acquired abroad over-compensate for this loss. Our results also suggest that social networks have no significant impact on becoming entrepreneurs for returnees but matter for non-migrants. Wahba, Jackline, Zenou, Yves 2009-11 social capital, entrepreneurship, selection, savings http://d.repec.org/n?u=RePEc:iza:izadps:dp4549&r=all We study the interaction between competitive markets that produce large but unequally distributed welfare gains and elections through which the poor majority can redistribute income away from the rich minority. In our simple laboratory democracy, subjects first earn their income by trading in a double auction market and thereafter vote on redistributive policies in two-candidate elections. In addition, in one of the treatments subjects can attempt to influence the candidates’ policy choices by transferring money to them. We observe very high levels of redistribution – even when transfers to candidates are possible – with little effect on market efficiency. Overall, the experimental results are explained by our equilibrium predictions. Großer, Jens, Reuben, Ernesto 2009-11 redistribution, double auction, elections, lobbying http://d.repec.org/n?u=RePEc:iza:izadps:dp4546&r=all The ratio bias – according to which individuals prefer to bet on probabilities expressed as a ratio of large numbers to normatively equivalent or superior probabilities expressed as a ratio of small numbers – has recently gained momentum, with researchers especially in health economics emphasizing the policy importance of the phenomenon. Although the bias has been replicated several times, some doubts remain about its economic significance. Our two experiments show that the bias disappears once order effects are excluded, and once salient and dominant incentives are provided. This holds true for both choice and valuation tasks. Also, adding context to the decision problem does not change this outcome. No ratio bias could be found in between-subject tests either, which leads us to the conclusion that the policy relevance of the phenomenon is doubtful at best. Lefèbvre, Mathieu, Vieider, Ferdinand M., Villeval, Marie Claire 2009-11 ratio bias, financial incentives, error rates, experiment http://d.repec.org/n?u=RePEc:iza:izadps:dp4539&r=all Low-skilled workers do not fare well in today's skill intensive economy and their opportunities continue to diminish. Given that individuals in this challenging skill segment of the workforce are more likely to have poor experiences in the labor market, and hence incur greater public expenses, it is particularly important to seek and evaluate their labor market options. Utilizing data from the Survey of Income and Program Participation, this paper provides a comprehensive analysis of the economic returns to business ownership among low-skilled workers and addresses the essential question of whether self-employment is a good option for low-skilled individuals that policymakers might consider encouraging. The analysis reveal substantial differences in the role of self-employment among low-skilled workers across gender and nativity – women and immigrants are shown to be of particular importance both from the perspectives of trends and policy relevance. We find that although the returns to low-skilled self-employment among men are relatively high we find that wage/salary employment is a substantially more financially rewarding option for most women. These findings raise the question of why low-skilled women enter self-employment. Our business start-up results are consistent, but not conclusive, with lack of affordable child care options and limited labor market opportunities in the wage/salary sector as motivating native born women to enter self-employment. We do not find empirical evidence of similar constraints among immigrant women. Lofstrom, Magnus 2009-10 self-employment, entrepreneurship, low-skill, women, immigrants http://d.repec.org/n?u=RePEc:iza:izadps:dp4514&r=all A central concern about immigration is the integration into the labour market, not only of the first generation, but also of subsequent generations. Little comparative work exists for Europe’s largest economies. France, Germany and the UK have all become, perhaps unwittingly, countries with large immigrant populations albeit with very different ethnic compositions. Today, the descendants of these immigrants live and work in their parents’ destination countries. This paper presents and discusses comparative evidence on the performance of first- and second-generation immigrants in these countries in terms of education, earnings, and employment. Algan, Yann, Dustmann, Christian, Glitz, Albrecht, Manning, Alan 2009-10 immigration, second-generation immigrants, integration http://d.repec.org/n?u=RePEc:iza:izadps:dp4519&r=all This paper re-examines the role of labor-market competition as a determinant of attitudes toward immigration. We claim two main contributions. First, we use more sophisticated measures of the degree of exposure to competition from immigrants than previously done. Specifically, we focus on the protection derived from investments in job-specific human capital and from specialization in communication-intensive jobs, in addition to formal education. Second, we explicitly account for the potential endogeneity arising from job search. Methodologically, we estimate, by instrumental variables, an econometric model that allows for heterogeneity at the individual, regional, and country level. Drawing on the 2004 European Social Survey, we obtain three main results. First, our estimates show that individuals that are currently employed in less exposed jobs are relatively more pro-immigration. This is true for both our new measures of exposure. Second, we show that the protection granted by job-specific human capital is clearly distinct from the protection granted by formal education. Yet the positive effect of education on pro-immigration attitudes is greatly reduced when we control for the degree of communication intensity of respondents' occupations. Third, OLS estimates are biased in a direction that suggests that natives respond to immigration by switching to less exposed jobs. The latter finding provides indirect support for the endogenous job specialization hypothesis postulated by Peri and Sparber (2009). Ortega, Francesc, Polavieja, Javier G. 2009-10 immigration attitudes, labor market, job-specific human capital, communication skills, international migration http://d.repec.org/n?u=RePEc:iza:izadps:dp4533&r=all This paper estimates the rate of return to the High/Scope Perry Preschool Program, an early intervention program targeted toward disadvantaged African-American youth. Estimates of the rate of return to the Perry program are widely cited to support the claim of substantial economic benefits from preschool education programs. Previous studies of the rate of return to this program ignore the compromises that occurred in the randomization protocol. They do not report standard errors. The rates of return estimated in this paper account for these factors. We conduct an extensive analysis of sensitivity to alternative plausible assumptions. Estimated social rates of return generally fall between 7-10 percent, with most estimates substantially lower than those previously reported in the literature. However, returns are generally statistically significantly different from zero for both males and females and are above the historical return on equity. Estimated benefit-to-cost ratios support this conclusion. Heckman, James J., Moon, Seong Hyeok, Pinto, Rodrigo, Savelyev, Peter A., Yavitz, Adam 2009-10 rate of return, cost-benefit analysis, standard errors, Perry Preschool Program, compromised randomization, early childhood intervention programs, deadweight costs http://d.repec.org/n?u=RePEc:iza:izadps:dp4526&r=all According to Becker's (1957) famous theory on discrimination, entrepreneurs with a strong prejudice against female workers forgo profits by submitting to their tastes. In a competitive market their firms lack efficiency and are therefore forced to leave. We present new empirical evidence for this prediction by studying the survival of startup firms in a large longitudinal matched employer-employee data set from Austria. Our results show that firms with strong preferences for discrimination, i.e. a low share of female employees relatively to the industry average, have significantly shorter survival rates. This is especially relevant for firms starting out with female shares in the lower tail of the distribution. They exit about 18 months earlier than firms with a median share of females. We see no differences in survival between firms at the top of the female share distribution and at the median, though. We further document that highly discriminatory firms that manage to survive submit to market powers and increase their female workforce over time. Weber, Andrea, Zulehner, Christine 2009-10 firm survival, profitability, female employment, discrimination, market test, matched employer-employee data http://d.repec.org/n?u=RePEc:iza:izadps:dp4508&r=all We examine differences in the value of statistical life (VSL) across potential wage levels in panel data using quantile regressions with intercept heterogeneity. Latent heterogeneity is econometrically important and affects the estimated VSL. Our findings indicate that a reasonable average cost per expected life saved cut-off for health and safety regulations is $7 million to $8 million per life saved, but the VSL varies considerably across the labor force. Our results reconcile the previous discrepancies between hedonic VSL estimates and the values implied by theories linked to the coefficient of relative risk aversion. Because the VSL varies elastically with income, regulatory agencies should regularly update the VSL used in benefit assessments, increasing the VSL proportionally with changes in income over time. Kniesner, Thomas J., Viscusi, W. Kip, Ziliak, James P. 2009-10 panel data, quantile regression, VSL, value of statistical life, fixed effects, PSID, fatality risk, CFOI http://d.repec.org/n?u=RePEc:iza:izadps:dp4500&r=all Over the last decades many OECD countries introduced parental leave regulations in order to counteract low and decreasing birth rates. In general, these regulations aim at making parenthood more attractive and more compatible with a working career, especially for women. The recent German Elterngeld reform is one example: By replacing 67 per cent of prepartum parental labor earnings for up to 14 months after birth of the child – if both father and mother take up the transfer – it intends to i) smooth or prevent households' earnings decline postpartum, ii) make childbearing attractive for working women while iii) keeping them close to the labor market, and iv) incentivize fathers to participate in childcare. We evaluate the reform by using a natural experiment created by the quick legislative process of the Elterngeld reform: Comparing outcomes of parents with children born shortly after and before the coming into effect of the law on 1 January 2007 yields unbiased estimates of the reform effects, because at the time when these children were conceived none of the parents knew that the regulation would be in force by the time their child is born. Our results are based on unique data from the official evaluation of the reform, which we conducted for the German government, and they show that the reform has been generally successful in attaining its objectives. In particular, we find a significant decrease in mothers' employment probability during the 12 months after giving birth, and a significant increase in mothers' employment probability after the Elterngeld transfer expires. Kluve, Jochen, Tamm, Marcus 2009-10 parental leave, natural experiment, female labor market participation http://d.repec.org/n?u=RePEc:iza:izadps:dp4505&r=all We study effects of financial incentives on the retirement age using stated preference data. Dutch survey respondents were given hypothetical retirement scenarios describing age(s) of (partial and full) retirement and replacement rate(s). A structural model is estimated in which utility is the discounted sum of within period utilities that depend on employment status and income. Parameters of the utility function vary with observed and unobserved characteristics. Simulations show that the income and substitution effects of pensions as a function of the retirement age are substantial and larger than according to studies using data on actual retirement decisions. Voňková, Hana, van Soest, Arthur 2009-10 pensions, flexible retirement, gradual retirement, stated choices http://d.repec.org/n?u=RePEc:iza:izadps:dp4527&r=all We consider the issue of illegal migration from Mexico to the US, and examine whether the lack of legal status causally impacts on outcomes, specifically wages and remitting behavior. These outcomes are of particular interest given the extent of legal and illegal migration, and the resulting financial flows. We formalize this question and highlight the principal empirical problem using a potential outcome framework with endogenous selection. The selection bias is captured by a control function, which is estimated non-parametrically. The framework for remitting is extended to allow for endogenous regressors (e.g. wages). We propose a new re-parametrisation of the control function, which is linear in case of a normal error structure, and test linearity. Using Mexican Migration project data, we find considerable and robust illegality effects on wages, the penalty being about 12% in the 1980s and 22% in the 1990s. For the latter period, the selection bias is not created by a normal error structure; wrongly imposing normality overestimates the illegality effect on wages by 50%, while wrongly ignoring selection leads to a 50% underestimate. In contrast to these wage penalties, legal status appears to have mixed effects on remitting behavior. Schluter, Christian, Wahba, Jackline 2009-10 non-parametric estimation, control functions, selection, counterfactuals, illegality effects, illegal migration, intermediate outcomes, Mexican Migration Project http://d.repec.org/n?u=RePEc:iza:izadps:dp4538&r=all The purpose in the present paper is to use individual panel data in the European Community Household Panel to analyse the impact on self-reported satisfaction from a number of economic and demographic variables. The paper contributes to the ongoing discussion of the relationship between life satisfaction and income. The panel property of the data makes it possible to study also the impact on satisfaction from income changes as well as the impact from acceleration in income and changes in labour market status on changes in satisfaction. A number of demographic variables and individual attitude indicators are also entered into the analysis of both the level of satisfaction and the change in satisfaction from one wave of the survey to the next. We find a strong impact from the level of income in all countries, an impact from change and acceleration in income for a smaller number of countries, a strong impact from most changes in labour market status and finally important effects from a number of demographic variables. Pedersen, Peder J., Schmidt, Torben Dall 2009-10 satisfaction, income, labour market status, health http://d.repec.org/n?u=RePEc:iza:izadps:dp4525&r=all The recent literature on instrumental variables (IV) features models in which agents sort into treatment status on the basis of gains from treatment as well as on baseline-pretreatment levels. Components of the gains known to the agents and acted on by them may not be known by the observing economist. Such models are called correlated random coefficient models. Sorting on unobserved components of gains complicates the interpretation of what IV estimates. This paper examines testable implications of the hypothesis that agents do not sort into treatment based on gains. In it, we develop new tests to gauge the empirical relevance of the correlated random coefficient model to examine whether the additional complications associated with it are required. We examine the power of the proposed tests. We derive a new representation of the variance of the instrumental variable estimator for the correlated random coefficient model. We apply the methods in this paper to the prototypical empirical problem of estimating the return to schooling and find evidence of sorting into schooling based on unobserved components of gains. Heckman, James J., Schmierer, Daniel, Urzua, Sergio 2009-10 instrumental variables, testing, correlated random coefficient, power of tests based on IV http://d.repec.org/n?u=RePEc:iza:izadps:dp4521&r=all Immigrants typically perform worse than other students in the OECD countries. We examine to what extent this is due to the population characteristics of the neighborhoods that immigrants grow up in. We address this issue using a governmental refugee placement policy which provides exogenous variation in the initial place of residence in Sweden. The main result is that, for a given share of immigrants in a neighborhood, immigrant school performance is increasing in the number of highly educated adults sharing the subject’s ethnicity. A standard deviation increase in the fraction of highly educated adults in the assigned neighborhood increases compulsory school GPA by 0.9 percentile ranks. This magnitude corresponds to a tenth of the gap in student performance between refugee immigrant and native-born children. We also provide tentative evidence that the overall share of immigrants in the neighborhood has a negative effect on GPA. Aslund, Olof, Edin, Per-Anders, Fredriksson, Peter, Grönqvist, Hans 2009-10 peer effects, ethnic enclaves, immigration, school performance http://d.repec.org/n?u=RePEc:iza:izadps:dp4499&r=all This paper documents how the structure of extended family networks in rural Mexico relates to the poverty and inequality of the village of residence. Using the Hispanic naming convention, we construct within-village extended family networks in 504 poor rural villages. Family networks are larger (both in the number of members and as a share of the village population) and out-migration is lower the poorer and the less unequal the village of residence. Our results are consistent with the extended family being a source of informal insurance to its members. Angelucci, Manuela, De Giorgi, Giacomo, Rangel, Marcos A., Rasul, Imran 2009-10 extended family network, migration, village inequality, village marginality http://d.repec.org/n?u=RePEc:iza:izadps:dp4516&r=all The paper describes and evaluates unemployment insurance savings accounts (UISAs) – a relatively new and not well-known way of providing unemployment benefits. The UISAs reduce work disincentives by allowing recipients to keep their own unused unemployment contributions, and offer the possibility to extend coverage to informal sector workers. In addition, if integrated with mandatory pension systems (and even social pensions), UISAs can be rapidly deployed and at a low cost, thus becoming a realistic tool to protect workers from the effects of the financial crisis. Even during normal times, the integration with the pension system – and social security in general – would give more flexibility to individuals in the management of short and long term savings (i.e., pension wealth) while avoiding unnecessary administrative costs. The paper discusses issues related to incentives, redistribution, and viability, and outlines a policy framework for design and implementation. It argues that the UISAs system is especially attractive for developing countries, where the "self-policing" nature of the system is particularly important given a much larger informal sector and weaker administrative capacity in comparison to developed countries. Robalino, David, Vodopivec, Milan, Bodor, András 2009-10 unemployment insurance, unemployment insurance savings accounts, unemployment http://d.repec.org/n?u=RePEc:iza:izadps:dp4520&r=all How do different components of the tax and transfer systems affect disposable income inequality? This paper explores the redistributive effects of different tax benefit instruments in the enlarged EU based on two approaches. Inequality analysis based on the standard approach suggests that benefits are the most important factor reducing inequality in the majority of countries. The factor source decomposition approach, however, suggests that benefits play a negligible role and sometimes even contribute slightly positive to inequality. On the contrary, here taxes and social contributions are by far the most important contributors to income inequality reduction. We explain these partly contradictory results with the different normative focus of the two approaches and show that benefits have other aims than redistribution. Finally, our country clustering shows that the Eastern European countries do not form a distinguished group. The Central Eastern European countries group together with the Continental European countries and the Baltic States show similarities with some Southern European countries. Fuest, Clemens, Niehues, Judith, Peichl, Andreas 2009-10 inequality, redistribution, decomposition, tax benefit systems http://d.repec.org/n?u=RePEc:iza:izadps:dp4498&r=all We provide descriptive evidence on the characteristics of a household’s extended family network using data from the Progresa social assistance program in rural Mexico. We exploit information on the paternal and maternal surnames of household heads and their spouses and the patronymic naming convention to identify the inter and intra generational family links of each household to others in the village. This provides an almost complete mapping of extended family networks structures across 506 Mexican villages, covering 22,000 households and over 130,000 individuals. We then provide evidence on – (i) whether husbands and wives differ in the extent to which members of their extended family are located in geographic proximity; (ii) the characteristics that predict the existence of extended family links; (iii) the similarity of households within the same family network in terms of their poverty, and how this differs within and between generations of the extended family. Angelucci, Manuela, De Giorgi, Giacomo, Rangel, Marcos A., Rasul, Imran 2009-10 extended family network, Progresa http://d.repec.org/n?u=RePEc:iza:izadps:dp4512&r=all Despite strong increases in women's labor force participation – especially among married women with children – in the 1980s, and somewhat less strong increases in the 1990s, the first decade of the twenty-first century has seen declines across the board. These have been especially marked among single women, women with no children, and women with more than 16 years of education. Single women with no children have experienced declines of 7.2, 6.2 and 3.6 percentage points since the late 1980s, among women with less than 16, 16, and more than 16 years of education, respectively. Own-wage elasticities have increased since 2000, after decreasing in the previous 20 years, and the absolute value of cross-wage elasticities has also increased, after declining for at least 20 years. Despite this, the absolute value of elasticities with respect to the presence of children has for the most part continued to decline. Measured factors cannot explain the marked declines in hours worked that have been observed, suggesting that while the labor supply function was hypothesized to have shifted to the right in the 1980s and 1990s, it has shifted back to the left since the late 1990s. And the characteristics of single and childless women dropping out of the labor force after 1999 have changed: they on average had worked more hours, earned more per hour, enjoyed less other income, and had fewer children, than those who had dropped out prior to 1999. Macunovich, Diane 2009-10 women's labor force participation, women's labor supply, opt-out revolution, women's own-wage elasticities, effect of children on women's labor force participation http://d.repec.org/n?u=RePEc:iza:izadps:dp4547&r=all Children adopted from abroad are an immigrant group about which little is known. According to the U.S. Census more than one and a half million children living in the U.S. are adopted, with fifteen percent of them born abroad. In fact more than twenty thousand adopted orphans from abroad enter the country each year. The families who adopt these orphans are mostly white, wealthy, and well educated (Kossoudji, 2008). What are the characteristics of children who are adopted from abroad and what incentives drive families to adopt them? In this paper we use the 2000 census to illuminate the landscape of international adoption. We address three issues: 1) How do the demographic characteristics of the children adopted from abroad change as other countries open and shut the door to inter-country adoptions, changing the supply of available children? 2) U.S. born parents and foreign-born parents may have different incentives to adopt. How are these incentives reflected in the characteristics of the children they adopt? 3) What explains differences in the estimates of foreign-born adopted children in the Census and the number of visas granted by the State Department? Lozano, Fernando A., Kossoudji, Sherrie 2009-11 immigrant children, international adoption http://d.repec.org/n?u=RePEc:iza:izadps:dp4550&r=all The increase in female employment and participation rates is one of the most dramatic economic changes to have taken place during the last century. However, while the employment rate of married women more than doubled during the last fifty years, that of unmarried women remained almost constant. In order to empirically analyze these trends we divide the paper into two parts: In the first, we empirically estimate a traditional female dynamic labor supply model using an extended version of Eckstein and Wolpin (1989) in order to compare the various explanations in the literature for the observed trends. The main finding is that the rise in education levels accounts for about one-third of the increase in female employment while about 40 percent remains unexplained by observed household characteristics. We show that this unexplained portion can be empirically attributed to changes in preferences or the costs of childrearing and household maintenance. In the second part, we formulate and estimate a new framework for the couple intra-family game that is then used to analyze the household dynamic labor supply. We find that female labor supply may have increased significantly due to a change in the form of the household game. Eckstein, Zvi, Lifshitz, Osnat 2009-11 dynamic discrete choice, female employment, accounting, household game http://d.repec.org/n?u=RePEc:iza:izadps:dp4502&r=all Industrial relations are in flux in many nations, perhaps most notably in Germany and the Britain. That said, comparatively little is known in any detail of the changing pattern of the institutions of collective bargaining and worker representation in Germany and still less in both countries about firm transitions between these institutions over time. The present paper maps changes in the importance of the key institutions, 1998-2004, and explores the correlates of two-way transitions, using successive waves of the German IAB Establishment Panel and both cross-sectional and panel components of the British Workplace Employment Relations Survey. We identify the workplace correlates of the demise of collective bargaining in Britain and the erosion of sectoral bargaining in Germany, and identify the respective roles of behavioral and compositional change. Addison, John T., Bryson, Alex, Teixeira, Paulino, Pahnke, André, Bellmann, Lutz 2009-10 union recognition, union coverage, sectoral and firm-level collective bargaining, works councils, joint consultative committees, changes in collective bargaining/worker representation states, bargaining transitions and their determinants http://d.repec.org/n?u=RePEc:iza:izadps:dp4542&r=all Spain, as other south-Mediterranean countries, is characterized for the predominance of split work schedules. Split work schedules typically consist of 5 hours of work in the morning (typically from 9 am to 2 pm), followed by a 2 hour break and another 3 hours of work in the afternoon/evening (typically from 4 pm to 7 pm). Because of the evening work hours, split work schedules are contributing to work-family conflicts in the midst of significantly higher female labor force participation. Our purpose is to examine who has a split work schedule and why. We focus on full-time working women with full-time working partners, for whom the need to reconcile work and family responsibilities is likely to be more pressing. We first find that women with partners with a split work schedule or without children (less than 20 percent our sample) are more likely to have a split work schedule. Yet, despite the revealed preference for a continuous work schedule of the remaining women in our sample, we fail to find evidence of a compensating wage differential for having a split work schedule. We thus examine why and find that younger and less educated women more likely to be constrained in their job choices are more likely to work in the private sector, where split work schedules are primarily found. Amuedo-Dorantes, Catalina, de la Rica, Sara 2009-11 work-family conflicts, timing of work, split/continuous time schedule, compensating wage differentials, job constraints http://d.repec.org/n?u=RePEc:iza:izadps:dp4509&r=all This paper provides a comprehensive evaluation of benefit sanctions, i.e. temporary reductions in unemployment benefits as punishment for noncompliance with eligibility requirements. In addition to the effects on unemployment durations, we evaluate the effects on post-unemployment employment stability, on exits from the labor market and on earnings. In our analysis we use a rich set of Swiss register data which allow us to distinguish between ex ante effects, the effects of warnings and the effects of enforcement of benefit sanctions. Adopting a multivariate mixed proportional hazard approach to address selectivity, we find that both warnings and enforcement increase the job finding rate and the exit rate out of the labor force. Warnings do not affect subsequent employment stability but do reduce post-unemployment earnings. Actual benefit reductions lower the quality of post-unemployment jobs both in terms of job duration as well as in terms of earnings. The net effect of a benefit sanction on post-unemployment income is negative. Over a period of two years after leaving unemployment workers who got a benefit sanction imposed face a net income loss equivalent to 30 days of full pay due to the ex post effect. In addition to that, stricter monitoring may reduce net earnings by up to 4 days of pay for every unemployed worker due to the ex ante effect. Arni, Patrick, Lalive, Rafael, van Ours, Jan C. 2009-10 benefit sanctions, earnings effects, unemployment duration, competing-risk duration models http://d.repec.org/n?u=RePEc:iza:izadps:dp4503&r=all In this paper we develop a structural model of female employment and fertility which accounts for intertemporal feedback effects between the two outcomes. We identify the effect of financial incentives on the employment and fertility decision by exploiting variation in the tax and transfer system which differs by employment state and number of children. To this end we simulate in detail the effects of the tax and transfer system including child care costs. The model provides estimates of structural preferences of women which can be used to study the effect of various policy reforms. In particular, we show that increasing child care subsidies conditional on employment increases labor supply of all women as well as fertility of the childless and highly educated women. Haan, Peter, Wrohlich, Katharina 2009-10 employment, fertility, financial incentives http://d.repec.org/n?u=RePEc:iza:izadps:dp4534&r=all Two of the most salient trends surrounding the issue of migration and development over the last two decades are the large rise in remittances, and an increased flow of skilled migration. However, recent literature based on cross-country regressions has claimed that more educated migrants remit less, leading to concerns that further increases in skilled migration will hamper remittance growth. We revisit the relationship between education and remitting behavior using microdata from surveys of immigrants in eleven major destination countries. The data show a mixed pattern between education and the likelihood of remitting, and a strong positive relationship between education and the amount remitted conditional on remitting. Combining these intensive and extensive margins gives an overall positive effect of education on the amount remitted. The microdata then allow investigation as to why the more educated remit more. We find the higher income earned by migrants, rather than characteristics of their family situations explains much of the higher remittances. Bollard, Albert, McKenzie, David, Morten, Melanie, Rapoport, Hillel 2009-10 remittances, migration, brain drain, education http://d.repec.org/n?u=RePEc:iza:izadps:dp4515&r=all Using German panel data from 1984 to 2007, we analyze the impact of labor division between husband and wife on the risk of divorce. Gary Becker’s theory of marriage predicts that specialization in domestic and market work, respectively, reduces the risk of separation. Traditionally, the breadwinner role is assigned to the husband, however, female labor force participation and their wages have risen substantially. Our results suggest that there are gender-specific differences, e.g. female breadwinner-couples have a substantially higher risk of divorce than male breadwinner-couples. In contrast, the equal division does not significantly alter the probability of separation. Kraft, Kornelius, Neimann, Stefanie 2009-10 divorce, labor division, Germany http://d.repec.org/n?u=RePEc:iza:izadps:dp4496&r=all Over the last decade, many countries have experienced dramatic increases in university enrolment, which, when not matched by compensating increases in other inputs, have resulted in larger class sizes. Using administrative records from a leading UK university, we present evidence on the effects of class size on students’ test scores. We observe the same student and faculty members being exposed to a wide range of class sizes from less than 10 to over 200. We therefore estimate non-linear class size effects controlling for unobserved heterogeneity of both individual students and faculty. We find that (i) at the average class size, the effect size is -0.108; (ii) the effect size is however negative and significant only for the smallest and largest ranges of class sizes and zero over a wide range of intermediate class sizes; (iii) students at the top of the test score distribution are more affected by changes in class size, especially when class sizes are very large. We present evidence to rule out class size effects being due solely to the non-random assignment of faculty to class size, sorting by students onto courses on the basis of class size, omitted inputs, the difficulty of courses, or grading policies. The evidence also shows the class size effects are not mitigated for students with greater knowledge of the UK university system, this university in particular, or with greater family wealth. Bandiera, Oriana, Larcinese, Valentino, Rasul, Imran 2009-10 class size, heterogeneity, university education http://d.repec.org/n?u=RePEc:iza:izadps:dp4532&r=all Social interaction with colleagues is an important job attribute for many workers. To attract and retain workers, managers therefore need to think about how to create and preserve high-quality co-worker relationships. This paper develops a principal-multi-agent model where agents do not only engage in productive activities, but also in social interaction with their colleagues, which in turn creates co-worker altruism. We study how financial incentives for productive activities can improve or damage the work climate. We show that both team incentives and relative incentives can help to create a good work climate. Dur, Robert, Sol, Joeri 2009-10 social interaction, altruism, incentive contracts, co-worker satisfaction http://d.repec.org/n?u=RePEc:iza:izadps:dp4501&r=all In this paper, we argue that credit market imperfections impact not only the level of unemployment, but also its persistence. For this purpose, we first develop a theoretical model based on the equilibrium matching framework of Mortensen and Pissarides (1999) and Pissarides (2000) where we introduce credit constraints. We show these credit constraints not only increase steady-state unemployment, but also slow down the transitional dynamics. We then provide an empirical illustration based on a country panel dataset of 20 OECD countries. Our results suggest that credit market imperfections significantly increase the persistence of unemployment. Dromel, Nicolas, Kolakez, Elie, Lehmann, Etienne 2009-10 credit markets, labor markets, unemployment, credit constraints, search frictions http://d.repec.org/n?u=RePEc:iza:izadps:dp4548&r=all We use data from the Irish census and exploit regional and temporal variation in infant mortality rates over the 20th century to examine effects of early life conditions on later life health. Our main identification is public health interventions which eliminated the Irish urban infant mortality penalty. Estimates suggest that a unit decrease in mortality rates at time of birth reduces the probability of being disabled as an adult by between .03 and .05 percentage points. We find that individuals from lower socio economic groups had marginal effects of reduced infant mortality twice as large as those at the top. Delaney, Liam, McGovern, Mark, Smith, James P. 2009-11 childhood health, disability http://d.repec.org/n?u=RePEc:iza:izadps:dp4536&r=all We develop a novel computerized real effort task, based on moving sliders across a screen, to test experimentally whether agents are disappointment averse when they compete in a real effort sequential-move tournament. Our theory predicts that a disappointment averse agent, who is loss averse around her endogenous expectations-based reference point, responds negatively to her rival's effort. We find significant evidence for this discouragement effect, and use the Method of Simulated Moments to estimate the strength of disappointment aversion on average and the heterogeneity in disappointment aversion across the population. Gill, David, Prowse, Victoria L. 2009-10 disappointment aversion, loss aversion, reference-dependent preferences, reference point adjustment, expectations, tournament, real effort experiment, slider task http://d.repec.org/n?u=RePEc:iza:izadps:dp4523&r=all Putting a limit on the duration of unemployment benefits tends to introduce a "spike" in the job finding rate shortly before benefits are exhausted. Current theories explain this spike from workers’ behavior. We present a theoretical model in which also the nature of the job matters. End-of-benefit spikes in job finding rates are related to optimizing behavior of unemployed workers who rationally assume that employers will accept delays in the starting date of a new job, especially if these jobs are permanent. We use a dataset on Slovenian unemployment spells to test this prediction and find supporting evidence. We conclude that the spike in the job finding rate suggests that workers exploit unemployment insurance benefits for subsidized leisure. Boone, Jan, van Ours, Jan C. 2009-10 unemployment benefits, spikes http://d.repec.org/n?u=RePEc:iza:izadps:dp4531&r=all This paper employs regression discontinuity methods to identify the effect of formality on Brazilian micro-firm performance. The SIMPLES program introduced in November 1996 consolidated multiple taxes and social security contributions into a single payment and reduced taxes for eligible small firms. This provides a quasi-natural experiment that allows us to eliminate many of the endogeneity issues surrounding the impact of formality, measured across several dimensions, on firm performance. We find that SIMPLES had a significant effect on the proportion of firms that have a license to operate, are registered as a legal entity, pay taxes and make social security contributions. Moreover, newly created firms that opt for operating formally achieve higher levels of revenue and profits, employ more workers and are more capital intensive (only for those firms that have employees). The channel through which this occurs is not access to credit or contracts with larger firms. Rather, it appears that the lower cost of contracting labor leads to adopting production techniques that involve greater permanence and a larger paid labor force. Fajnzylber, Pablo, Maloney, William F., Montes-Rojas, Gabriel V. 2009-10 micro-firms, self-employment, informality http://d.repec.org/n?u=RePEc:iza:izadps:dp4522&r=all We compare a set of econometric studies that measure the effect of net internal migration in neoclassical models of long-run real income convergence and derive 67 comparable effect sizes. The precision-weighted estimate of beta convergence is about 2.7%. An increase in the net migration rate of a region by one percentage point in increases the per capita income growth rate in that region on average by about 0.1 percentage points, thus suggesting an impact of net migration that is more consistent with endogenous self-reinforcing growth than with neoclassical convergence. Introducing a net migration variable in a growth regression increases the estimate of beta convergence slightly. Studies that use panel models or IV estimation methods yield smaller coefficients of net migration in growth regressions, while the opposite holds for regressions controlling for high-skilled migration. Ozgen, Ceren, Nijkamp, Peter, Poot, Jacques 2009-10 internal migration, economic growth, convergence, meta-analysis, neoclassical model, regional disparities http://d.repec.org/n?u=RePEc:iza:izadps:dp4535&r=all We identify the causal effect of compulsory military service on conscripts’ subsequent labor-market outcomes by exploiting the regression-discontinuity design of the military draft in Germany during the 1950s. Unbiased estimates of the effect of military service on lifetime earnings, wages, and employment are obtained by comparing men born before July 1, 1937 (the "White Cohort") who were exempted from compulsory military service to men who were born on or shortly after this threshold date and hence faced a positive probability of being drafted. We find that the putative earnings advantage and wage premium of those who served in the armed forces vanish when selection effects are taken into account. Bauer, Thomas, Bender, Stefan, Paloyo, Alfredo R., Schmidt, Christoph M. 2009-10 causal effect, quasi-experimental estimators, conscription http://d.repec.org/n?u=RePEc:iza:izadps:dp4540&r=all Laboratory experiments are a widely used methodology for advancing causal knowledge in the physical and life sciences. With the exception of psychology, the adoption of laboratory experiments has been much slower in the social sciences, although during the last two decades, the use of lab experiments has accelerated. Nonetheless, there remains considerable resistance among social scientists who argue that lab experiments lack "realism" and "generalizability". In this article we discuss the advantages and limitations of laboratory social science experiments by comparing them to research based on non-experimental data and to field experiments. We argue that many recent objections against lab experiments are misguided and that even more lab experiments should be conducted. Falk, Armin, Heckman, James J. 2009-10 laboratory experiments, field experiments, controlled variation http://d.repec.org/n?u=RePEc:iza:izadps:dp4524&r=all Wage determination under asymmetric information generates inefficiencies due to excess turnover. Severance pay and layoff taxes can improve efficiency. We show that inefficient separations can even be fully removed with fixed separation taxes in the case where the relevant private information is exponentially distributed. Delacroix, Alain, Wasmer, Etienne 2009-10 bargaining, asymmetric information, employment protection legislation, inefficient job separations http://d.repec.org/n?u=RePEc:iza:izadps:dp4504&r=all The strong correlation between child care and maternal employment rates has led previous research to conclude that affordable and readily available child care is a driving force both of cross-country differences in maternal employment and of its rapid growth over the last decades. We analyze the introduction of subsidized, universally accessible child care in Norway. Our precise and robust difference-in-differences estimates reveal that there is little, if any, causal effect of child care on maternal employment, despite a strong correlation. Instead of increasing mothers’ labor supply, the new subsidized child care mostly crowds out informal child care arrangements, suggesting a significant net cost of the child care subsidies. Havnes, Tarjei, Mogstad, Magne 2009-10 universal child care, female labor force participation http://d.repec.org/n?u=RePEc:iza:izadps:dp4543&r=all Ridder and Woutersen (2003) have shown that under a weak condition on the baseline hazard there exist root-N consistent estimators of the parameters in a semiparametric Mixed Proportional Hazard model with a parametric baseline hazard and unspecified distribution of the unobserved heterogeneity. We extend the Linear Rank Estimator (LRE) of Tsiatis (1990) and Robins and Tsiatis (1991) to this class of models. The optimal LRE is a two-step estimator. We propose a simple first-step estimator that is close to optimal if there is no unobserved heterogeneity. The efficiency gain associated with the optimal LRE increases with the degree of unobserved heterogeneity. Bijwaard, Govert, Ridder, Geert 2009-11 mixed proportional hazard, linear rank estimation, counting process http://d.repec.org/n?u=RePEc:iza:izadps:dp4528&r=all This paper analyzes the political sustainability of the welfare state in an environment where immigration is the main demographic force and where governments are able to influence the size and skill composition of immigration flows. Specifically, I present a dynamic political-economy model where both income redistribution and immigration policy are chosen by majority vote. Voters take into account their children's prospects of economic mobility and the future political consequences of today's policies. Over time, the skill distribution evolves due to intergenerational skill upgrading and immigration. I consider three immigration and citizenship regimes. In the first, immigrants stay permanently in the country and citizenship is obtained by birthplace (jus soli). In the second regime immigration is also permanent but citizenship is passed only by bloodline (jus sanguinis). In the third regime immigrants are only admitted temporarily and cannot vote. Our main finding is that under permanent migration and jus soli there exist equilibria where income redistribution is sustained indefinitely, despite constant skill upgrading in the population. However, this is not the case in the other two regimes. The crucial insight is that unskilled voters trade off the lower wages from larger unskilled immigration with the increased political support for redistributive transfers provided by the children of the current immigrants. In contrast, in the regimes where immigrants and their children do not gain the right to vote, unskilled voters oppose any unskilled immigration and political support for income transfers vanishes. We argue that these mechanisms have important implications for the ongoing debates over comprehensive immigration reform in the US and elsewhere. Ortega, Francesc 2009-10 immigration, citizenship, redistributive policies, political economy http://d.repec.org/n?u=RePEc:iza:izadps:dp4507&r=all We study the effect of team decision-making on bubbles and crashes in experimental asset markets of the kind introduced by Smith, Suchanek and Williams (1988). We find that populating such markets with teams of size two instead of individuals significantly reduces the severity of mispricing. In particular we observe that under our teams treatment, deviations in prices away from intrinsic value are significantly smaller in magnitude, shorter in duration and associated with lower volume and price volatility. We also find an unexpected gender effect in team composition, manifesting itself in more extreme – though not consistently more profitable – behaviour by all-male teams. Since these effects are not observed among male participants generally, we conjecture that they may be due to factors specific to the psychology of decision-making in male-dominated environments. Cheung, Stephen L., Palan, Stefan 2009-10 asset market experiments, price bubbles, group decision-making, gender composition of teams http://d.repec.org/n?u=RePEc:iza:izadps:dp4510&r=all A search model of the labor market is augmented to include commuting time to work. The theory posits that wages are positively related to commute distance, by a factor itself depending negatively on the bargaining power of workers. Since not all combinations of distance and wages are accepted, there is non-random selection of accepted job offers. We build on these ingredients to explore in the data the relationship between wages and commute time. We find that neglecting to account for this selection will bias downward the wage impact of commuting, and marginally affect the coefficients on education, age and gender. The correlation between the residuals of the selectivity equation and the distance equation is -0.70, showing the large impact of commute time on job acceptance decisions. We also use the theory to calculate the bargaining power of workers which largely varies depending on demographic groups: it appears to be much larger for men than that for women and that the bargaining power of women with young children is essentially zero. Rupert, Peter, Stancanelli, Elena, Wasmer, Etienne 2009-10 simultaneous equations, search model, commuting http://d.repec.org/n?u=RePEc:iza:izadps:dp4518&r=all A number of researchers and policy makers have recently argued that the most effective way of dealing with long-run disadvantage and the intergenerational transmission of poverty is through early childhood intervention and in particular policies aimed at supporting the family in early childhood development. In this paper we carry out a randomised evaluation of one such programme aimed at improving the skills and parenting strategies of parents, particularly those who find their child's behaviour difficult or challenging. Our evaluation shows that the treatment significantly reduced behavioural problems in young children when measured 6 months after the intervention. Furthermore our detailed cost analysis, combined with a consideration of the potential long-run benefits associated with the programme, suggest that the long-run rate of return to society from this programme is likely to be relatively high. O'Neill, Donal 2009-10 early intervention, parenting programme, randomised trial http://d.repec.org/n?u=RePEc:iza:izadps:dp4506&r=all This paper uses sequential stochastic dominance procedures to compare the joint distribution of health and income across space and time. It is the first application of which we are aware of methods to compare multidimensional distributions of income and health using procedures that are robust to aggregation techniques. The paper’s approach is more general than comparisons of health gradients and does not require the estimation of health equivalent incomes. We illustrate the approach by contrasting Canada and the US using comparable data. Canada dominates the US over the lower bi-dimensional welfare distribution of health and income, though not generally in terms of the uni-dimensional distribution of health or income. The paper also finds that welfare for both Canadians and Americans has not unambiguously improved during the last decade over the joint distribution of income and health, in spite of the fact that the uni-dimensional distributions of income have clearly improved during that period. Duclos, Jean-Yves, Échevin, Damien 2009-10 health inequality, self-reported health status, income distribution, stochastic dominances, social welfare http://d.repec.org/n?u=RePEc:iza:izadps:dp4513&r=all This study uses data from the Follow-up of Graduates Survey – Class of 2000, to look at the determinants of education-job for Canadian university graduates. From a public policy perspective, the question of education-job match is relevant given the substantial investment society puts into its post secondary institutions, and the role devoted to human capital in economic development. Our results indicate that one graduate out of three (35.1%) is in a job that is not closely related to his or her education. The most important result is that demographic and socioeconomic characteristics (gender and family background) do not matter very much in the match. On the other hand, education characteristics significantly influence match, with field specific programs (such as "Health sciences" and "Education") having the highest likelihood of obtaining an education-job match. In addition, the level of education (i.e. graduates with a postgraduate degree vs. a bachelor degree), as well as good grades, strongly affect the match. Employment characteristics also affect the match, but to a mixed extent, with certain characteristics, such as industry, as well as working full-time (vs. part time) affecting the match to a strong extent, while others, such as the permanence of employment, as well as the method used to obtain employment not having a significant effect on match. Boudarbat, Brahim, Chernoff, Victor 2009-10 education-job match, university graduates, Canada, Follow-up of Graduates Survey http://d.repec.org/n?u=RePEc:iza:izadps:dp4511&r=all This paper proposes a methodology for testing for whether tax reforms are pro-poor. This is done by extending stochastic dominance techniques to help identify tax reforms that will necessarily be deemed absolutely or relatively pro-poor by a wide spectrum of poverty analysts. The statistical properties of the various estimators are also derived in order to make the method implementable using survey data. The methodology is used to assess the pro-poorness of possible reforms to Mexico’s indirect tax system. This leads to the identification of several possible pro-poor tax reforms in that country. It also shows how the pro-poorness of a tax reform depends on one’s conception of poverty as well as on the revenue and efficiency impact of the reform. Duclos, Jean-Yves, Makdissi, Paul, Araar, Abdelkrim 2009-10 stochastic dominance, pro-poor changes, tax reforms, Mexico http://d.repec.org/n?u=RePEc:iza:izadps:dp4529&r=all In developing societies, social norms typically ascribe differential weights to paternal, maternal and communal (or state) contributions to children's expenses. Individuals internalize these valuations. I examine a Cournot model of voluntary contribution to children's goods in a two-adult household, where both spouses may have marginal rates of substitution across paternal, maternal and communal contributions that differ from unity. I show that a conflict may exist between the interests of parents and those of children. Depending on the marginal rate of substitution between paternal and maternal contributions, a lump-sum redistribution from fathers to mothers may make children better off, but both parents worse off, or vice versa. Additional public contribution funded by a lump-sum tax on either parent may make children better off, but at the cost of both parents. Thus, proposals to redistribute income from fathers to mothers need to take into account socially valorized gendered asymmetries in parental roles. Furthermore, there may exist a conflict, instead of congruence, between women and their children. Dasgupta, Indraneel 2009-10 intra-household distribution, social norms, domestic public good, redistribution http://d.repec.org/n?u=RePEc:iza:izadps:dp4537&r=all This paper develops a long run growth model for a major oil exporting economy and derives conditions under which oil revenues are likely to have a lasting impact. This approach contrasts with the standard literature on the "Dutch disease" and the "resource curse", which primarily focus on short run implications of a temporary resource discovery. Under certain regularity conditions and assuming a Cobb Douglas production function, it is shown that (log) oil exports enter the long run output equation with a coefficient equal to the share of capital. The long run theory is tested using a new quarterly data set on the Iranian economy over the period 1979Q1-2006Q4. Building an error correction specification in real output, real money balances, inflation, real exchange rate, oil exports, and foreign real output, the paper finds clear evidence for two long run relations: an output equation as predicted by the theory and a standard real money demand equation with inflation acting as a proxy for the (missing) market interest rate. Real output in the long run is shaped by oil exports through their impact on capital accumulation, and the foreign output as the main channel of technological transfer. The results also show a significant negative long run association between inflation and real GDP, which is suggestive of economic inefficiencies. Once the effects of oil exports are taken into account, the estimates support output growth convergence between Iran and the rest of the world. We also find that the Iranian economy adjusts quite quickly to the shocks in foreign output and oil exports, which could be partly due to the relatively underdeveloped nature of Iran's financial markets. Esfahani, Hadi Salehi, Mohaddes, Kamiar, Pesaran, Hashem 2009-10 growth models, long run relations, Iranian economy, oil price, foreign output shocks, error correcting relations http://d.repec.org/n?u=RePEc:hbs:wpaper:10-035&r=all This note accompanies the Cross?country Historical Adoption of Technology (CHAT) dataset. CHAT is an unbalanced panel dataset with information on the adoption of over 100 technologies in more than 150 countries since 1800. The data is available for download at: http://www.nber.org/data/chat. We discuss the main aim of CHAT, its scope and limitations, as well as several ways in which we have used the data so far and ways to potentially use the data for other research. Suggested acknowledgment: If you use the CHAT dataset for your research, please include the following citation: "Our technology measures come from the CHAT data set which is an extension of the data set described in Comin and Hobijn (2004)" Diego A. Comin, Bart Hobijn 2009-11 http://d.repec.org/n?u=RePEc:hbs:wpaper:10-033&r=all The financial crisis of 2008-9 has revealed that our broad model of corporate governance is broken, independent of the shortcomings in the regulatory system. Managers and boards of directors in scores of systemically important firms failed to protect employees, customers, or shareholders, and placed the global financial system at risk. I assert that the root cause of the crisis can be found in five related systems: incentives; risk management and control; accounting; human capital; and culture. The worst firms had lethal combinations of strong incentives, weak control and risk management, flawed internal and external accounting, low skill and/or low integrity people, and corrosive cultures. Piecemeal attempts to fix elements of corporate governance will fail. The problem, to illustrate, is not just the structure of compensation. Nor will increasing required capital prevent problems at companies with strong incentives and weak controls. I believe that we may need a new kind of external agency for systemically risky firms that would take a holistic look at the five systems to identify weaknesses, make recommendations to managers and boards, and set regulatory policies, including assessing charges for insuring against losses. Without such a comprehensive assessment and improvement plan, boards cannot do their jobs, and the system will remain as subject to calamitous events as it was before the crisis. William A. Sahlman 2009-10 http://d.repec.org/n?u=RePEc:hhb:sicgwp:2009_009&r=all Unique proprietary data on Swedish board members reveal that a non-trivial proportion of board members in Swedish listed firms have been convicted of serious crimes. Analyzing the data shows that board members with personal fraudulent behavior are more likely to be males than females. We also find that the greater the proportion of fraudulent board members, the lower is the profitability and the higher are the earnings (and cash flows) volatility of the firm. However, the negative effect of fraudulent behavior on profitability is mitigated when fraudulent board members have a larger stake in the firm’s equity. Finally, we find that the earnings of firms with more fraudulent board members are lower and less value-relevant. Given the strong legal enforcement in Sweden, our results raise serious concerns about the effects of board members’ personal fraudulent behavior on firm performance and risk-taking in other countries, particularly the United States and the United Kingdom. Amir, Eli, Kallunki, Juha-Pekka, Nilsson, Henrik 2009-10-27 Fraudulent behavior; Fraud; Crimes; Convicted board members; Corporate governance; Profitability; Earnings volatility http://d.repec.org/n?u=RePEc:isu:genres:13120&r=all The modeling of price risk in the theory and practice of commodity risk management has been developed far beyond that of crop yield risk. This is in large part due to the use of plausible stochastic price processes. We use the Pólya urn to identify and develop a model of the crop yield expectation stochastic process over a growing season. The process allows a role for agronomic events, such as growing degree days. The model is internally consistent in adhering to the martingale property. The limiting distribution is the beta, commonly used in yield modeling. By applying binomial tree analysis, we show how to use the framework to study hedging decisions and crop valuation. Hennessy, David A. 2009-11-06 crop insurance, growing degree days, martingale, Pólya urn, stochastic process. http://d.repec.org/n?u=RePEc:isu:genres:13119&r=all Despite pronouncements that the recession ended in the third quarter of 2009, the prospects for the holiday retail season remain bleak. This report describes the factors that will continue to suppress retail sales for the holiday season and beyond and forecasts how different retail categories will fare this holiday season. O'Brien, Meghan 2009-10-30 http://d.repec.org/n?u=RePEc:pre:wpaper:200924&r=all Most of the growth in international production over the past decade has been carried out via cross-border mergers and acquisitions. Yet previous empirical work relating to CBM&As has been confined to firm-specific factors. This is against the backdrop that researchers have not been able to develop a coherent theory explaining the increasing trends of CBM&As activity. Building on prior studies, this study attempts to extend the few existing studies by using a simple empirical nonlinear framework to analyse the number of cross-border mergers and acquisitions inflows between 1987 and 2008 into the UK from a macroeconomic perspective. The main findings are that the response of the inflow is asymmetric as there is more persistence during stock market booms versus recessions. There are asymmetries with respect to relative prices suggesting that an improvement in the terms of trade leads to higher inflows once the growth of stock prices is above a threshold level of 8%. Other factors which have significant bearing on CBM&As inflows are the rate of inflation and growth in real GDP. Agyenim Boateng, Ruthira Naraidoo, Moshfique M. Uddin 2009-11 Cross-border mergers & acquisitions, Macro-economic factors, UK, nonlinear LSTAR http://d.repec.org/n?u=RePEc:pse:psecon:2009-43&r=all The paper analyzes how uncertainty on traders' participation affects a competitive security market in which there are some informed traders. We show that discontinuities, or "crashes", can arise at equilibrium, even when no investor posts a priori an increasing demand. Because of uncertain participation, the precision of the information brought by a price is endogenous, affected by the size of the trades. As a result, two prices with different volumes and information revelation may clear the market for the same values of the fundamentals. At one price, insurance motives drive the exchanges, noise is large and little information is revealed. At another price, uninformed trades are small, which makes the clearing price much more informative. This multiplicity of prices with different precision of information generates discontinuities. Gabrielle Demange 2009 http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-382&r=all This paper proposes a new dynamic model of realized covariance (RCOV) matrices based on recent work in time-varying Wishart distributions. The specifications can be linked to returns for a joint multivariate model of returns and covariance dynamics that is both easy to estimate and forecast. Realized covariance matrices are constructed for 5 stocks using high-frequency intraday prices based on positive semi-definite realized kernel estimates. We extend the model to capture the strong persistence properties in RCOV. Out-of-sample performance based on statistical and economic metrics show the importance of this. We discuss which features of the model are necessary to provide improvements over a traditional multivariate GARCH model that only uses daily returns. Xin Jin, John M Maheu 2009-11-10 eigenvalues, dynamic conditional correlation, predictive likelihoods, MCMC http://d.repec.org/n?u=RePEc:fup:wpaper:0089&r=all This paper is the first of a Project whose objective is to build up a methodology for the evaluation of the regional impact of an university. This methodology will use input-output tools and the 2005 Brazilian inputoutput table. The major problems associated to such project are the data. The objective at this step is to test the data from the Censo do Ensino Superior (2005) in order to get employment and income multipliers of the impact of the Brazilian Federal Universities on the economy. The next step will consider the building up of regional input-output tables. Cássio Rolim, Ricardo Kureski 2009 regional impact of universities; employment and income multipliers; input-output http://d.repec.org/n?u=RePEc:fup:wpaper:0088&r=all Cássio Rolim 2009 http://d.repec.org/n?u=RePEc:fup:wpaper:0097&r=all There are serious problems in educational system in Brazil and Paraná State. Thus, implementation of policies towards the educational system in these two spheres is indispensable. However, there are some uncertainties in relation to the allocation of the resources. Therefore, because resources are scarce, the educational level that must be given more importance is the one that have the greatest potential of rising productivity. Having this concern as the central question to be answered in the present study, we carried out an analysis of the workers’ schooling on their wage return in Parana´ State to evaluate which educational level (elementary school, secondary school or college) is more important in income generation and, therefore, in labor productivity. Juliana Kikuchi Van Zaist, Luciano Nakabashi, Márcio A. Salvato 2009 returns of different levels of education; HECKMAN procedure; educational system investment http://d.repec.org/n?u=RePEc:fup:wpaper:0090&r=all The aim of this paper is to estimate the effect of manufacturing Brazilian firms´ knowledge production on their conditional probability of internationalization. In this way, an empirical study using (i) microdata from World Bank Investment Climate, Brazil 2003 and (ii) nonlinear instrumental variables regression method is provided. Our finding suggests that manufacturing firms´ conditional probability of starting to export can be increased from 23 until 70 percent points, depending from firms’ capacity to innovate. Luiz Alberto Esteves 2009 innovation; internationalization; probit; instrumental variables http://d.repec.org/n?u=RePEc:fup:wpaper:0093&r=all Firms exist to satisfy people’s basic needs and to fulfil their dreams. O Boticário is in the second case, proposing to make its customers more good-looking and young by providing them with perfumery and cosmetic products. This text aims to review, among the economics theories, the main concepts of the entrepreneurs and his function and, after that, to see how Miguel Krigsner has been innovative, creating new products, and combining new factors of production throughout 30 years of the firm’s history. For that, the text studies the firm’s history, describing the most important experiences for the firm’s success. O Boticário began as a pharmacy in 1977, in the center of Curitiba. When the place became too small to meet demand, a new factory was built in São José dos Pinhais, in 1980. All their produits are made in this factory, both for the national and international market. It is not only in the perfumery and cosmetic areas that O Boticário has innovated. It is has also differed from its competitors in term of products distribution by creating a franchising system that has become a reference, receiving national and international awards. The text ends by analyzing the firm’s relation with nature. Armando Dalla Costa, Gustavo Pereira da Silva 2009 O Boticário, perfumes and cosmetics, innovation of products, franchising http://d.repec.org/n?u=RePEc:fup:wpaper:0092&r=all The periods of fast growth in the Brazilian economy from the post-war until the end of the 1970s have been constrained by imbalances in the foreign sector. We propose in this paper a model, based on Kaldor, where capital accumulation, technological gap and long run external constrain are connected. Our hypothesis is that capital accumulation, under certain circumstances, can overcome external constrain if the accumulation effort promotes structural change increasing the importance of sectors technological-intensive. It is expected that the structural change in this direction will contribute to an increase in the income-elasticity of exports and to a decrease in income-elasticity of imports, resulting in the increase in the growth rate of real product compatible with the balance of payments equilibrium in the long run. The last part of the paper shows that the high investment rate observed in the Brazilian economy from the post-war period until the end of the 1970s resulted in the deepening of the import substitution process, what, in our interpretation, contributed to partially increase the long run growth rate of the Brazilian economy compatible with the balance of payment equilibrium. Marcos Tostes Lamônica, José Luís Oreiro, Carmem Feijó 2009 structural change, technological progress, industrialization, external restriction http://d.repec.org/n?u=RePEc:fup:wpaper:0095&r=all The objective this paper is explorer the strategic and trajectory of expantion of the of the Randon Group. This enterprise born how garage little in city of Caxias do Sul – RS, in the south of Brazil at decade of 1940, grounded over Raul Anselmo and Hercílio Randon brothers front the need of a means of survive. In the decades of 1950 and 1960, the Randon brothers known harness the environment and create the opportunities for transformed the garage in industry, leader in the market of implements for trucks. In the decade of 1970 the enterprise transformed in S. A. with holding negotiate in stock exchange for viable itself expantion, damage for crisis of the decade of 1980 that provoked an situation hard to firm. After this fact, the Randon Group again to growth across of enterprise in the market of car spare, financial services, special vehicles and implements. Moreover, the Randon Group have vacation for be multinational not only and great export, but with industrial plants in others countries and search of investors and partner for growth. Armando Dalla Costa, Elson Rodrigo de Souza-Santos 2009 Randon Group; family enterprise; expansion; conglomerate http://d.repec.org/n?u=RePEc:fup:wpaper:0096&r=all This paper discusses the new possibilities that exploration of oil from the Pré-sal reserves open to the Brazilian economy, which could become one of the largest oil producer and exporter. Three key aspects are discussed in the paper. First, the role played by Petrobras and its ambiguous position as a firm that seeks profits but which is at the same time an instrument of the energy policy of the Brazilian government. The second is the emergence of a debate on the legislation and rules that would be in place to organize oil exploration and distribute its benefits to the whole society. Thirdly, it addresses the forms and viability of oil exploration in these conditions. The paper thus aims to discuss whether the Pré-sal could effectively produce benefits to the Brazilian society. Armando Dalla Costa, Elson Rodrigo de Souza-Santos 2009 Pré-sal; regulatory mark; exploration model; Petrobras http://d.repec.org/n?u=RePEc:rep:wpaper:2009-05&r=all Power interruptions are a typical characteristic of national grids in developing countries.Manufacturing, processing, refrigeration and other facilities that require a dependable supply of power, and might be considered a small grid within the larger national grid,employ diesel generators for backup. In this study, we develop a stochastic simulation model of a very small grid connected to an unreliable national grid to show that the introduction of wind generated power can, despite its intermittency, reduce costs significantly. For a small grid with a peak load of 2.85 MW and diesel generating capacity of 3.75 MW provided by two diesel generators, the savings from using wind energy (based on wind data for Mekelle, Ethiopia) can amount to over a million dollars per month. While the savings from deployment of wind turbines are enormous, the variability of wind prevents elimination of the smaller diesel unit, although this unit operates less frequently than in the absence of wind power. G. Cornelis van Kooten, Linda Wong 2009-09 wind energy and development; stochastic simulation of electricity grids;economic savings from wind power http://d.repec.org/n?u=RePEc:des:wpaper:6&r=all The paper deals with the problems of fiscal sustainability and the stabilization of the public debt. It criticizes the mainstream approach to these issues andargues that an approach inspired by Domar's contribution (1944) is preferable. Whilemainstream analyses of debt stabilization are based on the hypothesis that the economy's growth rate is independent of public spending and its composition, in the paperthis hypothesis is removed. The growth rate is made dependent on the composition ofpublic spending. In this analytical context, ensuring the stabilization of the ratio of thepublic debt to the GDP does not necessarily requires running a primary surplus, whichinstead is the fundamental mainstream conclusion when the interest rate on the debtis higher than the economy's growth rate. The debt ratio can be stabilized throughincreases in the economy's growth rate caused by adequate changes in the composition of public expenditure. Claudio Sardoni 2009 http://d.repec.org/n?u=RePEc:sef:csefwp:239&r=all This paper examines the role of credit rating agencies in the subprime crisis, which was at the outset of the 2007-08 financial turmoil. The focus of the paper is on two aspects of ratings that contributed to the boom and bust of the market for asset-backed securities: rating inflation and coarse information disclosure. The paper discusses how regulation can be designed to mitigate these problems in the future. The suggestion is that regulators should require rating agencies to be paid by investors rather than by issuers (or at least constrain the way they are paid by issuers) and force greater disclosure of information about the underlying pool of securities. Marco Pagano, Paolo Volpin 2009-11-06 credit rating agencies, securitization, default, liquidity, crisis, transparency http://d.repec.org/n?u=RePEc:sef:csefwp:240&r=all This paper assesses the role of surveys for the early estimates of GDP in the euro area in a model-based automated procedures which exploits the timeliness of their release. The analysis is conducted using both an historical evaluation and a real time case study on the current conjuncture. Domenico Giannone, Lucrezia Reichlin, Saverio Simonelli 2009-11-06 Forecasting; factor model; real time data; large data sets; survey http://d.repec.org/n?u=RePEc:sef:csefwp:241&r=all Most stock exchange regulators around the world reacted to the financial crisis of 2007-2009 by imposing bans or regulatory constraints on short-selling by market participants. We use the large amount of evidence generated by these regime changes to investigate their effects on liquidity, price discovery and stock returns. Since bans were enacted and lifted at different dates in different countries, and in some countries applied to financial stocks only, we identify their effects with panel data techniques, and find that bans (i) were detrimental for liquidity, especially for stocks with small market capitalization and high volatility; (ii) slowed down price discovery, especially in bear market phases, and (iii) failed to support stock prices. Alessandro Beber, Marco Pagano 2009-05-06 liquidity, short selling, ban, crisis, volatility http://d.repec.org/n?u=RePEc:mpg:wpaper:2009_35&r=all The realization of market transactions often depends on decisions in groups in which members are anonymous and cannot communicate, but have interrelated outcomes. In a comprehensive study, we investigated the interaction of group effects, strategic effects and endowment effects in different group situations. We show that groups display an endowment effects for uncertain goods which is reduced by about 50% compared to the endowment effect in individuals in corresponding situations. In group situations with additional strategic incentives to overprice the endowment effect completely diminished. The strategic effects and group effects on pricing in group situations cannot be found for participants’ personal valuations of the good, whereas the endowment effect for personal valuations prevailed in both group conditions. This indicates that the endowment effect might be more fundamental than group effects and strategic effects. A paramorphic model for pricing in strategic group situations is suggested and practical implications are discussed. Andreas Glöckner, Janet Kleber, Stephan Tontrup, Stefan Bechtold 2009-10 Decision Making, Endowment Effects, Groups, Strategic Incentives http://d.repec.org/n?u=RePEc:mpg:wpaper:2009_15&r=all The literature on public goods has shown that efficient outcomes are impossible if participation constraints have to be respected. This paper addresses the question whether they should be imposed. It asks under what conditions efficiency considerations justify that individuals are forced to pay for public goods that they do not value. It is shown that participation constraints are desirable if public goods are provided by a malevolent Leviathan. By contrast, with a Pigouvian planner, efficiency can be achieved. Finally, the paper studies the delegation of public goods provision to a profit-maximizing firm. This also makes participation constraints desirable. Felix Bierbrauer 2009-05 Public goods, Mechanism Design, Incomplete Contracts, Regulation http://d.repec.org/n?u=RePEc:mpg:wpaper:2009_37&r=all On both sides of the Atlantic, legislators consider a cap on manager income. As a redistributive intervention, the cap would be misplaced. It affects such a small number of persons that the effect on the Gini coefficient would be negligible. Redistribution is, however, not the raison d’être of the rule. The public perceives a very high yearly income of some as a signal for a lack of solidarity in society, especially if recipients are responsible for low wages or even unemployment of many. Based on demoscopic data from Germany, this article shows that generalised trust in capitalism has indeed severely suffered. It explains why this is troublesome news for the legal order. From this starting point, it discusses the justification of a cap on manager income, despite the fact that the German constitution (unlike the US Lochner jurisprudence) in principle protects economic freedom of managers, firms and stockowners. While it cannot offer a strict proof that manager income works as a signal, if offers a piece of indirect evidence. By way of regression analysis, it shows that the Gini coefficient explains interviewees’ assessment of the justice of capitalism very well, once one controls for the unemployment rate in the year in question, plus the interaction between both explanatory variables. Christoph Engel 2009-10 cap on manager income; generalised trust in capitalism, Gini coefficient, limits to interventions into fundamental freedoms, unemployment rate http://d.repec.org/n?u=RePEc:mpg:wpaper:2009_33&r=all We present a banking model with imperfect competition in which borrowers’ access to credit is improved when banks are able to transfer credit risks. However, the market for credit risk transfer (CRT) works smoothly only if the quality of loans is public information. If the quality of loans is private information, banks have an incentive to grant unprofitable loans in order to transfer them to other parties, leading to an increase in aggregate risk. Nevertheless, the introduction of CRT generally increases welfare in our setup. However, under private information, higher competition induces an expansion of loans to unprofitable firms, which in the limit offsets the welfare gains from CRT completely. Hendrik Hakenes, Isabel Schnabel 2009-10 access to credit, bank competition, credit derivatives, Credit risk transfer, public and private information http://d.repec.org/n?u=RePEc:mpg:wpaper:2009_32&r=all This paper studies the incentives for production cost disclosure in an asymmetric Cournot duopoly. Whereas the efficient firm (consumers) prefers information sharing (concealment) when the firms choose accommodating strategies in the product market, the firm (consumers) may prefer information concealment (sharing) when it can exclude its competitor from the market. Hence, the rankings of expected profit and consumer surplus can be reversed if exit of the inefficient firm is possible. Although the efficient firm has stronger incentives to share information when it shares strategically, there remain cases in which the firm conceals information in equilibrium to induce exit. Jos Jansen 2009-10 cost asymmetry, Cournot duopoly, exit, information disclosure, precommitment http://d.repec.org/n?u=RePEc:mpg:wpaper:2009_34&r=all In 1878 the liberal parties lost enough votes to loose the majority in the parliament which they had defended in the general election just one year before. In this paper, the question of where the voters came from and why the voting changed so crucially within one year are re-examined. The analysis uses a new set of data aggregated at a lower level than those examined by previous stud-ies and makes use of King’s Algorithm, a tool provided by modern political science. The main finding of this paper is that the change towards protectionism was not caused by new, but by floating voters from the agricultural sector. Sibylle Lehmann 2009-10 http://d.repec.org/n?u=RePEc:mpg:wpaper:2009_16&r=all Economic approaches are becoming increasingly prominent in international law. A few years ago, Jack Goldsmith and Eric Posner caused a great stir with their account of The Limits of International Law, in which they argued that international law did not have any effect on state conduct. This contribution reviews two recent books analyzing the effectiveness of international law from an economic perspective. Both authors, Andrew Guzman and Joel Trachtman, take a much more differentiated approach than did Goldsmith and Posner, thus making analytical methods of economics more acceptable for mainstream international law scholarship. Still, this contribution argues that we should be cautious to perceive the economic perspective as a holistic explanation of “how international law works”. Economic models are, for methodological reasons, based on certain assumptions. The analytical tools are thus only capable to answer a certain range of questions so that they have to be complemented by other theoretical approaches. Therefore, we have to be very cautious with policy recommendations that are based on a purely economical perspective. Niels Petersen 2009-06 http://d.repec.org/n?u=RePEc:hhs:vtiwps:2009_013&r=all Gross contracts appear to be the most common contract form for procured public transport in Sweden and elsewhere. This contract form, it has been argued, gives weak incentives for operators to deliver the desired quality level. Therefore many procuring public transport authorities amend contracts with quality incentives. This paper is probably one of the first studies to examine how such quality incentives influence quality outcomes with focus on cancelled departures and delays. The main findings are that the introduction of quality incentives are correlated with both increases and decreases in measured quality outcomes. We do not think, however, that the incentives in themselves have negative effects but hypothesize that the results are driven by underlying cost changes for achieving desired quality objectives that exceed the possible revenues from the incentives. In interviews with the Stockholm public transport authority (SL) and some operators, two central observations surface. The first is that there are causes for quality failures that are not solely the responsibility of operators and that these are therefore not fully reached by the incentives, and the second is that the operators believe that they have exhausted what they can do under the current contracts. Jansson, Kjell, Pyddoke, Roger 2009-10-29 procured; public transport; gross contract; net contract; quality; incentive http://d.repec.org/n?u=RePEc:hhs:sulcis:2009_011&r=all Self-employment is very common among some immigrant groups in Sweden and many of them hire co-nationals in their firms. One reason might be that they want to give newly arrived co-nationals the possibility to earn an income. But what are the consequences for the employees of being employed by a co-national? This paper analyzes the impact on labour income and future employment prospects of being employed by self-employed co-nationals shortly after arrival to Sweden. We find that immigrants in this group have substantially lower incomes than newly arrived immigrants with other forms of employment. We also find that they are less likely to work as employees in the private sector (other than being employed by a self-employed) in the future and are much more likely to become self-employed. Andersson Joona, Pernilla, Wadensjö, Eskil 2009-10-30 ethnic economies; self-employment; income http://d.repec.org/n?u=RePEc:hhs:lunewp:2009_014&r=all This paper simulates the impact across household types of fully funded tax reforms designed to increase consumers’ fiber intake from grain consumption. Our results suggest that household types with the highest initial consumption share of fiber-rich products – i.e., households without children (seniors, couples without children, and single women without children) – experience the highest increase in fiber intake from these reforms. However, they also experience high increases in unhealthy nutrients from the reforms, making the net health effects difficult to evaluate. Seniors and couples without children also gain the most financially, paying less food taxes and facing, depending on the reform, either a lower price level than before the reform or a lower increase in the price level than the average household. These household types also face the lowest initial price level. Households with the lowest initial consumption share of fiber-rich products – families with children – appear to gain the least financially from the reforms: they pay more food taxes and face relatively high increases in price levels. Further, in general they experience an increase in fiber intake smaller than the average household. However, they do generally see reductions in the intake of added sugar, and in many cases saturated fat, which positively affects the health of families with children, who often overconsume these nutrients. Nordström, Jonas, Thunström, Linda 2009-10-16 consumer economics; food; health; taxation http://d.repec.org/n?u=RePEc:hhs:lunewp:2009_016&r=all The make-or-buy decision is analyzed in a simple framework combining contractual incompleteness with the existence of imperfect but contractible performance measures. Contractual incompleteness gives rise to two regimes, identified with make and buy. The performance measure on which comprehensive contracts can be written is imperfect in the sense of being manipulable. The main result is that the externality of manipulation on true performance is key; a positive (negative) "externality" favors make (buy). Andersson, Fredrik 2009-11-04 make-or-buy decision; manipulation; outsourcing http://d.repec.org/n?u=RePEc:hhs:lunewp:2009_015&r=all In this paper we estimate the opportunity cost of children. The underlying theoretical model is represented by a household production model. In the empirical analysis, we consider three different cohorts for men and women born between 1955 and 1970. For the women in the two oldest cohorts, the opportunity cost of two children is estimated to 28-29 per cent of full income, which in monetary terms is close to the estimated income difference between women employed in the public and private sector. The opportunity cost of fatherhood is generally positive, but only significantly positive for men born between 1960 and 1965. Nordström, Jonas 2009-10-16 Children; parenthood; opportunity cost; income loss http://d.repec.org/n?u=RePEc:hhs:nhhfms:2009_009&r=all A benchmark result in public economics is that it is possible to increase both tax revenue and welfare by making a monopoly subject to ad valorem taxes rather than unit taxes. We show that such revenue and welfare dominance does not hold in two-sided markets. Kind, Hans Jarle, Koethenbuerger, Marko, Schjelderup, Guttorm 2009-09-15 Ad Valorem Taxes; Unit Taxes; Two-Sided Markets; Revenue-Dominance; Welfare-Dominance; Monopoly http://d.repec.org/n?u=RePEc:hhs:nhhfms:2009_010&r=all Two measures of an error-ridden explanatory variable make it possible to solve the classical errors-in-variable problem by using one measure as an instrument for the other. It is well known that a second IV estimate can be obtained by reversing the roles of the two measures. We explore a simple estimator that is the linear combination of these two estimates, that minimizes the asymptotic mean squared error. In a Monte Carlo study we show that the gain in precision is significant compared to using only one of the original IV estimates. The proposed estimator also compares well with full information maximum likelihood under normality. Andersson, Jonas, Møen, Jarle 2009-09-15 Measurement errors; Classical Errors-in-Variables; multiple indicator method; Instrumental variable techniques http://d.repec.org/n?u=RePEc:hhs:nhhfms:2009_008&r=all Dynamic optimization problems cover a large class of problems in theoretical and applied economics. A simple iterative algorithm with fast convergence is proposed. It is demonstrated that the algorithm in a few steps produce excellent analytic (closed form) approximations including error bounds to a class of nonlinear problems. The algorithmic scheme is also well suited to produce numerical solutions. The notions of dynamic and potential rents are operationalized. The algorithm is utilizing a relation balancing these concepts. The result is particularly strong in the case of zero discounting where the exact CU-optimal policy is determined in a single step. Applying a particular seed in the general convergent scheme reproduces in a simple way results (formulas) published in the last decade in bioeconomics. Sandal, Leif K. 2009-09-15 Closed form approximations; Contraction algorithm; Renewable resource economics; Capital dynamic modeling; Zero discounting and optimality http://d.repec.org/n?u=RePEc:hhs:nhhfms:2009_007&r=all In the canonical model of investments, the optimal fractions in the risky assets do not depend on the time horizon. This is against empirical evidence, and against the typical recommendations of portfolio managers. We demonstrate that if the intertemporal coefficient of relative risk aversion is allowed to depend on time, or the age of the investor, the investment horizon problem can be resolved. Accordingly, the only standard assumption in applied economics/finance that we relax in order to obtain our conclusion, is the state and time separability of the intertemporal felicity index in the investor’s utility function. We include life and pension insurance, and we also demonstrate that preferences aggregate. Aase, Knut K. 2009-09-15 The investment horizon problem; complete markets; life and pension insurance; dynamic programming; Kuhn-Tucker; directional derivatives; time consistency; aggregation http://d.repec.org/n?u=RePEc:hhs:nhhfms:2009_006&r=all We develop a bioeconomic model to analyze a sole-owner fishery with fixed costs as well as a continuous cost function for the generalized Cobb-Douglas production function with increasing marginal returns to effort level. On the basis of data from the North Sea herring fishery, we analyze the consequences of the combined effects of increasing marginal returns and fixed costs. We find that regardless of the magnitude of the fixed costs, cyclical policies can be optimal instead of the optimal steady state equilibrium advocated in much of the existing literature. We also show that the risk of stock collapse increases significantly with increasing fixed costs as this implies higher period cycles which is a quite counterintuitive result as higher costs usually are considered to have a conservative effect on resources. Maroto, Jose M., Moran, Manuel, Sandal, Leif K., Steinshamn, Stein I. 2009-09-15 Bioeconomic modelling; Stock collapse; Fixed costs; Pulse fishing; Cyclical dynamics; Increasing marginal returns http://d.repec.org/n?u=RePEc:hhs:nhhfms:2009_011&r=all This article analyzes the value-relevance of industry-based and resource-based competitive advantage in a large sample of firms listed on the Oslo Stock Exchange. We measure competitive advantage by a single variable and perform a new decomposition into its underlying sources. In 1986-2005, the industry-based and the resource-based competitive advantage explain more than 20% of abnormal stock market returns, accumulated over five years. The resource-based advantage is almost four times more important than the industry-based advantage. Differences in both the return and the risk capability of firms’ net assets relative to their industry peers are significant parts of the resource-based advantage, estimated at 60% and 40%, respectively. Gjerde, Øystein, Knivsflå, Kjell Henry, Sættem, Frode 2009-10-20 Competitive advantage; superior performance; value-relevance of performance metrics http://d.repec.org/n?u=RePEc:hhs:bofitp:2009_020&r=all This paper investigates whether seasonalities in daily stock returns are related to the trading behavior of individual and institutional investors. The change in the investor structure of B-share markets in Shanghai and Shenzhen after the abolition of ownership restrictions in 2001 provides a unique testing environment. We show that day-of-the-week effects are attenuated after the market entrance of Chinese individual investors, who had previously not been allowed to trade in B-shares. Our empirical results suggest that institutional rather than individual investors are a main driving force behind such anomalies. In addition, we find evidence of reduced index return autocorrelation and US spillover effects in the post-liberalization period. Bohl, Martin T., Schuppli, Michael, Siklos, Pierre L. 2009-10-30 institutional investors; individual investors; stock return seasonalities; Chinese stock markets; GARCH model http://d.repec.org/n?u=RePEc:hhs:ifauwp:2009_022&r=all This paper provides a comprehensive evaluation of benefit sanctions ,i.e. temporary reductions in unemployment benefits as punishment for noncompliance with eligibility requirements. In addition to the effects on unemployment durations, we evaluate the effects on post-unemployment employment stability, on exits from the labor market and on earnings. In our analysis we use a rich set of Swiss register data which allow us to distinguish between ex ante effects, the effects of warnings and the effects of enforcement of benefit sanctions. Adopting a multivariate mixed proportional hazard approach to address selectivity, we find that both warnings and enforcement increase the job finding rate and the exit rate out of the labor force. Warnings do not affect subsequent employment stability but do reduce post-unemployment earnings. Actual benefit reductions lower the quality of post-unemployment jobs both in terms of job duration as well as in terms of earnings. The net effect of a benefit sanction on post-unemployment income is negative. Over a period of two years after leaving unemployment workers who got a benefit sanction imposed face a net income loss equivalent to 30 days of full pay due to the ex post effect. In addition to that, stricter monitoring may reduce net earnings by up to 4 days of pay for every unemployed worker due to the ex ante effect. Arni, Patrick, Lalive, Rafael, van Ours, Jan C. 2009-11-16 Benefit sanctions; earnings effects; unemployment duration; competing-risk duration models http://d.repec.org/n?u=RePEc:hhs:ratioi:0144&r=all Using cross-sectional data for 76 countries, we apply instrumental variable techniques based on pronoun drop, temperature and monarchies to demonstrate that historical trust levels predict several indicators of current welfare state design, including universalism and high levels of regulatory freedom. We argue that high levels of trust and trustworthiness are necessary, but not sufficient, conditions for societies to develop successful universal welfare states that would otherwise be highly vulnerable to free riding and fraudulent behavior. Our results do not exclude positive feedback from welfare state universalism to individual trust, although we claim that the important causal link runs from historically trust levels to current welfare state design. Bergh, Andreas, Bjørnskov, Christian 2009-10-29 Social trust; Welfare State http://d.repec.org/n?u=RePEc:hhs:stavef:2009_029&r=all . Kalil, Ariel, Mogstad, Magne, Rege, Mari, Votruba, Mark 2009-09-10 Child development; divorce; fathers' proximity; long-run outcomes; relocation http://d.repec.org/n?u=RePEc:hhs:stavef:2009_031&r=all . Chollete, Loran, Ning, Cathy 2009-09-14 Asymmetric dependence; copula; correlation complexity; extreme event; economic policy; money neutrality; systemic downturn http://d.repec.org/n?u=RePEc:hhs:stavef:2009_030&r=all . Rege, Mari, Telle, Kjetil, Votruba, Mark 2009-06-30 disability; downsizing; layoffs; plant closing; social insurance; social interaction; welfare norms http://d.repec.org/n?u=RePEc:hhs:ifswps:2009_018&r=all <p> In Sweden the most part of intergenerational transfers are made through the public sector. While our knowledge about the economic life cycle is far from complete we face new challenges with an ageing population. This paper discusses the demographic trends and relationship with the economic life cycle. Some possibilities to meet the problems associated with ageing are discussed.<p> Hallberg, Daniel 2009-11-04 ageing population; economic life cycle; retirement; human capital http://d.repec.org/n?u=RePEc:cra:wpaper:2009-27&r=all This paper analyses the effect of gender on reported and perceived levels of stress through examination of both the physical and psychological indicators. It may be interesting to work with police data due to high stress levels among police officers and the fact that the work environment is male dominant (females are a minority). In our study we not only explore gender differences, but also whether job and private environmental factors such as effective cooperation between units, a higher trust in the work partner, a higher level of work-life-balance and home stability, and a higher level of interactional fairness, affect female and male officers differently. Using multivariate regression analysis of police officers we find that female officers are significantly more likely to report suffering from physical stress indicators than their male counterparts while no gender differences are observable in regards to psychological stress. Moreover, a higher level of trust and cooperation, and a higher level of interactional fairness at work are not able to absorb physical stress among female, while these factors have a strong impact on male officers. On the other hand, for both, female and male officers, work-life balance and stability at home have the tendency of reducing physical stress. Martin Gächter, David A. Savage, Benno Torgler 2009-10 Gender, Stress, Police Officers, Burnout, Work-life Balance, Justice http://d.repec.org/n?u=RePEc:cra:wpaper:2009-26&r=all In comparing Switzerland and Germany, this paper discusses basic but potentially conflicting constitutional principles and the problems which can arise from such conflicts and which have to be handled by a constitution. We concentrate on three central areas: (i) the tension between democracy and the rule of law, (ii) direct versus (purely) representative democracy, and (iii) competitive versus co-operative federalism, where we also discuss problems of fiscal equalisation systems. Finally, we present some proposals for a reform of the German political system. Gebhard Kirchgässner 2009-10 Direct Democracy, Human Rights, Rule of Law, Federalism, Fiscal Equalisation http://d.repec.org/n?u=RePEc:oec:ecoaaa:733-en&r=all While Mexico’s growth performance has gradually improved over the past decades, its convergence toward OECD countries has been less rapid than in several other emerging markets. The recent significant reductions in import tariffs should help the economy take fuller advantage of trade and investment integration, which could be a relative strength for Mexico given its geographic location. Reforms introduced in the past two years, including those to promote competition and transparency in the financial sector and, to a lesser extent in telecommunications, will also stimulate the dynamism of the economy. Despite this progress, further reforms are needed to boost overall and within-sector productivity. Relative weaknesses in education, infrastructure, financial development, the rule of law, as well as a lack of competition come out in various studies as explaining why Mexico has not grown as fast as other countries. Focusing attention now on reforms in areas with rapid pay-offs such as improving competitiveness and infrastructure could yield double benefits in supporting the recovery from the current recession and longer-term growth. This can be achieved by increasing competition, especially in network industries, liberalizing further the foreign investment and trade regimes, and improving education coverage and trade-related infrastructure.<P>Pied au plancher : Des réformes structurelles pour dynamiser la croissance à long terme au Mexique et accélérer la sortie de crise<BR>Ces dernières décennies, le Mexique a progressivement amélioré ses performances en matière de croissance, mais sa convergence vers les pays de l’OCDE a été beaucoup moins rapide que celle de plusieurs autres marchés émergents. Les récentes réductions substantielles des droits à l’importation devraient aider l’économie à profiter plus pleinement de l’intégration des échanges et des investissements, ce qui pourrait constituer un atout relatif pour le Mexique compte tenu de sa situation géographique. Les réformes lancées ces deux dernières années, notamment celles qui visent à promouvoir la concurrence et la transparence dans le secteur financier et, à un degré moindre, dans les télécommunications, stimuleront également le dynamisme de l’économie. En dépit de ces progrès, de nouvelles réformes s’imposent pour favoriser la productivité globale et sectorielle. Selon diverses études, si la croissance du Mexique n’a pas été aussi rapide que celle des autres pays, cela tient aux faiblesses relatives concernant l’éducation, le développement du secteur financier et l’État de droit, à quoi s’ajoute le manque de concurrence. Concentrer maintenant l’attention sur des réformes rapidement rentables – en améliorant, par exemple, la compétitivité et les infrastructures – pourrait générer un double effet positif : soutenir la reprise pour sortir de la récession actuelle et créer de la croissance à long terme. On peut y parvenir en développant la concurrence, notamment dans les industries de réseau, en libéralisant davantage le régime des investissements étrangers et des échanges commerciaux, et en améliorant la couverture de l’enseignement et les infrastructures liées au commerce. David Haugh, Agustin Redonda 2009-11-03 financial markets, marchés financiers, economic growth, croissance économique, trade policy, economic development, politique commerciale, développement économique, aggregate productivity and growth, institutions and growth, antitrust issues and policies, cadres institutionnels, aggregate data, cross-country output convergence, convergence économique entre pays, productivité agrégée, politiques et mesures anti–trust http://d.repec.org/n?u=RePEc:oec:ecoaaa:732-en&r=all Despite progress over the past two decades Mexico?s health and education indicators remain well below the average of the OECD and some of its Latin American emerging market peers. Health insurance coverage is incomplete, especially for low-income families, and access to health services is highly uneven. There are several separate vertically integrated insurance networks, which increases administrative costs and results in an inefficient use of facilities. In education, lower secondary schools enroll only two thirds of the relevant age group and the quality of education is low, as indicated by poor PISA scores. This reflects poor teaching quality, a consequence of non-transparent teacher selection processes until recently, and limited school autonomy in budgeting, instruction and personnel decisions. Accountability to the government and parents is also low as there is no national exit exam after secondary education and the existing evaluation schemes are fragmented. Recent health and education reforms have started to address these issues, but more needs to be done to increase the efficiency of spending by increasing the coverage of health insurance, reducing the fragmentation of the health system, increasing enrolment in lower secondary education, and improving the quality of teaching.<P>Améliorer les performances : renforcer l’efficience des dépenses de santé et d’éducation au Mexique<BR>Malgré les progrès réalisés ces vingt dernières années, les indicateurs du Mexique dans les domaines de l’éducation et de la santé restent nettement inférieurs à la moyenne OCDE et aux indicateurs de certains pays émergents d’Amérique latine. La couverture par l’assurance-maladie est incomplète, en particulier pour les familles à bas revenu, et l’accès aux services de santé est très inégalitaire. Plusieurs systèmes d’assurance verticalement intégrés coexistent, ce qui accroît les coûts administratifs et empêche une utilisation efficiente des services. Dans le domaine de l’éducation, seuls deux tiers des enfants en âge d’être scolarisés dans le premier cycle de l’enseignement secondaire le sont effectivement et la qualité du système éducatif laisse à désirer, comme en témoignent les mauvais résultats obtenus dans le cadre de l’enquête PISA. Cette situation résulte d’une mauvaise qualité de l?enseignement, qui s’explique par le manque de transparence qui, jusqu’à une période récente, caractérisait les procédures de sélection des enseignants et par le manque d’autonomie des établissements scolaires sur les plans du budget, de l’enseignement et des décisions relatives au personnel. La responsabilité du système éducatif vis-à-vis du gouvernement et des parents est également limitée du fait qu’il n’y a pas d’examen de fin d’études au terme de la scolarité secondaire et que les systèmes d’évaluation existants sont fragmentés. Les réformes engagées récemment dans les domaines de la santé et de l’éducation ont commencé à remédier à ces faiblesses, mais des efforts supplémentaires s’imposent pour améliorer l’efficience des dépenses en étendant la couverture par l’assurance-maladie, en réduisant la fragmentation du système de santé, en augmentant le taux de scolarisation dans le premier cycle du secondaire et en améliorant la qualité de l’enseignement. Cyrille Schwellnus 2009-11-03 Mexico, Mexique, education policy, politique d'éducation, data envelopment analysis, health policy, politique de santé, analyse d'enveloppement des données http://d.repec.org/n?u=RePEc:oec:ecoaaa:730-en&r=all This paper examines the effect of economic crises on structural unemployment using an Autoregressive Distributed Lags model and accounting for the role of institutional settings. Analysing an unbalanced panel of 30 OECD economies from 1970 to 2008, we found that downturns have, on average, a significant positive impact on the level of structural unemployment rate. The maximum impact varies with the severity of the downturn. Institutions (such as Employment Protection Legislation, average replacement ratio and product market regulation) influence both the extent of the initial shock and the adjustment pattern in the aftermath of a downturn.<P>Comment les institutions influencent-elles le chômage structurel en temps de crise ?<BR>Ce document examine l’effet des crises économiques sur le chômage structurel en utilisant un modèle Autorégressif à Retards Distribués et en prenant en compte l’effet des institutions. A partir d’un panel non cylindré de 30 économies de l’OCDE de 1970 à 2008, les crises économiques sont estimées avoir, en moyenne, un effet significatif et positif sur le niveau du taux de chômage structurel. L’effet maximal varie avec la sévérité de la crise. Les institutions (législation sur la protection de l’emploi, ratio de remplacement moyen et régulation sur les marchés des produits) influencent à la fois l’amplitude du choc initial et l’ajustement suivant le choc. Davide Furceri, Annabelle Mourougane 2009-11-03 employment protection legislation, législation sur la protection de l'emploi, institutions, institutions, crisis, crise, structural unemployment, chômage structurel http://d.repec.org/n?u=RePEc:oec:ecoaaa:731-en&r=all In the decade following the 1998 financial crisis Russia’s banking system grew much larger and stronger – indeed, growth rates were dangerously high – but even before the onset of the current global crisis it continued to play a limited role in intermediating savings and investment, especially for small and medium-sized enterprises. Moreover, despite important improvements, some weaknesses in prudential supervision remained, and the Russian banking sector continued to have too many very small banks doing little if any banking business. This paper discusses the policy imperatives in the short term, in the face of the ongoing economic crisis, and reforms that could be implemented over the longer term to improve the efficiency and resilience of the financial system and raise Russia’s potential growth rate. While the current crisis is painful for the banking sector as well as the broader economy, it may facilitate a restructuring of the system that will be positive in the long run, as well as new approaches to regulation that will make banking less crisis-prone.<P>Vers un secteur bancaire russe plus efficace et résilient en Russie<BR>Pendant la décennie après la crise de 1998 le système bancaire russe est devenu beaucoup plus grand et fort – les taux de croissance étaient même inquiétants – mais même avant le début de la crise mondiale actuelle il a continué à jouer un rôle limité dans l’intermédiation de l’épargne et l’investissement, surtout pour les petites et moyennes entreprises. D’ailleurs, malgré des pas en avant importants, il restait des faiblesses dans la surveillance prudentielle, et le secteur bancaire avait toujours trop de banques minuscules qui avaient très peu de vraies activités bancaires. Cette étude aborde les principaux défis pour la politique envers les banques à court terme étant donné le contexte de crise économique, et les réformes qui pourraient être mises en œuvre à plus long terme afin d’augmenter l’efficacité et la stabilité du secteur bancaire et de hausser le taux de croissance de la production potentielle. La crise actuelle, tout en étant douloureuse pour le secteur bancaire et l’économie, pourrait faciliter une restructuration du système qui serait positive à long terme, ainsi que des nouvelles approches à la réglementation qui aideront à diminuer la vulnérabilité du système aux crises. Geoff Barnard 2009-11-03 corruption, transition, transition, transparency, transparence, assurance, banking, deposit insurance, banque, assurance des dépôts, Russia, economy, state ownership, Russie, économie, prudential supervision, international financial reporting standards, Sberbank, surveillance prudentielle, comptabilité, norme comptable internationale, corruption, Sberbank, accountability, propriété de l’État http://d.repec.org/n?u=RePEc:oec:eduaac:2009/10-en&r=all This article recommends approaches to take in designing sustainable educational environments. The authors present recent examples of UK school buildings that reduce carbon emissions and capitalise on renewable energy sources, and predict how schools will respond to energy needs in the future.<P>Durabilité et innovation dans les écoles du Royaume-Uni<BR>Cet article émet des recommandations sur les approches à adopter en vue de la conception d’environnements pédagogiques durables. Les auteurs présentent des exemples récents de bâtiments scolaires britanniques qui réduisent leurs émissions de carbone et capitalisent sur les sources d’énergie renouvelables, et prédisent la manière dont les écoles répondront à leurs besoins énergétiques dans le futur. Wayne Head, Richard Buckingham 2009-11 sustainable development, United Kingdom, learning environment, educational buildings, school infrastructure http://d.repec.org/n?u=RePEc:oec:eduaac:2009/9-en&r=all CELE’s International Pilot Project on Evaluating Quality in Educational Spaces aims to assist education authorities, schools and others to maximise the use of and investment in learning environments. This article provides an update on the pilot project, which is currently being implemented in Brazil, Mexico, New Zealand, Portugal and the United Kingdom.<P>Évaluer la qualité des espaces éducatifs : Étude pilote du CELE/OCDE<BR>L’Étude pilote internationale du CELE pour l’évaluation de la qualité des espaces éducatifs a pour objectif d’aider les autorités éducatives, les écoles et d’autres à optimiser les investissements et leur utilisation dans les environnements pédagogiques. Cet article donne un aperçu de l’avancement de l’étude pilote, qui est actuellement mise en œuvre au Brésil, au Mexique, en Nouvelle-Zélande, au Portugal et au Royaume-Uni. Hannah von Ahlefeld 2009-11 evaluation, learning environment, educational buildings, educational architecture, quality http://d.repec.org/n?u=RePEc:oec:eduaac:2009/8-en&r=all In the course of 2008, the Flemish Agency for Infrastructure in Education (AGIOn) evaluated the quality of school buildings in Flanders using a monitoring system based on international experience. The results showed that most school buildings satisfy the basic requirements of habitability and safety, but they often fall short when it comes to the new pedagogical and social challenges of the 21st century.<P>Contrôle de la qualité des bâtiments scolaires dans la communauté flamande de Belgique<BR>Au cours de l’année 2008, l’Office flamand pour l’infrastructure scolaire (AGIOn) a évalué la qualité des bâtiments scolaires en Flandres, en utilisant un système de contrôle basé sur l’expérience internationale. Les résultats ont démontré que la plupart des bâtiments scolaires répondent aux exigences de base en matière d’habitabilité et de sécurité, mais ne sont pas à la hauteur en ce qui concerne les défis pédagogiques et sociaux du XXI<sup>e</sup> siècle. Geert Leemans 2009-11 Belgium, educational buildings, educational architecture, school security, school building programme http://d.repec.org/n?u=RePEc:oec:elsaab:97-en&r=all This document provides a first comparative overview of the presence and outcomes of the children of immigrants in the labour markets of OECD countries, based on a collection of data from 16 OECD countries with large immigrant populations. Its key findings are the following: • In about half of all OECD countries, children of immigrants - both native-born offspring of immigrants and foreign-born who immigrated before adulthood with their parents - account for ten or more percent of young adults (aged 20-29) in the labour market. • Most children of immigrants have parents from low- and middle-income countries, and the share with parents from such countries is larger among foreign-born children than among the nativeborn offspring of immigrants. This is a result of the diversification of migration flows over the past 20 years. • Among the native-born children of immigrants in European OECD countries, Turkey is the single most important country of parental origin, followed by Morocco. When comparing the countries of parental origin for the native- and the foreign-born children of immigrants, one observes in the European OECD countries a strong decline in the importance of the origin countries of the post-World War II wave of labour migration, in particular Turkey but also Morocco, Italy, Portugal and Pakistan. • In all countries except Germany and Switzerland, a large majority of the native-born children of immigrants have obtained the nationality of their countries of residence. • The OECD’s Programme for International Student Assessment (PISA) has demonstrated lower assessment results for the children of immigrants in most European OECD countries. There are close links between PISA outcomes and educational attainment levels. In the countries in which children of migrants have large gaps in PISA-scores vis-à-vis children of natives, children of immigrants are also strongly overrepresented among those who are low-educated. • One observes a clear difference between the non-European OECD countries (Australia, Canada, New Zealand and the United States) on the one hand and European OECD countries on the other hand. In the former, the children of migrants have education and labour market outcomes that tend to be at least at par with those of the children of natives. In the European OECD countries (with the exception of Switzerland), both education and labour market outcomes of the children of immigrants tend to be much less favourable. • Part of the differences in labour market outcomes observed in most European OECD countries is due to the fact that the children of immigrants tend to have a lower educational attainment than the children of natives. However, significant gaps remain in many of these countries even after correcting for differences in average educational attainment. • The remaining gaps are particularly large for the offspring of migrants from Turkey and from certain non-OECD countries such as Morocco. In all countries, children with parents from middle-and low-income countries have lower outcomes than children of immigrants from highincome countries. The differences are particularly large for young immigrant women. • On average over the OECD countries for which data are available, the children of immigrants have an unemployment rate that is about 1.6 times higher than that of the children of natives, for both genders. The children of immigrants also have lower employment rates – the gaps compared with the children of natives are about 8 percentage points for men and about 13 percentage points for women. • For women, one observes much better results for the native children of immigrants than for young immigrants, suggesting that having been fully raised and educated in the country of residence brings some additional benefit. However, this is not observed for men, where the native-born children of immigrants do not seem to fare better than the young immigrants, particularly after accounting for the lower educational attainment of the latter group. • The less favourable picture for the female children of migrants compared with their male counterparts is less clear-cut after controlling for socio-demographic characteristics, in particular marital status and number of children. Part of the “double disadvantage” for the female offspring of immigrants seems to be due to the fact that in the age range under consideration (20-29 years), they are overrepresented among those who are (already) married and have children. Indeed, once controlling for this, native-born women who have parents from the Maghreb region or Southern Europe, as well those with Turkish parental origin, tend to have higher employment rates - relative to comparable natives - than their male counterparts. • When in employment, children of immigrants are in occupations similar to those of the children of natives. They are also widely spread throughout the economy, but tend to remain underrepresented in the public sector.<BR>Les principales conclusions qui s’en dégagent sont résumées ci-dessous. • Dans la moitié environ de l’ensemble des pays de l’OCDE, les enfants d’immigrés (aussi bien ceux nés dans le pays hôte de parents immigrés que ceux nés à l’étranger et qui ont immigré avec leurs parents avant d’avoir atteint l’âge adulte) représentent au moins dix pour cent des jeunes adultes (jeunes âgés de 20 à 29 ans) présents sur le marché du travail. • Les parents des enfants immigrés sont le plus souvent originaires de pays à revenu faible ou intermédiaire, et la proportion d’enfants dont les parents sont dans ce cas est plus forte parmi ceux qui sont nés à l’étranger que parmi les enfants nés dans le pays hôte. • Parmi les enfants nés dans un pays européen de l’OCDE de parents immigrés, ceux dont les parents sont originaires de Turquie sont les plus nombreux, suivis des enfants d’origine marocaine. Quand on compare les pays d’origine des parents immigrés d’enfants nés dans le pays hôte et d’enfants nés à l’étranger, on observe, dans les pays européens de l’OCDE, un fort recul de l’importance des pays d’origine correspondant à la vague de migration de travail de l’après- Deuxième Guerre mondiale. Cette observation concerne notamment la Turquie, mais aussi le Maroc, l’Italie, le Portugal et le Pakistan. • Dans tous les pays hormis l’Allemagne et la Suisse, une grande majorité des enfants nés sur le territoire de parents immigrés ont obtenu la nationalité de leur pays de résidence. • Le Programme international de l’OCDE pour le suivi des acquis des élèves (PISA) a démontré que, dans la plupart des pays européens de l’Organisation, les enfants d’immigrés obtenaient de piètres résultats lors des évaluations. Il existe un lien étroit entre les acquis scolaires mesurés par PISA et les niveaux d’études atteints. Dans les pays où l’on relève d’importantes disparités entre les enfants d’immigrés et les enfants de parents autochtones du point de vue des notes obtenues lors des tests PISA, les premiers sont aussi fortement surreprésentés parmi les personnes peu instruites. • On relève une nette différence entre les pays non européens de l’OCDE (Australie, Canada, États-Unis et Nouvelle-Zélande), d’une part, et les pays européens de l’Organisation, d’autre part. Dans le premier groupe, les enfants d’immigrés affichent généralement, au regard de l’éducation et de l’emploi, des résultats au moins égaux à ceux des enfants de parents autochtones. Mais dans les pays européens de l’OCDE (à l’exception de la Suisse), les résultats des enfants d’immigrés au regard de l’éducation et de l’emploi sont généralement moins bons. Thomas Liebig, Sarah Widmaier 2009-10-29 http://d.repec.org/n?u=RePEc:mar:magkse:200943&r=all This paper analyzes asymmetric tax competition under formula apportionment. It sets up a model with multinationals where two welfare-maximizing jurisdictions of different size levy source-based corporate taxes and allocate taxes using the formula approach. At the Nash equilibrium, tax rates are too low and public goods quantities are too small. The paper shows that the larger country levies a larger tax rate compared to the smaller country as it does under separate accounting. Citizens of the larger country are worse off than those of the smaller country. Matthias Wrede 2009 Multinational enterprises, corporate taxation, formula apportionment, asymmetric tax competition. http://d.repec.org/n?u=RePEc:mar:magkse:200944&r=all We investigate conditional correlations between six CEEC-3 financial markets estimated by DCC-MGARCH models. In general, the highest correlations exist between Hungary and Poland in foreign exchange and stock markets. Short-term money markets are rather isolated from each other. We find that the associations of CEEC-3 exchange rates versus the euro are weaker than those versus the US dollar. The persistence of the effect of shocks on the timevarying correlations is strongest for foreign exchange and stock markets, indicating a tendency toward contagion. In searching for the origins of financial market volatility in the CEEC-3, we uncover some evidence of Granger-causality on the foreign exchange markets. Finally, using a pool model, we investigate the impact of euro area, US, and CEEC-3 news on the correlations. Apart from ECB monetary policy news, we observe no broad effects of international news on correlations; instead, local news exerts an influence, which suggests adominance of country- or market-specific circumstances. David Büttner, Bernd Hayo 2009 Financial markets, Czech Republic, Hungary, Poland, political news, macroeconomic shocks, contagion, DCC-MGARCH http://d.repec.org/n?u=RePEc:ias:cpaper:09-wp501&r=all The modeling of price risk in the theory and practice of commodity risk management has been developed far beyond that of crop yield risk. This is in large part due to the use of plausible stochastic price processes. We use the Pólya urn to identify and develop a model of the crop yield expectation stochastic process over a growing season. The process allows a role for agronomic events, such as growing degree days. The model is internally consistent in adhering to the martingale property. The limiting distribution is the beta, commonly used in yield modeling. By applying binomial tree analysis, we show how to use the framework to study hedging decisions and crop valuation. David A. Hennessy 2009-11 crop insurance, growing degree days, martingale, Pólya urn, stochastic process. http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2009-145&r=all This paper evaluates transport consumption inequalities among French households, investigates their temporal dynamics, and estimates the redistributive effects of taxes on different commodity categories. A decomposition by expenditure component of the Gini inequality index is applied, using household-level data from five expenditure surveys conducted between the end of the 1970’s and the early 2000’s. The results highlight the effect of car social diffusion. Indeed, the relative contribution to global inequality of car use items, especially fuels, decreased regularly over time, reflecting the more and more widespread use of the car. Moreover, fuel taxes become regressive (i.e. they affect the poor more than the rich), while the progressive character of taxes on the remaining car use commodities weakens over time. Therefore, the design of policy measures to reduce car use and thus attenuate its nuisances for the environment should also account for the imperative of equity. Increasing car use costs, notably fuel prices, through an increase of uniform taxes would be particularly inequitable. In particular, the least wealthy of car-dependent households living in low-densely populated zones would face a heavy burden that they cannot avoid. Area-specific measures may be more appropriate. The case of local public transport underlines the necessity of accounting for disparities in terms of availability of alternatives to the car. Taxes on these services appear to be neutral at national level (i.e. neither progressive nor regressive), but this result hides a diversity of situations in terms of supply of these transport means according to the degree of urbanization and population density. Effectively, these taxes prove to be regressive when focusing on the Greater Paris region, a large urban area very well endowed with public transport infrastructure. Hence, a distinction by degree of urbanization is to be considered. Akli Berri 2009 Inequality, transport consumption, household expenditure surveys, Gini index, decomposition by component, redistributive effects of taxes http://d.repec.org/n?u=RePEc:esx:essedp:674&r=all In the last twenty years the divorce rate in the United States has being decreasing, differentiating the US trend from those of most Western countries. In this paper I explore the possibility to study this phenomenon by relating the patterns in the divorce rates to the role played by “time use complementarities” within the household. The changes in time consumption of couples in the last forty years are used as proxies for the changes in consumption habits and are analyzed through the American Time Use Data. The relation between time management and the likelihood of divorce is then studied making use of several datasets from the National Longitudinal Study, covering the period 1967-2004. The results show the emergence of relevant differences in the way American couples shape their time together during the last four decades. Spouses devote more time to joint leisure activities, while togetherness does not relate anymore to household chores and childcare. Furthermore the link between the way partners share household responsibilities and the hazard rate of divorce tends to vanish over time, suggesting a reduction in production complementarities as a deciding factor in the success of marriages. Domenico Tabasso 2009-10-29 http://d.repec.org/n?u=RePEc:esx:essedp:677&r=all The paper proposes that the organization of financial markets is decided by the allocation of the liability to repay investors. Based on the liability allocation, the paper examines all possible modes of organizing finance and monitoring in an economy a la Townsend (1979). The equilibrium mode is either Financial Intermediation (FI) where the monitor alone takes the liability, or Conglomeration where it is taken by a Conglomerate composed of entrepreneurs and the monitor. Conglomeration also implements the benefit of diversification, which thus does not drive FI. Moreover, opposed to what Diamond (1984) would predict, monitoring costs advantage FI. Tianxi Wang 2009-11-03 http://d.repec.org/n?u=RePEc:esx:essedp:675&r=all This paper addresses the issue of the presence and the extent of equalizing differences between temporary and permanent workers. The assumption of perfect competition in the labour market is directly questioned and a simple duopsonistic model is developed with the aim of capturing the main sources of differentiation among workers. The empirical analysis, based on several waves of the UK Labour Force Data, tends to confirm several of the hypotheses suggested by the model and emphasizes how in the short run workers who have experienced a change in their job status can expect a career trajectory in line with the theory on compensating differentials. In particular, shifts from temporary to permanent contracts tend to relate to a reduction in wage and a simultaneous increase in travel-to-work distance, while the wage dynamic related to the workers shifting from a temporary contract to another temporary position appears to be directly linked to individual characteristics. Domenico Tabasso 2009-10-29 http://d.repec.org/n?u=RePEc:esx:essedp:678&r=all This paper presents a model on the leverage of financial intermediaries, where debt are held by risk averse agents and equity by the risk neutral. The paper shows that in an unregulated competitive market, financial intermediaries choose to be leveraged over the social best level. This is because the leverage of one intermediary imposes a negative externality upon others by reducing their profit margins. The paper thus founds capital adequacy regulation upon the market failure and suggests that this regulation should bind not only commercial banks, but all financial intermediaries, including private equities and hedge funds. Tianxi Wang 2009-11-03 http://d.repec.org/n?u=RePEc:esx:essedp:676&r=all The paper shows that the principal can enhance her control over the agent's human capital by acquiring the physical capital that is critical for him to create value. However, the enhancement in the control necessarily reduces his incentive to make human capital investment ex ante and to exert e¤ort ex post. This trade-off between control and incentive thus decides the boundary of the firm. The paper also presents a rationale for M-form firms: centralized ownership of physical capital to facilitate coordination, and dispersed payoff rights to incentivize divisions. Tianxi Wang 2009-11-03 http://d.repec.org/n?u=RePEc:san:cdmacp:0901&r=all This paper investigates the business cycle fluctuations of the tradeable and nontradeable sectors of the US economy. Then, it evaluates whether a “New Open Economy” model having prices sticky in the producer’s currency can re¬produce the observed fluctuations qualitatively. The answer is positive: both in the model and in the data the standard deviations of tradeable inflation, out¬put and employment are significantly higher than the standard deviations of the corresponding nontradeable sector variables. A key role in generating this result is played by the greater responsiveness of tradeable sector variables to monetary shocks. Laura Povoledo 2009-02 New Open Economy Macroeconomics, Tradeable and Nontradeable Sectors, Business Cycles. http://d.repec.org/n?u=RePEc:san:cdmacp:0907&r=all This paper models the gold standard as a state contingent commitment technology that is only feasible during peace. Monetary policy during war, when the gold convertibility rule suspended, can still be credible, if the policy maker’s plan is to resume the gold standard in the future. The DGE model developed in this paper suggests that the resumption of the gold standard was a sustainable plan, which replaced the gold standard as a commitment technology and made monetary policy time consistent. Trigger strategies support the equilibrium: private agents retaliate if a policy maker defaults its plan to resume the gold standard. Elisa Newby 2009-06 Time Consistency, Monetary Policy, Monetary Regimes. http://d.repec.org/n?u=RePEc:san:cdmacp:0906&r=all We analytically examine output persistence from monetary shocks in a DSGE model with staggered prices or wages under a Taylor Rule for monetary policy. The best known such model assumes Calvo-style staggering of prices and flexible wages and is known to yield no persistence under a Taylor Rule. Switching to Taylor-style staggering introduces lagged output into the model’s ‘New Keynesian Phillips Curve’ equation. Despite this, we show it generates no persistence, whether staggering is in wages or prices. Surprisingly, however, Calvo-style staggering of wages does generate persistence, if there are decreasing returns to labour. Sebastiano Daros, Neil Rankin 2009-05 Output Persistence, Staggered Prices/Wages, Taylor Rule. http://d.repec.org/n?u=RePEc:san:cdmacp:0902&r=all We study a credible Markov-perfect monetary policy in an open New Keynesian economy with incomplete finacial markets. We demonstrate the existence of two discretionary equilibria. Following a shock the economy can be stabilised either 'quickly' or 'slow', both dynamic paths satisfy conditions of optimality and time-consistency. The model can help us to understand sudden change of the interest rate and exchange rate volatility in 'tranquil' and 'volatile' regimes even under a fully credible 'soft peg' of the nominal exchange rate in developing countries. Christoph Himmels, Tatiana Kirsanova 2009-08 Small Open Economy, Incomplete Financial Markets, Discretionary Monetary Policy, Multiple Equilibria. http://d.repec.org/n?u=RePEc:san:cdmacp:0905&r=all Recent work on optimal policy in sticky price models suggests that demand management through fiscal policy adds little to optimal monetary policy. We explore this consensus assignment in an economy subject to ‘deep’ habits at the level of individual goods where the counter-cyclicality of mark-ups this implies can result in government spending crowding-in private consumption in the short run. We explore the robustness of this mechanism to the existence of price discrimination in the supply of goods to the public and private sectors. We then describe optimal monetary and fiscal policy in our New Keynesian economy subject to the additional externality of deep habits and explore the ability of simple (but potentially non¬linear) policy rules to mimic fully optimal policy. Campbell Leith, Ioana Moldovan, Raffaele Rossi 2009-09 Monetary Policy, Fiscal Policy, Deep Habits, New Keynesian. http://d.repec.org/n?u=RePEc:san:cdmacp:0904&r=all A pervasive empirical finding for the US economy is that inflation is negatively correlated with the normalized market price of capital (Tobin's q) and growth. A dynamic stochastic general equilibrium model of endogenous growth is developed to explain these stylized facts. In this model, human capital is the principal driver of self-sustained growth. Long run comparative statics analysis suggests that inflation diverts scarce time resource to leisure which lowers human capital utilization. This impacts growth adversely and modulates cap¬ital adjustment cost downward resulting in a decline in Tobin's q. For the short run, a Tobin effect of inflation on growth weakens the negative association between inflation and q. Parantap Basu, Max Gillman, Joseph Pearlman 2009-05 http://d.repec.org/n?u=RePEc:san:cdmacp:0903&r=all We review the methods used in many papers to evaluate DSGE models by comparing their simulated moments with data moments. We compare these with the method of Indirect Inference to which they are closely related. We illustrate the comparison with contrasting assessments of a two-country model in two recent papers. We conclude that Indirect Inference is the proper end point of the puzzles methodology. Vo Phuong Mai Le, Patrick Minford, Michael Wickens 2009-09 Bootstrap, US-EU Model, DSGE, VAR, Indirect Inference, Wald Statistic, Anomaly, Puzzle. http://d.repec.org/n?u=RePEc:san:crieff:0911&r=all We consider a principal who deals with two privately informed agents protected by limited liability. Their technologies are such that the fixed costs decline with the marginal costs (the types), which are correlated. Because of these technological features, agents display countervailing incentives to misrepresent type. We show that, with high liability, the first-best outcome can be effected for any type if (1) the fixed cost is non-concave in type, under the contract that yields the smallest feasible loss to agents; (2) the fixed cost is not very concave in type, under the contract that yields the maximum sustainable loss to agents. We further show that, with low liability, the first-best outcome is still implemented for a non-degenerate range of types if the fixed cost is less concave in type than some given threshold, which tightens as the liability reduces. The optimal contract entails pooling otherwise.. Daniel Danau, Annalisa Vinella 2009-09 Countervailing incentives; Limited liability; Correlation; Pooling http://d.repec.org/n?u=RePEc:dgr:eureir:1765017106&r=all Two new methods for dealing with missing values in generalized canonical correlation analysis are introduced. The first approach, which does not require iterations, is a generalization of the Test Equating method available for principal component analysis. In the second approach, missing values are imputed in such a way that the generalized canonical correlation analysis objective function does not increase in subsequent steps. Convergence is achieved when the value of the objective function remains constant. By means of a simulation study, we assess the performance of the new methods. We compare the results with those of two available methods; the missing-data passive method, introduced Gifi's homogeneity analysis framework, and the GENCOM algorithm developed by Green and Carroll. Velden, M. van de, Takane, Y. 2009-11-02 generalized canoncial correlation analysis;missing values http://d.repec.org/n?u=RePEc:dgr:unumer:2009047&r=all Environmental innovation is an essential part of a knowledge based economy, as environmental innovation makes economies more efficient by encouraging and facilitating the use of fewer material or energy inputs per unit of output. In this respect, environmental innovation replaces material inputs with knowledge. Environmental innovation should also result in fewer externalities, or negative environmental impacts, which affect our health and well-being, also in terms of global climate change. Technology shifts caused by technological breakthroughs, rapid changes in demand for resources, or environmental imperatives could also impel societies to invest more heavily in research on how to use energy and other resources more efficiently. The main goal of this paper is to explore and identify relevant indicators for environmental innovation that could be used to develop innovation policy for all economic sectors, as well as for the field of environmental technologies. This is done firstly with the help of a qualitative model presenting the eco-innovation chain. Based on both literature and our data analysis, our chosen key indicators include measures on: environmental regulations and venture capital for the eco-industry; environmental publications, patents and business R&D; eco-industry exports and FDI; sales from environmentally beneficial innovation across sectors; and environmental impacts related to energy intensity and resource productivity of economies. Finding key eco-innovation indicators related to such factors is important for policy makers, as environmental innovation policy is required to counter the two market failures associated with environmental pollution and the innovation and diffusion of new technologies. Kanerva, Minna, Arundel, Anthony, Kemp, Rene 2009 Environmental innovation, environmental goods and services, innovation indicators, CIS, environmental impacts, European Union http://d.repec.org/n?u=RePEc:dgr:unumer:2009046&r=all This paper explores the use of complex adaptive systems theory in development policy analysis using a case study drawn from recent events in Uganda. It documents the changes that took place in the farming system in Soroti district during an outbreak of African cassava mosaic virus disease (ACMVD) and the subsequent decline in cassava production - the main staple food in the area. Resultant adaptation impacts are analysed across cropping, biological, economic and social systems each of which operate as an interlinked sub-system. The policy implications of this story suggest a policy agenda that recognises adaptation capacity as the life blood of complex adaptive systems. Since these types of systems are found in all realms of human activity, it follows that strengthening this capacity is a key developmental priority that requires linking together new configurations of actors and resources to tackle an ever-changing set of contexts. Hall, Andy, Clark, Norman 2009 Complex Adaptive Systems, Innovation Policy, Uganda, Cassava, Adaptation Capacity, Smallholder Production, Policy http://d.repec.org/n?u=RePEc:dgr:unumer:2009045&r=all We present a discrete choice model of consumption that incorporates two empirically validated aspects of consumer behaviour: inertia in consumption and interaction among consumers. We specify the interaction structure as a regular lattice with consumers interacting only with immediate neighbours. We investigate the equilibrium behaviour of the resulting system and show analytically that for a large range of initial conditions clustering in economic behaviour emerges and persists indefinitely. Short-run behaviour of the model is investigated numerically. This exercise indicates that equilibrium properties of the system can predict a short-run behaviour of the model quite accurately. Babutsidze, Zakaria, Cowan, Robin 2009 Clustering, Interaction, Habits, Consumer choice http://d.repec.org/n?u=RePEc:dgr:unumer:2009043&r=all Using the reaction of hydrogen with oxygen to water in order to produce electricity and heat, promises a high electrical efficiency even in small devices which can be installed close to the consumer. This approach seems to be an impressive idea to contribute to a viable future energy supply under the restrictions of climate change policy. Major reasons currently hampering the diffusion of such technologies for house energy supply in Germany are analysed in this paper. The barriers revealed, include high production costs as well as economic and legal obstacles for installing the devices so that they can be operated in competition to central power plants, beside others in tenancies. Droste-Franke, Bert, Kruger, Jorg, Lingner, Stephan, Ziesemer, Thomas H.W. 2009 fuel cell, diffusion processes, valuation of environmental effects, technological innovation http://d.repec.org/n?u=RePEc:dgr:unumer:2009044&r=all After joining the World Trade Organization (WTO), China witnessed a major inflow of Foreign Direct Investment (FDI). Many famous automobile firms of developed countries were attracted to invest in China to cooperate with domestic firms. This paper uses firm-level data of the Chinese automobile industry to analyze the determinants of, and the interrelationships between, innovation input and innovation output, and in particular whether FDI had any influence on these two aspects of innovation. A generalized tobit model will be estimated for both R&D and the share of innovative sales for 2002/2003 and 2005/2006. The findings show that FDI firms are less R&D intensive but, when they innovate in new products, they are more product innovative than domestic-funded firms. Chen, Fang, Mohnen, Pierre 2009 FDI, China, R&D, innovation, automobile industry http://d.repec.org/n?u=RePEc:dgr:umamet:2009016&r=all The quality of publications, approximated by the containing journal''s quality indicator, is often the basis for hire and promotion in academic and research positions. Over the years a handful of ranking methods have been proposed. Discussing the most prominent methodswe show that they are inherently biased against journals publishing short papers. Kóczy László Á., Nichifor Alexandru, Strobel Martin 2009 Economics ; http://d.repec.org/n?u=RePEc:dgr:umamet:2009026&r=all We examine the notion of the core when cooperation takes place in a setting with time and uncertainty. We do so in a two-period general equilibrium setting with incomplete markets. Market incompleteness implies that players cannot make all possible binding commitments regarding their actions at different date-events. We unify various treatments of dynamic core concepts existing in the literature. This results in definitions of the Classical Core, the Segregated Core, the Two-stage Core, the Strong Sequential Core, and the Weak Sequential Core. Except for the Classical Core, all these concepts can be defined by requiring absence of blocking in period 0 and at any date-event in period 1. The concepts only differ with respect to the notion of blocking in period 0. To evaluate these concepts, we study three market structures in detail: strongly complete markets, incomplete markets in finance economies, and incomplete markets in settings with multiple commodities. Habis Helga, Herings P. Jean-Jacques 2009 mathematical economics; http://d.repec.org/n?u=RePEc:dgr:umamet:2009033&r=all Unprecedented growth in private cross-border asset trade and asymmetric internationalbalance sheets are well-documented stylized facts of financial integration. Moreover, weobserve that current accounts are no longer the number one determinant of external balances. Advancing the work of Blanchard et al. (2005), this paper develops a portfolio-balance model that recognizes these stylized facts and shows how they influence the joint dynamics of the current account, the exchange rate and relative asset prices. Calibrating the model to the external adjustment process of the US, the model produces results that are broadly consistent with recent empirical trends. In particular, we find that the composition of its international balance sheet helps the US to better cope with external shocks. Holinski Nils, Kool Clemens, Muysken Joan 2009 international economics and trade ; http://d.repec.org/n?u=RePEc:dgr:umamet:2009043&r=all This paper assesses the impact of a dramatic reform of the Dutch pension system on mental health, savings behavior and retirement expectations of workers nearing retirement age. The reform means that public sector workers born on January 1, 1950 or later face a substantial reduction in their pension rights while workers born before this threshold date may still retire under the old, more generous rules. We employ a unique matched survey and administrative data set comprising male public sector workers born in 1949 and 1950 and find strong ex ante effects on mental health for workers who are affected by the reform. This effect increases as birth dates approach the threshold date. Furthermore, the effects differ in accordance with worker characteristics. Finally, we find that the response of those affected by the reform is to work longer and to save more. Grip Andries de, Lindeboom Maarten, Montizaan Raymond 2009 labour economics ; http://d.repec.org/n?u=RePEc:dgr:umamet:2009015&r=all According to standard rational choice theory, as commonly used in political science and economics, an agent''s fundamental preferences are exogenously fixed, and any preference change over decision options is due to Bayesian information learning. Although elegant and parsimonious, this model fails to account for preference change driven by experiences or psychological changes distinct from information learning. We develop a model of non-informational preference change.Alternatives are modelled as points in some multidimensional space, only some of whose dimensions play a role in shaping the agent''s preferences.Any change in these `motivationally salient'' dimensions can change the agent''s preferences. How it does so is described by a new representation theorem. Our model not only captures a wide range of frequently observed phenomena, but also generalizes some standard representations of preferences in political science and economics. Dietrich Franz, List Christian 2009 mathematical economics; http://d.repec.org/n?u=RePEc:dgr:rugsom:09002&r=all Bezemer, Dirk 2009 http://d.repec.org/n?u=RePEc:dgr:eureri:1765017096&r=all This paper proposes a novel exible approach to modelling time variation in asset return dependence by means of mixture copulas. We distinguish between the strength of dependence as determined by the parameter(s) of a given copula, and the structure of dependence as determined by the copula specification. The suggested time-varying mixture copula allows both dependence characteristics to vary over time. An empirical application to daily international equity markets, using a mixture of the symmetric, tail-independent Gaussian copula and the asymmetric, tail-dependent Gumbel copula, provides evidence that both the strength and structure of dependence exhibit substantial time-variation. From an economic perspective, we show that including changes in either the strength of dependence or the structure of dependence only, leads to serious miscalculation of Value-at-Risk estimates. Markwat, T.D., Kole, H.J.W.G., Dijk, D.J.C. van 2009-10-20 dependence;stock markets;copulas;international correlations http://d.repec.org/n?u=RePEc:hai:wpaper:200916&r=all This article documents a robust negative relationship between household size and medical expenditures. Residing in a larger family is associated with less consumption of medical care ceteris paribus. An additional household member is associated with between $255.60 and $277.36 fewer expenditures on health care on average. Using quantile regression, we found that the magnitude of cost saving associated with living in a larger family increases with the demand for medical care. Based on these findings, we conclude that larger family size may be beneficial to a person’s health. Future research is needed to verify the mechanisms underlying this correlation. Timothy J. Halliday, Mijung Park 2009-11-03 household size, medical expenditure, family, care-giving http://d.repec.org/n?u=RePEc:hai:wpaper:200914&r=all In 2001, the State of Hawaii established a 100 percent tax credit to promote investment in several targeted high technology industries. We chronicle the evolution of Hawaii’s high technology tax credits, describe their provisions, and catalog a host of problems associated with determining whether or not the tax credits have achieved results desired by lawmakers. We conclude that it was a mistake to initiate a generous tax credit program without adequate monitoring by public agencies or disclosure of how public funds are being used by recipients of tax credits. Andrew Kato, Sumner La Croix, James Mak 2009-10-27 tax credit, Hawaii, Act 221, qualified high technology business http://d.repec.org/n?u=RePEc:hai:wpaper:200915&r=all Economic theory suggests that switching from a general property tax to a split-rate tax increases land use efficiency and stimulates urban core development while preserving the environment and reducing urban sprawl. Under split-rate property taxation, land is typically taxed at a significantly higher rate than improvements (buildings). Since the mid-1960s, Hawaii lawmakers have experimented with the split-rate system to encourage economic growth and effect land reform. Recently, Kauai County has adopted the unusual practice of taxing improvements at a higher rate than on land. Kauai’s “inverted” split rate property tax provides tax relief to residents who own and occupy modest homes and simultaneously exports taxes to the tourist industry and visitors. This paper chronicles and explains the rationale behind Hawaii state and county experiments with split rate property taxation. Sally Kwak, James Mak 2009-07 Property taxes, split rate property taxation, tourist taxes http://d.repec.org/n?u=RePEc:esr:wpaper:rb2009/2/1&r=all Layte, Richard, Nolan, Anne 2009-06 qec http://d.repec.org/n?u=RePEc:esr:wpaper:rb2009/2/2&r=all Fitz Gerald, John, Keeney, Mary, Scott, Susan 2009-06 qec http://d.repec.org/n?u=RePEc:esr:wpaper:rb2009/3/2&r=all Whelan, Christopher T., Maitre, Bertrand 2009-09 qec http://d.repec.org/n?u=RePEc:esr:wpaper:rb2009/3/4&r=all Calvert, Emma, Russell, Helen, O'Connell, Philip J., McGinnity, Frances 2009-09 qec http://d.repec.org/n?u=RePEc:esr:wpaper:rb2009/2/6&r=all Smyth, Emer, Darmody, Merike, McGinnity, Frances, Byrne, Delma 2009-07 qec http://d.repec.org/n?u=RePEc:esr:wpaper:rb2009/3/3&r=all Smyth, Emer, McCoy, Selina 2009-09 qec http://d.repec.org/n?u=RePEc:esr:wpaper:rb2009/3/1&r=all Siedschlag, Iulia 2009-09 qec http://d.repec.org/n?u=RePEc:mod:recent:036&r=all In this paper we evaluate wage differentials in Italy combining gender and education perspectives. The main goal of the article is to verify whether the extent of the gender pay gap varies between highly- and low-educated workers, and whether or not the role played by gender differences in characteristics and in market rewards is similar in the two groups. We apply quantile regression analysis and an adaptation of the procedure suggested by Machado and Mata (2005) to evaluate the predicted wage gap at different levels of education, at different points of the female wage distribution scale. The analysis is carried out on the Italian sample of the last available year of the European Community Household Panel (2001). We show that the extent and the trend of the gap predicted across the female distribution is sharply different between groups with diverse educational levels. In the case of low-educated workers, although the predicted gap is largely explained by differences in rewards, lower levels of education or experience are however responsible for the gap, especially on the right-hand side of the distribution. On the contrary, highly-educated females have better characteristics than highly-educated men that partially compensate the rather high difference in returns, in particular at the extremes of the distribution. It thus follows that the unexplained part of the predicted gap reveals a glass ceiling effect only for more highly-educated females. Tindara Addabbo, Donata Favaro 2009-10 human capital; gender wage differentials; quantile regressions http://d.repec.org/n?u=RePEc:iie:wpaper:wp09-11&r=all This paper analyzes how the global financial crisis has impacted emerging Asia and identifies key characteristics that have made these economies more or less vulnerable to a transmission of crises from the advanced economies. After reviewing how economic outcomes in emerging Asia have evolved since the crisis began in the summer of 2007, Morris Goldstein and Daniel Xie review several studies of the effect of financial stress and/or growth slowdown in advanced economies on emerging Asia. They then discuss how emerging Asia is "different" in ways that matter for the contagion of crises, with the emphasis on currency and maturity mismatches, the nature of the region's foreign trade links (product composition, the geographic pattern of trade, and the degree of net export-led growth), financial market integration with the advanced economies, and the scope for implementing countercyclical monetary and fiscal stimulus. Morris Goldstein, Daniel Xie 2009-11 financial crisis, emerging Asia, crisis vulnerability http://d.repec.org/n?u=RePEc:snv:dp2009:200912&r=all This paper presents alternative specifications of the production functions of a large panel of Swedish firms for the period 1992-2000. The period can be characterized as a transition when long-run productivity growth in the Swedish economy improved from being among the weakest to one of the strongest within the OECD. In order to present a detailed exploration of this dramatic change, the time trend and general index models are applied to estimate total factor productivity (TFP) growth, rate of technical change and returns to scale. The models are extended to allow for firm-specific as well as time-varying technical change. The parametric TFP measures are also compared with the non-parametric Solow residual, and several hypotheses are tested to explain the growth patterns in the Swedish economy. It is found that the improved growth rate, initially starting in large exporting manufacturing firms, after a deep economic crisis at the beginning of the 1990s, spilled over to the rest of the economy, both manufacturing and services. Dong-hyun Oh, Almas Heshmati, Hans Loof 2009-08 Technical change, total factor productivity growth, manufacturing, service, enterprise panel data http://d.repec.org/n?u=RePEc:snv:dp2009:200902&r=all This paper examines the relationship between pay inequality, economic growth,and performance in Korea. Pay inequality is estimated by using Theil¡¯s index to identify the factors determining the level of pay inequality, and establish its relationship with economic growth and performance. For the empirical results we use panel data on the Korean manufacturing sector for the period 1993 to 2003. It appears that a large portion of rising pay inequality can be attributed to rising relative pay among the small-sized firms, outside the capital city area and in the ICT sectors which were affected by the economic structural reform since 1997. The findings support the hypothesis of an ¡°augmented¡± Kuznets Curve, according to which certain developed countries are found on an upward-sloping addendum to the original formulation of Kuznets. Yunhee KIM, Jeong-Dong LEE, Almas HESHMATI 2009-01 Pay Inequality, Financial Crisis, Kuznets Curve, Economic Growth,Performance http://d.repec.org/n?u=RePEc:snv:dp2009:200908&r=all This paper analyses the effects of different external knowledge sourcing methods on service innovation performance. We identify three external knowledge sourcing methods: informal information transfer, R&D collaboration, and technology outsourcing. Three hypotheses are established to examine the relationship between these three external knowledge sourcing methods and service innovation. Our result shows that the relationship between the extent of external knowledge sourcing and service innovation performance varies depending on the particular external knowledge sourcing method. This research grants important implication to firms in selecting an appropriate external knowledge sourcing strategy in service industry. Ki H. Kang, Jina Kang 2009-08 service innovation, external knowledge sourcing method, informal information transfer, R&D collaboration, technology outsourcing http://d.repec.org/n?u=RePEc:snv:dp2009:200918&r=all Set by government, corporate, financial, and individual sources, venture capitals(VCs) in South Korea adapted themselves to a new and uncertain VC market through stand-alone as well as syndicated investments. This study raises questions about whether the various financial sources differentially preferred and contributed to their portfolio firms even during the market boom in 2000. Even though there was no single capital source to show better performance, only corporate VCs are found not only to prefer, but also to contribute to intermediate-goods firms. This result can be based on the unique role of corporate VCs to make use of vertical value chain linkage for their investment. Younghoon Kim, Yeonbae Kim, Jeong-Dong Lee 2009-09 Corporate Venture Capital, Intermediate-goods Firm, Financial Sources, Vertical Value Chain Linkage http://d.repec.org/n?u=RePEc:snv:dp2009:200901&r=all In general, societies are divided into agricultural and industrial societies. This study presents perspectives on decelerating agricultural societies. Agricultural demand and supply play major roles in the development of societies. Three theories that describe an agricultural society and its deceleration patterns are described: the neo-classical production function and those articulated by Johnston and Mellor as well as induced innovation by Hayami and Ruttan. Two important cases of decelerating agricultural societies, medieval England and the U.S., are investigated through an examination of the process of agricultural society deceleration and ultimate replacement by an industrial society. The limitations of decelerating agricultural societies, with a focus on structural problems,impacts on industrial structure, and problems of agriculture in market and non-market areas, are discussed. The position of agriculture as described by economic development theory is established by analyzing the stages of economic development, the theory ofstructural change, and the theory of leading industry. Finally, the transition from an agricultural to a commercial society is described with a focus on the formation,development, value creation, and structural limitations of a commercial society. Tai-Yoo KIM, Almas HESHMATI, Jihyun PARK 2009-01 Agricultural development, Agricultural society, Commercial society, Decelerating society, Economic growth, Induced innovation, Simple reproduction http://d.repec.org/n?u=RePEc:snv:dp2009:200916&r=all Iceland, one of the smallest European economies, was hit severely by the 2008-financial crisis. This paper uses a firm-level Community Innovation Survey (CIS) data set to consider the economy in the period preceding the collapse of its financial system. We examine the linkage between the crisis and innovativeness from the perspective of technical efficiency by means of the Data Envelopment Analysis of 204 randomly selected firms. The results suggest that a substantial fraction of the Icelandic firms can be classified as non-efficient in their production process. The production scale of many manufacturing firms is too small to be considered technically efficient, while services firms typically use excessive resources in their production process. A remarkably weak performance in transforming R&D and labor efforts into successful innovations is observed. Based on the empirical results, suitable policy implications are suggested to remedy the inoptimal production structure and help economic recovery. Dong-hyun Oh, Hans Loof, Almas Heshmati 2009-09 Technical efficiency, R&D, Innovation, Productivity, Manufacturing,Services, Iceland http://d.repec.org/n?u=RePEc:snv:dp2009:200907&r=all In the era of ¡®open innovation¡¯, external knowledge is a very important source for technology innovation. In this paper, we investigate the relationship between external knowledge and performance of technology innovation. The effect of external knowledge on the performance of technology innovation can vary with different external knowledge sourcing methods. We identify three ways of external knowledge sourcing: information transfer from informal network, R&D collaboration, and technology acquisition. We propose three hypotheses to examine relationship between the three methods of external knowledge sourcing and the technology innovation performance. Our results show that information transfer from informal network and technology acquisition have positive relationships with the technology innovation performance. R&D collaboration, however, has an inverted-U shape relationship with technology innovation performance. This implies that the effect of external knowledge on technology innovation varies depending on the particular external knowledge sourcing method. This research has important implication for firms in selecting appropriate strategy for accessing external knowledge. Ki H. Kang, Jina Kang 2009-08 external knowledge, open innovation, knowledge sourcing method, technology innovation http://d.repec.org/n?u=RePEc:snv:dp2009:200919&r=all In order to examine the impact of adoption of Information Systems (ISs) on the actual performance of firms, we estimated the complementarities among ISs and found contextual factors using a survey dataset of 616 Korean firms. In particular, we introduced various contextual variables and analyzed their effects on the complementarities of firms. Our results indicate that IT stock serves as an important contextual factor for enhancing the complementarity between adoptions of Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM). It was also revealed that while IT stock has a strong positive direct impact on the performance of firms as well as an indirect impact mediated by ISs, other IT-related variables (such as IT organization and use of firewall) generally have a positive impact only when they are combined with the adoption of ISs. Yunhee Kim, Jae Young Choi, Yeonbae Kim 2009-09 Information Systems, Performance of Firms, Complementarity,Contextuality http://d.repec.org/n?u=RePEc:snv:dp2009:200909&r=all With the dramatically changing technology and market environments, the importance of technology alliance to develop new products and technologies by utilizing firms¡¯ external knowledge has increased. In order to provide insight on the relationship between teacher characteristics and technology alliance performances, this study conceptualized an alliance structure according to Lane and Lubatkin¡¯s ¡®dyadic construct,¡¯ consisting of student firms which absorb knowledge and teacher firms that transfer knowledge. Then we analyzed the relationship between teacher firms¡¯ relative characteristics and student firms¡¯ performance of the technology alliance, using the empirical data of the Korean IT firms that are listed on Korean stock market during 1999-2005. From this analysis, we find that teacher characteristics, such as technology capability, technology similarity, and capability for knowledge transfer, influence the performance of technology alliance. Gunno Park, Jina Kang 2009-08 Technology alliance, teacher firms¡¯characteristics, absorptive capacity, knowledge transfer, Korean IT firm http://d.repec.org/n?u=RePEc:snv:dp2009:200910&r=all This study proposes an alternative methodology for measuring environmentally sensitive productivity growth. The rationale of this methodology is to consider the features of technology appropriately by excluding a spurious technical regress based on the macroeconomic perspective. In order to consider this condition and to develop an alternative index, a directional distance function and the concept of the successive sequential production possibility set are combined. With this combination, the conventional Malmquist-Luenberger productivity index is modified to give the alternative sequential environmentally sensitive productivity index. This proposed index is employed in measuring productivity growth and its decomposed components of OECD countries for the period 1970-2003. We distinguish two main empirical findings. First, even though the components of the conventional Malmquist-Luenberger productivity index and the proposed index are different, the developments of productivity are similar. Second, unlike in previous studies, the efficiency change is the main contributor to the earlier study period, whereas the effect of technical change has prevailed over time. Donghyun Oh, Almas Heshmati 2009-03 efficiency change, environmentally sensitive productivity growth index, directional distance function, Malmquist-Luenberger productivity index, productivity,sequential production possibility set, technical change http://d.repec.org/n?u=RePEc:snv:dp2009:200914&r=all Purpose- The purpose of this research is to analyze empirically the structure of the Web2.0 service network and the mechanism behind its evolution over time. Design/Methodology/Approach - Based on the list of Web2.0 services and their Mashups that is announced on www.programmableweb.com, a network of Web2.0 services was constructed. Within this network, a node represents a Web2.0 service with an open API, and a link between two nodes represents the existence of a Mashup service that uses the two nodes.Findings - Our findings suggest that the evolution of the Web2.0 service network follows the preferential attachment rule, although the exponent of the preferential attachment is lower than for other networks following a preferential attachment rule. Additionally, our results indicate that the Web2.0 service network evolves to a scalefree network, but the exponent of the power law distribution is lower than for other networks as well. Originality/ value - The research applied social network analysis to the Web2.0 service network. It showed that its network structure and the evolution mechanism are different from those found in similar areas, e.g. the WWW. The findings imply that there are factors which lower the exponent of the preferential attachment equation and the power law distribution of the degree centralities. Research limitation/implications - However, we did not investigate the factors responsible for the low values of the exponent of the preferential attachment equation and the exponent of the power law distribution. However, we discussed that it could be correlated with the fact that the interconnection between nodes depends on the property of the nodes. Junseok Hwang, Jorn Altmann, Kibae Kim 2009-09 Software Services Economics, Web2.0 Mashup, Scale-Free Network, Preferential Attachment Rule, Self-Organization, Social Network Analysis http://d.repec.org/n?u=RePEc:snv:dp2009:200904&r=all The paper introduces a replacement forecasting model that operates at the brand level and overcomes limitations of existing models. The model (1) consists of a diffusion model and a time series model; (2) separately identifies the diffusion of first-time purchases and that of replacement purchases; (3) reflects brands¡¯ competitive factors affecting product diffusion; and (4) characterizes consumers¡¯ different replacement cycles.The model is applied to South Korea¡¯s mobile handset market. The model performs well in terms of its fit and forecasting when compared with other forecasting models incorporating replacement and repeat purchases. The usefulness of the model stems from its ability to describe complicated environments and its flexibility in including multiple factors that drive diffusion in the regression analysis. Jongsu Lee, Chul-Yong 2009-04 Replacement, Diffusion model, Mobile handset market http://d.repec.org/n?u=RePEc:snv:dp2009:200905&r=all This study analyzes the effects of knowledge characteristics on the extent of organizational effort for knowledge transfer. In this paper, three knowledge characteristics that affect organizational behavior for knowledge transfer are identified based on knowledge-based views and organizational learning theory: tacitness, difficulty, and the importance of knowledge. We establish three hypotheses on the effects of these three knowledge characteristics on the extent of effort for knowledge transfer (i.e., the frequency of contact with knowledge source), and provide empirical tests employing the dataset from project teams in a multinational consulting firm via the OLS model. Results show that tacitness, difficulty, and importance have positive effects on the frequency of contact with knowledge sources. This implies that firms exert more effort to acquire the knowledge when the knowledge is tacit, difficult, or important Ki H. Kang, Jina Kang 2009-08 knowledge transfer, knowledge characteristics, tacitness, difficulty,importance http://d.repec.org/n?u=RePEc:snv:dp2009:200903&r=all Forecasting demand for new technology for which few historical data observations are available is difficult but essential to successful marketing. The current study suggests an alternative forecasting methodology based on a hazard rate model using stated and revealed preferences. In estimating the hazard rate, information is derived initially through conjoint analysis based on a consumer survey and then updated using Bayes¡¯ theorem with available market data. Based on the results of the empirical analysis, the model described here can significantly improve demand forecasting for newly introduced technologies. Chul-Yong Lee, Jongsu LEE 2009-04 demand forecasting, conjoint analysis, Bayesian update, telematics service http://d.repec.org/n?u=RePEc:snv:dp2009:200915&r=all Although there are many studies for quantifying the academic performance of researchers, such as measuring the scientific performance based on the number of publications, there are no studies about quantifying the collaboration activities of researchers. This study addresses this shortcoming by examining the collaboration network structure of researchers, the number of collaborations with other researchers, and the productivity index of co-authors. Based on the measures, two new indices, the RC-Index and CC-Index, are proposed for quantifying the collaboration activities of researchers and scientific communities. After applying these indices on a data set generated from publication list of five schools of information systems, we discuss the usefulness of these indices. Alireza Abbasi, Jorn Altmann, Junseok Hwang 2009-09 http://d.repec.org/n?u=RePEc:snv:dp2009:200917&r=all Firms undertake various R&D activities to generate commercializable innovations and to create and sustain competitive advantage. However, mere exploitation of various R&D opportunities has no conclusive impacts on a firm¡¯s competitive advantage in innovation, since R&D activities might closely interact with each other and their appropriate combination would have a synergy effect on a firm¡¯s innovation performance. The aim of this paper is to explore various contextual factors behind synergy effects derived from interactions between R&D activities based on the economic and technological sources of the R&D complementarities, such as absorptive capacity, knowledge flows, and uncertainty, as well as to examine the existence of complementarities between corporate R&D activities, using the 2004 innovation survey data of Korean manufacturing industries. The corporate R&D activities considered in this study are in-house R&D, R&D cooperation, and commissioned R&D. Our research concludes that there exists a complementary relationship between a firm¡¯s internal R&D and R&D cooperation activity. In addition, our study discovered that the complementarity between R&D activities relies on the organizational contextualities?a firm¡¯s cumulative patent stocks, perceived level of imitation risk, experience of external knowledge acquisition, and information inflows from public research institutes and universities?that lie hidden under the firm-specific activities. Sungki Lee, Donghyuk Choi, Yeonbae Kim 2009-09 Contextuality, Complementarity, Innovation, In-house R&D, R&D cooperation, Commissioned R&D http://d.repec.org/n?u=RePEc:snv:dp2009:200906&r=all Recent research identify the type of partner as a critical factor determining the effect of R&D collaboration on innovation. Most firms tend to utilize various types of R&D collaboration partners simultaneously, and partnerships between different types of partners show different properties. Thus, the effect of R&D collaboration may vary depending on partner types. This study considers four partner types: competitors, customers, suppliers, and universities. It empirically examines the effect of R&D collaboration with each type of partner on product innovation,employing the Korea Innovation Survey data. Results show that R&D collaborations with customers and universities have a positive effect on product innovation, whereas R&D collaborations with suppliers and competitors have an inverted-U shape relationship with product innovation. Ki H. Kang, Jina Kang 2009-08 R&D collaboration, product innovation, competitors, customers, suppliers, universities http://d.repec.org/n?u=RePEc:snv:dp2009:200920&r=all Research into computing resource markets has mainly considered the question of which market mechanisms provide a fair resource allocation. However, while developing such markets, the definition of the unit of trade (i.e. the definition of resource) has not been given much attention. In this paper, we analyze the requirements for tradable resource goods. Based on the results, we suggest a detailed goods definition, which is easy to understand, can be used with many market mechanisms, and addresses the needs of a Cloud resource market. The goods definition captures the complete system resource, including hardware specifications, software specifications, the terms of use, and a pricing function. To demonstrate the usefulness of such a standardized goods definition, we demonstrate its application in the form of a WSAgreement template for a number of market mechanisms for commodity system resources. Marcel Risch, Jorn Altmann 2009-10 Grid economics, unit of trade, system resource trading, Cloud computing market, system virtualization, contract templates, WS-agreements, service level contract, Cloud economics http://d.repec.org/n?u=RePEc:snv:dp2009:200913&r=all Economies in knowledge-based societies grow faster than in previous agricultural and industrial societies. This growth is based on the information and communications technology (ICT) development. The production function of ICT industries shows increasing returns to scale. The network effect of ICT development causes increasingly accelerated production and consumption values as the market gets larger in all supply and demand aspects. Thus, ICT development is the fundamental driving force of the faster economic growth, accelerated by increasing returns to scale and the network effect. Early investment in ICT achieves steep economic growth. The definition and characteristics of a knowledge-based society are given, and the nature, causes, and patterns of the faster acceleration of it are explained. Tai-Yoo KIM, Almas HESHMATI, Jihyun PARK 2009-08 Knowledge-based society, Information society, Post-industrial society, Economic development, Faster acceleration, Industrial policy, Technical change http://d.repec.org/n?u=RePEc:snv:dp2009:200911&r=all This article analyses IMF estimates of economic growth in 180 countries (IMF, 2009),and links the results to the ¡°Re-orient¡± approach, put forward by Frank, 1998. With global economic gravitation shifting to the Indian Ocean/Pacific region, the article also analyses the role of MNC (foreign capital) penetration as the key variable of past quantitative dependency studies for contemporary economic growth and social performance. In a Schumpeterian fashion, MNC penetration reflects the power, which transnational oligopolies wield over local economies. Today, social polarization and stagnation increase as a consequence of the development model, based on high MNC penetration. Arno TAUSCH, Almas Heshmati 2009-08 International Relations and International Political Economy, Economic Development, Technological Change, and Growth http://d.repec.org/n?u=RePEc:ecl:illbus:09-0106&r=all This paper explores innovation, experimentation, and creativity in the public domain and in the public interest. Researchers in various disciplines have studied public entrepreneurship, but there is little research specifically on the nature, incentives and constraints of public entrepreneurship to innovate in the public interest. We begin by extending concepts of the entrepreneurial firm to include greater interactions in the public domain, and then turn to the role of entrepreneurial firms in fostering institutional change. This focus points toward opportunities for integrating transaction-costs, political and international business theories to achieve a more refined institutional theory of firm-government interactions that incorporates entrepreneurial agency as a principal mechanism for innovating in the fulfillment of public and private interests. Klein, Peter G., Mahoney, Joseph T., McGahan, Anita M., Pitelis, Christos N. 2009 http://d.repec.org/n?u=RePEc:ecl:illbus:09-0103&r=all Agency relationships--where one party (the principal) delegates authority to another (the agent)--are well studied in financial settings but less so in technical settings. The asymmetry of information between the general manager and the technical manager is likely to create the possibility of misdirected effort, an overuse of the agent's human capital, whether the agent is opportunistic or not. Analyzing a dataset of information technology hardware and staff spending by larger multidivisional firms during a growth phase of US IT spending, 1989-1993, results suggest that technical managers significantly overspent on hardware, with deleterious consequences for performance. Chief executive experience significantly altered the effects of overspending. Analysis of the results suggest a solution, a model termed "staged commitment," that can be used to monitor technical agents in many areas of business. Michael, Steven C. 2009 http://d.repec.org/n?u=RePEc:ecl:illbus:09-0105&r=all This paper develops a theoretical model to better understand how the priorities of the board of directors are influenced by the ownership structure and how that affects firm performance. Most corporate governance research focuses on a universal link between corporate governance practices (e.g., board structure, shareholder activism) and performance outcomes, but neglects how the specific context of each company and diverse environments lead to variations in the effectiveness of different governance practices. This study suggests that the ownership structure has an important influence on the priorities set by the board, and that these priorities will determine the optimal composition of the board of directors. In contrast to a board prioritizing monitoring, where directors with financial experience and a duality are important, a board prioritizing the provision of resources could benefit from directors with different characteristics, the presence of the CEO on the board of directors and a larger board size. Understanding the influence of the board of directors on firm performance requires greater sensitivity to how corporate governance affects different aspects of effectiveness for different stakeholders and in different contexts. The insights on the interaction between the ownership structure and board composition can shed new light onto the contradictory empirical results of past research that has tried to link board composition or structure to firm performance directly. In an effort to increase the relevance of future research on boards and firm performance, we provide a framework on the interaction between ownership, corporate boards and firm performance. In light of scandals and perceived advantages in reforming governance systems, debates have emerged over the appropriateness of implementing corporate governance recommendations mainly based on an Anglo-Saxon context characterized by dispersed ownership where markets for corporate control, legal regulation, and contractual incentives are key governance mechanisms. This paper adds to the literature that argues in favor of the need to adapt corporate governance policies to the local contexts of firms. Desender, Kurt A. 2009 http://d.repec.org/n?u=RePEc:ecl:illbus:09-0104&r=all This paper develops a more unified organizational economics theory within Strategy. We begin with perfectly competitive markets derived from the first fundamental welfare theorem of economics, and develop a parsimonious typology of market frictions. We show how two primary questions in Strategy--why firms exist and why some firms outperform others--can be evaluated from this market frictions logic. Building on this logic enables more systematic explanations and predictions concerning governance structures and economic rents in Strategy research. Mahoney, Joseph T., Qian, Lihong 2009 http://d.repec.org/n?u=RePEc:ecl:illbus:09-0102&r=all Adaptive structuration theory (AST, DeSanctis and Poole 1994) describes how people come to understand and use a technology. In this paper we develop the idea of proactive structuration--how social networking can be proactively managed in order to speed the comprehensive adaptation of a technology within a community of users. We examine two facets of proactive structuration--formal institutionalization of a community of practice and socialization of users--and stochastically model the impact of proactive structuration on comprehensive adaptation latency. Implications for the effective management of new technology adoption are discussed. Northcraft, Gregory B., Griffith, Terri L., Fuller, Mark A. 2009 http://d.repec.org/n?u=RePEc:ecl:wisagr:536&r=all This report provides detail on the construction of an index of tax and expenditure limitations (TELs) for the 50 US states for the time-frame 1969 to 2005. Separate annual indices are constructed for TELs on state and on local governments. The goal of constructing the indices is to provide a means to test a range of hypotheses concerning the impact of TELs on economic performance and on state and local government fiscal policies. This report documents the construction of the index. The data are provided in Excel spreadsheets so that others may construct alternative indices. Amiel, Lindsay, Deller, Steven, Stallmann, Judith 2009-05 http://d.repec.org/n?u=RePEc:ecl:wisagr:537&r=all In this paper we develop an econometric model of willingness to pay that integrates data on respondent uncertainty regarding their own willingness to pay. The integration is utility consistent and does not involve calibrating the contingent responses to actual payment data, and so the approach can "stand alone". In an application to a valuation study related to whooping crane restoration, we find that this model generates a statistically lower expected WTP than the standard CV model. Moreover, the WTP function estimated with this model is not statistically different from that estimated using actual payment data, suggesting that when properly analyzed using data on respondent uncertainty, contingent valuation decisions can simulate actual payment decisions. This method allows for more reliable estimates of WTP that incorporates respondent uncertainty without the need for collecting comparable actual payment data. Moore, Rebecca, Bishop, Richard C., Provencher, Bill, Champ, Patricia 2009-05 http://d.repec.org/n?u=RePEc:ecl:wisagr:535&r=all This paper investigates the pricing and vertical organization of differentiated products under imperfect competition. In a multiproduct context, a Cournot model is used to examine how substitution/complementarity relationships among products and vertical structures can affect the exercise of market power. This motivates a generalization of the Herfindahl-Hirschman index (termed VHHI) capturing how market concentration and vertical structures interact to influence prices of differentiated products. The analysis is applied to pricing of soybean seeds in the US over the period 2000-2007. We consider two vertical structures employed by biotech firms: vertical integration and licensing. The econometric analysis finds evidence that vertical organization has significant effects on seed prices. These effects are found to vary depending on the institutional setup and the bundling of genetic material. The empirical evidence shows that complementarity and economies of scope can reduce the effects of market concentration on prices. Shi, Guanming, Chavas, Jean-Paul 2009-04 http://d.repec.org/n?u=RePEc:ecl:wisagr:533&r=all In this paper we analyze the efficiency of voluntary incentive-based land-use policies for biodiversity conservation. Two factors combine to make it difficult to achieve an efficient result. First, the spatial pattern of habitat across multiple landowners is important for determining biodiversity conservation results. Second, the willingness of private landowners to accept a payment in exchange for enrolling in a conservation program is private information. Therefore, a conservation agency cannot easily control the spatial pattern of voluntary enrollment in conservation programs. We begin by showing how the distribution of a landowner's willingness-to-accept a conservation payment can be derived from a parcel-scale land-use change model. Next we combine the econometric land-use model with spatial data and ecological models to simulate the effects of various conservation program designs on biodiversity conservation outcomes. We compare these results to an estimate of the efficiency frontier that maximizes biodiversity conservation at each level of cost. The frontier mimics the regulator's solution to the biodiversity conservation problem when she has perfect information on landowner willingness-to-accept. Results indicate that there are substantial differences in biodiversity conservation scores generated by the incentive-based policies and efficient solutions. The performance of incentive-based policies is particularly poor at low levels of the conservation budget where spatial fragmentation of conserved parcels is a large concern. Performance can be improved by encouraging agglomeration of conserved habitat and by incorporating basic biological information, such as that on rare habitats, into the selection criteria. Lewis, David J., Plantinga, Andrew J., Nelson, Erik, Polasky, Stephen 2009-03 http://d.repec.org/n?u=RePEc:ecl:wisagr:534&r=all In Asian-Pacific developing countries, the prevalence of food insecurity has diminished dramatically in the past generation. Despite this, many millions continue to suffer from persistent or periodic food insecurity. The causes of food insecurity are both structural and market-related, including influences of public policy on market operations. The most vulnerable populations are those that simultaneously experience both these forms of insecurity. The places they inhabit tend to have poor-quality land, are exposed to climatic and other environmental risks, or both. These same populations either have relatively weak links with the non-food economy, in which higher wages and better income-earning opportunities make food self-sufficiency less important, or are prevented from accessing opportunities in the non-food economy because of poor or misguided policies. Southgate, Douglas, Coxhead, Ian 2009-04 http://d.repec.org/n?u=RePEc:ecl:ohidic:2009-12&r=all Though overall bank performance from July 2007 to December 2008 was the worst since at least the Great Depression, there is significant variation in the cross-section of stock returns of large banks across the world during that period. We use this variation to evaluate the importance of factors that have been discussed as having contributed to the poor performance of banks during the credit crisis. More specifically, we investigate whether bank performance is related to bank-level governance, country-level governance, country-level regulation, and bank balance sheet and profitability characteristics before the crisis. Banks that the market favored in 2006 had especially poor returns during the crisis. Using conventional indicators of good governance, banks with more shareholder-friendly boards performed worse during the crisis. Banks in countries with stricter capital requirement regulations and with more independent supervisors performed better. Though banks in countries with more powerful supervisors had worse stock returns, we provide some evidence that this may be because these supervisors required banks to raise more capital during the crisis and that doing so was costly for shareholders. Large banks with more Tier 1 capital and more deposit financing at the end of 2006 had significantly higher returns during the crisis. After accounting for country fixed effects, banks with more loans and more liquid assets performed better during the month following the Lehman bankruptcy, and so did banks from countries with stronger capital supervision and more restrictions on bank activities. Beltratti, Andrea, Stulz, Rene M. 2009-07 http://d.repec.org/n?u=RePEc:ecl:ohidic:2009-9&r=all We analyze the structure and attributes of subprime mortgage-backed securitization deals originated between 1997 and 2007. Our data set allows us to link loan-level data for over 6.7 million subprime loans to the securitization deals into which the loans were sold. We show that the securitization process, including the assignment of credit ratings, provided incentives for securitizing banks to purchase loans of poor credit quality in areas with high rates of house price appreciation. Increased demand from the secondary mortgage market for these types of loans appears to have facilitated easier credit in the primary mortgage market. To test this hypothesis, we identify an event which represents an external shock to the relative demand for subprime mortgages in the secondary market. We show that following the SEC's adoption of rules reducing capital requirements on certain broker dealers in 2004, five large deal underwriters disproportionately increased their purchasing activity relative to competing underwriters in ZIP codes with the highest realized rates of house price appreciation but lower average credit quality. We show that these loans subsequently defaulted at marginally higher rates. Finally, using the event as an instrument, we demonstrate a causal link between the demand for mortgages in the secondary mortgage market and the supply of subprime credit in the primary mortgage market. Nadauld, Taylor D., Sherlund, Shane M. 2009-04 http://d.repec.org/n?u=RePEc:ecl:ohidic:2009-17&r=all In this paper, I show that the variance of Fama-French factors, the variance of the momentum factor, as well as the correlation between these factors, predict an important fraction of the time- series variation in post-1990 aggregate stock market returns. This predictability is particularly strong from one month to one year, and it dominates that afforded by the variance risk premium and other popular predictor variables such as P/D ratio, the P/E ratio, the default spread, and the consumption-wealth ratio. In a simple representative agent economy with recursive preferences, I model the portfolio weight in each asset as a function of a stock's characteristics and show that the market return can be predicted by these variances. Chabi-Yo, Fousseni 2009-09 http://d.repec.org/n?u=RePEc:ecl:ohidic:2009-10&r=all Banks and other financial institutions should allocate capital in proportion to the marginal default value of each line of business, which is the derivative of the value of the bank's default put with respect to a change in the scale of the business. Marginal default values give a unique allocation that adds up exactly. Cross subsidies are avoided if capital allocations are set so that capital-adjusted marginal default values are the same for all lines. We include a series of examples showing how our procedures work and why the allocations are different from allocations based on VaR and the allocations implicit in risk-weighted bank capital requirements. We explain how capital allocations should be "priced" and charged to each line of business. Erel, Isil, Myers, Stewart C., Read, James A., Jr. 2009-05 http://d.repec.org/n?u=RePEc:ecl:ohidic:2009-1&r=all During the housing boom, many subprime home buyers were not able to make a mort- gage down payment and therefore were at risk of being rationed from the market. To resolve the issue, some buyers, sellers and intermediaries artificially expanded the scope of transactions by including items that cannot be collateralized. As a result, observed house prices were higher and mortgages larger, ultimately relaxing buyers' financial constraints. I estimate that between 2005 and 2008, up to 16% of highly leveraged (greater than 95% loan-to-value) transactions in Cook County, Illinois were inflated (with prices higher by 6% to 15%). Inated transactions are more likely in low-income neighborhoods and when intermediaries have a high stake in the transaction. Although borrowers were twice as likely to default, their mortgage rates were not higher. Ben-David, Itzhak 2009-06 http://d.repec.org/n?u=RePEc:ecl:ohidic:2009-8&r=all