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on Business Economics |
| By: | Philip Du Caju (National Bank of Belgium, Brussels.); François Rycx (DULBEA, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and NBB and IZA-Bonn.); Ilan Tojerow (DULBEA, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and NBB and IZA-Bonn.) |
| Abstract: | This paper investigates inter-industry wage differentials in Belgium, taking advantage of access to a unique matched employer-employee data set covering all the years from 1999 to 2005. Findings show the existence of large wage differentials among workers with the same observed characteristics and working conditions, employed in different sectors. These differentials are persistent and no particular downward or upward trend is observed. However, the dispersion of inter-industry wage differentials appears to show a cyclical pattern over time. Further results indicate that ceteris paribus, workers earn significantly higher wages when employed in more profitable firms. The time dimension of our matched employer-employee data allows us to instrument firms' profitability by its lagged value. The instrumented elasticity between wages and profits is found to be quite stable over time and varies between 0.034 and 0.043. It follows that Lester’s range of pay due to rent sharing fluctuates between about 24 and 37 percent of the mean wage. This rent-sharing phenomenon accounts for a large fraction of the industry wage differentials. We find indeed that the magnitude, dispersion and significance of industry wage differentials decreases sharply when controlling for profits. |
| Keywords: | Industry wage differentials, Rent-sharing, Matched employer-employee data |
| JEL: | D31 J31 J41 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:08-035&r=bec |
| By: | Jens Carsten Jackwerth (Universität Konstanz); James E. Hodder |
| Abstract: | We model a firm’s value process controlled by a manager maximizing expected utility from restricted shares and employee stock options. The manager also dynamically controls allocation of his outside wealth. We explore interactions between those controls as he partially hedges his exposure to firm risk. Conditioning on his optimal behavior, control of firm risk increases the expected time to exercise for his employee stock options. It also reduces the percentage gap between his certainty equivalent and the firm’s fair value for his compensation, but that gap remains substantial. Managerial control also causes traded options to exhibit an implied volatility smile. |
| Date: | 2008–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:knz:cofedp:0807&r=bec |
| By: | Bjuggren, Per-Olof (Jönköping International Business School); Eklund, Johan (Ratio); Wiberg, Daniel (Jönköping International Business School) |
| Abstract: | By examining a large number of Swedish listed firms, we analyse how institutional and foreign owners affect investment performance. To measure investment performance Mueller and Reardon’s (1993) marginal q is used, although derived directly from Tobin’s average q. Marginal q measures the ratio of the return on investment to the cost of capital. Our findings show that both domestic and foreign institutional owners positively influence firm performance. Furthermore a non-linear relation between institutional ownership concentration and performance is found. This is consistent with positive incentive effects and negative entrenchment effects. During the last decades the ownership structure of Swedish firms has undergone dramatic changes: institutional and foreign investors have been increasing their stakes, whereas Swedish households have decreased in importance. Controlling owners, often founding families, remain in control by resorting to an extensive use of dual-class shares. The practice of dual-class shares which separates cash-flow rights and control rights is also found to be an important determinant of firm performance that eradicates the positive influence of institutional ownership. |
| Keywords: | Corporate governance; institutions; ownership; performance; Tobin’s q; marginal q; |
| JEL: | C23 G30 L25 |
| Date: | 2008–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0128&r=bec |
| By: | Dolado, Juan José (Universidad Carlos III, Madrid); Stucchi, Rodolfo (Inter-American Development Bank) |
| Abstract: | This paper evaluates the impact of the widespread use of fixed-term contracts in Spain on firms' TFP, via its effect on workers' effort. We propose a simple analytical framework showing that, under plausible conditions, workers' effort depends positively on their perception (for given level of effort) about firms' willingness to convert fixed-term contracts into permanent ones. We test this implication using manufacturing firm level data from 1991 to 2005 by means of nonparametric tests of stochastic dominance and parametric multivariate regression approaches. Our main findings are that high conversion rates increase firm's productivity while high shares of temporary contracts decrease it. Both effects are quantitatively relevant. |
| Keywords: | temporary workers, workers' effort, firms' TFP |
| JEL: | C14 C52 D24 J24 J41 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3832&r=bec |
| By: | Thomas Bloch |
| Abstract: | In this paper, we investigate how bank mergers affect bank revenues and present empirical evidence that mergers among banks have a substantial and persistent negative impact on merging banks’ revenues. We refer to merger related negative effects on banks’ revenues as dissynergies and suggest that they are a result of organizational diseconomies, the loss of customers and the temporary distraction of management from day-to-day operations by effecting the merger. For our analyses we draw on a proprietary data set with detailed financials of all 457 regional savings banks in Germany, which have been involved in 212 mergers between 1994 and 2006. We find that the negative impact of a merger on net operating revenues amounts to 3% of pro-forma consolidated banks’ operating profits and persists not only for the year of the merger but for up to four years post-merger. Only thereafter mergers exhibit a significantly superior performance compared to their respective pre-merger performance or the performance of their non-merging peers. The magnitude and persistence of merger related revenue dissynergies highlight their economic relevance. Previous research on post-merger performance mainly focuses on the effects from mergers on banks’ (cost) efficiency and profitability but fails to provide clear and consistent results. We are the first, to our knowledge, to examine the post-merger performance of banks’ net operating revenues and to empirically verify significant negative implications of mergers for banks’ net operating revenues. We propose that our finding of negative merger related effects on banks’ operating revenues is the reason why previous research fails to show merger related gains. |
| JEL: | G21 G34 L25 C23 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:fra:franaf:192&r=bec |
| By: | Gábor Kátay (Department of Economics, Magyar Nemzeti Bank, 1850 Budapest, Szabadság tér 8-9, Hungary.) |
| Abstract: | In this paper I address the question to what extent wages are affected by product market uncertainty. Implicit contract models imply that it is Pareto optimal for risk neutral firms to provide insurance to risk averse workers against shocks. Using matched employer-employee dataset, I adopted the estimation strategy proposed by Guiso et al. (2005) to evaluate wage responses to both permanent and transitory shocks in Hungary and compared my results to similar studies on Italian and Portuguese datasets. I found that firms do insure workers against product market uncertainties, but the magnitude of the wage response differs depending on the nature of the shock. Broadly speaking, the wage response to permanent shocks is twice as high as the response to transitory shocks. Comparing my results to the two other studies, the main difference lies in the elasticity of wages to transitory shocks. Unlike these previous findings, my results show that full insurance to transitory shocks is rejected. JEL Classification: C33, D21, J33, J41. |
| Keywords: | product market uncertainty, risk sharing, wage insurance, optimal wage contract, matched employer-employee data. |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20080964&r=bec |
| By: | RACHIDA JUSTO (Instituto de Empresa) |
| Abstract: | Previous research into entrepreneurial exit has examined exit from a firm perspective focusing upon performance as the primary determinant of exit; however, new research is emerging which suggests that other variables (e.g. entrepreneurial human capital) may impact the exit decision over and above that accounted for by firm performance. Our research adopts a gender and family embeddedness perspective to examine the impact that gender and family situation (marital status, number of children, running a family business) have on voluntary exit decisions over and above that attributed to firm performance. |
| Keywords: | Gender |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:emp:wpaper:wp08-26&r=bec |
| By: | Helmut Bester (Free University Berlin, Dept. of Economics, Boltzmannstr. 20, D-14195 Berlin (Germany); Daniel Krähmer (University of Bonn, Hausdorff Center for Mathematics and Institute for Theoretical Economis, Adenauer Allee 24-42, D-53113 Bonn (Germany)) |
| Abstract: | This paper analyzes bilateral contracting in an environment with contractual incompleteness and asymmetric information. One party (the seller) makes an unverifiable quality choice and the other party (the buyer) has private information about its valuation. A simple exit option contract, which allows the buyer to refuse trade, achieves the first–best in the benchmark cases where either quality is verifiable or the buyer’s valuation is public information. But, when unverifiable and asymmetric information are combined, exit options induce inefficient pooling and lead to a particularly simple contract. Inefficient pooling is unavoidable also under the most general form of contracts, which make trade conditional on the exchange of messages between the parties. Indeed, simple exit option contracts are optimal if random mechanisms are ruled out. |
| Keywords: | Incomplete Contracts, Asymmetric Information, Exit Options JEL Classification No.: D82, D86, L15; Incomplete Contracts, Asymmetric Information, Exit Options |
| JEL: | D82 D86 L15 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:251&r=bec |
| By: | Dur, Robert (Erasmus University Rotterdam) |
| Abstract: | We develop a model of manager-employee relationships where employees care more for their manager when they are more convinced that their manager cares for them. Managers can signal their altruistic feelings towards their employees in two ways: by offering a generous wage and by giving attention. Contrary to the traditional gift-exchange hypothesis, we show that altruistic managers may offer lower wages and nevertheless build up better social-exchange relationships with their employees than egoistic managers do. In such equilibria, a low wage signals to employees that the manager has something else to offer − namely, a lot of attention − which will induce the employee to stay at the firm and work hard. Our predictions are well in line with some recent empirical findings about gift exchange in the field. |
| Keywords: | gift exchange, sabotage, extra-role behavior, wages, manager-employee relationships, social exchange, conditional altruism, reciprocity, signaling game |
| JEL: | D86 J41 M50 M54 M55 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3839&r=bec |
| By: | Burkhard Raunig (Oesterreichische Nationalbank, Otto-Wagner-Platz 3, A–1011 Vienna, Austria.); Martin Scheicher (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | We investigate the risk of holding credit default swaps (CDS) in the trading book and compare the Value at Risk (VaR) of a CDS position to the VaR for investing in the respective firm’s equity using a sample of CDS – stock price pairs for 86 actively traded firms over the period from March 2003 to October 2006. We find that the VaR for a stock is usually far larger than the VaR for a position in the same firm’s CDS. However, the ratio between CDS and equity VaR is markedly smaller for firms with high credit risk. The ratio also declines for longer holding periods. We also observe a positive correlation between CDS and equity VaR. Panel regressions suggest that our findings are consistent with qualitative predictions of the Merton (1974) model. JEL Classification: E43, G12, G13. |
| Keywords: | Credit Default Swap, Value at Risk, Structural Credit Risk Models. |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20080968&r=bec |
| By: | Thomas Bloch |
| Abstract: | In this paper, we examine the impact of mergers among German savings banks on the extent to which these savings banks engage in small business lending. The ongoing consolidation in the banking industry has sparked concerns about the continuous availability of credit to small businesses which has been further fueled by empirical studies that partly confirm a reduction in small business lending in the aftermath of mergers. However, using a proprietary data set of German savings banks we find strong evidence that in Germany merging savings banks do not significantly change the extent to which they lend to small businesses compared to prior to the merger or compared to the contemporaneous lending by non-merging banks. We investigate the merger related effects on small business lending in Germany from a bank-level perspective. Furthermore, we estimate small business lending and its continuous adjustment process simultaneously using recent General Method of Moments (GMM) techniques for panel data as proposed by Arellano and Bond (1991). |
| JEL: | G21 G28 G34 C23 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:fra:franaf:193&r=bec |
| By: | Rikke Ibsen (CCP (Center for Corporate Performance), Aarhus Business School); Elisabetta Trevisan (CCP (Center for Corporate Performance), Aarhus Business Schoo and V Ca’ Foscari University of Venice); Niels Westergaard-Nielsen (CCP (Center for Corporate Performance), Aarhus Business School) |
| Abstract: | This paper investigates the effect of job mobility and tenure on wage dynamics. In this respect, theory assesses that high job mobility and low tenure are associated to lower wage drop when workers experience a job change. We test this theory first comparing two labour market (i.e. Denmark and a large Italian region, Veneto) characterized by different job mobility and tenure, as a consequence of different level of EPL. Secondly, we perform a within Veneto analysis, comparing the different effects when workers are employed in small rather than big firms. Data drawn from the VWH (Veneto Workers History) and IDA (for Denmark) registered data, from 1987 to 2001, are used. In Denmark job mobility has a positive effect on wage increases, while built up on firm-specific human capital has a negative effect. In Veneto, instead, it appears that long tenure are more rewarding. Some evidences of positive impact of moving from job to job when the barriers are lower come from the analysis of the differences between small and big firms in Veneto. |
| Keywords: | Information sale, Cheap talk, Conflicts of interest, Information Acquisition, Firewalls, Market efficiency |
| JEL: | C14 C23 J24 J31 J63 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2008_40&r=bec |
| By: | Nick Netzer (Socioeconomic Institute, University of Zurich); Florian Scheuer (Massachusetts Institute of Technology) |
| Abstract: | In the presence of a time-inconsistency problem with optimal agency contracts, we show that competitive markets implement allocations that Pareto dominate those achieved by a benevolent planner, they induce strictly more e?ort, and they sometimes make the commitment problem disappear entirely. In particular, we analyze a model with moral hazard and two-sided lack of commitment. After agents have chosen a hidden e?ort and the need to provide incentives has vanished, ?rms can modify their contracts and agents can switch ?rms. As long as the ex-post market outcome satis?es a weak notion of competitiveness and su?ciently separates individuals who choose di?erent e?ort levels, the market allocation is Pareto superior to a social planner’s allocation. We construct a speci?c market game that naturally generates robust equilibria with these properties. In addition, we show that equilibrium contracts without commitment are identical to those with full commitment if the latter involve no cross-subsidization between individuals who choose di?erent e?ort levels. |
| Keywords: | Time-Inconsistency, Moral Hazard, Competitive Markets, Adverse Selection |
| JEL: | D02 D82 C73 E61 H11 P51 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:soz:wpaper:0814&r=bec |
| By: | Sam Schulhofer-Wohl (Princeton University) |
| Abstract: | I study the welfare cost of business cycles in a complete-markets economy where some people are more risk averse than others. Relatively more risk-averse people buy insurance against aggregate risk, and relatively less risk-averse people sell insurance. These trades reduce the welfare cost of business cycles for everyone. Indeed, the least risk-averse people benet from business cycles. Moreover, even innitely risk-averse people suer only nite and, in my empirical estimates, very small welfare losses. In other words, when there are complete insurance markets, aggregate uctuations in consumption are essentially irrelevant not just for the average person { the surprising nding of Lucas (1987) { but for everyone in the economy, no matter how risk averse they are. If business cycles matter, it is because they aect productivity or interact with uninsured idiosyncratic risk, not because aggregate risk per se reduces welfare. |
| Keywords: | business cycles; risk aversion; risk sharing; heterogeneity |
| JEL: | E32 E21 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:pri:wwseco:1045&r=bec |
| By: | Douglas Gale (New York University); Piero Gottardi (University Of Venice Cà Foscari) |
| Abstract: | We study a competitive model in which debt-financed firms may default in some states of nature. Incomplete markets prevent firms from hedging the risk of asset firesales when markets are illiquid. This is the only friction in the model and the only cost of default. The anticipation of such losses alone may distort firms' investment decisions. We characterize the conditions under which competitive equilibria are inefficient and the form the inefficiency takes. We also show that endogenous financial crises may arise as a result of pure sunspot events. Finally, we examine alternative interventions to restore the efficiency of equilibria. |
| Keywords: | illiquid markets, default, incomplete markets, price distortions, inefficient investment |
| JEL: | D5 D8 G1 G33 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2008_36&r=bec |
| By: | DANIEL FERNANDEZ (Instituto de Empresa); JUAN SANTALO (Instituto de Empresa) |
| Abstract: | We report evidence that Product Market Competition is positively associated to widely-used Corporate Social Responsibility ratings. In particular we show that different market concentration measures are negatively associated to social impact ratings. We also provide evidence that changes in import penetration rates instrumented by import tariffs are positively associated to these social ratings. Finally we report that firm pollution levels are negatively associated to market concentration measures. Our results suggest that -all else constant- doubling competition in the marketplace would increase CSR ratings of an average company between 184% and 800%. |
| Keywords: | Strategy , Corporate social responsibility, Product market competition |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:emp:wpaper:wp08-27&r=bec |
| By: | Magda, Iga (Polish Ministry of Labour and Social Policy); Rycx, Francois (Free University of Brussels); Tojerow, Ilan (Free University of Brussels); Valsamis, Daphné (Free University of Brussels) |
| Abstract: | This study compares the structure and determinants of inter-industry wage differentials in Eastern and Western European countries (namely Belgium, Italy, the Netherlands, Norway, Portugal and Spain compared with Latvia, Lithuania, the Czech Republic, Poland and Slovakia). To do so, we use a unique harmonised, linked employer-employee data set, the 2002 European Structure of Earnings Survey. Findings show substantial differences in earnings across sectors in all countries, even when controlling for a wide range of employee, job and employer characteristics. The hierarchy of sectors in terms of wages appears to be quite similar in Eastern and Western European countries. Among high-wage sectors, we find the energy (coke, petroleum, gas, electricity and nuclear power), chemical, financial and computer industries. In contrast, it is in the traditional sectors (wood and cork industry, textile, clothing and leather industry, hotels and restaurants, and retailing) that wages are lowest. Further results suggest that the dispersion of inter-industry wage differentials fluctuates considerably across countries. It is relatively small in Norway and Belgium, large in the Netherlands, Italy, Spain, Poland and the Czech Republic, and very large in Portugal, Latvia, Lithuania and Slovakia. Our findings support the hypothesis of a negative relationship between the dispersion of inter-industry wage differentials and a country's degree of corporatism. |
| Keywords: | inter-industry wage differentials, collective bargaining, Europe, matched employer-employee data |
| JEL: | J31 J51 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3830&r=bec |
| By: | Alexander Vogel and Joachim Wagner (Institute of Economics, University of Lüneburg) |
| Abstract: | This paper uses a newly available comprehensive panel data set for manufacturing enterprises from 2001 to 2005 to document the first empirical results on the relationship between imports and productivity for Germany, a leading actor on the world market for goods. Furthermore, for the first time the direction of causality in this relationship is investigated systematically by testing for self-selection of more productive firms into importing, and for productivity-enhancing effects of imports (‘learning-by-importing’). We find a positive link between importing and productivity. From an empirical model with fixed enterprise effects that controls for firm size, industry, and unobservable firm heterogeneity we see that the premia for trading internationally are about the same in West and East Germany. Compared to firms that do not trade at all two-way traders do have the highest premia, followed by firms that only export, while firms that only import have the smallest estimated premia. We find evidence for a positive impact of productivity on importing, pointing to self-selection of more productive enterprises into imports, but no evidence for positive effects of importing on productivity due to learning-by-importing. |
| Keywords: | imports, exports, productivity, enterprise panel data, Germany |
| JEL: | F14 D21 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:106&r=bec |
| By: | Renaud Bourlès (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579) |
| Abstract: | This paper examines the effect of moral hazard on dynamic insurance contract. It models primary prevention in a two period model with classification risk. Agents' preferences appear to play an important role in the determination of preventive effort and prepayment. If absolute prudence is larger that absolute risk aversion, moral hazard increases prepayment of premium and classification risk. This highlights a tradeoff between prevention and prepayment that arises from the classification risk. An increase in the difference between prudence and twice risk aversion (that we define as the degree of foresight) moreover makes dynamic insurance contracts more stable (when competing with spot insurance) if the cost of prevention is low enough when agents preferences exhibit CRRA. Under a formulated utility function with linear reciprocal derivative, we finally show that an increase in agents' degree of foresight enhances the stability of dynamic contract and the extent of prepayment. |
| Keywords: | Dynamic Insurance, Classification Risk, Moral Hazard, Prudence |
| Date: | 2008–11–22 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00340830_v1&r=bec |
| By: | Matthias Deschryvere; Annu Kotiranta |
| Abstract: | ABSTRACT : This study empirically explores whether the propensity to offshore affects the total domestic employment at the firm level. The analysis is based on a Finnish weighted sample of 652 firms and screens the effect of offshoring different kinds of tasks. Two main channels of offshoring tasks are taken into account : offshore outsourcing and in-house offshoring. The main conclusion is that offshoring can significantly affect the total domestic employment but that the significance and the direction of the effect depend on which kind of offshoring is involved. Our results offer evidence that in both the manufacturing and service sectors offshore outsourcing of services has a positive effect on employment. In addition it was found that the effect of R&D offshoring on the probability to anticipate an increase of total domestic employment depends on the offshoring channel. Offshore outsourcing of R&D has a positive effect on the anticipated domestic employment, whereas in-house offshoring of R&D has a negative effect. Specific for the manufacturing sector is that offshore outsourcing of production also has a negative significant effect. A final conclusion is that only in the service sector does in-house offshoring of services have a negative effect on the probability to anticipate an increase of domestic employment. By dissecting offshoring by tasks and channels the above empirical findings contribute to a better understanding of the aggregate effects of offshoring on domestic employment. |
| Keywords: | globalization, internationalization, outsourcing, offshoring, job loss, domestic effects, home country effects |
| JEL: | F16 F23 L20 |
| Date: | 2008–11–19 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1166&r=bec |
| By: | Claus Schnabel and Joachim Wagner (Institute of Economics, University of Lüneburg) |
| Abstract: | In this note we cast some doubt on the claim put forward by David Blanchflower (2007) that the probability of being unionized follows an inverted U-shaped pattern in age with a maximum in the mid- to late 40s. By using a special test for an inverted Ushaped pattern that has not been applied to the age-membership nexus before, and by constructing exact confidence intervals for the maximum value, we demonstrate that at least for West Germany Blanchflower’s hypothesis does not hold. Our findings suggest that more definitive evidence is needed before the existence of international unionization-age patterns can be taken for granted. |
| Keywords: | unionization, age, inverted U-shape, Germany |
| JEL: | J51 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:107&r=bec |
| By: | Topi Miettinen (SITE, Stockholm School of Economics, and Max Planck Institute for Ecopnomics, Jena, Germany) |
| Abstract: | In line with the widely applied principle of just deserts, we assume that the severity of the penalty on a contract offender increases in the harm on the other. When this principle holds, the influence of the efficiency of the agreement on the incentives to abide by it crucially depends on whether actions are strategic complements or substitutes. With strategic substitutes, there is a conflict between Pareto-efficiency and the incentives to abide. The opposite tends to be true when actions are strategic complements. The results are interpreted in the context of legal contracts and in that of informal mutual promises. |
| Keywords: | partnerships, contracts, pre-play communication, legal enforcement, social norms, guilt |
| JEL: | C72 C78 K12 Z13 |
| Date: | 2008–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2008-088&r=bec |
| By: | DIAGNE, Abdoulaye (Consortium pour la Recherche Economique et Sociale (CRES) - Université Cheikh Anta Diop, Dakar, Sénégal); NIANG, Abdou-Aziz (LEG - CNRS UMR 5118 - Université de Bourgogne) |
| Abstract: | The aim of this paper is to check whether the economic and monetary policies developed under the CFA area create co-movements of business cycles of member countries. Indeed, the synchronization of business cycles is a result which can help to appreciate the degree of regional integration. Using the generalized dynamic factor model by Forni et al. (2004), we analyzed the one hand the co-movements between countries of CFA area over the period 1980-2004 and on the other hand we also conducted an analysis for UEMOA and CEMAC areas over the same period. This enabled us also to examine the effectiveness of the economic and monetary integration policies which are specific to these two sub-regional entities and also to check determinants of co-movements in their business cycles. |
| Keywords: | regional integration ; Co-movement ; Dynamic Factor Model ; CFA area |
| JEL: | F02 E30 C33 F41 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:lat:legeco:2008-08&r=bec |
| By: | Climent Quintana-Domeque (Princeton University) |
| Abstract: | I attempt to explain why compensating differentials for job disamenities are difficult to observe. I focus on the match between workers’ preferences for routine jobs and the variability in tasks associated with the job. Using data from the Wisconsin Longitudinal Study, I find that mismatched workers report lower job satisfaction and earn lower wages. Both male and female workers in routinized jobs earn, on average, 12% less than their counterparts in non-routinized jobs. Once preferences and mismatch are accounted for, this difference decreases to 8% for men and 5% for women. Accounting for mismatch is important when analyzing compensating differentials. |
| Keywords: | wage differentials, preferences, job attributes, routine tasks, mismatch |
| JEL: | J30 J31 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1063&r=bec |
| By: | Luc Laeven; Fabian Valencia |
| Abstract: | In episodes of significant banking distress or perceived systemic risk to the financial system, policymakers have often opted for issuing blanket guarantees on bank liabilities to stop or avoid widespread bank runs. In theory, blanket guarantees can prevent bank runs if they are credible. However, guarantee could add substantial fiscal costs to bank restructuring programs and may increase moral hazard going forward. Using a sample of 42 episodes of banking crises, this paper finds that blanket guarantees are successful in reducing liquidity pressures on banks arising from deposit withdrawals. However, banks' foreign liabilities appear virtually irresponsive to blanket guarantees. Furthermore, guarantees tend to be fiscally costly, though this positive association arises in large part because guarantees tend to be employed in conjunction with extensive liquidity support and when crises are severe. |
| Keywords: | Banking crisis , Loan guarantees , Risk management , Liquidity , Bank credit , Financial systems , Moral hazard , |
| Date: | 2008–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:08/250&r=bec |
| By: | Manuel A. Hidalgo Pérez (Department of Economics, Universidad Pablo de Olavide); Jesús Rodríguez López (Department of Economics, Universidad Pablo de Olavide); José María O´Kean Alonso (Department of Economics, Universidad Pablo de Olavide) |
| Abstract: | Using the EU KLEMS dataset we test the capital-skill complementarity hypothesis in a cross-section of sectors in Spain between 1980 and 2005. We analyze three groups of workers, who are classed according to skill level: high, medium and low. Capital assets have been broken down into ICT (information and communication technologies) assets and non-ICT assets. Acquisition and usage costs of ICT assets declined throughout the period studied, both in absolute terms and relative to the other capital assets and workers. Our principal finding is that the substitutibility between workers and ICT assets falls as worker skill level rises. In fact, the ICT assets were strongly complement with highly skilled workers and were not substitutive with them. Throughout the period analyzed, the fraction of employed medium- and high-skill workers rose by 21% and 12%, respectively, to the disadvantage of low-skill workers. After decomposing these changes, we found that the latter were dominated by an ajustment within sectors more than by a composition effect or adjustment between sectors. These adjustments may be explained by reference to the estimated elasticities of substitution. |
| Keywords: | capital-skill complementarity, ICT, translog cost function, elasticity of substitution. |
| JEL: | E22 J24 J31 O33 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:08.12&r=bec |
| By: | Henry S. Farber (Princeton University) |
| Abstract: | Job tenure and the incidence of long-term employment have declined sharply in the United States. However, rates of job loss as measured by the Displaced Workers Survey (DWS), while cyclical, have not increased. This presents a puzzle that has several potential solutions. One is that, while overall rates of job loss have not increased, rates of job loss for high-tenure workers have increased relative to those for lower-tenure workers. Another is that there has been an increase in rates of job change that is not captured in the limited questions asked in the DWS. Some of this seemingly voluntary job change (e.g., the taking of an offered buy-out) may reflect the kind of worker displacement that the DWS was meant to capture but is not reported as such by workers. In this study, I address these issues by 1) documenting the decline in job tenure and longterm employment using data from various supplements to the Current Population Survey (CPS) from 1973-2006, 2) documenting the lack of secular change in rates of job loss using data from the DWS from 1984-2006, and 3) exploring the extent to which the observed patterns result from a relative increase in rates of job loss among high-tenure workers. I find that the decline in job tenure and long-term employment is restricted to the private sector and that there has been some increase in job tenure and long-term employment in the public sector. I find no secular changes in relative rates of job loss in either sector that could account for these trends. Reconciliation of the trends in the tenure and displacement data must lie with a failure to identify all relevant displacement in the DWS. |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:pri:cepsud:1055&r=bec |
| By: | Morris M. Kleiner (University of Minnesota and NBER); Alan B. Krueger (Princeton University and NBER) |
| Abstract: | This study provides the first nation-wide analysis of the labor market implications of occupational licensing for the U.S. labor market, using data from a specially designed Gallup survey. We find that in 2006, 29 percent of the workforce was required to hold an occupational license from a government agency, which is a higher percentage than that found in studies that rely on state-level occupational licensing data. Workers who have higher levels of education are more likely to work in jobs that require a license. Union workers and government employees are more likely to have a license requirement than are nonunion or private sector employees. Our multivariate estimates suggest that licensing has about the same quantitative impact on wages as do unions -- that is about 15 percent, but unlike unions which reduce variance in wages, licensing does not significantly reduce wage dispersion for individuals in licensed jobs. |
| Keywords: | occupational licensing; regulation; wages |
| JEL: | J8 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1069&r=bec |
| By: | Altmann, Steffen (IZA); Falk, Armin (University of Bonn); Wibral, Matthias (University of Bonn) |
| Abstract: | Promotion tournaments play an important role for the provision of incentives in firms. In this paper, we extend research on single-stage rank-order tournaments and analyze behavior in multi-stage elimination tournaments. The main treatment of our laboratory experiment is a two-stage tournament in which equilibrium efforts are the same in both stages. We compare this treatment to a strategically equivalent one-stage tournament and to another two-stage tournament with a more convex wage structure. Confirming previous findings average effort in our one-stage treatment is close to Nash equilibrium. In contrast, subjects in our main treatment provide excess effort in the first stage both with respect to Nash predictions and compared to the equivalent one-stage tournament. The results for the more convex two-stage tournament show that excess effort in the first stage is a robust finding and that subjects react only weakly to differences in the wage structure. |
| Keywords: | personnel economics, tournament, incentives, laboratory experiment |
| JEL: | M51 M52 J33 C92 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3835&r=bec |
| By: | Michael Artis (Institute for Political and Economic Governance, Manchester University); Toshihiro Okubo (Research Institute for Economics and Business Administration, Kobe University) |
| Abstract: | The paper uses long-run GDP data for developed countries drawn from Maddison (2003) to generate deviation cycles for the period from 1870 to 2001. The cyclical deviates are examined for their bilateral cross-correlation values in three separate periods, those of the first globalization wave (1870 to 1914), the period of the“bloc economyâ€(1915 to 1959) and for the period of the second globalization (1960-2001). Cluster analysis is applied and the McNemar test is used to test for the relative coherence of alternative groupings of countries in the three periods. The bloc economy period emerges as one that features some well-defined sub-global clusters, where the second globalization period does not, the first globalization period lying between the two in this respect. The second globalization period shows a generally higher level of cross correlations and a lower variance than the other two periods. The features uncovered suggest that the second globalization period is indeed one that comprises a more inclusive world economy than ever before. |
| Keywords: | Globalization, Bloc economy, Business cycle, Cluster analysis, McNemar test |
| JEL: | F02 F15 F41 N10 E32 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:232&r=bec |
| By: | André van Hoorn (Radboud University Nijmegen, Department of Economics); Robbert Maseland (Radboud University Nijmegen, Department of Political Science. Max Planck Institute for the Study of Societies, Cologne) |
| Abstract: | Following Max Weber’s seminal work, much recent work has turned to religious values to explain socio-economic developments. We present a test of Weber’s original thesis that addresses fundamental limitations of previous research. A novel method that builds on happiness research is used to measure a religious work ethic in terms of the psychic costs of unemployment. The resulting ‘experienced preferences’ provide strong support for Weber’s original thesis: for both Protestants and Protestant countries, not having a job has substantially larger negative happiness effects than for other religious denominations. This provides a Weber-type channel relating religion to socio-economic outcomes. |
| Keywords: | values, religion, happiness, preferences, outcomes, culture |
| JEL: | J20 J60 P50 Z12 |
| Date: | 2008–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:gra:paoner:08/07&r=bec |
| By: | Silvia Faggian (Department of Applied Mathematics, University of Venice) |
| Abstract: | The paper concerns the study of equilibrium points, namely the stationary solutions to the closed loop equation, of an infinite dimensional and infinite horizon boundary control problem for linear partial differential equations. Sufficient conditions for existence of equilibrium points in the general case are given and later applied to the economic problem of optimal investment with vintage capital. Explicit computation of equilibria for the economic problem in some relevant examples is also provided. Indeed the challenging issue here is showing that a theoretical machinery, such as optimal control in infinite dimension, may be effectively used to compute solutions explicitly and easily, and that the same computation may be straightforwardly repeated in examples yielding the same abstract structure. No stability result is instead provided: the work here contained has to be considered as a first step in the direction of studying the behavior of optimal controls and trajectories in the long run. |
| Keywords: | Linear convex control, Boundary control, Hamilton–Jacobi–Bellman equations, Optimal investment problems, Vintage capital |
| JEL: | C61 C62 E22 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:vnm:wpaper:182&r=bec |