New Economics Papers
on Computational Economics
Issue of 2010‒05‒22
twenty-two papers chosen by

  1. The Role of International Carbon Offsets in a Second-best Climate Policy: A Numerical Evaluation By Enrica De Cian; Massimo Tavoni
  2. Use of Simulation Models to Study the Dynamic of Recall of Non-Conform Perishable Produce through the Supply Chain By Busato, Patrizia; Berruto, Remigio
  3. Modelling structural change in the agricultural sector â An Agent-based approach using FADN data from individual farms By Mohring, Anke; Zimmermann, Albert; Mack, Gabriele; Mann, Stefan; Ferjani, Ali; Gennaio, Maria-Pia
  4. Closing the factory doors until better times: CGE modelling of drought using a theory of excess capacity By Wittwer, Glyn; Griffith, Marnie
  5. An analytical framework for incorporating land use change and forestry in a dynamic CGE model By Pant, Hom M.
  6. Value-At-Risk Optimal Policies for Revenue Management Problems By Matthias Koenig; Joern Meissner
  7. Farm level effects of EU policy liberalization: Simulations based on an EU-wide agricultural sector model and a supply model of the German agricultural sector By Deppermann, Andre; Grethe, Harald; Offermann, Frank
  8. Delay Management with Re-Routing of Passengers By Dollevoet, T.; Huisman, D.; Schmidt, M.; Schobel, A.
  9. Economics of controlling a spreading environmental weed By Chalak, Morteza; Pannell, David
  10. Labor Market and Income Effects of a Legal Minimum Wage in Germany By Müller, Kai-Uwe; Steiner, Viktor
  11. Scenarios and Options for Productivity Growth in Philippine Agriculture: An Application of the Agricultural Multimarket Model for Policy Evaluation (AMPLE) By Briones, Roehlano M.
  12. Assessing poverty and distributional impacts of the global crisis in the Philippines : a microsimulation approach By Habib, Bilal; Narayan, Ambar; Olivieri, Sergio; Sanchez-Paramo, Carolina
  13. Information Modelling for Quality and Sustainability By Lehmann, Richard J.; Reiche, Robert; Fritz, Melanie; Schiefer, Gerhard
  14. Reconciling Model and Information Uncertainty in Development Appraisal By Peter Byrne; Pat McAllister; Pete Wyatt
  15. Welfare and Pricing of Mail in a Communications Market By Cremer, Helmuth; De Donder, Philippe; Dudley, Paul; Rodriguez, Frank
  16. Automatic Stabilizers, Economic Crisis and Income Distribution in Europe By Dolls, Mathias; Fuest, Clemens; Peichl, Andreas
  17. Modelling the effects of an abolition of the EU sugar quota on internal prices, production and imports By Nolte, Stephan; Buysse, Jeroen; Van der Straeten, Bart; Claeys, Dakerlia; Lauwers, Ludwig; Van Huylenbroeck, Guido
  18. Sectoral Targets for Developing Countries: Combining "Common but Differentiated Responsibilities" with "Meaningful participation" By Meriem Hamdi-Cherif; Céline Guivarch; Philippe Quirion
  19. The Economic Crisis, Public Sector Pay, and the Income Distribution By Callan, Tim; Nolan, Brian; Walsh, John R.
  20. Investment in Transport Infrastructure, and Gas-Gas Competition By Gasmi, Farid; Oviedo, Juan Daniel
  21. Outsourcing and Offshoring: Sector Implications for Dynamics, Growth, and Sustainability By Weaver, Robert D.; Chung, Sung Hoon
  22. Non-linear models of disability and age applied to census data By Irene Albarrán; Pablo J. Alonso; Juan Miguel Marín

  1. By: Enrica De Cian (Fondazione Eni Enrico Mattei and University of Venice); Massimo Tavoni (Princeton Environmental Institute, Fondazione Eni Enrico Mattei, and Centro Euro-Mediterraneo per i Cambiamenti Climatici (CMCC))
    Abstract: International carbon offsets have been promoted since the Kyoto Protocol and an increasing number of countries have implemented or proposed cap-and-trade schemes with international trading, even though with quantitative or qualitative restrictions. Those limits reflect the trade-off between economic efficiency, distributional issues, and the need for additionality of foreign mitigation measures. Ceilings are also justified on the ground that international offsets undermine the capability of climate policy to induce and diffuse technological change. This paper addresses these issues in a second-best setting that explicitly considers the interplay between multiple externalities. We evaluate numerically how limits to the size, the timing, and the participation in an international carbon market affect the macroeconomic costs of climate policy, international financial transfers, and the incentive to carry out innovation. Results indicate that when constraints on international offsets are moderate, such as limiting their use to at most 15% of regional abatement, efficiency losses are small because they are partly compensated by more technological change and energy market effects, although specific regional patterns are identified. Regarding financial outflows from OECD countries, already a 15% ceiling would limit financial transfers significantly. Provisions of this kind are in line with some of the most recent policy proposals in OECD countries.
    Keywords: Energy-economy Modelling, Climate Policy, Technology Spillovers
    JEL: Q54 Q55 Q43 H23
    Date: 2010–04
  2. By: Busato, Patrizia; Berruto, Remigio
    Abstract: The traceability allows, for each product, to sketch the manufacturing process through a system documentary, enabling to identify the operational structures involved, the products and the lots, to define the flows of production, packaging and distribution. There are researches that investigate the traceability within the firm, but little work has been carried out on the investigation of the traceability system over the whole supply chain. The supply-chain of fresh produce is constituted of many links: producer/grower, warehouse, packing centre, distribution centre, retailers and finally the consumer. Each of these is a system itself that interacts with the other components of the supply-chain. The non-conformity could occurs in each of these links. Because of processing plant requirement, storage requirements, and because of savings in the traceability process, often small size lots are merged together to form a large size lot at some points in the supply-chain. Larger lot size could imply higher risk for the consumers in case of recall of the produce and much higher recall time and cost for the supply-chain. When a non-conformity occurs, the time to recall the produce depends on many factors: lot size, lead time for information spreading from link to link, product transit time among links, product storage procedures and times, and the point in the supply chain where the problem occurred. To study with a system approach different scenarios for the recall procedure the authors realized a discrete event dynamic simulation model using Extendsim®. In the paper is described the model framework and one practical example.
    Keywords: Traceability, Logistics, Dynamic simulation, Agribusiness, Agricultural and Food Policy, Farm Management, Food Consumption/Nutrition/Food Safety, Research and Development/Tech Change/Emerging Technologies, Risk and Uncertainty,
    Date: 2009–10
  3. By: Mohring, Anke; Zimmermann, Albert; Mack, Gabriele; Mann, Stefan; Ferjani, Ali; Gennaio, Maria-Pia
    Abstract: The development of multi-agent models for agriculture has allowed the inclusion of farm decision-making behaviour and interactions in the simulation of smaller agricultural regions. Important methodological impact for this has come in particular from scientists from Germany. Currently under construction, the SWISSland model claims to depict as realistically as possible the 50,000 family farms comprising the whole of Swiss agriculture in all their heterogeneity as regards farm and cost structures as well as farm decision behaviours, with the aim of improving the simulation and forecasting of structural change. This paper describes methodological aspects in the formation of the agent population by combining various data sources such as accounting and spatial data and the results of surveys. As its basis, SWISSland uses the 3300 Swiss Farm Accountancy Data Network (FADN) farms, whose representativeness is substantially improved by means of a corrective procedure. Individual-farm optimisation models simulate the heterogeneous behaviour of the agents, for whom a potential exists for land trade within regional groups. With the linking of different methods and recorded data, we can expect to see a marked increase in the quality of the assessment of policy consequences.
    Keywords: Structural change, Swiss agriculture, multi-agent model, agent definition, linear optimization, Agricultural and Food Policy, Farm Management, Land Economics/Use,
    Date: 2010–04
  4. By: Wittwer, Glyn; Griffith, Marnie
    Abstract: The aim of this paper is to analyse the regional economic impacts of a prolonged period of recurrent droughts. The model used for analysis is TERM-H2O, a dynamic successor to the bottom-up, comparative static TERM (The Enormous Regional Model). We concentrate on the regions of the southern Murray-Darling basin. Large change simulations are a challenge for modellers. Drought brings substantial inward supply shifts for farm sectors. This paper outlines various theoretical modifications undertaken to improve the modelling of drought in a computable general equilibrium (CGE) framework and then applies them to the period from 2005â06 on. In particular, we apply a theory of sticky capital adjustment to downstream processing sectors, whereby processors temporarily retire capital in response to scarcer farm products, limiting upward price movements in farm outputs and resulting in more realistic modelling of drought. Results are explained using a back-of-the-envelope approach. This framework allows us to estimate the economic impacts of allowing water trade. In addition, the approach provides some estimate as to the impact of prolonged drought on structural change in predominantly rural regions of south-eastern Australia.
    Keywords: Research Methods/ Statistical Methods,
    Date: 2010
  5. By: Pant, Hom M.
    Abstract: Forestry poses a challenge to computable general equilibrium (CGE) modellers working with recursively dynamic models. This is because of the lag between its inputs and output, which do not correspond to the same time period as other sectors. Inputs are applied for a number of years before a forest is ready for harvest. As a result, attempts in the past to incorporate a well-specified forestry sector in a recursive CGE model have been only partly successful. The purpose of this paper is to fill this gap by presenting a consistent analytical framework which can be used to incorporate forestry into a recursively dynamic global CGE model. A key feature of the framework is that it splits the forestry activity into three partsâplanting, holding and harvesting. Planting and harvesting are done by standard production sectors and holding is done by investors, whose behaviour is already modelled in these CGE models. In addition, global forests are classified into three groupsâcommercial plantation forests, environmental plantation forests and native forests. All harvested forest land is made available for competition for alternative agricultural uses and will be allocated to the activity it is best suited for, given productivity differences for different activities. This framework can be used in a CGE modelling framework to support implementation of the proposed reduced emissions from deforestation and forest degradation (REDD) schemes as well as being applied to study land allocations, nationally and globally, across activities under alternative scenario assumptions. For example, the model can be used to project the effects on food production and prices of an increase in bio-fuel subsidies.
    Keywords: Agribusiness,
    Date: 2010
  6. By: Matthias Koenig (Department of Management Science, Lancaster University Management School); Joern Meissner (Department of Management Science, Lancaster University Management School)
    Abstract: Consider a single-leg dynamic revenue management problem with fare classes controlled by capacity in a risk-averse setting. The revenue management strategy aims at limiting the down-side risk, and in particular, value-at-risk. A value-at-risk optimised policy offers an advantage when considering applications which do not allow for a large number of reiterations. They allow for specifying a confidence level regarding undesired scenarios. We state the underlying problem as a Markov decision process and provide a computational method for computing policies, which optimise the value-at-risk for a given confidence level. This is achieved by computing dynamic programming solutions for a set of target revenue values and combining the solutions in order to attain the requested multi-stage risk-averse policy. Numerical examples and comparison with other risk-sensitive approaches are discussed.
    Keywords: operations research, risk management, capacity control, revenue management, risk, value-at-risk
    JEL: C61
    Date: 2010–05
  7. By: Deppermann, Andre; Grethe, Harald; Offermann, Frank
    Abstract: The impact of sectoral or economy wide policy scenarios is often of strong political and public interest, yet it is a scientific challenge. When analyzing different levels of aggregation, the use of single models may not be sufficient. In this paper we establish an interface between the European Simulation Model (ESIM) and the Farm Modelling Information System (FARMIS). The linkage of the two models allows us to quantify adjustment processes both at the sectoral level and at the farm group level for the German agricultural sector. Different liberalization scenarios are presented and compared to a reference scenario. The abolishment of market price support leads to a reduction of farm incomes, especially if direct payments are also reduced. The low absolute level of return to labor, particularly in grazing livestock farms, suggests strong changes in farm structure as well as the farm input industry in Germany under the full liberalization scenario.
    Keywords: Model Linkage, Policy Impact Assessment, Income Distribution, Agricultural and Food Policy, Farm Management, Land Economics/Use,
    Date: 2010–04
  8. By: Dollevoet, T. (Erasmus Econometric Institute); Huisman, D. (Erasmus Econometric Institute); Schmidt, M. (Erasmus Econometric Institute); Schobel, A. (Erasmus Econometric Institute)
    Abstract: The question of delay management is whether trains should wait for a delayed feeder train or should depart on time. In classical delay management models passengers always take their originally planned route. In this paper, we propose a model where re-routing of passengers is incorporated. To describe the problem we represent it as an event-activity network similar to the one used in classical delay management, with some additional events to incorporate origin and destination of the passengers. We present an integer programming formulation of this problem. Furthermore, we discuss the variant in which we assume fixed costs for maintaining connections and we present a polynomial algorithm for the special case of only one origin-destination pair. Finally, computational experiments based on real-world data from Netherlands Railways show that significant improvements can be obtained by taking the re-routing of passengers into account in the model.
    Keywords: public transportation;delay management;re-routing;OD-pairs
    Date: 2010–05–11
  9. By: Chalak, Morteza; Pannell, David
    Abstract: Weeds can cause significant problems to natural ecosystems. Although there have been numerous studies on the economics of weed control, relatively few of these studies have focused on natural ecosystems. This paper addresses this gap in the literature by assessing the cost-effectiveness of a comprehensive range of control strategies for blackberry (Rubus anglocandicans) in natural environments in Australia. We developed a stochastic dynamic simulation model and a deterministic dynamic optimisation model. The stochastic model calculates the expected net present value (NPV) of a range of control strategies, including any combination of treatment options. The optimisation model identifies the treatment combination that maximises NPV. Both models represent the costs and efficacies of control options over 25 years. The results indicate that using rust (Phragmidium violaceum) as a biological control agent only marginally increases NPV and excluding rust does not affect the optimal choice of other control options. The results also show for a wide range of parameter values that a strategy which combines the herbicide grazon (Triclopyre and picloram) and mowing is optimal. If chemical efficacy decreases by 20 percent it becomes optimal to include grazing blackberry by goats in the control strategy.
    Keywords: Environment, Economics, Weed, Stochastic, Optimisation, Management, Environmental Economics and Policy,
    Date: 2010
  10. By: Müller, Kai-Uwe (DIW Berlin); Steiner, Viktor (DIW Berlin)
    Abstract: In view of rising wage and income inequality, the introduction of a legal minimum wage has recently become an important policy issue in Germany. We analyze the distributional effects of a nationwide legal minimum wage of 7.50 € per hour on the basis of a microsimulation model which accounts for the complex interactions between individual wages, the tax-benefit system and net household incomes, also taking into account potential employment effects as well as indirect effects on consumption. Simulation results show that the minimum wage would be rather ineffective in raising net household incomes and reducing income inequality, even if it led to a substantial increase in hourly wages at the bottom of the wage distribution. The ineffectiveness of a minimum wage in Germany is mainly due to the existing system of means-tested income support and the position of minimum wage earners in the income distribution.
    Keywords: minimum wage, wage distribution, employment effects, income distribution, inequality, microsimulation
    JEL: I32 H31 J32
    Date: 2010–05
  11. By: Briones, Roehlano M.
    Abstract: <p>Sustaining and accelerating agricultural growth remains a development imperative in view of persistent rural poverty and emerging threats to food security. While growth can be achieved by expansion of agricultural area and input intensification, growth through improvement in productivity is a promising option. However, productivity growth appears to be a relatively low priority for policy. Rather, the agricultural strategy is oriented toward domestic protection to achieve self-sufficiency and to support production by generous subsidies. In contrast, an alternative strategy may be one that is competition-oriented and productivity-based, i.e., one that favors integration with the international economy through trade, as well as making domestic investments targeted at productivity growth.</p> <p>Scenarios for Philippine agriculture under these policy options are evaluated using a new supply and demand model (Agricultural Multimarket Model for Policy Evaluation or AMPLE). Model simulations suggest that: rapid productivity growth, even when combined with trade liberalization, is generally favorable for farmers and consumers based on improved outlook on production, exports, and food consumption. In contrast, trade liberalization alone has a contractionary effect on agriculture; and production support is a costly instrument for promoting agricultural growth. The model experiments suggest that a back-to-basics strategy for agriculture, incorporating various productivity-based instruments such as investments in R&D, extension, rural infrastructure, protection of the resource base of agriculture, and even human capital formation and institutional reforms, are key to long-term agricultural growth.</p>
    Keywords: agriculture, productivity growth, scenario analysis, supply and demand, technological change
    Date: 2010
  12. By: Habib, Bilal; Narayan, Ambar; Olivieri, Sergio; Sanchez-Paramo, Carolina
    Abstract: As the financial crisis has spread through the world, the lack of real-time data has made it difficult to track its impact in developing countries. This paper uses a micro-simulation approach to assess the poverty and distributional effects of the crisis in the Philippines. The authors find increases in both the level and the depth of aggregate poverty. Income shocks are relatively large in the middle part of the income distribution. They also find that characteristics of people who become poor because of the crisis are different from those of both chronically poor people and the general population. The findings can be useful for policy makers wishing to identify leading monitoring indicators to track the impact of macroeconomic shocks and to design policies that protect vulnerable groups.
    Keywords: Rural Poverty Reduction,Regional Economic Development,Labor Policies,Achieving Shared Growth,Economic Theory&Research
    Date: 2010–04–01
  13. By: Lehmann, Richard J.; Reiche, Robert; Fritz, Melanie; Schiefer, Gerhard
    Abstract: The food sector is confronted with a growing number of public and private requirements, which call for provision of information about the quality and sustainability of food, such as, e.g., its origin, safety and production conditions. This forces enterprises to innovate towards demand driven and knowledge-based production of food. As a consequence, intra- and inter-enterprise production and information processes have to be integrated and suitable information systems need to be developed to provide information for related decision processes. The present paper introduces a generalized modelling framework for model-based decision support systems (DSS) involving production and information processes across whole supply networks. The different phases of a decision process are supported by the integration of functional, behavioural and informational network models using the Unified Modeling Language (UML) and discrete-event simulation.
    Keywords: Supply chain management, Model-based decision support systems (DSS), Process integration, Unified Modeling Language (UML), Discrete-event simulation, Agribusiness, Agricultural and Food Policy, Farm Management, Food Consumption/Nutrition/Food Safety, Research and Development/Tech Change/Emerging Technologies, Risk and Uncertainty,
    Date: 2009–10
  14. By: Peter Byrne (School of Real Estate & Planning, Henley Business School, University of Reading); Pat McAllister (School of Real Estate & Planning, Henley Business School, University of Reading); Pete Wyatt (School of Real Estate & Planning, Henley Business School, University of Reading)
    Abstract: This paper investigates the effect of choices of model structure and scale in development viability appraisal. The paper addresses two questions concerning the application of development appraisal techniques to viability modelling within the UK planning system. The first relates to the extent to which, given intrinsic input uncertainty, the choice of model structure significantly affects model outputs. The second concerns the extent to which, given intrinsic input uncertainty, the level of model complexity significantly affects model outputs. Monte Carlo simulation procedures are applied to a hypothetical development scheme in order to measure the effects of model aggregation and structure on model output variance. It is concluded that, given the particular scheme modelled and unavoidably subjective assumptions of input variance, simple and simplistic models may produce similar outputs to more robust and disaggregated models.
    Date: 2010
  15. By: Cremer, Helmuth; De Donder, Philippe; Dudley, Paul; Rodriguez, Frank
    Abstract: We build a model where a postal incumbent offering single piece, transactional and advertising mail competes with postal entrants and with a firm offering an alternative medium. We solve for the optimal prices under various competition assumptions. We calibrate the model and provide numerical simulations in order to shed light on the impact of these assumptions on volumes and welfare levels.
    Date: 2010–04–02
  16. By: Dolls, Mathias (University of Cologne); Fuest, Clemens (University of Oxford); Peichl, Andreas (IZA)
    Abstract: This paper investigates to what extent the tax and transfer systems in Europe protect households at different income levels against losses in current income caused by economic downturns like the present financial crisis. We use a multi country micro simulation model to analyse how shocks on market income and employment are mitigated by taxes and transfers. We find that the aggregate redistributive effect of the tax and transfer systems increases in response to the shocks. But the extent to which households are protected differs across income levels and countries. In particular, there is little stabilization of disposable income for low income groups in Eastern and Southern European countries.
    Keywords: automatic stabilization, crisis, inequality, redistribution
    JEL: E32 E63 H2 H31
    Date: 2010–04
  17. By: Nolte, Stephan; Buysse, Jeroen; Van der Straeten, Bart; Claeys, Dakerlia; Lauwers, Ludwig; Van Huylenbroeck, Guido
    Abstract: We apply a spatial price equilibrium model of the world sugar market to simulate an abolishment of the EU quota system in 2015/16. To overcome the normative nature of the approach, we calibrate the model by attaching a non-linear cost term to each trade flow. This is in some regards similar to positive mathematical programming. We suggest an economic interpretation and an econometric specification of the cost term. Production in the EU increases to almost 16 million tons. Twelve member states increase production, seven reduce it. Preferential imports are significantly reduced. Simulated effects are found to be more pronounced the higher the world market price.
    Keywords: CAP, structural change, sugar, TRQ, spatial modelling, trade preferences, PMP, Agricultural and Food Policy, Farm Management, Land Economics/Use,
    Date: 2010–04
  18. By: Meriem Hamdi-Cherif (CIRED, Chaire Paris-Tech «Modélisation Prospective au service du Développement Durable»); Céline Guivarch (CIRED, Ecole des Ponts Paris-Tech); Philippe Quirion (CIRED, CNRS and LMD-IPSL)
    Abstract: Although a global cap-and-trade system is seen by many researchers as the most cost-efficient solution to reduce greenhouse gas emissions, developing countries governments refuse to enter into such a system in the short term. Hence, many scholars and stakeholders, including the European Commission, have proposed various types of commitments for developing countries that appear less stringent, such as sectoral approaches. In this paper, we assess such a sectoral approach for developing countries. More precisely, we simulate two policy scenarios in which developed countries continue with Kyoto-type absolute commitments, whereas developing countries adopt an emission trading system limited to electricity generation and linked to developed countries' cap-and-trade system. In a first scenario, CO2 allowances are auctioned by the government, which distributes the auctions receipts lump-sum to households. In a second scenario, the auction receipts are used to reduce taxes on, or to give subsidies to, electricity generation. Our quantitative analysis, led with a hybrid general equilibrium model, shows that such options provide almost as much emission reductions as a global cap-and-trade system. Moreover, in the second sectoral scenario, GDP losses in developing countries are much lower than with a global cap-and-trade system and so is the impact on the electricity price.
    Keywords: Sectoral Approach, Sectoral Target
    JEL: Q38
    Date: 2010–04
  19. By: Callan, Tim; Nolan, Brian; Walsh, John R.
    Abstract: An important aspect of the impact of the economic crisis is how pay in the public sector responds - in the face not only of the evolution of pay in the private sector, but also extreme pressure on public spending (of which pay is a very large proportion) as fiscal deficits soar. What are the effects on the income distribution of cutting public sector pay rates or alternative strategies to reduce the public sector pay bill, and how do these vary depending on the evolution of pay in the private sector? This paper investigates these issues using data and a tax-benefit simulation for Ireland, a country which faces a particularly severe fiscal crisis and where innovative measures have already been implemented to claw back pay from public sector workers in the guise of a "pensions levy", followed most recently by a significant cut in nominal pay rates. The SWITCH tax-benefit model first allows the distributional effects of these measures, which achieved a substantial reduction in the net public sector pay bill, to be teased out. The overall impact on the income distribution, set against alternative scenarios for pay in the private sector, is assessed. This provides empirical evidence relevant to policy choices in relation to a key aspect of household income over which governments have direct influence, while at the same time illustrating methodologically how a tax-benefit model can serve as the base for such investigation.
    Date: 2010–05
  20. By: Gasmi, Farid; Oviedo, Juan Daniel
    Abstract: This paper develops a simple model in which a regulated (upstream) transporter provides capacity to a marketer competing in output with an incumbent in the (downstream) gas commodity market. The equilibrium outcome of the firms' interaction in the downstream market is explicitly taken into account by the regulator when setting the transport charge. We consider various forms of competition in this market and derive the corresponding optimal transport charge policies. We then run simulations that allow us to perform a comparative welfare analysis of these transport infrastructure investment policies based on different assumptions about the intensity of the competition that prevails in the gas commodity market.
    Keywords: transport capacity investment, regulation, natural gas
    JEL: L51 L91
    Date: 2009–11
  21. By: Weaver, Robert D.; Chung, Sung Hoon
    Abstract: As national economies have integrated through removal of trade barriers, the potential for offshoring production was quickly recognized as a strategy to enhance firm performance. At the same time, labor market reforms opened the door for outsourcing of labor services to specialist firms that supply labor force teams. The implications of these trends for industries that rely on specialized workforces have drawn considerable attention. Both manufacturing and food processing have seen substantial movement toward oursourced labor, yet little research has considered the implications of these trends. In both manufacturing and food processing, specific labor skills are needed that require training and consistency of supply to ensure efficiency in raw material and plant capacity utilization. Hiring from local labor force in the short-run involves search, training, and adjustment costs. In the longer-term, a sustainable labor pool must be developed and nutured. Hiring through outsourced labor services firms involves a distinctly different cost structure and longer-term dynamics play a different role and performance for the employer as well as the local labor force. Individually, firms face a choice between hiring from a local labor force or outsourcing that task to a specialist firm. Within a labor market, firms competing for labor from the same pools have joint interests in maintaining a sustainable labor force while they compete to fill their demands. However, as some firms initiate use of outsourced labor, the local labor force may be impacted. This issue has not been considered and is taken up by this paper. The paper presents a microeconomic model and uses simulation to evaluate the implications of increased labor service contracting on sustainability of the local labor force. In particular, our results show that as contracted external labor increases, the local labor pool decreases and search costs increase rendering local labor at less attractive choice for employers. A threshold is identified in terms of extent of local labor employment at which the viability of local labor employment collapses. We show that even before this threshold is met, the labor force benefits of the location vanish, reducing the locational rationale for the employer to natural resource access, output market proximity, and fixed investments in plant and equipment. The marginal benefits of the location based on these factors may then be outweighed by those available at other locations and the firm may relocate. We conclude with consideration of implications for labor force policy targeted at sustaining particular industries.
    Keywords: Labor force, Offshoring, Outsourcing, Food System, Sustainability, Agribusiness, Agricultural and Food Policy, Farm Management, Food Consumption/Nutrition/Food Safety, Risk and Uncertainty,
    Date: 2009–10
  22. By: Irene Albarrán; Pablo J. Alonso; Juan Miguel Marín
    Abstract: It is usually considered that the proportion of handicapped people grows with age. Namely, the older the man/woman is, the more level of disability he/she suffers. However, empirical evidence shows that this assessment is not always true, or at least, it is not true in the Spanish population. This study tries to assess the impact of age on disability in Spain. It is divided into three different parts. The first one is focused in describing the way disability is measured in this work. We used a former index defined by the authors that distinguishes between men and women. The second one is focused in a literature review about the methods used in this paper. This section emphasizes on local regression, feed forward neural networks and BARS. Finally, in the last section estimations are undertaken. Several methods are used and, therefore, there are fairly differences in the results, not only among the methodologies, but also between genders.
    Keywords: Disability, Local estimation, Splines, Neural networks, BARS
    JEL: C10 C11 C45 C50
    Date: 2010–05

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