nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2013‒08‒31
27 papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Third Generation University Strategic Planning Model Development By Skribans, Valerijs; Lektauers, Arnis; Merkuryev, Yuri
  2. Intra-triad Knowledge Flows By Karlsson, Charlie; Norman, Therese
  3. Technology Parks versus Science Parks: does the university make the difference? By Albahari, Alberto; Pérez-Canto, Salvador; Barge-Gil, Andrés; Modrego, Aurelia
  4. Practice Makes Perfect: Entrepreneurial-Experience Curves and Venture Performance By Toft-Kehler, Rasmus; Wennberg, Karl; Kim, Phillip
  5. With a little help from my friends: Supplying to multinationals, buying from multinationals, and domestic firm performance By Holger Görg; Adnan Seric
  6. R&D cooperation and industry cartelization By Prokop, Jacek; Karbowski, Adam
  7. Proximity and Innovation: From Statics to Dynamics By Pierre-Alexandre Balland; Ron Boschma; Koen Frenken
  8. R&D, Integration, and Foreign Ownership By KWON Hyeog Ug; Jungsoo PARK
  9. Technological Dynamics and Social Capability: US States and European Nations By Jan Fagerberg; Maryann P. Feldman; Martin Srholec
  10. The Impact of China on Stock Returns and Volatility in the Taiwan Tourism Industry By Chia-Lin Chang; Hui-Kuang Hsu; Michael McAleer
  11. Small business exit: Review of past research, theoretical considerations and suggestions for future research By DeTienne, Dawn; Wennberg, Karl
  13. Localization of Collaborations in Knowledge Creation By INOUE Hiroyasu; NAKAJIMA Kentaro; SAITO Yukiko
  14. Identifying High-Growth Firms By Halvarsson, Daniel
  15. Entrepreneurship and the Entrepreneur: A Synthesis View By Dissanayake, Srinath
  16. Explaining entrepreneurial orientation among university students: evidence from Italy By A. Arrighetti; F. Landini; L. Caricati; N. Monacelli
  17. Human capital, social capital and organizational performance: A structural modeling approach By J. Augusto Felicio; Eduardo Couto; Jorge Caiado
  18. Implications of Value Creation and Capture in Global Value Chains - Lessons from 39 Grassroots Cases By Ali-Yrkkö, Jyrki; Rouvinen, Petri
  19. The Impact of Information Provision on Agglomeration Bonus Performance: An Experimental Study on Local Networks By Banerjee, Simanti; de, Vries Frans; Hanley, Nicholas; van, Soest Daan
  20. Growth effect of FDI in developing economies: The role of institutional quality By JUDE, Cristina; LEVIEUGE, Gregory
  21. Gender differences in educational aspirations and attitudes By Rampino, Tina; Taylor, Mark P.
  22. Organizational Control Systems and Pay-for-Performance in the Public Service By Bruno S. Frey; Fabian Homberg; Margit Osterloh
  23. Dynamic Selection and the New Gains from Trade with Heterogeneous Firms By Thomas Sampson
  24. Regional age structure, human capital and innovation: Is demographic ageing increasing regional disparities? By Gregory, Terry; Patuelli, Roberto
  25. Risk Preferences and Estimation Risk in Portfolio Choice By Hao Liu; Winfried Pohlmeier
  26. Industrial Growth and Structural Change: Brazil in a Long-Run Perspective By Dante Aldrighi; Renato P. Colistete
  27. Measuring Investment in Human Capital Formation: An Experimental Analysis of Early Life Outcomes By Doyle, Orla; Harmon, Colm P.; Heckman, James J.; Logue, Caitriona; Moon, Seong Hyeok

  1. By: Skribans, Valerijs; Lektauers, Arnis; Merkuryev, Yuri
    Abstract: The paper discusses implementation of a research that is aimed at development of a simulation model which would allow analyzing different development strategies of the third generation university. Small countries’ universities have limits of growth. The problem can be solved with a new approach to university role. The third generation defines university as innovation generation, transfer and implementation center, while maintaining the traditional university functions. The 3G university activities change number of innovative companies in the country. With growth of the number of innovative companies, potential researches and innovation customers’ amount grow. With time the amount of conducted research and developed innovative products growth. Innovative products and technologies is the basis of university competitiveness in the 21st century. Universities must develop, accumulate, implement and get benefits from innovative products and technologies.
    Keywords: system dynamics; higher education; resource management; organizational learning; funding; quality; knowledge; innovation
    JEL: C02 C50 C51 C60 C69 I20 I21 I22 I23
    Date: 2013
  2. By: Karlsson, Charlie (Centre of Excellence for Science and Innovation Studies (CESIS ), Jönköping International Business School); Norman, Therese (Centre of Excellence for Science and Innovation Studies (CESIS ), Jönköping International Business School)
    Abstract: In this paper we point out a gap in the EU 2020 strategy to deliver growth that is smart, through more effective investments in education, research and innovation. The gap in the strategy is that in addition to investing in its own R&D, the EU must take advantage of knowledge created in the rest of the world. Even if EU is a major generator of new knowledge and will become even more so when the strategy is implemented, more new knowledge is (and will be) generated outside than inside the EU. New knowledge developed in other parts of the world are not flowing immediately, automatically and without costs to the relevant actors within the EU. It is critical for the EU to develop efficient channels for the imports of knowledge from other parts of the world. We analyze EU’s capacity to absorb knowledge created in the other Triad nations (United States and Japan) through the following channels for international knowledge flows: academic knowledge channels, patents as a knowledge channel, technology trade, strategic R&D cooperation, trade networks, foreign direct investments, and high-skilled migration. The indicators show that there are certain types of knowledge channels that Europe must try to use much more extensively in order to become a leading knowledge economy.
    Keywords: knowledge flows; knowledge channels; knowledge absorption; EU2020
    JEL: O30
    Date: 2013–08–19
  3. By: Albahari, Alberto; Pérez-Canto, Salvador; Barge-Gil, Andrés; Modrego, Aurelia
    Abstract: Although the notion of Science and Technology Parks (STPs) has become fairly widespread, however, the level of university involvement in these parks differs hugely. At the extremes, there are parks that are owned and managed by universities, and parks with no formal links of any kind with a university. We use data from the Community Innovation Survey (CIS) for Spain and a survey of STP park managers to analyse how the level of involvement of a university in the STP affects the innovation outputs of its tenants and their links with universities. We find that higher involvement of a university in the STP negatively affects tenant’s innovation sales and positively affects the number of patent applications. We find no robust evidence of the involvement of a university in the propensity for park firms to cooperate with a university or to purchase external R&D services from the university.
    Keywords: Science Parks, Technology Parks, Innovation Policy, Academia-Industry links
    JEL: L2 O25 O3 R11
    Date: 2013–08–21
  4. By: Toft-Kehler, Rasmus (Copenhagen Business School, Symbion Entrepreneurial Learning Lab); Wennberg, Karl (Ratio and Stockholm School of Economics); Kim, Phillip (Wisconsin School of Business)
    Abstract: This study tackles the puzzle of why increasing entrepreneurial experience does not always lead to improved financial performance of new ventures. We propose an alternate framework demonstrating how experience translates into expertise by arguing that the positive experience-performance relationship only appears to expert entrepreneurs, while novice entrepreneurs may actually perform increasingly worse because of their inability to generalize their experiential knowledge accurately into new ventures. These negative performance implications can be alleviated if the level of contextual similarity between prior and current ventures is high. Using matched employee-employer data of an entire population of Swedish founder-managers between 1990 and 2007, we find a non-linear relationship between entrepreneurial experience and financial performance consistent with our framework. Moreover, the level of industry, geographic, and temporal similarities between prior and current ventures positively moderates this relationship. Our work provides both theoretical and practical implications for entrepreneurial experience—people can learn entrepreneurship and pursue it with greater success as long as they have multiple opportunities to gain experience, overcome barriers to learning, and build an entrepreneurial-experience curve.
    Keywords: Serial Entrepreneurship; Learning Curves; Experience; Similarity; Performance
    JEL: L26 M13
    Date: 2013–07–17
  5. By: Holger Görg; Adnan Seric
    Abstract: This paper uses firm level data for 19 African countries to look at the link between domestic firms’ business relationship with multinationals and their performance in terms of innovation and productivity. Quite uniquely, we also evaluate the importance of support received by the domestic firm, either from the government or the multinational business partner, for this link. Overall, our data analysis shows that for the average domestic firm, supplying to a foreign multinational in the country (the backward linkage) is positively associated with product innovation. Buying from a multinational (the forward linkage) is positively associated with labor productivity. These results are independent of any type of support from the government or multinationals. We also find that domestic firms’ process innovation activity is only positively associated with supplying a multinational if the firm also receives assistance from the government or multinational. Furthermore, we find that supplying a multinational is only positively associated with domestic firms’ productivity if the firm received technology transfer from the multinational customers
    Keywords: multinationals, technology transfer
    JEL: F23
    Date: 2013–08
  6. By: Prokop, Jacek; Karbowski, Adam
    Abstract: The objective of this paper is to investigate the impact of R&D cooperation on cartel formation in the product market. The R&D investments that precede the production process are aimed at the reduction of the unit manufacturing costs, and could create positive externalities for the potential competitors. In contrast to the preceding literature, we assume that the competition between firms on the product market takes place according to the Stackelberg leadership model. For simplicity we focus on the case of duopoly. Numerical analysis shows that a closer cooperation at the R&D stage may strengthen the incentives to create a cartel in the product market. --
    Keywords: R&D cooperation of firms,industry cartelization,Stackelberg competition
    JEL: O31 L41 L13
    Date: 2013
  7. By: Pierre-Alexandre Balland; Ron Boschma; Koen Frenken
    Abstract: Despite theoretical and empirical advances, the proximity framework has remained essentially static in that the given proximity between actors explains the extent to which they interact in knowledge networks and profit from such interactions. We propose a dynamic extension of the proximity framework of Boschma in which we account for co-evolutionary dynamics between knowledge networking and proximity. For each proximity dimension, we describe how proximities might increase over time as a result of past knowledge ties. We capture these dynamics through the processes of learning (cognitive proximity), integration (organizational proximity), decoupling (social proximity), institutionalization (institutional proximity), and agglomeration (geographical proximity). We end with discussing several avenues for future research on the dynamics of knowledge networking and proximity.
    Keywords: proximity, innovation, knowledge networks, proximity dynamics, geographical proximity
    JEL: R10 R11 B52
    Date: 2013–08
  8. By: KWON Hyeog Ug; Jungsoo PARK
    Abstract: This study empirically investigates the effect of foreign ownership on research and development (R&D) investment based on firm-level panel dataset for the period 2000-2008 taken from the <i>Basic Survey of Japanese Business Structure and Activities</i>. The results reveal the following. First, the "integration effect" on R&D is negative for domestic or foreign majority ownership. Second, although the "foreign ownership effect" controlling for integration effect is insignificant, it becomes positive only when the parent firm is located in a non-G7 country. Third, the negative integration effect is stronger for vertical integration than it is for horizontal integration. These findings have an important implication in that the globalization and integration of firms not only may affect the pattern of production process and the global supply chain, but also have important influence on the level of domestic R&D activities.
    Date: 2013–08
  9. By: Jan Fagerberg (Centre for Technology, Innovation and Culture, University of Oslo); Maryann P. Feldman (Department of Public Policy, University of North Carolina); Martin Srholec (CERGE-EI, Economics Institute, Academy of Sciences of the Czech Republic)
    Abstract: This paper analyzes factors shaping technological capabilities in United States and European countries, and shows that the differences between the two continents in this respect are much smaller than commonly assumed. The analysis demonstrates a tendency towards convergence in technological capabilities for the sample as a whole between 1998 and 2008. The results indicate that social capabilities, such as well-developed public knowledge infrastructure, an egalitarian distribution of income, a participatory democracy and prevalence of public safety condition the growth of technological capabilities. Possible effects of other factors, such as agglomeration, urbanization, industrial specialization, migration and knowledge spillovers are also considered. The paper is a revised, updated and shortened version of working paper 20111114 in this series.
    Keywords: innovation, technological capability, social capability, Europe, United States
    Date: 2013–08
  10. By: Chia-Lin Chang; Hui-Kuang Hsu; Michael McAleer (University of Canterbury)
    Abstract: This paper investigates the stock returns and volatility size effects for firm performance in the Taiwan tourism industry, especially the impacts arising from the tourism policy reform that allowed mainland Chinese tourists to travel to Taiwan. Four conditional univariate GARCH models are used to estimate the volatility in the stock indexes for large and small firms in Taiwan. Daily data from 30 November 2001 to 27 February 2013 are used, which covers the period of Cross-Straits tension between China and Taiwan. The full sample period is divided into two subsamples, namely prior to and after the policy reform that encouraged Chinese tourists to Taiwan. The empirical findings confirm that there have been important changes in the volatility size effects for firm performance, regardless of firm size and estimation period. Furthermore, the risk premium reveals insignificant estimates in both time periods, while asymmetric effects are found to exist only for large firms after the policy reform. The empirical findings should be useful for financial managers and policy analysts as it provides insight into the magnitude of the volatility size effects for firm performance, how it can vary with firm size, the impacts arising from the industry policy reform, and how firm size is related to financial risk management strategy.
    Keywords: : Tourism, firm size, stock returns, conditional volatility models, volatility size effects, asymmetry, tourism policy reform
    JEL: C22 G18 G28 G32 L83
    Date: 2013–08–13
  11. By: DeTienne, Dawn (Colorado State University); Wennberg, Karl (Ratio and Stockholm School of Economics)
    Abstract: In this chapter we look at exit as a multidimensional and multidisciplinary phenomenon that may involve processes and outcomes operating at multiple levels of analysis. We do so because entrepreneurship research is often considered a phenomenondriven academic field (Shane, 2003; Sorenson and Stuart, 2008) and entrepreneurship is in itself a multidimensional concept: its definition depends on the focus of the research undertaken (Davidsson, Low, & Wright, 2001). In this field, it is surprising that exit has received much less attention than the phenomenon of entry, growth, or innovation among new firms; however, there has been renewed interest in this topic and this research crosses many disciplines and multiple theoretical perspectives. In this chapter, we provide an indepth review of that research which is applicable to small business. We review disciplinary approaches to research on exit, and then present a literature review of 28 empirical studies of entrepreneurial exit during the last 29 years. We summarize these studies under a number of topical areas and discuss the potential for further development in these areas. In doing so, we provide a framework and opportunities for future research.
    Keywords: Entrepreneurship; Exit
    JEL: L26 M13
    Date: 2013–08–22
  12. By: Linda Hamdi-Kidar (IAE Toulouse - Institut d'Administration des Entreprises - Toulouse - PRES Université de Toulouse); Cyrielle Vellera (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre-Mendès-France - Grenoble II)
    Abstract: Regardless the type of industry, it has been shown that users, and more specifically lead users, are among the prime developers of truly novel solutions. Most stop before market launch of their innovation, but others go further and start their own firms. While an encouraging body of literature has proven the crucial role and the commercial interest of integrating lead users in the innovation process, little research has been done concerning motivations that drive these individuals to become firm-founders. In this article, we identify the intrinsic and extrinsic motivations that drive some lead users to switch from an innovator role to an entrepreneur role.
    Keywords: Lead users ; User entrepreneurs ; User Innovation
    Date: 2012
  13. By: INOUE Hiroyasu; NAKAJIMA Kentaro; SAITO Yukiko
    Abstract: This study investigates the localization of knowledge exchange behavior by using data on inter-establishment collaborations in Japanese patent applications. Using distance-based methods, we obtain the following results. First, inter-establishment collaborations are significantly localized at the 5% level, with the range of localization at approximately 100km. Second, the extent of collaboration localization was stable during 1986-2005 despite the extensive developments in information and communications technology facilitating easy communication between remote researchers. Third, the extent of collaboration localization is much larger in inter-firm collaborations than in inside-firm collaborations. Furthermore, in inter-firm collaborations, the extent of localization is larger in collaborations with firms having only one research establishment. As a whole, inter-establishment collaborations are localized and stable, and localization occurs to complement firm-border effects, especially with regard to small firms.
    Date: 2013–08
  14. By: Halvarsson, Daniel (Ratio)
    Abstract: This paper investigates the role(s) of high-growth firms (HGFs) in the robust growth-rate distribution. HGFs are identified as firms for which the growth-rate distribution exhibits power-law decay. In contrast to the traditional means of identifying HGFs, a distributional approach eliminates the need to specify an arbitrary growth rate or percentage share. The latter approach is illustrated by the growth-rate distribution for Swedish data on incorporated firms at the aggregate level and at the 2-digit industry level. The empirical results indicate that a power law is sometimes present in the growth-rate distribution and suggest that HGFs are rarer than previously thought.
    Keywords: High-growth firms; Gazelles; Firm growth-rate distribution; Laplace distribution; Power law
    JEL: D22 L11 L25
    Date: 2013–08–21
  15. By: Dissanayake, Srinath
    Abstract: This small note on defining entrepreneurship is produced due to the apparent pursue of stereotyped knowledge among students in general. The author postulates to be an accountant or a finance manager should not be the prime concerns of students. There are other emerging areas as well. for an instant, Business Technology, Entrepreneurship, Value Based Marketing, Green Accounting, Personal Management etc. Given the unimportance of stereotyped knowledge, the author intends to define Entrepreneurship concisely to convince the students about the value of such a field. With some scholarly definitions on entrepreneurship, the author writes what entrepreneurship is and who is an entrepreneur. Most notably, in the definition of entrepreneur, the author adds the notion of Intrapreneurship allowing students to think out of the box.
    Keywords: Entrepreneurship, Intrapreneurship, Stereotyped Knowledge
    JEL: M00
    Date: 2013–08–20
  16. By: A. Arrighetti; F. Landini; L. Caricati; N. Monacelli
    Abstract: This paper presents one of the first studies on the entrepreneurial orientation of Italian university students. For a large sample of students from the University of Parma (Italy), we estimate the sources of entrepreneurial intent, distinguishing between the propensity to start a new business and the perceived likelihood of becoming an entrepreneur. In line with previous research in other countries, entrepreneurial intent is explained by a wide set of variables, including psychological, social and contextual factors. For Italian university students, the current economic crisis and the consequent increase in uncertainty do not seem to significantly weaken the importance of psychological variables as factors shaping entrepreneurial intent, confirming that these variables maintain primary relevance regardless of the context and the economic situation. While the perception of a lack of economic opportunities does not significantly affect the propensity to start a new venture, it does have a negative impact on the perceived likelihood of becoming an entrepreneur. This, in turn, suggests that the ongoing economic recession may indeed have a negative impact on the future entrepreneurial supply through a discouragement effect. Finally, the impact of family and business associations on stimulating entrepreneurial intent turns out not to be statistically significant. The combination of these results significantly contributes to our general understanding of entrepreneurial intent among Italian university students.
    Keywords: entrepreneurial intent, university students, Italy, economic crisis
    Date: 2013
  17. By: J. Augusto Felicio (School of Economics and Management (ISEG), Technical University of Lisbon); Eduardo Couto (School of Economics and Management (ISEG), Technical University of Lisbon); Jorge Caiado (CEMAPRE, School of Economics and Management (ISEG), Technical University of Lisbon)
    Abstract: This research evaluates the human capital and social capital of managers and its influence on the performance of small and medium-sized Portuguese companies. We resorted to the structural modeling methodology approach applied to a sample of 192 small and medium companies aged between four and fifteen years from five different activity sectors. It was concluded that human capital affects social capital and the experience and cognitive ability influence personal relations and complicity. The organizational performance is strongly influenced by human capital through the cognitive ability of the manager. It's an important contribution to the management literature.
    Keywords: Human capital, Social capital, Organizational performance, Cognitive ability, Small and medium enterprises
    Date: 2013–08
  18. By: Ali-Yrkkö, Jyrki; Rouvinen, Petri
    Abstract: This report summarizes 39 detailed ETLA case studies of global value chains (GVCs). The findings suggest that the value added in global value chains is less tied to their tangible aspects than what conventional wisdom suggests. Intangible aspects of GVCs tend to be more important, but their poor measurement in available statistics misguides. With the raise of GVCs, interests of governments and multinational enterprises operating within national borders are increasingly at odds, e.g., when it comes to transfer pricing practices. The evidence from Finland shows that misinterpreted (or ignored) transfer pricing rules have significant impacts on GDP and other macroeconomic measures. Since multinational enterprises, and GVCs they operate, have grown to dominate international trade, the focus of national policymakers should shift from companies and industries to tasks and functions that are conducted within national borders.
    Keywords: global value chains, Finland, transfer pricing, case studies, economic policy
    JEL: F23 L14 M11
    Date: 2013–08–19
  19. By: Banerjee, Simanti; de, Vries Frans; Hanley, Nicholas; van, Soest Daan
    Abstract: The Agglomeration Bonus (AB) is a mechanism to induce adjacent landowners to spatially coordinate their land use for the delivery of ecosystem services from farmland. This paper uses laboratory experiments to explore the performance of the AB in achieving the socially optimal land management configuration in a local network environment where the information available to subjects varies. The AB poses a coordination problem between two Nash equilibria: a Pareto dominant and a risk dominant equilibrium. The experiments indicate that if subjects are informed about both their direct and indirect neighbors' actions, they are more likely to coordinate on the Pareto dominant equilibrium relative to the case where subjects have information about their direct neighbors' action only. However, the extra information can only delay - and not prevent - the transition to the socially inferior risk dominant Nash equilibrium. In the long run, the AB mechanism may only be partially effective in enhancing delivery of ecosystem services on farming landscapes featuring local networks.
    Keywords: Agglomeration bonus, agri-environment schemes, biodiversity conservation, ecosystem services, information spillovers, Payments for Ecosystem Services, spatial coordination
    Date: 2013–08
  20. By: JUDE, Cristina; LEVIEUGE, Gregory
    Abstract: This paper investigates the effect of FDI on economic growth conditional on the institutional quality of host countries. We consider institutional heterogeneity to be an explanation for the mixed results of previous empirical studies and we develop several arguments to show that institutional quality modulates the intensity of FDI impact on growth. Using a comprehensive data set for institutional quality, we test this hypothesis on a sample of 94 developing countries over the period 1984-2009. The use of Panel Smooth Transition Regression (PSTR) allows us to identify both the heterogeneity and the threshold of institutional quality that influence the FDI growth effect. These results have significant implications for policy sequencing in developing countries. In order to benefit from FDI-led growth, the improvement of the institutional framework should precede FDI attraction policies. While some features of institutional quality have an immediate effect on fostering FDI-led growth, others need a consistent accumulation of efforts, therefore challenging the effectiveness of institutional reforms in developing countries.
    Keywords: FDI, growth, heterogeneity, institutional quality, PSTR, Developing economies
    JEL: C34 F21 F43 O16
    Date: 2013–08–26
  21. By: Rampino, Tina; Taylor, Mark P.
    Abstract: We use data from the youth component of the British Household Panel Survey to examine gender differences in educational attitudes and aspirations among 11-15 year olds. While girls have more positive aspirations and attitudes than boys, the impacts of gender on childrens attitudes and aspirations vary significantly with parental education level, parental attitudes to education, childs age and the indirect cost of education. Boys are more responsive than girls to positive parental characteristics, while educational attitudes and aspirations of boys deteriorate at a younger age than those of girls. These findings have implications for policies designed to reduce educational attainment differences between boys and girls as they identify factors which exacerbate the educational disadvantage of boys relative to girls.
    Date: 2013–08–20
  22. By: Bruno S. Frey; Fabian Homberg; Margit Osterloh
    Abstract: Under certain conditions, output related performance measurement and pay-for-performance produce negative outcomes. We argue that in public service, these negative effects are stronger than in the private sector. We combine Behavioural Economics and Management Control Theory to determine under which conditions this is the case. We suggest as alternatives to the dominant output related pay-for-performance systems selection and socialization, exploratory use of output performance measures, and awards.
    Keywords: organization control; organizational forms; public administration; organizations; public service motivation
    Date: 2013–06
  23. By: Thomas Sampson (LSE)
    Abstract: This paper develops an open economy growth model in which firm heterogeneity increases the gains from trade. Technology spillovers from incumbent firms to entrants cause the productivity threshold for firm survival to grow over time as competition becomes tougher. By raising the profits of exporters, trade increases the entry rate and generates a dynamic selection effect that leads to higher growth. The paper shows that the gains from trade can be decomposed into: static gains that equal the total gains from trade in an economy without technology spillovers, and; dynamic gains that are strictly positive. Since trade raises growth through selection, not scale effects, the positive growth effect of trade vanishes when firms are homogeneous. Thus, firm heterogeneity creates a new source of dynamic gains from trade. Calibrating the model to the U.S. economy implies that dynamic selection approximately triples the gains from trade.
    Date: 2013
  24. By: Gregory, Terry; Patuelli, Roberto
    Abstract: Demographic change is expected to affect labour markets in very different ways on a regional scale. The objective of this paper is to explore the spatio-temporal patterns of recent distributional changes in the workers age structure, innovation output and skill composition for German regions by conducting an Exploratory Space-Time Data Analysis (ESTDA). Beside commonly used tools, we apply newly developed approaches which allow investigating the space-time dynamics of the spatial distributions. We include an analysis of the joint distributional dynamics of the patenting variable with the remaining interest variables. Overall, we find strong clustering tendencies for the demographic variables and innovation that constitute a great divide across German regions. The detected clusters partly evolve over time and suggest a demographic polarization trend among regions that may further reinforce the observed innovation divide in the future. --
    Keywords: innovation,workforce age structure,exploratory space-time data analysis,regional disparities
    JEL: J11 O31 R11 R12 R23
    Date: 2013
  25. By: Hao Liu (CoFE, University of Konstanz, Germany); Winfried Pohlmeier (CoFE, University of Konstanz, Germany; ZEW, Germany; RCEA, Italy)
    Abstract: This paper analyzes the estimation risk of efficient portfolio selection. We use the concept of certainty equivalent as the basis for a well-defined statistical loss function and a monetary measure to assess estimation risk. For given risk preferences we provide analytical results for different sources of estimation risk such as sample size, dimension of the portfolio choice problem and correlation structure of the return process. Our results show that theoretically sub-optimal portfolio choice strategies turn out to be superior once estimation risk is taken into account. Since estimation risk crucially depends on risk preferences, the choice of the estimator for a given portfolio strategy becomes endogenous. We show that a shrinkage approach accounting for estimation risk in both, mean and covariance of the return vector, is generally superior to simple theoretically suboptimal strategies. Moreover, focusing on just one source of estimation risk, e.g. risk reduction in covariance estimation, can lead to suboptimal portfolios.
    Keywords: efficient portfolio, estimation risk, certainty equivalent, shrinkage
    JEL: G11 G12 G17
    Date: 2013–08
  26. By: Dante Aldrighi; Renato P. Colistete
    Abstract: This paper presents a long-run analysis of industrial growth and structural change in Brazil, from the coffee export economy in the nineteenth century to the present day. We focus on Brazil’s high economic growth in most of the twentieth century and the disruption caused by the collapse of debt-led growth in the early 1980s. We then examine the recent trends in economic growth and structural change, with a sectoral analysis of output, employment and productivity growth. Employing new data and estimates, we identify a sharp break with the earlier period of high outuput and productivity growth in Brazil’s manufacturing industry before the 1980s. From the 1990s, the relatively successful process of learning and technological advance by manufacturing firms that took place since the early industrialization has lost strength and Brazil’s productivity growth has declined and stagnated.
    Keywords: Industrial Growth; Structural Change; Brazil
    JEL: N66 O14 L60
    Date: 2013–08–21
  27. By: Doyle, Orla (University College Dublin); Harmon, Colm P. (University of Sydney); Heckman, James J. (University of Chicago); Logue, Caitriona (University College Dublin); Moon, Seong Hyeok (University of Chicago)
    Abstract: The literature on skill formation and human capital development clearly demonstrates that early investment in children is an equitable and efficient policy with large returns in adulthood. Yet little is known about the mechanisms involved in producing these long-term effects. This paper presents early evidence on the nature of skill formation based on an experimentally designed, five-year home visiting program in Ireland targeting disadvantaged families - Preparing for Life (PFL). We examine the impact of investment between utero to 18 months of age on a range of parental and child outcomes. Using the methodology of Heckman et al. (2010a), permutation testing methods and a stepdown procedure are applied to account for the small sample size and the increased likelihood of false discoveries when examining multiple outcomes. The results show that the program impact is concentrated on parental behaviors and the home environment, with little impact on child development at this early stage. This indicates that home visiting programs can be effective at offsetting deficits in parenting skills within a relatively short timeframe, yet continued investment may be required to observe direct effects on child development. While correcting for attrition bias leads to some changes in the precision of estimates, overall the results are quite similar.
    Keywords: early childhood intervention, human capital development, randomized control trial, multiple hypotheses, permutation testing
    JEL: C12 C93 J13 J24
    Date: 2013–08

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