nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2011‒02‒19
twenty-six papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. The Pure Logic of Accounting: A Critique of the Fair Value Revolution By Yuri Biondi
  2. Are union representatives badly paid? Evidence from France By Thomas Breda
  3. Inégalités et soutenabilité de la croissance chinoise By Mary-Françoise Renard
  4. Are SRI Funds More Resilient towards the Global Financial Crisis? By Miwa Nakai; Keiko Yamaguchi; Kenji Takeuchi
  5. The tax system and the financial crisis By Vieri Ceriani; Stefano Manestra; Giacomo Ricotti; Alessandra Sanelli; Ernesto Zangari
  6. Economic ideas and redistributive policy in the Spanish parliament: the 1900 debate on fiscal progressivity By Javier San-Julián-Arrupe
  7. Price rigidity in Europe and the US: A comparative analysis using scanner data By B. VERHELST; D. VAN DEN POEL
  8. Bounded Rationality By Penelope Hernandez; Coralio Ballester
  9. La dimension conflictuelle des projets d’infrastructure : essais sur la décision publique, le contentieux et les prix immobiliers. By Pham, Hai-Vu
  10. L’économie de la médecine libérale. By Ducos, Jean
  11. Qui sont les salariés payés au niveau du salaire minimum? Une analyse empirique à partir de données turques By Calavrezo, Oana; Pelek, Selin
  12. The identity of sociology or what to do when the universe is unknown: qualitative solutions against the quantitative obsession By Gomez, José Andrés; Merino, Bernat Roig; Tur, Antonio Aledo
  13. A closer look at financial development and income distribution By Céline Gimet; Thomas Lagoarde-Segot
  14. Beyond the crisis: EMU and labour market reform pressures in good and bad times By Vassilis Monastiriotis & Sotirios Zartaloudis
  15. New Jobs — Cleaner Air: Employment Effects Under Planned Changes to the EPA’s Air Pollution Rules By James Heintz; Heidi Garrett-Peltier; Ben Zipperer
  16. Dynamics of Output and Employment in the U.S. Economy By Deepankar Basu; Duncan K. Foley
  17. Outsourcing, Demand and Employment Loss in U.S. Manufacturing, 1990 – 2005 By James Burke; Gerald Epstein; Seung-Yun Oh
  18. "What Happens if Germany Exits the Euro?" By Marshall Auerback
  19. "Unit Labor Costs in the Eurozone: The Competitiveness Debate, Again" By Jesus Felipe; Utsav Kumar
  20. Global Imbalances: Non-conventional View By Vladimir Popov
  21. Performance of islamic banks across the world: an empirical analysis over the period 2001-2008 By KABLAN, Sandrine; YOUSFI, Ouidad
  22. The political economy of innovation; an institutional analysis of industrial policy and development in Brazil By Menezes, Jose H. V.
  23. The Theory of Institutional Change Revisited: The Institutional Dichotomy, Its Dynamic, and Policy Implications in a More Formal Analysis By Elsner, Wolfram
  24. Childhood, Schooling and Income Inequality By Cavapozzi, Danilo; Garrouste, Christelle; Paccagnella, Omar
  25. Integrating Equality - Globalization, Women’s Rights, Son Preference and Human Trafficking By Seo-Young Cho
  26. Market Dynamics in Sypply Chains: The Impact of Globalization and Consolidation on food companies' mark-ups By Eleni A.Kaditi; ;

  1. By: Yuri Biondi (PREG - Pole de recherche en économie et gestion - CNRS : UMR7176 - Polytechnique - X)
    Abstract: When international accounting standards were renamed to become international financial reporting standards, this seemed to imply that accounting no longer needed to exist, but rather had to be reconsidered as a part of financial communication and advertising. Does traditional accountability no longer matter? Betrayed investors and globalized stakeholders would dissent. A difference of nature continues to exist between fair values disclosed by managers and certified by auditors, and the actual performance generated by the enterprise entity through time, space, and interaction. In a world shaped by complex organizations facing unfolding changes, hazard and limited knowledge, the quest for fundamental principles of accounting is not academic. Accounting principles constitute a primary way that the creation and allocation of business incomes is governed; that is, fairly managed and regulated in the public interest, having respect to “other people interests.” This article adopts a dualistic posture that opposes the accounting conceptual frameworks based on fair value (market basis) and historical cost and revenue (process basis). The fundamental premises about the underlying economics of the enterprise entity are discussed, including the representation of the business and the concepts of asset and liability. References are made to the case of accounting for intangibles, and to the distinction between equities and liabilities. The cost and revenue accounting perspective is then defended in terms of accountability, but also from the informational viewpoint: historical accounting information plays a special role as a lighthouse in the dynamic and strategic setting of the Share Exchange. In particular, two refinements of the historical cost (and revenue) accounting model are suggested. The first one regards the treatment of earned revenues from continuing operations, and the second, the recognition of shareholders' equity interest computed on the actual funds provided in the past, coupled with the distinction between shareholders' equity and entity equity.
    Keywords: accounting theory; international financial reporting standards (IFRS); intangibles; conceptual framework; accounting principles and rules; accounting standards; marked-to-market; fair value; marked-to-models; accounting regulation
    Date: 2011
  2. By: Thomas Breda (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: In this paper, I study the wage differential between firms' union representatives and their coworkers using a linked employer-employee dataset. On the employee side of the data, the surveyed workers are asked if they are unionized but we do not know which unionized workers are union representatives. On the employer side of the data, I have access to the number of union representatives and unionized workers in each firm. I use this information to construct an indicator of the firm-level probability for a randomly drawn unionized worker to be union representative. This indicator is then used to split the directly observable wage differential between unionized and non-unionized workers into two differentials: one between union representatives and non-unionized workers and another one between unionized workers who are not a union representative and non-unionized workers. Estimates that control for individual characteristics and firm-level fixed effects show that union representatives' wages are 10% lower than those of other unionized workers and non-unionized workers. Additional tests suggest that this gap can be understood as the result of a non-cooperative strategic interaction between employers and union representatives.
    Keywords: unions ; wage differentials ; representative ; probability-based estimator
    Date: 2010–09
  3. By: Mary-Françoise Renard (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: Le remarquable taux de croissance de l'économie chinoise lui a permis d'être sans doute l'un des rares pays en voie de développement à se situer dans une logique de rattrapage par rapport aux pays développés. Elle a ainsi pu faire fortement diminuer la grande pauvreté et les réformes économiques ont permis un accroissement général des revenus. Mais si cette vision positive correspond bien à une réalité de l'efficacité de la politique économique chinoise, elle s'accompagne de plus en plus d'inquiétudes si l'on s'intéresse à l'aspect équité. Le nombre croissant de manifestations de mécontentement atteste des déséquilibres sociaux importants et conduit à s'interroger sur les contraintes que cela impose à la croissance chinoise. Quelle est l'origine de ces inégalités et quelles en sont les principales conséquences ?
    Keywords: chine;inegalites;réformes
    Date: 2011–02–09
  4. By: Miwa Nakai (Graduate School of Economics, Kobe University); Keiko Yamaguchi (Graduate School of Humanities and Social Sciences, Okayama University); Kenji Takeuchi (Graduate School of Economics, Kobe University)
    Abstract: This paper compares the resilience of Socially Responsible Investment (SRI) funds with that of conventional funds towards the global financial crisis by using an event study methodology. Taking the bankruptcy of Lehman Brothers as the particular event, we estimated the average cumulative abnormal returns of both SRI funds and conventional funds. Our results show that SRI funds are more resilient to such a shock. Similar results are obtained by an estimation with a market model that accounts for ARCH effects.
    Keywords: SRI, Event study, Financial crisis
    JEL: A13 M14
    Date: 2011–02
  5. By: Vieri Ceriani (Banca d'Italia); Stefano Manestra (Banca d'Italia); Giacomo Ricotti (Banca d'Italia); Alessandra Sanelli (Banca d'Italia); Ernesto Zangari (Banca d'Italia)
    Abstract: This paper investigates the effects of the tax system on the economic factors that triggered the financial crisis. We examine three cases in which the tax regime interacted with these factors, reinforcing them. First, we focus on the taxation of residential building: while the importance of capital gains taxes is disputed, the deductibility of mortgage interest may have contributed to the financial crisis by creating some of the raw materials for the securitization industry. Second, a narrow perspective on the tax treatment, together with specific provisions, may have fostered performance-based remuneration of managers, resulting in overemphasis of short-term profitability and incentive to excessive risk-taking. Third, the securitization process, which played a key role in the outbreak of the financial crisis, was accompanied by opportunities for tax arbitrage and reduction of the overall tax wedge paid by investors, through offset of incomes that are ordinarily taxed at different rates; a de facto exemption of CDS premiums received by non-residents supplemented the tax arbitrage.
    Keywords: taxation, financial crisis, housing market, stock options, securitization, credit default swaps
    JEL: H2 G1
    Date: 2011–01
  6. By: Javier San-Julián-Arrupe (Universitat de Barcelona)
    Abstract: This paper analyses the debate on the introduction of progressive rates in the inheritance tax, which took place in the Spanish Parliament in 1900. The article highlights the interest of this debate concerning two aspects: First, the parliamentary discussion itself, very controversial, showed an atypical alliance between conservatives and republicans supporting a very limited progressivity. In their view, this was just a tool to achieve real tax proportionality, and by no means should be a redistributive measure. Liberals' opposition feared the ultimate consequences of progressive taxes and refused its introduction in Spain, as it entailed serious hazard for property. Second, the wide use of economic ideas to support arguments in the debate make evident that the Members of Parliament taking part in the debate had a noteworthy degree of economic expertise. Therefore, parliamentary discussions were effectively contributing to the progress, expansion and institutionalization of political economy in contemporary Spain.
    Keywords: economy, parliament, public finance, progressivity.
    JEL: A11 B12 K34 N43
    Date: 2011–02
    Abstract: This paper uses scanner data from two large retailers to offer new insights into the extent of price rigidity in Europe and the US. Recent empirical research in this field has made extensive use of monthly data to study price stickiness and to control for the impact of temporary sales. We show that the use of monthly data is potentially highly misleading. We employ scanner data in (bi)weekly frequency and highlight the importance of high frequency data in studying price rigidity. Regular prices show roughly the same degree of flexibility in Europe and the US, in line with recent empirical research, when we study monthly price series derived from our high frequency scanner data. This finding collapses, however, when the original scanner datasets in higher base frequency are examined. Regular prices are then far more flexible in the US than in Europe. This result is robust to the type of sales filter that we apply and the statistic used to capture price rigidity.
    Keywords: price setting, scanner data, frequency of price change, sales filtering
    JEL: C33 D4 E3 L66
    Date: 2010–11
  8. By: Penelope Hernandez (ERI-CES); Coralio Ballester (University Alicante)
    Abstract: The observation of the actual behavior by economic decision makers in the lab and in the field justifies that bounded rationality has been a generally accepted assumption in many socio-economic models. The goal of this paper is to illustrate the difficulties involved in providing a correct definition of what a rational (or irrational) agent is. In this paper we describe two frameworks that employ different approaches for analyzing bounded rationality. The first is a spatial segregation set-up that encompasses two optimization methodologies: backward induction and forward induction. The main result is that, even under the same state of knowledge, rational and non-rational agents may match their actions. The second framework elaborates on the relationship between irrationality and informational restrictions. We use the beauty contest (Nagel, 1995) as a device to explain this relationship.
    Keywords: Behavioral economics, bounded rationality, partial information
    JEL: C61 C73
    Date: 2011–01
  9. By: Pham, Hai-Vu
    Abstract: La thèse étudie l’opposition des riverains à des projets d’aménagement de l’espace. Elle défend la vision selon laquelle cette dimension conflictuelle, fréquemment rencontrée lors de la réalisation des projets d’infrastructure, n’est pas un état de dysfonctionnement à éviter dans le processus décisionnel. Composée de 4 essais qui traitent le phénomène sous différents angles, elle évoque les points principaux suivants. Les outils d’aide à la décision, dont le calcul économique public et diverses procédures de concertation, ne permettent pas d’aboutir à des décisions parfaites et incontestables. La géographie des conflits est fortement corrélée à celle de l’urbanisation et les opposants mettent en doute le principe de l’utilité publique. Le marché immobilier n’est pas indifférent aux signaux de nuisance des futurs projets, ainsi qu’à la lutte organisée des associations locales. Ainsi, la thèse soutient l’idée que la dimension conflictuelle résulte de facteurs irréductibles. Elle ne représente pas un échec, mais participe de la confrontation nécessaire entre les acteurs coexistant sur un territoire, porteurs de préférences et d’intérêts divergents. C’est d’ailleurs cette confrontation qui les contraint à discuter, à relever des points de désaccords, puis à sortir ensemble de la divergence grâce à l’action collective. L’analyse du contentieux administratif constitue la matière principale du travail. Le terrain d’étude est l’espace périurbain de l’Ile de France.
    Abstract: This thesis studies the local opposition phenomenon in carrying out public facility project. It defends the idea that the growing conflict dimension in infrastructure project is not necessarily a dysfunction to be voided in the decision making process. Composed from 4 articles, the thesis observes the phenomenon under different angles, and invokes the following major points. Decision making tools, among which the cost-advantage analysis and public consultation procedures, don’t permit to deliberate perfect and incontestable decision. The geography of conflict is highly correlated to that of urbanization. The opponents to public decision doubt about the public utility. The property market is not indifferent to signals of future project’s nuisance, as well as to the organized resistance of local associations. Hence, the thesis defend that the conflict dimension of public facility projects is resulted from irreducible factors. It doesn’t represent a failure, but a needed confrontation among coexisting actors in the same territory, actors whose interests and preferences are divergent. It is then this confrontation which will force them to have dialogue, to raise disagreement points, and get out of the divergence thanks to collective action. Administrative lawsuit study is the principal material of this work. The study area is the peri-urban area of the Ile de France region.
    Keywords: living framework; litigation; conflict; public decision; public facility project; cadre de vie; contentieux; conflit; décision publique; projet d’infrastructure;
    JEL: R52 K41
    Date: 2010–09
  10. By: Ducos, Jean
    Abstract: Cette thèse a pour objet de réaliser une analyse économique de la médecine libérale en insistant sur ce qui, à nos yeux, est tu ou non reconnu. Il s’agit d’une analyse institutionnaliste basée sur l’encastrement historique et social de la santé. Après une présentation des spécificités de l’économie de la santé et un historique, nous abordons les institutions de la médecine libérale. Les caractéristiques essentielles de l’offre sont présentées en mettant l’accent sur ce qui fait problème tels que les comportements opportunistes des médecins libéraux, les carences de la régulation et les défaillances de la médecine libérale, sans oublier qu’il s’agit d’une profession en souffrance et en manque de reconnaissance. Concernant la demande, nous nous efforçons d’introduire l’état de maladie dans l’analyse économique. Enfin, après une mise en exergue des problèmes de la médecine libérale, nous faisons des propositions dans une perspective de développement des soins de santé primaires. Nous concluons sur l’utilité de la médecine libérale et sur son avenir fondé sur sa capacité à se réforme.
    Abstract: This thesis aims to undertake an economic analysis of private medical practice while stressing on elements, which in our view, remain unsaid or unrecognised. It is about an institutional analysis, based on the historic and social embedding of the health. After presenting the specificities of health economics and a history, we will deal with the institutions of private medical practice. The essential features of « supply » are introduced by stressing upon the drawbacks of private medical practice concerning the opportunistic behaviour of private practitioners and the deficiencies in regulation, without ignoring the fact that it is a profession that is suffering and needs recognition. As far as « demand » is concerned, we will stress upon the state of sickness in the economic analysis. Finally, after underlining the problems linked with private medical practice, we will outline proposals with a perspective of developing primary health care. The conclusion will treat the utility factory of private medical practice and its future, based upon its capability to reform itself.
    Keywords: régulation médicale; primary health care; private medical practice; ethics; embedding; demand of care; soins de santé primaires; médecine libérale; institutions; éthique; encastrement; demande de soins;
    JEL: I18 I11
    Date: 2010–11
  11. By: Calavrezo, Oana (Laboratoire d’Economie d’Orléans); Pelek, Selin (Galatasaray University Economic Research Center)
    Abstract: Au cours des dernières décennies, la littérature internationale a accordé un intérêt particulier à l’analyse du salaire minimum dans les pays émergents. Dans ce travail, nous nous intéressons au cas de la Turquie. Nous souhaitons contribuer à une littérature économique quasi inexistante concernant les caractéristiques socioéconomiques des salariés payés au salaire minimum. Ainsi, l’objectif principal de ce papier est de dégager un profil pour les salariés rémunérés au salaire minimum. Des techniques économétriques simples (modèle logit dichotomique, modèle logit multinomial ordonné généralisé) sont mises en œuvre dans un but purement descriptif. Nous mobilisons des données originales issues de l’enquête « Budget » de l’Institut des statistiques de Turquie couvrant la période 2003-2006. A partir de l’affiliation des individus à la sécurité sociale, nous pouvons faire la distinction entre l’emploi formel et l’emploi informel. Ces deux « marchés » de l’emploi ont un fonctionnement assez différent. Par conséquent, nous travaillons sur deux populations : celle des salariés concernés par l’emploi formel et celle des salariés concernés par l’emploi informel. Nous confirmons pour le cas de la Turquie, que le fait de toucher le salaire minimum est associé plus fréquemment à des populations considérées généralement comme « fragiles » (femmes, jeunes, personnes résidant à la campagne, individus ayant peu d’ancienneté dans l’entreprise et personnes qui perçoivent des aides de la part de l’Etat). En outre, ces caractéristiques socio-économiques influencent de la même manière la propension d’être payé autour du salaire minimum pour les populations de salariés formels et informels. En revanche, des caractéristiques comme le niveau du diplôme, le secteur d’activité ou la taille de l’entreprise ont des effets différents sur la probabilité de toucher une rémunération proche du salaire minimum pour les salariés formels et les salariés informels.
    Keywords: Salaire minimum; emploi formel; emploi informel; structure salariale; Turquie; logit dichotomique; logit multinomial ordonné généralisé
    JEL: C35 J31 J38 J83
    Date: 2011–02–13
  12. By: Gomez, José Andrés (University of Huelva); Merino, Bernat Roig (Polytechnic University of Valencia); Tur, Antonio Aledo (University of Alicante)
    Abstract: Social Sciences can, on occasions, be similar to the so called “hard” sciences. However, in many cases, neither the object nor the classical methods fit in with the objectives of the work. The object requires methodological and technical adjustments, which are often avoided by means of an improper rigidity of the object’s needs. These adjustments can even alter the original research idea. The main objective of this article consists of proving that those objects of study, less suitable to be addressed by rigid positivistic strategies, can be approached both scientifically and sociologically. This can be achieved with the use of different strategies and flexible methodologies to ensure validity and reliability standards. This paper will be posed, firstly, a reflection on the epistemological nature of the debate about the rigid-flexible perspectives. Secondly, the strategies and tools used by the research team to achieve the reduction of the uncertainty about the size and characteristics of the population studied will be described. Finally, some of the survey results obtained in this project will be compared to those provided by the FAMILITUR Survey (2008), conducted by the Spanish Institute of Tourist Studies (IET)
    Keywords: methodological flexibility; quantitative-qualitative approach; identity of social sciences; residential tourism
    JEL: C10
    Date: 2010–12–30
  13. By: Céline Gimet (Université de Lyon, Lyon, F-69003, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Thomas Lagoarde-Segot (Euromed Management, School of Management, Marseille & DEFI ; University of Aix-Marseille, France)
    Abstract: This paper analyzes the under-investigated relationship uniting financial development and income distribution. We use a novel approach taking into account for the first time the specific channels linking banks, capital markets and income inequality, the time-varying nature of the relationship, and reciprocal causality. We construct a set of annual indicators of banking and capital market size, robustness, efficiency and international integration. We then estimate the determinants of income distribution using a panel Bayesian structural vector autoregressive (SVAR) model, for a set of 49 countries over the 1994-2002 period. We uncover a significant causality running from financial sector development to income distribution. In addition, the banking sector seems to exert a stronger impact on inequality. Finally, the relationship appears to depend on characteristics of the financial sector, rather than on its size.
    Keywords: finance, income distribution, SVAR
    JEL: C33 D63 G15 O16
    Date: 2011
  14. By: Vassilis Monastiriotis & Sotirios Zartaloudis
    Abstract: There is a widespread perception among the public and policy-makers that EMU carries one-way pressures for enhanced flexibility in the labour market. We discuss the theoretical basis of this by examining four mechanisms through which the establishment of the common currency and the functioning of EMU can impact on the labour markets, both within the Eurozone and of the New Member States. We argue that the theory and empirics of the link between EMU and labour market flexibility are not conclusive, leaving room for varying degrees of, and directions for, the (de)regulation of national labour markets. This discretion is partly reflected in the experience of labour market reforms in the Eurozone. An examination of the institutional framework for employment policies in the EU further corroborates the conclusion that EMU does not restrict, but rather puts on the agenda, the active exploration of policy options aimed at strengthening the resilience and adaptability of the European economy as well as its quality, fairness and competitiveness. We argue that this is no different today, during or after the crisis, than it was ‘before it all started’.
    Date: 2010–06–01
  15. By: James Heintz; Heidi Garrett-Peltier; Ben Zipperer
    Abstract: In this study commissioned by Ceres, James Heintz, Heidi Garrett-Peltier, and Ben Zipperer examine the economic impacts of air pollution regulations forthcoming from the Environmental Protection Agency: the Clean Air Transport Rule governing sulfur dioxide and nitrogen oxide emissions, and the National Emissions Standards for Hazardous Air Pollutants for Utility Boilers rule, which will set limits for hazardous air pollutants. Focusing on 36 states, the study assesses the potential employment impacts of the transformation of the nation’s energy generation plants to a cleaner, more efficient fleet, through investments in pollution controls and the retirement of outdated plants.
    Date: 2011
  16. By: Deepankar Basu; Duncan K. Foley
    Abstract: This paper investigates the changing relationship between employment and real output in the U.S. economy from 1948 to 2010 both at the aggregate level and at some major industry-grouping levels of disaggregation. Real output is conventionally measured as value added corrected for price inflation, but there are some industries in which no independent measure of value added is possible and existing statistics depend on imputing value added to equal income. Indexes of output that exclude these imputations are closely correlated with employment over the whole period, and remain more closely correlated during the current business cycle. This analysis offers insights into deeper structural changes that have taken place in the U.S. economy over the past few decades in a context marked by the following three factors: (i) the service (especially the financial) sector has grown in importance, (ii) the economy has become more globalized, and (iii) the policy orientation has increasingly become neoliberal. We demonstrate an economically significant reduction in the coefficient relating employment growth to output growth over the business cycles since 1985. Some of this change is due to sectoral shifts toward services, but an important part of it reflects a reduction in the coefficient for the goods and material value-adding sectors.
    Keywords: Okun's Law; Kaldor-Verdoorn Eect; Global restructuring; measurement of real output
    JEL: E12 E20
    Date: 2011
  17. By: James Burke; Gerald Epstein; Seung-Yun Oh
    Abstract: Burke, Oh, and Epstein focus on new measures of foreign outsourcing to track changes in the offshoring of manufacturing activity and to explore how offshoring along with other factors are related to the dramatic dislocation of workers in the US manufacturing sector in recent years. They present past studies that have explored the impact on workers of growing offshoring in manufacturing industries, introduce a new measure of imported inputs, and examine the growth of foreign outsourcing activity in manufacturing industries from 1987 to 2002. The authors present a counterfactual analysis as a way to show the loss of manufacturing industry employment resulting from rising foreign outsourcing between 1987 and 2005, and then explore the effect of foreign outsourcing on employment in US manufacturing industries for the period 1990 to 2005 using a regression analysis of industry data.
    Date: 2011
  18. By: Marshall Auerback
    Abstract: Like marriage, membership in the eurozone is supposed to be a lifetime commitment, “for better or for worse.” But as we know, divorce does occur, even if the marriage was entered into with the best of intentions. And the recent turmoil in Europe has given rise to the idea that the euro itself might also be reversible, and that one or more countries might revert to a national currency. The prevailing thought has been that one of the weak periphery countries would be the first to call it a day. It may not, however, work out that way: suddenly, the biggest euro-skeptics in Europe are not the perfidious English but the Germans themselves.
    Date: 2011–02
  19. By: Jesus Felipe; Utsav Kumar
    Abstract: Current discussions about the need to reduce unit labor costs (especially through a significant reduction in nominal wages) in some countries of the eurozone (in particular, Greece, Ireland, Italy, Portugal, and Spain) to exit the crisis may not be a panacea. First, historically, there is no relationship between the growth of unit labor costs and the growth of output. This is a well-established empirical result, known in the literature as Kaldor's paradox. Second, construction of unit labor costs using aggregate data (standard practice) is potentially misleading. Unit labor costs calculated with aggregate data are not just a weighted average of the firms' unit labor costs. Third, aggregate unit labor costs reflect the distribution of income between wages and profits. This has implications for aggregate demand that have been neglected. Of the 12 countries studied, the labor share increased in one (Greece), declined in nine, and remained constant in two. We speculate that this is the result of the nontradable sectors gaining share in the overall economy. Also, we construct a measure of competitiveness called unit capital costs as the ratio of the nominal profit rate to capital productivity. This has increased in all 12 countries. We conclude that a large reduction in nominal wages will not solve the problem that some countries of the eurozone face. If this is done, firms should also acknowledge that unit capital costs have increased significantly and thus also share the adjustment cost. Barring solutions such as an exit from the euro, the solution is to allow fiscal policy to play a larger role in the eurozone, and to make efforts to upgrade the export basket to improve competitiveness with more advanced countries. This is a long-term solution that will not be painless, but one that does not require a reduction in nominal wages.
    Keywords: Competitiveness; Eurozone; Income Distribution; Unit Labor Costs
    JEL: D31 D33 E25 J30
    Date: 2011–02
  20. By: Vladimir Popov (New Economic School, Moscow)
    Abstract: Maintaining today’s global imbalances would help to overcome the major disproportion of our times – income gap between developed and developing countries. This gap was widening for 500 years and only now, in the recent 50 years, there are some signs that this gap is starting to decrease. The chances to close this gap sooner rather than later would be better, if the West would go into debt, allowing developing countries to have trade surpluses that would help them develop faster. Previously, in 16-20th century, it was the West that was developing faster, accumulating surpluses in trade with “the rest” and using these surpluses to buy assets in developing countries, while “the rest” were going into debt. Now it is time for “the rest” to accumulate assets and for the West to go into debt.
    Date: 2010–05
  21. By: KABLAN, Sandrine; YOUSFI, Ouidad
    Abstract: Our study aims at analyzing Islamic bank efficiency over the period 2001-2008. We found that they were efficient at 92%. The level of efficiency could however vary according to the region where they operate. Asia displays the highest score with 96%. Indeed, country like Malaysia made reforms in order to allow these banks to better cope with the existing financial system, display the highest scores. On the contrary countries with Islamic banking system do not necessarily display efficiency scores superior to the average. The subprime crisis seems to have impacted those banks indirectly. And market power and profitability have a positive impact on Islamic banks efficiency, while it is the contrary for their size. The latter implies that they do not benefit from scale economy, may be because of the specificity of Islamic financial products.
    Keywords: Islamic Finance; Islamic Banks; performance; efficiency; stochastic frontier analysis.
    JEL: C23 G32 G21
    Date: 2011–02–07
  22. By: Menezes, Jose H. V.
    Abstract: This dissertation examines Brazilian industrial policies during the administrations of President Lula (2003-2010) and questions if innovation has truly been the main driver of those instruments. It provides a brief overview on the intersections of politics, economics, innovation and institutions as well as the main choices, incentives and alliances of the Brazilian government, which are illustrated by the Innovation Law, PITCE, PDP and campaign financing of President Lula's 2002 and 2006 candidacies. By adding to the analysis Brazil's exports, its balance of trade and the expenditures of BNDES, this research indicates a disconnect between the intentions and the results of the industrial policy. China and “low-tech” businesses seem to have become the real drivers of the government's agenda; the first for its importance to the Brazilian economy and the latter for its influence with government. Finally, while recognizing some positive results, it presents an alternative model based on a “high-tech” natural resources vision of development which could convert the current challenges into opportunities
    Keywords: Brazil; development; institutions; innovation; industrial policy
    JEL: O1 O38 O3
    Date: 2010–08–01
  23. By: Elsner, Wolfram
    Abstract: The original institutionalist theory of institutional change as elaborated by Paul D. Bush (1987) in the traditions of Veblen, Ayres and J.F. Foster (called here the VAFB-paradigm), provides a most important theoretical and empirical device for critical institutional analysis, with its clarification of the value base and of different forms and dynamics of value-behavior patterns. Bush’s paper was certainly one of the most important ones in Institutionalism. The Theory of Institutional Change pushed Institutionalism to a certain limit by elaborating its logical relations and systems that have been underexplored for so long. Coming from different ‘galaxies’, established formal approaches and methods, such as system dynamics, econometrics, network analysis, graph theory, or game theory—in fact, often applied only bluntly in the mainstream—have been interpreted, developed and applied by institutional and evolutionary economists in an evolutionary-institutionalist perspective in recent decades. However, a theoretical and methodological gap somehow still existed until recently that those practicing institutionalists had to deal with. This gap seems to become closed in different areas (such as the Theory of Institutional Change or the Social Fabric Matrix Approach) currently. This paper tries to demonstrate that careful proper interpretations allow, in a ‘dialectical’ process, to bridge the remaining gap and reveal surprising equivalences and complementarities with resulting synergies for the future. The example here is the mutual approximation of the VAFB-paradigm and evolutionary-institutionally interpreted game theory, called the EIGT-paradigm here. Should such bridge-building be corroborated in the near future, Institutionalism would be enabled to cut across traditional and long lasting boundaries with respect to deeper both empirical and logical analysis. This might turn out to be a historical project of the extension of Institutionalism’s reach. The particular asymmetry of the logics of instrumental vs. ceremonial warrants explains a general dominance of the ceremonial. The forms of change of institutional value-behavior structures derived are (1) (reinforced) ‘ceremonial encapsulation’, (2) regressive institutional change and (3) progressive institutional change. In the cases (2) and (3), the degree of ceremonial dominance will have to increase (decrease) and the system’s ‘permissiveness’ to decrease (increase). The conceptualization of institutions, the asymmetric schematization of value-behavior-structures, the reason for ceremonial dominance, and the possibility of progressive institutional change will be reconsidered and compared in this paper using a game-theoretic perspective, with its basically instrumental comprehension of institutions and with the ceremonial warrant comprehensible only as a degeneration of the instrumental. We refer to a most simple social dilemma interaction structure and a supergame solution. Surprising equivalences and complementarities emerge, with potentials of cross-fertilization. An initially instrumental institution is considered to develop (in fact degenerate), together with (1) the emergence, or reproduction, of status and power differentials in hierarchical systems, and (2) the striving for easy, smooth, and cheap decision-making, or ‘economies of scale’ of decision-making, first into a still instrumental norm and eventually into a ceremonial or abstract norm. The latter takes place, when original conditions have changed but the institutional structure will not properly adapt because of the two motives of status gain and economies of scale of institutionalized decision-making. In a game-theoretical perspective, ceremonial dominance and ceremonial encapsulation preventing a new progressive institutional change would translate into an insufficient new collective action capacity, due to (1) habituation, (2) an insufficient incentive structure and (3) a neglect of the common future. The conclusion of the critical role of policy to initiate, accelerate, and stabilize progressive institutional change is shared in the original institutionalist and the game-theoretic perspectives as well. A well-defined institutional policy approach, inferable in some detail from the game-theoretic logic, may initiate a lock-out of ceremonial encapsulation, through a change of the incentive structure and an increase of the importance and awareness of interdependence and a common future. The public agent must be capable of ‘meritorizing’ the private-interaction outcomes through a negotiated, participatory social process. Thus, the public agent would interact with the interaction system of the private agents in a well-defined way, i.e., ‘institutional policy’ as a double interactive policy. In all, large potentials for cross-fertilization of institutionalism and game theory.
    Keywords: Emergence of Institutions; Institutional Change; ‘institutional-game-theoretic’formalism ;Interactive Policy
    JEL: B52 D02 C72
    Date: 2011–02–09
  24. By: Cavapozzi, Danilo; Garrouste, Christelle; Paccagnella, Omar
    Abstract: Parental or socioeconomic background plays an important role in determining employment outcomes during the individual whole life-cycle. The extent to which individuals move (up or down) the social ladder relative to one¿s parents is known as inter-generational social mobility. In a relatively immobile society individual outcomes, such as education, occupation or incomes, tend to be strongly related to those of their parents. On the one hand, in less mobile societies human skills may be wasted or mis-allocated. On the other hand, the motivations, the effort, the individual productivity may be affected by the lack of equal economic opportunities. These in turn may affect the overall efficiency and growth potential of a country. The influence of parental socio-economic status on the descendants¿ education, incomes and occupation has been widely investigated in the literature (Solon, 2002; Corak, 2004; OECD, 2010). Even though no single indicator can summarize a so puzzling picture, a general pattern that emerges is that a group of countries (namely, Mediterranean countries) shows a low inter-generational social mobility, while another group of countries (for instance, Nordic countries) tends to be relatively mobile. In this contribution we exploit the richness of SHARELIFE information on household economic resources and social background of respondents at the age of 10 to investigate the relationship between their educational attainments, their labour market outcomes and the social environment where they grew up.
    Keywords: Retrospective survey; Childhood indicators; Human capital accumulation; Income inequalities
    JEL: E24 J24
    Date: 2010–12
  25. By: Seo-Young Cho (Georg-August-University Göttingen)
    Abstract: Employing economic and social globalization indicators, we empirically analyze whether globalization affects women’s rights in the economic and social dimensions. Using panel data from 150 countries over the 1981-2008 period, we find that social globalization positively affects both women’s economic and social rights, while the impact of economic globalization disappears when controlling for social globalization. Furthermore, we find that social globalization also reduces ‘son preference’ problems, prevailing in developing countries. However, (marginalized) foreign women, proxied with inflows of human trafficking, are not beneficiaries of such ‘female-friendly’ globalization effects.
    Keywords: economic and social globalization; women’s economic and social rights; son preference; human trafficking
    JEL: F15 J13 J16 O16 O19
    Date: 2011–02–14
  26. By: Eleni A.Kaditi; ;
    Abstract: This paper examines whether ownership and increased competitive pressure affect food retailers’ market power, analysing whether all actors involved in the food supply chain deviate from the pricing behaviour that exists under perfect competition. A method proposed by Roeger (1995) is used to estimate price-cost margins, relaxing the assumptions of perfect competition and constant returns to scale. The obtained results show that foreign investments and consolidation have a positive and significant impact on the market power of food processors and retailers. Food processors, agricultural producers and wholesalers have lower price-cost margins than retailers, which suggests that these actors price closer to marginal costs being more concerned with maximising social welfare or that the former have higher costs than retailers. The results are robust to various estimation techniques and specifications.
    Keywords: Price-cost mark-ups, multinational firms, retailing
    JEL: F23 L13 L81
    Date: 2011

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