nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2011‒05‒24
eighteen papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  2. Subjectivity in Credit Allocation to Micro-Entrepreneurs: Evidence from Brazil By Isabelle Agier; Ariane Szafarz
  3. Setting It Right: Employment Protection, Labour Reallocation and Productivity By Martin, John P.; Scarpetta, Stefano
  4. What determines work hours?: who you work with or where you work? By Kuroda, Sachiko; Yamamoto, Isamu
  5. Profits and Exploitation: A Reappraisal By Yoshihara, Naoki; Veneziani, Roberto
  6. Antitrust Law and the Promotion of Democracy and Economic Growth By Niels Petersen
  7. Forced board changes: Evidence from Norway. By Nygaard, Knut
  8. Is it what you inherited or what you learnt ? Intergenerational linkage and interpersonal inequality in Senegal By Lambert, Sylvie; Ravallion, Martin; van de Walle, Dominique
  9. On the institutional innovation process : EU regulation through an evolutionary lens By Evita Paraskevopoulou
  10. Is there a gender gap in housing? Marital property rights in Ecuador By Twyman, Jennifer; Deere, Carmen Diana
  11. Estimating the Value of Antitrust Investigations: A Case Study in Agriculture By Coatney, Kalyn T.; Tack, Jesse B.
  12. Persuading Consumers With Social Attitudes By Bühler, Stefan; Halbheer, Daniel
  13. Measuring equity in health: a normative decomposition By Li Donni, P;; Peragine, V;; Pignataro G;
  14. ’Europe’, ‘Womanhood’ and ‘Islam’: Re-aligning Contested Concepts via the Headscarf Debate By Nora Fisher Onar
  15. The sources of profitability By Flaschel, Peter; Fröhlich, Nils; Veneziani, Roberto
  16. Gender disparities in primary education across siblings: is intra household disparity higher in regions with low child sex ratios? By Husain, Zakir; Dutta, Mousumi; Saha, Manashi
  17. The making of heterodox microeconomics By Lee, Frederic
  18. Markets as Economizers of Information: Field Experimental Examination of the "Hayek Hypothesis" By Omar Al-Ubaydli; Peter Boettke

  1. By: Giovanni Anania; Rosanna Nisticò (Dipartimento di Economia e Statistica, Università della Calabria)
    Abstract: Price dispersion, i.e. a homogeneous product sold at different prices by different sellers, is among the most replicated findings in empirical economics. The paper assesses the extent and determinants of spatial price dispersion for 14 perfectly homogeneous food products in more than 400 retailers in a market characterized by the persistence of a large number of relatively small traditional food stores, side by side large supermarkets. The extent of observed price dispersion is quite high, suggesting that monopolistic competition prevails as a result of the heterogeneity of services offered. When prices in an urban area (where the spatial concentration of sellers is much higher and consumer search costs significantly lower) have been compared with those in smaller towns and rural areas, differences in search costs and the potentially higher degree of competition did not yield lower prices; quite the contrary, they were, on average, higher for 11 of the 14 products considered. Supermarkets proved to be often, but not always, less expensive than traditional retailers, although average savings from food shopping at supermarkets were extremely low. Finally, the results of the study suggest that sellers behave differently in their pricing strategies; these differences emerge both at the firm level, and for supermarkets within the same chain. The fact that products considered were homogeneous, purchases frequently repeated, the number of sellers large, and search costs relatively low, did not suffice to keep price dispersion low. From the results presented in the paper, it is clear that what is important in explaining price dispersion is the contemporaneous heterogeneity of retailers (in terms of services) and consumers (in terms of search and shopping preferences), which makes it possible for a monopolistic competition structure of the market to emerge and for small traditional food retailers to remain in business.
    Keywords: Price dispersion, Retail pricing, Food markets
    JEL: L81 D83 D43 Q13
    Date: 2011–05
  2. By: Isabelle Agier; Ariane Szafarz
    Abstract: This paper estimates the impact of loan officers' subjectivity on microcredit granting by exploiting an exceptionally detailed database from a Brazilian microfinance institution. Loan officers collect field data, meet with applicants, and make recommendations to the credit committee that in turn has the final say on both loan approval and loan size. The loan officers' subjectivity is captured through the lens of disparate treatment based on gender. Indeed, our estimations show that an unfair gender gap is observed in loan size, and that this gap is almost exclusively attributable to the loan officers. We interpret this finding as evidence that, despite monitoring and wage incentivization, microcredit officers keep letting their subjective preferences interfere with loan granting. We conclude by suggesting alternative means to curb subjectivity in credit allocation to micro-entrepreneurs.
    Keywords: Subjectivity Loan Size; Microcredit; Gender; Loan Officer; Entrepreneurs
    JEL: O16 D82 J33 L31
    Date: 2011–05
  3. By: Martin, John P. (OECD); Scarpetta, Stefano (OECD)
    Abstract: This paper provides a critical review of the recent empirical evidence on the links between regulations affecting the hiring and firing of workers, labour reallocation and productivity growth. It also reviews how workers affected by labour mobility fare and discusses policy options to support them. The upshot is that employment protection has a sizeable effect on labour market flows and these flows, in turn, have significant impacts on productivity growth. At the same time, the evidence also shows that while greater labour market reallocation benefits many workers through higher real wages and better careers, some displaced workers lose out via longer unemployment durations and/or lower real wages in post-displacement jobs. In this context, reforms of employment protection should be considered as part of a comprehensive package that also includes an adequate safety net for the unemployed and effective re-employment services.
    Keywords: job and worker flows, employment protection, productivity
    JEL: J23 J53 K31
    Date: 2011–05
  4. By: Kuroda, Sachiko; Yamamoto, Isamu
    Abstract: By using a unique dataset on managerial-level employees who were transferred from Japan to European branches of the same global firms, we examine what would happen to work hours when a worker moves from a long-hour-working country to relatively shorter-hour countries. Even after controlling for business cycles, unobserved individual heterogeneity, job characteristics, and work hour regulations, we find a significant decline in Japanese work hours after their transfer to Europe, resulting from working-behavior influences of locally hired staff. We also find that the reduction in hours worked highly depends on the extent of the workers’ interactions with local peers.
    Date: 2011–03
  5. By: Yoshihara, Naoki; Veneziani, Roberto
    Abstract: This paper provides a mathematical analysis of the Marxian theory of the exploitation of labour in general equilibrium models. The two main definitions of Marxian exploitation in the literature, proposed by Morishima (1974) and Roemer (1982), respectively, are analysed in the context of general convex economies. It is shown that, contrary to the received view, in general these definitions do not preserve the so-called Fundamental Marxian Theorem (FMT), which states that the exploitation of labour is synonymous with positive profits. A new definition of Marxian labor exploitation is proposed, which is shown to preserve the FMT in general convex economies, in equilibrium.
    Keywords: exploitation, profits, reproducible solutions
    JEL: D31 D46 B51 B24
    Date: 2011–04
  6. By: Niels Petersen (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: There is a considerable debate in the legal literature about the purpose of antitrust institutions. Some argue that antitrust law merely serves the purpose of economic growth, while others have a broader perspective on the function of antitrust, maintaining that the prevention of economic concentration is an important means to promote democratization and democratic stability. This contribution seeks to test the empirical assumptions of this normative debate. Using panel data of 154 states from 1960 to 2007, it analyzes whether antitrust law actually has a positive effect on democracy and economic growth. The paper finds that antitrust law has a strongly positive effect on the level of GDP per capita and economic growth. However, there is no significant positive effect on the level of democracy. It is suggested that these results might be due to the current structure of existing antitrust laws, which are designed to promote economic efficiency rather than to prevent economic concentration.
    Date: 2011–01
  7. By: Nygaard, Knut (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: The recently introduced gender quota on Norwegian corporate boards dramatically increased the share of female directors. This reform offers a natural experiment to investigate changes in corporate governance from forced increases in gender diver- sity, and whether these changes in turn impact firm performance. I find that investors anticipate the new directors to be more effective in firms with less information asymmetry between insiders of the firm and outsiders. Firms with low information asymmetry experience positive and significant cumulative abnormal returns (CAR) at the introduction of the quota, whereas firms with high information asymmetry show negative but insignificant CAR.
    Keywords: Natural experiment; Regulation; Corporate governance; Gender quota.
    JEL: G34 G38
    Date: 2011–03–09
  8. By: Lambert, Sylvie; Ravallion, Martin; van de Walle, Dominique
    Abstract: Institutional features of the African setting -- large extended families and imperfect credit and land markets -- matter to the equity and efficiency roles played by intergenerational linkages. Using original survey data on Senegal that include an individualized measure of consumption, this paper studies the role played by land inheritance, other bequests and parental background as influences on an adult's economic welfare and economic activities. Although intergenerational linkages are evident, the analysis finds a seemingly high degree of mobility across generations, associated with the shift from farm to non-farm sectors and the greater economic activity of women. Male-dominated bequests of land and housing bring little gain to mean consumption and play little role in explaining inequality, although they have effects on the sector of activity. Inheritance of non-land assets and the education and occupation of parents (especially the mother) and their choices about children's schooling are more important to adult welfare than property inheritance. Significant gender inequality in consumption is evident, although it is almost entirely explicable in terms of factors such as education and (non-land) inheritance. There are a number of other pronounced gender differences, with intergenerational linkages coming through the mother rather than the father.
    Keywords: Population Policies,Gender and Law,Agricultural Knowledge&Information Systems,Rural Development Knowledge&Information Systems,Gender and Health
    Date: 2011–05–01
  9. By: Evita Paraskevopoulou
    Abstract: The focal point of this paper is the study of the process of emergence of novel institutions and the identification of factors that may influence the outcome of this process. We view inst accepted sets of rules that influence We consider regulations as endogenously emerging institutions that evolve in accordance to other socioeconomic factors and analyze the regulatory process at each of its stages adopting an evolutionary approach. Evidence shows that the regulatory process resembles the innovation process as it can be viewed as a process of knowledge accumulation and transmission that is facilitate empirically contextualized in the European political system, the detergents industry and specific regulations formed at European level. Data is drawn by secondary resour of public and private stakeholders participating in the process
    Keywords: Evolutionary theory, Institutions, Regulation, Policy
    JEL: K20 L50 L65 O25 O43
    Date: 2011–04
  10. By: Twyman, Jennifer; Deere, Carmen Diana
    Abstract: This study conducts a gender analysis of homeownership in Ecuador, drawing upon data collected through the nationally-representative 2010 Ecuador Household Asset Survey carried out by the authors. The survey collected data on asset ownership both at the household and individual levels. This allows us to overcome a typical problem faced by gender analyses, that of only having the sex of the household head and not the sex of the owner(s). The study explores gender differences in homeownership and housing wealth. There is fairly equal distribution of homeownership and housing wealth, which is not all that surprising given the partial community property marital regime. Any property purchased during marriage or while in a consensual union is considered joint property, unless it is inherited, in which case it is considered individually-owned property. This plus the fact that housing is an asset typically acquired during marriage/consensual union may help explain the relatively egalitarian distribution pattern of housing ownership and housing wealth. There are, however, gender differences in the determinants of homeownership and housing wealth. Past migration is associated with women owning homes and owning more housing wealth but does not seem to impact menâs homeownership or housing wealth. An extra year of schooling increases menâs housing wealth more than womenâs housing wealth and women living in the coastal region own less housing wealth than men in the region.
    Keywords: homeownership, gender, marital regime, partial community property rights, Ecuador, International Development,
    Date: 2011
  11. By: Coatney, Kalyn T.; Tack, Jesse B.
    Abstract: The goal of our analysis is to enhance the understanding of the value of antitrust regulatory activities, specifically the impact of investigations of anticompetitive behavior. The results suggest that prices significantly increased as soon as the targets of the investigation were made aware they were being investigated. Higher prices are suggestive of a more competitive market outcome, which in turn suggests that the benefits of an investigation begin accruing immediately upon awareness by the offending party. The higher prices remained as long as the investigation was open. After the investigation was closed, market prices systematically declined to the same low pre-knowledge state.
    Keywords: Antitrust, Auctions, Agricultural and Food Policy, Demand and Price Analysis, K42, D44, C23,
    Date: 2011–05
  12. By: Bühler, Stefan; Halbheer, Daniel
    Abstract: This paper analyzes persuasive advertising and pricing in oligopoly if firms sell differentiated products and consumers have heterogenous social attitudes towards the consumption by others. Deriving product demand from primitives, we show that the demand-enhancing effect of persuasive advertising varies across consumers and increases in the average degree of conformity. In equilibrium, both quality and cost leaders choose higher advertising intensities and charge higher prices than their competitors. In addition, we show that an increase in the average degree of conformity among consumers reinforces asymmetries between firms.
    Keywords: Advertising, social attitude, consumption externality, quality
    JEL: D11 D43 L15 L21 M37
    Date: 2011–04
  13. By: Li Donni, P;; Peragine, V;; Pignataro G;
    Abstract: This paper proposes a new approach to the measurement of equality of opportunity in health, based on the path independent Atkinson index of equality. The proposed decomposition is applied both to the ex-ante and the ex-post methodologies recently adopted by the literature. The approach is applied to the measurement of equality of opportunity in health using ten waves of the British Household Panel Survey. Results confirm that socioeconomic background is an important factor determining individual health in adulthood while the incidence of equality of opportunity is around one third of the overall equality according to a substantial stable pattern over years. Our findings also depict that differences in education, in social conditions and in the life style are crucial determinants of the shape of the observed health equalities in adulthood, explaining how potential differences can be derived by the combination of different circumstances.
    Keywords: Equality of opportunity; health inequalities; Atkinson index; responsibility;
    JEL: C52 D82 G22 I10
    Date: 2011–05
  14. By: Nora Fisher Onar
    Abstract: Europe, Womanhood, and Islam are concepts infused with what Ricoeur called a surplus of meaning. That is, they bear diverse and often contradictory significations for observers at different times and places. This paper compares the interplay of tensions between the concepts by unpacking how they align in the context of three different public philosophies, liberal modernism, and what the paper terms ‘atavistic’ and ‘cosmopolitan’ postmodernism. It does so, moreover, with reference to empirical debates over the headscarf in European and/or Europeanized contexts. It shows that when Europe, Womanhood, and Islam are read through a liberal modernist prism they can be aligned to reduce tensions; however, this requires a critical examination of several assumptions associated with liberal modernism. The paper goes on to show that atavistic postmodern readings point to the incommensurability of the three concepts, while cosmopolitan postmodern frames represent a promising platform for their reconciliation. In so doing, the paper also highlights the structural affinities in feminist and Islamist modes of response to liberal modernity such that it is possible to talk about first-, second-, and third-wave Islamism as well as feminism.
    Keywords: gender policy; identity; political science; normative political theory
    Date: 2011–04–15
  15. By: Flaschel, Peter; Fröhlich, Nils; Veneziani, Roberto
    Abstract: This paper is built around a theorem proved analytically and exemplified empirically in Flaschel, Franke and Veneziani (2010) which states that profitable capital-using labor-saving technical change is under mild conditions always reducing the labor content of commodities. This type of technical change therefore increases Marx’s value rate of profit in a systematic way. Against this background the paper studies the relationship between the actual value and price rate of profit and derives expressions that show that the deviation between them may be of a secondary and unsystematic nature. This result is then exemplified empirically using flow as well as stock matrix data for the German economy. The paper argues on this basis that prices of production are in fact of a questionable nature and an unnecessary detour in the input-output oriented analysis of the profitability nexus between total labor costs and the actual prices of the considered commodities.
    Keywords: Labor values; profit rates; input-output models
    JEL: D46 B51 D57 C67
    Date: 2011–05
  16. By: Husain, Zakir; Dutta, Mousumi; Saha, Manashi
    Abstract: Strong son preference in developing countries often motivates parents to undertake sex selection at birth, infanticide, and subsequent neglect of daughters, leading to low child sex ratios in these countries. An interesting question is whether such attitudes also lead to gender discrimination in primary education. While there is a vast literature on inter-household gender discrimination in education, studies of discrimination between siblings is comparatively rare. This paper asks the question: Do parents tend to educate sons more than daughters? Using unit level National Sample Survey Organization data for the 61st Round (2004-2005), we analyze disparity in primary educational attainments between siblings and examine whether such intra-household disparity is higher in areas where child sex ratios are low. Findings indicate that parental attitude towards education and practices may be more complicated and less uniformly negative at lower levels of education than commonly portrayed.
    Keywords: Education; Gender; Sibling; India
    JEL: I21 C25 J16
    Date: 2011–05–05
  17. By: Lee, Frederic
    Abstract: This paper constitutes the first chapter in my work-in-progress manuscript, Microeconomic Theory: A Heterodox Approach. Because many heterodox feel that the only micro theory is mainstream micro, the paper starts with a brief rejection of mainstream theory. It then proceeds to give an overview of heterodox economic theory. The third section defines heterodox microeconomic theory and relates it to heterodox value theory. Since heterodox economic theory and particularly microeconomic theory is not already formed, it has to be created. Thus the fourth section of the paper delineates the heterodox methodology of theory creation, which includes critical realism and the method of grounded theory, and discusses various methodological issues such as data, case studies, mathematics and modeling, and econometrics. The following section deals with the historical character of heterodox economic theories; and the paper ends with a discussion about the making of heterodox microeconomic theory that will take place in the subsequent chapters of the book.
    Keywords: Heterodox; Microeconomics; Critical Realism; Grounded Theory
    JEL: B50 D00 B41
    Date: 2011–05–12
  18. By: Omar Al-Ubaydli (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Peter Boettke (Department of Economics, George Mason University)
    Abstract: The work of Friedrich Von Hayek contains several testable predictions about the nature of market processes. Vernon Smith termed the most important one the ‘Hayek hypothesis’: equilibrium prices and the gains from trade can be achieved in the presence of diffuse, decentralized information, and in the absence of price-taking behavior and centralized market direction. Vernon Smith tested this by surveying data on laboratory experimental markets and found strong support. We repeat this exercise using field experimental market data. Using field experiments allows us to test several other predictions. Generally speaking, we find support for Hayek’s theories.
    Keywords: price dynamics, entrepreneurs, field experiment, market process
    JEL: B53 C90 D40 D51 D61 D82 L26
    Date: 2011–05

This nep-hme issue is ©2011 by Frederic S. Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.