nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2012‒02‒27
sixteen papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. The cult of statistical signicance. What economists should and should not do to make their data talk By Walter Krämer
  2. Out of sight, out of mind: Modern economics, social interactions, and Smith’s sympathy By Andrés Álvarez; Jimena Hurtado
  3. Quantum decision making by social agents By V. I. Yukalov; D. Sornette
  4. Fading Hope in the US By Ritzen, Jo; Zimmermann, Klaus F.
  5. The Economics of Pensions. Remarks on Growth, Distribution and Class Con ict. By Codrina Rada
  6. Does Power of Political Economy and Regulation Make Istanbul a Financial Center? (Ekonomi Politik ve Düzenlemenin Gücü Istanbul’u Finans Merkezi Yapabilir Mi?) By Coskun, Yener
  7. Financial Performance of Microfinance Institutions-A Macroeconomic and Institutional Perspective By Katsushi S. Imai; Raghav Gaiha; Ganesh Thapa; Samuel Kobina Annim; Aditi Gupta
  8. The Effects of Gender Quotas in Latin American National Elections By Kotsadam, Andreas; Nerman, Måns
  9. Do Female Representatives Adhere More Closely to Citizens’ Preferences Than Male Representatives? By David Stadelmann; Marco Portmann; Reiner Eichenberger
  10. Soil endowments, production technologies and missing women in India By Carranza, Eliana
  11. Education, Vocational Training and R&D: Towards New Forms of Labor Market Regulation By Margarida Chagas Lopes
  12. New cohort fertility forecasts for the developed world By Mikko Myrskylä; Joshua R. Goldstein; Yen-hsin Alice Cheng
  13. Gender Gaps in PISA Test Scores: The Impact of Social Norms and the Mother's Transmission of Role Attitudes By González de San Román, Ainara; de la Rica, Sara
  14. Does Institutional Quality Affect Firm Performance? Insights from a Semiparametric Approach By Bhaumik, Sumon K.; Dimova, Ralitza; Kumbhakar, Subal C.; Sun, Kai
  15. Financing businesses in Africa : the role of microfinance By Aggarwal, Shilpa; Klapper, Leora; Singer, Dorothe
  16. Le Trueque argentin au prisme de la dette : une socioéconomie des pratiques monétaires et financières. By Saiag, Hadrien

  1. By: Walter Krämer
    Abstract: This article takes issue with a recent book by Ziliak and McCloskey (2008) of the same title. Ziliak and McCloskey argue that statistical significance testing is a barrier rather than a booster for empirical research in economics and should therefore be abandoned altogether. The present article argues that this is good advice in some research areas but not in others. Taking all issues which have appeared so far of the German Economic Review and a recent epidemiological meta-analysis as examples, it shows that there has indeed been a lot of misleading work in the context of significance testing, and that at the same time many promising avenues for fruitfully employing statistical significance tests, disregarded by Ziliak and McCloskey, have not been used.
    Date: 2011
  2. By: Andrés Álvarez; Jimena Hurtado
    Abstract: After having reviewed some of the recent advances in Economics trying to incorporate new elements in our understanding of human interactions, we aim at contributing to this line of research using Adam Smith’s system of sympathy. The features Smith attributes to the intersubjective identification mechanism of sympathy lead not only to conceive the construction of a community but also the possibility of exclusion of some of its members. The asymmetry of sympathy allows explaining emulation of those seen as more fortunate as well as the exclusion of those perceived as miserable. Through a formal representation we try to illustrate the phenomena of inclusion and exclusion present in intersubjetive relations and the construction of communities. Keywords: Adam Smith, sympathy, emulation, exclusion. JEL Codes: B12, B31, D03.
    Date: 2012–01–11
  3. By: V. I. Yukalov; D. Sornette
    Abstract: Decision making of agents who are members of a society is analyzed from the point of view of quantum decision theory. This generalizes the approach, developed earlier by the authors for separate individuals, to decision making under the influence of social interactions. The generalized approach not only avoids paradoxes, typical of classical decision making based on utility theory, but also explains the error-attenuation effects observed for the paradoxes occurring when decision makers, who are members of a society, consult with each other increasing in this way the available mutual information.
    Date: 2012–02
  4. By: Ritzen, Jo (IZA and Maastricht University); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: A substantial literature claims that the strong increase in inequality over the last decade in countries such as the US would lead to a collapse of society. Fading hopes in the population seem to confirm this. The paper rejects this interpretation since the decline in hopes cannot be traced back to rising inequality.
    Keywords: confidence, ethnicity, hope, human capital, income inequality
    JEL: D31 J15
    Date: 2012–02
  5. By: Codrina Rada
    Keywords: E24; E12; G23; H55; JEL Classification: This paper compares fully-funded (FF) and pay-as-you-go (paygo) pension plans in a Keynesian framework for an economy with overlapping generations and excess capacity. The model addresses both short/mediumrun equilibria and steady-states. Income distribution and class con ict, two crucial aspects of the political economy of pensions, become multidimensional. In a fully-funded economy class con ict between capitalists and labor gets diused in the short-run by retirees' own interest to maintain a high prot share. In the long-run capitalists recognize that they can control their (net) share of prots by controlling employment and therefore the number of future retirees through capital accumulation. An extension of the model can show that scal policy is not always helpful in a fully-funded economy. A pay-as-you-go economy maintains a closer resemblance to the classical story of class con ict over income distribution. This is because workers and retirees have their interests aligned with the wage share. In this case scal policy through spending can be eective without creating a debt problem.
    Date: 2012
  6. By: Coskun, Yener
    Abstract: Turkey is well behind the many countries according to socio-economic development criteria. Activities aim to make Istanbul a financial center seem paradoxical due to less developed and risky characteristics of national economy and financial system. It seems that these activities have both economic and political rationales. Economic rationale of the Istanbul Financial Center (IFC) project suggests that Turkish economy has transformed to a safe harbor. Political rationale of this project may imply that evolving economy politics of post 9/11 environment may create economic advantages for Turkey. It has observed that the tool of regulation is of central role for the idea of the development of a financial center in Istanbul. In this paper, by using literature and data analysis, we examine the chance of the success of the regulatory/bureaucratic approach for IFC project. We conclude that IFC project has weak internal dynamics and it occurred due to both its political attractiveness and also cyclical local/global economic/political conditions. But, it is not realistic to expect strong positive outcomes from the IFC project, if the project would focus only regulatory/bureaucratic approach.
    Keywords: Istanbul; financial center; London; Z/Yen; governance; Turkey;9/11
    JEL: B10 G15 G38 E20
    Date: 2011–11–01
  7. By: Katsushi S. Imai (Economics, School of Social Sciences, University of Manchester, UK & Research Institute for Economics and Business Administration, Kobe University, Japan); Raghav Gaiha (Faculty of Management Studies, University of Delhi, India); Ganesh Thapa (International Fund for Agricultural Development, Italy); Samuel Kobina Annim (ELancashire Business School, University of Central Lancashire, UK & Department of Economics, University of Cape Coast, Ghana); Aditi Gupta (Yes Bank, Mumbai)
    Abstract: This study investigates the effect of both institutional factors and the macro economy on the financial performance of MFIs. Drawing upon the Microfinance Information Exchange data and cross-country data on macro economy, finance and institutions, we use three stage least squares and Hausman-Taylor to take account of endogeneity. We find that institutional factors affect MFIs’ financial performance, in particular, profitability, operating expense, and portfolio quality. Also, GDP and share of domestic credit to GDP have positive impacts on MFIs’ financial performance. Hence policies to raise country-level institutional qualities are required for making the activities of MFIs sustainable.
    Keywords: Microfinance, Financial Performance, Macro economy and Institutions
    Date: 2012–02
  8. By: Kotsadam, Andreas (Dept of Economics, University of Oslo); Nerman, Måns (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This study investigates the effects of gender quotas in national elections on political participation, public policy, and corruption in Latin America. We are able to replicate the findings from previous research that women in politics do affect these outcomes, but only when we treat the number of women in parliament as exogenous. We argue, however, that the introduction of gender quotas caused an – in this context – exogenous increase in women’s representation, and while we find that quotas in Latin America increased the number of women in parliament, we find no substantial effects beyond mere representation. The mechanisms for these findings are scrutinized, and we find no indications that quota women are more marginalized than other elected women in Latin American parliaments. Hence, increasing women’s representation by means of gender quotas may not result in the same outcomes as an increased representation in non-quota elections.<p>
    Keywords: gender quotas; Latin America; women in parliament
    JEL: D72 H50 Z10
    Date: 2012–02–20
  9. By: David Stadelmann; Marco Portmann; Reiner Eichenberger
    Abstract: We analyze whether female or male members of parliament adhere more closely to citizens’ revealed preferences with quasi-experimental data. By matching individual representatives’ voting behavior on legislative proposals with real referenda outcomes on the same issues, we identify the effect of gender on representatives’ responsiveness to revealed preferences of the majority of voters. Overall, female members of parliament tend to adhere less to citizens’ preferences than male parliamentarians. However, when party affiliation is controlled for, the effect of gender vanishes. These results are consistent with other evidence showing that women are more socially minded and tend to affiliate themselves more with left parties.
    Keywords: Gender; Discrimination; Voter Preferences; Political Economy
    JEL: D73 J16 J10
    Date: 2012–02
  10. By: Carranza, Eliana
    Abstract: The female population deficit in India has been explained in a number of ways, but the great heterogeneity in the deficit across districts within India still remains an open question. This paper argues that across India, a largely agrarian economy, soil texture varies exogenously and determines the workability of the soil and the technology used in land preparation. Deep tillage, possible only in lighter and looser loamy soils, reduces the use of labor in cultivation tasks performed by women and has a negative impact on the relative value of girls to a household. The analysis finds that soil texture explains a large part of the variation in women's relative participation in agriculture and in infant sex ratios across districts in India.
    Keywords: Labor Markets,Common Property Resource Development,Population Policies,Crops&Crop Management Systems,Labor Policies
    Date: 2012–02–01
  11. By: Margarida Chagas Lopes
    Abstract: Labor market regulation and its relations with education and training have been performing an historical trajectory which closely intertwined with developments in economic thought. Under the form of human capital theories, neo-classical economics set the bridge between labor market equilibrium and education outputs for decades. The functionalist approach behind that lasting relationship was to be challenged by economic crises and globalization, which imposed the unquestionable supremacy of the demand for skilled work. Likewise, even if only that more strict perspective of education would prevail, which fortunately is not the case, time and hazard came to undertake its denigration on the grounds of a severe loss of regulatory efficiency as globalization was setting up.In this paper we shed light on the increasing role which innovation is called to perform in labor market hetero regulation in the present phase of globalization. Depending on the institutional design throughout which R&D become embedded in nowadays societies, evidence clearly reveals how innovation strategies are to be found so asymmetrically implemented between developed and developing countries, thereby leading to the enlarging divide between the “new North” and “new South” globalization off springs.
    Keywords: labor market regulation, education and training, innovation, knowledge, North-South divide, Portugal
    JEL: I24 J24
    Date: 2012–02
  12. By: Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany); Joshua R. Goldstein (Max Planck Institute for Demographic Research, Rostock, Germany); Yen-hsin Alice Cheng (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: The 1970s worries of the "population bomb" were replaced in the 1990s with concerns of population aging driven by falling birth rates. Across the developed world, the nearly universally-used fertility indicator, the period total fertility rate, fell well below two children per woman. However, declines in period fertility have largely been an artifact of later – but not necessarily less – childbearing. We produce new estimates of the actual number of children women have over their lifetimes – cohort fertility – for 37 developed countries. Our results suggest that family size has remained high in many "low fertility" countries. For example, cohort fertility averages 1.8 for the 1975 birth cohort in the 37 countries for which average period total fertility rate was only 1.5 in 2000. Moreover, we find that the long-term decline in cohort fertility has flattened or reversed in all world regions previously characterized by low fertility. These results are robust to statistical forecast uncertainty and the impact of the late 2000s recession. An application of the new forecasts analyzing the determinants of cohort fertility finds that the key dimensions of development that have been hypothesized to be important for fertility – general socioeconomic development, per capita income, and gender equality – are all positively correlated with fertility for the 1970s cohorts. Gender equality, however, emerges as the strongest determinant: where the gap in economic, political, and educational achievement between women and men is small, cohort fertility is high, whereas where the gap is large, fertility is low. Our new cohort fertility forecasts that document the flattening and even reversal of cohort fertility have large implications for the future of population aging and growth, particularly over the long term.
    Keywords: World, cohort fertility, developed areas, forecasts
    JEL: J1 Z0
    Date: 2012–02
  13. By: González de San Román, Ainara (University of the Basque Country); de la Rica, Sara (University of the Basque Country)
    Abstract: The existence of gender gaps in test scores has been documented in the relevant literature for a wide range of countries. In particular, the Programme for International Student Assessment (PISA) conducted by the OECD over the past ten years reveals that on average female students underperform (outperform) males in maths (reading) test scores in most of the countries that take part in the evaluation programme. We find that differences in culture and social norms across countries and across regions within the same country are crucial determinants in understanding gender differences in PISA 2009 test scores: girls perform relatively better in both maths and reading in societies where gender equality is enhanced, and the effect varies over the distribution of scores. In addition, we find substantial evidence for the intergenerational transmission of gender role attitudes, especially from mothers to daughters, as the performance of girls – not that of boys, is better in families where the mother works outside home.
    Keywords: PISA, test scores, achievement, gender differences, culture, role attitudes, intergenerational transmission
    JEL: C14 C33 I21 I24 J16
    Date: 2012–02
  14. By: Bhaumik, Sumon K. (Aston University); Dimova, Ralitza (University of Manchester); Kumbhakar, Subal C. (Binghamton University, New York); Sun, Kai (Aston University)
    Abstract: Using a novel modeling approach, and cross-country firm level data for the textiles industry, we examine the impact of institutional quality on firm performance. Our methodology allows us to estimate the marginal impact of institutional quality on productivity of each firm. Our results bring into question conventional wisdom about the desirable characteristics of market institutions, which is based on empirical evidence about the impact of institutional quality on the average firm. We demonstrate, for example, that once both the direct impact of a change in institutional quality on total factor productivity and the indirect impact through changes in efficiency of use of factor inputs are taken into account, an increase in labor market rigidity may have a positive impact on firm output, at least for some firms. We also demonstrate that there are significant intra-country variations in the marginal impact of institutional quality, such that the characteristics of "winners" and "losers" will have to be taken into account before policy is introduced to change institutional quality in any direction.
    Keywords: institutional quality, firm performance, marginal effect, textiles industry
    JEL: C14 D24 K31 O43
    Date: 2012–02
  15. By: Aggarwal, Shilpa; Klapper, Leora; Singer, Dorothe
    Abstract: This paper evaluates how microfinance performed in providing business financing in 27 Sub-Saharan African countries. It uses data from the 2009 and 2010 Gallup World Poll, a nationally-representative survey of at least 1,000 individuals per country, conducted in up to 157 countries per year. The data, supported by rigorous statistical evidence in related literature on the use of microcredit around the world, demonstrate that economic gains from microcredit have been more modest than what was once believed. On the other hand, the analysis suggests that the poor save in order to start new businesses and that the introduction of formal products for small savings can be a key financial innovation. The authors also analyze the challenges the poor face in setting money aside to save, and discuss what policymakers can do to promote savings.
    Keywords: Access to Finance,Banks&Banking Reform,Debt Markets,Financial Intermediation,Emerging Markets
    Date: 2012–02–01
  16. By: Saiag, Hadrien
    Abstract: Cette thèse prolonge les réflexions des économistes institutionnalistes quant à la nature de la monnaie à partir de l’étude d’un ensemble de systèmes monétaires locaux en Argentine (trueque). Pour ce faire, elle prend appui sur une reconstitution de l’histoire des principaux réseaux de trueque d’ampleur nationale (niveau méso) ainsi que sur des observations de pratiques monétaires et financières de leurs participants, issues d’une enquête de terrain de type ethnographique (niveau micro). Ces données soulignent que la monnaie doit être appréhendée comme un système d’évaluation et de règlement des dettes. Une telle approche permet d’abord de distinguer les pratiques monétaires des pratiques financières et de préciser leurs interdépendances. Elle insiste également sur la diversité des pratiques monétaires (supports matériels des moyens de paiement et évaluation des dettes) et des modalités d’émission des moyens de paiement. Ce faisant, la monnaie est à même de participer à la reproduction d’organisations territoriales plus ou moins centralisées et de rapports sociaux très contrastés (tantôt violents, tantôt émancipateurs). Enfin, concevoir la monnaie à partir de la dette pose la question de l’accès aux moyens de paiement de la part de ceux qui ont été relayés aux marges du salariat à travers l’expansion de l’économie dite « informelle ».
    Abstract: This work questions the nature of money through the analysis of a complex set of local monetary systems located in Argentina (trueque). It is based on both the reconstitution of the history of the main national trueque networks (meso-level) and the observation of the monetary and financial practices of their participants, carried out through an ethnographic fieldwork (micro-level). These data suggest that money must be understood as a system of evaluation and settlement of debts. Such approach allows first to distinguish financial from monetary practices and to clarify their interdependences. Second, it puts the emphasis on the wide diversity of monetary practices (i.e. the material media of the means of settlement and evaluation of debts) and modalities of issuing the means of settlement. Therefore, money can participate to the reproduction of special organizations more or less centralized and to widely contrasted social relations (either violent or emancipating). Finally, to conceive money from debt begs the question of the access to the means of settlement of those who have been excluded from the fordist wage-labor nexus through the expansion of the so-called “informal economy.
    Keywords: Argentina; debt; federalism; informal economy; money trueque; Argentine; dette; économie informelle; fédéralisme; finance; monnaie; trueque;
    JEL: A14 H11 H63 E26 E42
    Date: 2011–12

This nep-hme issue is ©2012 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.