nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2012‒06‒05
seventeen papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. Occupational Sex Segregation and Management-Level Wages in Germany: What Role Does Firm Size Play? By Busch, Anne; Holst, Elke
  2. Value and utility in a historical perspective By Pogany, Peter
  3. Nota sulle relazioni fra l’analisi di Schumpeter e quella di Sraffa By Mario De Marchi
  4. Schumpeter in a matrix: a Stock Flow Consistent analysis of technological change By Alessandro Caiani; Antoine Godin; Stefano Lucarelli
  5. Path-breaking innovations for lung cancer: a revolution in clinical practice By Mario Coccia
  6. The Anatomy of Error in Decision-making of Rationally Behaving Agents from the Perspective of the Theory of Bounded Rationality: Extension for Contextual Games By Tomas Otahal; Radim Valencik
  7. The Role of Services for Manufacturing Firms’ Exports By Lodefalk, Magnus
  8. A method to monitor poverty dynamics among microfinance clients: An example using survey data from Bangladesh By Hernandez-Hernandez, Emilio; Schreiner, Mark
  9. Men, Women, and Machines: How Trade Impacts Gender Inequality By Chinhui Juhn; Gergely Ujhelyi; Carolina Villegas-Sanchez
  10. Interlinkages and structural changes in cross-border liabilities: a network approach By Alessandro Spelta; Tanya Ara\'ujo
  11. Including women in the policy responses to high oil prices: a case study of South Africa By Fofana, Ismaël
  12. Current Status and Challenges of Third-Sector Organizations in Japan: A comparison of their organizations, governance, and finance based on corporate forms (Japanese) By USHIRO Fusao
  13. Analyzing top US income shares: earned or extracted? By Lambert, Thomas; Kwon, Eundak
  14. Individual and context factors determine gender-specific behaviour: the case of school milk in Germany By Salamon, Petra; Weible, Daniela; Buergelt, Doreen; Christoph, Inken B.; Peter, Guenter
  15. The Fair Trade movement: an economic perspective By Kadow, Alexander
  16. Complexity and Narrow Bracketing in Credit Choice By Kalaycı, Kenan; Serra-Garcia, Marta
  17. What should regulation do in the field of micro-finance? By Renuka Sane; Susan Thomas

  1. By: Busch, Anne (DIW Berlin); Holst, Elke (DIW Berlin)
    Abstract: The paper analyzes the gender pay gap in private-sector management positions based on German panel data and using fixed-effects models. It deals with the effect of occupational sex segregation on wages, and the extent to which wage penalties for managers in predominantly female occupations are moderated by firm size. Drawing on economic and organizational approaches and the devaluation of women's work, we find wage penalties for female occupations in management only in large firms. This indicates a pronounced devaluation of female occupations, which might be due to the longer existence, stronger formalization, or more established "old-boy networks" of large firms.
    Keywords: gender pay gap, managerial positions, occupational sex segregation, gendered organization, firm size
    JEL: B54 J16 J24 J31 J71 L2 M51
    Date: 2012–05
  2. By: Pogany, Peter
    Abstract: Since value and utility are the highest profile abstractions that underlie an epoch’s intellectual climate and ethical principles, their evolution reflects the transformation of socioeconomic conditions and institutions. The “Classical Phase” flourished during the first global system, laissez-faire/metal money/zero multilateralism (GS1); the second, “Subjective/Utilitarian” phase marked the long transition to the current epoch of “Modern Subjectivism/General Equilibrium,” tied to the second and extant global system, mixed economy/minimum reserve banking/weak multilateralism (GS2). History has witnessed the material de-essentialization of value and substantialization of utility. But now the two concepts face a thorough transvaluation as the world’s combined demographic and economic expansion encounters ecological/physical limitations. An extended macrohistoric implosion may lead to a third form of global self-organization: two-level economy/maximum bank reserve money/strong multilateralism (GS3). If history unfolds along the suggested path, not only economics, but also thinking about economics would change. It would be considered an evolving hermeneutic of the human condition expressed through global-system-specific texts. The implied critical alteration, with the recognition of the entropy law’s importance as its focal point, matches the prediction of Swiss thinker Jean Gebser (1905-1973) about the impending mutation of human consciousness into its integral/arational structure. Such extrapolations form the context in which the fourth historical phase of value and utility is hypothesized, leading to the material re-essentialization of value and de-substantialization of utility.
    Keywords: value; utility; new historical materialism; a new take on universal history
    JEL: A12 Z10 N00 Q01 B00
    Date: 2012–05–15
  3. By: Mario De Marchi (Ceris - Institute for Economic Research on Firms and Growth,Rome,Italy)
    Abstract: This paper considers the matter of possible links between Schumpeter’s theory of technological change and the economic theory of the classical or neo-Ricardian school. The paradigm of the neo-Ricardian theory adopted here is that found in Sraffa’s book Production of Commodities by Means of Commodities. The idea of investigating how distribution changes as technology changes take place by adapting a method originally conceived for the determination of rentes is put forth. Shifts in the hierarchy of dominant-dominated techniques are explicitly taken into account here. This way, the model helps explain the shifts in prices and production efficiency caused by the diffusion of innovation as well as the related changes in the volume of surplus generated by the economic system and how such surplus is shared among the various classes.
    JEL: O33
    Date: 2012–06
  4. By: Alessandro Caiani (Department of Economics and Business, University of Pavia); Antoine Godin (Department of Economics and Business, University of Pavia); Stefano Lucarelli (Department of Economics “Hyman P. Minsky”, University of Bergamo)
    Abstract: Schumpeter showed that the boom and bust cycles are intrinsically related to the functioning of the capitalist economy. These boom and bust cycles are inherent to the rise innovation. Our paper analyses innovation cycles in a stock flow consistent framework. It focuses on the essential role of internal and external finance in the emergence of a new technological paradigm. We present two models. The first one, as a tribute to Schumpeter’s work, follows strictly Schumpeter’s description of the business cycles induced by technological change, except for the financial side. The second model presents a multi-sectorial economy composed of consumption and capital goods industries, a banking sector and two households sectors: capitalists and wage earners. The stock flow consistent approach allows us to track the flows of funds resulting from the rise of innovators in the system. The dynamics of prices, employment and wealth distribution among the different sectors is analysed. Above all, the role of financial-innovation nexus is underlined. The paper builds the grounds for a wider analysis of schumpeterian structural changes described in Schumpeter (1934/1912) and Schumpeter (1964/1939) We find this particularly relevant to understand the impact and potential sources of instability of an ever more financialized monetary economy of production.
    Keywords: Schumpeter, Innovation, Stock Flow Consistent Models, Monetary Circuit
    JEL: O30 O4 E32
    Date: 2012–05
  5. By: Mario Coccia (Ceris - Institute for Economic Research on Firms and Growth,Turin, Italy)
    Abstract: Lung cancer is one of main cause of death worldwide and traditional chemotherapy agents have reached the maturity phase in the treatment of advanced non-small cell lung cancer. The purpose of this paper is to analyse the evolutionary growth of knowledge patterns of vital radical innovations to treat lung cancer, driven by new technological paradigm of the targeted therapy, that have generating a revolution in clinical practice, increasing the overall survival of patients and quality of life. This new scientific pathway has evolving with an allometric process that involves a disproportionate growth of targeted therapy in relation to standard platinum-based chemotherapy alone.
    JEL: O33 I1 L65
    Date: 2012–06
  6. By: Tomas Otahal (Department of Economics, Faculty of Business and Economics, Mendel University in Brno); Radim Valencik (University of Finance and Administration)
    Abstract: How can errors in decision-making by rationally behaving individuals be explained? The concepts of bounded rationality proposed by H. Simon and of imperfect information in the complex reality by F. Hayek attack the over-restrictive assumption of perfectly informed individuals or organisms in neoclassical microeconomics. Since this assumption excludes erroneous decision-making, some results must be explained by questioning the rationality assumption. In this paper, we show that erroneous decision-making of individuals and organisms is not necessarily erroneous if we look at the contextual games which individuals and organisms play in the complex reality. This helps to explain errors in the decision-making of individuals or organisms, while maintaining the assumption of rational behavior. At the same time, we show that the errors observed in the contextual analysis of games in the decision-making of individuals or organisms can only be apparent.
    Keywords: Bounded rationality, complex systems, contextual games, erroneous behavior, rational decision-making
    JEL: D01 C73
    Date: 2012–06
  7. By: Lodefalk, Magnus (Department of Business, Economics, Statistics and Informatics)
    Abstract: Manufacturing firms increasingly focus on services. This trend is evident in their composition of input, in-house production and seemingly also in total sale. Firms’ services intensity may affect their productivity, and thereby competitiveness abroad. Services are also instrumental in connecting to the foreign market and can help firms to differentiate their offers. However, only bits and pieces of the relation between services and manufacturing’s exports have been analysed in previous literature. This study contributes by discussing the role of services for the firm, arriving at some conjectures and testing them empirically. Export intensity is regressed on two services parameters, applying a fractional model to a rich panel of firms in Sweden in the period 2001-2007. The microeconometric results suggest that there is an effect of services inputs, while controlling for covariates and firm heterogeneity. Raising the proportion of services in in-house production, on average, yields higher export intensity. Buying-in more services is associated with higher export intensity for firms in selected industries. Overall, the study provides new firm-level evidence of the role of services as inputs in manufacturing.
    Keywords: firm; export intensity; manufacturing; services; intangibles; innovation
    JEL: F14 L24 L25 L60 O33
    Date: 2012–05–24
  8. By: Hernandez-Hernandez, Emilio; Schreiner, Mark
    Abstract: This article presents a practical methodology to monitor poverty changes among microfinance clients using available household panel data. As an example, it presents an estimation of the net number of people that rose above the $1/day poverty line while members of Grameen Bank and BRAC during 1990 to 2006. The proposed method contributes to on-going efforts from microfinance practitioners to verify whether their clients are moving out of poverty and validate management strategies aiming to target new poor clients, and increase their share of poor clients over time. Estimates show that about 6.6 million people rose above the $1/day poverty line in 1990-2006 while members of Grameen or BRAC. This represents about 40 percent of the total number of poor people that crossed this poverty line during the same time period at the national level, which validates targeting strategies to reach the poor.
    Keywords: Microfinance; poverty reduction; poverty monitoring; Bangaldesh
    JEL: E21 D14 B41
    Date: 2012–01–09
  9. By: Chinhui Juhn; Gergely Ujhelyi; Carolina Villegas-Sanchez
    Abstract: This paper studies the effect of trade liberalization on an under-explored aspect of wage inequality – gender inequality. We consider a model where firms differ in their productivity and workers are differentiated by skill as well as gender. A reduction in tariffs induces more productive firms to modernize their technology and enter the export market. New technologies involve computerized production processes and lower the need for physically demanding skills. As a result, the relative wage and employment of women improves in blue-collar tasks, but not in white-collar tasks. We test our model using a panel of establishment level data from Mexico exploiting tariff reductions associated with the North American Free Trade Agreement (NAFTA). Consistent with our theory we find that tariff reductions caused new firms to enter the export market, update their technology and replace male blue-collar workers with female blue-collar workers.
    JEL: F1 J2 J31
    Date: 2012–05
  10. By: Alessandro Spelta; Tanya Ara\'ujo
    Abstract: We study the international interbank market through a geometrical and a topological analysis of empirical data. The geometrical analysis of the time series of cross-country liabilities shows that the systematic information of the interbank international market is contained in a space of small dimension, from which a topological characterization could be conveniently carried out. Weighted and complete networks of financial linkages across countries are developed, for which continuous clustering, degree centrality and closeness centrality are computed. The behavior of these topological coefficients reveals an important modification acting in the financial linkages in the period 1997-2011. Here we show that, besides the generalized clustering increase, there is a persistent increment in the degree of connectivity and in the closeness centrality of some countries. These countries seem to correspond to critical locations where tax policies might provide opportunities to shift debts. Such critical locations highlight the role that specific countries play in the network structure and helps to situates the turbulent period that has been characterizing the global financial system since the Summer 2007 as the counterpart of a larger structural change going on for a more than one decade.
    Date: 2012–05
  11. By: Fofana, Ismaël
    Abstract: The recent surge in oil prices has created concern about its impacts on poor people in South Africa. The strong economic performance recorded over the period 1995-05 has not contributed to a substantial reduction in poverty in this country, particularly among women that tend to be overrepresented among poor households. Government management of an oil shock is important in reducing its adverse impacts in oil-importing countries. Thus, this study examines alternative policy responses to the recent high oil prices through a gender lens in South Africa. A multisector general equilibrium framework is developed to account for the energy specificities of the economy and its relationship with nonenergy sectors. In addition, male and female supplies of labor and the households' demand for energy and nonenergy commodities are explored through a careful modeling of the household economy along with the market economy. The simulation scenarios combine increases in world prices of crude oil, petroleum products, and coal with various fiscal policy responses. Under the floating prices scenario, gross domestic product (GDP) falls compared to the baseline value driven by the inflationary effect of high energy prices and the exchange rate depreciation. Labor earnings also fall, while the gap between male and female earnings widens. The low participation of women compared to men in nonoil energy and export-oriented industries increases their vulnerability to the oil price shock. The gender employment gap also increases under the fixed petroleum price scenarios regardless of the tax-financing option. Further, fiscal policy responses are explored through the broadening of price supports to all commodities and all industries financed by an additional tax on household revenue. A government subsidy to businesses under the oil price shock shows the highest multiplier effect—higher GDP and labor earning effects—but the gap in male and female employment does not change significantly compared with that in the floating and set price scenarios. The government subsidy to businesses is decomposed by type of industry to further explore its gender employment impact. Simulation results indicate that the gender employment gap improves when the subsidy is allocated to high female-employing industries. On the other hand, providing a subsidy to industries that easily substitute capital–energy technology with low-skilled work gives the best GDP outcome. Therefore, this study shows that fiscal policy can help ensure equitable growth when an economy faces a serious challenge, such as a surge in world oil prices. This indicates that supporting industries that easily substitute the capital–energy factor and female-dominated, low-skilled work is the most efficient and gender-equitable fiscal response to high oil prices in South Africa. Given the small differences in GDP and employment results between the fiscal response scenarios with and without a focus on gender equity, the cost of investing in gender equality appears to be small.
    Keywords: petroleum, price shock, Gender, Fiscal policies, General equilibrium model, household economy, domestic work, time allocation,
    Date: 2012
  12. By: USHIRO Fusao
    Abstract: Conditions have emerged in Japan where the third sector is now discussed in comparison with the government and corporate sectors, following developments such as a rapid increase in the number of specified non-profit organizations, institutional reform of public interest corporations, and rising attention on social enterprises. It is now the opportune time to position the third sector as a whole as a provider of "New Public Commons." Compared to previous discussions on non-profit organizations (NPOs) that focused only on specified NPOs, this third sector comprises the non-profit sector broadly, including public interest corporations as well as cooperative associations, neighborhood associations, and social enterprises.<br />This paper will illustrate the management characteristics of third-sector organizations as a whole and those of the subsystems based on corporate forms, using the results of the questionnaire that we conducted. In addition, it will discuss systems that enable the third sector to fulfill its generally expected roles and looks at the challenges concerning its management, including the unification of extremely diversified non-profit corporation systems, taking into account the differences and commonalities among the various corporate forms.
    Date: 2012–05
  13. By: Lambert, Thomas; Kwon, Eundak
    Abstract: With the current Occupy Movement occurring on Wall Street and other parts of the globe, a lot of attention has recently been given to growing inequality and how much the top 1 percent of households have in terms of income versus the other 99 percent in the United States. Mainstream economists and other social scientists point to greater trade liberalization, lower union membership, smaller government, greater GDP growth, a greater presence of the financial services industry in the economy, and lower marginal tax rates on upper income households as making significant contributions to growing income inequality and greater income shares for those at the top of the income scale in the United States. Additionally, some mention that gains to upper income households have been made possible by a growing pay gap between skilled and unskilled or educated versus less educated workers, in which upper income households are made up disproportionately of college educated and highly trained individuals. Finally, declines in the number of high paying jobs in manufacturing are also blamed for rising inequality and greater gains in income to top income households relative to those in other income groups. All of these factors affecting inequality have been found to be statistically significant in one study or another. This research note does not dispute the findings of other research efforts but explores the use of three other concepts to explain income inequality. The use of 1) the profitability of the private sector, 2) the decline in the wages and salaries of most workers, and 3) the Marxian concept of rate of exploitation are offered as additional explanations of inequality and the income shares of top income households. Since the Great Depression, it appears that the income shares of the top strata are due just as much to the income losses and “exploitation” of other groups and to governmental policies as they are due to the performance of the general US economy or to the performance of private sector profitability and returns on education. These findings which offer support to both sides of the arguments over greater accumulation of income by those at the top of the income scale.
    Keywords: income inequality; profitability; rate of exploitation; surplus value; top income shares; trade unions
    JEL: B5
    Date: 2012–05–02
  14. By: Salamon, Petra; Weible, Daniela; Buergelt, Doreen; Christoph, Inken B.; Peter, Guenter
    Abstract: A German federal research was established to analyse determinants on school milk demand. Among those, individual factors, like children’s eating habits, attitudes, preferences and socio-economic variables were considered but also contextual factors like attitudes and habits of class teachers and school variables were regarded; and more, price effects on demand were derived via a price experiment. As girls order significantly less school milk than boys this paper aims to analysis gender-specific decisions. In the analysis, a database is used in which individual order information are merged with survey results concerning pupils, parents, class teachers, school principals and school milk managers of the sampled schools. A multilevel analysis is applied, because included explanatory variables of gender-specific school milk orders can be assigned to different groups (individual, class, school, price phase) in which the independence of variable distributions may be hampered; whereas equations are established as ordinary logistic function. Estimates for both genders comprise individual factors affecting positively the school milk orders like e.g., the provision of school milk free of charge, or when pupils think that `milk tastes good´ and contextual factors such as their class teachers’ involvement. Gender-specific distinctions cover e.g., the fact that male pupils have a higher probability to order school milk and react to price incentives. Concerning the context variables, boys react to teachers and principal attitudes. In contrast, with girls prices have a very limited impact, but their parents and teachers are regarded as role models. Girls prefer more choices in product differentiation. These results indicate gender-specific programs integrating their family and teachers, and a wider range of product choices.
    Keywords: gender differences, multilevel analysis, school milk, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety,
    Date: 2012
  15. By: Kadow, Alexander
    Abstract: Fair Trade (FT) products such as coffee and textiles are becoming increasingly popular with altruistic consumers all over the world. This paper seeks to understand the economic effects of this grassroots movement which directly links ethically-minded consumers in industrialised countries with marginalised producers in developing economies. We extend the Ricardian trade model and introduce a FT sector in developing South that offers a fair wage – the FT premium. There are indeed positive welfare effects from FT but those come at the expense of rising inequalities within South which are in turn a rational by-product of FT. The degree of inequalities depends on the specifics of the cooperative structures in the FT sector. Given the rigidities and inequalities FT introduces and rests upon, this form of alternative trade appears to be only sustainable as niche movement.
    Keywords: Fair Trade, comparative advantage, wage premium, inequalities, ethical consumerism, cooperative,
    Date: 2011
  16. By: Kalaycı, Kenan; Serra-Garcia, Marta
    Abstract: We examine experimentally the effect of complexity on individual decision making. We focus on credit choices, as they have been widely criticized for their complexity in recent years. In a first study, we find that complexity in benefits leads to random mistakes, while complexity in costs leads to a specific mistake: choosing a high-benefit loan, with very costly repayment schemes. In a second study, we show that individuals still (mistakenly) choose the high-benefit loan, even if cheaper and simple loans are available. This suggests that, when costs are complex, individuals bracket narrowly, focus on benefits and ignore costs, while they do not when benefits are complex. Hence, our results show that complexity and narrow bracketing may be deeply intertwined: complexity that makes narrow bracketing cognitively easier is likely to lead to myopic choices, such as choosing complex and expensive loans, despite the presence of simple and cheaper loans.
    Keywords: Complexity; Credit; Mistakes; Narrow Bracketing
    JEL: C91 D03 D14
    Date: 2012–05
  17. By: Renuka Sane (Indira Gandhi Institute of Development Research); Susan Thomas (Indira Gandhi Institute of Development ResearchInstitute of Economic Growth)
    Abstract: Recent events in India have brought a fresh focus on the appropriate regulatory stance towards micro-finance. In this paper, we review facts and recent experience about Indian microfinance. We analyse the puzzles of financial regulation in this field from first principles, and argue that the mainstream mechanisms of consumer protection and micro-prudential regulation need to be modified owing to joint-liability groups. From this perspective, we suggest regulatory strategies that need to be adopted for dealing with micro-credit and financial distribution that focuses on the poor. This analysis and conceptual framework also helps analyse the two policy responses till date, the Malegam report and the draft Microfinance Bill, 2011.
    Keywords: Micro-finance, micro-credit, joint-liability-groups, India, consumer protection, regulation
    JEL: G20 G21 G28
    Date: 2012–03

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