nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2013‒11‒29
ten papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. Debunking Squared By Kakarot-Handtke, Egmont
  2. Innovation for economic performance: The case of Latin American firms By Arias Ortiz, Elena; Crespi, Gustavo; Tacsir, Ezequiel; Vargas, Fernando; Zuniga, Pluvia
  3. Values and Social Capital as Predictors of Attitudes towards Innovation By Nadezhda Lebedeva; Ekaterina Osipova; Liubov Cherkasova
  4. Senior management labor market: from economic growth to crisis. The case of Russia By Sergey Solntsev
  5. Wage Comparisons in and out of the Firm. Evidence from a Matched Employer-Employee French Database By Olivier Godechot; Claudia Senik
  6. Habits and Envy: What Drives the Consumption Behavior of U.S. Households? Evidence from PSID, 1999-2009 By Kai D. Schmid; Moritz Drechsel-Grau
  7. Neglected implications of neoclassical capital-labour substitution for investment theory:another criticism of Say's Law By Fabio Petri
  8. Evolution of labour motivation for textile workers in soviet Russia (1918-1929): a microanalysis of archival data By Irina Shilnikova
  9. In the shadow of the interlocking directorates regulation. A comparative case study By Alberto Baccini; Leonardo Marroni
  10. Australia’s Foreign Investment Review Board and the Regulation of Chinese Investment By Rebecca Mendelsohn; Allan Fels

  1. By: Kakarot-Handtke, Egmont
    Abstract: Steve Keen has debunked a good part of standard economics. However, he has left standing the theory of profit. This is unfortunate, because the theory of profit is the pivot of all of theoretical economics. This tightly focused paper clarifies the factual relation of profit and income, which should be helpful to put Keen’s alternative to the standard approach on sound foundations.
    Keywords: new framework of concepts; structure-centric; consumption economy; Profit Law; market clearing; budget balancing; error detection; four quadrant scheme
    JEL: B59
    Date: 2013–11–22
  2. By: Arias Ortiz, Elena (Education Division, Inter-American Development Bank); Crespi, Gustavo (Competitiveness and Innovation Division, Inter-American Development Bank); Tacsir, Ezequiel (UNU-MERIT / MGSoG, and Competitiveness and Innovation Division, Inter-American Development Bank); Vargas, Fernando (Competitiveness and Innovation Division, Inter-American Development Bank); Zuniga, Pluvia (UNU-MERIT / MGSoG)
    Abstract: In this paper, a wide range of innovation indicators are analysed in order to describe the innovation behaviour of manufacturing firms in LAC using the recently released Enterprise Surveys 2010. The Enterprise Surveys define innovation rates as the share of firms introducing product and process innovations. The survey also measures the proportion of firms investing in research and development (R&D) and filing for intellectual property rights (IPRs). The aim of this note is to understand the main characteristics of innovative firms and to gather new evidence with regard to the nature of the innovation process in the region. Statistics about the performance of LAC firms are provided using different types of indicators to measure firms' innovative behaviour. In particular, differences in innovation performance and effort by country, sector, and key firm characteristics, such as being a multinational or exporter, are explored. Those firms in LAC that are top R&D performers are identified, and the analysis closes with an exploration of firm characteristics that strongly correlate with the probability of being a top R&D performer in the region.
    Keywords: innovation, research and development, Latin America, enterprise surveys
    JEL: D22 O31 O33 O34
    Date: 2013
  3. By: Nadezhda Lebedeva (National Research University Higher School of Economics (Moscow, Russia). International Laboratory of Socio-Cultural Research.); Ekaterina Osipova (National Research University Higher School of Economics (Moscow, Russia). International Laboratory of Socio-Cultural Research); Liubov Cherkasova (National Research University Higher School of Economics (Moscow, Russia). International Laboratory of Socio-Cultural Research:)
    Abstract: This study examines the relationship of values and social capital with attitudes towards innovations. The respondents (N = 1238) were asked to fill in a questionnaire, which included the Schwartz value survey SVS-57, a selfassessment scale of innovative personality traits [Lebedeva, Tatarko, 2009], and a method of assessing social capital [Tatarko, 2011]. The results of the correlation analysis revealed a positive correlation between values of Openness to Change and a positive attitude to innovation. It was also found that the components of social capital (trust, tolerance, perceived social capital) positively correlated with attitudes to innovation. The empirical model obtained by means of a structural equation modeling generally confirmed the hypothesis of the study and demonstrated the positive impact of the values of Openness to Change and social capital on attitudes towards innovations in Russia
    Keywords: creativity, innovation, attitude to innovation, social capital, perceived social capital, individual values
    JEL: A13
    Date: 2013
  4. By: Sergey Solntsev (National Research University Higher School of Economics. Laboratory for Labor Market Studies. Senior Research Fellow)
    Abstract: This paper presents an analysis of changes in senior management labor market in Russia during the 2000s. The original data consists of information on the appointments of 5771 senior managers in Russia from late 1999 until 2009. The study focuses on mobility between economic sectors, and managerial positions, human capital, including education and experience and the proportion of women and expats in the senior management market. We found that the Russian labor market of top-level managers can be described as a relatively closed market, where professional executives dominate. During the period of economic growth Russian companies preferred to hire outsiders partly due to the lack of appropriate internal candidates. The typical senior manager in Russia is a 30-40 years old man with a degree in economics, engineering, or science, who moves every 2-3 years to their next executive position. The most significant changes, noted during the crisis, were the increase of the firms’ demand for senior managers’ specific human capital and the decrease of demand for general human capital.
    Keywords: senior managers, corporate governance, labor market, career mobility, human capital, economic crisis.
    JEL: J24 J62 J63 M51
    Date: 2013
  5. By: Olivier Godechot (IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris - Institut d'Études Politiques [IEP] - Paris - PRES Sorbonne Paris Cité - Fondation Nationale des Sciences Politiques [FNSP], OSC - Observatoire sociologique du changement - Sciences Po - CNRS : UMR7049, MaxPo - Max Planck Sciences Po Center on Coping with Instability in Market Societies - Max Planck Institute for the Study of Societies - IEP Paris); Claudia Senik (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), UP4 - Université Paris 4, Paris-Sorbonne - Université Paris IV - Paris Sorbonne - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique)
    Abstract: This paper looks at the association between wage satisfaction and different notions of reference wage, based on a matched employer-employee dataset. It shows that workers' satisfaction depends on otherpeople's income in different ways. Relative income concerns are important, but we also find robust evidence of signal effects. For instance, workers are happier the higher the median wage in their firm, holding their own wage constant. This is true of all employees, whatever their relative position in the firm. This signal effect is stronger for young people and for women. These findings are based on objective measures of earnings as well as subjective declarations about wage satisfaction, awareness of other people's wage and reported income comparisons.
    Keywords: Income comparisons ; Income distribution ; Job satisfaction ; Wage satisfaction ; Signal effect ; Matched employer-employee survey data
    Date: 2013–11
  6. By: Kai D. Schmid; Moritz Drechsel-Grau
    Abstract: In this paper we estimate the relevance of habits versus interpersonal comparisons for the consumption behavior of U.S. households. We exploit information from the recently released consumption expenditure data of the Panel Study of Income Dynamics (PSID) covering the time span from 1999 to 2009. We find that both habits, measured as lagged consumption, and envy motives, measured as reactions of consumption to consumption changes of households that are perceived to be richer, matter substantially. Hence, household consumption is not only determined by habit persistence but also by interpersonal comparisons. Most importantly, our estimations reveal that envy motives might play a much more prominent role for households' consumption choices than habits do.
    Keywords: Household Consumption, Reference Consumption, Habits, Relative Income Hypothesis, Difference GMM, PSID
    JEL: C23 D12 D91 E21
    Date: 2013
  7. By: Fabio Petri
    Abstract: Neoclassical capital-labour substitution correctly understood is unable to prove a tendency toward the full employment of resources because it leaves investment indeterminate if the full employment of labour is not assumed to start with; then Say's Law loses plausibility because of the inevitable presence of accelerator-type influences on investment, even neglecting the inconsistencies of neoclassical capital theory; and wage decreases cause a decrease of investment, undermining the 'neoclassical synthesis' criticism of Keynes. The way a negatively interest-elastic investment function is obtained by Romer without assuming the full employment of labour, that is through adjustment costs, relies on several grave mistakes. The recent DSGE models which directly assume that investment equals savings are not supported by general equilibrium theory because the latter theory is admitted by the specialists not to be a positive theory, nor can those models rely on the neoclassical synthesis or monetarism because of the critique of this paper (besides the capital critique), so they must be discarded too.
    JEL: E2 B5
    Date: 2013–10
  8. By: Irina Shilnikova (National Research University Higher School of Economics (Moscow, Russia); Faculty of Economics; Associate Professor)
    Abstract: This paper examines the main measures taken to stimulate textile workers during the years of “War Communism” and the New Economic Policy and identifies the dynamics of the roles of the main elements of the labour stimulation system (compensation, coercion, and commitment). We discover what stimuli proved to be the most efficient during “War Communism” and the New Economic Policy. We analyse whether there was succession in the industrial labour stimulation system in pre-revolutionary (1880-1914) and Soviet (1918-1929) Russia and how actively Soviet managers employed the best practices of the pre-revolutionary factory administration. This paper also analyses the question of new practices introduced in the changing political and socio-economic circumstances. This paper is mainly based on archival sources.
    Keywords: Soviet Russia, “War Communism”, New Economic Policy, labor motivation, textile industry.
    JEL: N34
    Date: 2013
  9. By: Alberto Baccini; Leonardo Marroni
    Abstract: - Network analysis techniques are used for investigating the probable effects of a change in the regulation that aims to prevent the anticompetitive effects of the crossed presence of the same administrators in the boards of directors of competing firms, known as interlocking directorates (ID). The case study considered is a recent Italian law (Section 36 of Law Decree n. 201/2011) which prohibits ID on the boards of credit, insurance and financial companies. The ID networks of the top-100 Italian listed companies and of the financial companies in this same list are considered and compared with the analogous networks in the U.S.. The U.S. networks represent a benchmark given that in the U.S. companies act in the shadow of the Section 8 of the Clayton Act that has banned ID since 1914. The effects on the ID networks of the new Italian law are simulated under two different interpretations of the law. If the law will be applied according to a narrow interpretation, Italian ID network will rest substantially unaltered. On the other hand if the law will be applied according to a broad interpretation, the ID network for financial firms will be completely modified with a network configuration very similar to the American benchmark.
    JEL: K2 L41 G2 G34
    Date: 2013–09
  10. By: Rebecca Mendelsohn (Australian National University and Australia and New Zealand School of Government); Allan Fels
    Abstract: Foreign investment has played an important role in the Australian economy since the country's foundation. Part of the latest wave of foreign direct investment (FDI) in Australia has been by Chinese firms, and largely by state-owned enterprises with connections to the Chinese state. Despite the value it has generated for the Australian economy, Chinese FDI has been controversial and has exposed some of the shortcomings in Australia's foreign investment review process. This paper evaluates Australia's foreign investment regime, and pays particular attention to the Foreign Investment Review Board (FIRB). Questions are asked about how closely the FIRB's role and processes regulatory best practice. The paper also considers whether greater fidelity by the FIRB to principles of good governance could better serve Australia's broad policy interests and reduce Chinese perceptions of an opaque and discriminatory foreign investment regime.
    Keywords: China; Australia; Foreign Direct Investment; Regulation; Good Governance
    JEL: K2
    Date: 2013–11

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