nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2016‒11‒27
ten papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Inequality, financialisation and economic decline By Pasquale Tridico; Riccardo Pariboni
  2. The Rise of a Mainstream in Economics By Michel De Vroey; Luca Pensieroso
  3. Liberal Foundations of Basic Income. Argument Combining Philosophy and Economics. By Claude Gamel
  4. Undoing Gender with Institutions. Lessons from the German Division and Reunification By Quentin Lippmann; Alexandre Georgieff; Claudia Senik
  5. Math, Girls and Socialism By Quentin Lippmann; Claudia Senik
  6. Growth, Stagnation and Decline of a Village: An Autobiographical Essay on the Socio-economic History of Tarar, Bihar (India) By Mishra, SK
  7. The Role of Newly Industrialized Economies in Global Value Chains By Dominik Boddin
  8. Trust and Performance: Exploring Socio-Economic Mechanisms in the “Deep” Network Structure with Agent-Based Modeling By Gao, Lin
  9. The Role of Local Accounting Standard Setters in Institutional Complexity: 'Explosion' of Local Standards in Japan By Saori Matsubara; Takahiro Endo
  10. Gender Differences in Willingness to Compete: The Role of Culture and Institutions By Booth, Alison L.; Fan, Elliott; Meng, Xin; Zhang, Dandan

  1. By: Pasquale Tridico; Riccardo Pariboni
    Abstract: The objective of this paper is to argue that the labour productivity decline experienced in recent years by several advanced countries can be explained, following a Kaldorian-Classical approach, by a weak GDP performance and by a decline in the wage share. Moreover, drawing inspiration from recent Post- Keynesian literature, we identify the ongoing worsening in income equality and the increase in the degree of financialisation as other major explanatory factors of sluggish productivity. The paper will provide a brief literature review concerning non-mainstream attempts to endogenise labour productivity. We will then discuss how labour flexibility and shareholder value orientation, one of the main aspects of financialisation, can negatively affect equality and labour productivity. Finally, we will propose and test an extended version of Sylos Labini’s productivity equation, where productivity is claimed to depend positively on GDP rate of growth and the wage share, and negatively on income inequality and financialisation.
    Keywords: Labour productivity, Inequality, Financialisation.
    JEL: E02 E12 E24 E44
    Date: 2016–11
  2. By: Michel De Vroey (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Luca Pensieroso (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: Our paper contends that the existence of mainstream economics ought to be understood as a particular case of the now widespread certification phenomenon, which defines good practices on the grounds of a compliance with well-defined standards. Basing our analysis on Leijonhufvud’s vision of the construction of economic theory, we document the fragmentation process which economics has undergone from the marginalist revolution to the present. Studying the evolution of five sub-branches of economics, we show how at the end of the 1970s loose standards for good research practices were replaced by narrower ones in each of them. We claim that this change and the emergence of a mainstream were two faces of the same process.
    Keywords: mainstream, decision tree, neoclassical approach
    JEL: A10 A20 B20
    Date: 2016–11–18
  3. By: Claude Gamel (LEST - Laboratoire d'économie et de sociologie du travail - Université de la Méditerranée - Aix-Marseille 2 - Université de Provence - Aix-Marseille 1 - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Debates among Liberals on social justice have played a major role in current discussion on basic income (or universal benefit). In this paper, the notion is considered on the basis of the “economics of liberal egalitarianism”, for which the anchor point is to be found in Rawls’ philosophical works. Although this author certainly does not support basic income, he still provides an appropriate general framework to consider it, in particular through the hierarchy of his principles of justice (I). At the third level of this hierarchy, the interpretation of the “principle of difference” appeared controversial concerning the treatment of “Malibu surfers”, through which Van Parijs can have defended the unconditional nature of basic income (II). There remains the transition from the philosophy to the economics of basic income, which allows considering it as a precise alternative of negative income tax. At this stage, a rereading of Friedman’s intuition on this topic results in seeing basic income as a “universal tax credit” (III). We conclude with some brief remarks on the general rules necessary for a possible implementation of this conception of basic income in the case of France (IV).
    Abstract: Les débats entre libéraux sur la justice sociale ont beaucoup alimenté la réflexion contemporaine sur le revenu d’existence (ou allocation universelle). Cette notion est présentée ici comme relevant de « l’économie de l’égalitarisme libéral », dont le point d’ancrage se situe dans l’œuvre philosophique de Rawls. Celui-ci n’est certes pas partisan de l’allocation universelle, mais sa pensée offre néanmoins un cadre général adéquat pour en parler, en particulier par la hiérarchie des principes de justice qu’il défend (I). Au troisième niveau de cette hiérarchie, l’interprétation à donner au « principe de différence » a suscité la controverse des « surfeurs de Malibu », par laquelle Van Parijs a pu défendre le caractère inconditionnel de l’allocation universelle (II). Reste alors à passer de la philosophie à l’économie de l’allocation universelle, en montrant comment cette dernière peut être considérée comme une variante précise d’impôt négatif sur le revenu. A ce stade, une relecture de l’intuition de Friedman sur la question aboutit à considérer le revenu d’existence comme un « crédit d’impôt universel » (III). En conclusion, sont esquissées dans le cas de la France quelques observations sur les modalités éventuelles d’application d’une telle conception du revenu d’existence (IV).
    Keywords: liberalism,basic income,unconditional nature,universal tax credit,libéralisme,revenu d’existence,inconditionnalité,crédit d’impôt universel.
    Date: 2016–11–15
  4. By: Quentin Lippmann (PSE - Paris School of Economics); Alexandre Georgieff (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Claudia Senik (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, UP4 - Université Paris-Sorbonne)
    Abstract: Social scientists have provided empirical evidence that "gender trumps money", meaning that gender norms can be more powerful than economic rationality in shaping daily arrangements between spouses. In particular, when they deviate from the "male breadwinner" norm, women react by "doing gender", i.e. overplaying their feminine role by increasing the number of housework hours that they accomplish. The risk of divorce also increases when a woman earns more than her husband. This paper shows that, however powerful, these norms are cultural and can be trumped by institutions. We use the 41-year division of Germany as a natural experiment and look at differences between East and West Lander in terms of gender behavior after the German reunification. As most countries of the socialist bloc, the former GDR had designed institutions that were much more gender equalizing than their counterpart in the former FRG. We show that these institutions have created a culture that keeps inuencing behavior up to the current period. In particular, East Germany differs from West Germany in the sense that a woman can earn more than her husband without "doing gender" and without putting her marriage at risk.
    Keywords: German Division,Household economics,Gender norms,Culture,Institutions
    Date: 2016–10
  5. By: Quentin Lippmann (PSE - Paris School of Economics); Claudia Senik (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, UP4 - Université Paris-Sorbonne)
    Abstract: This paper argues that the socialist episode in East Germany, which constituted a radical experiment in gender equality in the labor market and other instances, has left persistent tracks on gender norms. We focus on one of the most resilient and pervasive gender gaps in modern societies: mathematics. In spite of the great push of girls into education since the 1980s, mathematics remains a predominantly male field in most developed countries. But the underperformance of girls in math is sharply reduced in the regions of the former GDR, in contrast with those of the former FRG. We show that this East-West difference is due to girls' attitudes, confidence and competitiveness in math, and not to other confounding factors, such as the difference in economic conditions or teaching styles across the former political border. We also provide illustrative evidence that the gender gap in math is smaller in European countries that used to be part of the Soviet bloc, as opposed to the rest of Europe. The lesson is twofold: (1) a large part of the pervasive gender gap in math is due to social stereotypes; (2) institutions can durably modify these stereotypes.
    Keywords: Gender Gap in Math,Institutions,German Division,Gender Sterotypes,I2, J16, J24, P36, Z13
    Date: 2016–10
  6. By: Mishra, SK
    Abstract: This autobiographical essay tells the story of growth, stagnation and decline of a village socio-economy in Bihar (India) that the author observed during the past six decades or so. It grew with optimism and cooperation among the inhabitants. But very soon it was eclipsed by the drive to aggressive resource acquisition, transgression and group rivalry culminating to crime and gloom. Almost each family of the village became contributor as well as subject to ‘envy-barrier to development’. Envy and ill will became the very stuff of life that dominated everything else. The pleasure of malevolence became the dominant drive to social behaviour. The people there now have almost no social or even personal purpose to reckon with. They are hiding themselves in their houses; they are afraid of their own shadows. They speak cautiously and stroll cautiously. The village has lost its life force, it has lost its shine, it has lost its present and it has lost its future.
    Keywords: Village socio-economy, Bihar, India, development, decline, stagnation, historical, autobiographical
    JEL: B52 O17 Z13
    Date: 2016–11–22
  7. By: Dominik Boddin
    Abstract: In light of increased vertical specialization and the dominance of trade in intermediates rather than final goods, this paper seeks to raise awareness of the limitations of traditional trade measures on a gross output basis. To do so, this paper uses the WIOD, a world input output table, as an alternative trade measure to analyze the role of six newly industrialized economies in global value chains. The differences between measures on a gross output basis and value added basis are striking. Export shares measured by both methods differed by more than 20 percent for some industries. These findings highlight the need for more sophisticated world input output data to form a better understanding of global trade dynamics and country interdependencies.
    Keywords: Newly industrializing economies;International trade;Industrialization;Economic data and statistics;Data analysis;Global Value Chains, Vertical Specialization, Newly Industrialized Economies
    Date: 2016–10–17
  8. By: Gao, Lin
    Abstract: This paper extends the concept of interaction platforms and explores the evolution of interaction and cooperation supported by individuals’ changing trust and trustworthiness on directed weighted regular ring network from the angle of micro scope by using agent-based modeling. This agent-based model integrates several considerations below via a relatively delicate experimental design: 1) a characteristic of trust is that trust is destroyed easily and built harder (Slovic, 1993); 2) trustworthiness may be reflected on both strategy decision and payoff structure decision; 3) individuals can decide whether or not to be involved in an interaction; 4) interaction density exists, not only between neighbors and strangers (Macy and Skvoretz, 1998), but also within neighbors; 5) information diffusion. In this agent-based model, marginal rate of exploitation of original payoff matrix and relative exploitation degree between two payoff matrices are stressed in their influence of trust-destroying; influence of observing is introduced via imagined strategy; relationship is maintained through relationship maintenance strength, and so on. This paper treats number of immediate neighbors, degree of embeddedness in social network, mutation probability of payoff matrix, mutated payoff matrix, proportion of high trust agents and probabilities of information diffusion within neighborhood and among non-neighbors as important aspects happening on interaction platforms, and the influences of these factors are probed respectively on the base of a base-line simulation.
    Keywords: Trust, trustworthiness, directed weighted regular ring network, agent-based modeling, marginal rate of exploitation, relative exploitation degree, imagined strategy, relationship maintenance strength, number of neighbors, degree of embeddedness in social network, mutation of payoff matrix, information diffusion, social mobility, institutional quality, evolution of interaction, evolution of cooperation
    JEL: B52 C63 D82 D85
    Date: 2016–11–21
  9. By: Saori Matsubara (Tokai University, Department of Business Administration); Takahiro Endo (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: Purpose The paper intends to locate the role of local standard setters in institutional complexity, where multiple sources of pressure for change and continuity coexist. The existing research does not fully explore this since it tends to illustrate the way in which a particular interpretation concerning certain accounting standards prevails over time (Archel et al., 2011; Murphy and O'Connell, 2013; Pelger, 2015; Young, 2014). Design/methodology/approach It empirically examines and critiques the Japanese experience through the concepts of institutional complexity and translation that specify the relationship between the name and types of practice of accounting standards in the local context (Czarniawska and Sevón, 1996, 2005; Erlingsdóttir and Lindberg, 2005; Røvik, 2016; Sahlin and Wedlin, 2008). Data sources are texts produced (between 2001-2015) by the local accounting standard setter and relevant organisations that represent firms, the certified public accountants and regulatory agency, respectively. Findings The local accounting standard setter in Japan was exposed to competing pressures between change and maintenance, which was translated by the standard setter in Japan. Consequently, the translation led to an 'explosion' of local accounting standards ('pure' IFRS, Japanese GAAP, modified IFRS and US GAAP). Originality/value This article is the first attempt to systematically examine the role of a local standard setter under institutional complexity. It illustrates how institutional complexity is turned into divergent outcomes against the assumption of previous research that indicates multiple interpretations of particular accounting standards finally merging into a specific one.
    Keywords: IFRS, Local standard setter, Translation, Institutional perspective
    Date: 2016–11
  10. By: Booth, Alison L. (Australian National University); Fan, Elliott (National Taiwan University); Meng, Xin (Australian National University); Zhang, Dandan (Peking University)
    Abstract: In the laboratory experiment reported in this paper we explore how evolving institutions and social norms, which we label 'culture', change individuals' preferences and behaviour in mainland China. From 1949 China experienced dramatic changes in its socio-economic institutions. These began with communist central planning and the establishment of new social norms, including the promotion of gender equality in place of the Confucian view of female 'inferiority'. Market-oriented reforms, begun in 1978, helped China achieve unprecedented economic growth and at the same time Marxist ideology was gradually replaced by the acceptance of individualistic free-market ideology. During this period, many old traditions crept back and as a consequence social norms gradually changed again. In our experiment we investigate gender differences in competitive choices across different birth cohorts of individuals who, during their crucial developmental-age, were exposed to one of the two regimes outlined above. In particular we investigate gender differences in competitive choices for different birth cohorts in Beijing using their counterparts in Taipei (subject to the same original Confucian traditions) to control for the general time trend. Our findings confirm: (i) that females in Beijing are significantly more likely to compete than females from Taipei; (ii) that Beijing females from the 1958 birth cohort are more competitive than their male counterparts as well as more competitive than later Beijing birth cohorts; and (iii) that for Taipei there are no statistically significant differences across cohort or gender in willingness to compete. In summary, our findings confirm that exposure to different institutions and social norms during the crucial developmental age changes individuals' behaviour. Our findings also provide further evidence that gender differences in economic preferences are not innately determined.
    Keywords: gender, competitive choices, culture, behavioural economics
    JEL: C9 C91 C92 J16 P3 P5 D03
    Date: 2016–11

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