nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2017‒01‒15
eight papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Capital theory: Less is more By Mariolis, Theodore; Tsoulfidis, Lefteris
  2. The Continuing Relevance of Keynes's Philosophical Thinking: Reflexivity, Complexity, and Uncertainty By Davis, John B.
  3. Intra-Household Inequality and Overall Inequality By Kanbur, Ravi
  4. On the Political Economy of Financial Deregulation By Korkut Erturk
  5. Why are policy real interest rates so high in Brazil? An analysis of the determinants of the Central Bank of Brazil's real interest rate By Balliester Reis, Thereza
  6. Gender Differences in the Union Wage Premium? A Comparative Case Study By Alex Bryson; Harald Dale-Olsen; Kristine Nergaard
  7. The Gender Wealth Gap Across European Countries By Schneebaum, Alyssa; Rehm, Miriam; Mader, Katharina; Hollan, Katarina
  8. Wages, Housework, and Attitudes in the Philippines By Dacuycuy, Connie B.

  1. By: Mariolis, Theodore; Tsoulfidis, Lefteris
    Abstract: Capital theory and the associated with it price effects resulting from changes in the distributive variables hold centre stage when it comes to the internal consistency of both classical and neoclassical theories of value. The article briefly reviews the literature and then focuses on the detected skew eigenvalue distribution of the vertically integrated technical coefficients matrices of actual economies. The findings prompt the use of the Schur triangularization theorem for the construction even of a single industry from the input-output structure of the entire economy. Such a hyper-basic industry, in combination with hyper-non-basic industries, embodies properties that may capture the behaviour of the entire economic system. Thus, we can derive some meaningful results consistent with the available empirical evidence.
    Keywords: Capital theory, Eigenvalue distribution, Production prices, Hyper-basic industry, Effective rank
    JEL: B21 B51 C67 D46 D57
    Date: 2016–12–31
  2. By: Davis, John B. (Department of Economics Marquette University)
    Abstract: This paper explains the continuing relevance of Keynes’s philosophical thinking in terms of his anticipation of complexity thinking in economics. It argues that that reflexivity is a central feature of the philosophical foundations of complexity theory, and shows that Keynes employed an understanding of reflexivity in both his philosophical and economic thinking. This argument is first developed in terms of his moral science conception of economics and General Theory beauty contest analysis. The paper advances a causal model that distinguishes direct causal relationships and reflexive feedback channels, uses this to distinguish Say’s Law economics and Keynes’s economics, and explains the economy as non-ergodic in these terms. Keynes’s policy activism is explained as a complexity view of economic policy that works like self-fulfilling and self-defeating prophecies. The paper closes with a discussion of the ontological foundations of uncertainty in Keynes’s thinking, and comments briefly on what a complexity-reflexivity framework implies regarding his thinking about time.
    Keywords: Keynes, complexity, reflexivity, non-ergodic, policy activism, uncertainty, time
    JEL: E12 B41
    Date: 2017–01
  3. By: Kanbur, Ravi
    Abstract: Assessing the specific contribution of intra-household inequality to standard measures of overall inequality and poverty is an underdeveloped area of research and policy analysis. However, intra-household inequality is clearly important. It is argued in this paper that neglecting intra-household inequality could lead to (i) an understatement of inequality and an overstatement of the impact of growth on poverty reduction; (ii) a mis-statement of the potential impact of minimum wage policies on poverty; (iii) mis-design of transfer policies to reduce inequality and poverty. Any discussion of inequality in the welfare state cannot afford to ignore intra-household inequality.
    Date: 2016–12
  4. By: Korkut Erturk
    Abstract: Drawing broadly on the literature on the political economy of the financial crisis, the paper looks at deregulation as a market driven process that culminated in a collective action failure. In the run up to the 2008 Financial Crisis strong competition and moral hazard went hand in hand and that raises a flag that needs explanation. The paper argues that opportunistic profit (rent) seeking was more the cause rather than the effect of moral hazard and regulation failure. Deregulation promised higher profitability partly because of better risk management made possible by advances in information technology and partly because financial institutions could take “tail-risks” the full cost of which they did not have to bear. The profits deregulation promised in turn incentivized financial firms to invest in tilting the political process to shape government policy. Because systemic risk cannot be fully privatized social insurance against it is inevitably a common pool (or open) resource, which means that there is an incentive for financial units to over-extract in the form of excessive risk taking in the absence of effective regulation. That explains why with deregulation market competition could culminate in excessive risk taking with mounting social costs. Using simple game theory the paper gives a stylized account of what sustained the deregulatory trend. In the course of deregulation, the regulator’s implicit threat of imposing discipline on financial institutions lost much of its credibility. That, combined with growing plutocracy go a long way in explaining why deregulation became a run-away market driven process that worsened the problem of moral hazard over time.
    Keywords: financial deregulation, collective action failure, excessive risk taking, moral hazard JEL Classification: D72, C70, G20, G18
    Date: 2016
  5. By: Balliester Reis, Thereza
    Abstract: This paper discusses the reasons for Brazil.s high policy real interest rates by considering two opposing views, the orthodox and heterodox approaches. While orthodox authors defend the position that bad domestic policies are the cause of the high interest rate, heterodox economists claim that the international financial system and orthodox policies influence the level of the policy rate in Brazil. The aim of this study is to assess whether the proposed arguments can be supported when comparing Brazilian real interest rates with other developing countries under the same monetary regime. The conclusion is that, although the orthodox and heterodox arguments are both intuitively plausible, when comparing stylized facts and testing the hypotheses econometrically neither is sufficient to elucidate the Brazilian case. The paper concludes by suggesting that there might be political causes of the high real interest rates in Brazil such as a politically influential rentier class.
    Keywords: Brazil,Central Bank,interest rate,monetary policy,developing countries
    JEL: E43 E58
    Date: 2016
  6. By: Alex Bryson (University College London, National Institute of Social and Economic Research and Institute for the Study of Labor); Harald Dale-Olsen (Institute for Social Research); Kristine Nergaard (Fafo)
    Abstract: Trade unions have transformed from male-dominated organisations rooted in manufacturing to majority-female organisations serving predominantly white-collar workers, often in the public sector. Adopting a comparative case study approach using nationally representative linked employer-employee surveys for Norway and Britain we examine whether, in keeping with a median voter model, the gender shift in union membership has resulted in differential wage returns to unionisation among men and women. In Britain, while only women receive a union wage premium, only men benefit from the increased bargaining power of their union as indicated by workplace union density. In Norway, on the other hand, although a union wage premium arises from individual union membership for men and women in male-dominated unions, in workplaces where the union is female-dominated women benefit more than men from the increased bargaining power of the union as union density rises. The findings suggest British unions continue to adopt a paternalistic attitude to representing their membership, in contrast to their more progressive counterparts in Norway.
    Keywords: Trade unions; Collective bargaining; Union density; Wage premium; Gender
    JEL: J28 J51 J81 L23
    Date: 2016–12–12
  7. By: Schneebaum, Alyssa; Rehm, Miriam; Mader, Katharina; Hollan, Katarina
    Abstract: This paper studies the gap in wealth between male and female single households using 2010 Household Finance and Consumption Survey data for eight European countries. In the raw data, a large gap emerges at the upper end of the unconditional distribution. While OLS estimates show no difference in average net wealth levels, quantile regressions at the 95th percentile yield mixed evidence for the gender wealth gap in different specifications. Labour market characteristics and participation in asset and debt categories largely explain the differences between male and female single households. We show that the gender gap in net wealth is driven by gender gaps in gross wealth and its components, but is attenuated in four countries by gender gaps in (collateralized) debt. In the full specification, the unexplained gap in gross wealth amounts to 27% in Slovakia, 33% in France, 44% in Austria, 45% in Germany, and 48% in Greece. A robustness check using person-level pension wealth confirms the presence of a gender gap for the full population. (authors' abstract)
    Keywords: Gender; Wealth; Wealth Gap; Distribution
    Date: 2016–09
  8. By: Dacuycuy, Connie B.
    Abstract: This paper is one of the few studies that systematically analyze housework in the Philippines. It seeks to understand how wage and attitudes to work and family life affect the time devoted to housework. Based on different specifications and estimators, our findings indicate that the respondent’s own wage is not a significant predictor of his or her housework hours, but it is a significant predictor of the spouse’s time devoted to nonmarket production. We find that the husband’s housework hours are positively affected by the female respondent’s wage while the wife’s housework hours are negatively affected by the male respondent’s wage. We turn to the Philippine context to explain these results and find the combination of egalitarian society and gender inequality in the labor market as plausible explanations. Results also show that both wage and attitudes have direct effects on the wife’s housework time but that some of the effects of wage are mediated by the respondent’s attitudes toward gender roles.
    Keywords: Philippines, housework, wage, specialization, instrumental variable technique
    Date: 2016

This nep-hme issue is ©2017 by Carlo D’Ippoliti. 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.