nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2018‒02‒26
nineteen papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. An Armington-Leontief Model By Ferran Sancho
  2. Kaldor and Piketty’s Facts: The Rise of Monopoly Power in the United States By Gauti B. Eggertsson; Jacob A. Robbins; Ella Getz Wold
  3. Risks and challenges of complex financial isntruments: an analysis of SSM banks By Rosario Roca; Francesco Potente; Luca Giulio Ciavoliello; Alessandro Conciarelli; Giovanni Diprizio; Lanfranco Lodi; Roberto Mosca; Tommaso Perez; Jacopo Raponi; Emiliano Sabatini; Antonio Schifino
  4. Economic Pluralism in the Study of Wage Discrimination: A Note By Drydakis, Nick
  5. Gender and inequality: austerity and alternatives By Perrons, Diane
  6. Kinetic Theory for Finance Brownian Motion from Microscopic Dynamics By Kiyoshi Kanazawa; Takumi Sueshige; Hideki Takayasu; Misako Takayasu
  7. Successful Transition to a Market Economy in Vietnam: An Interpretation from Organizational Ecology Theory By Tran, Hien Thu; Santarelli, Enrico
  8. Structural change and female participation in recent economic growth: A multisectoral analysis for the Spanish economy. By Rosa Duarte; Cristina Sarasa; Mònia Serrano
  9. Uninvadable social behaviors and preferences in group-structured populations By Alger, Ingela; Lehmann, Laurent; Weibull, Jörgen W.
  10. The Micro-Geography of Academic Research:How Distinctive is Economics? By John Gibson
  11. An Epidemiological Model of Crisis Spread Across Sectors in The United States By Eva (E.F.) Janssens; Robin (R.) Lumsdaine; Sebastiaan (S.H.L.C.G.) Vermeulen
  12. Intergenerational Health Mobility in the US By Timothy Halliday; Bhashkar Mazumder; Ashley Wong
  13. The intergenerational transmission of gender role attitudes: Evidence from immigrant mothers-in-law By Bredtmann, Julia; Höckel, Lisa Sofie; Otten, Sebastian
  14. From point to point: estimating regional exports from the bottom-up by applying a gravity model on individual firms By Moritz Lennert
  15. Political Change and Informality: Evidence from the Arab Spring By Elsayed, Ahmed; Wahba, Jackline
  16. The Gender Earnings Gap in the Gig Economy: Evidence from over a Million Rideshare Drivers By Cody Cook; Rebecca Diamond; Jonathan Hall; John List; Paul Oyer
  17. The "End of Men" and Rise of Women in the High-Skilled Labor Market By Guido Matias Cortes; Nir Jaimovich; Henry E. Siu
  18. Contemporary of every age: Gaetano Filangieri between public happiness and institutional economics By Balzano, Maria Silvia; Vecchione, Gaetano; Zamagni, Vera
  19. Does Labor Market Tightness Affect Ethnic Discrimination in Hiring? By Carlsson, Magnus; Fumarco, Luca; Rooth, Dan-Olof

  1. By: Ferran Sancho
    Abstract: We develop a novel linear Leontief model with an Armington flavor. We show (1) that the standard linear model is a special case of this new model and (2) that this model allows the computation of multiplier effects with no external output bias. We also provide (3) a mathematical proof of the solvability of the model and the non-negativity of the newly derived multiplier matrix that results from the model's equilibrium solution.
    Keywords: Armington principle; extended linear equilibrium model; technological productivity.
    JEL: C62 C67 D57
    Date: 2018–02–23
  2. By: Gauti B. Eggertsson; Jacob A. Robbins; Ella Getz Wold
    Abstract: The macroeconomic data of the last thirty years has overturned at least two of Kaldor’s famous stylized growth facts: constant interest rates, and a constant labor share. At the same time, the research of Piketty and others has introduced several new and surprising facts: an increase in the financial wealth-to-output ratio in the US, an increase in measured Tobin’s Q, and a divergence between the marginal and the average return on capital. In this paper, we argue that these trends can be explained by an increase in market power and pure profits in the US economy, i.e., the emergence of a non-zero-rent economy, along with forces that have led to a persistent long term decline in real interest rates. We make three parsimonious modifications to the standard neoclassical model to explain these trends. Using recent estimates of the increase in markups and the decrease in real interest rates, we show that our model can quantitatively match these new stylized macroeconomic facts.
    JEL: E3 E5 E6 O4
    Date: 2018–02
  3. By: Rosario Roca (Bank of Italy); Francesco Potente (Bank of Italy); Luca Giulio Ciavoliello (Bank of Italy); Alessandro Conciarelli (Bank of Italy); Giovanni Diprizio (Bank of Italy); Lanfranco Lodi (Bank of Italy); Roberto Mosca (Bank of Italy); Tommaso Perez (Bank of Italy); Jacopo Raponi (Bank of Italy); Emiliano Sabatini (Bank of Italy); Antonio Schifino (Bank of Italy)
    Abstract: We investigate the valuation risk affecting financial instruments classified as L2 and L3 for accounting purposes. These are instruments that are not directly traded in active markets and are often relatively complex, opaque and illiquid. There is a huge volume of L2 and L3 instruments in the balance sheets of SSM banks (around €6.8 trillion worth, considering both assets and liabilities). We argue that the complexity and opacity of these instruments create substantial room for discretionary accounting and prudential choices by financial intermediaries, which have incentives to use this discretion to their advantage. The current regulatory reporting standard is not sufficient to make a comprehensive assessment of the overall risks stemming from L2 and L3 instruments. We highlight that these instruments share some characteristics with NPLs (illiquidity, opacity), and argue that the risk they pose might also be comparable.
    Keywords: fair value accounting, level 2 instruments, L3 instruments, prudential regulation
    JEL: G21 G28 G32 M41
    Date: 2017–12
  4. By: Drydakis, Nick (Anglia Ruskin University)
    Abstract: Economic pluralism proposes that economists and social planners should consider alternative theories to establish a range of policy actions. Neoclassical, Feminist and Marxian theories evaluate well-grounded causes of wage discrimination. Racist attitudes, uncertainties regarding minority workers' productivity and power relations in lower-status sectors might generate discriminatory wages. Each cause deserves corresponding policy action. Given pluralism, wage discrimination might be reduced by implementing equality campaigns, creating low-cost tests to predict workers' productivity and abolishing power relations towards minority workers. Pluralism might be jeopardised if there is a limited desire to engage with less-dominant theoretical frameworks. Also, pluralism might be misled with rejection of dominant theories.
    Keywords: economic pluralism, schools of economic thought, wages, discrimination
    JEL: B4 B5 B54 J71
    Date: 2018–01
  5. By: Perrons, Diane
    Abstract: Gender equality policies aim to increase women’s participation in the market economy, but they do not always recognise that market societies reproduce inequalities at micro and macro levels. At the micro level, labour markets are gendered institutions, and at the macro level, austerity policies have inherent biases and negative impacts that fall disproportionately on women.
    JEL: N0
    Date: 2017–02–08
  6. By: Kiyoshi Kanazawa; Takumi Sueshige; Hideki Takayasu; Misako Takayasu
    Abstract: Recent technological development has enabled researchers to study social phenomena scientifically in detail and financial markets has particularly attracted physicists since the Brownian motion has played the key role as in physics. In our previous report (arXiv:1703.06739; to appear in Phys. Rev. Lett.), we have presented a microscopic model of trend-following high-frequency traders (HFTs) and its theoretical relation to the dynamics of financial Brownian motion, directly supported by a data analysis of tracking trajectories of individual HFTs in a financial market. Here we show the mathematical foundation for the HFT model paralleling to the traditional kinetic theory in statistical physics. We first derive the time-evolution equation for the phase-space distribution for the HFT model exactly, which corresponds to the Liouville equation in conventional analytical mechanics. By a systematic reduction of the Liouville equation for the HFT model, the Bogoliubov-Born-Green-Kirkwood-Yvon hierarchal equations are derived for financial Brownian motion. We then derive the Boltzmann-like and Langevin-like equations for the order-book and the price dynamics by making the assumption of molecular chaos. The qualitative behavior of the model is asymptotically studied by solving the Boltzmann-like and Langevin-like equations for the large number of HFTs, which is numerically validated through the Monte-Carlo simulation. Our kinetic description highlights the parallel mathematical structure between the financial Brownian motion and the physical Brownian motion.
    Date: 2018–02
  7. By: Tran, Hien Thu; Santarelli, Enrico
    Abstract: This paper investigates the rationales for the successful economic transition in Vietnam by applying organizational ecology theory. We claim that Vietnam could achieve a smooth transition because the country preserved the strong institutional capacity of the state in parallel with an instant market liberalization approach. Instead of transforming state-owned firms directly into private-owned firms, the economy produced a population of collectively owned and mixed-ownership enterprises that coexisted with state-owned firms to pave the way for the large-scale emergence of privately owned firms afterward. The mechanism underpinning this transition path lies in the evolution and interaction among three organizational forms during the various stages of the transition. Initially, the new private sector emerges and survives because of receiving “legitimacy spillovers” from the well-legitimized collective and mixed sector that shares some “identity overlap”. Overtime, as the private sector accumulates its constitutive legitimacy it competes with and challenges the existence of the old state and collective sector. Finally, the Schumpeterian “creative destruction” process replaces the old sector with the new dominant sector. Empirically, we test this mechanism using the census data of firms operating in Vietnam during 2000-2010, a period following the “doimoi” policy in 1986 that officially recognized private firms in the constitution and included them in the government’s annual statistical coverage. We apply Blundell and Bond’s generalized method of moments (GMM) estimation technique and Cox’s proportional hazard model to study the interaction effects of economic sectors in terms of profitability and survival respectively.
    Keywords: ecology theory,ecological process,ownership type,organizational form,economic sector,transition country,Vietnam
    JEL: L2 O2 O5
    Date: 2018
  8. By: Rosa Duarte (Universidad de Zaragoza); Cristina Sarasa (Universidad de Zaragoza); Mònia Serrano (Universitat de Barcelona)
    Abstract: Economic growth has different impacts on gender gaps. Despite that the incorporation of women into the labour market drove towards a convergence with male participation in recent decades, a notable gender pay gap still persists standing at around 15% on average in the European Union. In this context, this paper evaluates the impact of economic growth patterns on the evolution of female employment and gender pay gaps. As a case study, we examine Spanish economic growth from 1980 to 2007 and the influences on the size, composition (by skill), and distribution (by sector) of female and male employment, as well as the consequences for gender gaps. First, sectorial feminization, direct discrimination, and structural change factors are identified and evaluated as sources of change in gender pay gap. Second, we explore the influence of demand, technology, and intensity factors on the evolution of employment in Spain, combining gender, skill, sectorial, and temporal perspectives.
    Keywords: Female participation, Gender pay gap, Structural change, Structural decomposition analysis, Input-output analysis.
    JEL: A30 B54 C67 E24
    Date: 2018
  9. By: Alger, Ingela; Lehmann, Laurent; Weibull, Jörgen W.
    Abstract: Humans have evolved in populations structured in groups that extended beyond the nuclear family. Individuals interacted with each other within these groups and there was limited migration and sometimes conáicts between these groups. Suppose that during this evolution, individuals transmitted their behaviors or preferences to their (genetic or cultural) o§spring, and that material outcomes resulting from the interaction determined which parents were more successful than others in producing (genetic or cultural) o§spring. Should one then expect pure material self-interest to prevail? Some degree of altruism, spite, inequity aversion or morality? By building on established models in population biology we analyze the role that di§erent aspects of population structureó such as group size, migration rates, probability of group conáicts, cultural loyalty towards parentsó play in shaping behaviors and preferences which, once established, cannot be displaced by any other preference. In particular, we establish that uninvadable preferences under limited migration between groups will consist of a materially self-interested, a moral, and an other-regarding component, and we show how the strength of each component depends on population structure.
    Keywords: Strategic interactions; Preference evolution; Evolution by natural selection; Cultural transmission; Pro-sociality; Altruism; Morality; Spite
    JEL: A12 A13 B52 C73 D01 D63 D64 D91
    Date: 2018–02
  10. By: John Gibson (University of Waikato)
    Abstract: This study examines micro-geographic clustering of academic research, focusing on economics. Three U.S. ZIP codes are associated with articles in the top five economics journals that garnered one-half of all citations to the articles published in these journals over 2000 to 2015. This remarkable degree of micro-geographic concentration is not apparent in any other discipline. Outside of economics the top three ZIP codes are associated with just 12% of citations to their top five journals, on average. Concentration of citations to economics articles whose authors are associated with a few key ZIP codes has strengthened over time, even as it has weakened for other disciplines. This distinctively high level of spatial concentration in economics research is not consistent with hypotheses about disciplinary differences stemming from market forces or from reliance on research infrastructure located in specific locations.
    Keywords: citations; economics; micro-geography; scientometrics; spatial concentration
    JEL: A12 R12
    Date: 2018–02–21
  11. By: Eva (E.F.) Janssens (Tinbergen Institute; Erasmus University of Rotterdam); Robin (R.) Lumsdaine (American University, Erasmus University of Rotterdam); Sebastiaan (S.H.L.C.G.) Vermeulen (Tinbergen Institute; Erasmus University of Rotterdam)
    Abstract: This paper develops a discrete-time epidemiological model for the spread of crises across sectors in the United States for the period 1952-2015. It is the first to use an epidemiological approach with macroeconomic (Flow of Funds) data. An extension of the usual one-period Markov model to a two-period setting incorporates the concept of downturns that may either precede a crisis or from which the sector may recover and avert a crisis. The results indicate that the nonfinancial business and private depository institutions & money market mutual funds sectors are highly contagious while the monetary authority is the least contagious.
    Keywords: Flow of Funds; economic downturns; Susceptible-Infected-Removed(SIR); contagion; epidemiology
    JEL: E37 E32 E01 G01
    Date: 2018–01–26
  12. By: Timothy Halliday (University of Hawaii); Bhashkar Mazumder (Federal Reserve Bank of Chicago); Ashley Wong (Northwestern University)
    Abstract: Studies of intergenerational mobility have largely ignored health despite the central importance of health to welfare. We present the first estimates of intergenerational health mobility in the US by using repeated measures of self-reported health status (SRH) during adulthood from the PSID. Our main finding is that there is substantially greater health mobility than income mobility in the US. A possible explanation is that social institutions and policies are more effective at disrupting intergenerational health transmission than income transmission. We further show that health and income each capture a distinct dimension of social mobility. We also characterize heterogeneity in health mobility by child gender, parent gender, race, education, geography and health insurance coverage in childhood. We find some important differences in the patterns of health mobility compared with income mobility and also find some evidence that there has been a notable decline in health mobility for more recent cohorts. We use a rich set of background characteristics to highlight potential mechanisms leading to intergenerational health persistence.
    Keywords: Health, mobility, Inequality, health insurance, intergenerational mobility, intergenerational transmission
    JEL: I10 I14 J62 I13
    Date: 2018–02
  13. By: Bredtmann, Julia; Höckel, Lisa Sofie; Otten, Sebastian
    Abstract: The recent literature on intergenerational mobility has shown that attitudes and preferences are an important pathway for the intergenerational transmission of economic outcomes. We contribute to this literature by documenting that intergenerationally transmitted gender role attitudes also explain economic outcomes of individuals other than immediate relatives. Focusing on daughters-in-law, we examine whether the gender role attitudes of foreign-born mothers-in-law affect the fertility and labor supply decisions of native US women. Our results reveal that women's labor market participation is significantly positively related to the gender role attitudes in her mother-in-law's country of origin. Employing a new identification strategy, we show that this finding is due to the intergenerational transmission of gender roles rather than other unobservable characteristics of the mother-in-law's country of origin. These results suggest that the cultural values held in their source country do not only influence the behavior of immigrants and their descendants, but can also affect the labor force participation of native women. We do, however, not find any evidence that intergenerationally transmitted gender role attitudes affect the fertility behavior of native women.
    Keywords: intergenerational transmission,gender role attitudes,culture,immigration,fertility,female labor force participation
    JEL: J13 J15 J22 D1
    Date: 2017
  14. By: Moritz Lennert
    Abstract: Not much data exists on regional, intra-national exports. Differentestimation methods exist of which some use proxies such as transportflows and others are modeling results, based either on the location-quotient or on gravity. Some of these models do not take into accountdistance, or if they do they generally use aggregated spatial data, leadingto biases. This paper presents an approach that applies a bottom-up point-by-point gravity model on individual firms, using national input-outputtables as input for correctly constraining the model. The model is applied tothe case of Belgian NUTS 3 regions.
    Keywords: intra-national trade; distance-based methods; input-output model; gravity model
  15. By: Elsayed, Ahmed (IZA); Wahba, Jackline (University of Southampton)
    Abstract: This paper examines informality during the political and economic turmoil that accompanied the Arab Spring revolution in Egypt. The paper focuses on unprotected employment and the extent to which it changed by educational level right after the January Uprising of 2011. We find that over time and particularly after the revolution, informal employment has increased for both high- and low-educated workers however, through different paths: high educated were more likely to be stuck in informality, whilst low-educated formal workers were more likely to lose their contracts. The results suggest a high level of rigidity in the Egyptian labor market even in the wake of the Arab Spring.
    Keywords: informal employment, job contracts, Arab Spring
    JEL: J21 J23 J24 J31 O17
    Date: 2017–12
  16. By: Cody Cook; Rebecca Diamond; Jonathan Hall; John List; Paul Oyer
    Abstract: The growth of the "gig" economy generates worker flexibility that, some have speculated, will favor women. We explore one facet of the gig economy by examining labor supply choices and earnings among more than a million rideshare drivers on Uber in the U.S. Perhaps most surprisingly, we find that there is a roughly 7% gender earnings gap among drivers. The uniqueness of our data - knowing exactly the production and compensation functions - permits us to completely unpack the underlying determinants of the gender earnings gap. We find that the entire gender gap is caused by three factors: experience on the platform (learning-by-doing), preferences over where/when to work, and preferences for driving speed. This suggests that, as the gig economy grows and brings more flexibility in employment, women's relatively high opportunity cost of non-paid-work time and gender-based preference differences can perpetuate a gender earnings gap even in the absence of discrimination.
    Date: 2018
  17. By: Guido Matias Cortes; Nir Jaimovich; Henry E. Siu
    Abstract: We document a new finding regarding changes in labor market outcomes for men and women in the US. Since 1980, conditional on being a college-educated man, the probability of working in a cognitive/high-wage occupation has fallen. This contrasts starkly with the experience for college-educated women: their probability of working in these occupations rose, despite a much larger increase in the supply of educated women relative to men. We consider these facts in light of a general neoclassical model of the labor market. One key channel capable of rationalizing these findings is a greater increase in the demand for female-oriented skills in cognitive/high-wage occupations relative to other occupations. Using occupation-level data, we find evidence that this relative increase in the demand for female skills is due to an increasing importance of social skills within such occupations. Evidence from both male and female wages is also indicative of an increase in the demand for social skills.
    JEL: E24 J16 J23
    Date: 2018–02
  18. By: Balzano, Maria Silvia; Vecchione, Gaetano; Zamagni, Vera
    Abstract: In the decades around the turn of the eighteenth century, Naples was capital of the Kingdom of the Two Sicilies and Europe’s third most populous city. From the early decades of the eighteenth to the end of the nineteenth century, the city spawned a school of intellectuals that, though predominantly juridical in cast, nevertheless displayed a surprisingly substantial openness to a new approach to the social sciences, which had developed above all in France, heavily influenced by the natural sciences and the experimental method. In harmony with Enlightenment thought, Gaetano Filangieri was the precursor, two centuries back, of the principles of indissoluble interaction between formal and informal institutions and economic development, between governance and social feedback, that are pillars of today’s school of institutional economics. His writings anticipated, in a number of respects, conceptual approaches adopted by later scholars. The present paper offers an institutional focus on his work, referring above all to Douglass North and his treatment of the role of the Glorious Revolution.
    Keywords: Gaetano Filangieri; Kingdom of the Two Sicilies; Institutional economics
    JEL: B2 B25 B31
    Date: 2018–01–10
  19. By: Carlsson, Magnus (Linnaeus University); Fumarco, Luca (Linnaeus University); Rooth, Dan-Olof (Stockholm University)
    Abstract: Several studies using observational data suggest that ethnic discrimination increases in downturns of the economy. We investigate whether ethnic discrimination depends on labor market tightness using data from correspondence studies. We utilize three correspondence studies of the Swedish labor market and two different measures of labor market tightness. These two measures produce qualitatively similar results, and, opposite to the observational studies, suggests that ethnic discrimination in hiring decreases in downturns of the economy.
    Keywords: hiring discrimination, ethnic discrimination, labor market tightness, the business cycle, correspondence studies, field experiments, ranking models, screening models
    JEL: C93 J15 J21 J71
    Date: 2018–01

This nep-hme issue is ©2018 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.