nep-pbe New Economics Papers
on Public Economics
Issue of 2011‒06‒04
eight papers chosen by
Keunjae Lee
Pusan National University

  1. Selection of Public Servants into Politics By Thomas Braendle; Alois Stutzer
  2. Some Determinants of Intermediate Local Governments' Spending Efficiency: The Case of French Départements By Maria Nieswand; Stefan Seifert
  3. Trust, Trustworthiness, Relational Goods and Social Capital: A Cross-Country Economic Analysis By Paul Downward; Tim Pawlowski; Simona Rasciute
  4. Funding in Public Sector Pension Plans - International Evidence By Eduard Ponds; Clara Severinson; Juan Yermo
  5. Long-Term Fiscal Effects of Public Pension Reform in Norway — A Generational Accounting Analysis By Christian Hagist; Bernd Raffelhüschen; Alf Erling Risa; Erling Vårdal
  6. Definition and Management of the Third Sector in Japan (Japanese) By USHIRO Fusao
  7. Product Innovation and Economic Growth, Part II: The role of intermediate goods for product innovation (Japanese) By YOSHIKAWA Hiroshi; ANDO Koichi; MIYAKAWA Shuko
  8. Contribution of Local Agglomeration Economies to Productive Efficiency: Stochastic Frontier Estimation with Establishment-level Data on Japanese Manufactures (Japanese) By NAKAMURA Ryohei

  1. By: Thomas Braendle; Alois Stutzer (University of Basel)
    Keywords: Political selection, public servants, incompatibility, political representation, corruption, government consumption
    JEL: D72 K39
    Date: 2011
  2. By: Maria Nieswand; Stefan Seifert
    Abstract: Efforts undertaken by France to restructure the allocation of governmental competencies increased the importance of subnational governments by transferring additional tasks. This paper analyzes the efficiency of public spending on an intermediate government level for a sample of 96 départements in metropolitan France in 2008. Spending efficiency is measured using Data Envelopment Analysis (DEA). Results indicate significant room for improvements and detect spending inefficiencies averaging between 10 and 22 percent, depending on model specification. To explain efficiency, a bootstrapped truncated regression, following Simar and Wilson (2007), is applied. The second-stage regression shows that efficiency is also determined by exogenous factors and identifies the distance to the national capital, inhabitants' income and the share of inhabitants of an age over 65 as significant determinants of efficiency.
    Keywords: Intermediate government spending efficiency, nonparametric efficiency analysis, bootstrapped truncated regression
    JEL: C14 H11 H72
    Date: 2011
  3. By: Paul Downward (Loughborough University); Tim Pawlowski (German Sport University Cologne); Simona Rasciute (Loughborough University)
    Abstract: For a sample of 34 countries, this paper examines the impact that relational goods have on trust and, more specifically, trustworthiness; that is the degree of trust placed in others. Relational goods emanate from social interactions, which can be viewed as underpinning the development of social capital in the sense of helping to form trust in society. The relational goods examined comprise both informal activities such as meeting with family and friends, as well as more formal but voluntary association connected with participation in cultural, political, civic, sport and religious organisations. As the measure of trust comprises an ordered variable, a variety of ordered estimators are applied to the data, including attempts to account for the country-specific grouping of observation and, as a consequence, unobserved heterogeneity. The results suggest that whilst informal relational activities tend to generate trustworthiness, consistent with the concept of ‘thick’ trust, along with cultural and civic association and frequent political association, there is less evidence that sports does. In addition, the results suggest that religious association can actually reduce trustworthiness along with less frequent political association. Therefore, the results suggest, that it is the type and frequency of associational activity that contributes to the development of trustworthiness, rather than its existence per se.
    Keywords: Trust, relational goods, social capital
    JEL: D60 I31 C25
    Date: 2011–05
  4. By: Eduard Ponds; Clara Severinson; Juan Yermo
    Abstract: Most countries have separate pension plan for public sector employees. The future fiscal burden of these plans can be substantial as the government usually is the largest employer, pension promises in the public sector tend to be relatively generous, and future payments have to be paid out directly from government revenues (pay-as-you-go) or by funded plans (pension funds) which tend to be underfunded. The valuation and disclosure of these promises in some countries lacks transparency, which may be hiding potentially huge fiscal liabilities that are being passed on to future generations of workers. In order to arrive at a fair comparison between countries regarding the fiscal burden of their DB public sector pension plans, this paper gathers more evidence on public sector pension plans regarding the type of pension promise and quantifies the future tax burden related to these pension promises. The reported liabilities are recalculated using both a fair value approach (local market discount rates) and a common, fixed discount rate across all countries which reflects projected growth in national income. We also estimate for a number of plans from a sample of OECD countries the size of the net unfunded liabilities in fair value terms as of the end of 2008. This fiscal burden can also be interpreted as the implicit pension debt in fair value terms.
    JEL: H55 H6 H7 H75 H83
    Date: 2011–05
  5. By: Christian Hagist (Research Center for Generational Contracts, University of Freiburg); Bernd Raffelhüschen (Research Center for Generational Contracts, University of Freiburg); Alf Erling Risa; Erling Vårdal
    Abstract: Generational Accounts (GAs) measure the fiscal sustainability of the public sector. We ask whether the contributions from the Government Pension Fund and remaining oil and gas wealth in the ground, together with the pension reform taking effect in 2011, are sufficiently large to secure generational balance in Norway. Our results show that the pension reform has a substantial effect, and contributes as much to generational balance as the total petroleum wealth. Neither increased economic growth per se nor increased fertility contribute to improve the GAs. The structural characteristics of higher employment and lower transfer payments typical for cyclical upturns, improve the GAs substantially. Optimistic assumptions regarding these structural characteristics do not remove the need for further reforms to obtain fiscal sustainability of the Norwegian public sector.
    Keywords: Generational Accounting, Norway, Fiscal Policy, Intergenerational redistribution
    JEL: H50 J10
    Date: 2010–08
  6. By: USHIRO Fusao
    Abstract: While Japan has taken liberal steps in reforming its big government welfare state, there has been a significant rise in the type of civil activities geared toward problem solving within Japanese society. However, in order to envision new relationships—i.e., the demarcation of roles and cooperation—between and among the government, corporate, and third sectors as an extension of these developments, it is necessary to define the overall picture of the third sector that embraces various types of entities—public corporations, specified nonprofit organizations, cooperative associations, social enterprises, and so forth—and to understand the status of their management. Public corporations, which altogether form a very complex portfolio of organizations today, have proliferated and diverged over the years under the now-defunct <i>shumu kancho</i> (competent ministry) system that allowed for the formation of public corporations at the discretion of the respective competent government ministries.<br /><br />This paper discusses how Japan should define its third sector, using as a reference the American approach (of defining the third sector as a nonprofit sector) and the European approach (of defining the third sector as a group of social economy organizations).<br /><br />We conducted a questionnaire survey, based upon which to examine the organizational characteristics and management of third-sector organizations in Japan, and this paper presents some ideas derived from the survey findings. Key findings are as follows: (1) Japanese third-sector organizations have a fairly organized and solid management system, (2) there remain considerable problems regarding transparency, (3) the conventional image of third sector organizations as being extremely dependent on the government should be reexamined because only 29.5% of their income is generated by public funds and the breakdown of income by nature shows that voluntarily-offered funds ("voluntary income") account for only 22.3% with the remaining 77.8% coming from their operations ("earned income"), and (4) 30% to 50% of the third-sector organizations seek to grow and develop by boosting their income.
    Date: 2011–03
  7. By: YOSHIKAWA Hiroshi; ANDO Koichi; MIYAKAWA Shuko
    Abstract: Technological progress, especially product innovation, plays an important part in generating economic growth under the conditions of low fertility and an aging population. Technological progress is typically measured by growth accounting, that is, total factor productivity (TFP). The analysis of IT products measured by TFP is certainly important, but it does not provide the whole picture regarding the contribution of IT products to economic growth. <br /><br />Based on our previous paper, this paper further explains the relationship between product innovation and TFP theoretically. To capture the wider picture of product innovation, Part II examines solar power and smart phones, both of which have shown remarkable demand-driven growth recently. Also, we discuss the role of intermediate goods for product innovation in a broad sense.
    Date: 2011–03
  8. By: NAKAMURA Ryohei
    Abstract: There are two types of local industrial agglomeration of economic activity. One is the clustering of like-kind businesses—small and medium-sized companies, plants, and other types of establishments belonging to the same industrial group—in a specific geographic area. The other is the agglomeration of individuals, typically, employees of a large-scale company. The former type of agglomeration relates to localization economies, whereas the latter relates to scale economies arising from the size of operations.<br /><br />It is usually difficult to distinguish the effects of these two types of agglomeration when we use aggregated data, such as those aggregated at the regional level. Also, such regionally aggregated data do not allow us to capture differences in the extent to which each establishment benefits from agglomeration. Most of the previous studies on agglomeration economies and productivity have failed to properly discern the effects of agglomeration at the establishment level.<br /><br />This study focuses on the effects of local agglomeration on productivity, taking into account the spatial distribution of the size of establishments within a certain geographic area. The data set used in this study is comprised of four-digit establishment-level data on Japanese manufactures for 2005. The use of establishment-level data in estimating a frontier production function enables us to identify various agglomeration effects. In this study, we focus on traditional industries and high-tech industries, both of which tend to benefit from localization economies. The estimation model is based upon the stochastic frontier production function approach, in which we examine what type of local agglomeration contributes to the improvement of productive efficiency. The estimation results point to the effectiveness of industrial cluster policy as a means to generate agglomeration economies.
    Date: 2011–04

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