nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2013‒11‒22
four papers chosen by
Karl Petrick
Western New England University

  1. "Hierarchy of Ideals in Market Interactions: An Application to the Labor Market" By Aurelie Charles
  2. Amerisclerosis? The Puzzle of Rising U.S. Unemployment Persistence By Coibion, Olivier; Gorodnichenko, Yuriy; Koustas, Dmitri
  3. Does Welfare Spending Crowd Out Charitable Activity? Evidence from Historical England under the Poor Laws By Nina Boberg-Fazlic; Paul Sharp
  4. Extreme wheather and civil war in Somalia: does drought fuel conflict trhough livestock price shocks?. By Maystadt, Jean-Francois; Ecker, Olivier; Mabiso, Arthur

  1. By: Aurelie Charles
    Abstract: This paper argues that a hierarchy of ideals exists in market interactions that sets the benchmark on the norm of fairness associated with these interactions, thus affecting pricing decisions associated with market exchange. As norms emerge, an ideal determines the criteria of optimal behavior and serves as a basis for market exchange. Norms homogenize the diversity of commodities in market interactions according to a hierarchy of norms and values. The paper then goes on to illustrate how this hierarchy of ideals works in the labor market, leading to inequality of access to jobs and wages between groups of individuals. Groups socially perceived to be diverging from the context-dependent dominant ideal are likely to suffer most in market interactions.
    Keywords: Market Exchange, Norms, Optimality, Labour Market
    JEL: B00 D1 E31 J31 J71 P00
    Date: 2013–11
  2. By: Coibion, Olivier (University of Texas at Austin); Gorodnichenko, Yuriy (University of California, Berkeley); Koustas, Dmitri (University of California, Berkeley)
    Abstract: The persistence of U.S. unemployment has risen with each of the last three recessions, raising the specter that future U.S. recessions might look more like the Eurosclerosis experience of the 1980s than traditional V-shaped recoveries of the past. In this paper, we revisit possible explanations for this rising persistence. First, we argue that financial shocks do not systematically lead to more persistent unemployment than monetary policy shocks, so these cannot explain the rising persistence of unemployment. Second, monetary and fiscal policies can account for only part of the evolving unemployment persistence. Therefore, we turn to a third class of explanations: propagation mechanisms. We focus on factors consistent with four other cyclical patterns which have evolved since the early 1980s: a rising cyclicality in long-term unemployment, lower regional convergence after downturns, rising cyclicality in disability claims, and missing disinflation. These factors include declining labor mobility, changing age structures, and the decline in trust among Americans. To determine how these factors affect unemployment persistence, this paper exploits regional variation in labor market outcomes across Western Europe and North America during 1970-1990, in contrast to most previous work focusing either on cross-country variation or regional variation within countries. The results suggest that only cultural factors can account for the rising persistence of unemployment in the U.S., but the evolution in mobility and demographics over time should have more than offset the effects of culture.
    Keywords: unemployment persistence, labor mobility, trust, demographics
    JEL: E24 E32 E52 J64 R11 R23
    Date: 2013–11
  3. By: Nina Boberg-Fazlic (University of Copenhagen); Paul Sharp (University of Copenhagen)
    Abstract: This paper examines the relationship between government spending and charitable activity. We present a novel way of testing the ‘crowding out hypothesis’, making use of the fact that welfare provision under the Old Poor Laws was decided on the parish level, thus giving the heterogeneity we need to test for the impact of different levels of welfare support within a single country. Using data on poor relief spending combined with data on charitable incomes by county for two years before and after 1800, we find a positive relationship: areas with more public provision also enjoyed higher levels of charitable income. These results are confirmed when instrumenting for Poor Law spending using the distance to London and historical migration to London, as well as when looking at first differences.
    Keywords: Charity, crowding out hypothesis, England, Poor Laws
    JEL: H5 I3 N3
    Date: 2013–11
  4. By: Maystadt, Jean-Francois; Ecker, Olivier; Mabiso, Arthur
    Abstract: Climate change leads to more frequent and more intense droughts in Somalia. In a global context, weather shocks have been found to perpetuate poverty and fuel civil conflict. By relating regional and temporal variations in violent conflict outbreaks with drought incidence and severity, we show that this causality is valid also for Somalia at the local level. We find that livestock price shocks drive drought-induced conflicts through reducing the opportunity costs of conflict participation. Our estimation results indicate that a temperature rise of around 3.2 degrees Celsius—corresponding to the median Intergovernmental Panel on Climate Change scenario for eastern Africa by the end of the century—would lower cattle prices by about 4 percent and, in turn, increase the incidence of violent conflict by about 58 percent. Hence climate change will further aggravate Somalia’s security challenges and calls for decisive action to strengthen both drought and conflict resilience, especially in pastoralist and agropastoralist livelihoods.
    Keywords: drought; conflict; civil war; livestock; prices; Somalia; Horn of Africa;
    Date: 2013

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