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on Regulation |
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Issue of 2005‒04‒24
seven papers chosen by Christian Calmes Université du Québec en Outaouais, Canada |
| By: | Bent E. Sørensen (Department of Economics, University of Houston); Yuliya Demyanyk (Department of Economics, University of Houston); Charlotte Ostergaard (Norwegian School of Management and Norges Bank) |
| Abstract: | We estimate the effects of deregulation of U.S. banking restrictions on the amount of interstate personal income insurance during the period 1970–2001. Interstate income insurance occurs when personal income reacts less than one-to-one to state-specific shocks to output. We find that income insurance improved after banking deregulation, and that this effect is larger in states where small businesses are more important. We further show that the impact of deregulation is stronger for proprietors’ income than for wage income. Our explanation of this result centers on the role of banks as a prime source of small business finance and on the close intertwining of the personal and busi- ness finances of small business owners. Our analysis casts light on the real effects of bank deregulation, on the insurance function of banks, and on the integration of bank markets. |
| Keywords: | Financial deregulation, integration of bank markets, interstate risk shar-ing, small business finance. |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:hou:wpaper:2005-03&r=reg |
| By: | Greg Caldwell |
| Abstract: | The author develops a theoretical model of bank closure. The regulatory decision about bank failure consists of two parts: whether to close and how to close. Assuming that the closure decision is credible, the welfare implications of two resolution regimes are considered. In one case, a meta-regulator supervises, closes, and resolves failed banks using an ex post efficient criterion. In the other case, a supervisor closes the bank while a deposit insurer resolves the closure on the basis of least cost. The bank chooses the riskiness of its loan portfolio in response to the announced policy. The supervisor can limit risk-shifting incentives of banks ex ante by raising capital requirements. The cost of this decision is a misallocation of economic resources, since some welfare-enhancing projects are abandoned. Market discipline is determined both exogenously, by the level of uninsured depositors, and endogeneously, by the regime and capital requirements chosen. Least costly resolution weakly dominates an ex post efficient resolution decision when market discipline is present. Neither mechanism outperforms when it is reliant on capital regulation in the absence of market discipline. |
| Keywords: | Financial Institutions |
| JEL: | G21 G28 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:05-11&r=reg |
| By: | Michael Finus (University of Hagen); Bianca Rundshagen (University of Hagen) |
| Abstract: | We analyze the formation of self-enforcing international environmental agreements under the assumption that countries announce their participation either simultaneously or sequentially. It is shown that a sequential formation process opens up possibilities for strategic behavior of countries that may lead to inferior outcomes in terms of global abatement and welfare. We then analyze whether and under which conditions a regulator like an international organization, even without enforcement power, can improve upon globally suboptimal outcomes through coordination and moderation, given that recommendations must be Pareto-improving to all parties. |
| Keywords: | International environmental agreements, Timing of participation decision, Coalition theory, Role of international regulator |
| JEL: | C72 D70 H41 Q50 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2005.45&r=reg |
| By: | Bernard Sinclair-Desgagné (HEC Montréal); Maia David (UMR INRA-INAPG Économie publique) |
| Abstract: | This paper re-examines environmental regulation, under the assumption that pollution abatement technologies and services are provided by an imperfectly competitive environment industry. It is shown that each regulatory instrument (emission taxes and quotas; design standards; and voluntary agreements) has a specific impact on the price-elasticity of the polluters’ demand for abatement services, hence on the market power of the eco-industry and the resulting cost of abatement. This implies that the optimal pollution tax will be higher than the marginal social cost of pollution, while a voluntary approach to pollution abatement may fail unless the eco-industry itself is willing to participate. |
| Keywords: | Pollution regulation, End-of-pipe pollution abatement, Environment industry |
| JEL: | H23 L13 Q58 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2005.56&r=reg |
| By: | Juan J. Dolado (Universidad Carlos III de Madrid, CEPR and IZA Bonn); Marcel Jansen (Universidad Carlos III de Madrid and IZA Bonn); Juan F. Jimeno (Banco de España, CEPR and IZA Bonn) |
| Abstract: | In many countries, Employment Protection Legislation (EPL) establishes different regulations for certain groups of workers who face more disadvantages in the labor market (young workers, women, unskilled workers, etc.) with the aim of improving their employability. Wellknown examples are the introduction of atypical employment contracts (e.g. temporary and determined-duration contracts) which ease firing restrictions for some, but not all, workers. This paper discusses the effects of EPL varying among workers of different skills on the level and composition of unemployment, job flows, productivity and welfare. By using an extension of Mortensen-Pissarides’ (1994) search model where heterogeneous workers compete for the same jobs, we are able to identify several key channels through which changing firing costs for some groups of workers affects hiring and firing of all workers and, hence, may have a different impact on aggregate labor market variables than reducing firing costs across the board. Some analytical and simulation results also show that these effects of differentiated firing costs by workers’ skills may be different depending upon the initial state of the labor market. |
| Keywords: | firing costs, unemployment, matching |
| JEL: | J64 J63 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1564&r=reg |
| By: | Francesco Sindico (Universitat Jaume I) |
| Abstract: | USA, Canada and Argentina have challenged before the World Trade Organisation the European Communities’ (EC) denial of Genetically Modified (GM) product imports, which took place from 1998 to 2004 . Against this background, the goal of this paper is twofold. Firstly, we will determine which WTO provisions would have been violated by the EC. Secondly, we will highlight the dispute’s most important legal issues in order to see to what extent the dispute might influence the ongoing trade and environment debate. The paper concludes that the role of the precautionary principle in the application of the EC legislation is one of the dispute’s main issues. Furthermore, the Panel findings on the legal nature of the precautionary principle, and on its relevance for the interpretation of WTO provisions, will finally determine the influence of the GMO dispute on the trade and environment debate. |
| Keywords: | GMO, WTO, Trade, Environment |
| JEL: | Q00 F10 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2005.11&r=reg |
| By: | Judith Hellerstein (University of Maryland); David Neumark (Public Policy Institute of California and IZA Bonn) |
| Abstract: | Wage gaps between individuals of difference races, sexes, and ethnicities have been documented and replicated extensively, and have generated a long history in labor economics research of empirical tests for labor market discrimination. The most widely-used approach to test for labor market discrimination is based on wage regressions estimated at the level of individual workers, with the estimate of discrimination inferred from the residual race, sex, or ethnic group differential in wages that remains unexplained after including a wide array of proxies for productivity. What is absent from the residual wage approach - and in our view leaves the approach vulnerable to being regarded as uninformative regarding discrimination - is any directly observable measure of productivity with which to adjust differentials in wages in trying to infer whether a particular group suffers from discrimination. The ideal solution would be individual-level productivity data that can be compared with wages. Any of the variables that differ across groups and are unobserved in the residual wage regression approach should affect wages and productivity equally, and hence not bias the test. However, such data are extremely rare, in large part because individual productivity is often unobservable and seldom measured. This chapter focuses on the use of matched employer-employee data sets to carry out a version of this ideal test, but at the establishment level. When these data sets permit the measurement of the demographic characteristics of establishments' workforces, as well as the estimation of production functions, they can be used to infer productivity differentials between workers in different groups. Comparisons of these productivity differentials with wage differentials then provide versions of the ideal test for discrimination at the establishment level. In addition to providing tests of discrimination, matched employer-employee data sets have proven useful in studying other questions that arise in the economics of discrimination, including measuring labor market segregation and assessing its consequences, and examining hypotheses or predictions that are central to economic models of discrimination. |
| Keywords: | labor market discrimination, matched employer-employee data |
| JEL: | J71 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1555&r=reg |