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on Regulation |
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Issue of 2006‒03‒11
eight papers chosen by Christian Calmes Universite du Quebec en Outaouais, Canada |
| By: | Andre van Stel; David Storey; Roy Thurik |
| Abstract: | This paper investigates the effect of business regulations on various measures of entrepreneurship. Using data for a sample of countries participating in the Global Entrepreneurship Monitor between 2002 and 2005, we estimate a two-equation model explaining the nascent and the actual entrepreneurship rate, while taking into account the interrelationship between the two variables. Various determinants of entrepreneurship reflecting the demand and supply side of entrepreneurship as well as business regulation measures are incorporated in the model. Data on various categories of business regulations are taken from the World Bank Doing Business data base. Our estimation results suggest that, while entry regulations only have a small and indirect impact on the actual entrepreneurship rate, the impact of labour market regulations is more important. We also find that the determinants of opportunity and necessity entrepreneur-ship are fundamentally different. |
| Keywords: | nascent entrepreneurship, young businesses, business regulations, Global Entrepreneurship Monitor, World Bank Doing Business |
| JEL: | K20 L51 M13 O57 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:esi:egpdis:2006-04&r=reg |
| By: | Yuriy Gorodnichenko (University of Michigan); Klara Sabirianova Peter (Georgia State University and IZA Bonn) |
| Abstract: | This study is the first to provide a systematic measure of bribery using micro-level data on reported earnings, household spending and asset holdings. We use the compensating differential framework and the estimated sectoral gap in reported earnings and expenditures to identify the size of unobserved (unofficial) compensation (i.e., bribes) of public sector employees. In the case of Ukraine, we find that public sector employees receive 24-32% less wages than their private sector counterparts. The gap is particularly large at the top of the wage distribution. At the same time, workers in both sectors have essentially identical level of consumer expenditures and asset holdings that unambiguously indicate the presence of nonreported compensation in the public sector. Using the conditions of labor market equilibrium, we develop an aggregate measure of bribery and find that the lower bound estimate of the extent of bribery in Ukraine is between 460 mln and 580 mln U.S. dollars (0.9-1.2% of Ukraine’s GDP in 2003). |
| Keywords: | wage, wage differentials, public sector, corruption, bribery, Ukraine |
| JEL: | J3 J4 O1 P2 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1987&r=reg |
| By: | Veronika Grimm; Gregor Zoettl |
| Abstract: | We analyze a market game where firms choose capacities under uncertainty about future market conditions and make output choices after uncertainty has unraveled. We show existence and uniqueness of equilibrium under imperfect competition and provide an intuitive characterization of equilibrium investment. We show that investment in oligopoly, in the first and second best solution can be unambiguously ranked, in particular investment incentives are highest in the First Best solution and lowest under imperfect competition. We finally demonstrate that intervention of a social planer only at the production stage leads to strategic uncertainty at the investment stage and moreover decreases total investment below the level obtained under imperfect competition. |
| Keywords: | Investment incentives, demand uncertainty, cost uncertainty, Cournot competition, First Best, Second Best, capacity obligations, spot market regulation |
| JEL: | D43 L13 D41 D42 D81 |
| Date: | 2006–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:kls:series:0023&r=reg |
| By: | Willem MOLLE |
| Abstract: | In the past he EU has taken up an ever more important role in mat ters of cohesion policy. The objectives and principles of EU coh esion policy have been given a strong constitutional basis. We de scribe the development of this EU constitutional frame in the fir st section. We then turn our attention to the systemic choice t he EU has made to put these constitutional elements into practice . To that end we discuss in some detail the objectives: we specif y the three dimensions of cohesion: economic, social and territor ial. Next we move into governance aspects; in other words the wa ys and means. As far as ways are concerned we specify how the EU delivers its cohesion policy. Particularly important in this re spect is the development of a system of multi level government in volving notably regional authorities but also other actors. The s econd point we deal with are the regulatory and financial means: in other words the choice of instruments. We find that on these two points the EU has made choices that are rather in line with theoretical prescriptions. We turn our attention next to the qu estion whether the EU can improve on the systemic choices made. I n this framework we deal with a few question that are now heavily debated. |
| Keywords: | EU cohesion policies, Constitution, Multi-level Governance |
| URL: | http://d.repec.org/n?u=RePEc:mil:wpdepa:2006-08&r=reg |
| By: | Kris James Mitchener |
| Abstract: | Drawing on the variation in financial distress across U.S. states during the Great Depression, this article suggests how bank supervision and regulation affected banking stability during the Great Depression. In response to well-organized interest groups and public concern over the bank failures of the 1920s, many U.S. states adopted supervisory and regulatory standards that undermined the stability of state banking systems in the 1930s. Those states that prohibited branch banking, had higher reserve requirements, granted their supervisors longer term lengths, or restricted the ability of supervisors to liquidate banks quickly experienced higher state bank suspension rates from 1929 to 1933. |
| JEL: | N2 E44 G21 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12074&r=reg |
| By: | Donald N. Dewees |
| Abstract: | Competitive electricity markets are artificial markets with extensive rules for all participants arising from the complex interconnections of the electricity network. Governments or regulatory agencies oversee the market design process and the operation and maintenance of the market, so market design is necessarily a political process. The conceptual design of the market must recognise the political forces that will operate on the market design process so that the political process will not thwart the intended outcome of the market as it has in some jurisdictions including Ontario. The limited ability of consumers to understand changes in the electricity sector in the short run poses a real constraint on what can be achieved politically. Letting the market set the price means that governments cannot ensure any particular future price level and both theory and experience tell us that prices may increase after restructuring (California, Ontario, Alberta). This makes it difficult to sell restructuring to consumers who will be interested in the price they pay and not much interested in abstractions like efficiency. Another challenge for electricity restructuring is that the starting points differ from one jurisdiction to another and the starting points matter. The problems are different if you begin with a crown monopoly than if you have investor-owned utilities; if expected prices are higher than recent prices rather than lower; if governments have been deeply involved in the electricity sector rather than distant from it; if the public has experience with stable electricity prices rather than fluctuating prices. Finally, the situation in neighbouring jurisdictions matters as well. Restructuring in a low-price jurisdiction surrounded by high prices will increase the prospect of price increases at home, while a high-price island is more likely to see its prices decline. If workable competition will be difficult to achieve at home, strong interties to neighbouring jurisdictions can improve competitive performance if the market is appropriately designed. Air pollution, like electricity, moves across borders, so one must assess and evaluate the pollution implications of competition and make any appropriate adjustments to the market design. |
| Keywords: | electricity restructuring, electric utilities, market design |
| JEL: | L94 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-205&r=reg |
| By: | Hodgkinson, Ann (University of Wollongong); Markey, Ray (Auckland University of Technology) |
| Abstract: | This paper tests the impact of the Workplace Relations Act 1996 (WRA) by looking at changes in the behaviour of a panel of workplaces in the Illawarra Region of NSW between 1996 and 2004. The results support the proposition that the major impact has been on the level of unionisation and union density in these workplaces. There was virtually no expansion in the use of enterprise bargaining or AWAs, although there was a small but significant increase in non-union agreement making. Rather than encourage the use of single jurisdictions to register awards and collective agreements, in the Illawarra at least, there was a strong trend to dual State and Federal jurisdictions. Thus the WRA has been relatively ineffective in achieving flexibility and decentralised employee relations goals but has resulted in a high level of decollectivisation. |
| Keywords: | Workplace Relations Act, Illawarra region, flexibility, decollectivisation |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:uow:depec1:wp05-30&r=reg |
| By: | Michel A. Robe; Eva-Maria Steiger; Pierre-Armand Michel |
| Abstract: | A popular view of limited liability in financial contracting is that it is the result of societal preferences against excessive penalties. The view of most financial economists is instead that limited liability emerged as an optimal institution when, in the absence of a clear limit on economic agents' liability, the development of some economic activities might have been thwarted. Viewing the institution from the perspective of optimal legal system design allows us to better understand the current debate on it. We present a broad history of penalties in financial contracts to highlight the interactions between technology, legal environments, purpose of the financial relationship, and contractual provisions. We show that harsh monetary and non-pecuniary penalties are not mere relics from a bygone era and, at the same time, that limited liability is far from a recent institution. We then discuss trade-offs associated with legal mandates of either unlimited or limited liability, both for the contracting parties and for the rest of Society. We identify two broad patterns. First, the toughness of liability rules and bankruptcy laws decreases as exogenous sources of uncertainty become relatively more important, and increases with the opportunity for moral hazard (related to diligence, risk taking, or deception). Second, bankruptcy laws become more lenient as the scope for labor specialization and the returns to human capital or entrepreneurship increase. |
| Keywords: | Limited Liability, Bankruptcy, Debt Bondage, Debtors' Prison, History |
| JEL: | G32 D82 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2006-013&r=reg |