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on Regulation |
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Issue of 2006‒09‒23
sixteen papers chosen by Christian Calmes Universite du Quebec en Outaouais, Canada |
| By: | Yuliya Demyanyk (Federal Reserve Bank of St. Louis); Charlotte Ostergaard (Norwegian School of Management and Norges Bank); Bent E. Sørensen (University of Houston and CEPR) |
| 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 other components of personal 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 business finances of small business owners. Our analysis casts light on the real effects of bank deregulation, on the risk sharing function of banks, and on the integration of bank markets. |
| Keywords: | Financial deregulation, integration of bank markets, interstate risk sharing, small business finance. |
| Date: | 2006–09–18 |
| URL: | http://d.repec.org/n?u=RePEc:bno:worpap:2006_09&r=reg |
| By: | Björn Brügemann (Yale University and IZA Bonn) |
| Abstract: | Differences in employment protection across countries appear to be quite persistent over time. One mechanism that could explain this persistence is the so called constituency effect: high employment protection creates a mass of workers in favor of maintaining high protection because deregulation would mean that they would lose their jobs. To the extent that this mechanism is at work, employment protection would appear to be a policy that is difficult to deregulate once it has been introduced. In this paper I consider an alternative mechanism generating persistence that makes employment protection a policy that is difficult to introduce. If a legislative process is initiated to introduce employment protection, it is reasonable to assume that firms have an opportunity to lay off workers before employment protection becomes effective. Firms would have an incentive to do so in order to avoid the cost associated with stringent employment protection in the future. Anticipating this, workers whose situation is already precarious may not find it in their best interest to support the legislative process to introduce employment protection in the first place. The main result of the paper is that the ability of firms to adjust employment before an increase in employment protection becomes effective may give rise to situations in which both low and high employment protection are stationary political outcomes. |
| Keywords: | employment protection, job creation and destruction, political economy |
| JEL: | E24 J41 J65 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2297&r=reg |
| By: | Friedrich G. Schneider (Department of Economics, Johannes Kepler University Linz, Austria) |
| Abstract: | Estimations of the size and development of the shadow economy for 145 countries, including developing, transition and highly developed OECD economies over the period 1999 to 2003 are presented. The average size of the shadow economy (as a percent of "official" GDP) in 2002/03 in 96 developing countries is 38.7%, in 25 transition countries 40.1%, in 21 OECD countries 16.3% and in 3 Communist countries 22.3%. An increased burden of taxation and social security contributions, combined with a labor market regulation are the driving forces of the shadow economy. Furthermore, the results show that the shadow economy reduces corruption in high income countries, but increases corruption in low income countries. Finally, the various estimation methods are discussed and critically evaluated. |
| Keywords: | shadow economy of 145 countries; tax burden; tax moral; quality of state institutions; regulation; DYMIMIC and other estimation methods |
| JEL: | O17 O5 D78 H2 H11 H26 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2006_17&r=reg |
| By: | Paul Conway; Donato de Rosa; Giuseppe Nicoletti; Faye Steiner |
| Abstract: | This paper investigates the effect of product market regulations on the international diffusion of productivity shocks. The empirical results indicate that restrictive product market regulations slow the process of adjustment through which best practice production techniques diffuse across borders and new technologies are incorporated into the production process. This suggest that remaining cross-country differences in product market regulation can partially explain the recent observed divergence of productivity in OECD countries, given the emergence of new general-purpose technologies over the 1990s. The paper also investigates two channels through which product market regulations might affect the international diffusion of productivity shocks, namely the adoption of information and communications technology and the location decisions of multi-national enterprises. In both cases the effect of anticompetitive product market regulation is found to be negative and significant. <P>Régulation, concurrence et convergence de la productivité <BR>Cette étude analyse les effets de la régulation dans les marchés des biens sur la diffusion des chocs de productivité au niveau international. Les résultats empiriques indiquent que les restrictions dans les marchés des biens ralentissent le processus d'ajustement à travers lequel les techniques de production les plus avancées se répandent au-delà des frontières et sont incorporées dans l'activité productive. Ces résultats suggèrent que les différentes approches dans la régulation des marchés des biens qui caractérisent encore les pays de l'OCDE peuvent expliquer en partie la tendance à la divergence des niveaux de productivité qui a été observée récemment dans la zone OCDE, étant donné l'émergence des nouvelles technologies de l'information et communication au cours de la même période. L'étude analyse aussi deux canaux par lesquels la régulation peut influencer la diffusion des chocs de productivité au niveau international : l'investissement en nouvelles technologies de l'information et communication et les décisions de localisation des filiales des entreprises multinationales. Dans les deux cas, les résultats suggèrent que l'effet des régulations qui font obstacle à la concurrence dans les marchés des biens est négatif et significatif. |
| Keywords: | foreign direct investment, investissement direct étranger, productivity convergence, institutions and growth, information and communication technologies, panel data analysis, convergence de la productivité, institutions et croissance, technologies de l'ínformation et communication, analyse en données de panel |
| JEL: | C33 O11 O33 O40 O47 |
| Date: | 2006–09–04 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:509-en&r=reg |
| By: | Eckhard Wurzel |
| Abstract: | High levels of unemployment and rising social charges have lead to considerable pressure on labour markets to adjust. Major steps in labour market reform have been implemented over the last three years. These need to be followed up in several respects in order to raise the economy’s capacity to generate employment. The present tax and transfer system still implies significant disincentives for labour supply of older people and spouses, which should be eliminated. Unemployment related benefits and active labour market policies can be better geared toward activating the unemployed, while institutional reform of the Public Employment Service should continue. On the labour demand side, there remains scope to raise the efficiency of Germany's employment protection system. Also, provisions should be made to allow for a higher degree of wage flexibility across qualifications and regions to fight unemployment. Regulatory conditions in other parts of the economy interact in important ways with labour market performance, underlining the need for a broad based reform approach. This Working Paper relates to the 2006 OECD Economic Survey of Germany (www.oecd.org/eco/surveys/Germany). <P>La réforme du marché du travail en Allemagne : Comment améliorer l’efficacité <BR>Face à un chômage élevé et à un alourdissement des charges sociales, des ajustements sont devenus de plus en plus nécessaires sur les marchés du travail. D'importantes réformes du marché du travail ont été mises en oeuvre ces trois dernières années. Elles doivent être poursuivies dans plusieurs domaines afin de permettre à l'économie de créer davantage d'emplois. Le système actuel de prélèvements et de transferts dissuade encore dans bien des cas les personnes âgées et les conjoints de travailler, situation à laquelle il y aurait lieu de remédier. L'indemnisation du chômage et les politiques actives du marché du travail pourraient être conçues de manière à favoriser davantage le retour à l'emploi des chômeurs, et la réforme institutionnelle du service public de l'emploi doit être poursuivie. S'agissant de la demande de main-d'oeuvre, l'efficience du système de protection de l'emploi pourrait être améliorée. Par ailleurs, il y aurait lieu de prendre des dispositions pour permettre une plus grande flexibilité des salaires en fonction des qualifications et suivant les régions, afin de lutter contre le chômage. Les conditions de réglementation dans d'autres secteurs de l'économie interagissent de façon importante avec la performance du marché du travail, soulignant le besoin d'une approche globale des réformes. Ce document de travail se rapporte à l’Étude économique de l’OCDE de l’Allemagne (www.oecd.org/eco/etudes/Allemagne). |
| Keywords: | unemployment, chômage, employment protection legislation, législation sur la protection de l'emploi, Germany, Allemagne, employment, emploi, salaire minimum, public employment services, service public de l'emploi, minimum wage, labour market reform, unemployment benefits, labour force participation, activation strategies, wage rigidities, wage determination, policy synergies, réforme du marché du travail, allocations chômages, activité des personnes sur le marché du travail, stratégie d'activation, rigidités salariales, détermination des rémunérations, synergies des politiques |
| JEL: | J22 J23 J26 J31 J32 J33 J48 J52 J65 J68 |
| Date: | 2006–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:512-en&r=reg |
| By: | Simon P. Anderson |
| Abstract: | Regulation of television advertising typically covers both the time devoted to commercials and restrictions on the commodities or services that can be publicized to various audiences (stricter laws often apply to children’s programming). Time restrictions (advertising caps) may improve welfare when advertising is overprovided in the market system. Even then, such caps may reduce the diversity of programming by curtailing revenues from programs. They may also decrease program net quality (including the direct benefit to viewers). Restricting advertising of particular products (such as cigarettes) likely reflects paternalistic altruism, but restrictions may be less efficient than appropriate taxes. |
| Keywords: | television, advertising, regulation, length caps, advertising content |
| JEL: | D42 L15 M37 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:vir:virpap:363&r=reg |
| By: | De la Cruz, Javier; Stephanou, Constantinos |
| Abstract: | The objective of this policy paper is to identify and propose high-level legal and regulatory reforms to Colombia ' s financial system structure that would enhance efficiency and/or mitigate risks. Five specific and four general reforms are proposed and evaluated based on their compatibility with the aforementioned objectives, ease of implementation, impact, and consistency with international practice. Potential implications for supervision and competition, as well as likely criteria for developing a carefully sequenced reform roadmap, are also highlighted. |
| Keywords: | Banks & Banking Reform,Financial Intermediation,Corporate Law,Non Bank Financial Institutions,Financial Crisis Management & Restructuring |
| Date: | 2006–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4006&r=reg |
| By: | Gine, Xavier; Karlan, Dean S. |
| Abstract: | Group liability is often portrayed as the key innovation that led to the explosion of the microcredit movement, which started with the Grameen Bank in the 1970s and continues on today with hundreds of institutions around the world. Group lending claims to improve repayment rates and lower transaction costs when lending to the poor by providing incentives for peers to screen, monitor, and enforce each other’s loans. However, some argue that group liability creates excessive pressure and discourages good clients from borrowing, jeopardizing both growth and sustainability. Therefore, it remains unclear whether group liability improves the lender’s overall profitability and the poor’s access to financial markets. The authors worked with a bank in the Philippines to conduct a field experiment to examine these issues. They randomly assigned half of the 169 pre-existing group liability ' centers ' of approximately twenty women to individual-liability centers (treatment) and kept the other half as-is with group liability (control). We find that the conversion to individual liability does not affect the repayment rate, and leads to higher growth in center size by attracting new clients. |
| Keywords: | Banks & Banking Reform,Knowledge Economy,Banking Law,Education for the Knowledge Economy,Contract Law |
| Date: | 2006–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4008&r=reg |
| By: | MARIA NIEVES CARRERA (Instituto de Empresa) |
| Abstract: | In recent international debates on auditing regulation, Spain has assumed a real prominence as a claimed practical example of where a policy of mandatory audit firm rotation did not work and was duly abolished. This study provides an analysis of the implementation and removal of such policy in Spain. Using the evidence provided by congressional hearings, financial newspapers and other documents we demonstrate that at no stage was mandatory rotation of audit firms ever enforced on Spanish auditors. |
| Keywords: | Auditing regulation, Auditor independence, Mandatory audit firm rotation |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:emp:wpaper:wp06-21&r=reg |
| By: | Fernanda Rivas (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República) |
| Abstract: | There exists evidence in the social science literature that women may be more relationshiporiented, may have higher standards of ethical behavior and may be more concerned with the common good than men are. This would imply that women are more willing to sacrifice private profit for the public good, and this would be especially important for political life. Many papers with field data have found deference’s in the corrupt activities of males and females, but given their different insertion in the labor market and in politics, it is not clear if the differences are due to differences in opportunities or real gender differences. The aim of this paper is to see if women and men, facing the same situation behave in a different way, as suggested in the field-data studies, or on the contrary, when women are in the same position as men they behave in the same way. The results found in the experiment show that women are indeed less corrupt than men. This suggests that increasing women’s participation in the labor force and politics would help to reduce corruption. |
| Keywords: | corruption, gender, experiment |
| JEL: | C91 D73 J16 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:ude:wpaper:0806&r=reg |
| By: | Linda Y. Yueh |
| Abstract: | This paper explores whether the patent law and intellectual property rights (IPR) system have resulted in innovation in China during the reform period. It appears that the patent laws have produced a stock of patents, where the success rates of patent applications are fairly uniform across the country. As the IPR framework does not vary across provinces, we asked which factors would explain innovation in China. We find the main determinants of patents to be R&D expenditure and foreign direct investment, but not the number of researchers, though the level of human capital matters. We conclude that the patent laws in China have been associated with innovation that has accompanied economic growth despite imperfections in the legal system. |
| Keywords: | Intellectual Property Rights, Patent Laws, Law and Economics, Innovation, Economic Growth, China |
| JEL: | O34 K29 O4 O53 K19 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:271&r=reg |
| By: | Antoni, Manfred (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Jahn, Elke J. (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]) |
| Abstract: | "Over the past three decades Germany has repeatedly deregulated the law on temporary agency work by stepwise increasing the maximum period for hiring-out employees and allowing temporary work agencies to conclude fixed-term contracts. These reforms should have had an effect on the employment duration within temporary work agencies. Based on an informative administrative data set we use hazard rate models to examine whether the employment duration has changed in response to these reforms. We find that the repeated prolongation of the maximum period for hiring-out employees significantly increased the average employment duration while the authorization of fixed-term contracts reduced employment tenure." (author's abstract, IAB-Doku) ((en)) |
| Keywords: | Leiharbeit, Diffusion, Leiharbeitnehmer, Persönlichkeitsmerkmale, Beschäftigungsdauer, Arbeitsmarktpolitik, Arbeitsrecht, Deregulierung, Betriebszugehörigkeit |
| JEL: | C41 J23 J40 J48 K31 |
| Date: | 2006–09–14 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:200618&r=reg |
| By: | Merkl, Christian; Stolz, Stéphanie |
| Abstract: | Based on a quarterly regulatory dataset for German banks from 1999 to 2004, this paper analyzes the effects of banks’ regulatory capital on the transmission of monetary policy in a system of liquidity networks. The dynamic panel regression results provide evidence in favor of the bank capital channel theory. Banks holding less regulatory capital and less interbank liquidity react more restrictively to a monetary tightening than their peers. |
| Keywords: | monetary policy transmission, bank lending channel, bank capital channel, liquidity networks |
| JEL: | C23 E52 G21 G28 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp2:4771&r=reg |
| By: | Busse, Matthias; Groizard, José Luis |
| Abstract: | The paper explores the linkage between income growth rates and foreign direct investment (FDI) inflows. So far the evidence is rather mixed, as no robust relationship between FDI and income growth has been established. We argue that countries need a sound business environment in the form of good government regulations to be able to benefit from FDI. Using a comprehensive data set for regulations, we test this hypothesis and find evidence that excessive regulations restrict growth through FDI only in the most regulated economies. This result holds true for different specifications of the econometric model, including instrumental variable regressions. |
| Keywords: | Multinationals, Spillovers, Institutions, Development |
| JEL: | C31 F21 F43 L51 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec06:4729&r=reg |
| By: | Blackburn, Keith; Forgues-Puccio, Gonzalo F. |
| Abstract: | We study the effect of international financial integration on economic development when the quality of governance may be compromised by corruption. Our analysis is based on a dynamic general equilibrium model of a small economy in which growth is driven by capital accumulation and public policy is administered by government- appointed bureaucrats. Corruption may arise due to the opportunity for bureaucrats to embezzle public funds, an opportunity that is made more attractive by financial liberalisation which, at the same time, raises efficiency in capital production. Our main results may be summarised as follows: (1) corruption is always bad for economic development, but its effect is worse if the economy is open than if it is closed; (2) the incidence of corruption may, itself, be affected by both the development and openness of the economy; (3) financial liberalisation is good for development when governance is good, but may be bad for development when governance is bad; and (4) corruption and poverty may co-exist as permanent, rather than just transitory, fixtures of an economy. |
| Keywords: | Corruption, development, financial liberalisation |
| JEL: | D73 F36 O11 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec06:4731&r=reg |
| By: | von Lilienfeld-Toal, Ulf; Mookherjee, Dilip |
| Abstract: | Should the law restrict liability of defaulting borrowers? We abstract from possible benefits arising from limited rationality or risk-aversion of borrowers, contractual incompleteness, or lender moral hazard. We focus instead on general equilibrium implications of liability rules with moral hazard among borrowers with varying wealth. If lenders are on the short side of the market, weakening liability rules lower lender profits, may cause additional exclusion among the poor, but generate additional rents for wealthier borrowers. For certain changes in liability rules (such as a ban on bonded labor, or weakening bankruptcy rules below a wealth threshold) they also raise productivity among borrowers of intermediate wealth. Hence they can be interpreted as a form of efficiency-enhancing redistribution from lenders and poor borrowers to middle class borrowers. Our model provides a possible rationale for why weaker liability rules are observed in wealthier countries. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec06:4741&r=reg |