Search

We develop an empirical search-matching model which is suitable for analyzing the wage, employment and welfare impact of regulation in a labor market with heterogeneous workers and jobs. To achieve this we develop an equilibrium model of wage determination and employment which extends the current literature on equilibrium wage determination with matching and provides a bridge between some of the most prominent macro models and microeconometric research. The model incorporates productivity shocks, long-term contracts, on-the-job search and counter-offers. Importantly, the model allows for the possibility of assortative matching between workers and jobs due to complementarities between worker and job characteristics. We use the model to estimate the potential gain from optimal regulation and we consider the potential gains and redistributive impacts from optimal unemployment insurance policy. Here optimal policy is defined as that which maximizes total output and home production, accounting for the various constraints that arise from search frictions. The model is estimated on the NLSY using the method of moments.

Fragmented welfare service delivery has been identified as a significant barrier to improving outcomes for highly disadvantaged individuals. The ‘YP4’ trial, conducted from 2005 to 2009, sought to evaluate, by randomised control method, an approach proposed by Campbell et al. (2003) for integrating delivery of employment, housing, health and other services for young homeless jobseekers. Rather than providing extra access to services or utilisation of different services, the YP4 trial involved assignment of a case manager to help tailor and coordinate available services to reflect the specific circumstances of young homeless jobseekers. We find that the YP4 program did not have a significant effect on economic or psychological wellbeing, a finding that is robust to application of experimental and quasi-experimental methods. It is argued that our study contributes to knowledge on program design, particularly in relation to the importance of the scale of intervention and program administration.

This paper presents an original econometric model for estimating a Dose Response Function though a regression approach when treatment is continuous, individuals may react heterogeneously to observable confounders and selection-into-treatment may be (potentially) endogenous. After the description of the model, two estimation procedures are set out: one based on OLS under conditional mean independence, and one based on IV under selection endogeneity. The paper goes on by presenting ctreatreg, a author’s user-written Stata routine for an easy implementation of such a model. The paper proceeds by performing a Monte Carlo experiment to test the reliability of the model and of its associated Stata routine. Results show that the model and the Stata routine ctreatreg are both reliable as estimates consistently fit the expected results.

This paper looks at the determinants of secondary school attendance in Bangladesh with a focus on the interaction between community gender norms and relative supply of madrasas (i.e. Islamic schools). We present a theoretical framework where the probability of children's school participation varies with respect to a non‐economic factor – how the community observes social norms regarding female mobility – conditional upon the types of available schools. Household data from the Bangladesh Demographic Health Survey (BDHS) is combined with community information on the availability of non‐religious secondary schools and madrasas to test our theoretical predictions. We find that in communities which are more 'progressive', in the sense that women have a relatively high level of mobility, the effect of non‐religious school availability on attendance does not vary by gender. However in the more 'conservative communities', female schooling is more sensitive to the availability of, or distance to, madrasas.

The paper estimates the effect of the abolition of user charges for outpatient care (30 CZK/1.2 EUR) in 2009 on the demand for ambulatory doctor visits in the Czech Republic. The reform applied only to children, which enabled us to take the difference-in-differences approach. Children constitute a treatment group, whereas adults serve as a control group. Besides the treatment effect, we control also for a number of personal characteristics using a micro-level data (EU-SILC). We estimate two models: Multinomial logit (MNL) and Zero-inflated negative binomial (ZINB). The effect of the abolition of user charges on the number of doctor visits proved insignificant suggesting that either the demand for this type of care is indeed inelastic, user charges were set too low or the people have not changed their behavior yet. On the contrary, we found that personal income, the number of household members and sex significantly influence the number of visits to the doctor. Two robustness checks using restricted samples confirms the results.

This paper discusses twenty five methodological issues covering selected areas of both micro and macroeconomics. Included on the micro side are issues related to modelling the price system, assessing its efficiency, competing models of competition, modelling technological change and economic growth, dealing with risk and uncertainty, and policies related to R&D support, picking winners, and support of infant industries. Included on the macro side are issues related to the alleged refutation of old fashioned Keynesian economies by the stagflation of the 1970s, the use of the Dixit Stiglitz model of monopolistic competition in macro models, the current imperative that all the micro behaviour underling macro relations be based on dynamic inter-temporal optimization, the downplaying of fluctuations in aggregate demand as a driver of cyclical fluctuations, and the interpretation of the economy’s recent behaviour.

Das Papier zeigt zunächst mögliche Gründe und Ursachen für die Errichtung und die Bewahrung unabhängiger Institutionen in demokratischen Rechtsstaaten auf. Danach werden formelle und behavioralistische Kriterien benannt, anhand derer der Grad der Unabhängigkeit auf einem Kontinuum zwischen den Grenzen „vollständig abhängig“ und „vollständig unabhängig“ beurteilt werden kann.

The problem of public sector governance is considered as the task of improving the ownership structure of the economy. In this regard, the first part of the paper provides a brief overview of the theory of privatization. The arguments of supporters and opponents of privatization are confronted with the results of the privatization campaigns in the developing as well as developed countries, including their contemporary and past experience. The costs and potential benefits of privatization are analyzed, focusing on the current Russian conditions. The analysis shows that the costs and benefits depend on the quality of governance and the quality of the market; the effectiveness of privatization increases in both variables. The negative impact of privatization campaigns on both business performance and economic growth occurs in developing countries more often than in developed countries. Thus, the decision on privatization should be considered in the context of a more general problem of finding a rational structure of ownership in the economy.

The problem of public sector governance is considered as the task of improving the ownership structure of the economy. In this regard, the first part of the paper provides a brief overview of the theory of privatization. The arguments of supporters and opponents of privatization are confronted with the results of the privatization campaigns in the developing as well as developed countries, including their contemporary and past experience. The costs and potential benefits of privatization are analyzed, focusing on the current Russian conditions. The analysis shows that the costs and benefits depend on the quality of governance and the quality of the market; the effectiveness of privatization increases in both variables. The negative impact of privatization campaigns on both business performance and economic growth occurs in developing countries more often than in developed countries. Thus, the decision on privatization should be considered in the context of a more general problem of finding a rational structure of ownership in the economy.

This chapter presents an integrated economic approach that organizes and interprets the evidence on child development. It also discusses the indicators of child well-being that are used in international comparisons. Recent evidence on child development is summarized, and policies to promote child well-being are discussed. The chapter concludes with some open questions and suggestions for future research.

The Institute for Prospective Technological Studies (IPTS) of the European Commission’s Joint Research Centre (JRC) is currently undertaking research activities in order to describe the current situation and functioning of the markets for non Genetically Modified Identity Preserved crops and derived products. For this purpose, JRC-IPTS organized an International Workshop on "Markets for non-GM Identity Preserved crops and derived products" in Seville on 21&22 June 2012. This workshop brought together key stakeholders in the supply chain, as well as leading scientists and experts active in the field of non-GM IP markets. This JRC Scientific and Policy Report provides the proceedings of the June 2012 workshop, that covered the following topics: Session 1: Situation and availability of non-GM Identity Preserved crops on world markets Session 2: Non-GM IP crops for the EU feed and livestock sector Session 3: EU demand for food products from non-GM IP crops and derived ingredients Session 4: Case studies of the use of non-GM IP crops or derived product for animal or biofuel production

The aim of this study is to examine the effects of business incubator programs and its services on tenant firm performance. In this context, the effect of business incubator services on firms’ survival was examined through the case of Turkey’s Business Development Centers (İŞGEMs). The scope of this research consist of 414 firms, 238 firms which exist in incubators located in Adana, Diyarbakır, Elazığ, Ereğli, Eskişehir, Mersin, Nevşehir, Samsun, Tarsus, Van, Yozgat and Zonguldak İŞGEMs and 176 firms which left these incubators before. Within the framework of research model, business incubator services were categorized as (1) office services, (2) shared/common services, (3) education/training services and (4) counseling services and include total of 22 sub-services. As a research methodology, Kaplan-Meier survival estimates were used. As a result of the research models, it was concluded that all service groups have significant and positive effects on firms’ survival probabilities.

As stated also in the title of the paper, the analysis proposed is contrary to normative microeconomics. Therefore, we do not intend to analyze the individuals, with the intent to show if they behave correctly or wrongly, economically speaking.Our intention is to follow the logic of the individuals that act in the economic markets, led by their own rationality and the way they manage to became aware of their needs.The purpose of the paper is to determine the necessary degree of rationality so as the expectations of the individuals match the results of their actions in order to fulfill hierarhically their needs. In this matter, we will explain why Sen and Kekes are mistaken when they tie some of needs to products.We will analyze the needs, same as the institutions that pass the test of time and belong firstly to the modern individual. The thing that modifies and can be linked to products is the level of satisfaction and the standard to which these needs are satisfied.

Third-party institutions (judges, real-estate agents, referees, mediators, and arbiters) are designed to avoid mis-coordination among potential cooperators. They differ from first-party institutions (lobbyists) who act as rent-seekers in bargaining. They also differ from second-party institutions (auditors) who act as monitors in principal-agency problems. Third-party institutions are geared to minimize distorted belief formation, which arises from the uncertainty of how to judge the over-contribution of others: Is it the outcome of a positive income shock or is it expressive of real income being higher than estimated income? Given positively skewed income distribution and bounded rationality, such uncertainty leads to mis-judgments of the contribution of others as “unfair,” leading to the collapse of cooperation.

We study mechanism design in quasi-linear environments when there are two alternatives. We show that under a mild range condition, every implementable deterministic allocation rule is a generalized utility function maximizer. In unbounded domains, if we replace our range condition by an independence condition, then every implementable deterministic allocation rule is an affine maximizer. Our results extend Roberts' affine maximizer theorem (Roberts, 1979) to the case of two alternatives.

Auf der Basis eines mittels einer Onlinebefragung erhobenen Datensatzes wird auf der Basis der haushalts- bzw. konsumgütertheoretischer Überlegungen und verhaltenstheoretischer Konzepte untersucht, wie der Umfang der von ehrenamtlich Engagierten in Fußballvereinen geleisteten Arbeit von der Art der zugrundeliegenden Motive abhängig ist. Dabei wird auch auf Motiv-Nutzen-Differenzen ehrenamtlichen Engagements eingegangen. Die Ergebnisse zeigen, dass der Umfang ehrenamtlichen Engagements mit der Ausprägung intrinsischegoistischer und altruistischer Motive steigt, wohingegen extrinsisch-egoistische Motive keinen systematischen Einfluss auf den Umfang ehrenamtlichen Engagements haben.

Earlier studies conclude that spouses' retirement strategies are not independent from each other and that policies affecting individuals in a couple are also likely to affect the economic behaviour of their partner. In this study, we exploit retirement age legislation in France as well as a retirement policy change to identify the effect of own and spousal retirement on spouses' hours. To this end, we use a Fuzzy Regression Discontinuity approach combined with Differences in Differences, for both spouses. The data for the analysis are drawn from French Labour Surveys pooled over thirteen years. The sample for the analysis includes over 85,000 dual-earner couples with spouses aged 50 to 70. We find evidence of large and significant jumps in the own retirement probability at the legal early retirement age for both men and women in a couple. We also conclude that the 1993 reform reduced significantly the probability of retirement at the early retirement age for married men while the effect was not significant for married women. Husbands' retirement probability increases significantly when the wife reaches early retirement age while her retirement probability is not responsive to his early retirement age. We conclude that hours fall significantly upon own and partner's retirement for both spouses. On average, her hours fall by 2.7 per cent when he retires while his hours fall by 5 per cent when she retires, implying an average reduction of one hour per week for women and two hours for men if their spouse retires.

This paper presents a new user-written STATA command called ivtreatreg for the estimation of five different (binary) treatment models with and without idiosyncratic (or heterogeneous) average treatment effect. Depending on the model specified by the user, ivtreatreg provides consistent estimation of average treatment effects both under the hypothesis of “selection on observables” and “selection on unobservables” by using Ordinary Least Squares (OLS) regression in the first case, and Intrumental-Variables (IV) and Selection-model (à la Heckman) in the second one. Conditional on a pre-specified subset of exogenous variables x – thought of as driving the heterogeneous response to treatment – ivtreatreg calculates for each model the Average Treatment Effect (ATE), the Average Treatment Effect on Treated (ATET) and the Average Treatment Effect on Non-Treated (ATENT), as well as the estimates of these parameters conditional on the observable factors x, i.e., ATE(x), ATET(x) and ATENT(x). The five models estimated by ivtreatreg are: Cf-ols (Control-function regression estimated by OLS), Direct-2sls (IV regression estimated by direct two-stage least squares), Probit-2sls (IV regression estimated by Probit and two-stage least squares), Probit-ols (IV two-step regression estimated by Probit and ordinary least squares), and Heckit (Heckman two-step selection model). An extensive treatment of the conditions under which previous methods provide consistent estimation of ATE, ATET and ATENT can be found, for instance, in Wooldgrige (2002, Chapter 18). The value added of this new STATA command is that it allows for a generalization of the regression approach typically employed in standard program evaluation, by assuming heterogeneous response to treatment.

This paper estimates the economic impact of the actual implementation of the Services Directive across the Member States based on the new data on barriers to cross-border provision and to establishment for the periods before and after the Directive. It is however still an updated prediction or extrapolation exercise rather than an assessment of its full effects, because the period following the implementation of the Directive is too short to yield sufficient data. The study takes into account the domestic impact of barrier reductions on labour productivity, a novelty with respect to previous studies. It concludes that, while the likely effects of the achieved barrier reductions are large, Member States may reap yet additional significant benefits from the Directive if they continue their reform efforts. Besides the reduction of sectoral barriers, the Directive also seeks administrative simplification through the setting up of national Points of Single Contact (PSC). The study estimates an approximate possible economic impact of setting up PSC through the new establishments of service activities. Again it demonstrates that Member States can reap significant additional gains by improvements in the PSC.

This paper builds on the methods of local instrumental variables developed by Heckman and Vytlacil (1999, 2001, 2005) to estimate person-centered treatment (PeT) effects that are conditioned on the person's observed characteristics and averaged over the potential conditional distribution of unobserved characteristics that lead them to their observed treatment choices. PeT effects are more individualized than conditional treatment effects from a randomized setting with the same observed characteristics. PeT effects can be easily aggregated to construct any of the mean treatment effect parameters and, more importantly, are well-suited to comprehend individual-level treatment effect heterogeneity. The paper presents the theory behind PeT effects, studies their finite-sample properties using simulations and presents a novel analysis of treatment evaluation in health care.

In this paper we study delegation environments based on Fershtman, Judd, and Kalai ([1987], hereafter FJK). By imposing a certain assumption on the notion of implementability, called implementability with mutually rational agents, they show that every efficient outcome can be fully implemented in subgame perfect Nash equilibrium (SPNE). For their analysis, we first argue that FJK's model can and should be interpreted as a problem in mechanism design. With this in mind, we first modify their model so that agents' participation decision is explicitly built in. Then, we argue that FJK uses a non-standard solution concepts in the mechanism design literature -- in order to attain full implementability, they strengthen notion of implementability, instead of using a refined equilibrium concept. In response, we follow the standard mechanism design approach -- employ a refined SPNE (weakly undominated SPNE, U-SPNE) as the equilibrium concept, while keeping the notion of the implementability unchanged. By applying U-SPNE, we show that in certain classes of 2x2 games -- including prisoners' dilemma, coordination games, and battle of sexes -- every efficient outcome is fully implementable in U-SPNE.

In this paper, we develop a general view of regulation as a set of constraints imposed on market transactions by a welfare-maximizing authority. We present a novel frictional search model with horizontal differentiation and nontransferable utility in which a regulator determines the set of permitted match-specific production functions. Once the dynamic market opens, buyers and sellers are matched and sellers propose transactions from among those that are allowed. We show the existence and uniqueness of a marketequilibrium for any choice of regulatory constraints and characterize the regulator’s exante optimal choice of regulatory environment. We argue that in less developed, or ‘thin’, markets, regulation is an important tool to correct market failure arising from mismatch between buyers and sellers. However, if markets develop and become ‘thick’, regulations can become onerous vestiges and deregulation is welfare-enhancing. In this case, a regulator can rely on market participants’ equilibrium behavior instead of explicit constraints on economic activities to ensure that transactions occur efficiently.

When choice options are complex, policy makers may seek to reduce decision making errors by making a high quality option the default. We show that this positive effect is at risk because such a policy creates incentives for decision makers to "drop out" by paying no attention to the decision and accepting the default sight unseen. Using decision time as a proxy for attention, we confirm the importance of this effect in an experimental setting. A key challenge for policy makers is to measure, and if possible mitigate, such drop out behavior in the field.

The interchange fee applied in four-party card systems transfers incomes in the payment card business from merchants to cardholders. Assessment of the interchange fee and the interpretation of its role have prompted serious professional debate in recent years. Beyond the professional debate, competition proceedings were also launched in connection with interbank agreements related to the interchange fee and the setting of the fee, but so far specific regulation has been adopted only in a few countries. The first part of the study describes the function of the interchange fee and the related economic theories, followed by a discussion of issues arising in connection with the interchange fee from the point of view of competition authorities and regulators. The second part of the study presents the results of analyses relating to the Hungarian payment card market and interchange fees. On the basis of these results, we conclude that prudent regulatory intervention, taking into account both primary and secondary market effects, may be justified in relation to the interchange fee, due to the structure and level of development of the Hungarian market.

In his paper I study policy responses to an increase in post-merger distress. I consider the integration of regions as a merger of populations which I view as a revision of social space, and I identify the effect of the merger on aggregate distress. The paper is based on the premise that the merger of groups of people alters their social landscape and their comparators. Employing a specific measure of social distress that is based on the sensing of relative deprivation, a merger increases aggregate distress: the social distress of a merged population is greater than the sum of the social distress of the constituent populations when apart. In response, policies are enacted to ensure that aggregate distress and/or that of individuals does not rise after a merger. I consider two publicly-financed, cost-effective policies designed so as not to reduce individuals' incomes: a policy that reverses the negative effect of the merger on the aggregate level of relative deprivation, bringing it back to the sum of the pre-merger levels of aggregate relative deprivation of the two populations when apart; and a policy that is aimed at retaining the relative deprivation of each individual at most at its pre-merger level. These two policies are developed as algorithms. Numerical examples illustrate the application of the algorithms.

This paper analyses the effects of minimum wages on competition in the German roofing sector. The case is particularly interesting since this sector is faced with a uniform minimum wage despite significant regional disparities in productivity and wages. As a control industry we take the plumbing sector, which shows a similar market structure and demand trend but is not subject to a minimum wage. Employing a comprehensive firm panel data and using a difference-in-difference approach, we estimate the impacts of minimum wages on market entries and exits and firms’ profitability. We find significant effects for East Germany which point to a substantial shift in industry structure. Minimum wages decreased both market entries and exits for roofing firms while they increased entries of sole traders. A decreasing number of non-sole traders lowered competition for this group of firms and helped them to increase profitability. The increasing share of sole traders may indicate some type of evasion strategy in eastern Germany, particularly since wages for skilled roofers declined towards the minimum wage. In the western part of the country minimum wages had no impact on competition.

I study the integration of regions in the form of a merger of populations, which I interpret as a revision of people's social space and their comparison set; I illustrate the way in which a merger can aggravate social distress; and I consider policy responses. Specifically, I view the merger of populations as a merger of income vectors; I measure social distress by aggregate relative deprivation; I demonstrate that a merger increases aggregate relative deprivation; and I show that a social planner is able to reverse this increase by means of least-cost, post-merger increases in individual incomes, but is unable to counter it by relying exclusively on a self-contained income redistribution that retains individual levels of wellbeing at their pre-merger levels.

Este estudio se deriva de la evaluación del Programa de Coinversión Social (PCS), el cual aporta recursos financieros a las Organizaciones de la Sociedad Civil (OSCs) para el desarrollo de grupos vulnerables y con rezago mediante el fomento de su capital social. Para la evaluación, se analizó la relación del capital social con el PCS y el fortalecimiento de las OSCs. Se llevó a cabo un estudio cualitativo y cuantitativo, el primero consistió en entrevistas a profundidad y grupos focales; el segundo en una encuesta con dos instrumentos aplicados a las OSCs y a los beneficiarios. Se utilizó el análisis de componentes principales y la metodología de variables latentes para estimar los aspectos no observables y multidimensionales de los conceptos de capital social y fortalecimiento institucional. Se estimaron dos Modelos de Ecuaciones Estructurales (SEM) para captar la influencia mutua entre los indicadores de ambos conceptos, así como su relación, los cuales generaron resultados similares: el PCS fortalece a las OSCs para el desarrollo de sus proyectos, su capital social se obtiene de esta forma. Las OSCs cuentan con capital social entre sus miembros y su población objetivo, crean redes con otras OSCs donde se identifican e intercambia información y apoyo, y fomentan cohesión social. Se identificaron los elementos que determinan el fortalecimiento institucional y el capital social de las OSCs, su conocimiento podría contribuir a focalizar los apoyos del PCS para el logro de sus objetivos.

There is a strong presumption among economists that domestic reforms are promoted by regionalism. Yet strong empirical evidence for this proposition is lacking. This paper examines both the theoretical arguments and empirical evidence on this issue, drawing on the relevant economic, political, and legal literature. The authors argue that in general, the case for reciprocity in domestic reforms is weak. In the one case where a regional agreement appears to have promoted domestic reform—the European Union (EU)—the enforcement mechanisms used by the European Court of Justice played a significant role. But those mechanisms are not unique. Instead, the authors argue that the EU’s success was because domestic constituents were empowered to take action against uncompetitive regulation. Thus the EU promoted economic reform in sensitive, behind-the-border areas because it overcame the problem of loss of sovereignty by internalizing the political battle to domestic interests, and yet still provided a non-political frame of reference for the debate.

The costs associated with unhealthy food consumption are not only paid by those suffering from overweight but by all members of society in terms of higher costs for social security systems. With this in mind, we study the effectiveness of a tax, a subsidy and cash incentives in reducing unhealthy food consumption. Using an inter-temporal rational choice model with habit, we calibrate and simulate the effect of those policies to US and UK data. Our findings suggest that cash incentives may be the most effective policy in reducing unhealthy food consumption yet it can be the most costly one. Taxes are relatively ineffective in reducing unhealthy food consumption. Subsidies have the best balance between effectiveness and monetary benefits to the society.

The network approach to entrepreneurship has become a notable theoretical perspective within the literature. Networking activities enable gaining resources for new ventures in growth process while allowing growing firms to maintain their flexibilities. In this study, we investigate the effects of intra-incubator networking activities on new firm growth performance in business incubators. Based on a survey of newly founded firms located in three major incubation centers located in Adana, Tarsus and Samsun cities in Turkey, we empirical test the network success hypothesis. Differences between growing and non-growing firms have been analyzed by using essential network characteristics. Empirical research investigating the effect of networking on incubated new firm performance is rare. Among them, to our knowledge, we, first time, employ essential network characteristics approach in performance analysis among incubated firms. The results have shown that incubated firms have similar intra-incubator networking intensity whether it is a growing or non-growing over time.

We consider market rules for transferring IP addresses, numeric identifiers required by all computers connected to the Internet. Transfers usefully move resources from lowest- to highest-valuation networks, but transfers tend to cause socially costly growth in the Internet's routing table. We propose a market rule that avoids excessive trading and comes close to achieving social efficiency. We argue that this rule is feasible despite the limited powers of central authorities. We also offer a framework for reasoning about future prices of IP addresses, then explore the role of rentals in sharing information about the value of IP address and assuring allocative efficiency. (JEL D47, D82, D85, L86)

There is a strong presumption among economists that domestic reforms are promoted by regionalism. Yet strong empirical evidence for this proposition is lacking. The purpose of the paper is to examine in some detail both the theoretical arguments and empirical evidence on this issue, drawing on the relevant economic, political and legal literatures. The paper argues that in general, the case for reciprocity in domestic reforms is weak. In the one case where a regional agreement appears to have promoted domestic reform — the European Union — the enforcement mechanisms used by the European Court of Justice played a significant role. But those mechanisms are not unique. Instead, the paper argues that the EU's success was because domestic constituents were empowered to take action against uncompetitive regulation. Thus the EU promoted economic reform in sensitive, behind-the-border areas because it overcame the problem of loss of sovereignty by internalising the political battle to domestic interests, and yet still provided a non-political frame of reference for the debate.

In a scenario where terrorist organizations, based in an LDC, target a rich nation, we examine a joint, multi-pronged and dynamic counter-terror strategy and the role that developmental aid plays in its success. We show that aid-tying leads to a fruitful virtuous cycle whereby joint counter-terror operations help in the observability of aid delivery, and aid in its turn makes greater counter-terror possible. Further, the counter-terror operations must be the largest possible at the very beginning. We argue that it is not necessarily the case that a more hawkish donor is less pro-development, or that a more altruistic donor is softer on terror. Moreover, we identify channels through which international diplomacy aimed at reducing regional hostility can help in the war against terror.

Despite the recent popularity of conditional cash transfers (CCT) and payments for environmental services (PES) programs, what determines their success is not well understood. We developed a conceptual framework to give insight into some of the main determinants of CCT and PES program efficiency that hope to increase investments in human and environmental capital. We used a simple agent-based model and validated the results with empirical data from existing programs. We show that 1) the share of participants who meet the program’s conditions at baseline is a powerful predictor of program efficiency, (2) and selection bias erodes program efficiency to a large extent. (Selection bias stems from agents who already meet program criteria and who self-select into programs at higher rates than those who do not meet the conditions.) Based on these results, we discuss possibilities for improving efficiency—mainly by targeting applicants or increasing payments—and criteria for evaluating and choosing CCT, PES, or other policy instruments.

The paper puts forward a small but novel idea of how we can cut down the incidence of bribery. There are different kinds of bribes and what this paper is concerned with are bribes that people often have to give to get what they are legally entitled to. I shall call these ― “harassment bribes”. Suppose an income tax refund is held back from a taxpayer till he pays some cash to the officer. Suppose government allots subsidized land to a person but when the person goes to get her paperwork done and receive documents for this land, she is asked to pay a hefty bribe. These are all illustrations of harassment bribes. Harassment bribery is widespread in India and it plays a large role in breeding inefficiency and has a corrosive effect on civil society. The central message of this paper is that we should declare the act of giving a bribe in all such cases as legitimate activity. In other words the giver of a harassment bribe should have full immunity from any punitive action by the state. It is argued that this will cause a sharp decline in the incidence of bribery. The reasoning is that once the law is altered in this manner, after the act of bribery is committed, the interests of the bribe giver and the bribe taker will be at divergence. The bribe giver will be willing to cooperate in getting the bribe taker caught. Knowing that this will happen, the bribe taker will be deterred from taking a bribe. It should be emphasized that what is being argued in this paper is not a retrospective pardon for bribe-giving. Retrospective pardons are like amnesties. They encourage rather than discourage corrupt behavior by rewarding the corrupt. And, in the process, they corrode society‘s morals.

Microfinance in general and microcredit programs in particular have attracted much attention among interest groups concerned with poverty eradication and are seen by many as highly promising means in order to alleviate poverty. More recently, the spotlight has turned increasingly on the development and promotion of microsaving devices and mechanisms suitable to the unbanked poor. Along these lines, the Saving Mobilization program implemented by BRAC in Uganda is an attempt to encourage a saving culture as well as overcoming barriers to make use of saving services at more formal financial institutions. Building on a randomized control trial, the aim of this study is to investigate the impact of this program on the saving behavior of participants. The intervention is successful in increasing the usage of semi-formal financial institutions on the extensive margin as well as to boost the amount held at these institutions. The total amount of savings, however, remains unaffected. Impact heterogeneity is important and the analysis shows that illiterate individuals as well as individuals having experienced theft in the recent past are more likely to respond to the program.

Market Design is an emerging field that seeks to provide a practical solution for various resource allocation problems. The current article discusses several issues arising in real-world market design, innovative ideas proposed to overcome those issues, and their applications in areas such as spectrum licenses allocation, Internet sponsored-search advertising, housing allocation, public school placement, kidney exchange, course allocation, and online matchmaking.

This paper evaluates the impact of the Chilean Supplier Development Program, aimed at improving and stabilizing the commercial linkages between small and medium-sized suppliers and their large firm customers, during the period 2003-2008. Applying propensity score matching and difference-in-differences, we find that both groups of firms benefited from the coordination efforts. The program increased sales, employment, and the sustainability of small and medium-sized suppliers. It also increased the sales of large firms and raised their ability of becoming exporters. We also find that the timing of the effect is different for suppliers and large firms. While the effect on suppliers appeared one year after the firms enrolled in the program, the effect on large firms took two years to appear.

Armed conflicts, natural disasters and infrastructure projects continue to force millions into migration. This is especially true for developing countries. After World War II, about 8 million ethnic Germans experienced a similar situation when forced to leave their homelands and settle within the new borders of West Germany. Subsequently, a law was introduced to foster their labor market integration. We evaluate the success of this law using unique retrospective individual-level panel data. We find that the law improved expellees' overall situation but failed to restore their pre-war occupation status. This holds implications for the design of integration policies today.

In this paper we investigate how heterogeneous agents choose among tournaments with different prizes. We show that if the number of agents is sufficiently small, multiple equilibria can arise. Depending on how the prize money is split over the tournaments, these may include, for example, a perfect-sorting equilibrium in which high-ability agents compete in the high-prize tournament, while low-ability agents compete for the low prize. However, there are also equilibria in which agents follow a mixed strategy and there can be reverse sorting, i.e. low-ability agents are in the tournament with the high prize, while high-ability agents are in the low-prize tournament. We show that total effort always decreases compared to a single tournament. However, splitting the tournament may increase the effort of low-ability agents.

Current federal policies to ‘make work pay’ leave the vast majority―88%―of low-income working families in the U.S. without the guarantee of a decent living standard, even with full-time work. In their new study, Jeannette Wicks-Lim and Jeffrey Thompson advance proposals to substantially strengthen minimum wage laws and the federal Earned Income Tax Credit (EITC) program in the United States, so that, in combination, they can guarantee decent living standards for all full-time U.S. workers and their families. By considering minimum wage laws and the EITC as complements, they show how these measures can operate most effectively and, crucially, how any possible negative unintended consequences of each measure can be minimized. Their proposal increases the effectiveness of these two policy measures so that they would guarantee 60% of all low-income working families a decent living standard through full-time employment. Wicks-Lim and Thompson assess the federal fiscal impact of the changes they propose to the two policies, and consider potential sources of revenue to pay for the increases. They discuss the need for a full-employment economy as the context in which the maximum number of families can have a decent living standard, and propose policies towards that end.

FThis paper was prepared based on the surveys among managers of industrial enterprises, which are conducted by IET in compliance with the European harmonized methodology monthly, from September 1992 and cover the entire territory of the Russian Federation. The panel is about 1100 companies, which employ more than 15 per cent of total employment in the industry. The panel is biased towards large enterprises in each of the sub-industries. Feedback on questionnaires is 65-70 per cent.

Many countries levy reduced-rate indirect taxes on newspapers, with proclaimed policy goals of stimulating investment in journalism and ensuring low newspaper prices. However, by taking into account the fact that the media industry operates in two-sided markets, we find the paradoxical result that the consequences of a low-tax regime might be quite the opposite; low investments and high prices. We also show that the low-tax regime tends to increase newspaper differentiation. If the advertising market is relatively small, the newspapers might invest too little in journalism and be too differentiated from a social point of view. In this case a tax increase will be welfare-enhancing.

The competitiveness of the state of Guanajuato is linked to very few activities under the leading influence of very few municipalities. The sensibility of these locations to economic growth is also highly dependent on the performance of the very few activities: shoes, autos, oil, processed foods and chemicals are extremely important to their respective city. Other places rest to a higher degree on a more stable demand condition of non tradeables in services and trade, naturally less exposed to competition. The obvious policy implication may be to reinforce the specialization of each location according to revealed competitive advantages individually. Of course, the source of competitiveness may vary between activities and between locations; some enjoy firms’ assigned competitiveness while others are more conventional cases of competitiveness based on productivity. Each type demand different policy approaches. The search of competitive clusters on the basis of revealed specializations at the regional level, may lead to recognize the relevance of space beyond the limits of political demarcation, i.e. beyond the state of Guanajuato as such. Many potential linkages may only surge when these neighboring advantages are fully recognized.

In 1997, the Comisión Reguladora de Energía of Mexico implemented a netback rule for linking the Mexican natural gas price to the Texas price. At the time, the Texas price reflected a reasonably competitive market. Since that time, there have been dramatic increases in the demand for natural gas and there are various bottlenecks in the supply of natural gas. As a result, the price of natural gas in Texas now reflects the quasi-rents created by these bottlenecks. This paper addresses the optimality of the netback rule when the price of gas at the Texas market reflects the quasi-rents created by bottlenecks in the supply of natural gas to the United States pipeline system. In this paper, it is shown that it is optimal for the Mexican government to use the netback rule based on the Texas price of gas to set the price natural gas in Mexico even though the Texas market cannot be considered a competitive market, and the Texas price for natural gas reflects quasi-rents created by various bottlenecks. The indirect welfare function approach used in this paper can be extended to address the problem of pricing gas when there are multiple sources of imported gas from LNG terminals.

We intend to present in this article the results of an empirical study conducted in Mehedinti County by the means of which we seek to highlight the link between labor flexicurity and performance of economic entities. Labor flexicurity signifies the relationship between the flexibility and security of labor and states that necessary balance between the interests of employees and those of employers, at macroeconomic level, that are pointed out by the partnership government - employers - trade unions. At the microeconomic level, flexicurity fits into the set of values that compose the organizational culture, making it difficult to detect and even more hard to assess. Once we have selected businesses with an average number large enough to be able to identify the elements of organizational culture, we tried through a questionnaire to put every trader in one of the four quadrants of the flexicurity matrix. Choosing a homogeneous set of performance indicators allowed us to visualize the correlation between labor flexicurity and performance of economic entities in Mehedinþi County.

The paper analyzes the effects on the demand for owner-occupied housing that are likely to result from the Swedish 1983-85 tax reform. This is done by means of a micro-simulation model which takes into account the dichotomous nature of the demand for housing: the consumers choose the mode of tenure (owning versus renting) as well as the quantity of housing conditional on the choice of the mode of tenure. The tax reform consists of a general reduction of marginal tax rates (i.e. an increase in disposable income) together with limitations in the deductibility of mortgage interests. The simulations show that this will cause an increase in home-ownership in the sense that more households will demand owner occupied housing. At the same time, however, the households will demand smaller houses on the average, and thus aggregate demand for small and medium-sized units will increase while demand for large units will fall sharply.